The Biggest Impediment to Healthcare Price Transparency?

Gag Clauses masquerading as trade secrets.

The Uniform Trade Secrets Act suggests that to qualify as a trade secret, the secret information must provide a competitive advantage to its owners. While concealing negotiated price information could, in certain circumstances, provide a payer or a provider with a competitive advantage (for example, because the negotiated prices are lower than the competition’s and could enable the payer or provider to gain additional market share), the majority of that practice today is nothing more than rent-seeking behavior.

However, the trade secrets claim is asserted to prevent any communication of provider prices to health plan members or any other third party. Some payers are forbidden to use pricing information in any way that could potentially lead to patients voting with their feet, which is the exact goal of price transparency.

In other words, these clauses are nothing more than gag clauses designed specifically to counter the movement toward greater price transparency.

Some states, such as Maine, are countering by adopting new legislation, known as “right to shop laws” that compels all health plans to provide price transparency to certain categories of its members. Others can follow suit. More broadly, Congress could investigate the abuse of the Uniform Trade Secrets Act to forcefully prevent transparency and stifle market competition.

Source: Health Affairs, April 19, 2018

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• In economics, “Rent-seeking” is an attempt to maximize economic return by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth.

• A “Gag Clause” is a provision often included in a physician’s contract with insurers, preventing he/she from being open with his patients about the terms of the patient’s payment and specific procedure costs. 

$280K Is What a Couple Retiring This Year Will Need to Cover Health Care

• Fidelity says the cost breaks out to $133,000 for men and $147,000 for women, primarily because of their expected longer lifespans.
• “Covering health care costs remains one of the most significant, yet unpredictable, aspects of retirement planning,” says Shams Talib, executive vice president and head of Fidelity Benefits Consulting. “It’s important for individuals to educate themselves and take steps while working to ensure they are prepared to address these costs.”
• Fidelity says that its estimate is based on a couple retiring at age 65. However, for those who retire earlier, the costs will be higher. 

Source: April 19, 2018 Plansponsor.com. 

  

California Seeks to Reduce Healthcare Prices with Provider Rate Caps

Let the fireworks begin.  This will get incredibly heated. From California Healthline:  

Backed by labor and consumer groups, a California lawmaker unveiled a proposal Monday calling for the state to set health care prices in the commercial insurance market. 

Supporters of the legislation, called the Health Care Price Relief Act, say California has made major strides in expanding health insurance coverage, but recent changes haven’t addressed the cost increases squeezing too many families. 

To remedy this, Assembly Bill 3087 calls for an independent, nine-member state commission to set health care reimbursements for hospitals, doctors and other providers in the private-insurance market serving employers and individuals. 

The bill faces formidable opposition from physician groups and hospitals. 

“No state in America has ever attempted such an unproven policy of inflexible, government-managed price caps across every health care service,” Ted Mazer, president of the California Medical Association, said in a statement. 

At a press conference Monday, Assembly member Ash Kalra (D-San Jose) and other sponsors of the bill said the commission would use Medicare reimbursements as a benchmark and then factor in providers’ operating costs, geography and a reasonable amount of profit to establish rates. More details on the legislation are expected during committee hearings.

   

Yet Another Study Finds that Wellness Programs Do not yield Any Company Savings or Produce Healthier Employees

From HR Executive: 

The belief that some workplace wellness programs are worth the money hit a snag recently when researchers at University of Illinois at Urbana-Champaign released a study that found such programs show “limited evidence” that they actually work. 

According to the researchers, such programs cover more than 50-million workers and are intended to reduce medical spending, increase productivity and improve well-being, but they found workplace-health programs such as health or fitness assessments, weight-control programs or disease-management classes, among others, don’t result in happier, healthier employees, medical cost reduction, lower absenteeism or higher productivity. 

The trio of researchers—Damon Jones of the University of Chicago, and David Molitor and Julian Reif of the University of Illinois at Urbana-Champaign—created and deployed a comprehensive workplace wellness program study for a large employer, the University of Illinois. Employees were randomly assigned program eligibility and financial incentives individually. All told, about 5,000 (56 percent) of eligible employees participated. 

