HHS Announces 2017 Out-of-Pocket Maximums

Money and gavelThe Department of Health and Human Services (HHS) has announced the 2017 out-of-pocket maximums applicable to self-funded and fully insured employer health plans. The maximums for 2017 have been set as follows:

  • Individual coverage: $7,150
  • Family coverage: $14,300

All non-grandfathered health benefit plans in effect on or after January 1, 2014 are required to comply with the Affordable Care Act’s (ACA) mandate that employer health plans’ annual in-network out-of-pocket maximums not exceed HHS’ established limits. The 2017 limits represent an increase from the current 2016 maximums of $6,850 for individual coverage (an increase of $300), and $13,700 for family coverage (an increase of $600).

The out-of-pocket limits represent the maximum amount that an enrollee must pay for covered essential health benefits through cost-sharing. It typically includes the annual deductible as well as any cost-sharing obligations the enrollee must meet after the deductible has been satisfied. The out-of-pocket maximum does not include premiums, cost sharing associated with of out-of-network services, or the cost of nonessential health benefits.

According to a recent study by United Benefits Advisors (UBA), out-of-pocket costs have increased significantly over the past decade, although median plan limits have remained below HHS’ out-of-pocket maximums. According to UBA, both individual and family coverage plans saw significant increases in median in-network plan out-of-pocket maximums in 2015. It is expected that out-of-network expenses will continue to increase significantly as well, as employers continue to widen the cost-share gap between employer and employee responsibilities.

For solutions to help mitigate employee health benefit plan costs that don’t simply shift costs to valued employees, contact the benefits experts at POMCO today.


Congress Delays Cadillac Tax Until 2020

BusinessmanPresident Obama has signed into law a two-year delay of the Cadillac Tax. The delay is part of Congress’s $1.8 trillion omnibus spending deal, the Consolidated Appropriations Act of 2016. In response to strong concerns expressed by employers and labor groups regarding the potential negative financial impact of the tax, Congress proposed the two-year delay.

The Cadillac Tax was added to the Internal Revenue Code by the Affordable Care Act (ACA) and was originally slotted for 2018. It is a 40 percent excise tax on the health plan value  that exceeds $10,200 for individual coverage and $27,500 for family coverage. The tax would be imposed on applicable employers, health insurers and “persons who administer plan benefits.” The Consolidated Appropriations Act also makes the Cadillac excise tax deductible for those entities required to pay it. The tax was originally enacted as non-deductible, so the change in tax status will potentially ease the burden to some applicable employers.

The Consolidated Appropriations Act also authorizes the U.S. comptroller general and the National Association of Insurance Commissioners to study whether the ACA uses appropriate benchmarks to determine whether the tax should be adjusted to reflect age and gender factors when setting excise tax thresholds.

Over the past several years employers have started making strategic benefit plan decisions to avoid the pending tax, such as shifting costs to members, reducing benefits, or transitioning to high deductible health plans. Even though the tax has been delayed, employers are still encouraged to work with their benefits administration partners and brokers to assess whether their health benefit plan is at risk of being subject to the tax so that adjustments can be made prior to its eventual enforcement.

It is anticipated that the two-year implementation delay will provide time for further examination of the proposed Cadillac Tax law to allow Congress and the new Administration to further examine and consider how best to execute the proposed tax. Some are still hopeful that the tax will be repealed before January 1, 2020.


A CFO’s Guide to Making Benefit Plan Determinations

What Questions Should You be Asking?

Simplifying AdministrationEmployee benefits are one of the most significant bottom line costs for any organization. Chief financial officers play an essential role in determining what benefit plan solutions not only fit into the organization’s budget, but have the potential for the greatest cost savings. As you plan for the coming year’s expenses and work with your human resources director and benefits consultant to determine the right employee benefit solutions for your employees, ask the following questions:

Is our current health benefit plan at risk for the Affordable Care Act’s (ACA) Cadillac Tax?

