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Friday, March 26, 2010

Eligibility for Your Medical Benefits Plan

As we near the end of Open Enrollment I want to highlight some changes to the eligibility rules for our medical and dental plans. These mostly impact new employees coming in after the first of next month. Supervisors and all of us who recruit should know this information so we can use our benefits to recruit prospective talent. I believe we have a good story to tell.

Immediate Eligibility

Although this isn't completely new, I find that some people don't realize it. You are eligible for coverage under our medical and dental plan beginning on your hire date. You must allow a few days for sign-up, card printing and mailing, etc... but there is no waiting period after you're hired.

Part-time Employee Eligibility

This year for the first time we are extending eligibility to part-time employees. This doesn't cover temps, interns, contractors or any other casual labor. This eligibility extends only to those individuals who work regularly 20 hours per week or more and who the company classifies as a "Regular, Part-time Employee."

Pre-Existing Condition Exclusions

For now these are still legal, and we will have a 12-month exclusion period for all new employees hired after April 1, 2010. With immediate eligibility extending even to part-time employees the plan must protect itself from "adverse selection" which is the phenomenon whereby sick people single out our company simply for the immediate eligibility, get their illness officially diagnosed, covered and treated, and then quit. All employees who come over to Blue Cross from the UHC plan have creditable coverage under federal law and are exempt from pre-existing exclusions.

It is my understanding the Blue Cross is printing cards today and that all of you who have made your benefits choices, including those who are making no changes, should have your cards on time. We appreciate the time and attention everyone has given to this year's Open Enrollment process and believe we've found a quality, cost-effective program for FY '11.

Wednesday, March 24, 2010

What Healthcare Reform Means for Our Benefits

Unless you've been camping in a distant cave you know that this week the House of Representatives approved comprehensive healthcare reform legislation. Over the next nine years this new law has the potential to substantially change the healthcare system and industry in this country. While most everyone knows something happened, what it means seems open to interpretation.

Walking through the corporate office this week as part of our Open Enrollment process I heard many opinions and had several requests to blog on this topic. I've also sought out news items off the web, TV and radio. In addition, about a half dozen unsolicited email articles have come to my inbox by companies wanting to sell us consulting services for our health plans. The following is a summary of what I've learned to date.

One more thing before we start. I am neither Republican nor Democrat, conservative nor liberal. Please don't try to paint me with a particular political brush if you don't agree with my analysis. Liberal/progressives tout this law as the savior of humanity, and conservative talk radio refers to it as unconstitutional Armageddon. It is neither; it's a change in direction from a private insurer system to a quasi-private system with greater government involvement.

The goals of this legislation are to cover more uninsured Americans and control the escalating cost of medical coverage. To do this the government is proposing to use a number of levers at it's disposal, from changes in tax law, expanding medicare coverage rules, penalties and subsidies for different personal and corporate behaviors, and an expanded regulatory power requiring all Americans to be covered by health insurance of some form or another.

Specifically, here is what happens and roughly in what order:

Within 90 days

  • Family policies (I assume both group and personal) must allow dependents to stay on the plan until they reach age 26. In Tennessee right now that age is 24; in most states it's 22.

  • Plans may not apply a pre-existing condition exclusion to children under 19.

  • Uninsured citizens can obtain coverage through a federally subsidized insurance program.

  • Increased medicare prescription drug coverage.

  • Small businesses with fewer than 25 employees get a tax credit for providing benefits.
  • Restrictions on lifetime and annual spending caps in insured medical plans.

  • Medicare must cover preventative care at 100% (no co-pays, deductibles, or co-insurance)

  • Establish a reinsurance program for employers providing retiree medical coverage for retirees >55 yrs old but not yet Medicare eligible. Phases out by 2014.

  • Insurers must report not only what they spend on claims but how much they spend on administrative overhead.

In 2014

  • Establishes health insurance exchanges for individuals to buy insurance in a more competitive market.

  • Establishes Small Business Option Programs (SHOPs) where employers with less than 100 employees can group together and buy insurance with better buying power.

  • Requires all employers with more than 50 employees to provide health insurance or pay a tax fine of up to $2,000 per employee.

  • Requires all citizens to have health insurance or pay a tax fine phased in over four years of up to $750.

