Employers are playing out the conflicts produced by using big sticks versus carrots to encourage employees on their health plan to make important lifestyle changes. The experience of one such company, Clarian Health Partners in Indianapolis, Indiana, was featured in the Chicago Tribune this week. This employer and others often find the animosity created by the stick builds a barrier to accomplishing the very goal they set out to reach. Clarion switched from a stick to a carrot and is now rewarding positive health indicators, such as normal blood pressure and cholesterol levels, by providing $30 in the paycheck and has 95% voluntary program participation.
MedBen works with employers throughout the Midwest to design wellness initiatives that are linked to the employer’s health plan in a way that promotes an employee-employer partnership. Regardless of the approach, however, employee communication is key and should be done well in advance, repeated often and should always include the reasons why the employer is putting the initiatives in place. See story, www.chicagotribune.com/business/chi-sun_health_0210feb10,0,1758041.story
Individuals with diabetes incur health care costs that are 2.3 times higher than those without the disease, according to a recent American Diabetes Association report. Further, the cost of diabetes has increased significantly over the last several years, totalling $174 billion annually:
“The findings suggest that out of the $174 billion, $116 billion is spent on medical expenditures and $58 billion in reduced national productivity, such as work-related absenteeism, reduced productivity at work and at home, unemployment form chronic disability and premature mortality.
The largest cost for care under medical expenditures includes:
- Hospital impatient care (50% of cost);
- Diabetes medication and supplies (12%);
- Retail prescriptions to treat diabetes complications (11%); and
- Physician costs (9%).”
A summary of the report is available from the America’s Health Insurance Plans (AHIP) here.
The full report is available here.
In case you missed it, this year’s flu shot missed the mark. The Wall Street Journal health blog has the story here.
“This year, the CDC said it has found that most so–called influenza B viruses that are running around the country aren’t fazed by the current edition of the flu vaccine. That’s because two of three components in the vaccine were aiming for the wrong target.”
For the eighth consecutive year, MedBen has no findings from their annual SAS 70 Type II Audit.
SAS 70 is short for “Statement on Auditing Standards No. 70: Service Organizations”, and defines the standards an auditor uses to measure a company’s internal controls – the safeguards it has put in place to ensure policies and procedures are followed. A SAS 70 Type I service auditor’s report assesses if the company’s description of these controls accurately reflects the safeguards actually used and whether they are suitable to meet control objectives. A Type II service auditor’s report goes one step further, including with Type I information the auditor’s opinion as to the operating effectiveness of the controls during the period under review.
The Sarbanes-Oxley Act of 2002 requires public company boards and management to undergo an annual Type II audit. As a privately held company, Sarbanes-Oxley rules do not apply to MedBen. However, we voluntarily submit to SAS 70 audits in order to establish and maintain our claims processing standards.
The SAS 70 Type II Audit is only one of the ways MedBen upholds claims accuracy. Our dedicated software performs over 300 “auto checks” on every claim, flagging any inconsistencies and errors. And internal staff members review 5% of each examiner’s claims everyday.
Clients and brokers can download a copy from the password-protected “Plan Design” blog tab above (simply click on the regulatory tab). Registering is easy.
HCC Life Insurance Company has profiled MedBen’s Advanced Warning and Containment (AWAC) initiative in their January, 2008 newsletter. The HCC Voice does a nice job of summarizing AWAC’s offerings.
The Wall Street Journal reports on the recent Chantix advisory issued by the FDA.
Expect health care costs to rise by an average of 6%, says Towers Perrin in their 2008 Health Care Cost Survey (available here). Most of MedBen’s stop-loss carriers are using a 13%-15% trend and MedBen Mutual is using a 15.5% medical trend.
While Towers Perrin’s increase may seem small, they also start from a much higher cost level. Their 2008 projected average – $9,144 for health care costs – is derived from a “premium equivalent” but would translate to between $7,500 and $8,300 in medical and prescription claim costs, depending on administrative costs.
MedBen’s self-funded block averaged $7,498 in medical and prescription costs in 2007, up 11% from 2006.
“How do we increase our value to our clients this year?” As a benefits company devoted to quality, we continually question how we can perform better, provide more and cost less. We want to deliver to each of our clients a level of service - competitively priced - that is available from no other administrator or insurer … no matter which one or how big. Period. Our focus is on making our clients love how smoothly their plan works and how satisfied their employees are while we find cutting-edge ways to reduce the claim expense that comprises on average about 90% of total plan costs. We want you to see that you’ve never gotten so much service and expertise for that 4%, on average, we cost you.
MedBen’s approach brought about some big client success stories in 2007. One such story is a large health care system that saved $2 million in annual claims cost in their first year with MedBen. These savings came through targeted plan design changes and aggressive claims control, coupled with the introduction of two MedBen consumer-driven products, the Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA). A government employer showed how cost savings could be sustained with this same FSA/HRA combination by experiencing claims expenses reduction for the fourth consecutive year. Total savings for this 100-life employer has topped $1 million. These are just two examples of real claims savings produced this past year. In fact, the majority of our clients with a consumer-driven product were below the national average employee health care cost of $7,861.
