House Passes Bill to Protect Access to Affordable Health Care Options

Press Release from Education and the Workforce Committee Chairwomen Virginia Foxx on April 5, 2017.

The House today passed the Self-Insurance Protection Act (H.R. 1304), legislation that would protect access to affordable health care options for workers and families. Introduced by Rep. Phil Roe (R-TN), the legislation would reaffirm long-standing policies to ensure workers can continue to receive flexible, affordable health care coverage through self-insured plans. The bill passed by a bipartisan vote of 400 to 16.

“By protecting access to self-insurance, we can help ensure employers have the tools they need to control health care costs for working families,” Rep. Roe said. “Millions of Americans rely on flexible self-insured plans and the benefits they provide. Federal bureaucrats should never have the opportunity to limit or threaten this popular health care option. This legislation prevents bureaucratic overreach and represents an important step toward promoting choice in health care.”

“This legislation provides certainty for working families who depend on self-insured health care plans,” Chairwoman Virginia Foxx (R-NC) said. “Workers and employers are already facing limited choices in health care, and the least we can do is preserve the choices they still have. I want to thank Representative Roe for championing this commonsense bill. While there’s more we can and should do to ensure access to high-quality, affordable health care coverage, this bill is a positive step for workers and their families.”

BACKGROUND: To ensure workers and employers continue to have access to affordable, flexible health plans through self-insurance, Rep. Phil Roe (R-TN) introduced the Self-Insurance Protection Act (H.R. 1304). The legislation would amend the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code to clarify that federal regulators cannot redefine stop-loss insurance as traditional health insurance. H.R. 1304 would preserve self-insurance and:

  • Reaffirm long-standing policies. Stop-loss insurance is not health insurance, and it has never been considered health insurance under federal law. H.R. 1304 would reaffirm this long-standing policy.
  • Protect access to affordable health care coverage. By preserving self-insurance, workers and employers will continue to benefit from a health care plan model that has proven to lower costs and provide greater flexibility.
  • Prevent bureaucratic overreach. Clarifying that regulators cannot redefine stop-loss insurance would prevent future administrations from limiting a popular health care option for workers and employers.

For a copy of the bill, click here.

For a fact sheet on the bill, click here.

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State of Self-Funding State Benefit Plans

The article below is from International Foundation of Employee Benefit Plans, written by Teri Dougherty

Governor Scott Walker recently proposed self-funding Wisconsin’s $1.5 billion health insurance program for 250,000 state and local government workers and their dependents. For now, it is a proposal that is being heavily debated in the Wisconsin State Legislatures Joint Finance Committee. If self-insurance contracts are approved by May 1, 2017, a new self-funding arrangement could go into effect January 1, 2018.

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Image Source: www.ifebp.org

To self-fund or fully insure is mostly a question of who will take on the financial risk of paying claims for covered benefits. Here’s a closer look at the many considerations involved, using Wisconsin as an example.

Self-funding isn’t an all-or-nothing option. According to the National Conference of State Legislatures (NCSL), 46 of the 50 states self-fund at least one health benefit plan. Because Wisconsin currently self-funds three benefit plans, Wisconsin is considered a self-funding state by NCSL. Currently less than 30 states completely self-fund their health insurance programs.

Why self-fund some benefits and not others?

The state of Wisconsin is currently self-funding, or assuming the risk for their pharmacy, vision and wellness benefits. At the same time, the state pays health insurance premiums to 17 health maintenance organizations (HMOs) for fully insured medical coverage. A third option is to partially self-fund, in which the state/employer complements its self-funded program by purchasing stop-loss insurance.  Stop-loss insurance provides financial protection only if self-funded claims exceed a specified dollar amount within a specified period.

John C. Garner, in his book Self-Funding Health Benefit Plans, describes how state-sponsored self-funded plans may be structured:

  • Creation. Before a public employee plan may be self-funded, either enabling legislation or an opinion of the states attorney general is usually required.
  • Plan choice. Most state plans are multiple option plans, whereby employees are offered more than one health plan.
  • Participation. Most state plans permit other government entities within the state to become participating members, such as:
    • Independent state agencies
    • Counties
    • Cities, towns and municipalities
    • Principalities
    • Public universities
    • Water districts
  • The plans are usually funded as a general asset plan. Since public employers are tax-exempt, no trust is needed. Stop-loss agreements are typical with these plans.
  • Governance. Self-funded plans are usually managed as soundly as the political environment will permit. A board or committee that includes employee representatives typically governs the plan. With substantial employee representation, the need for a claims buffer may be greater for a public plan than for a private plan.
  • Administration of state plans (e.g., claims, consulting, risk management, utilization review, disease management and prescription drug cards) is generally provided by outside vendors—just like most other self-funded single employer plans.
  • Regulation. Public employee plans are not subject to ERISA, hence they do not have to meet federal reporting and disclosure requirements. Since they do not have ERISA preemption, the plans must meet any applicable state rules and regulations.

The Wisconsin debate involves multiple considerations, including how the elimination of multiple fully insured health plans options may affect the market and worker choice. The Legislature’s Joint Finance Committee is expected to consider the self-funding issue in April or May, 2017.  Will there be a shift in Wisconsin to self-insurance for the state workers’ health plan? How might that shift impact the state’s next budget, health care market and economy? The International Foundation, residing in the great state of Wisconsin, will stay tuned.

