Health Care Reform Update

Volume 2 Issue 3
August 4, 2010

The Health Care Reform Update is a publication intended to provide objective information on the health care reform updates from Washington DC. Many businesses report health care as their second and fastest growing expense. With all the headlines and discussions, we know that it is difficult to separate fact from fiction. We will periodically send articles to help you maintain a knowledgeable position on the topic. We believe in building relationships with our clients; solving their problems, exchanging information, ideas and resources with them and providing them with value-added services. This is our way to share great information with you and it is our mission to continue to improve upon these philosophies. Enjoy this issue of the Health Care Reform Update and thank you for reading it. It was our pleasure putting it together for you.

Better Health Means Lower Costs

By Sally Roberts

Knoxville, Tenn.—Like most employers, the largest benefit problem facing the city of Knoxville, Tenn., has been the rapidly cost of health care. 

The City’s health care costs rose a staggering 141% from 2001 to 2006.

Backed by a new administration that embraced change, Gary Eastes, the city’s risk and benefits manager, set out in 2005 to do something about it. 

He knew that to truly effect change and reduce costs, he needed to find ways to encourage employees to change their unhealthy behaviors.  But before he could implement any incentive programs, he had to do something about the City’s health plan. 

Since 1999, city employees had been covered under the State of Tennessee’s medical insurance pool, with a vast majority of employees covered under the state’s first-dollar health maintenance organization plan with small copayments. 

But “because it was pool-rated, we could improve employee health but it wouldn’t help our claims, we were going to have to leave the state plan.”

So after an extensive request-for-proposal process, Mr. Eastes ultimately selected a fully insured BlueCross BlueShield of Tennessee Inc.’s preferred provider organization plan with either a $300 individual/$600 family deductible or a $1000 individual/$2000 family deductible.  It covers all preventive services, including colonoscopies, at 100%. 

The new plan, which became effective in 2006, did not go over well with city employees, who felt entitled to their first-dollar benefits.
“The $300 deductible scared them to death,” Mr. Eastes said.  “There were employees telling me they’d be financially bankrupt by the end of one year, that there was no way they could afford this deductible.  It really terrified them.”

But this was just the beginning of Mr. Eastes’ vision for helping employees live better lives.  The new health plan was coupled with a city-funded health reimbursement arrangement that encouraged wellness participation, care for chronic disease and consumerism. 
Although the incentives have evolved throughout the past few years, employees that agree to undergo a health screening are eligible for HRA contributions:

  • Employees earning less that $29,320 earn $150, while those earning between $29,321 and $39,460 receive a $75 HRA contribution each year
  • Employees and one eligible dependent who commit to being physically active for at least 20 minutes three times a week earn $20 per month
  • Employees who are tobacco-free earn $100 per year and an additional $100 per year if all covered dependents are also tobacco-free
  • Single employees participating in the highest deductible PPO network earn $150 a year and those with family coverage earn $450 a year
  • Employees participating in one chronic disease self-care program earn $40 per quarter and $80 per quarter if they participate in two or more programs.
  • Employees participating in the city’s prenatal program earn $200 upon delivery of a child

The HRA is working to change behaviors, Mr. Eastes said.

Participation has grown each year with about 85% of employees receiving the annual health screening exam.  In addition, 37% more employees requested the tobacco-free incentive this year compared with last year, and up to 40% of participants receive the physical activity incentive in any given month.

It went self-funded in 2008 as a way to get “better control” over employee health and see results immediately, Mr. Eastes said.

He also avoided a 6% cost increase this year by increasing the city’s lowest deductible plan to $500 for an individual and $1000 for family coverage. 

Source: Business Insurance

Looking Ahead to September 23... What's Next?

Effective on the first plan anniversary on or after 9/23/2010, the following “interim final rules” ( final rules are subject to change) will apply. As clarification continues to be provided through the federal government’s rule making process, we will share the information with you.

No Pre-Existing Condition
Exclusions for Anyone Under Age 19

Insurance companies cannot deny coverage to children under the age of 19 due to a pre-existing condition.  This includes both benefit limitations and coverage denials.  This will apply to all individual market and group health insurance plans. Grandfathered individual plans are exempt from this requirement.   

Extending Coverage for Young Adults
(Federal Law—State became effective 7/1)

If a plan covers dependent children, it must continue to do so for unmarried and married children until the child attains age 26. For plans already in existence on March 23, 2010, the age 26 limit only applies if the child is not eligible for other coverage. This exception ends in 2014. Final interim regulations specifically mandate that the terms of a group health plan or individual health insurance coverage providing dependent coverage cannot vary or be restricted based on age (except for children who are 26 or older).

Ohio has recently enacted similar legislation that, like its federal counterpart, extends coverage for adult children in all plans that provide coverage for dependent children. Unlike the federal law, however, the limiting age for coverage is 28 and the child must be (1) unmarried; (2) not employed by an employer that offers any health benefit plan which the child is eligible for coverage, and (3) not eligible for coverage under Medicare or Medicaid.

No Arbitrary Rescissions of Insurance Coverage

Insurers and plans will be prohibited from rescinding coverage for individuals or groups of people except in cases involving fraud or an intentional misrepresentation of material facts.  In the past, companies could search for an error or other technical mistakes on a customer’s application and use this error to deny payment for services when the customer got sick.  

