Insurance Insider News February 3, 2010
NEW PRODUCTS l IN CALIFORNIA l HEALTHCARE
EMPLOYEE BENEFITS l FINANCIAL PLANNING l LIFE SETTLEMENTS
HEALTHCARE
U.S. Issues Mental Health Parity Rules
The Departments of Labor, Health and Human Services (HHS), and the Treasury jointly issued new rules on mental health parity for group health plans. The rules apply to any group health plan that includes mental health and substance use disorder benefits, along with standard medical and surgical coverage. Plans must treat them equally in terms of out-of-pocket costs, benefit limits, and practices, such as prior authorization and utilization review.
These practices must be based on the same level of scientific evidence that the insurer uses for medical and surgical benefits. For example, a plan can’t apply separate deductibles for treatment related to mental health or substance use disorders and for treatment related to medical or surgical benefits. They must be calculated as one limit.
The rules implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). MHPAEA applies to employers with 50 or more workers whose group health plans offer mental health or substance use disorder benefits. The new rules are effective for plan years beginning on or after July 1, 2010.
Comments on the interim final regulation are due 90 days after the publication date. Comments may be emailed to the federal rulemaking portal at http://www.regulations.gov.
$7 Billion Potential Savings in Healthcare Reform
The basic insurance exchange systems, featured in health reform legislation, may bring value to consumers to the individual market. But, the small group market is another story. The most affordable and efficient route to healthcare reform in the small group market is to combine new insurance regulations with many existing private sector capabilities, according to a report by Avalere Health.
Bernard DiFiore, president and CEO of BenefitMall said, “BenefitMall has lobbied on behalf of general agencies and brokers throughout the healthcare debate. They believe…public exchanges would negatively impact the small group market in two ways – creating an unnecessary expense to build something that already exists and lessening the value of choice. Currently, small businesses can maximize coverage value from thousands of plans that are available within the private sector. Public exchanges would restrict choice to only a few plans and carriers.”
For the study, Avalere compared health reform initiatives in Massachusetts and Maryland. The Massachusetts exchange model has been very successful at meeting the needs of individual purchasers, but less effective in enrolling small groups. In the first year of operation, only 42 small groups enrolled in the pilot, far short of the 100-group goal.
Maryland passed the Health Care Reform Act, which created a comprehensive standard health benefits plan (CSHBP) for the small group market. A private market of general agents evolved to centralize the administrative functions of purchasing health insurance for small employers. Maryland’s small group market already operates with plan standardization and administrative simplification, which are touted as two of the chief goals of insurance exchanges.
Employers Say Healthcare Reform Would Increase Costs
A significant majority of U.S. employers say healthcare reform would lead to higher costs for employer-sponsored benefit programs and healthcare services, according to a survey by Towers Watson and the National Business Group on Health. Seventy-one percent of employers surveyed say that health reform would increase the cost of healthcare services and 69% say it would increase the cost of their benefit programs.
Additionally, 35% say health reform would lead to fewer employers offering subsidized benefits. Forty-six percent of employers say it would decrease employer-sponsored offerings of retiree medical benefits, 5% say it would increase offerings, and 27% say it would cause no change.
On the other hand, 71% say healthcare reform would increase access to health benefit coverage; 34% say it would increase transparency of provider prices; and 30% say it would increase the transparency of provider quality. Thirty-four percent say it would increase the number of large employers that replace their plans with consumer-driven health plans (CDHP); 9% say it would decrease the number, and 27% say there would be no change.
Forty percent of employees say they would not be comfortable purchasing their own insurance in the reformed markets as an alternative to employer-sponsored coverage.
For more information, visit www.towerswatson.com.
Group Asks for Remedy to Carrier Denials and Delays
Consumer Watchdog urged President Obama to close a legal loophole that bars people from holding their health insurance providers legally accountable for denials and delays of care even if those denials or delays result in serious injury or death.
Consumer Watchdog also asked Obama not to wait for Congress, but to re-establish a Special Assistant for Consumer Affairs in the White House -- a post every other Democratic president since President Kennedy has filled. That post would offer a voice for patients who lack legal remedies against insurance companies. To watch a Dateline report on the issue visit http://www.consumerwatchdog.org/patients/EqualJusticeForPatients/. For more information, visit http://www.consumerwatchdog.org/resources/EqualJustice.pdf .
Safety Net Providers Benefit from Stimulus Funding
During the recession, the higher demand on safety net providers has not affected healthcare safety net providers as much as expected, according to a study by the Center for Studying Health System Change (HSC). Federal stimulus funding has helped providers weather the economic storm by partially offsetting reductions in state, local and private funding. HSC studied Cleveland, Greenville, S.C., northern New Jersey, Phoenix, and Seattle.
The 2009 American Recovery and Reinvestment Act (ARRA) provided higher matching funds for state Medicaid programs, increased funding to support hospitals serving disproportionate numbers of low-income and Medicaid patients, and provided additional grants to federally qualified health centers (FQHCs).