The Wall Street Journal Health Blog clues us in on the simple things in life: How to increase your chances of surviving a fall from 47 stories and how to live an extra 14 years - separately, of course. Here is the article.
Auto suppliers are among the leading industries exploring worksite wellness options for their associates. MedBen Vice President Cindy Steen recently met with several Midwest auto supplier groups for Honda of America to discuss ways to make their worksite wellness programs most successful. Among the points emphasized was the importance of linking wellness initiatives to your Health Plan.
“We see more employers directly tying wellness program participation to specific health benefits,” Steen said, sharing the six most common qualifying wellness activities for such designated health benefits:
Steen went on to explain how employers typically use several qualifying activities as opposed to just one. “Some employers will include a discretionary activity that the employee can select based on the results of their Health Risk Assessment. In these cases, the activity must meet with the approval of a physician or other representative of their worksite wellness program,” she explained. “This approach allows the participant to focus some attention on a personal health goal and yet be rewarded for their efforts.”
Discussion with the auto suppliers also included the types of benefit rewards employers are providing for achievement of specified wellness activities, such as: enhanced benefits, reduced co-pays, reduced employee contributions and the distribution of health benefit dollars into a health reimbursement arrangement, or other health savings account.
Steen cautioned that whenever self-funded employers link health benefits to wellness, they must be mindful of the HIPAA wellness rules. “Employers should always make sure that they design their program so everyone can participate or that they offer a reasonable alternative or the opportunity to use a medical waiver,” she said.
MedBen is planning more wellness conferences in 2008. If you are interested in being placed on the mailing list, just e-mail firstname.lastname@example.org.
Happy holidays to MedBen clients, brokers, consultants and vendors. Please note our holiday hours here.
The Houston Chronicle’s business section recently included a good overview of the differences between Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). The article can be found here.
MedBen tends to recommend HRAs more often to our partially self-funded clients because of the flexibility of HRAs over HSAs – although we administer both types of programs.
As The Chronicle article notes:
“The main difference involves who keeps money earmarked for health care but not spent. It’s the employee under HSAs, the company under HRAs.
HRAs emerged as a way to help cover deductibles — the money patients have to spend before an insurance plan kicks in. As employers wrangled with rising health care costs, HRAs used in conjunction with high-deductible health plans gained traction.
Austin-based Whole Foods Market offers HRAs to its employees. Full-time workers don’t pay any health insurance premium out of their own paychecks, but are covered under a high deductible insurance plan coupled with an HRA. Whole Foods funds the accounts; the more years of service, the greater the contribution.
“Team members can choose what eligible expenses they want to pay for with their HRA dollars,” spokeswoman Ashley Hawkins said.”
If you are considering moving to an HRA or an HSA, don’t hesitate to contact either your broker or your Regional Sales Director.
If your employees use the MedBen debit card to make payments from their Flexible Spending Accounts (FSAs), they’ll soon find the process even more convenient! In response to group feedback, MedBen is replacing its current debit card with the “BennyTM” card. Beginning January 2008, FSA plan groups will be issued new cards in accordance with their plan renewal. Your current card will remain active until your renewal date.
The new debit card can be used anywhere Visa is accepted, including pharmacies, physicians and hospitals. The employee simply presents “BennyTM” when making a qualified purchase and the amount will come directly out of their FSA, saving time and paperwork. Over 80% of transactions can be completed with no supporting documents! Moreover, by using a direct data link to major pharmacy benefit managers (PBMs), we can auto-substantiate 100% of prescriptions filled through those PBMs!
If your group has a January 1 FSA plan renewal date and currently offers our debit card, you will receive new cards in late December, so long as employee enrollment forms are sent to MedBen by December 4. Your current cards will continue to work until 11:59pm on December 31, 2007; the new cards will activate at 12:01 am on January 1.
If you are a current debit card user and have questions about the card changeover, please call FSA Customer Service at (800) 297-1829. To get more information about MedBen FSAs or adding the debit card service to your plan, call MedBen Marketing Services at (888) 627-8683.
“News, Updates & Fresh Ideas.” That’s the philosophy behind The MedBen Blog, which will provide you with a steady stream of useful information about MedBen plans, products and services. We will also include stories of interest regarding the benefits industry, especially those that have a bearing on the employer’s bottom line.
The blog is divided into three distinct areas:
MedBen News – This area offers timely features about the many ways we strive to provide our customers with peace of mind. New products, value-added services, website enhancements – if it’s happening at MedBen, we’ll share it here! MedBen News also spotlights our benefits vendor partners and analyzes current events that may impact your health plan.
Regulatory Updates – The latest state and federal legislative issues relating to health care are highlighted in this area. We’ll break down what it all means in straightforward language, and how it potentially affects the employer, in terms of both paperwork and pocketbook.
Plan Design – This area offers fresh ideas on how MedBen groups can make positive changes to their MedBen plans, without raising costs or sacrificing benefits. It also will serve as a place for clients to download instructive documents about how they can make the best use of our products and services. Due to the confidential nature of the material found here, this section is password-protected and accessible only to MedBen clients, agents, brokers and consultants.