The Cadillac Tax is a 40 percent excise tax on employer-sponsored health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The mandate is set to go into effect in 2018¹, leaving employers only two full calendar years to make plan changes in order to avoid the tax. For organizations that are collectively bargained in particular, it may be necessary to begin negotiations and planning now, in order to avoid the tax in 2018. To mitigate the risk of the tax, some employers are choosing to restructure benefits, move to narrow networks, or offer a high-deductible health plan (HDHP) in order to reduce overall plan costs and health plan value.

What is the cost of our spousal coverage?

According to BenefitsPro, the average cost of providing health care for a family was $16,351 in 2013, a 4 percent increase from the year prior, and employees paid, on average, only $4,565 of that total. As part of a trend to not only reduce overall health care costs, but also as a strategy to further avoid Cadillac Tax implications, a growing number of employers are restricting spousal benefit coverage by implementing a working spouse rule. The rule stipulates that if the spouse of an employee has access to primary health care through his/her own employer, and the employer pays for a designated portion of the single coverage cost, the spouse is not eligible for coverage under your plan. As an alternative, some employers are allowing spouses to remain covered, but are adding a surcharge to the cost for the employee. CFOs should weigh the cost benefits of a working spouse rule against how such a significant change may be viewed by employees. Though bottom line costs are a priority, recruitment and retention of talent must be considered with every benefit decision.

Are we conducting eligibility audits?

One of the largest causes of benefit leakage is outdated or inaccurate coordination of benefits. Employees may inadvertently fail to notify their employer of a change in their dependent’s status, but regardless of the reason, employers have an obligation to protect their health plan by ensuring that claims are not paid to anyone who is not truly eligible for coverage. Eligibility audits are a helpful tool for identifying such scenarios as dependents that have exceeded the plan’s age limit, a change in marital status such as a divorce, or cases when a child is not a legal dependent per the terms of the plan, such as a nephew or grandchild. According to Employee Benefit Advisor, a dependent eligibility audit can provide a typical ROI of nearly 15 percent and millions of dollars in cost savings. Organizations should conduct an eligibility audit at least every four years in order to identify enrollees who, per the plan guidelines, should no longer be eligible for coverage

Have we considered self-funding?

According to the Kaiser Family Foundation’s 2014 Employer Health Benefits Survey, more employers are self-funding their employee benefits, and that number has been on the rise. According to Kaiser, 15 percent of covered employees at small companies with 3-199 employees, and 81 percent of covered employees at larger firms, are enrolled in plans which are either partially or completely self-funded. CFOs should consider the advantages of self-funding, which include a greater flexibility in plan design and benefit options, access to actionable claims data, and lower administrative costs. Self-funding also provides enhanced cash flow options. Unlike fully insured plans that require advanced premium payment, under a self-funded plan, claims can be funded as they are due, which allows employers to keep more money in a bank account where it can earn interest.

For a health benefit plan assessment and customized cost-avoidance solution for your health benefit plan, contact the benefit experts at POMCO today.


¹ After this article was published in December 2015 Congress delayed the Cadillac tax until 2020. Read more here.



The Cost of Polypharmacy

The cost of polypharmcyPolypharmacy is a term used to describe the use of four or more medications by a single patient. It typically occurs in patients managing a chronic condition, or in a patient who is over 65 years of age. Affecting approximately 40 percent of seniors, polypharmacy poses significant health risks, including drug-interactions, and dosing errors. For health plans, not only are higher numbers of prescribed medications costly, but the risk of adverse reactions could result in additional incurred costs in the form of hospitalizations. By understanding the risks of polypharmacy, and by partnering with an administrator with nurse case management capabilities, the risks and costs of polypharmacy can be mitigated.

