Aetna members considered to be at high or moderate risk for hospital readmission within 30 days of discharge will receive support from a pharmacist in the form of in-home medication reviews or telephone consultations.
Aetna is kicking off a pilot program to provide one-on-one medication management support services to members at risk for hospital readmissions.
The Hartford-based insurer is teaming with CVS Caremark and Dovetail Health, a Massachusetts-based care management company, for a 6-month trial. The program will be offered in Maryland, Virginia, and Washington, D.C. Caremark and Dovetail say they will dedicate specific pharmacists to the pilot.
The program is expected to help members manage their health through personal support from a pharmacist including in-home consultations. It will focus on members who take multiple medications and have recently been discharged from a hospital, nursing home or rehabilitation facility.
Reducing hospital readmissions is on everyone's to-do list thanks to quality and outcome measures and incentives introduced through healthcare reform. Medication management issues are linked to more than 60% of "post-discharge adverse events," according to an Aetna spokesperson.
Each year about 3.5 million discharged hospital patients who make medication mistakes end up back in the hospital. Medication non-adherence contributes about $15.2 billion to the nation's annual healthcare costs, according to research cited by Aetna.
Here is how the program will work: Aetna case managers will identify the members considered to be at high risk or moderate risk for hospital readmission within 30 days of discharge. Within two days of discharge, the high-risk members will be contacted by a Dovetail pharmacist to schedule an in-home medication review. The moderate-risk members will be monitored by telephone contact with a CVS Caremark pharmacist.
"Many patients who are newly discharged from a hospital or rehab facility are taking multiple medications. Trying to navigate multiple treatment guidelines provided by the patient's primary care physician and the treatment facility discharge team can be overwhelming," Troyen A. Brennan, M.D., M.P.H., executive vice president and chief medical officer for CVS Caremark said in a press statement.
"Our research shows that the intervention of a clinical pharmacist helps patients better understand their medications and avoid potential setbacks to recovery after returning home."
The focus will be to educate members about their medications and the importance of following physician prescription directions. The reviews will cover all medications prescribed for the member to identify any potential problems with the medication mix that could put the patient at-risk for adverse reactions.
Pharmacists will work with members, their physicians, and case managers to identify gaps in care and to develop and implement a detailed healthcare plan, including physician follow-up visits.
In addition, the home visits for high-risk patients will provide an opportunity to identify other risk factors, such as home safety, that could affect a member's ability to adhere to a medication regimen.
After the initial consultation, both high-risk and moderate-risk members will receive ongoing support for 30 days. In addition to regular contact by a pharmacist, nurses will also mentor the members on the importance of filling prescriptions and taking their medications as prescribed. After the 30 days, the member will be discharged from the pilot and moved into a case management program for continued follow-up and care.
Member participation will be voluntary. Aetna has not set a goal for how many members it hopes to enroll in the pilot but according to a company spokesperson expects to "enroll a sufficient sample size to provide meaningful data on program success."
Readmission rates and member satisfaction of program participants will be measured at the end of the pilot.
In announcing its plan for a $100 million initial public offering, the healthcare alliance and group purchasing organization may be actually setting its sights on a larger payday, says one healthcare economist.
The $100 million Premier Inc. plans to raise through an initial public offering is termed "a pittance" by one industry observer and is likely "a placeholder" valuation.
In an e-mail exchange, Adam Powell, a healthcare economist and president of Payer+Provider Syndicate in Boston, noted that Premier had $869 million in total net revenue and $632 million in gross profit in fiscal year 2013. "The $100 million that Premier hopes to raise through the offering is a pittance."
That could mean Premier is actually setting its sights on a larger payday. Premier officials declined to comment citing the "quiet period" when Premier is subject to an SEC ban on talking about its stock.
The Charlotte-based healthcare alliance and group purchasing organization filed on Monday with the SEC a registration statement on Form S-1 regarding a proposed IPO of its Class A common stock. The number of shares to be offered and the price range for the offering have not yet been determined.
