Debunking Three Myths About Reference-Based Pricing

This article was published on May 9, 2018 on BenefitsPro, written by Steve Kelly, co-founder and CEO of ELAP Services. Photo Credit: BenefitsPro.

The most successful business owners and employers surround themselves with advisers who are experts in their field and can guide companies on making sound business decisions. In an industry as complex as health care, brokers are relied on as trusted counsel when it comes to choosing the best benefit options. For brokers to serve as a knowledgeable authority and stay relevant in today’s diverse benefits marketplace, they must be educated on the facts.

Reference-based pricing, also known as metric-based pricing, is a topic that is sometimes misrepresented or misunderstood in the broker community. Astute benefits professionals recognize that reference-based pricing is a viable cost-containment opportunity, and there are good reasons why it’s growing in popularity for self-funded employers. After all, when was the last time brokers could offer employers a solution with the potential to save up to 30 percent on their total health care spend?

Guiding clients in new territory

Significant savings aside, some business owners may be uncomfortable with the idea of leaving the familiar insurance atmosphere behind. This is when brokers can exhibit their expertise and help their clients adequately plan for and address potential risks. Brokers can also rely on experienced partners to assist with the design of a health plan that makes the most sense for their clients.

Being engaged and informed enables brokers to encourage clients to push past their initial discomfort and fully understand the value of reference-based pricing. Here are some common myths that surround this type of health plan.

Myth 1: Balance billing only occurs on plans with reference-based pricing.

One of the most common myths about reference-based pricing is that clients who utilize the solution will put their members at financial risk because of balance billing. In today’s health care landscape, more Americans are struggling with medical expenses. Among Americans ages 65 and younger who have insurance, 20 percent said they had problems paying medical bills within the past year. In addition, out-of-network providers and specialists are operating at in-network facilities, and this results in unexpected balance bills.

Balance billing, and variations of that practice, is actually quite common and not limited to reference-based pricing plans. According to a new national survey of 2,200 adult U.S. residents by the Consumer Reports National Research Center, nearly one-third of privately insured Americans received a surprise medical bill in the past two years where their health plan paid less than expected.

If a broker selects a proficient and experienced reference-based pricing partner, the likelihood of balance billing is reduced because the solution is focused on fair payment to medical providers. In the instance when a reimbursement is not accepted, the right partner will provide a strong member advocacy program that backs members, advocates for their best interests, and drives toward fair and agreed-upon outcomes for all parties.

Myth 2: Providers will deny care to patients who have reference-based pricing plans.

First and foremost, the Emergency Medical Treatment and Active Labor Act (EMTALA) prohibits medical facilities from denying care to any patient in an emergency. In non-emergency situations, companies that utilize reference-based pricing and provide a reasonable reimbursement with a fair profit margin to medical facilities find that the vast majority accept the payment. On rare occasions where access is denied, experienced reference-based partners can negotiate a resolution for that specific episode of care.

Partnering with a reference-based pricing solution that includes line-by-line, in-depth auditing for each medical service is another way brokers can be confident that medical facilities will be compensated fairly and promptly. A quality provider of reference-based pricing solutions will also guide brokers appropriately regarding client fit and regional market conditions. The existence of collaborative relationships with area health systems is another indicator of a reference-based pricing partner that is doing their due diligence to prioritize fair provider reimbursement and minimize push back.

Myth 3: Employers using reference-based pricing will end up battling hospitals.

It’s worth repeating that the vast majority of medical providers will accept adjusted payments that are calculated using valid metrics to determine fair reimbursement amounts. If a facility does not accept a reference-based payment, there are many steps before the situation escalates to legal action.

In fact, sitting down and speaking with a medical facility can help lead to positive resolutions for everyone involved. When community businesses and hospital systems come to the table, there are significant advantages for both the health systems and the employers. Working together to find solutions creates the opportunity for a positive ripple effect of benefits.

If a resolution cannot be reached, it is important that brokers and employers are partnered with a reference-based pricing solutions provider with a strong patient advocacy sector. A quality solution provider will assure that members and employers are protected against unfair billing, collections and potential litigation.

