Lane 3

More Liability for Employers with less than 20 Employees

Much has been made about the changes to COBRA that are contained in the American Recovery and Reinvestment Act of 2009, but not too many people realize that every employer with less than 20 employees has obligations under this law too. These are not insurance company obligations but employer responsibilities.

Responsibility combined with inaction equals liability.

Basically, the law mandates that certain employees who were involuntarily terminated between September 1, 2008 (yes, 2008) and December 31, 2009 be made to pay only 35% of their state continuation premiums starting March 1, 2009. The special open enrollment provision in the law applies only to COBRA groups, not those subject to state continuation.

So, if you have less than 20 employees and have terminated or will terminate someone do you know how to properly offer them continued health coverage? If not, let me know and we will give you a hand.

Will EMR Give Us Tort Reform?

Currently a doctor may be exposed to a malpractice suit if he overlooks something in a patient’s file and the individual suffers because of it. Now imagine that the doctor is hooked up to a national electronic medical records (EMR) database which includes all of that patient’s records – from all the doctors he has ever seen. Is the current doctor going to be held liable for missing a key piece of information held in the volumes of past doctor notations?

Ahhh, the law of unintended consequences. Is this an avenue for tort reform? Here’s to Hope…

NICE?

As part of Obama’s stimulus bill, it sounds like the US is going to get its version of the UK’s NICE (National Institute for Health and Clinical Excellence) or what I call the Department of Health Care Rationing.

In October 2007, a client who has offices in the UK called for help. A dear friend of his was suffering from breast cancer and had been told that the drug Lapatinib might offer her some hope (it goes by the trade name of Tykerb and is produced by GlaxoSmithKline). Unfortunately, England’s National Health System (NHS) would not cover the drug basically saying that the cancer needed to spread more before it would be appropriate for use.

To add insult to injury if the lady bought the drug herself then she would lose her national health care:

However, with another breast cancer drug Tykerb (Lapatinib) shortly to be licensed, a debate has arisen over the rights of patients to pay for their own treatment. The new drug would cost a patient about £25,000 a year, and anyone choosing to have it would have to pay for the rest of their treatment privately, as ‘topping up’ NHS treatment is not allowed.

In the end, I was unable to do much more than confirm that NICE isn’t. His friend wasn’t going to get the drug she needed.

Several months later I followed up with my client. Here is his reply: “Hey Angus, my friend got Lapatinb – good eh? Thanks for your encouragement. Eventually she got it through a foreign country. Anyway, here’s hoping.”

So, my friends, keep your passports up-to-date. Before long, you may need to sneak out of the country to get some meds…

SCHIP Signed: Doctors Get a Pay Cut

Yesterday President Obama signed the 2009 reauthorization bill for the State Children’s Health Insurance Program (SCHIP) program. This legislation will reportedly make about 4,000,000 individuals now eligible for that taxpayer funded health coverage at a cost of $33 billion over four and a half years. Many of these people moving onto the SCHIP plan will be leaving their private insurance.

Combine that news with the recent Milliman report which shows that over $88 billion dollars is cost shifted from government sponsored plans (Medicare, Medicaid/SCHIP) to private sector plans and you can easily see that the doctors who treat these new SCHIP patients will be getting a pay cut.

About now you are asking, “What the heck is cost shifting and why should I care?” Let’s say a doctor would normally charge $125 for an office visit. SCHIP, however, will only reimburse the doctor $100 for the visit. In order to make up the loss, the doctor charges $150 to the patient with private insurance. Thus, in essence, cost shifting is a tax on people with private insurance (individual medical policies or ones offered through a person’s employer).

On another note, I’m still trying to figure out the math on this. Please let me know if you find an error in my logic:

$33,000,000,000 – cost of program, divided by
4.5 years – equals
$7,333,333,333 – annual costs to cover 4 million kids through SCHIP.

But, one can purchase an individual Aetna policy for $78/month ($936/year), so correct me if I’m wrong, but couldn’t the government the go into the private sector and cover over 7.8 million kids for the same amount of money?

$7,333,333,333 – annual cost to cover 4 million kids through SCHIP, divided by
$936 – annual cost to cover an individual under an Aetna policy
7,835,000 – kids covered by a private sector solution

So, it looks like our elected officials have taken a route that will grow government and cover fewer of the people they say they are trying to help. At the same time, (i) doctors will get less reimbursement for the patients who switched from private insurance to SCHIP, (ii) many doctors will quit seeing Medicaid/SCHIP patients because they get lower compensation, (iii) individuals and employers who have private insurance policies can expect an incremental increase in their premium rates, and (iv) taxpayers can expect a bill from the government when this underfunded coverage needs another cash infusion.

