CMS Modifies Bundled Pay Requirements

dg-bundled-paymentsWhile hospitals in 34 geographic areas will still be required to participate in the Comprehensive Care for Joint Replacement Model, hundreds of acute care hospitals in other areas have received a reprieve. In addition to modifying CJR model compliance, CMS recently finalized plans to cancel the Episode Payment and Cardiac Rehabilitation Incentive Payment Models, both of which were scheduled to become effective on January 1, 2018.

While a number of hospitals will voluntarily participate in the CJR model and others have expressed interest to participate in the two cancelled models, the agency said there would not be enough time to restructure the models prior to the planned 2018 start date. Even though some have criticized the Trump administration for a lack of interest in value-based care, the administration has expressed a strong commitment to value-based payment, but says it prefers voluntary models.


Want to tackle rising health costs? Consider self-funding ancillary lines

This article was published on February 05, 2018 on Employee Benefit News, written by Liisa Granfors-Hunt.

If your medical plan is fully insured, switching to self-funding (and covering catastrophic claims) can be downright intimidating, even with stop-loss insurance. That’s why many employers are sticking a toe in the financial risk pool by self-funding one or two ancillary lines of coverage.

The most commonly self-funded ancillary benefits are dental and short-term disability, followed by vision. These benefits are relatively low risk: Chances are, your employees don’t typically use dental services much beyond bi-annual checkups and a filling here and there. Short-term disability is a popular benefit for employees needing maternity leave. However, if you plan accordingly, these claims won’t drastically affect the benefit spend.

Self-funding can save money and provide a greater level of transparency into how a benefits plan is performing. Here’s where you can save money: When insurance companies price products, they determine the premium by reviewing actuarial data, setting aside a portion to pay current claims, reserves to pay future claims, plus a profit. Why let the insurance company hold your reserves? By self-funding, employers hold that money.


Photo Source: Employee Benefit News

If you’re interested in trying self-funding for dental or short-term disability coverages, you’ll need some claims data to work with. When you self-fund a benefit such as dental care, an underwriter will review your claims history, taking into account the number of people covered under the plan, and determine what your expected claims will be based on past data and future trends. You’ll set a budget that includes your fee for plan administration, based and your expected claims. We don’t recommend self-funding the benefit the first year you offer it.

What to consider

When self-funding short term disability, depending on your comfort level, there are varying levels of help to administer the plan. Third-party administrators can handle the full range of managing a self-funded plan, such as adjudicating the claim, calculating the amount to pay and actually paying the claim. This takes some of the pressure off of plan sponsors who are completely new to self-funding, but, as with anything that conveys value, TPAs come at a cost. Therefore, you may choose to handle most of this responsibility yourself, including calculating the benefit and drawing the check. But before you make that decision, assess the availability and knowledge of your internal resources.

For both dental and short term disability, compliance is key. Depending on how your plan is structured, you may be responsible for complying with state and federal regulations that your carrier handled previously. When setting up your plan, it’s vital to ensure that you understand where responsibilities lie so you can remain compliant.

Risk should be your primary concern. Sure, this may seem obvious — for ancillary benefits such as dental and short-term disability, the risk is relatively low. Self-funding an insurance benefit means you should watch how the plan is performing more closely than you would if it were fully insured.

One example of potential savings

For companies who weigh the risk and begin self-funding dental, the savings can be very real. One company offered an employer paid dental plan to its 420 eligible employees. The plan averaged 394 enrolled members over 18 months. During that same 18-month period, the employer paid $567,474 in premiums. The insurance company paid $481,617 in dental claims, equaling a difference of $85,857. Even after adding a $4.50 per employee per month administration fee to the claims cost, the employer would have saved nearly $54,000, or 9.5% of the total cost.

Medical costs continue to rise steeply; self-funding some of your ancillary cove rages can give you greater insight into how your program is performing and help you save money.


Empowering Employees: Big Talk, Little Action

dg-empoweringTelemedicine offers a lot of potential for everyone – added convenience for busy families and lower costs than a traditional office visit. But as helpful as this service can be, it will only make a difference if it is used.

Low utilization is not unique to telemedicine. It’s a common problem with many new, well designed and well-intended health care services. Encouraging plan members to actually use new offerings is a challenge for employer groups, large and small. And while utilization is often higher in self-funded health plans, all employers need help turning talk into action. Here are a few ideas to consider:

It’s all about them – With health care consuming more of everyone’s income and attention, we all have a vested interest in our benefits. And while wonderful tools like telemedicine keep coming to the table, you need to look at these offerings from your member’s perspective rather than your own. Talk with your employees; ask if a service will help them and listen to their feedback. If it can add real value to your employee’s lives, utilization will follow.