Of course, no blog is complete without a bit of feedback! Visitors are welcome to provide their own viewpoints by leaving their comments. Just click on the “Register” link located on the right side of the page, and you’ll be able to let your e-voice be heard!
The MedBen Blog will be updated regularly, so we recommend you check in every day to stay informed! And if you have a topic that you feel may be of interest, please send your ideas to Vice President of Marketing Cindy Steen at email@example.com.
MedBen Access has changed for the better! If you’re a frequent visitor of our 24/7 claims and benefits information website, you’ll notice some important differences on your next visit designed to make your online experience even more user-friendly, including a personalized information page and convenient drop-down menus. And if you’re a newcomer, we think you’ll find MedBen Access to be an easy way to manage your health care plan!
For those who have yet to check out MedBen Access, the site allows you to perform a variety of customer service functions, such as checking real-time status of current pending claims, tracking your plan year contributions, and reviewing your plan’s benefit summary – and that’s just for starters!
There’s a lot you can do on MedBen Access, so we invite you to go to www.medben.com and take a look for yourself! To create a User Name and Password, follow the simple instructions on this MedBen Basics flyer. And if you have questions about MedBen Acess, please contact our Customer Service Department at (800) 686-8425 or firstname.lastname@example.org.
Segal Co. offers a good overview of the effect of the class action lawsuit related to drug pricing. You can get the summary from Segal’s website here.
As Segal notes, the calculation for Average Wholesale Pricing, or AWP, was determined to inflate the price of approximately 8,500 drugs by 4%. Pharmacy pricing for groups is usually expressed in terms of AWP minus some percentage.
The survey also reviews some of the alternative pricing structures, such as wholesale acquisition cost (WAC).
In addition to the pricing structure, MedBen recommends the following to its clients when looking at drug pricing:
Transparency - demand full disclosure of discounts and rebates received by the pharmacy benefit manager. Many managers offer what appears to be a stronger discount on brand name drugs, only to withhold a bigger portion of the generic discount available. The same thing holds true for rebates. Pharmacy Benefit Managers “guarantee” a per drug rebate, keeping dollars above that rebate. Generally, you want all the discounts available – even if it means no guarantee – and all the rebates paid.
Full Fee Disclosure - make sure to get a statement of all fees being paid from your pharmacy program.
Measure Performance - utilization, member copayment (in dollars and percentage of drug ingredient cost), generic substitution rate, drug ingredient costs and amount paid per member per month will offer a good benchmark to measure the effectiveness of your drug plan.
Consumer Reports has a top 10 of overused medical procedures and the associated hazards in their November issue. A summary can be found on their web site.
Among the top 10 are back surgeries (90% of of back pain goes away within six weeks), heartburn surgery, prostate treatments, implanted defibrillators (according to Consumer Reports, over 30 percent of defibrillators placed are not needed), coronary stents, cesarean sections, whole body screens (the editors warn of false positives), high-tech angiography, high-tech mammogram and the virtual colonoscopy (if something questionable is found on the virtual colonoscopy, in goes the tube and up go the charges).
As the headline warns, “Insured? You’re money in the bank to the health-care system.”
What can consumers do? Be cautious around the top ten, lead a healthier lifestyle and work with your physician. Ask questions and devise a treatment plan together.
Employers with the lowest comparable health costs focus on strong clinical programs and solid plan management over proclaimed discounts, according to the 2007 SHPS Health Practices Study (you can download the study here). According to SHPS’s CEO Rishabh Mehtrotra:
“We discovered a troubling pattern whereby employers use financial models and network procurement strategies to manage health costs instead of addressing the underlying clinical risks driving the demand for health care.”
Five key findings in the report, according to Employee Benefit News are:
1) Employers that focus on targeted conditions in their programs experience costs averaging 18.2% lower that norms.
2) Incentives for participation in desirable health behaviors led to costs averaging 15.1% lower than norms.
3) Companies using strong benefit managers with centralized recordkeeping and solid eligibility procedures experienced costs on average 12.7% below norms.
4) Wellness promotion and education helped costs by 16.9%.
5) Practices that increased costs included over-reliance on proclaimed network discounts, multiple plan design options used to control costs, use of deductibles and copays in isolation to control costs, and using the health care benefits as a tool to become an “employer of choice” or to lower turnover.
Walgreen’s third quarter earnings were a good reflection of the general trend of tighter prescription drug margins. According to a posting on The Wall Street Journal’s Health Blog, “Despite higher revenues, Walgreen’s net income for the quarter was down 3.8% from last year.”
The blog also notes that the major pharmacy benefit managers, from Express Scripts to Medco, saw similar results.
As more drugs become available generically, it is tougher for these companies to make money on the spread between brand and generic drugs. Bad news for the middlemen, who have traditionally keep part of the margin as profit. Good news for smart benefit plan buyers who demand fully transparent plans and complete pass-through of discounts instead of savings and rebate guarantees that give the impression of savings while allowing valuable margin to be left on the table.