Grow your business with reference-based pricing

With the correct information and tools to reduce risk, brokers can guide well-suited clients to utilize reference-based pricing as a tool to reduce health care spend, which can help business owners and employers transform their business. Offering reference-based pricing as a solution can help brokers remain in the center of the health care benefits discussion and help them to grow their business, attract new clients and retain current clients.

Being knowledgeable about reference-based pricing gives brokers an opportunity to showcase their expertise to clients, and choosing a proven partner enables them to offer a viable solution with significant cost savings.

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Help Pass the HSA Improvement Act

United States Capitol Building

On March 1, Representatives Mike Kelly (R-PA) and Earl Blumenauer (D-OR) introduced H.R. 5138, the Bipartisan HSA Improvement Act. The legislation includes several provisions NAHU has advocated in recent years to address issues with HSAs and employer-sponsored coverage.

The legislation seeks to promote flexibility, encourage innovation and expand access to HSAs by aligning HSA regulations with the most effective cost-containment strategies that will help consumers save money and stay healthy.

Specifically, the legislation would:

  • allow HSA plans to offer pre-deductible coverage of health services at onsite employee clinics and retail health clinics.
  • allow HSA plans to offer pre-deductible coverage for services and medication that manage chronic conditions.
  • permit the use of HSA dollars toward wellness benefits, including exercise and other expenses associated with physical activity.
  • clarify that employers can offer “excepted benefits” like telehealth and second-opinion services to employees with a HSA plan.
  • correct the definition of “dependents,” streamline FSA conversion and fix the prohibition on a spouse using a HSA.

Contact your representative today! NAHU is calling on all members to send an Operation Shout asking your member of Congress to support H.R. 5138. You can also call your state representative.

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Reference-based pricing: where do carriers go from here?

This article was published May 10, 2018 on BenefitsPro.com, written by Alex Tolbert.

Medical Bill

Photo Source: BenefitsPro

Back in 2015, the big topic in health care was insurance company consolidation. This was the year Anthem announced plans to acquire Cigna, and Aetna put out a bid for Humana.

Mergers across four of the country’s biggest insurers would have significantly reshaped the U.S. insurance landscape, and not everyone thought it was a good idea. There were concerns that consolidation would lead to rising costs for consumers. In fact, CEO of electronic medical record company athenahealth, Jonathan Bush, had this to say to CNBC about the potential deals:

“These [mergers] are what happen when industries essentially die. Hopefully what will happen is there will be disruptive innovation and the role of the traditional health insurance company will be obsolete.”

Here in 2018, we know neither of these mergers took place, after facing antitrust scrutiny from the Department of Justice. But even though the mergers fell through, Bush still may have been spot-on about innovation coming along and disrupting the current health insurance business model.

That disruptive innovation is reference-based pricing. This strategy for paying for health care is gaining ground, affecting carriers’ value propositions. It isn’t yet clear whether this reference-based pricing will, as Bush predicted, make insurance companies obsolete, but it could change the face of the health care landscape in the U.S.

What is reference-based pricing?

Reference-based pricing is a new payment model for employer-sponsored benefits plans. Rather than working with a traditional insurance carrier to negotiate price discounts at hospitals, self-funded employers using a reference-based pricing strategy pay hospitals directly, typically in excess of Medicare.

For example, if an employee receives a bill for $20,000, but Medicare would pay $10,000 for the same service, the employer might pay $14,000, and encourage the hospital to accept the payment in full.

To understand why this is so disruptive to insurers, we have to look at how things work now.

Insurance networks

Provider networks are a key part of insurers’ value proposition to employers. In the current health care system, hospital pricing is based around what’s called a chargemaster rate. These prices are not typically shared publicly. Insurance companies negotiate discounts off the chargemaster rate, and pass these discounts on to employers. Insurers compete with each other based on which hospitals are in their “network,” and how significant their discounts are off of the hospital chargemaster prices.

