Author Archives: Reeve Conover

Reference Based pricing in action

When Pacific Steel & Recycling CFO Tim Culliton realized his 750 employees were paying too much for healthcare, he knew the company needed a new plan.

So instead of renewing their current fully funded insurance plan, the Great Falls, Montana-based company, fired their third party administrator and switched to a self-funded plan with a PPO network. They also decided to try reference-based pricing — a highly debated method among benefits advisers for curbing employer healthcare costs.

Working side-by-side with their adviser, Scott Haas of USI Insurance Services, the employer instituted a reference-based pricing strategy in January 2014. So far, the program has led to a reduction in the cost basis of medical claims, Haas says. The pair were able to lower the company’s annual health spend to $3.5 million from $8 million, a savings of about $5 million.

“We saw a significant increase in hospital charges,” Culliton says. “We saw a 400% increase in those costs … that caused us to begin to investigate a different payment process. That ultimately was the beginning of us moving to a reference-based pricing program.”

Reference-based pricing refers to pricing outside what is set by traditional insurance carriers. Provider reimbursement is based on a percentage of what Medicare would typically pay the provider which often ranges from 120% to 170% of Medicare reimbursement, according to Business Benefits Group.

Some employers have been using reference based pricing as a way to curb high healthcare costs. But not everyone is entirely convinced. In an interview with Employee Benefit News, Jake Frenz, CEO of the PBM SmithRx says implementing a reference-based pricing model may be easier said than done.

Washington Targetting Drugmakers?

NEW YORK/WASHINGTON — The Trump administration on Thursday scrapped one of its most ambitious proposals for lowering prescription medicine prices, backing down from a policy aimed at health insurers and raising the possibility of new measures focused on drugmakers.

The abandoned proposal would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.

The decision represents a new setback to U.S. President Donald Trump’s efforts to deliver on a pledge to lower drug prices for consumers before the November, 2020 elections, when Republicans want to capitalize on voter concern over high healthcare costs.

It allows companies like Cigna Corp and CVS Health Corp, which negotiate rebates with drugmakers on behalf of the government’s Medicare program, to continue to benefit from those discounts.

Paying for your employees private plan…

Under the Obama administration, this was legislated to be a violation of the ACA. Until January 1,2020 ” employers are still prohibited from reimbursing premiums for individual coverage. .” Recently President Trump sing an executive order, and Health and Human Services, Labor and Treasury have announced the following changes:

Beginning on January 1, 2020, two new Health Reimbursement Arrangements are created.

The first, the individual Coverage HRA, allows any size employer to give employees cash for major medical coverage in lieu of group coverage. Brokers can help provide shopping assistance to your employees to assist in this process.

The second, the Excepted Benefit HRA, allows employers to pay for copays, deductibles, etc even if the employee is not on your health insurance plan.

More to follow on these as the regulations are fleshed out.

Sharing ministry unlicenses

while this is not our area, its is worth a read.

CONCORD, NH – As a result of a recent Georgia court order, the New Hampshire Insurance Department is advising consumers that Aliera, a company that markets itself as a health care sharing ministry, may be operating illegally in New Hampshire.
In the past, Aliera acted as a plan administrator to Unity Healthshare, which is a qualified health care sharing ministry. In a recent letter, Unity Healthshare members were notified about a pending legal action in the Superior Court of Fulton County, Georgia between Aliera and Unity Healthshare. It includes a court order which made findings about Aliera, Unity, and certain individuals involved with Aliera’s operations.
The Georgia court found that “the evidence shows that Aliera has taken actions to misappropriate [Unity’s] assets; namely by unilaterally attempting to transition the Unity HCSM plans to Trinity.” The court also found that the company misrepresented itself to state insurance regulators, and that “Timothy Moses, who exercises substantial control over Aliera, was convicted of felony securities fraud and perjury in federal court.”
The court also found that Aliera is a for-profit company and cannot qualify as a health care sharing ministry under state or federal law. The Insurance Department is concerned about potential fraudulent or criminal activity on the part of Aliera. Since the company may be an illegitimate health care sharing ministry, consumers should be aware that if they remain in an Aliera product, they may be covered by an unlicensed insurance company.
Unity Healthshare, now known as OneShare Health, was authorized by the court to reach out to Unity members about their options, and consumers who have purchased a Unity/Aliera product should be aware that they may be receiving this communication.
“I urge consumers to proceed with caution when purchasing health coverage options outside of Affordable Care Act compliant plans. It is critical to review all of your plan documents and ask questions of your insurance agent to ensure the coverage is right for you,” said Insurance Commissioner John Elias. “If you are ever unsure about an insurance company or an agent you are working with, stop before signing any paperwork and call the Insurance Department to confirm the company or agent offering the coverage is legitimate and licensed in the state.”
A few health care sharing ministries (also known as health care sharing organizations) operate in New Hampshire. These organizations do not offer health insurance, but may present plans in a way that looks and feels similar to a health insurance plan. Members of these organizations “share” health costs on a voluntary basis. Consumers should be aware that these plans have no obligation to pay for any medical services and have no requirement to cover any particular categories of health care services, such as preventative care. In New Hampshire, some health care sharing ministries are exempt from insurance
regulation due to state law. However, if an organization does not meet the standard for an exemption under state law (for instance, if it is a for-profit company), it may be operating as an unlicensed insurance company. More information about health care sharing ministries can be found on the Department’s website.
If a consumer has questions or concerns about a health coverage option they should contact the Department, especially if (1) the plan is presented as “ACA compliant” but it is not listed on HealthCare.gov; (2) if the plan seems like a deal that is “too good to be true;” and/or (3) if the plan is presented as exempt from Department oversight, but does not appear to meet health care sharing ministry exemption criteria.
The New Hampshire Insurance Department Can Help:
The New Hampshire Insurance Department’s mission is to promote and protect the public good by ensuring the existence of a safe and competitive insurance marketplace through the development and enforcement of the insurance laws of the State of New Hampshire. Contact us with any questions or concerns you may have regarding your insurance coverage at 1‐800‐ 852‐3416 or (603) 271‐2261, or by email at consumerservices@ins.nh.gov. For more information, visit www.nh.gov/insurance.

Florida Company Sued Over Sales of Skimpy Health Plans

The two policyholders have filed a lawsuit in federal court against Health Insurance Innovations, based in Tampa, Fla., accusing the company of misleading them about the kind of policy they were buying. They say they believed they were purchasing Affordable Care Act plans that include coverage guarantees. But they were sold much less comprehensive coverage that left them vulnerable to tens of thousands of dollars in unpaid medical bills, according to the lawsuit. Their complaints underscore problems with some types of cheaper health insurance alternatives that the Trump administration has expanded. Critics of the government’s decision, including the Association for Community Affiliated Plans and the National Alliance on Mental Illness, are also suing the Trump administration over relaxation of rules for these plans. “This isn’t real insurance,” said Jason Kellogg, one of the lawyers representing the individuals in the Florida case. They are seeking class-action status, estimating that as many as 500,000 people may have bought these policies.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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