Two Minute Drill

Keep Your Doctor? Your Preferred Hospital? Do Your Homework Before Selecting A Plan.

With healthcare reform and the Affordable Care Act almost in full bloom, more potentially game-changing unintended consequences are starting to emerge.  One such consequence stems from the introduction of “narrow networks.” Initially intended for healthcare.gov or Exchange based products, most carriers have utilized the narrow networks to round out the low end of their 2014 individual and employer sponsored group plan offerings.

Employers changing plans in 2014 will have to pay closer attention to network selection. Or, potentially pay the price when you or your employees learn that preferred, familiar, closest and, in some cases, the best doctors and hospitals may not be in your plan’s network.

Until now, network size has not been a huge determinant in selecting carriers and plans. Most of the major insurance companies in the group market provided access to a vast selection of doctors and hospitals, especially those providers with the best reputations. With the advent of the Affordable Care Act and its impact on rate structures, benefits, and plan designs, carriers have less discretion on plan designs and rate setting. As a result, they are turning to these “skinnied” down networks as a primary means to manage costs, differentiate, and vary premium across their respective plan offerings.

In order to gauge the impact, I checked the online directories of two of the major group health plans in one large county in the Tampa Bay market where I reside. While decidedly informal and unscientific in nature, it nevertheless highlights the contrast.

I compared a few key categories of each respective carrier’s heretofore “staple” network (still offered; higher rates than the narrow network plans) against the new skinnier network offering (newly offered; lower rates than staple network plans). In both cases the “staple” networks contained a significantly greater number of providers, were described as open access, and did not require referrals. The new skinnier networks offered fewer participating providers, required designation of a Primary Care Provider (“PCP”), and required PCP referrals to obtain other services.

In comparing several categories of specialists, the narrow networks were on average comprised of about 50% fewer specialist physicians than the traditional networks.  However, the biggest difference between the customary networks and the newer narrower networks came when comparing participating PCPs and hospitals.  Here’s the breakdown:

Carrier 1

Carrier 2

OA Network

Narrow Referral-Driven  Network

OA Network

Narrow Referral-Driven  Network

Primary Care

1280

227

1300+

325

Hospital Primary and Secondary

12

3 (includes 1 major)

18

10 (includes 1 major)

We’ll be monitoring further developments, reporting more on this issue in future posts as well as discussing practical alternative strategies to this growing cost vs. access issue (eg. direct contracting, plan customization, buying a lower cost plan and supplementing, etc.).

In the meantime, what can you do?

When it comes to changing to new plans, look before you leap.  Or, at least plan on doing some homework.

To read more about this topic go to these recent articles in the Washington Post, Insurers Restricting Choice of Hospitals and Doctors to Keep Costs Down,” and at Health Care Policy and Marketplace Review, If You Like Your Doctor You Will Be Able to Keep Your Doctor. Period.”

Did you hear Baxter the dog has health insurance?

There is a story that circulated last week on Twitter that a guy enrolled himself on healthcare.gov but the welcome letter that came was addressed to his dog, Baxter. Apparently they mistook his password for his name.

That got me thinking…

Two months ago I had a doctor’s appointment and I had to take my cat (a good old guy) to the vet.  My doctor is phenomenal. He works his tail off.  I received excellent care but he quickly moved on to the next patient. He seemed to be maxed out with time and the demands on him from his medical practice.

My veterinarian is also a phenomenal person. The visit for the cat took approximately the same amount of time. Yet the vet was more relaxed and seems to have more capacity in his practice.

The vet bill was $63 bucks cash.

The doctor’s office filed the claim through my insurance plan and it was knocked down from $120 to $65 bucks.  I paid the $65 bucks to my doctor’s office about 45 days AFTER the date of my appointment.

As I read about how physicians are creating concierge practices, operating outside insurance and considering leaving Medicare, I can’t help but think of those two visits.

I wonder if there is a way to make low dollar costs in healthcare more transparent and efficient. Maybe even the ACA could move in this direction instead of focusing on low copay plans in most of the advertising.

I wonder why we, as a society, seem to be more accepting to pay cash for a vet visit but less likely to be responsible for the full cost of a routine doctor’s office visit — when often they net out to roughly the same cost.

Here is a recent article that appeared in The Wall Street Journal about concierge medicine, titled Pros and Cons of Concierge Medicine.

Happy Thanksgiving to you and yours from all of us at BBG!

Khan Academy Primer on PPACA or Obamacare

The Barrett boys (and their dad) have used Khan Academy to enrich all their learning. I recommend it strongly. Most people reading this post may not need this PPACA/Obamacare primer, but it is very good and bias free.  Check it out and more important, please pass it along to someone who can benefit from a better understanding of the structure of this law that is currently creating such cultural consternations. Enjoy!

https://www.khanacademy.org/humanities/american-civics-subject/american-civics/v/ppaca–or–obamacare

Where Are Our Healthcare Dollars Being Spent?

Quite often in the course of working with our clients on practical and innovative approaches to lower their healthcare costs or mitigate pending increases, we are asked two questions:

“Why is healthcare so expensive?” And “where is the money going?”

The first question is so hugely complicated there may not be enough bandwidth on the internet to analyze it and address it in writing. The second question was addressed in a recent study published by the Agency for Healthcare Research and Quality and related in easier to read fashion in a joint Kaiser Health News/Washington Post article.