According to pharmacy benefits manager Express Scripts, the average senior utilizes six different medications, and more than 15 percent of seniors use at least 10 different medications simultaneously. One common scenario in which polypharmacy occurs is when a patient is being treated by multiple physicians who are unaware of one another’s prescription treatment plans. A study by Express Scripts found that seniors being treated by two different physicians had an average of 27 prescription fills and were at-risk for 10 medication errors each year. For patients being treated by as many as seven physicians, their average number of prescriptions increased to a staggering 52, with the potential for 22 annual medication errors. Other causes for polypharmacy may include:

  • Interaction with other drugs that require treatment from a third drug, a scenario called “cascading drug therapy”
  • Inadequate screening for drug allergies
  • Inappropriate dosing strength based on the patient’s age, size or health status
  • Use of expired medications
  • Use of over-the-counter or alternative treatments

When a patient is utilizing so many different medications, there is the potential for increased side effects and even reactions that contradict one another, or that a drug being used for one condition will have a negative impact on another health problem. For example, a medication used to manage diabetes may negatively impact heart function and may not be appropriate for a patient at-risk for heart failure. In addition, patients prescribed four or more medications often report that they find it difficult to remember when to take each drug, leading to complications associated with inappropriate medication use and non-adherence.

In addition to the severe risks for the patient, employer health plans are at-risk for significant costs associated with not only higher drug utilization patterns, but the potential for health complications caused by mixing so many medications. Polypharmacy can harm a patient’s health, resulting in increased doctor visits, emergency room visits, and inpatient stays. According to OptumRX, medication misuse and polypharmacy cost the United States more than $177 billion in unnecessary visits to the doctor, the emergency room, and the hospital every year.

Patients managing one or more chronic conditions do not need to struggle to follow their treatment plans alone. For employers partnering with a benefits administrator that offers nurse case management services, an on-staff registered nurse can assist at-risk patients to manage their condition. A nurse case manager may:

  • Conduct a medication review that includes over-the-counter medications
  • Assist in coordinating care and treatment plans among multiple physicians
  • Educate the patient and his/her family members on risks of overdosing, underdoing, and non-adherence
  • Assist the patient in finding generic substitutions, if applicable

By engaging a nurse case manager, at-risk patients are more likely to use medications appropriately, and use less of them for shorter periods of time. By helping to make each patient’s medication treatment plan as efficient as possible, employers can mitigate the impact of avoidable drug and health care costs and reduce their overall bottom line.


The Growing Trend of Telemedicine

Blonde woman at laptopWe will always have a need for high quality, accessible health care provided by knowledgeable and compassionate physicians and care providers. What is changing, however, is access to such care. There is not only an increase in the number of available telemedicine, or virtual providers entering the health care marketplace, but an increase in adoption of such services, as tech-savvy consumers are becoming more comfortable with the idea of a virtual doctor’s visit conducted via video conference. According to HIS, an information and analytics firm, cumulative annual growth of video consultations between primary care providers and their patients is expected to crease by nearly 25 percent a year over the next five years to 5.4 million by 2020.

As a benefit to employees and health plan members, telemedicine services provide convenient access to quality health care providers and physician consultations, especially for minor ailments, mental health services, dermatology, and smoking cessation services. Rather than waiting for a doctor’s office appointment, which may book weeks or even months in advance, or seeking care at a costly urgent care center, patients can schedule a virtual consultation, typically within a short window, and receive more immediate and cost-efficient advice and care.

In addition, based on a study conducted by the journal Telemedicine and eHealth, telemedicine services have been proven to reduce:

  • Emergency room visits
  • Hospital admissions and readmissions
  • Average lengths of stay
  • Mortality rates

The study aimed to analyze the benefits of telemedicine services specifically for patients with three chronic conditions: congestive heart failure (CHF), stroke, and chronic obstructive pulmonary disease (COPD).

As a benefit to the employer, providing convenient access to physician care helps ensure members are diagnosed for risk factors that, if left untreated, could result in a catastrophic event and high dollar claims in the future. According to Towers Watson, telemedicine services could save employers more than $6 billion a year in health care costs. To maximize savings, a health plan population would need to use telemedicine services exclusively in place of in-person doctor’s office visits, urgent care visits, and emergency room care. However, telemedicine services have perhaps been most efficiently utilized by employers as part of a broader and fully integrated population health management solution that includes other interventions across the care continuum such as online wellness tools, onsite/near-site clinics, disease management services, and wellness coaching. Such a platform ensures at risk members are more quickly identified and provided with appropriate care, given their unique needs and risk factors.