  • Provides tax credits for businesses that buy their health insurance through SHOPs

  • Provides subsidies for individuals who purchase health insurance through an Exchange

  • Employers who provide health insurance but which cost the employee more than 8% of their annual income (provided employee makes no more than 4x federal poverty level) must provide that employee with a voucher for what the company would have spent on the employee's insurance so that the employee can use that to buy insurance from an Exchange.

  • Employers whose employees use vouchers to purchase insurance from an Exchange must pay a fine of up to $750 per employee.

In 2018

  • IRS will impose a 40% tax on "high-end" health plans valued at $10,200/yr or greater for single coverage and $27,500/yr for family coverage. FSA and HSA contributions must be added to the cost of premiums for this calculation.

  • FSA Annual limits (what you can save in a tax year) will be reduced from $3,500 to $2,500.


The immediate changes for our plan are the lifting of lifetime and annual maximums, and adding dependents up to age 26 back on our plan if we're asked to do so. Our new plan has pre-existing condition exclusions for new-hires after April 1st, but we won't be able to apply it to children under 19. Depending upon how the insurer underwrites our plan, these changes could add risk and therefore increase our premiums for next year's renewal.

Past this year, candidly its too early to tell what impact this will have on our plan. There is a Senate reconcilliation bill to be passed, a Presidential Executive Order that's supposed to put more limits on taxpayer funding of elective abortions, and court challenges in as many as 34 states. Another potential change would be amendments to the bill. Congress' approval rating is around 17%, close to an historic low, and we may have a substantially different Congress next year which might want to make changes.

Just remember, most of the changes from this law impact individual and small company plans, and we're covered under a corporate plan. Most of these changes impact how the uninsured buy coverage, and just about everyone here has coverage. We'll keep you informed as we know more, but overall there's no real cause for celebration or jumping out of windows yet. As the Zen Master said, "We'll see."

Wednesday, March 17, 2010

FY '11 Medical Plan Decisions Simplified

It's open enrollment month in our company and many people are trying to make a decisions regarding their medical plans for the fiscal year beginning April 1st. This year our Tennessee employees have a four-option choice; PPO vs. High Deductible Plan (HDP), and Blue Cross "P" network vs. "S" network.

With the various differences in premiums, co-pays, deductibles, HSA vs. FSA, etc... there is a lot to consider. The HDP has gained momentum due to favorable payroll deductions and some good feedback from people currently in the plan. The S network rates are cheaper, but that network does not include any HCA hospitals including some where several of our people live.

With a lot at stake, and a lot to sift through, here are some simple decision points you should consider if you work at Nelson. This is just my opinion and does not change any of the Open Enrollment information we've sent to our people. We have informational meetings going on and you should attend one of those if you're struggling with this decision.

1. FSA, HSA, or Neither. In my opinion "Neither" shouldn't be an option. If you're going to spend money on co-pays, deductibles, or coinsurance this year why not get the savings of deferring that money to yourself pre-tax? Since "Neither" is not a smart option, then the choice is FSA vs. HSA and that's simple. HSA accounts are only available due to (a stupid) federal law if you have the HDP. Choose the FSA if you choose the PPO; choose the HSA if you choose the HDP.

2. PPO or HDP. The HDP combined with an HSA saves you more money in almost every instance, but there's an important catch that I'll get to in a minute. Practically everything you spend on your medical costs in the new fiscal year counts towards the deductibles and maximum out of pocket expenses. When you reach the $8,800 out of pocket maximum the plan pays at 100%. The PPO maximum out of pocket is $6,000 but only the deductible and coinsurance count towards it. Co-pays do not count toward it, and continue on after it. You can spend $6,000 and still pay co-pays into infinity.

So why not go with the HDP in all cases? Since everything counts towards the deductible ($1,200 individual and $2,400 family by law) there are no co-pays. That means that every prescription you buy, every doctor's visit, any ER services, everything up to when you satisfy the deductible is at your expense out of pocket. You'll get that back through premium savings by year's end and you'll save money in most cases. However, if you aren't $2,400 liquid at the start of the year the HDP can get you into serious financial difficulty. If you can't afford that much out of pocket starting April 1st, the PPO may be your better option.