What’s there not to like? Your thoughts?

Georgia Gets a New Provider Network

Deborah Michael and I organized an informal breakfast meeting this morning between physician practice consultant, Mike Fleischman and insurance company executive, Don Weitzel. Oil and water under most circumstances, but productive in this setting.

To date Principal Life Insurance Company has rented the Private Healthcare Systems (PHCS) network of doctors and hospitals. While this has been a beneficial relationship one can see how owning your own network rather than renting one may produce some badly needed efficiencies.

Principal Edge, as the new network is called, will be installed as the default provider network for small- to medium-sized employer clients – it’s not a Medicare Advantage network! It is designed to be provider-focused and bring unique features to the doctor community. Don Weitzel, who is now the President of Principal Edge Network Georgia, is busy recruiting medical providers to the new panel. Principal hopes to have the new network in place in the last quarter of 2009.

Mike Fleischman, a principal with the consulting firm Gates Moore & Company, brought over twenty years of experience in provider / insurer contract negotiations to the table. Mike was able to represent the concerns of the provider community in that insurers must be more responsive in timeliness of payment and simplification of reimbursement schedules.

Principal Edge seems to accommodate these issues in its promise to pay providers within 15 calendar days (not work days). Failing to do so may result in a penalty being paid to the provider. Innovative thinking for an insurance company!

If there is a take-away for the doctor community it is to seriously consider signing up for this network. Like I said before, it is not another doomed Medicare Advantage plan asking for your time. Principal Life is a solid company that can bring thousands of paying patients to your door. And, you know the payor is Principal, not a nameless TPA tucked behind a rented network.

As an insurance agency we are looking forward to a more competitively priced medical plan to show our clients. Hopefully we can put a quote in front of you someday soon!

Obama’s COBRA Changes

Occasionally I am asked when a person who is on COBRA will be off the group plan. Often times the COBRA participant is sicker than the general employee population and is therefore holding the group back from switching insurers and getting lower premium rates for everyone.

The answer has been 18 to 36 months depending on the qualifying event. Now, however, under President Obama’s plan the answer could be when the participant becomes eligible for Medicare (age 65 to 67)!

As part of the stimulus bill, Congress (H.R. 598 and S. 29) is considering proposals that would force taxpayers to subsidize COBRA premiums for those who are out-of-work. A couple of the highlights:

Employees who are at least age 55 or had 10 or more years of service would be allowed to stay on the group plan under COBRA beyond the typical 18 month deadline. This coverage could continue until any other termination reason occurs namely Medicare entitlement or failure to pay COBRA premiums.

The new law will require taxpayers to provide premium assistance (65 percent of the COBRA premium) for up to 12 months for those who elected COBRA from September 1, 2008, through December 31, 2009. It would apply to employment terminations for reasons other than gross misconduct. Employers will go through an awkward system of paying the premium to the insurer and then getting a credit on payroll taxes.

Sadly, many employees don’t appreciate how much their employer pays for health insurance on their behalf until they get that first COBRA premium bill. Yes, insurance is expensive, but then so is that unexpected $50,000 surgery!

Eventually the Federal stimulus bill funds will dry up and politicians will be forced to take away the benefit or, more likely, make employers or the states subsidize COBRA premiums.

I predict that these changes proposed by Obama will drive up the cost of private health insurance and force more people onto taxpayer subsidized plans (COBRA, Medicaid, SCHIP) – all of which is a stated goal of those promoting nationalized health care.

Well, we did ask for change…

Navy SEAL Fitness Challenge

My wife can breath easy now, there won’t be a Navy recruiter knocking at the door for me. This past Saturday some friends from the Fowler YMCA and I completed the Navy SEAL Fitness Challenge. The Challenge is an outreach program of the SEALs with the mission of promoting health and exercise in the general population. They probably get a first look at solid talent along the way too.

The Challenge consists of:

swim 500 yards (side or breast stroke). Rest ten minutes.

push-ups; as many as possible in two minutes. Rest two minutes.

sit-ups; as many as possible in two minutes. Rest two minutes.

pull-ups; as many as possible, no time limit. Rest ten minutes.

run 1.5 miles.