Does Your Consumer-Driven Health Plan Put You At Risk for the Cadillac Tax?

Affordable Care Act (ACA), Out-of-Pocket-MaximumsThere are significant questions regarding 2018’s potential Cadillac Tax in the minds of employers across the nation. The Affordable Care Act’s (ACA) proposed 40 percent excise tax on high cost plans has the potential to either significantly add costs to employers’ health plans, or require a shift of costs to members in an effort to avoid the tax – something many employers are hesitant to concede. Aside from the potential impact to health benefit plans, new insight indicates that the Cadillac tax may impact employers’ abilities to offer consumer-driven health plans (CDHP) such as flexible spending accounts (FSA) and health savings accounts (HSA). Read on to prepare your benefit strategy prior to 2018.

Potential Impact to FSAs

The Cadillac tax intends to levy a 40 percent penalty on health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The tax applies only to the portion of the plan cost that falls above those thresholds. Since the maximum FSA contribution limits, which are estimated to be $2,700 by 2018, are typically additive to other benefit costs for employees that elect contributions, the cumulative cost of coverage between health and FSA plans could easily trigger the penalty fee for generous health plans. For this reason, some employers are considering terminating their FSA benefit, but maintaining their health benefit plan structure.

According to BenefitsPro.com, a recent survey of hospital management personnel identified that many hospitals intend to remove their FSA plans from their benefit plan offering if the ACA’s Cadillac Tax goes into effect in 2018. This potential trend is because FSA benefits may have an impact on triggering the Cadillac Tax penalty. According to the Kaiser Family Foundation, an estimated 26 percent of employers anticipate that their FSA offering may, in part, trigger the excise tax.

As an alternative solution to canceling an FSA plan entirely, other employers are considering re-structuring their FSA to only allow employer contributions, or to limit the employee’s contribution below the maximum IRS thresholds, thus diminishing the risk that an employee’s additional contribution may push the employee’s total cost of overage over the Cadillac Tax’s acceptable limit

Aside from FSA plan reductions, employers may also want to consider reducing such pre-tax ancillary health benefit options as critical disease or hospital indemnity plans.

Potential Impact to HSAs

As the proposed ACA mandate currently stands, employer and employee contributions to HSAs are also subject to the Cadillac Tax’s threshold limit. While the popularity of HSAs coupled with high deductible health plans (HDHP) have been on the rise as employers look for solutions to mitigate their overall benefit plan costs, HSAs, when coupled with employer pre-tax contributions, may now increase an employer’s risk of being subject to the 40 percent excise tax.

Similar to the decisions facing employers offering FSAs, employers are considering reducing or eliminating their pre-tax contributions to their employees’ HSA accounts in order to avoid reaching the Cadillac Tax’s threshold. Such a trend could reduce the effectiveness of HSAs as a successful strategy for employees to reduce their out-of-pocket health care costs. It may also limit opportunities for employers to incentivize population health management program initiatives in the form of HSA contributions – an employee engagement strategy that has been extremely successful in increasing wellness program participation.

Potential Changes in the Future

As a result of concerns expressed by organizations that the Cadillac Tax may impact their ability to help employees pay for quality health care expenses, many benefits professionals are advocating for benefit accounts to be excluded from the threshold limits before the Cadillac Tax goes into effect in 2018.  In addition, there is still hope that the United States Treasury Department and the Internal Revenue Service (IRS) will delay enforcement of the tax through extended transition relief.


Projecting the Impact of the Proposed Cadillac Tax on Employer Sponsored Health Coverage

Quantifying the Population Health Management InvestmentOne aspect of the Affordable Care Act (ACA) that has been looming large in the now foreseeable future is the “Cadillac Tax,” a 40 percent excise tax on employer-sponsored health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The tax applies only to the portion of the plan cost that falls above those thresholds, and was proposed in the initial ACA regulations passed back in 2010. For years, employers have been warily waiting for final regulations to be issued regarding the Cadillac Tax, and some have even hoped that the regulations may be changed significantly to reduce or remove the tax. As we enter 2016, however, the Cadillac Tax is still anticipated to become a mandated requirement in 2018. Employers are working with their brokers and benefits administration partners to project how the Cadillac Tax could impact their health plan, and are making changes to mitigate the potential cost impact.