'A Push Toward Diversification'
The IPO, which had been rumored for months, comes as national GPOs face increased pressure from regional competitors as well as hospitals. As hospitals become more integrated, for example, they are taking on "increased aspects of the purchasing process," says Gene Schneller, PhD, a professor of supply chain management at Arizona State University.
Schneller notes that in recent years there has been a push toward diversification as the major GPOs, including MedAssets, Premier, and Novation have expanded their businesses beyond traditional supply chain services to include analytics, recruiting, and consulting services.
Although no details are available regarding how the proceeds of an IPO would be invested, both Schneller and Powell see the potential infusion of cash as an opportunity for Premier.
Investing in Supply Chain
Schneller says this is the time to for Premier to invest in supply chain management. GPO members, especially smaller hospitals, are challenged by the Patient Protection and Affordable Care Act to reduce costs. "The supply chain has visibility that it's never had before. Developing services and products that will bring better performance to the supply chain will be the key to success."
Powell says the cash raised will enable Premier to spend more heavily on building its analytics and consulting businesses. "Post-IPO, Premier has the potential to have an even stronger and more diversified business."
Premier is owned by 181 hospitals, health systems, and other healthcare organizations, including Adventist Health, Catholic Health Partners, Geisinger HealthSystem, and the University of Texas MD Anderson Cancer Center. The owners will be issued Class B shares and retain voting control.
Premier also provides purchasing contracts for 2,900 hospitals, 100,000 alternate sites, and 400,000 physicians.
The IPO will include a reorganization of Premier into two divisions, one will focus on traditional supply chain activities (Premier Supply Chain Improvement) and the other on consulting and performance (Premier Healthcare Solutions).
Allegations of Kickbacks
In going public, Premier joins MedAssets as the only other major GPO that is shareholder-owned. There is bad blood between the two competitors. MedAssets has accused Premier of encouraging hospitals to join in order to participate in the IPO, which is a violation of federal anti-kickback regulations.
Premier states in the IPO prospectus that its discussions "with current and prospective member owners regarding the possibility that we would undertake an initial public offering were conducted in compliance" with the anti-kickback statutes. It concedes, however, that "no assurance can be given that enforcement authorities will agree with our assessment."
Only 14% of consumers surveyed understand basic insurance terms such as "copayments," and "deductibles." They will make "disastrous decisions," when health insurance exchanges come online in a few weeks, says an economist and researcher.
With health insurance exchanges expected to launch on Oct. 1, health insurers have been busy creating websites and other materials to help guide their potential customers through the new online marketplace.
Typically the insurers use an interactive resource that walks consumers through the HIX process, provides information about available tax credits, and produces a customized summary of options. By all reports these websites are well received.
A study from Carnegie Mellon University suggests, however, that despite these efforts, the root problem for consumers is that health insurance has become so complex that consumers just don't understand it. The study casts doubt on whether consumers can even make informed healthcare purchasing decisions.
The study, published in the Journal of Health Economics, looks at two surveys—one covering insurance basics and a second asking respondents to figure out their share of a hospital bill.
Study Results
The results were "dismal," says George Loewenstein, PhD, a professor of economics and philosophy at CMU, and the lead researcher on the study. Only 14% of respondents understood basic, everyday insurance terms such as coinsurance, copayments, deductibles, and out-of-pocket payments.
Only 11% were able to calculate their share of a hospital bill. In the interest of full disclosure, however, I have to admit that question stumped me, too
By the way, the respondents were between the ages of 25 and 64, had private health insurance, and were the decision makers about their medical care. So they had some basic knowledge of the system.
Behavioral economists at the University of Pennsylvania, Stanford, Harvard, and Yale universities and the University of Chicago, as well as professionals at a health insurance company also participated in the research.
Disastrous Decisions
The findings confirm Loewenstein's worse fears that few people actually understand even the basic fundamentals of the medical insurance programs they pay for each month. "Insurance plans incorporate all sorts of incentives designed to encourage customers to make specific types of decisions. What is the likelihood [consumers] will respond to these incentives if they can't understand the most basic elements of plan design?"
