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Health and Benefits

Health Care Service Provider Audit

When switching to a new health insurance plan, how will I know if my employees can continue to use their preferred physicians, hospitals and facilities?

When an employer changes its health plan, it often means moving from one provider network to another.  An employer must consider the benefits of moving to the new network against the potential that some of its employees may need to find new doctors.

To assist employers with this analysis, RMC offers a healthcare provider audit. This audit compares the penetration of proposed service provider networks in the geographic regions that apply to eligible employees. The audit is based on a sample of primary care physicians, specialty care physicians, and facilities identified as providers of interest by the employer and its employees. Results are presented in an easy-to-understand format, which allows for easy comparison between the network alternatives.

Provider Networks

Health insurance arrangements utilize provider networks to offer members access to medical services at pre-negotiated discount rates. Provider networks are often assembled by health insurance companies. Healthcare providers who elect to participate in a network agree to provide their services to network members at pre-negotiated discount rates, rather than at their usual “off-the-rack” rates.  Healthcare providers benefit from this arrangement through the volume of plan participants steered to them by the network. Plan participants benefit by gaining access to the network’s discounted rates for medical care.

Provider networks range in size from regional to national, and in breadth of access from narrow managed care networks to broad open access networks. Customized local networks can be assembled with significant member volume (i.e., plans with thousands of insured members). The network options available vary by location and insurer. Multiple networks may be offered in situations where an employer requires broad regional or nationwide coverage, or where the array of choices available to plan members includes multiple insurance carriers.

Example

An employer is considering switching health insurance carriers at renewal. However, the employer is concerned that switching insurance carriers might mean that some of its employees will lose access to their existing doctors or clinics. To ensure a smooth transition to a new carrier, the employer requests RMC to conduct a healthcare provider audit. The employer will use the healthcare provider audit to determine how employees will be impacted by the decision to change insurance carriers.

The first step in the audit is for RMC to provide the employer’s employees with a temporary link to a portal where each employee can identify the doctors and/or facilities they would like to include in the audit. The employees also identify the importance of each doctor and/or facility on a scale of 1 to 10; 1 being of low importance and 10 being of high importance. Lastly, they identify if they would like to keep the name of the doctor or facility confidential.

The window for submissions is typically limited to five business days, which can be extended at the employer’s request. Employee submissions on the portal are sent directly to RMC. Once the portal closes, RMC prepares an audit of the networks to assess compatibility with the providers identified by the employees. The results of the audit are provided in a simple table format, as shown below.

Table 1 – Service Provider Audit Results Example #1

In this example, Network A provides the least access to the requested service providers – two doctors, one infusion facility, and one major hospital do not accept Network A.

Network C provides more access when compared to Network A, but one facility and provider – marked confidential by an employee – do not accept Network C.

Network B provides the most access, with only one facility that does not accept Network B.

The relative importance of each provider also factors into the decision-making process. For example, the below audit was prepared using two networks.

Table 2 – Service Provider Audit Results Example #2

Network A provides the least access to the requested service providers – three providers do not accept Network A.

Network B provides the most access so the requested service providers – one provider does not accept Network B.

One might assume that Network B is the obvious choice since more doctors on the list accept Network B. However, the one doctor that does not accept Network B was marked as a 10 out of 10, in terms of importance. The sum of the doctors and facilities that do not accept Network A only adds up to 6. Therefore, an argument could be made that Network A is a better option.

When faced with a decision like Example #2, the relative importance of each provider, volume of participants, provider specialty, and a host of other factors should be considered in the decision-making process.

Categories
Health and Benefits

The Real Cost of a Premium Holiday

As group health insurance premiums rise each year, employers look for solutions to mitigate their increased costs. An emerging trend this year is “premium holiday”, which insurers are offering to make it seem like employers can save on coverage.

In reality however, this price adjustment trend rarely results in long-term savings and can easily result in employers paying more.

Premium Holidays Rarely Offer Sustained Savings

A “premium holiday” usually provides a break on premiums for one month, thereby seeming to reduce an employers’ health insurance costs for the year. Most of these programs skip an entire month’s premium for the first year that coverage is in place, although a few may offer a one-month discount instead.

However, these price adjustments rarely deliver on their promise of reducing overall costs.

Plans that offer a so-called “premium holiday” frequently come with increased costs both in the upcoming plan year and in any years thereafter.

For the upcoming year, a premium holiday can be used to make a policy’s annual premium appear artificially low. Offering a one-month discount on a policy that’s seeing a major rate increase can mask the increase to a significant degree.

In reality, the increase is usually still quite substantial even after the one-month premium discount is taken into account.