3. P vs S Network. The list of doctors in these two networks is almost identical; the difference in is hospital coverage. In the Nashville area only, Blue Cross has a negotiated relationship with the non-HCA hospitals. In exchange for HCA hospitals being excluded, the other hospitals offer a deeper discount to patients with S network coverage. If your doctors have privileges at Vanderbilt, Baptist and St. Thomas (or their related facilities) or if you're willing to change doctors then the S network will save you money. If your doctor only has privileges at local HCA hospitals (Summit, Centennial, Skyline, etc...) and you aren't willing to change doctors you should select the larger P network. If your doctors are all at covered facilities (mine are all at Vanderbilt) then you should take S as it makes no sense to pay more for network access that you don't use.

So there you have it. Decide on PPO vs. HDP depending upon your liquidity, then select an FSA or HSA depending on which plan you selected and take advantage of tax savings on your non-covered expenses. Select P vs. S depending on which hospitals you use and where your favorite doctors are allowed to practice. Feel free to email or call me at the office if you have further questions.


Monday, March 15, 2010

Molested in a Runaway Prius: The Top Ten List

I've been home-bound for a few days due to knee surgery. As a Catholic who owns two Toyotas, and proud on both accounts, it's been tough to avoid the news. The hysteria over 30 year old allegations of priestly impropriety has moved from the U.S. to Ireland and now to Germany. The smart money inside the Church is that Spain is next. Meanwhile, "Me too!" runaway Toyota incidents with lawyers and reporters on standby plague the world's largest automaker.

Being a student of institutional behavior, and a great admirer of these two great institutions, it's pained me to watch them get behind the story in their respective news cycles. Meanwhile, Late Night host David Letterman sets the standard for getting past his own reprehensible behavior of having sex with young female staffers over whom he had authority as host of the show and owner of the show's production and distribution company, Worldwide Pants.

The differences in how these three companies handled their respective scandals is a lesson in being nimble when trouble strikes. Both the Catholic Church and Toyota are old and venerable organizations with their own cultures. They see the world through their own lens and are almost incapable of seeing themselves as the world sees them. Letterman's company, by contrast, is a media company and understands the news cycle as well as anyone. When trouble struck, how all three reacted gives all other companies a cautionary lesson in handling crisis communications.

The Church's sex abuse scandal began in 2002 with a series of stories in the Boston Globe. These first cases were legitimate; where serial pedophiles working as priests in the Boston diocese were knowingly moved from parish to parish by Cardinal Bernard Law without regard for the safety of those parishes children. When the story broke the Church first obfuscated, then gave vague assurances that all was well, and only addressed the story after multiple lawsuits were in the works. It looked slow and out of touch and, by inference, guilty.

The truth of the scandal, which still goes on today, is that the majority of abuse cases were brought forward after 2004, two years after the original disclosures. Over 70% of those cases were for abuses committed between 1962 - 1974. Less than 1% of the Church's priests in the U.S. were responsible for over 60% of the accusations. So how does such a small number of predators taint the world's largest religious organization? Lawyers, money, and the smell of blood in the water. Two organizations, SNAP (Survivors Network of those Abused by Priests) and Voice of the Faithful are full of attorneys and people selling books and speaking engagements about pedophile priests. They have opened branches both theologically and regionally and raise money off their websites. This story won't die until they've run the table on all religions and regions.

The Toyota story is similar, in that the problems with it's models came from prior years and the mistakes of a prior CEO. During the late 1990's through about 2007 Toyota expanded it's production 50% in order to gain bragging rights over GM as the world's largest automaker. To expand that quickly they built new factories in foreign countries and for the first time ever allowed non-Japanese owned parts suppliers to make critical parts. All the sticking accelerator pedals came from one Canadian supplier.

When early trouble came, about two years ago, Toyota obfuscated and denied any problem, and in the process looked guilty. When news of multiple deaths of sticking pedals came to light, they were already behind the story. When the news broke worldwide there were 19 cases over 9 million cars over 10 years. Now there are 54 reported cases, none of which can be verified or reproduced. There are 64 class action lawsuits against the company and law firms worldwide are trolling for new plaintiffs. Even those not experiencing defects are being encouraged to join class actions for loss of resale or trade-in value due to the scandal. As with the Church, blood in the water, money and lawyers have given the story a life of it's own.

