insurance

Using An Old Opening Joke Line To Illustrate Costs In Healthcare

We have all heard jokes that begin with
“Three guys walk into a bar….”

I thought it might make sense to use that model to explain why “referenced-based pricing” and general consumer awareness in healthcare are important to consider. Here goes:

Three guys walk into a hospital to get the same procedure….

– THE FIRST GUY is covered by MEDICAID and the billed amount to the government is $60.

– THE SECOND GUY is covered by MEDICARE and the billed amount is $100.

– THE THIRD GUY is covered by PRIVATE INSURANCE and the billed amount is $250.

cost-1174933_1280

There are long and complicated reasons why this exists, but it does.  One of the things that many people are talking about but still few are doing is called “reference-based pricing” (RBP).  This is where an employer will agree to only pay a percentage above MEDICARE.  It is still edgy and can create problems for members under this type of program, but it makes sense.  Basically, the employer is saying “I understand that providers charge us more but we will only agree to a certain percentage above what you bill to Medicare.”   The reason it is edgy is that it could pit the provider against the member or the provider may even turn the member away.  Nonetheless, RBP is out there and will likely get more attention.

Although structural programs like referenced-based pricing may be too early to embrace, it is wise to know that better pricing is out there and consumers can take advantage by asking questions and comparing prices.

I know that “three guys walk into a bar” has a much better ring to it than “three guys walk into a hospital”, but it is important to know that you may be able to find a better deal on your costs.

This is something BBG is studying and we are gathering pricing differences for our clients.

CDHC-Comparison-Shopping

 

2016 Medical Loss Ratio Rebates: Get a Check From Your Carrier?

Notifications from insurance carriers about this year’s rebates have recently started going out to employers. Under the ACA, carriers have until September 30 to notify employers if they are to receive a rebate.  Any impacted employees will also be notified by the carriers that a rebate is being issued to their employer and that the employee can check with their employer to find out if they qualify for a portion of it.

This is the fourth year of the medical loss ratio rebate checks. While the total number and the aggregate dollar amounts of rebates are about half of what they were in the MLR provision’s first year (2013), more are being issued this year than last year.  From what we hear, a relatively small percentage of employers are receiving rebates and for those that do the amounts are modest.

As a refresher….

The Minimum Medical Loss Ratio (MLR) requirement is part of the Affordable Care Act (ACA). The MLR requirements set minimum percentages of premium dollars that health plans must spend on health care (medical costs and activities that improve health care quality).  If a health plan spends less in medical costs than the minimum percentage it has to pay rebates to employers.  The employer then has to follow government guidelines on how to use the rebates. The employer must use the amount of an MLR rebate that is proportionate to the premiums paid by subscribers (enrolled employees) to benefit its subscribers. There are several ways employers can choose to do this.

For more information you can read our earlier article, refer to 68557 How Employers Should Handle MLR Rebates 8-30-16, or go to

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/technical-releases/11-04

https://www.irs.gov/uac/medical-loss-ratio-mlr-faqs

Example Rebate Check

ARE YOU WONDERING ABOUT THE “CONTROLLED GROUP” QUESTION? HERE’S WHAT YOU NEED TO KNOW

The “Controlled Group” question is popping up for many employers with much greater frequency as part of various and sundry regulatory applications, audits, surveys, reporting requirements and underwriting questionnaires.

Netting it out in layman’s terms — at least as it relates to health insurance and ACA compliance — a controlled group may exist when multiple companies fall under common ownership.

The ACA includes a provision under which companies that have a common owner (or are otherwise generally related) are combined and treated as a single employer for purposes of determining if the companies collectively employ at least 50 FTEs (the combo of full-time EEs and full-time equivalent EEs).

THE LAW OF DISPROPORTIONATE COSTS: SMALL NUMBER OF EMPLOYEES ACCOUNT FOR LION’S SHARE OF GROUP HEALTH PLAN MEDICAL COSTS

There’s plenty of cost related analytics available to support the disproportionate cost premise that medical expenses are highly concentrated among a very small proportion of enrolled employees.  These highlights, for example, from a Agency for Healthcare Research and Policy (AHRQ) are pretty telling:

  • 1 % of the population accounts for 21.4 % of total health care expenditures nationally
  • 5 % of the population account for 49.9 % of total expenditures
  • 10 % of accounts for 65.6 % of all medical costs
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