Are you considering adding an ACO plan?

Employers are warming up to Accountable Care Organizations (ACOs), but is that the right option for your employees? There are already great resources on how ACOs work [i] – and I am not going to recount these details for you here. Instead, I want to help you determine if these types of plans might be a good fit for your employees.

ACOs are a product of the Affordable Care Act (ACA), but they are not completely unfamiliar territory for those of us who have been around a while. HMOs have a rather negative connotation to many of us who were enrolled in them 20-ish years ago, but they are very much an older and less tech savvy model of the ACO. If an ACO is streaming music from the cloud, and HMO is a cassette tape. They may sound alike, but they are fundamentally different.

Service Area Issues

A few important aspects of these plans have changed. Like HMOs, ACOs are specific to a particular service area, as they have to have a hospital network to succeed. So, to the extent possible, you will need to have a carrier knit together your ACO offerings if you have multiple locations, or have a benefits administration system that is smart enough to know who is eligible for which plan (and also reassign eligibility should an employee move service areas).

Cost Savings

The older HMOs relied on restrictions to care to drive costs savings. This added more administrative hassle (to both members and providers) and potentially to inappropriate restrictions for patients whose doctors were not good at documenting their case for the necessity of the care.

As the pendulum swung from the old model of restriction to a newer one of freedom, the new way to help control costs was to make the member foot the first part of the bill to a greater extent than they had to do in years – hence, the birth of the high deductible health plan (HDHP), or consumer driven health plan (CDHP).

Many employers added HDHPs/CDHPs over the last few years – we were looking for any way to help mitigate the rising medical plan trend. The main problem with this approach is that consumers really don’t have any easy ways to understand health care costs, much less become a smart consumer. 

Yes, we were all surprised when we went to the pharmacy in January and had a $300 fee, but that did not necessarily help us become better consumers. Many of us just grumbled under our breath and paid the bill – especially if our employer help us with some seed money in our HSA/HRA (or other savings) accounts.

But what about all of those great consumer tools? Even the best built tools and resources only help for some situations – I am probably not going to search for the lowest cost emergency room when I think I am having a heart attack. Nor do I necessarily understand why one place might charge more than another – maybe the more expensive provider is better quality? How are we to know, when health care quality is not well defined by anyone, much less your employees?

Accountability

For an ACO to work correctly, the accountability shifts from the member in the HDHP back to the provider, but with the technology to make the process (hopefully) much smoother. That sounds great, right? Doctors can help me navigate the system, their nurses will call and check on me when I forget to refill my diabetes medication, and they will help me navigate the complex health care systems.

However, we’ve just spent the last few years telling members that they had to be accountable!? No wonder employees are always confused. It’s like we’ve just told them butter is better than margarine, after years of pushing margarine. We give up!

That said, many of your members may really like the concept of having more savvy advocates for their health care – especially if they have a chronic condition or if most of their providers are already in the narrower network. Since I am a visual person, here’s how I like to think about how ACOs fit on the spectrum:

ACO Graphic

So, where do your employees want to fall on that spectrum?

  • Are they constantly confused about their plan and what is/is not covered? If so, they should move to the left.
  • In control and only asking very detailed questions? Maybe they can venture more to the right.

Savings

Will an ACO save your employer money? I am not sure we really know the answer to that yet. We do know thahave these plans do tend to attract the health (when priced at a lower price point) or those who already frequent the network. More time will help us determine if there are really savings to be had by pushing responsibilities back to providers. Unfortunately, the patient also needs to take accountability, including diet, exercise and medication adherence, Somehow, we can’t figure out how to create a plan that holds everyone accountable. I don’t think PPOs do that well, either.

Network Size

The other factor on this, of course, if the network size – ACOs typically have a significantly smaller network than most PPOs and HDHPs on the market. Let’s hope that some of that changes over time, as ACOs grow their network and integrate providers into their systems. 

For now, that’s another confusing factor in all of this – especially when many providers do not turn someone away when they show up and they are not in the member’s plan. Some even use non-network status this as a strategy and submit excessive bills to employer plans to exploit loopholes in non-network provider coverage. The usual and customary rates they receive are greater than the network price, so they waive any member fees and go after the insurance company with appeals and even lawsuits.

That’s exactly why some more provider accountability sounds so good to me right now, and I think (at least for now) ACOs are an option worth considering for many employers. Even if savings are unknown, increased member satisfaction with a more guided model may be the,right fit for your population, or even for you.

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[i] See the following resources:

Is Google still searching for gender pay equity?

You may have seen that the Department of Labor is going after Google for “extreme” gender pay discrimination. You can read the latest Google response via a blog post here.

So what’s happening and why does this matter?

