It’s a Hot Topic and One We’ll Hear More About in the Months Ahead
Whether it’s Medicare at 50, a Buy-In Option or Medicare for All, there is little doubt that the debate on expanding Medicare will be a centerpiece issue as the 2020 primary season intensifies. Prior to the Democratic debates, some of these proposals were receiving strong support among Democrats and even a few Republicans. As the conversation has continued and some of the issues have been analyzed, support has weakened – primarily due to costs.
While Senator Bernie Sanders estimates the cost of his plan at $1.38 trillion per year, other studies have published numbers in excess of $30 trillion over 10 years. Expectations of provider reimbursement rates far below what private plans currently pay have experts cautioning that hospitals will close their doors and drug companies will lose much of their funding for research and development.
Employers Provide Better Benefits After helping employers provide high quality health benefits for more than 5 decades, we are confident that workers enjoy far better medical care and customer service than they will experience in a Medicare for All or other Government sponsored system. Add concerns over longer wait times and the government’s ability to potentially reject certain treatments and Americans could face a system similar to those that currently encourage people from other countries to seek quality medical treatment in the U.S. We’re equipped to help our clients control future healthcare costs and retain the flexibility their plans provide. To learn more, give us a call at your convenience.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 implemented prescription drug coverage under Medicare (Medicare D), requiring all employers that offer prescription drug benefits to provide an annual notice of Medicare open enrollment. The notice must go to all Medicare eligible plan participants and qualified beneficiaries before October 15th each year. The notice requirement applies to all employers offering prescription drug benefits regardless of size, whether fully-insured or self-funded, or regardless of ACA grandfathered status. Notification must go to all Medicare eligible plan participants, including active employees and their dependents, retirees and COBRA participants. For most employers, it is easier to issue the notice to all participants as a blanket notice than to identify Medicare eligible employees.
The notice requires that the plan sponsor first determine if their plan offers creditable coverage (meaning it is on average at least as comprehensive as Medicare D coverage), or non-creditable. The Centers for Medicare and Medicaid Services (CMS) provides a simple process to determine whether prescription drug coverage is creditable or not. Once that determination is made, CMS provides model notices to send to participants in both English and Spanish. Notices may be sent separately, included as part of open enrollment or other benefit related materials, or electronically as long as the DOL’s rules on electronic delivery are followed.
Additionally, all plan sponsors are required to notify CMS within 60 days of the start of each plan year as to whether or not their prescription drug plan is creditable or not creditable. This notification is done online at CMS here.
For Diversified Group clients who have elected to have Diversified Group handle your Medicare D notices, DG will determine if the plan is considered creditable or not and will then send the notice either to the client or directly to the plan participant depending upon which service was elected.
With statistics showing that 10,000 baby boomers will turn 65 each day from now until 2030, the impact on our workforce will be dramatic. When the last of the baby boomers reach age 65 in 2029, nearly 25% of our population will be 65 or older. This is up from about 15% today. While 62% of Americans are between the ages of 18 and 64 and considered to be of working age, this percentage will drop to 58% by the end of the next decade. While this poses growing problems for Social Security and Medicare in the U.S., many other countries face even bigger challenges.
In a previous newsletter, we discussed bundling introduced by Medicare which focuses on orthopedic and cardiac procedures. Through the mandatory initiative for comprehensive care for joint replacements (CJR), which became policy in 2016, some 800 hospitals are participating in the program.
While some sources report the results of bundling as mixed, Medicare reports that joint replacement payments increased by approximately 5% nationally, but decreased 8% for BPCI participants. One large health system achieved a 20.8% episode decrease and another reported a significantly shorter prolonged length of stay – a sign of fewer complications resulting from surgery.
Providers, both acute and post-acute, shared in the savings and indications are that post-acute savings were achieved because their care was bundled, placing these providers at risk. Even though efforts to repeal and replace or modify the Affordable Care Act are on hold, more healthcare providers and payers can be expected to embrace bundling going forward.
The article below is from Employee Benefit News, titled “5 ways Trumpcare is likely to change employee benefits,” by Craig Hasday.
Post-election, I have met with dozens of employers and the No. 1 question on their mind is: What will the new administration do to our healthcare strategy and what steps do I take to correctly position my employee benefit program?
The short answer is to stay the course. Except for those employers offering minimum essential coverage plans to avoid the employer mandate penalty, not much will happen short-term to change the employer dynamic.
Healthcare will continue to be driven through the employers. Cost pressures will continue to press forward the evolution of high-deductible plans, risk-based contracting and consumerism. The biggest challenge will be to facilitate these transitions.
My best estimate of what will change:
Since the employer mandate will disappear, so will minimum essential coverage plans. If they were only offered because the employer had to do so, the employers will discontinue these as soon as they can.
1094/1095 reporting will stop, but it is probably too late to stop this year’s upcoming requirement. Good riddance — what a waste of time and resources.
The Cadillac tax will be a thing of the past. Congress will seek to pay for indigent care by limiting the individual exclusion for healthcare benefits provided by employers. This will further facilitate the shift to high-deductible plans.