The purpose of the Cadillac Tax is to reduce overall health care costs and reduce the tendency of companies to provide rich health care benefits to employees as a form of compensation that is not taxed at the same level as ordinary income. Utilization trend data indicates that overly generous health plans lead to over-utilization of health care services, which in turn, increase overall health care spend nationwide. By encouraging employers to move away from overly-rich benefits, the Cadillac Tax hopes to encourage individual plan members to become more responsible, cost-conscientious consumers of health care services.

While this is a goal that has the theoretical potential to financially benefit employers and their health plans, many organizations are casting a worried eye toward the impact reducing their benefits will have on their valued employees. The Cadillac Tax’s requirements are particularly concerning for collectively bargained plans with long-standing negotiated benefit plans. If employers at risk of being subject to the excise tax do not make benefit changes, however, they stand to incur significant costs in the form of penalty tax dollars.

The Congressional Budget Office estimates that the total liability for companies subject to the tax could reach $79 billion from 2018 and 2023, and according to Forbes, 40 percent of employers expect the Cadillac Tax to affect at least one of their current health plans come 2018, while 14 percent expect it to immediately impact the majority of their current health benefit plans. Further, according to Mercer, approximately one third of employers are at risk of paying the Cadillac Tax in 2018 if they do not make adjustments to their health benefit plan costs, and that percentage may increase to as much at 50 percent by 2018.

In addition to the financial impact of the excise tax itself, the Cadillac Tax will further financially impact employers in the form of administrative costs. According to new guidance issued by the Internal Revenue Service (IRS), it is considering two approaches to determine which entity must actually remit payment for the tax — the “insurer,” or for self-funded plans, the employer. Under the other approach being considered, the employer would calculate the tax and direct any applicable plan administrators to pay the portion associated with the plan they administer. Regardless of the final regulatory outcome, the administrative requirements associated with calculating and reporting potential tax implications may significantly impose administrative and financial burdens on many employers.

Given the potential for both tax and administrative cost requirements, many employers may decide they need to lower their health care costs by reducing their health benefit cost share in order to ensure overall affordability of their plan. According to Bloomberg Business, after several years of shifting health care costs to employees, organizations are slowing their adoption of high-deductible health plans (HDHP) in part because they are waiting to see if lawmakers repeal, or revise, the terms of the Cadillac Tax. If the Tax is not repealed, it is anticipated that the increasing trend of offering HDHPs as options or even full replacements to traditional PPO plans is likely to continue in 2018 and beyond.

Other strategies that some employers are implementing to mitigate health plan costs include implementing a working spouse rule, in which employees pay a higher premium to enroll a spouse who has coverage available from his/her own employer – or not allowing the spouse to enroll as primary, or even as secondary, at all. In addition, employers are adding population health management programs to encourage healthy behavior in an effort to reduce risk factors that could lead to high utilization patterns or catastrophic claims.

As 2018 approaches, many employers will be faced with a difficult decision: reduce employee benefits, or face significant tax penalties. For strategic recommendations for mitigating health plan costs without compromising on the quality of your health benefit plan offering, contact the benefits experts at POMCO.


Combating Opioid Abuse in Workers’ Compensation Plans with Advances in Bio Analytics

Opioid Abuse in workers' compensationOpioid abuse is a growing epidemic impacting individuals across the nation. According to the U.S. Centers for Disease Control (CDC), 44 people die every day due to opioid overdose. Patients are commonly prescribed these strong and often addictive painkillers to alleviate pain after an accident, injury, or illness, and too many are not able to properly wean themselves off of the need for their pain reducing effects. The opioid crisis in our nation has become particularly concerning for employers, as the ongoing utilization of these drugs by injured workers is driving workers’ compensation plan costs.