Keep in mind that tech companies are especially notorious for gender hiring and pay issues. Many articles have addressed the ongoing struggle to keep women in technology-related jobs, and there is even a website/network dedicated to women empowering others in these roles: www.womenintechnology.org

Since the technology field is already dominated by men, it is only natural that there exists a potential for bias, either deliberate or unconscious, against others “not like me,” including gender and race/culture. Google’s own published workforce statistics for their technology jobs support some of this behavior:

Google

Yes, Google’s tech workforce is 81% male and 57% white. That compares to the US averages of 49.2% male and 61.6% non-Hispanic, white in the 2015 data.  Note that the Google ethnicity above shows their tech workforce is 37% Asian, whereas the US average in 2015 is 5.6% Asian, so that is skewing the white percentages down quite a bit.

So why does this matter? Can’t Google hire who they want and pay their employees what they want?

Well, no, they cannot. Google is a Federal contractor, so they are subject to the pay practice rules of the OFCCP (Office of Federal Contract Compliance Programs), which requires Federal contractors “take affirmative action to ensure that applicants are hired and employees are treated during employment without regard to race, creed, color or national origin.” Gender was added in 1967, but apparently it takes more than 50 years to get the task accomplished!

It also matters because Google is a household name – it is even the verb we use for searching for something online! So, Google should know that they are a huge target for any compliance concern. They should be preemptively monitoring their HR practices and procedures for any potential issue, but apparently they were behind on that front.

The initial charge from the OFCCP/Department of Labor was for gender pay discrimination from 2014 to 2015, and the suit was filed in court in 2016. Note that in the Google blog post cited above they note “In late 2016, we performed our most recent analysis across 52 different, major job categories, and found no gender pay gap.” Is that too late? What about 2015 data? Looks like they still have a legal issue from that time frame.

I do appreciate that Google has published their compensation process online here: https://rework.withgoogle.com/guides/pay-equity/steps/introduction/. This is a valuable resource for other employers to use in their own compensation strategies. The blog post also notes that Google “recently expanded the analysis to cover race in the US.” That makes me cringe, because they actually should have been considering race before they were required to consider gender in pay equity issues, according to the OFCCP rules.

Lessons Learned

There are some lessons for all HR/Compensation managers from all of this:

  • Have a compensation philosophy and use it as your mantra
  • Define your jobs/requirements and classify them accordingly
  • Stick to your structure and try to prevent outliers
  • Assess your overall data at least annually and make adjustments where needed
  • Push back on hiring managers when you see bias in hiring/compensation decisions, where appropriate

These are not easy steps for HR – we are often already considered the bureaucracy/red tape. However, this is one front that is worth pushing back on and your legal team will thank you when you can defend your decisions in court (and can back them up with the statistical data as evidence).

 

 

Can we have an adult conversation about health care reform?

This video is about a week old, but I just found it today:

If you have the patience to watch it, John Green of the vlogbrothers (and an author of teen fiction) sums up the issues facing us with health care reform in about seven minutes. It is a bit like watching a whirling dervish, but they clearly researched the issues and have a handle on some of the trade-offs at stake.

It’s worth a watch, if only to see it all explained rather succinctly!

Will your older employees EVER retire?

According to a new Career Builder survey conducted by Harris Poll, they don’t plan to do so any time soon. One of the main reasons, according to the survey team, is financial uncertainty.

According to the survey results, “one third of workers ages 60+ (34 percent) say they aren’t sure how much they’ll need to save in order to retire.” These are employees typically within 5 year of retirement, and they don’t even know if they are near or far from being able to do so. That’s a problem not only for your employees, but also for employers who now have a large chunk of older workers who are probably ready to go, but not financially able to do so. Your employee engagement and productivity may be headed downhill.

The survey found that “when asked if they’re currently contributing to retirement accounts, more than 1 in 4 (26 percent) workers 55+1 said they do not participate in a 401(k), IRA or other retirement plan.” My guess is that if the employee is not participating, then neither is the employer; meaning, these people probably have little to no savings for retirement.

What’s worse, based on the survey results, “30 percent of U.S. workers ages 60 and older plan to retire at age 70 or older. Another 20 percent don’t believe they will ever be able to retire.” That’s 50% of workers age 60+ who plan to stick around for an additional ten years or longer!

What if those employees have health issues and/or are not fully engaged? What if they become disabled and cannot work, or insist on trying to work while not at 100%?

This seems like a looming HR crisis. How can we educate employees to save? The “head-in-the-sand” approach that seems to be prevalent with older employees is a huge disservice to themselves (and you).

Consider looking at your contribution data and specifically check on your age 50+ population. Are they currently saving? Are their savings on-track? What resources do you have to help educate them about what they need to do today to retire when they are ready?