Medicare will not change. The politics on this are a losing battle for whoever takes it on. The Democrats’ “Medi-scare” tactics will force Republicans to back off.
Drug costs are going to come down. While pharma is a powerful lobby, this issue has too much momentum. Whether it’s reimportation or transparency laws, something is going to give.
As you may recall, with the introduction of Medicare Part D prescription drug benefits, the Centers for Medicare and Medicaid Services (CMS) imposed specific notice requirements on employers.
Each year, employers whose healthcare plans include prescription drug benefits are required to notify all Medicare beneficiaries and the CMS of the “creditable” or “non-creditable” coverage status of their prescription drug plan. This notice is due on October 14th, before the open enrollment period begins. (Medicare Part D Open Enrollment is October 15th – December 7th).
Onus on the Employer
Not all carriers are providing notices to their potential Medicare-eligible participants, even if they have assisted in this process in the past. Most carriers are only sending the notice to those individuals they know are already covered by Medicare. Diversified Group recommends you send the notice to all plan participants to ensure that all participants, including spouses and dependents that need the notice, will receive it.
CMS also requires plan sponsors to provide notice of their creditable-coverage status to Part D-eligible members at other times, including:
Before an individual’s initial opportunity to enroll in Part D (generally satisfied by the requirement to provide notice annually to all Medicare-eligible employees prior to Oct. 15).
Before the effective date of coverage for any Medicare-eligible individual that joins the employer’s plan.
When the plan’s prescription drug coverage ends or its creditable coverage status changes.
Upon an individual’s request.
Helping Diversified Group Clients Comply
If your health benefits plan is administered by Diversified Group, you have been informed of the requirements related to Medicare Part D Notices AND the steps we can take to help your plan comply with all Medicare related communication. If you have questions regarding Medicare Part D Notices, please contact your Diversified Group representative at your convenience.
When it comes to Medicare Part D, we know you have questions. Luckily, Diversified Group has answers! Below are a few of the frequently asked questions we have received regarding Medicare Part D.
How Do I Determine if Our Prescription Plan is Credible or Not?
Employers are not required to obtain an attestation by a qualified actuary when determining creditable coverage status unless they are electing the retiree drug subsidy. As an alternative to hiring an actuary, employers/plan sponsors can use the following safe harbor plan design provided by CMS:
To qualify for the simplified determination (and be deemed creditable), the plan must meet the following standards:
provide coverage for brand-name and generic prescriptions;
provide reasonable access to retail providers;
be designed to pay on average at least 60% of particpants’ prescription drug expenses; and
satisfy at least one of the following standards:
The prescription drug coverage either has no annual benefit maximum or has a maximum annual benefit of at least $25,000;
The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual; or
For integrated plans only, an integrated health plan (a) has no more than a $250 deductible per year; (b) either has no annual benefit maximum or has a maximum annual benefit payable by the plan of at least $25,000; and (c) has a lifetime combined benefit maximum limit of at least $1 million
When does Coverage qualify for the Safe Harbor?
The safe harbor requirements vary according to whether or not the prescription plan is integrated. An integrated plan would have to meet the first three bullet points in the list above, as well as meet subsection (c) of the fourth bullet point. If the plan is not integrated, it would have to meet the first three bullet points and either subsection (a) or (b) of the fourth bullet point in order to qualify.
Are Health Savings Accounts (HSA) taken into Account when Determining if Coverage is Creditable to Part D?
Under CMS guidance, HSAs are not to be taken into account when determining whether coverage is creditable. Consequently, employers will not have to send disclosure notices for them. However, notices would be required for High Deductible Health Plans (HDHP) and other non-account benefits available to participants with HSAs.
In addition, most HDHPs that are compatible with HSAs will be considered non-creditable to Part D based on the safe harbor described above. This is because the deductibles are integrated with the major medical coverage and the deductibles exceed $250 (see subsection (a) under bullet 4).
Diversified Sends Us a Medicare Part D Creditable Coverage Determination Each Year – How does Diversified Arrive at their Determination?
We make our determination based on the simplified safe harbor plan design method described above. As part of this process, we review prior prescription benefit history. Most plans will be creditable to Medicare Part D based on the safe harbor, except for HSAs, compatible HDHPs, and plans that pay less than 60% of the cost of prescription drugs based on prior claim history. In these cases, an employer may want to obtain the services of an actuary to see if the plan is actuarially equivalent to Medicare Part D.
Some of our employer groups have hired an actuary and found that their HDHP is creditable. If you decide to hire an actuary for your Medicare Part D determination, please be sure to let us know by contacing your Diversified Account Executive. This is especially important if we are mailing your Medicare Part D notices to employees and reporting your creditable coverage status to CMS.
If you’ve elected to have Diversified handle the distribution of Federal Initial and Annual Notices, then you are all set! The Medicare Part D Notices and CMS reporting requirements described above are included with that service. If you are unsure or would like to elect this service, please contact your Account Executive today at (888) 322-2524!