New advances in bio analytics are providing workers’ compensation plan administrators with new insight into ways to identify if a patient may be more likely than the average individual to experience opioid overuse. By implementing such advanced bio analytics, workers’ compensation plans are better equipped to both help patients fully recover without ongoing prescription medication use, and control workers’ compensation plan costs.

Opioids come in several forms, and may include such familiar drugs as: fentanyl, morphine, codeine, hydrocodone (Vicodin, Lortab), methadone, oxycodone, (Percocet, OxyContin), hydromorphone (Dilaudid) and meperidine (Demerol). Recent data indicates that prescription opioids are being prescribed too often to treat the wrong kinds of pain, without eliminating the source of the pain, creating an unnecessary long-term dependency on the drug for the patient. Such long-term dependency on drugs that merely mask pain symptoms can result in a return-to-work delay or extended disability for patients who are not moving toward full recovery by using more effective treatment-based clinical methods.

For example, many work-related injuries involve back pain, and an increasing number of health care providers are prescribing opioids both short-and long-term to help patients manage their back pain symptoms. This comes despite clinical data that suggests that opioid use is not the most effective strategy for treating back-pain. Rather, it often results in prolonged feelings of opioid dependence to mask symptoms when the source of the pain is not being properly treated. Opioid effectiveness typically plateaus after 60 days of treatment; however the drugs are often prescribed to patients for longer periods of time.

According to guidelines from the American College of Occupational and Environmental Medicine and Washington’s Department of Labor & Industries, in the past, 42 percent of workers with back injuries were prescribed an opioid treatment in the first year after their injury – most of the time after the first medical visit. One year later however, 16 percent of those workers were still utilizing opioid medications. In addition to back pain, opioids are generally prescribed for three reasons in workers’ compensation claims: catastrophic injury with chronic pain, an injury involving surgical treatment which requires immediate pain control, and general pain control.

According to research conducted by The Workers’ Compensation Research Institute (WCRI), which looked at data from 21 states, longer-term opioid use is most prevalent in New York State and Louisiana, however California and Texas were also noted as having significant long-term opioid usage. The study found that in New York State specifically, 14 percent of non-surgical workers’ compensation claimants prescribed narcotics were identified as longer-term users of the drugs.

In California, according to its Workers’ Compensation Institute, only 3 percent of the state’s doctors prescribe 55 percent of dispensed opioids. Over the last decade, the state has seen a significant increase in opioid prescriptions. Between 2002 and 2011 California’s Workers’ Compensation Institute (CWCI) identified a 300 percent increase in opioids. In 2002 approximately 1 percent of all injured worker outpatients were prescribed opioids, but by 2011 that percentage had increased to 5 percent and payments for opioid prescriptions had risen from 4 percent to 18 percent in that time period, representing at 321 percent increase in payments in only nine years.

This trend of long-term opioid use is particularly concerning for workers’ compensation plans, since the medical benefits portion of a workers’ compensation claim may be open for a number of years and may be open for the lifetime of the injured worker, resulting in significant annual plan costs. According to WCRI opioids account for up to 3 percent of costs in shorter-term claims and between 15 and 20 percent of all medical costs on longer term workers’ compensation claims.

Fortunately, recent advances in bio analytics are making it possible for workers’ compensation plan administrators to predict potential high-cost, high-risk claimants and intervene before long-term addiction occurs.

A personal metabolic evaluation (PME) is a biometric test intended to measure drug sensitivity for an individual patient for current and future care. The PME is an easy to administer test that will discern how an individual will metabolize commonly prescribed workers’ compensation medications. Employers who require the test for employees identified as at risk, are armed with data and knowledge about an employee’s potential for opioid abuse. Such knowledge allows for a more discerning review of the individual’s claims and treatment plan, and allows a nurse case manager to more greatly emphasize a return-to-work strategy that focuses on weaning the patient off of the prescribed medication before use becomes long term.