Other factors may have supported the safety net in the five communities. For example, during the past decade, federal expansion grants for community health centers have increased the number of programs and the capacity of programs to help direct people to primary care providers. This may have stemmed the expected surge in emergency department use by the uninsured during the downturn.
In some cases, the costs of leasing facilities have declined significantly and providers have found larger, more qualified applicant pools for financial and administrative positions. Also, employees are more likely to stay in their positions than risk going elsewhere, reducing recruiting and training costs.
But, the news is not all good. Many free clinics are facing more serious financial strains because they have been ineligible for stimulus funding and they are more dependent on private donations. Moreover, free clinics do not get enhanced Medicaid reimbursements, as do FQHCs and other community health centers
As state and local officials grapple with large budget deficits, safety net hospitals and community health centers face funding cuts that would offset gains from federal stimulus funding. All five states reduced optional Medicaid services for adults or proposed reductions in dental, vision, mental health, podiatry, and prescription drug coverage.
Most providers say they are trying to control labor costs, which add up to a significant portion of their operating budgets. All five communities report varied degrees of layoffs or reductions through attrition, especially at safety net hospitals and free clinics, although wage freezes are more common.
Many health centers are at full capacity, limiting their ability to accept new patients and causing longer waits for care. Further, the effects of the recession are highly localized and some safety net hospitals in other communities have encountered significant financial problems and service cutbacks.
Unemployment and uninsured rates are likely to remain high for some time despite some signs of an economic recovery at the end of 2009. Greater demands on safety net providers are likely to persist even as federal stimulus funding ends.
Safety net providers have adopted strategies to stay financially viable, but many say they have not yet felt the full affect of recession. For more information, visit http://www.hschange.org.
Latest Survey of Claims Processing Times
The American Assn. of Health Plans released its latest survey of claims receipt and payment timing. The most recent previous report was published in May 2006.
Here are some highlights from the latest survey:
• 82% of claims were received electronically in 2009,
up from 75% in 2006 and 44% in 2002.
• There is often a notable lag before health insurance plans receive claims
from healthcare providers. In 2009, 22% of claims were received from
healthcare providers more than 30 days after the date of patient service
and 12% of claims were received more than 60 days after the date of service.
• Health insurance plans processed nearly 99% of “clean” claims
within 60 days, and 97% of claims within 30 days.
• Approximately 75% of claims were adjudicated using automated
verification and validation processes that do not require manual intervention.
That’s up from 68% in 2006 and 37% in 2002.
For more information, visit www.ahip.org.
NEW PRODUCTS
Indexed UL
ING is introducing an indexed universal life product that includes two non-U.S. stock market indexes. ING Indexed Universal Life-Global offers policy death benefit protection and the choice of a fixed interest strategy or an indexed strategy. For more information, contact ING Life Sales Support at 1-866-ING-SELL.
Flexible Income Fund
Transamerica Asset Management Group plans to lower the expense ratio of its Transamerica Flexible Income fund. The pricing structure includes a reduction of the fund’s management fee by a maximum of .25% and a .10% waiver on the fund’s Class A 12b-1 fee. For more information, visit www.transamericafunds.com.
Online Work/Life Forums
For the eighth year, Unum is teaming up with the Disability Management Employer Coalition (DMEC) to offer forums on workplace topics. The Virtual Education Forum is made possible by Unum’s sponsorship and is part of DMEC’s distance learning offerings.
The 2010 winter-spring forum schedule is as follows:
• Feb. 9: Several different employer-based transitional work models.
• March 9: Clinical and employer-based strategies for managing chronic pain.
• May 11: 2010 FMLA regulation changes.
• June 15: Voluntary benefit communication and enrollment strategies.
For more information, visit www.dmec.org.
Detailed Analysis of Healthcare Reform
Research and Markets is offering an economic analysis of medical markets, which is updated with the latest information on healthcare reform and the emergence of Barack Obama's plan. The report covers the developing healthcare system in China to provide a more global perspective. For more information, visit http://www.researchandmarkets.com/research/e74081/health_economics_a.
IN CALIFORNIA
Health Net to Provide Medi-Cal Dental Coverage
Health Net of California, Inc. is restoring dental benefits for its adult Medi-Cal beneficiaries in Los Angeles County. Their coverage was eliminated in 2009 due to state budget cuts. Health Net unveiled a similar substitute dental program in Sacramento County in 2009, which quickly became a popular benefit among adult Medi-Cal beneficiaries.
Robert Shechet, DDS, director of dental programs for Health Net of California said, “We believe we are the only health plan in California extending dental benefits to adult beneficiaries and providing substitute dental benefits to adults in the Medi-Cal program until the usual or similar benefits are restored. This is one more way we are working to preserve California’s medical and dental safety net.” For more information, visit http://www.healthnet.com.
