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Why Private Medicare Plans Don’t Cost Less

Medicare Advantage has historically cost 7 to 12 percent more than traditional Medicare, according to the Medicare Payment Advisory Commission. But to conclude that this cost difference proves that private health plans have no place in Medicare misreads the Medicare Advantage experience in an important way: It ignores the decisive role that government has played in driving up the program’s costs. Medicare Advantage is only partly about reducing costs. It is also designed to increase choice for beneficiaries. And the incentives that government gives private health plans to expand choice end up undercutting efforts to save money.

Under Medicare Advantage, private plans deliver Medicare services directly to patients. Insurance companies bid to provide Medicare beneficiaries with a different package of services than traditional Medicare, but their coverage must be at least as generous. The government then reimburses the insurers to cover about 13 million enrollees, or about 27 percent of the Medicare population.

Both insurers and consumers are making choices. Beneficiaries opt out of traditional Medicare if they think a private plan offers them a better deal, and insurers enter the Medicare Advantage market if they believe it will be profitable. The crucial point is that both consumers and insurers need an incentive to take part in the market. That costs money — and it is the government that has chosen to pay the price to give beneficiaries more choices. The result is that insurers compete by covering more services rather than by reducing premiums and improving efficiency to remain profitable at lower premiums.

Read the full report here.

Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

The Latest Surprise About the Obamacare Health Exchanges

According to a new report released, average premiums offered on the new individual government healthcare exchanges are comparable to and sometimes less than their employer-sponsored counterparts.

The data might intrigue business owners grappling with rising health-care costs and changes related to 2010’s Affordable Care Act. In 2017, states will have the option to open exchanges to companies with more than 100 employees. If patterns continue, exchanges could be a viable alternative for employers in coming years.

The study, conducted by PwC’s Health Research Institute, reviewed insurance policies from 15 state exchanges and the District of Columbia, as well as exchanges run by the government in any remaining states. Data from median and low-cost premiums were then compared to survey data of employer-sponsored premiums from 156 million people in 2013.

Read the full report ref=”http://www.entrepreneur.com/article/231163#ixzz2uNWSSUCy” target=”_blank”>here.

Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

90 Day Waiting Period Final and Proposed Regulations Issued

On February 20, 2014, two regulations on the 90-Day Waiting Period Limitation were issued jointly by the Departments of Health and Human Services, Labor, and the Treasury. The first regulation is the final rule as it pertains to originally proposed regulations in August, 2013. The second is a proposed regulation that focuses on limitations to employee orientation periods.

Final Rule

There are no substantial changes from the proposed regulations in August, 2013. The waiting period limitation is the period of time that must pass before coverage for an employee or dependent, who is otherwise eligible to enroll under the terms of the plan, can become effective. This limitation can be no more than 90 days; coverage must become effective by the 91st day from the date of eligibility.

Two notable differences from the originally proposed regulations are allowance for a “reasonable and bona fide employment-related orientation period,” and employees that are terminated and later rehired to be treated as a new employee for purposes of the waiting period.

Plans must comply with the original proposed regulations with the first plan year that begins on/after 1/1/2014. For plan years beginning on or after 1/1/2015, plans must comply with the final regulations.

The final rule confirms the following specifics:

* Calendar days are counted in determining the 90-day period, including weekends and holidays. Plans may choose to permit coverage earlier than the 91st day for easier administration around events such as weekends, holidays or payroll periods. However, a requirement that coverage will become effective the first day of the following month or payroll period would not be permitted if the waiting period is 90 days. The employer defines the eligibility criteria.
* The time in which eligible employees take to elect coverage is not counted as part of that 90-day limit.
* If a person enrolls as a late or special enrollee, any time period before the enrollment date is not counted as part of the 90-day limit.
* Employees that were once terminated then rehired may be treated as a new hire subject to the plan’s eligibility and waiting period requirements. The same applies to employees moving between eligible and non-eligible employment positions.

Newly Proposed Regulations

These proposed regulations would ensure that orientation periods are not used to avoid compliance with the 90 day waiting period limitation, or used as a loop-hole in the passage of time. An orientation period could be used to evaluate the employment situation and would allow employers to begin standard orientation and training processes. The proposed orientation period cannot exceed one month, determined by adding one month from an employee’s start date, minus one calendar day.