Employers have traditionally been incentivized to select insurers that have broad networks, because patients who visit out-of-network facilities are often charged the full chargemaster rate. But as networks have narrowed and prices continue to rise for both employees and employers, more business leaders are starting to question whether the traditional insurance network discount is meaningful. If you don’t know the amount from which you’re getting a discount, then how can you judge the value?

More employers are finding they can get better value for their health care dollar by negotiating with hospitals directly, and negotiating up from Medicare’s rate, rather than down from the chargemaster price.

By eliminating a key part of the carrier’s value proposition, reference-based pricing represents significant disruption for insurers’ business models.

Where do carriers go from here?

As employers are increasingly demanding more transparency and rationality in health care pricing, insurers are looking for a way forward.

Perhaps recognizing that they will no longer be competing on provider network and group plans alone, carriers like UnitedHealthcare, Humana and Aeta have been rapidly diversifying their service lines by acquiring health care service companies.

For example, witness the acquisition by UnitedHealthcare’s Optum segment of DaVita, and Humana’s recent acquisition of Kindred Healthcare. Carriers are also pursuing retail affiliations—CVS plans to acquire Aetna, and Humana and Walmart are reportedly in talks to partner.

The role of insurers isn’t obsolete, but as employers see less value in networks, carriers will have to compete on different measures. This could prove hard to do. If so, reference-based pricing may turn out to be the disruptive innovation Jonathan Bush was predicting all along.

May is Mental Health Awareness Month – Why Your Company Should Care

This article was published on May 4, 2018 on Corporate Fitness & Health’s blog. Photo Credit Corporate Fitness & Health.

Given that most of us spend a good amount of our time at work, it should come as no surprise that our work environment plays a significant role in our mental health and overall well-being. Despite the role that office culture plays in employee health, companies rarely, if ever, mention mental health.

As mental health issues become more prevalent in the workplace, employers should consider taking ownership, and learn how to best combat the stressors that are particular to their workforce.

2016 Work and Well-Being survey by the American Psychological Association (APA) reported that less than half of the 1,501 workers surveyed felt their organization supported employee well-being, and one in three reported being chronically stressed on the job.

Mental Health Problems Cost Employers

Less than one-third of Americans are happy with their work. Half of the workforce is “checked-out.”  18% are unhappy with their current position with some even sabotaging the success of their workplace. An unhappy or unhealthy work environment is bad for a business’ bottom line and bad for employees.

Employees with untreated mental illnesses cost employers billions of dollars each year. An estimated 217 million days of work are lost annually due to productivity decline related to mental illness and substance abuse, according to the Center for Prevention and Health Services.

Workplace Stress

Stress is on the rise. More than half (54%) of employees are reporting high stress levels, up five points from last year. Further, 37% say their stress levels are higher than the previous year, according to the 2017 National Business Group on Health/Aon Hewitt Consumer Health Mindset Survey.

The good news? There are a number of ways employers can help combat stress, such as creating an emotional fitness strategy to reduce stigma and address stressful, top-of-mind issues.

If we recognized that all of us deal with our mental health every day – from personal health or family stressors, to work demands, to upsetting world events – we would understand the value in protecting it and promoting our personal resilience to deal with whatever life presents to us.

Who is your population? Evaluate your work environment to address issues that negatively impact employees’ emotional health and train leaders and managers to spot the subtle warning signs of a suffering employee.

Those in unhealthy work environments tend to gain more weight, have more healthcare appointments, and have higher rates of absenteeism. Stress from work can also impact their family life, mental health and even increase risks for chronic illnesses and heart attacks.

Mental Health Awareness Month Is an Opportunity

People aren’t considered either mentally healthy or mentally ill. Mental health is a continuum, and an organization’s culture can greatly impact where an employee falls on that continuum.

Nearly 1 in 5 people experienced a diagnosable mental health problem in the last year, and many other people are at risk, according to SAMHSA (Substance Abuse and Mental Health Services Administration). The vast majority of people struggling with issues like depression, anxiety, and other mental illnesses suffer in silence.

Mental Health Awareness Month is an opportune time for employers to open up the conversation about mental health issues in the workplace. Implementing stress awareness, or a corporate wellness program are just a few ways companies can promote positive mental well-being in their workplace.

