Friday, October 24, 2014

AonHewitt: 25% of employers have yet to evaluate impact of ACA "Cadillac" plan tax

A quarter of employers said that they still have not determined the impact of the Patient Protection and Affordable Care Act’s (ACA) excise tax on high cost or "Cadillac" health plans, according to recent research from AonHewitt. In addition, more than one-third of employers reported that their executive leadership and finance teams have limited or no knowledge of the implications of the tax for their organizations.

Excise tax. In 2018, the ACA will impose a 40 percent excise tax on employer-sponsored health coverage that exceeds a threshold amount. Plans with this level of coverage have been dubbed “Cadillac” health plans. The tax will be imposed with respect to coverage for a tax period if: (1) an employee is covered under an applicable employer-sponsored plan; and (2) there is any “excess benefit” with respect to the coverage. An excess benefit is defined as the sum of the monthly excess amounts during a tax period. A monthly excess amount is the excess of: (a) the aggregate cost of the applicable employer-sponsored coverage of the employee for the month, over (b) an amount equal to 1/12 of the annual limitation for the calendar year in which the month occurs.

Majority taking steps to minimize exposure. Aon Hewitt did find that while a quarter of organizations have not assessed the impact of the excise tax on their health plans, the majority of companies are taking steps to minimize their exposure to the tax. The survey noted that 40 percent of employers expect the excise tax to affect at least one of their current health plans in 2018 and 14 percent expect it to immediately impact the majority of their current health benefit plans.

Of those employers that have determined the excise tax’s impact, 62 percent said they are making significant changes to their health plans for 2015, including reducing the richness of their plan designs; increasing the use of wellness incentives; evaluating private exchange options for retirees (both pre- and post-age 65); and reducing spousal subsidies through mandates or surcharges.

“While the excise tax provision of the ACA doesn’t go into effect until 2018, it is accelerating the pace of change for U.S. employers,” noted Jim Winkler, chief innovation officer for Aon Hewitt's Health business. “Over the next few years, employers expect to use both traditional and innovative tactics to make substantive changes to their health plans to minimize their exposure to the tax and put them on a path to lower rates of health care cost increases.”

Wednesday, October 22, 2014

ACA compliance: ADP describes challenges for mid-size businesses

Mid-sized businesses, those with 50-999 employees, are experiencing a gap in confidence when it comes to the U.S. economy, with the cost of health coverage, the large number of government regulations, and the complexities of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) ranking among their top three concerns. These results stem from a new study released by ADP. More specifically, 69% of midsized business owners and executives are concerned with health coverage costs, along with costs of other benefits, 54% are concerned with the ACA specifically, and 51% are concerned with the level and volume of government regulations.

ADA says these  mid-sized business owners contribute more than one third of all U.S. jobs and represent nearly one-third of private sector U.S. gross domestic product.

No clarity on ACA. Unfortunately, it appears from the study that many mid-sized businesses are out of touch with not only management of ACA issues, but economic consequences of non-compliance with various laws and regulations. Even though the constitutionality of the ACA has been upheld by the U.S. Supreme Court and many of its provisions have been implemented, more than half of midsized businesses in the ADP study said they still have no plans in place to manage it.

In addition, more than one-third of businesses in the study reported that they had been fined or penalized for the failure to comply with laws regarding workforce management, but 58% of those did not know how much the fines cost. Also, 47% did not know how many times they had been fined. Neither result bodes well for businesses that may be facing the imposition of the ACA’s employer mandate penalty.

ADP adds that, while concern about the ACA has dropped slightly since 2013 among mid-sized businesses, less than a quarter of them say they are confident that they have the necessary tools and information for making decisions about the best health and benefits strategies for their companies. Furthermore, more than three quarters of mid-sized business owners reported lacking confidence that their organizations understand all of the ACA’s new regulations.

Strategies among mid-sized businesses for managing ACA compliance include outsourcing benefits administration (7%), putting together a plan to control or lower the cost of employees’ health insurance (56%), reducing the number of plans offered to employees (33%), and offering wellness programs (46%).


Monday, October 20, 2014

What's “reasonable” for reference-based pricing is clarified by IRS, HHS, and Labor Department

The Departments of Labor, Health and Human Services and the Treasury have issued guidance setting forth factors that they will consider when determining if a non-grandfathered group health plan has met its obligations under PHS Act Sec. 2707(b). This latest in a series of frequently-asked questions (FAQs) addresses obligations with regard to reference-based pricing. Under reference-based pricing, a plan pays only a fixed amount for a particular procedure, which certain providers then accept as payment in full.

Reference-based pricing must stay within MOOP costs. PHS Act 2707(b), as added by the ACA, provides that annual cost-sharing imposed by a non-grandfathered group health plan may not exceed the limitations under ACA(c)(1), which limits enrollees’ out-of-pocket costs. The maximum out-of-pocket (MOOP) costs for plan or policy years beginning in 2015 is $6,600 for self-only coverage, and $13,200 for other coverage.

Previously, the Departments have expressed concerns that reference-based pricing, designed to encourage plans to negotiate treatments with high-quality providers at reduced costs, could be a subterfuge for the imposition of otherwise prohibited limitations on coverage, without ensuring access to quality care and an adequate network of providers. Therefore, they clarified that reference-based pricing would not cause a plan to run afoul of PHS Act Sec. 2707(b) MOOP provisions as long as the plan uses a reasonable method to ensure that it offers adequate access to quality providers.

What is a reasonable method? The Departments have stated that they will consider all facts and circumstances when determining if a plan is ensuring adequate access to quality providers at a reference price. Such facts and circumstances include the following:

Type of service. If a plan treats providers that accept the reference amount as the only in-network providers, the reference-based pricing should apply only to services for which the time between the discovery of the need for care and the provision of care lets a consumer make an informed choice with regard to their provider. Also, for emergency services, it will not be considered reasonable to limit or exclude a plan’s cost-sharing from counting toward the MOOP with respect to providers who do not accept the reference-based price.

Reasonable access. Plans should ensure that an adequate number of providers accepting a reference price are available to participants and beneficiaries.

Quality standards. The providers accepting the reference price should meet reasonable quality standards.

Exceptions process. This should be easily accessible, and services rendered by providers that do not accept the reference price should be treated by the plan as if they were administered by a provider that did accept the reference price if: (a) access is unavailable to a provider that accepts the reference price or (b) quality could be compromised with the reference price provider.

Disclosure. A fee may not be charged for the following disclosures: (1) information on pricing structure, which should be provided automatically; and (b) upon request, a list of providers accepting the reference price, a list of providers accepting a negotiated price above the reference price, and information on the process and underlying data that ensure quality standards are met by the providers accepting the reference price.