Navy SEALs Odie and Otter shepherded our group of about 40 competitors through the exercises. The first event wasn’t bad as we all swim regularly at the Y. Maxing out push-ups is pretty tough though – elbows had to break 90 degrees going down and arms had to be extended when up. As soon as your knees (or face) hit the mat you were done. Any rest you got was done in a plank position. Believe it or not, two minutes is a long time when you are doing push-ups. Brian took the steady approach not stopping at all. I did thirty, then sets of five, resting in between.

By now you must be wondering why would anyone want to be doing this on a nice, chilly Saturday morning. T-shirts, of course. White for competitors who complete the exercises but fail to meet each of the SEAL standards to get into BUD/S, tan for ones that meet the standards, and the coveted blue ones for those who meet the “competitive” standards. These requirements and our scores are outlined in the table below.

After a couple minutes of refreshing rest we were on to sit-ups. To be a successful rep the elbows must touch knees and shoulders must touch ground on return. You can only rest only in the up position. After the sit-ups we went outside for the pull-up portion. Your chin had to go all the way over the bar and on return you had to have your arms all the way extended. Brian excelled with 16 pull-ups.

For me the run was the worst. Besides being dump truck slow I really just don’t like to run. Maybe there’s a correlation – still trying to think through that one. In any event, Brian was his usual fast self, Britt managed tan shirt time, the boys did great, and I was close to dead last in our group.

As I reflect on the event and the 50 or so minutes that it took for us to complete it I am reminded that we are just amateurs, feeling all good about ourselves that we can do x amount of whatever in a certain amount of time. Odie and Otter, and guys like them, are out living very dangerous lives so we can go to work, kiss the wife and kids and think less about reality than we really should. In the end, we said our thank-yous and said that we appreciated the work that they are doing, but those words cannot express the true understanding of the sacrifices that the Navy SEALs make on our behalf. A pretty cool bunch of folks who we can only pretend to stand next to.

More photos will be posted here.

Norcross Rangers – Kohl’s Cup Champs!

Congratulations to the Norcross Rangers! This past weekend they took the 12 and under championship at the Kohl’s Cup in Fayetteville, Georgia.

It was an exciting series with the Rangers beating the Fayette Strikers (7-0) on Saturday then losing to a close game (3-2) to the Columbus Titans. Then it was back to the hotel where the boys had a great time at the pool, hot tub, racquetball court (except for Nicky), and workout room.

Sunday morning had the team up against the Kennesaw Sonics. Solid play from everyone assured a win (5-2) – and a rematch against the Titans for the Championship! The game started at 1p.m. and was scoreless going into the second half. Then the Rangers came alive!

The boys played solid ball throughout the game. Blake, Dylan, and Trevor provided the core of the offense and had some phenomenal scores.

Midfielders Evan, Jake K., Alex and Haydon kept the pressure on making the Titans play on their side of the field for much of the game.

Christian, Jake S., Haydon, Nicky and Alex provided the strong legs to anchor the fullback position. Everyone was cheered on by David who was getting over a nasty illness yet still was there to support the team.

McLean had a great game as keeper going against the Titan’s best and winning a penalty kick. Then Trevor then took McLean’s punt and passed to Dylan who had a remarkable kick for a quick score!

The Rangers ended up beating the Titans 5 – 0! Coaches John, Jeff and Art did a fantastic job all season teaching the boys great technique, ball handling skills and game strategy. In the end the lesson was overcoming adversity and knowing that fair play and sportsmanship wins in the end. Hats off to the Rangers, the coaches and the parents!

11/15/08 Pictures
11/16/08 Pictures

echoEleven – getting it done the new (old) way

“It’s not the strongest of the species that survives, or the most intelligent that survives. It is the one that is most adaptable to change.” – Charles Darwin

Steve Riley, President and CEO of echo11media, came whipping into the Chequer’s parking lot a couple Fridays ago on his R 1100 RT. It was the perfect fall day to enjoy good company and some crab cakes on the patio.

Founded in 1998, echoEleven combines custom eLearning consulting and development with a Adobe Training Partnership to provide the most comprehensive eLearning services. Over the past 3 years Steve has expanded the core business of Adobe authorized training to include two SaaS product offerings and is quickly growing his recurring revenue stream. Steve’s vision of the future for echoEleven is to continue to expand and evolve their online learning products.