After testing is completed, the facilitating laboratory delivers an interpretive report to an employer and its workers’ compensation plan administrator that enables a treating physician to lead injured workers to their best possible outcome by prescribing the most effective medications at optimal dosages, minimizing any trial and error. The interpretive report is designed to give physicians the information they need to make more informed treatment decisions.  Every report is unique, based on the genetic attributes of the individual patient, and focuses on three key elements:

  1. Explaining the metabolic behavior of an individual
  2. Identifying what medications to rule out and avoid immediately
  3. Providing direction to the physician on the optimal prescription treatment plan

Ideally, an employer’s pharmacy benefit manager (PBM) and/or medical management program partner are engaged in the discussion and work to aid in the identification of injured workers that would benefit from a PME referral.

Almost every claim can benefit from the PME test, however, ideal candidates can be identified using the following list of clinical triggers:

  • Patients currently using opioids or anti-depressants
  • Patients prescribed 3 or more medications
  • Patients whose physician has prescribed an increase in strength or dosage
  • Patients in pre- or post-surgery
  • Post-surgical patients specifically who after 30 days post-surgery are still receiving pain management prescriptions
  • Patients prescribed escalating dosages of narcotics
  • Patients who have been prescribed morphine equivalent dosages (MED) of medications exceeding 100 mg
  • Patients whose prescription patterns include frequent switching of medications
  • Patients with high dollar monthly prescription costs
  • Patients who often attempt to re-fill too early, resulting in frequent rejections at the point of sale
  • Patients who have been prescribed narcotics for 3 months or more

Other strategies employed by strategic workers’ compensation plan administrators to effectively mitigate the risk of prolonged opioid use and manage plan costs include:

  • Medical bill audits
  • Network, pharmacy, and fraud and abuse protections
  • Nurse case management of patients that emphasizes return-to-work strategies
  • Retrospective drug utilization reviews
  • General employee education regarding opioid misuse
  • Injured worker narcotic education initiatives
  • Physician dispensing education
  • Pre-hire drug testing

To learn about POMCO’s partnership with Insight Labs and the steps it is taking to help clients combat rising prescription drug workers’ compensation plan costs, contact POMCO’s Risk Management department today.


Six Advantages of Self-funding Your Employee Benefit Plan

Professional Man Celebrating Fists in the airAccording to the Kaiser Family Foundation’s 2014 Employer Health Benefits Survey, more employers are self-funding their employee benefits, and that number has been on the rise. According to Kaiser, 15 percent of covered employees at small companies with 3-199 employees, and 81 percent of covered employees at larger firms, are enrolled in plans which are either partially or completely self-funded.  The percent of covered employees enrolled in self-funded plans has increased for large firms since 2004. Both mid- and large-sized employers are learning the advantages inherent in self-funding employee benefits.

As you plan for the coming benefit year, consider the following advantages of self-funding, and whether or not it may be a financial strategy that can help your organization meet its corporate goals:

  1. Cost-Containment. Third party administrators (TPA) that manage self-funded plans have the capability to go beyond strict network discount arrangements on every claim payment to find additional cost savings. With internal claim reviews, fraud and abuse protections, custom claim negotiations, and case management solutions, each claim can be reduced before it is paid to ensure the employer is paying the least amount required.
  1. Greater flexibility. While insurance carriers sell pre-designed, fully insured health and dental plans with restricted benefits and strict plan limitations, under a self-funded arrangement, a TPA can customize a plan design to the exact specifications of the employer at the benefit/cost-share level. This opportunity poses a significant advantage to collectively bargained plans and allows employers to strategically manage the cost of their plan.
  1. Actionable data. Fully insured plans receive minimal experience data from their carriers, which limits an employer’s ability to understand what factors are impacting costs. Strategic TPAs can offer their self-funded plans fully-customized data, data analytic tools, and predictive modeling solutions, that can be used to help guide plan design strategy in an effort to mitigate cost-drivers.
  1. Lower Administrative costs. With a self-funded plan, employers avoid the costs of claim reserves, steep insurance carrier profit margins, risk charges, premium taxes, and contingency margins. They also avoid the Affordable Care Act’s Health Insurance Tax, which is expected to incur $145 billion in revenue.
  1. Enhanced cash flow. Unlike fully-insured plans that require advanced premium payment, under a self-funded plan, claims can be funded as they are due, which allows employers to keep more money in a bank account where it can earn interest.
  1. Strategic Service. TPA client service staff members are highly trained in the intricacies of self-funding. They are benefits experts who work to collaborate with employers and their brokers or consultants to properly manage the plan to optimal efficiency. This engagement and service involvement provides self-funded employers with a trusted partner to assist with escalated member inquiries, plan experience review discussions, compliance resources, and strategic expertise.