Essentially, the study found zero benefits from this specific workplace wellness program in its first year. Health costs, sick days, productivity and even gym visits remained static. According to Reif, assistant professor of finance and economics at the University of Illinois Urbana-Champaign, the research sought to determine the causal impact of the program on health and employment outcomes. While 39 outcomes showed no improvement, two were positive: Workers who joined the wellness program did become likelier to be screened for health issues, and they thought their employer put a high priority on employee health. ...

The People vs. Sutter: 1,500 Health Plans File a Class Action vs. Sutter For Systematic Overcharging and Anticompetitive Action

From the Sacramento News and Review: 

Attorney Richard Grossman represents a group of 1,500 health plans in a class-action suit against Sacramento-based Sutter Health, alleging that the industry giant has been illegally overcharging patients for more than a decade. The case is being closely watched by policymakers across the country as hospital consolidation increases and prices continue to rise. Last November, it was discovered that Sutter destroyed 10 years of records after the lawsuit was filed. SN&R publisher Jeff vonKaenel visited Grossman in his San Francisco office for an interview. 

What is significant about this lawsuit?
This case is extraordinarily important, because it’s a documented fact that the cost of hospital health care in Northern California exceeds the cost for the same health care in Southern California by 30 to 40 percent. When I learned that that was the case and examined what was likely to be behind it, I determined that there is no explanation for that kind of price disparity other than anti-competitive behavior that restrains price competition here and allows hospital providers to increase their prices without discipline. The discipline that we all accept and rely upon to keep prices low and quality high. And that’s competition in our marketplace. 

Without that competition, there is no reason for competitors to keep their prices at the lowest possible rates and no reason for them to increase their quality. With competition, they have tremendous incentive to do what our economic system requires, which is provide the best quality at the lowest possible price and, if you fail to do so, you do so at your peril. 

Who are you representing in this case?
As of last August, I represent all self-funded health plans—employers that pay for the health care of their employees directly without purchasing insurance to cover those costs. That’s how half of the individuals in Northern California—for that matter, across the country—obtain their health care coverage. 

What are you alleging in the lawsuit that Sutter did to allow their health care costs to go up 30 to 40 percent?
Sutter’s anti-competitive conduct is extremely treacherous. What they did was they entered into anti-competitive and illegal contracts with all of the major health insurance companies that provide health care coverage in Northern California. And those contracts require the following: One, that if you utilize one Sutter Health provider, one of their hospitals or one of their medical practices across the state, you must utilize all of them in your network. And if you fail to do that, you will pay a huge pricing penalty.

The full interview is absolutely worth reading and can be found here. 

Employer Could Be In Hot Water After Commenting That Healthcare Costs are "Skyrocketing" After Paying for a Plan Dependent's $250K Claim

From Seyfarth Shaw:  

... Plaintiff’s son, who suffers from a permanent and debilitating neurological condition, was hospitalized for four months in 2013. As an employee of Atlas Industries, Inc., plaintiff participated in a group medical plan that covered his son’s medical expenses. Atlas’s plan was partially self-insured, and the company paid approximately $250,000 for the son’s care. 

Seven months later, plaintiff did not call Atlas or report to work for three consecutive days after he had been released to work following a medical leave. Atlas’s handbook provided that any employee absent for three consecutive days without permission would be automatically fired. After plaintiff’s third no-call/no-show day, his supervisor fired him. 

Plaintiff sued, alleging that the company had fired him because of his son’s medical expenses, and thus that the company was liable for both retaliation and interference under ERISA. In support, plaintiff pointed to evidence that (1) Atlas had expressed concerns about “skyrocket[ing]” medical costs in employee notices; (2) an Atlas Vice President had told him in 2013 that he hoped his son would be released soon because the medical costs were getting expensive for the company; and (3) an Atlas human resources director showed another employee the son’s medical expenses and said that large payments were causing the company’s health insurance costs to rise. 

While the district court entered summary judgment for Atlas, the Sixth Circuit reversed, finding that there was enough evidence of interference or retaliation to deny summary judgment. Specifically, while the supervisor who fired plaintiff did not know about the son’s medical expenses, the Sixth Circuit found significant that the Vice President and director who commented about medical expenses played a role in the decision. Also, plaintiff contended that Atlas had tried to contact other employees before firing them under the no-call/no-show policy, but did not do the same for him. ...