For example, if an employee’s start date is October 1, the last permitted day of the orientation period is October 31. The 90-day waiting period would then begin November 1.

The proposed rule is open for a 60-day comment period.

HIPAA Certificates of Creditable Coverage

The final regulations also addressed the issuance of HIPAA Certificates of Creditable Coverage (HIPAA Certificate) in light of the prohibition on applying pre-existing condition limitations (PCL) starting in 2014. Because this prohibition applies to plans based on their plan year (rather than immediately on 1/1/2014), terminating individuals may still have a need for a HIPAA Certificate to receive credit toward a PCL under another employer’s plan. Therefore, all plans must continue to provide HIPAA Certificates until 12/31/2014.

For more future guidance and more information as final rules are released, visit InformedOnReform.com.

Review the Final Regulations here.

Review the new Proposed Regulations here.

Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

Payors In Care Delivery: When Does Vertical Integration Make Sense?

In recent years, much of the payor industry has transitioned away from a medically underwritten model to a guaranteed-issue, community-rated, risk-adjusted model. As a result, managing the total cost of care has become the dominant imperative for achieving competitive advantage.

As payors have sought ways to develop effective managed-care approaches for this new environment, interest in vertical integration has increased considerably. In the four years between 2005 and 2008, payors announced just 12 vertical integration M&A deals. In the subsequent four years, the number jumped to 26, and recent targets have largely been physician groups and integrated care organizations. These deals have not just been attempts to create competitive advantage—they have also been defensive plays to counteract potential challenges from provider consolidation and the acquisition of physician practices by hospital systems interested in vertical integration of their own.

Read the full report here.

Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

Treasury and IRS Issue Final Regulations Implementing Employer Shared Responsibility Under the Affordable Care Act for 2015

Employer responsibility provisions begin in 2015; future rules will simplify reporting for businesses

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued final regulations implementing the employer responsibility provisions under the Affordable Care Act (ACA) that take effect in 2015. In addition, final regulations will be issued shortly that aim to substantially streamline employer reporting requirements for employers that offer highly affordable coverage to all or virtually all of their full-time employees. The employer responsibility rules assist employers affected by these policies in providing quality, affordable coverage to their workers. If employers decide not to offer insurance to their employees, they will make an employer shared responsibility payment beginning in 2015 to help offset the costs to taxpayers of their employees getting tax credits through the Health Insurance Marketplace.

“While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” said Assistant Secretary for Tax Policy Mark J. Mazur. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”

The final rules issued today implement the employer shared responsibility provisions of the ACA, under section 4980H of the Internal Revenue Code. The rules make a number of commonsense improvements in response to input on the proposed regulations issued in December 2012.

Highlights of today’s rules include addressing a number of questions about how plans can comply with the employer shared responsibility provisions; ensuring that volunteers such as firefighters and emergency responders do not count as full-time employees; and phasing in provisions for businesses with 50 to 99 full-time employees and those that offer coverage to most but not yet all of their full-time workers.

How the policy affects employers (PDF Fact Sheet):

· Small Businesses with fewer than 50 employees: (about 96% of all employers): Under the Affordable Care Act, companies that have fewer than 50 employees are not required to provide coverage or fill out any forms in 2015, or in any year, under the Affordable Care Act.

· Larger employers with 100 or more employees (about 2% of employers): The overwhelming majority of these companies with 100 or more employees already offer quality coverage. Today’s rules phase in the percentage of full-time workers that employers need to offer coverage to from 70 percent in 2015 to 95 percent in 2016 and beyond. Employers in this category that do not meet these standards will make an employer responsibility payment for 2015.

· Employers with 50 to 99 employees (about 2% of employers): Companies with 50-99 employees that do not yet provide quality, affordable health insurance to their full-time workers will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply.

For more information and final rule:

https://www.federalregister.gov/articles/2014/02/12/2014-03082/shared-responsibility-for-employers-regarding-health-coverage

http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf

Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.