Talk about health, not cost – Research indicates that when it comes to their health and well-being, there are many things members would prefer to hear about than fees and costs. A majority are interested in improving their health. It takes time, but focusing on current health risks and personalizing communications as much as possible will help members want to get more engaged.

Educate to empower – Transparency tools and online portals are no different than other modern advances. If people don’t understand them, they will never catch on. Like telemedicine, unless employees understand how to use it and when they can use it, they will never realize the benefit of having an experienced, board certified physician, with access to their medical records, available to help them 24/7.

While it seems that other new disruptive innovations, such as Alexa, catch fire overnight, they do take time. Since your employee communication budget likely pales in comparison to those driving consumers to Amazon, talk with your TPA about new ways to zero in on the needs of your employees. Doing so can lead to increased utilization and a happier, healthier workforce in 2018 and beyond.


Unnecessary Medical Care: More Common Than You Might Imagine

This article was published on February 1, 2018 on National Public Radio, Inc, written by Marshall Allen.

Photo Source: NPR, Inc.

It’s one of the intractable financial boondoggles of the U.S. health care system: Lots and lots of patients get lots and lots of tests and procedures that they don’t need.

Women still get annual cervical cancer testing even when it’s recommended every three to five years for most women. Healthy patients are subjected to slates of unnecessary lab work before elective procedures. Doctors routinely order annual electrocardiograms and other heart tests for people who don’t need them.

That all adds up to substantial expense that drives up the cost of care for all of us. Just how much, though, is seldom tallied. So, the Washington Health Alliance, a nonprofit dedicated to making care safer and more affordable, decided to find out.

The group scoured the insurance claims from 1.3 million patients in Washington state who received one of 47 tests or services that medical experts have flagged as overused or unnecessary.

What the group found should cause both doctors, and their patients, to rethink that next referral. In a single year:

  • More than 600,000 patients underwent a treatment they didn’t need, treatments that collectively cost an estimated $282 million.
  • More than a third of the money spent on the 47 tests or services went to unnecessary care.
  • 3 in 4 annual cervical cancer screenings were performed on women who had adequate prior screenings – at a cost of $19 million.
  • About 85 percent of the lab tests to prep healthy patients for low-risk surgery were unnecessary — squandering about $86 million.
  • Needless annual heart tests on low-risk patients consumed $40 million.

Susie Dade, deputy director of the alliance and primary author of the report released Thursday, said almost half the care examined was wasteful. Much of it comprised the sort of low-cost, ubiquitous tests and treatments that don’t garner a second look. But “little things add up,” she said. “It’s easy for a single doctor and patient to say, ‘Why not do this test? What difference does it make?'”

ProPublica has spent the past year examining how the American health care system squanders money, often in ways that are overlooked by providers and patients alike. The waste is widespread – estimated at $765 billion a year by the National Academy of Medicine, about a fourth of all the money spent each year on health care.

The waste contributes to health care costs that have outpaced inflation for decades, making patients and employers desperate for relief. This week Amazon, Berkshire Hathaway and JPMorgan Chase rattled the industry by pledging to create their own venture to lower their health care costs.

Wasted spending isn’t hard to find once researchers — and reporters — look for it. An analysis in Virginia identified $586 million in wasted spending in a single year. Minnesota looked at fewer treatments and found about $55 million in unnecessary spending.

Dr. H. Gilbert Welch, a professor at The Dartmouth Institute who writes books about overuse, said the findings come back to “Economics 101.” The medical system is still dominated by a payment system that pays providers for doing tests and procedures. “Incentives matter,” Welch said. “As long as people are paid more to do more they will tend to do too much.”

Dade said the medical community’s pledge to “do no harm” should also cover saddling patients with medical bills they can’t pay. “Doing things that are unnecessary and then sending patients big bills is financial harm,” she said.

Officials from Washington’s hospital and medical associations didn’t quibble with the alliance’s findings, calling them an important step in reducing the money wasted by the medical system. But they said patients bear some responsibility for wasteful treatment. Patients often insist that a medical provider “do something,” like write a prescription or perform a test. That mindset has contributed to problems like the overuse of antibiotics — one of the items examined in the study.

The report may help change assumptions made by providers and patients that lead to unnecessary care, said Jennifer Graves, vice president for patient safety at the Washington State Hospital Association. Often a prescription or technology isn’t going to provide a simple cure, Graves said. “Watching and waiting” might be a better approach, she said.