Please take the time and effort to address this issue before it becomes a crisis for your HR department (and your employees!). They will thank you for it!

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1 CareerBuilder commissioned study of 3,411 employees ages 18 and over (employed full-time, not self-employed, non-government) between November 16 and December 6, 2016, of which 971 are ages 55+.

Does telehealth actually increase employer costs?

A recent research paper in Health Affairs noted that “12 percent of direct-to-consumer telehealth visits replaced visits to other providers, and 88 percent represented new utilization” — meaning that 88% of the people who used telemedicine for acute respiratory illnesses probably would not have otherwise gone to the doctor. This increased the plan costs by $45 per telehealth user.

So, let’s back up a bit here. What is telehealth? Telehealth connects a patient with a provider using technology – this can be a phone call, an online chat or a video conference to conduct what would otherwise be a normal office visit, and can only be used for certain ailments. The thought is that this convenience will allow members to easily access car for certain conditions (especially if in a remote location) at a fraction of the cost. However, don’t expect to use telehealth for a broken arm or chest pain – go to the emergency room, instead.

There are some key things to take away from this study, but don’t drop your telehealth benefits yet!

First, while the study had a large sample and covered several years of claims, it did only analyze one diagnosis: respiratory illness. So, it is really limited in its applicability to assessing the costs for all telemedicine visits.

Next, keep in mind that some of the “new utilization” generated may have actually prevented larger claims down the road. Some of those patients who would have otherwise skipped a traditional office visit may have developed pneumonia or other more complicated and expensive illnesses as a result of the lack of care without telemedicine.

Monitoring your telemedicine utilization and expense is definitely something to keep an eye on; and if you are an employer who has access to claims data, you might want to investigate claims activity before and after introducing telemedicine (if possible).

Lastly, remember that not all benefits like this are in place to reduce costs. Providing a benefit that makes care convenient can be valuable to your employees! So, take these evaluations with a grain of salt and step back and remember why you introduced them in the first place. My guess is that even if your population uses this benefit a bit more, the additional $45 per utilizing member is probably worth the expense, given your total health care spend.

What do people want from health care reform?

According to a new JAMA Infographic, most people want lower out of pocket costs from their health plan. That is hardly surprising given the prevalence of cost shifting that has occurred by most employers in recent years. How that will happen, though, is not an easy fix for both employers and ACA plans.

Lowering pharmacy costs are also universally important to those surveyed. This is also probably due to the higher deductibles that people now experience and the transparency of these often very high costs now that co-payments are less prevalent. People now understand just how expensive pharmacy benefits are – except for those using specialty medications. I am sure many of these users are still sheltered for the full costs of these drugs. Manufacturer coupons are also not helping with this issue.

These data also confirm that the ACA now has a more positive image than in months past – maybe because the threat of it going away has made it more valuable to those who benefit from it (including those in employer-based plans who have benefited from richer benefits and broader coverage, even with the associated increased costs).

As you can imagine, the amount of Federal funding going toward assistance for lower income individuals is clearly divided along party lines. This is also the case around the Federal government’s involvement in health care, in general.

The main issue for legislators is that only 19% of those polled want the ACA repealed without a replacement in hand. That’s too small, even considering any margin of error, for congress to consider this as a viable option (at least without further push-back from constituents).

Click the link above to see more. Good insights into how your employees may feel about their plan, as well…

AHCA Pulled

Well, the big plan to replace the Affordable Care Act (ACA) did not happen, so what is an employer to do?

The good news is that you are (hopefully!) already doing it. Keep on keeping on!

The bad news is that all of that relief you were seeking from the AHCA is now gone, so we need to continue onward with the ACA for now.

First, keep up with your reporting and all other ACA requirements. I know the IRS does not require individuals to report their insurance coverage on their tax forms anymore, but you are still required to report to individuals and submit your federal filing on time.

Next, think ahead. The dreaded “Cadillac Tax” is still looming large in 2020. That means that the 40% excise tax for more generous medical benefits is still out there, and you should probably be planning toward falling under the limits in 2020.

What does that mean? Right now we are not so sure. We do know that the prior limits that were originally set to go live in 2018 will be indexed for the future implementation dates. However, we don’t yet know exactly what they will be. The 2018 limits were $10,200 for individual coverage, and $27,500 for family coverage, so using those numbers are the best bet for now.

We were also promised some relief to adverse selection including some allowance for an older/sicker workforce. That sounds like a step in the right direction, but still makes planning for 2020 difficult, at best.

My guess is that the 2020 implementation will be further delayed, as we debate the ongoing ACA (or any replacement) and how we pay for these now entitled benefits. Employers need to stay on top of compliance issues, and not bury heads in the sand. The year 2020 will be here sooner than any of us want.

Stay tuned and thanks for reading.