Now compare that to the biggest non-story of the year: David Letterman's assignations with female staffers. When faced with possible extortion, Letterman went public first, said he did it, made fun of it, and that was that. His extortionist plead guilty last week and Letterman is still #1 on late night television. Benedict and Toyoda are the guys cleaning up someone else's mess, but the press and the lawyers don't care. That's not consistent with their narrative. Meanwhile Letterman goes on about his business.

So what's the critical learning for our organizations?

1. Tell you story first.
2. If you screwed up, decide how to fix it
3. Make communicating that part of your story.
4. Take care of anyone you've harmed or injured. Handling real claims early is cheapest.
5. Put together a team of PR, HR and legal to work cross-functionally on the situation.
6. Use your team to push back immediately and aggressively on those "Me too!" claims.

Your goals are to (7) make sure internal and external stakeholders know that you're the good guys, (8) fix what you've broken, and (9) let the bad guys know that any ill-gotten profit from your problems won't be quick or easy. Finally, (10) do some soul searching on how this happened (as Toyota and the Church have both done well) and make sure this doesn't happen again. The alternative, as my two much-loved institutions are finding out, is a decade of litigation.

Monday, March 08, 2010

Watch Your Medical Coding and Billing

The American health care system is either the finest in the world or a hopeless morass of waste depending on who you talk to and their party affiliation. One thing that is absolute truth about our system is that it's complicated, and one of the root causes of that complexity is the interface between medical coders, medical provider billing, and your insurance plan. I'm near the end of a medical coding/billing/insurance problem that I've been working since July. The facts of this case (which I have permission to share) should help you understand why it's important to know your benefits, watch your bills, question everything, and use your HR department if necessary.

In July we had a dependent on the plan who was referred by her primary care physician for a colonoscopy. The patient here had no symptoms or problems but had reached the age when that procedure is recommended. The colonoscopy was performed later that month and the results were clear except for a mild case of diverticulosis, which requires no treatment. The patient was told to come back in 10 years to repeat the procedure. The UHC benefit for a precautionary endoscopy is 100%.

So imagine the employee's surprise when they received a nearly $300 bill for their 20% of this procedure. They asked for our intervention and I called UHC, who replied that the medical coding had been a "diagnosis" code, meaning in coding lingo that the procedure had been done because of a diagnosis, not as a precautionary wellness measure. We contacted the doctor's office, who said the medical facility's billing department did the coding. We contacted the medical coding unit who said that was the doctor's notes and so couldn't be changed.

I did something here that I've never done; I emailed the UHC rep, doctor, his nurse, and the facility billing department and said, in essence, "Who made the mistake?" If the coding is right then the doctor is wrong; if the doctor is right then the coding, billing, and insurance are all wrong. I don't anticipate getting a Christmas card from any of them, but finally a patient representative from the hospital called and said that the doctor's notes would be sent through for re-coding and re-billing.

About four months later the employee gets yet another bill for the co-pay. We speak with the medical facility's accounting department and UHC (who was wonderful in this instance), and UHC sent them what they said was their third verification that the patient owed zero balance. I spoke with the Accounting the department with assurance that all was well. Last month the patient received another bill for the co-pay, so this time we faxed the Explanation of Benefits showing no patient responsibility to the Accounting unit.

Over the weekend the employee received another bill for the same amount. Today I called and asked to speak to an Accounting supervisor, only to find that the accounting clerk who received my fax didn't forward it to the Adjustment Office for re-billing, and assures me all will be corrected this month.

At the heart of the problem is the complexity of the tasks vs. the ability of those performing them. Medical Coding is a semi-skilled vocation that really should be a highly skilled vocation. As a field it is trying to professionalize but has a long way to go. Unfortunately, how providers bill is based on this coding , and there's a lot of bad coding being done. Similarly, hospital and independent physician billing is complex and about half of the people doing it aren't up to the job. Finally, you have the insurance carriers who will readily question a strange bill if it costs them more money, but who are all too happy to rely on the coding and billing if it costs them less. In this case, as I said, UHC was very helpful.

Moral of the story? Questions your bills. In this case the employee knew that their plan paid 100% of preventative endoscopy procedures or they would be $300 poorer today.

If you don't like the answer you get, come see your HR department. We can either explain to you what your owe and why, or help you push back on bad coding and billing. Until patients and health plans become active, noisy and even a little belligerent we'll be the little guy victims in a complex system that favors the institutions who designed it.