No Lifetime Dollar Limits on Coverage

Insurers and employers are prohibited from imposing lifetime dollar limits on essential benefits (ie. hospital stays).  

Broader Doctor Choice

Health plan members may designate any available participating primary care physician (PCP) as their provider (ie. pediatricians for children).  Plans can also not require a referral for OB-GYN care.  This applies to all individual market and group plans, except those that are grandfathered.  

No Higher Out-of-Network Cost-Share for Emergency Department Services

Health plans and insurers will not be able to charge higher cost-sharing (copays or coinsurance) or require prior authorization for emergency services that are obtained out of a plan’s network.  This applies to all individual market and group plans, except those that are grandfathered.  

Appealing Insurance Company Decisions

Provides consumers with a way to appeal coverage determinations or claims to their insurance company, and establishes an external review process.  

Restricted Annual Dollar Limits on Coverage

Insurance companies’ use of annual dollar limits on the amount of insurance a patient may receive will be restricted for new plans in the individual market and all group plans.  This is step one of the “phase out” of the use of annual dollar limits on “essential health benefits” that will take place over the next three years until 2014 when the Affordable Care Act bans them for most plans.  The rule at this time does not provide any further detail or definition of “essential health benefits”. 

· 9/23/10: Plans issued or renewed are allowed an annual limit no lower than $750,000
· 9/23/11: minimum limit raised to $1.25 million
· 9/23/12: minimum limit raised to $2 million
· 1/1/2014: all annual dollar limits on coverage of essential health benefits will be prohibited

Limits apply to all employer plans and all new individual market plans.  It does not apply to grandfathered individual plans.  

Elimination of Cost-Sharing for Preventive Care in Medicare and Private Plans

Preventive care will now be covered at 100%, eliminating all cost-sharing requirements imposed on insured participants.  In addition to routine immunizations for children, adolescents, and adults; the following is a non-exhaustive list of medical services and procedures which may not be subject to any participant cost-sharing: (1) one-time screening for abdominal aortic aneurysm in men aged 65 to 75 who have ever smoked; (2) blood pressure screening for all adults over age 18; (3) breastfeeding counseling for new mothers; (4) breast cancer screening for all women over the age of 40 every 1-2 years; (5) a cervical cancer screenings for sexually active women; (6) screening for elevated cholesterol lipids for men over the age of 35; (7) screening for elevated cholesterol lipids for women over the age of 45;           (8) colorectal cancer screening for all adults over the age of 50 and continuing until the age of 75; (9) diabetes screenings for adults with pre-diabetes symptoms; (10) venereal disease testing for pregnant women; (11) HIV screening for at risk individuals; (12) routine osteoporosis screening for women over the age of 60.

“Doughnut Hole” Rebate

Under the Medicare Part D benefit, the “doughnut hole” starts when the retail cost of a Medicare beneficiary’s medications reaches $2,830 and continues until the beneficiary has spent $4,550 (which would be reached when the covered cost of medications reaches $6,430).  In this gap the Medicare Beneficiary must pay 100% of the cost of his or her medication. Pursuant to Health Care reform, Medicare beneficiaries who reach the coverage gap, or "doughnut hole,” in prescription drug coverage are eligible to receive $250 rebates. The coverage gap is phased out completely by 2020.

Employer Retiree Health Benefits Reinsurance

Effective June 1, 2010 the Patient Protection and Affordable Care Act established a temporary program to reimburse employment-based plans for a portion of the costs they incur providing health coverage to early retirees. Under this program, a plan sponsor may be reimbursed for 80% of the qualifying retiree health benefit costs incurred by its retiree health plan. Qualifying costs are limited to those that exceed $15,000 and do not exceed $90,000.

Source: www.informedonreform.com; www.healthcarereform.gov;  Millisor + Nobil: A Legal Professional Association

Workplace Remains Key Source of Health Coverage

We are excited to announce the new Fedeli Group Wellness and Preventive Care program provided by WellCall, Inc., a nationwide health and wellness company. A healthy person is a happier and more productive person; a happy, more productive person is a more successful person who helps make a healthy, happy successful business more successful, which makes life a more enjoyable experience.

The Fedeli Group Wellness and Preventive Care program offers a vast range of wellness services including a Personal Health Profile—a personalized report highlighting ways to improve the way you look and feel, plus your own private health coach to help you make some of the health changes you’ve been wanting. You may choose to lose some weight, start an exercise plan, quit smoking, or manage your stress—to name just a few. Your family can receive these services too.

Benefits include:

  • Online personal health profile (PHP)
  • Unlimited personal wellness coaching via phone, e-mail, or IM
  • Tip sheets and online tools
  • 24/7 access to online wellness programs
  • Biometric Screening
  • Guidance to Preventative Care

The program will be focused on screenings, prevention, and education with a goal of overall wellness.

More information on The Fedeli Group Wellness and Preventive Care program to follow.

How The Fedeli Group Can Help

As this legislation becomes more clear, we will provide detailed outlines of the changes. We will create regular information updates to keep you informed. If you have an immediate need, please contact us. Also feel free to check the benefits section of our website for updates at www.thefedeligroup.com.