When a major Atlanta-based airline found themselves in midst of a merger with a dying online learning technology, they turned to echoEleven for their state of the art online learning technologies and reduced their content creation turn around time from months to days!!

Ten years of bootstrapping – from the rubble of dot bomb, through 9/11 and now into the credit crunch – has left Steve with the thick skin necessary to continue to grow echoEleven through the challenging years to come. Over lunch we discussed the decision de jour. His office lease was up – renew at no real financial change or sign the contract for some slick new space that had been in the works for months – twice the space and twice the monthly expense. Steve recalled that he knew iXL was heading south when he saw their name on the Equifax building. That said, a calculated risk… new office and growth… the decision to move was made!

While he is an entrepreneur, Steve considers himself a business owner first and foremost. He bristles when someone asks his exit strategy though he knows that’s an important part of his business horizon. He is in it for the long haul slowly building recurring revenue and using whatever extra cash is on hand to fund innovation.

So what advice would Steve give a start-up in these tough economic times – what key success factors are necessary to surviving the coming years?

Keep a positive attitude.

Cash flow is king. Keep expenses low and remain flexible.

Position the company as a solution that reduces client costs.

Maintain low to no debt obligation.

Create and grow recurring revenue.

What others would you add to the list?

10 ways to lower benefits costs

Okay, I guess that TARP thing isn’t exactly working out now is it? Prudent companies are looking at ways to cut costs. Let’s explore some ways to squeeze real dollars out of your employee benefits program without significantly harming your goal of attracting and retaining employees:

1. Ditch the PEO. If there was ever an inefficient, expensive way to deliver employee benefits this is it. Buying workers comp, payroll administration and group insurance from standalone vendors should afford immediate dollar savings.
2. Reduce non-network medical benefits. It is not unusual for 90 or 95% of medical claims to be incurred with in-network doctors and hospitals. So why have overly generous non-network benefits that few people use? An employer may have non-network medical benefits paid at 80%; consider reducing to 70%. If at 70% consider a change to 60%.
3. Institute an opt-out program. If your plan pays a significant amount of dependent premiums and a decent number of those dependents have access to other coverage (through their employer’s plan), then providing an incentive to get off your plan will lower your premium costs.
4. Install an HSA or HRA plan. This solution is not for everyone. Much will depend on the overall health of your group, you and your employees’ willingness to take on claims liability, and the financial ability of you and your employees to fund the HSA or HRA.
5. Eliminate unused plans. We’ve taken over a number of groups that were paying for benefits that their employees just didn’t use – a vision plan for instance. Go to your employees and have a heart-to-heart. Discuss what forms of compensation are important – salary, commissions, bonuses, each employee benefit, etc. You may be surprised with their candor and understanding.
6. Tighten up your definition of an eligible employee. If presently an employee must work 30 hours a week to be eligible for benefits, consider raising the requirement to 40. If presently an employee must wait 30 days before benefits start, consider increasing that wait to 60 or 90 days.

The suggestions above, in relative terms, have little impact on an employee’s perception of his or her benefits package. Let’s assume, however, that items 1 – 6 did not produce the necessary level of savings. Even though your goal of attracting and retaining employees will suffer, you may be forced to consider these more drastic measures:

7. Reduce benefits. Now we are getting serious. You are shifting costs from the employer to the employee. Increase deductibles, copayments, and patient out-of-pocket costs. Switch from the more expensive PPO and POS plans to the more restrictive, cost effective HMO products.
8. Adjust employee premium contributions. This one will hit to the heart of the matter. Very simple – make your employees pay more out of their pocket for their insurance.
9. Eliminate benefit plans. I always say that you should insure catastrophic risks. Keep your medical and long-term disability plans. Keep your dental plan if possible. Dental insurance is not covering a catastrophic risk, but it is a great employee benefit. In tight times short-term disability and vision plans are luxuries and should be on the chopping block.
10. Eliminate a class of eligible employees. In certain industries (mainly blue collar ones) you may see the elimination of a whole class of employee from eligibility. For example, exclude all hourly employees from the eligible class. Obviously this is a last ditch tactic.

None of this is fun to think about, but know that reducing costs as early as possible will enhance a company’s chance of survival. Some of these suggestions can be implemented with little effect on employees and their moral. Others will have a direct and real impact on the employees’ disposable income.

Effective employee communications is key. How any change is presented to the employee population is important. While I’m biased on this issue, an ethical, competent and experienced insurance broker is your best resource at a time like this. Call us if you need help: 770-300-0001.