The Diversified Group family of companies includes Corporate Fitness & Health. With over 30 years of experience, CF&H can help your organization implement a wellness program that will keep your employees happy, healthy and engaged.

May is Employee Health & Fitness Month

May is National Employee Health & Fitness Month! Diversified Group’s wellness consulting and services company, Corporate Fitness & Health (CF&H), celebrates employee health and fitness all year long. But, they want to encourage all organizations to use this month to show their employees how much they care about their well-being. With chronic illnesses (and the expensive medical claims that go with them) on the rise, employers have started to take it upon themselves to help encourage employees to focus on their health. However, employee wellness programs are not just about saving money on medical claims. It’s about taking care of the people you rely on for your business to be successful.

So, What Can You Do to Celebrate?

Here is a list of things you can do to encourage employee wellness at your organization:

  • Provide employees with a company-wide walking break. Even just 20 minutes of walking can do wonders for the heart and the mind.
  • Provide a healthy breakfast or luncheon. Many companies are quick to bring in pizza for their employee luncheons, but if you have been trying to educate employees on good nutrition, providing healthy sandwich and salad options sends a stronger message that you really believe in it. More and more places are now offering healthier catering options such as Subway, Panera, Cosi and B.GOOD (locations vary).
  • Provide an onsite seminar or display. Give your employees a chance to learn something new about their health or an opportunity to practice some healthy behaviors. Corporate Fitness & Health can offer a variety of educational opportunities with topics ranging from exercise to stress to nutrition.
  • Host an onsite blood pressure clinic. A simple blood pressure check takes less than 2 minutes, but it can potentially save a person’s life if they haven’t been to see their doctor in a few years.
  • Kick off a wellness challenge. Sometimes a little competition goes a long way when it comes to motivating people to focus on their health. Challenges can cover a variety of health habits, such as walking or other exercise, fruit and veggie consumption, weight loss, hydration challenges and more.

And, don’t forget that May is also Mental Health Awareness month. So, it is also a great time to try offering meditation breaks. CF&H has skilled staff members who can lead guided meditation sessions and teach valuable breath-work techniques to help reduce stress.

Corporate Fitness & Health

Participate in the Camphill Village 5K Coming up on May 12th

joggers

Diversified is proud to be a sponsor of the Camphill Village 5K Trail & Fun Run again in its 3rd season and we’d love to have YOU be a participant! The event takes place on Saturday, May 12th and there are three running options…

  • Run virtually from home! No matter where you participate, take to Facebook and Instagram to share photos and your reason for participating leading up to and during the run. Be sure to use the hashtag #Camphill5K, and they’ll feature your posts on their website and share them on social media. If you send your address, they will also send you a gift from their event to show their thanks.
  • Sponsor a runner or sign up to personally run the 5K Trail Run through the Camphill Village scenic woods and pathways.
  • Sponsor a participant or sign up to leisurely walk, jog or stroll around Ring Road at the Village in the Fun Run. (Kids 12 & under run the Fun Run for free!)

See – it’s easy for just about anyone to participate and support this wonderful cause. Through sponsorships, donations and registrations, this 5K and Fun Run will help to provide the programs and services that make Camphill Village the very special place it is for adults with special needs.

At Diversified Group, we’re helping to raise awareness of this event and this cause and hoping to make virtual participation even larger! The Camphill Village 5K has attracted virtual runners from all over the country and raised more than $40,000 to benefit the lives of people who call Camphill Village their home.

To run virtually, all you have to do is click below to visit the website, go to Runner Sign Up and be sure to select “Outside of the Village” when registering.

About Camphill Village

Camphill Village in upstate New York is 615 acres of wooded hills, gardens and pastures. Adults with special needs and long- and short-term service volunteers live and work together as equals in extended family homes throughout the area. We are a non-profit organization dedicated to our mission of being an integrated community where people with developmental differences are living a life of dignity, equality and purpose. Through sponsorships, donations and registrations, this 5K and Fun Run will help to provide the programs and services that make Camphill Village the very special place it is for adults with special needs.