While this is really big picture stuff, in answering the question on where the money is being spent, they present some interesting (perhaps only to analytical geeks like me) and startling facts worth taking a moment to contemplate:

  • In 2010, Americans spent @ $1.3 TRILLION on healthcare (This addresses direct payments for care provided during the year.  It jumps to $2.8 TRILLION when you include health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care).
  • 1% of the population accounted for 21% of the $1.3 TRILLION spent.
  • 5% accounted for 50% of all healthcare expenditures.  And, 10% are credited with 66% of the healthcare spend.
  • Contrast that with the 50% of the folks in the U.S. that accounted for less than 3% of the costs.

Our BBG world is micro and hyper-intensively focused on helping mid-size and small employers control costs and improve outcomes one employer at a time. We can’t even begin to suggest we know where the big picture solution lies. That’s for folks a lot smarter and better equipped. It does appear clear however, even to this lay person, that to put a dent in this ever growing cost curve, the lion’s share of the resources and efforts must laser focus on solving the 5% accounting for 50% cost equation…

For more on the study or the article, go here:

http://meps.ahrq.gov/mepsweb/data_files/publications/st421/stat421.shtml

And, here: www.kaiserhealthnews.org/stories/2013/october/08/one-percent-of-costliest-patients.aspx

Ezra says, “Healthcare.gov is in defacto shutdown.”

That is the title of Ezra Klein’s piece in yesterday’s Washington Post that indicates while the federal healthcare exchange is said to be open for business, it really isn’t.  Klein interviews highly respected health industry consultant Bob Laszewski who possesses up-close knowledge of the ballyhooed rollout of the federal health insurance exchange healthcare.gov. Laszewski and Klein provide some real, matter-of-fact insight and perspective on the utter chaos surrounding the rollout. Interestingly, while much of the latest news cycle highlights the many glitches associated with the exchange’s front end rollout, the article discusses even bigger problems that may loom on the system’s back end, if and when coverage is purchased and goes into effect.

Caveat emptor.

Read the entire piece at http://m.washingtonpost.com/blogs/wonkblog/wp/2013/10/23/healthcare-gov-is-in-de-facto-shutdown/

Looking for Official ACA Information?

Interested in finding what official online resources are available from the federal government for learning about the various requirements and other aspects of healthcare reform?  With implementation of the major pieces of healthcare reform around the corner and the complexity seemingly growing with each passing day, I was.  A cursory investigation led to these six main government-sponsored websites, no doubt there are many others.  Here are the big six for those who might want a handy reference:

Official Site of the Affordable Care Act
https://www.healthcare.gov/

U.S. Department of Health & Human Services (HHS)
http://www.hhs.gov/healthcare/

The Internal Revenue Service (IRS)
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home

U.S. Department of Labor  (DOL)
http://www.dol.gov/ebsa/healthreform/

U.S. Small Business Administration
http://www.sba.gov/healthcare

The White House
http://www.whitehouse.gov/healthreform

Confused About 2014 Maximum-Out-of-Pocket Costs?

ACA Prescribed Limits Are Still on Track for Most Plans in 2014

Out-of-Pocket (OOP) maximums of $6,350 for individuals and $12,700 for families will still apply for most customary fully-insured health insurance plans in 2014 (coinciding with renewal/anniversary dates; new plan year effective dates). Many publications and other news sources have created some confusion by reporting that the Affordable Care Act provision limiting maximum out of pocket costs has been delayed until 2015. The delay only impacts those plans that carve out certain benefits (e.g. pharmacy, mental health benefits) for administration by separate third-party providers.  In those cases, a health plan’s medical benefits and its carved out benefit(s) may apply toward separate out-of-pocket maximums in 2014.  This appears to be a one year exception for carve-outs and all plans are expected to aggregate out-of-pocket maximums beginning in 2015.

ACA October 1 Notice of Coverage Mandatory for Employers

DOL Update Confirms No Penalties for Non-Compliance

As part of the implementation of the Affordable Care Act, Health and Human Services (HHS) is requiring that all employers distribute to their employees basic information related to the new Federally Facilitated Healthcare Exchange or Marketplace that is scheduled to be introduced on October 1, 2013.  While the details of the exchanges still have yet to be released, the requirement for employers to notify their employees remains in effect.

Official rules defining compliance have not been issued. HHS, however, has issued guidelines. Here’s a net of those guidelines:

  • Applies to employers that employ one or more employees and generate annual revenue of $500,000 or more.
  • Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status.
  • The notice must include information regarding the existence of a new Marketplace and contact information and description of the services provided by a Marketplace. It must inform the employee that he/she may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace; and inform the employee that if the employee purchases a plan via the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer; and, that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
  • Employers are required to provide the notice to ALL current employees not later than October 1, 2013.  In 2014, any new employees are to be provided a notice within 14 days of an employee’s start date.   It may be provided electronically.
  • Model language is available on the DOL’s website.  Employers may use it or a modified version, provided the notice meets the content requirements described above.

Complete details can be found on the DOL website http://www.dol.gov/ebsa/newsroom/tr13-02.html

Our take on the bottom line is this:  Even though details of the exchanges have not yet been released, HHS is requiring all employers to distribute by October 1, 2013 an announcement to all employees regarding the upcoming open enrollment for the Federally Facilitated Healthcare Exchange or Marketplace – regardless of each employee’s employment or plan enrollment status.  However, and contrary to some of the fear mongering opportunists kicking up dust in and around the market, in a recently released FAQ the DOL clarified that while employers should provide a written notice to all employees about the Health Insurance Marketplace by October 1, 2013, there is no fine or penalty under the law for failing to provide the notice .

www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html

We will try and keep you posted on any new developments.

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