In future years, a policy’s premium can increase dramatically when a one-month premium holiday isn’t included in the renewal. When employers are no longer given a discount, their next policy premium not only increases by the annual rate increase, but they also have to take into consideration that they are paying for twelve months rather than eleven.

The result is that premium holidays often result in employers spending more on health insurance than they intend to or realize.

The Increased Costs That Premium Holidays Mask Are Significant

While the exact amount that employers end up paying for health insurance is specific to each employer and its policy, the increased costs that premium holidays mask can be substantial. To see just how much this scheme can actually cost an employer, consider the following example of an employer who pays $120,000 in annual health insurance premiums.

The employer is facing a rate increase of 24 percent for 2021, which equates to a $28,800 increase for the year based on its 2020 premium of $120,000. As an incentive to renew, the employer is offered a one-time premium holiday that saves it $12,400 in 2021.

Although this looks attractive at first glance, the total premiums for the year come to $136,400 – an increase of 14 percent!

Moreover, the employer’s premium increase for 2022 will be based on a premium of $148,800, even though the employer only paid $136,400 in 2021.  Even if the insurer does not raise rates in 2022, but only eliminates the premium holiday, the employer will pay $148,800 in 2020, an increase of almost 10% percent.

There Are Other Ways to Mitigate Rising Health Insurance Costs

For an employer faced with rising health insurance costs, there are other ways to mitigate this expense. One way is through a self-funded health plan. A self-funded health plan can reduce an employer’s cost of providing health insurance to its employees, while still providing high quality coverage.

Contact us to learn more about how self-funded health plans can help mitigate these rising insurance costs. One of our team members would be happy to discuss the benefits of a self-funded health plan for your business.

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Health and Benefits

What Does the CARES Act Say About “Balance Billing”?

What is Balance Billing?

Everybody knows about “balance billing”, even if they have never heard the term.  “Balance billing” refers to the bill that a patient gets from a medical provider for the difference between the provider’s charge and the amount paid by insurance.  Whether a patient gets a bill and the amount of the bill may depend upon whether the medical provider is “in-network” or “out-of-network”.

Balance Billing and the CARES Act

Politicians and academics have been talking about this problem for years.  However, nobody has been able to do anything about it.  Until now – at least in part.  The CARES Act provides $100 billion in relief aid for hospitals and other medical providers.  As a condition of receiving money from this fund, a provider is required to sign an agreement attesting to the receipt of the money and agreeing to certain terms and conditions.  Among those terms and conditions is the following, which appears on the Department of Health and Human Services website:

The Secretary has concluded that the COVID-19 public health emergency has caused many healthcare providers to have capacity restraints.  As a result, patients that would ordinarily be able to choose to receive all care from in-network healthcare providers may no longer be able to receive such care in-network.  Accordingly, for all care for a presumptive or actual case of COVID-19, Recipient certifies that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient.

In addition, a spokesperson for the Department said:

The intent of the terms and conditions was to bar balance billing for actual or presumptive COVID-19.

Conclusion

Like any government pronouncement, this one is racked with ambiguity.  For example, it should be easy to identify an actual COVID-19 patient.  But, who is a “presumptive COVID-19 patient”?  This and many other questions will have to be answered by further guidance.  However, this may be an important step forward in ending “balance billing”.

If you are interested in learning more about balance billing and other health insurance solutions for your business, contact RMC Group.

 

Categories
Health and Benefits

Healthcare Costs are on the Rise

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[Transcript]

17.9%…

Think about that number for a moment…

It represents almost 1/5 but almost 1/5 of what?

This number should shock every CPA and business owner for one reason.

17.9% is the percent of the U.S. GDP that is spent on healthcare and it’s unsustainable.

Now here’s how that number impacts your business clients.

Small businesses tend to face more challenges with their health insurance than their larger counterparts.

If you’ve been asking your clients how much money they spend on health care, then you already know that they’re seeing double-digit increases every year.

This creates a real problem for businesses that are trying to balance their budgets.

They’re faced with the prospect of offering less or minimum coverage, and passing more cost to their employees or they might decide not to offer health insurance at all.

Health insurance is an important part of a compensation package, so not providing it can hurt a business ability to attract and keep talented employees.

Good employees are hard to find, so don’t drive the good ones away or at least give them an excuse to begin looking elsewhere because they will.

So what are you recommending to your clients as a CPA.

Your clients expect you to have answers, whether they tell you or not you can bring a solution to this problem and provide more value to your clients with an alternative option that can potentially lower health costs without losing the existing coverages.

To find out if any of your clients could benefit from this, drop me a comment below or give me a call.

Help your client keep more of that pie.

17.9% is a big number!