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More Move to Self-Funding

self-fundingThe Employee Benefit Research Institute reports that nearly 20% of mid-sized employers made the jump to self-insurance from 2013 to 2015. A major attraction is the availability of data and analytics, enabling the employer to learn how healthcare dollars are being spent. A growing number of employers are using this data to incentivize employees who lower claim costs by choosing more efficient hospitals or freestanding imaging centers when tests such as an MRI are needed.

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Small Groups Can Combat Rising Healthcare Premiums with Level Funding

The rising cost of employee healthcare has more small employer groups choosing level funding over their traditional fully-insured health plans. What are the advantages of this option for your small business?

Cost Control and Opportunity for Savings

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Level funding is a form of partial self-funding that enables the employer to budget for monthly expenses while enjoying the financial advantages that larger organizations have enjoyed for years. With level funding, the employer pays a set amount each month to cover fixed costs as well as anticipated claim costs. Stop loss insurance funds claims that exceed the employers funding limit. If claims are below the funding limit, the surplus remains in the employer’s claim fund.

Other Advantages of Level Funding Include:

  • Easy to Operate
  • High Performance PPO Networks
  • Expert Administration
  • And More…

Level Funding with DG/25+

dgb-minutemanDiversified Group’s DG/25+ is a level funded health plan that offers flexibility and cost control for employers in Massachusetts and New Hampshire. This plan operates very much like a fully-insured health plan. Employers of 25 or more can establish a monthly health plan budge, while still enjoying the economic advantages of self-funding.

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Effective TPAs Contribute to Self-Funding Success

Article as seen in HM Stop Loss News November 2016

One of the most important success factors in self-funding is the service provided by the third party administrator (TPA). Since most employers do not have the expertise or the time to handle the day-to-day management of their health benefits programs, contracting a TPA for the administration of their plans is essential to achieving strong results. HM Insurance Group believes a successful relationship with the TPA is important to both the self-funded employer and the Stop Loss carrier.

Most standard TPA services include adjudicating claims, determining eligibility, communicating important information with plan members, creating forms, providing customer service and working with the Stop Loss carrier on catastrophic claim communication and financial reimbursement. There also are additional modern services that many TPAs provide that exceed these basic services. It is important to identify the key differences in administrative services and claims management approaches that individual TPAs possess in order to evaluate their overall contribution to a successful self-funding experience.

During our more than 30 years in the industry, HM Insurance Group has identified certain practices and approaches taken by effective TPAs that truly set them apart in managing benefits programs. This information should be considered only as a guide.

Key areas where superiority can be noted are as follows: 

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Self-Funding Employee Healthcare Plans is on the Rise

Several studies show an increase in the number of companies choosing self-insurance as well as an expectation that this trend will continue.

“Between 2013 and 2015, the proportion of midsized companies with 100 to 499 employees that were self-insured increased 19%, to 30%. The percentage of small firms with fewer than 100 employees that self-funded their health plans grew 7%, to 14%.”

This increase was expected with the introduction of the Affordable Care Act. In some cases, the law proposed requirements on health plans that do not apply to self-funded plans, making it an appealing solution. To read more about the rewards and risks small to large sized businesses weigh when deciding to self-insure click here.

It also appears that this rise in self-funded health plans over fully insured is going to continue. According to the Benefits Strategy & Benchmarking Survey, “the trend of switching from fully insured to self-insured is expected to grow by 35% in the next two years, from 28% to 38%.” There are several factors driving this continued trend. Employers are searching for savings in a world where healthcare costs and specialty drug costs are rising out of control. And, the ability to have access to health plan data, and services like telemedicine are very valuable added benefits.

To read why more and more companies are expected to continue to choose self-funding click here.

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Get More from Your Healthcare Spend

spendWith research showing that the average cost of healthcare surpassed $11,000 per employee in 2015, stretching every healthcare dollar is a must. Since self-funding is the foundation from which so many cost control strategies emerge, we encourage you to take this step if you haven’t already done so.

Understand the Needs of Your Group
Since every employer group is unique, it’s imperative that you look closely at demographics, prior claims and medical conditions. The availability of meaningful data is one of the biggest advantages of a self-funded plan, and key to making sure that those with chronic conditions such as diabetes or hypertension are receiving the treatment and attention they need. If your administrator isn’t helping in this critical area, you have the wrong administrator!

Coordination Matters
Self-funded health plans involve several parts that need to be working together. If you think healthcare is complex, put yourself in the shoes of your members and their families. Programs such as utilization review, hospital pre-certification, disease management and healthcare coaching can go a long way in managing costs. Services like patient advocacy and telemedicine can help members get the care they need in an efficient setting. For example, while office visits cost about $130, a telemedicine visit can be equally effective at a cost of about $40. With so many variables available today, it’s easy to see why customer service and care coordination are as important to your bottom line as they are to your employees.

Education and Wellness
Once a self-funded plan design and professional administration are in place, employee education and wellness integration must follow. Few factors influence healthcare costs more than lifestyle choices and the need to make informed buying decisions. And whether it involves understanding benefits or choosing a high quality, efficient provider, studies show that members need more support. To help in this area, many TPAs are integrating online access to comparative data on costs and providers.

When you consider that we can only manage what we can measure, delivering meaningful information to members, when they need to make a healthcare decision, should result in happier, healthier employees and lower costs for all.

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