To identify waste, the alliance study ran commercial insurance claims through a software tool called the Milliman MedInsight Health Waste Calculator. The services were provided during a one-year period starting in mid-2015. The claims were for tests and treatments identified as frequently overused by the U.S. Preventive Services Task Force and the American Board of Internal Medicine Foundation’s Choosing Wisely campaign. The tool categorized the services one of three ways: necessary, likely wasteful or wasteful.

The report’s “call to action” said overuse must become a focus of “honest discussions” about the value of health care. It also said the system needs to transition from paying for the volume of services to paying for the value of what’s provided.


Employees Are Spending More for Health Care, Using Less. Put a Stop to It!

Paying more for less is never a good thing, especially when it comes to employee health care costs. And while many people have become almost numb to this trend, Diversified Group is doing more than ever to help self-funded health plan clients fight back. With cost transparency tools contained in programs such as Pharamasense and RealTimeChoices, Diversified is providing employers and members the tools needed to compare out-of-pocket costs as well as quality.

Read on for a full article from BenefitsPro that discusses how employees are spending more on health care, but using it less.

Employees’ health care spending up, usage down

This article was published on January 24, 2018 on BenefitsPro, written by Jack Craver.

Drug Costs

Working Americans are using less care and paying more for health care.

Despite reducing their consumption of health care services, Americans with employer-sponsored insurance spent more than ever before on health care in 2016, according to a new study by the Health Care Cost Institute.

Spending is going up simply due to price increases for prescription drugs, operations and doctor’s visits.

Spending for those with employer health plans increased 4.6 percent in 2016. The previous year, spending increased 4.1 percent. In the prior two years, spending increased by less than 3 percent annually.

“Working Americans are using less care and paying significantly more,” Niall Brennan, president of HCCI, tells the Wall Street Journal. “That has huge implications for the health-care system, for the overall stability and growth for our economy as a whole.”

The study also examined how prices have increased for medical services and medication between 2012 and 2017. It found that spending on surgeries increased by an average of 30 percent during that time, while spending on administering drugs, such as chemotherapy, increased by 37 percent.

These spending increases coincided with a decline in the use of the services. Surgeries declined by 16 percent and the on-site administration of drugs declined by 4 percent.

The biggest increase, however, was for prescription drugs. The cost of brand-name drugs more than doubled, rising 110 percent during the five year period. That came despite a 38 percent decline in the number of prescription days filled.

When taking into account generic drugs, the spending increase on medication was still significant: 27 percent. Of course, many of the most notable price increases in recent years have involved generic drugs.

The dramatic increases in spending for prescription drugs helps explain why the American College of Physicians took the step two years ago to recommend that doctors prescribe generic versions whenever possible, reasoning that the high prices of branded drugs make it less likely that patients will fill their prescription.

High drug prices have also led a group of hospitals to team up to manufacture their own drugs, in an attempt to bypass a pharmaceutical industry that they believe has gone off the rails with its pricing.

Fittingly, on Wednesday the American Psychological Association released findings from a survey showing that roughly two-thirds of Americans say that the cost of health insurance is a source of stress in their household. Smaller majorities also report that changes to federal health care policy and the cost of medications cause them stress.

While the APA study found a high level of stress across all demographic groups, Hispanics and those who live in cities are far more likely to say they’re worried about them or a loved one losing access to health care services. Fifty-five percent of millennials said they are stressed by the lack of access to mental health services, compared to only 25 percent of baby boomers and 14 percent of older adults.


Strong Growth Forecast for Telemedicine

This article was published on January 15, 2018 on HealthLeaders Media, written by John Commins.


Telemedicine has been a hot topic in healthcare for some time. And, while plenty of content has discussed its potential of added convenience and lower costs, plenty of other content has pointed out its low utilization. It’s true that most people are not pursuing the consumer-like behaviors that telemedicine can offer, such as video doctor visits via mobile device or prescription drug cost comparison tools. However, the article included below recently discussed the strides that Teladoc, a telemedicine provider, made in 2017, leading some in the industry to expect fast growth within the telemedicine space.

At Diversified Group, we believe strongly in telemedicine and we offer telemedicine solutions. We work closely with our clients to help them zero in on the needs of their employees and explore possible cost control measures, such as telemedicine. Please read the full article below.

The industry is riding sustained tailwinds that will push growth 30% to more than 40% in coming years. Factors include a growing dearth of clinicians, an aging population, and technological innovations that will improve patient access and experience.

If Teladoc, Inc. is a bellwether for the telemedicine industry, the outlook is bright.

Jason Gorevic, CEO of the Purchase, NY-based telemedicine provider, called 2017 “a landmark year as we redefined the virtual care delivery landscape with our acquisition of Best Doctors.”