Even scarier, he says, is the thought of millions of consumers, most previously uninsured, deciphering the intricacies of the bronze, silver, gold, and platinum offering on the exchanges. "Consumers can't be engaged in this process if they don't have basic knowledge of how health insurance works. They'll make disastrous decisions," Loewenstein states.
While it's great that navigators and all kinds of assisters will be out in the field helping consumers work through the exchange offerings, Loewenstein thinks there is a better way. He would like to see is a simplified health insurance plan offered—not simple in terms of coverage—but in terms of how it pays for treatments and procedures.
A Better Way
Under his ideal plan, copayments and transparency would rule the health insurance world. Cost sharing, deductibles, and co-insurance would all disappear. Paying for healthcare would be similar to going to a restaurant and ordering from the menu. The prices would be right there.
Loewenstein acknowledges that copayments would have to increase and consumers would certainly face the sticker-shock of how much an MRI or CT actually costs. The upside is that healthcare costs would be predictable. No more waiting for your insurer to send along a statement of benefits detailing a bunch of confusing adjustments.
Loewenstein tested his plan on the survey respondents, who he says were somewhat more likely to make lower cost choices, such as going to an urgent care clinic under the simplified plan, and were more able to understand the cost ramifications of that decision under the simplified plan.
Loewenstein says he has asked health insurance executives why coverage is so complicated. He has been told that a lot of the complexity arises from the incentives built into plans to get consumers to do things such as go to an urgent care center for an earache or to shop around for the best price on certain procedures.
The million dollar question of course is: how can consumers take full advantage incentives if they can't make sense of their policies?
Loewenstein has reached out to insurers to pitch his simplified health plan without success. "It seems like a no-brainer to me, but so far insurance companies have a very little appetite for the idea."
The weak economy, which has reduced healthcare service utilization, is cited as the leading contributor to moderate growth in health insurance premiums by the Kaiser Family Foundation in its Employer Health Benefits Survey.
Commercial payers don't make much of a scapegoat for climbing healthcare costs based on the current trajectory of health insurance premiums.
Annual premiums for employer-sponsored family health coverage increased by 4% in 2013 to $16,351, according to the 2013 Employer Health Benefits Survey released Tuesday by Kaiser Family Foundation/Health Research & Educational Trust.
Employees pay about 28% or $4,565 of the annual premium cost in 2013, up from $4,316 in 2012.
But in describing the cost increase as "historically moderate and good news," Drew Altman, PhD, Kaiser Foundation president and CEO, added that the American people don't "ever share this sense of moderation. I think that is because over time, what people pay for healthcare has significantly eclipsed increases in their wages and inflation."
Since 2003, healthcare premiums have increased 80%, nearly three times as fast as wages (31%) and inflation (27%).
The weak economy, which has reduced healthcare service utilization, was cited as the leading contributor to the moderation in premium and healthcare costs.
And while the increase in premiums may be modest, more employers are passing along a bigger share of healthcare costs to their employees. Some 78% of employees now face an annual deductible, up from 58% in 2006. And the average deductible has almost doubled from $584 in 2006 to $1,135 in 2013.
Speaking during a press conference, Altman noted that workers in lower-wage firms are feeling the brunt of cost increases, paying $1,363 more toward family premiums than their counterparts in higher-wage firms.
For now employers' favored cost-cutting strategy involves offering wellness programs. Some 35% of respondents identified wellness programs as a "very effective" cost containment strategy. Some 99% of large firms (200 or more employees) and 76% of small firms (199 or fewer employees) offer at least one wellness program.
The most popular wellness programs for large employees are flu shots, employee assistance programs, and Web-based resources for healthy living. Some 36% of large employers and 8% of small employers offer wellness incentives.