 

IRS Allows Taxpayers with Family Coverage to Use $6,900 HSA Limit for 2018

On April 26, 2018, the IRS announced that, for 2018, taxpayers with family high deductible health plan (HDHP) coverage may treat $6,900 as the annual contribution limit to their health savings accounts (HSAs).

Earlier this year, a tax law change for 2018 reduced the HSA contribution limit for individuals with family HDHP coverage from $6,900 to $6,850. After this change was announced, the IRS received complaints that the $50 reduction would be difficult and costly to implement.

The IRS has now decided to allow taxpayers with family HDHP coverage to use the original $6,900 limit for HSA contributions for 2018, without facing excess contribution penalties.

Action Items

Employers with HDHPs may want to inform their employees about the HSA contribution limit change for family HDHP coverage. Employees who changed their HSA elections to comply with the reduced limit may wish to change their elections again for the $6,900 limit.

A Great Look at How Healthcare Spending Has Changed over the Decade

From Benefits Pro:  

... Health care costs have increased in the economy at a much higher rate than anything else, concurrent with an increase in demand for health services driven by the health care system itself. 

In 1982, the average consumer went to the doctor 1.8 times per year; by 2015, that number had increased to 5.5 times per year per average consumer.  Frequency and volume of patient visits has risen with the acquisition of most primary care practices and specialists by large health care systems who own hospitals.  Providers within hospital-owned health care systems are encouraged to “churn” patients, meaning refer to other specialty providers within the health care organizations to drive more billings and revenue. A lack of transparency has made it easy for high health care costs to be hidden, with the justification that “it doesn’t harm the employee, because once they meet their deductible and out-of-pocket limit, it all be covered for them.”  Who hasn’t heard that comment when they question a health care bill? 

Today, the average employee health plan deductible has increased to $1,500, while the out-of-pocket max for individuals exceeds $6,000. At the same time, wages have remained relatively flat, so more and more of today’s wage earners’ paychecks are going to pay health care expenses. In 2017, health care expenses accounted for 17.9 percent of GDP. 

Concerned employers who see these costs continuing to rise are looking for new ways to address and attack the issues, and the good news is that solutions do exist. 

Rising RX costs add to the problem.  Pharmacy costs have grown from less than 10 percent of employer health care spend to more than 20 percent of claims today.  Much of the increased RX spend comes from higher cost specialty drugs being marketed and priced to maximize profits for the pharmacy industry and those receiving rebates. 

Concurrently, insurance companies drive profits by creating formularies based on maximizing drug rebates pharmacy manufacturers pay them, rather than pushing formularies based on lowest costs for employees and employers. ... 

Getting PAID – A New Path for Employers to Address Federal Wage and Hour Violations

From Employee Benefit News: 

It is a dilemma that many employers have faced. You discover that your company violated federal law on minimum wage or overtime payments. You want to fix the problem, but you do not know how to do so without prompting employee demand letters, a Department of Labor audit or, perhaps worst, a class action lawsuit. The Department of Labor’s Wage and Hour Division (WHD) has set out to provide employers a way to quickly resolve these issues and avoid litigation…potentially.

The WHD recently announced a new nationwide pilot program called the Payroll Audit Independent Determination (PAID) program. This new program aims to facilitate timely resolution of potential overtime and minimum wage violations under federal law without litigation and to improve employers’ compliance with wage and hour laws.

While full details of the PAID program have yet to be rolled out, the basic premise is as follows:

• employer reviews WHD compliance materials;
• employer conducts an audit of its compensation practices and identifies non-compliant policies or potential claims it would like to proactively resolve;
• employer calculates the amount of back wages it believes are owed to affected employees;
• employer contacts WHD and submits its calculations and all required documents. These include, among other items, an explanation of the scope of the potential violations and a certification that the employer is not litigating the compensation practices at issue in court, arbitration, or otherwise;
• WHD evaluates the information and confirms the back wages;
• WHD issues a summary of unpaid wages and forms describing the settlement terms for each employee, which employees may sign to receive payment; and
• employer issues prompt payment.

A chief benefit of the PAID program is that employers who self-report and cooperate with WHD to remedy violations will not be required to pay liquidated damages or civil monetary penalties. They will also avoid the costs of litigation for all employees who accept the payment and sign a release. ...