For more information on why so many employers are transitioning to self-funding, review the infographic below.


shift to self-funding

More Employers Adopt On-Site Health Clinics as a Cost-Control Measure

On-site clinicsAccording to a recent article by Forbes, nearly 33 percent of large employers have opened onsite clinics within their corporate offices in order to increase employee access to routine and preventive care, and to reduce overall health plan costs. This trend comes despite the looming Affordable Care Act’s (ACA) Cadillac Tax which, starting in 2018; looks to impose a 40 percent excise tax on the most costly employer benefit plans.

Many employers that fear they may be subject to the Cadillac Tax are making proactive changes to their health plans to avoid the tax in the form of increased copayments and deductibles, and benefit reductions including the narrowing of networks. For employers looking to remain competitive in the marketplace relative to employee benefits, such changes can come at the price of employee acceptance and satisfaction. In addition, when plans shift costs to employees, some members become more inclined to skip routine, preventive, or event chronic medical care in order to mitigate their out-of-pocket costs. Such measures can ultimately lead to exacerbated health plan costs in the end, when a decrease in preventive or chronic care management results in a costly catastrophic event.

Some industry experts anticipated that employers might be less interested in establishing onsite clinics after the Internal Revenue Service (IRS) issued guidance clarifying that the cost of worksite clinics would be factored in to the total Cadillac tax threshold. Contrarily, many employers have been embracing the on-site clinic model as a means of offering an affordable way to bring convenient, routine, preventive, and urgent care services to their employees.

A recent study by Mercer, found that 29 percent of employers with 5,000 or more employees have successfully established on-site clinics. An earlier Mercer study indicated that the industries that are most commonly adopting the practice include health care facilities, municipalities, and manufacturing organizations.

Services offered at on-site clinics may include:

  • The management of preventive health and wellness programs to help manage health risks and maximize member benefits
  • The treatment of primary and urgent care needs
  • Dispensement of commonly prescribed prescription drugs to improve generic use and formulary compliance
  • Initial on-site mental health triage, counseling, and integration with employee assistance program (EAP) services
  • Traditional occupational health services, including those associated with work-site injuries, illnesses and exposure
  • Health coaching and care management services
  • Referrals to high quality community physicians and specialists when outside care is required
  • The administration of travel medicine
  • Vaccinations

The on-site clinic model is effective from a cost-containment perspective because not only are employees more likely to see a physician or nurse located right in their own office; they avoid scheduled time off and the need for unplanned sick days.

Additional benefits to employers of establishing on-site clinics include:

  • Improved overall population health
  • The ability to enhance a corporate wellness benefit offering
  • An increase in employee retention, recruitment, and morale
  • Enhanced management of employee health risk and chronic conditions

According to Mercer, the cost of offering an on-site clinic is usually in the low single digits as a percentage of the overall health care spend for an employer. According to a survey it recently conducted among employers that have implemented an on-site clinic, 49 percent of respondents indicated that their spend on the worksite clinic was only 5 percent or less of its annual spending on all active employee health plans and worksite clinics. From a cost-savings perspective, cost reductions come in layers. First, costs are reduced through the increased efficiency of an on-site health center as opposed to exclusive employee use of the retail health system, and then from a reduction in catastrophic claims due in large part to the wellness, disease management, and chronic care programs offered as a part of the on-site clinic model.

For more information on on-site/near-site clinics as part of an effective population health management solution, contact the benefit experts at POMCO today.