FINANCIAL PLANNING
2010 Retirement Income Summit
The 2010 Retirement Income Summit will be held May 3 to 4 at the Westin Chicago River North, Chicago, IL. For more information, visit http://www.investmentnews.com/2010summit or call 212.210.0238.
LIFE SETTLEMENTS
Trends in the Life Settlement Market
The life settlement market faces an uncertain future due to the constrained capital environment and decreased taste for innovative financial products brought on by the credit crisis, according to a report from Aite Group, LLC. Aite interviewed more than 30 interviews with senior stakeholders in the life settlement industry including vendors and their clients.
Another challenge involves the difficulties in estimating the life expectancies of the insured. The industry will benefit as evolving state regulations legitimize its core offerings, helping it gain acceptance among life insurance distributors. Industry optimists anticipate robust life settlement volumes in coming years while pessimists present a more conservative figure. Based on available evidence, Aite Group estimates that the life settlements industry will chart a middle course, recovering from a sub-par 2009 to transact about $13 billion annually from 2010 to 2013. For more information, visit. www.aitegroup.com
Hiring Goes Hand in Hand with Targeted Workforce Reductions
Thirty-two percent of employers in a Towers Watson Survey said their employees' cost of healthcare coverage is higher now than it was before the financial crisis and 38% think it will be even higher a year from now. Twenty-eight percent expect that they will put more emphasis on making sure that the benefits provide a desired level of security for employees. Much larger numbers of respondents expect to increase their focus on controlling and reducing benefit costs (53%) and managing the risk and volatility of those costs (49%).
Fifty-two percent of employers report that employees working past their desired retirement age is higher than it was before the financial crisis.
"While employers are clearly hopeful that 2010 will bring healthier balance sheets and bottom lines for their businesses, they also seem mindful that their employees might not share that optimism. With unemployment numbers still high and healthcare costs continuing to rise, many employees will not be able to shake off their concern for the future. How a strengthening global economy will affect these trends remains to be seen. The good news, based on our client experience, is that many companies already recognize the need to make thoughtful investments to retain and engage their existing talent despite the continuing uncertainty about the business climate and the resulting caution about taking on added workforce costs," said Ravin Jesuthasan, at Towers Watson.
The survey also includes the following findings:
• 30% say employees have, on average, reduced their contributions to 401(k) plans from pre-financial crisis levels and 51% have seen an increase in employees' hardship withdrawals from pre-financial crisis levels.
• 48% say employees shifted 401(k) plan allocations out of equities, however 37% expect employees to shift back toward equities a year from now.
• Respondents expect to fund their short-term incentive plans at 100% this year, compared to 80% in 2008 and 60% last year.
• The U.S. employment picture looks mixed at best in 2010, with hiring picking up at a majority of U.S. organizations even as some plan to continue making targeted workforce reductions, according to a survey by Towers Watson. The survey did find signs of optimism, especially predictions that employee productivity and engagement will improve over the next year. 92% of respondents plan to hire in 2010. However, 36% are also planning targeted workforce reductions, down from the 58% that have done so since the financial crisis began.
Forty-one percent of the survey respondents agree that it's easier to retain talent now than it was before the financial crisis. However, 51% think that retention will be more difficult a year from now. For more information, visit http://www.towerswatson.com/research/960.
Employee Benefits
Workers Need Programs to Coordinate Eldercare
Employees who are caring for an older relative are more likely to report health problems like depression, diabetes, hypertension, or heart disease, costing employers an additional healthcare cost of 8% per year, according to a recent MetLife study. The report was with the National Alliance for Caregiving and the University of Pittsburgh.
Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute said, "Coordination of eldercare services and wellness initiatives may open avenues of innovation to benefit employees and employers. Employers can provide support to their employees and…reduce their healthcare costs by anticipating and responding to the challenges of eldercare."
The report says that employers should consider integrating their wellness and eldercare programs. In addition to practices like flexible hours, paid time off and telecommuting, employers can offer the following wellness programs to reduce the stress on caregivers:
• Stress-reduction seminars.
• On-site yoga and exercise classes.
• Relaxation techniques and massage therapy.
• Decision-support systems with information about available services.
• Financial incentives to encourage participation in preventive benefits
offered by employers, such as premium reductions for getting
annual physicals, mammograms, Pap tests, smoking cessation classes,
and exercise).
• Expanded on-site medical screenings.
• Free legal and financial advice, especially pertaining to Medicare,
Medicaid, and insurance.
The study reveals that younger caregivers (ages 18 to 39) cost their employers 11% more for healthcare than non-caregivers, while male caregivers cost an additional 18%. Eldercare responsibilities may be closely associated with high-risk behaviors like smoking and alcohol consumption. Employed caregivers find it more difficult than non-caregivers to take care of their own health or participate in preventive health screenings. For example, women caregivers were less likely to report annual mammograms than non-caregivers. Ten percent of caregivers missed at least one day of work over a two-week period because of health issues compared to 9% of non-caregivers. For more information, visit www.maturemarketinstitute.com.