IRS Addresses Male Sterilization and Male Contraceptive Benefits and HSA Eligibility

From Thompson Reuters:

The Internal Revenue Service (IRS) has issued Notice 2018-12, which provides that health plans that offer benefits for male sterilization or male contraceptives without a deductible (or with a deductible below the minimum annual deductible for high deductible health plans (HDHPs) under the rules for health savings accounts (HSAs)) do not qualify as HDHPs. The notice includes transition relief until 2020 for individuals enrolled in plans that do not qualify as HDHPs under this guidance. ... 

Notice 2018-12 

In Notice 2018-12, the IRS takes the position that benefits for male sterilization and male contraceptives are not preventive care under Code Section 223. As a result, a health plan that provides benefits for male sterilization and contraceptives without satisfying the minimum deductibles for HDHPs under the Code's HSA rules is not an HDHP. These requirements apply regardless of whether coverage of such benefits is required by state law.
An individual who is not covered by an HDHP for a month is not an eligible individual under the HSA rules and may not, as a result, deduct HSA contributions for that month. In addition, HSA contributions made by an employer on behalf of such an individual are not excludible from income and wages. ....

 

Patients Overpay For Prescriptions 23% Of The Time, Analysis Shows

From Kaiser Health News: 

As a health economist, Karen Van Nuys had heard that it’s sometimes cheaper to pay cash at the pharmacy counter than to put down your insurance card and pay a copay. 

So one day, she asked her pharmacist how much her prescription would cost if she didn’t use her health coverage and paid cash. 

“And sure enough, it was [several dollars] below my copay,” Van Nuys said. 

Van Nuys and her colleagues at the University of Southern California Schaeffer Center for Health Policy & Economics decided to launch a first-of-its-kind study to see how often this happens. They found that customers overpaid for their prescriptions 23 percent of the time, with an average overpayment of $7.69 on those transactions. 

The USC study, released Tuesday, analyzed the prices that 1.6 million people paid for 9.5 million prescriptions in the first half of 2013, based on data from Optum Clinformatics, an organization that sells anonymized claims data for analysis, and National Average Retail Price (NARP) data, which contained drug prices paid by insurers and was based on a national survey of pharmacists. 

It showed that the overpayments totaled $135 million during that six-month period. 

The practice of charging a copay that is higher than the full cost of a drug is called a “clawback” because the middlemen that handle drug claims for insurance companies essentially “claw back” the extra dollars from the pharmacy. (The middlemen, known as pharmacy benefit managers, include Express Scripts, CVS Caremark and OptumRx. Express Scripts and CVS Caremark say they don’t use clawbacks. OptumRx declined immediately to comment.) 

Here’s how it works: After taking your insurance card, your pharmacist says you owe a $10 copay, which you pay, assuming that the drug costs more than $10 and your insurance is covering the rest. But unbeknownst to you, the drug actually cost only $7, and the PBM claws back the extra $3. Had you paid out-of-pocket, you would have gotten a better deal. ... 

Client Question: Can Medicare File 3-Year Old Claims Against Our Plan?

Question: Our company’s group medical plan has a 12-month time limit for filing claims. We received a notice from Medicare and it looks like they want to file claims with our plan that are three years old. Is that allowed?

Answer: Medicare does not submit claims to group medical plans, but they do make demands for reimbursement to correct errors. This usually happens in dual coverage situations, which means that the individual is covered under both the employer’s group plan and Medicare. Federal law then determines which plan must pay first. Generally, the employer’s plan pays first on claims by active employees (and spouses) if the employer’s total workforce size is 100 employees or more. On the other hand, Medicare is the primary payer if the employer has fewer than 20 employees or, regardless of the employer’s size, if the claim is for a retiree or retiree’s spouse. (Further rules apply to employers with 20 – 99 workers, and to special cases involving people with end-stage renal disease.)

To identify potential dual coverage situations, insurers and administrators report group plan enrollment information to the Centers for Medicare and Medicaid Services (CMS). Not all cases are identified in advance, though, and occasionally Medicare pays claims that should have been paid by the group plan. CMS then contacts the employer or insurer to collect information on specific claimants and find possible Medicare overpayments.

CMS usually is looking for information on persons for whom Medicare has already paid claims, which may have been several years ago. Receiving an inquiry now regarding claims paid three years ago is not unusual.