“Through rapid integration, Teladoc has brought to market innovation that gives members a single point of access for a wide array of medical needs. We are seeing a tremendous reception from both clients and prospects to this unique, comprehensive solution,” he said.

Preliminary numbers provided by Teladoc support Gorevic’s claims. According to unaudited 2017 financial results, the company saw:

  • Total revenues of $232 million, an 88% increase over 2016
  • Total membership of 23 million, a 31% increase over 2016
  • Total visits of 1.46 million, a 53% increase over 2016, and representing utilization of 7%, compared to 6% utilization in 2016.

Teladoc finished 2017 on an upswing, with unaudited fourth quarter results showing:

  • Total revenues of $76 million, a 103% increase over 2016
  • Total adjusted EBITDA of $2.5 million compared to a loss of $8 million in the fourth quarter 2016
  • Total visits of 460,000, a 48% increase over 2016, and representing utilization of 2%, compared to 1.8% utilization during the same period in 2016

Continue reading

The New Year’s Resolution You Should Keep: Managing Your Healthcare Costs

The article below was published on January 3, 2018 by DigitalDealer, written by Contributing Writer Steve Kelly.

Photo Source: DigitalDealer

We came across this article written by Steve Kelly, co-founder and CEO of ELAP Services. It discusses one common theme that all of us at Diversified Group hear more and more from not only our auto dealer clients, but from a growing number of our clients – the fact that amidst increasing healthcare costs, employers are seeking out better, less expensive ways to offer healthcare to their employees. Making the switch from a traditional health insurance plan to self-insurance creates the opportunity to achieve the savings they are looking for. We have been proud to partner with ELAP Services for many years and can attest to the results discussed in his article, which can be read below.

January is the month of new beginnings, and of course, New Year’s resolutions. But beyond setting a personal goal this year, what if you decided to use your energy to set your dealership up for success instead? What if your New Year’s resolution was to finally find a better, less expensive way to offer healthcare to your employees?

Each year auto dealers around the country feel the squeeze of rising healthcare costs. Insurance premiums for family coverage have increased by 55 percent since 2007, and while these costs are felt by the individuals and families on the plan, the employer who sponsors the health plan often carries the financial burden. Meanwhile, the total operating profit for the average dealership decreased 43.5 percent from 2016 to 2017, proving that healthcare costs and profits are out of sync, and healthcare costs have a substantial impact on dealers trying to run profitable businesses.

Becoming fed-up with the increasing costs year over year, more businesses are looking for viable, cost-saving alternatives to PPOs and are increasingly turning to self-funded or self-insured plans. Self-insurance is when an employer takes the money it would pay an insurance company and instead pays healthcare providers directly for medical claims.

According to the Employee Benefit Research Institute, the number of businesses offering self-insured health plans has increased by nearly 37 percent from 1996 to 2015. This huge increase proves that employers are trying to find the right, less expensive healthcare solution for their business. But, if you are considering self-insurance to forgo the hassles and costs of a PPO, you are missing the key component to assisting with risks of self-insurance. Self-insurers can really only maximize their health plans when paired with the reference-based pricing method.

The reference-based pricing method is the assessment and payment of medical claims based on the provider’s actual cost to deliver the service or by utilizing Medicare cost data as a benchmark. This means that rather than paying a discount off of an unknown price, an employer knows the true cost and pays a fair price for the service. Reference-based pricing helps remove the curtain of PPO “discounts,” leaving you with a fair and reasonable price to pay for a medical service.

Quite frankly, changing from a traditional healthcare plan to self-insurance with reference-based pricing could be a total game changer for your dealership. Self-insurers who use reference-based pricing benefit from significant cost savings in comparison to their PPO discounts. With the help of a partner, employers pay their healthcare bills going line by line through the expenses and with an understanding of the actual cost it takes to provide a medical service, like they would any other business cost—and in the way healthcare was meant to be paid for. On average, with the right strategic partner, you can expect to save up to 30 percent off your total healthcare spend in the first year.

So, this year, rather than throwing in the towel a few weeks in, like we often do for New Year’s resolutions, resolve to empower yourself by learning the facts and evaluating if your current healthcare plan is truly offering you the value it promises. Identifying a better, less expensive way to offer healthcare to your employees will allow you to do something novel like put the savings back into running your dealership.

About the Author

Steve Kelly is the co-founder and CEO of ELAP Services, a leading healthcare solution for self-funded employers across the U.S. He is a recognized expert and frequently called-upon speaker in the insurance, employee benefits and risk management industry, bringing more than three decades of experience solving his clients’ complex healthcare challenges.