After wellness programs, disease management was identified as an effective cost cutting strategy by 22% of respondents followed by consumer driven health plans (20%), higher employee cost sharing (17%), and tighter managed care restrictions (8%).
Other survey findings:
The average annual premium for individual; coverage increased by 5% to$5,884 in 2013.
The PPO was the most popular plan with 57% of the covered employees, followed by high-deductible health plans (20%), and HMOs (14%).
Some 61% of covered workers face co-insurance if they are hospitalized; in 2013 the average co-insurance rate for a hospital admission was 18%.
For physician office visits 74% of covered workers have a copayment for primary care physician visits, and 72% have one for specialist physician visits. The average copayment if $23 for primary care and $35 for specialty care.
Altman said the moderation in healthcare costs indicates that employers believe they don't need to do anything "radical to control costs" such as reducing worker benefits.
Cost and reimbursement pressures, the explosion of boomers in the hospital patient mix, and the movement toward population health are spurring health systems to launch their own health insurance plans.
Health systems are increasingly taking on new roles and becoming health insurers. Spurred by healthcare reform, the creation of health insurance exchanges, and a shift to population health, health systems are assessing the opportunities of becoming a payer against the risk of taking that step in the ever evolving healthcare industry.
A growing number of health systems are deciding that it is worth the risk. In a June survey of more than 100 hospitals and health system across the country, 34% responded that they already own health plans. Another 21% said they plan to launch a health insurance plan by 2018, according to the Advisory Board Co., a Washington, D.C.-based research and consulting firm.
Among the health systems launching health plans:
Boston-based Tufts Medical Center and its physician group, as well as Vanguard Health System received regulatory approval this week to launch Minuteman Health, which will be offered on the Massachusetts health exchange, the Commonwealth Connector.
Catholic Health Partners, a Cincinnati-based health system, will launch an insurance plan on the Ohio HIX on Oct. 1.
North Shore-Long Island Jewish Health System, a Long-Island, NY-based hospital system has received state approval to offer its health plan called CareConnect on the state health insurance exchange beginning Oct. 1.
Piedmont Healthcare and WellStar Health System, two powerful Atlanta-based health systems, are developing a health plan that will offer commercial and Medicare Advantage products in 2014.
"There's an economic piece to this that is really creating urgency to change the way organizations care for patients and ultimately [change] the way they are paid," says Frank Williams, CEO of Evolent Health, an Arlington, VA-based firm that helps hospitals and health systems work through the pros and cons of becoming a provider-payer.
Evolent is working with 15 health systems and several of them are looking at creating their own health plan. As primary drivers of the trend, Williams cites cost and reimbursement pressures, the explosion of boomers in the hospital patient mix, and the movement toward population health.
He says with the focus on population health hospitals and health systems now have a much broader view of their place in the healthcare delivery system. They look beyond their own walls to their affiliated physicians, as well as their outpatient and home health resources. They are exploring how to bring these entities together in a more seamless way to deliver a better product to the market in terms of cost and quality.
"Once you begin to move in that direction, how do you get paid? Health systems are stepping back and asking how [they] can get paid effectively to get a return from this effort," says Williams. "Some are deciding that it makes sense to offer their own product to the market."
He says most providers taking this step are not looking to "sign on General Electric and cover their employees worldwide." Small employer groups are particularly appealing because their coverage decisions are based on the local healthcare network where their employees get most of their care.
For providers the health insurance business model is often a narrow network—typically comprising their own hospitals and affiliated physicians—that can be closely managed to control cost, quality, and coordination.
However, a marketplace reality is that scale is important. "If you're going to make this investment, you need enough revenue to support the effort," states Williams.
To offer effective health insurance coverage requires that a network include enough facilities and physicians to provide access and member convenience. While a provider may have a good strong footprint in a particular geographic areas, to have a viable product may require a broader coverage area. That probably means taking on a partner.
As a case in point, Williams offers the alliance between Piedmont Healthcare and WellStar Health System. Piedmont is strong in Atlanta's southern suburbs, but really needed a broader geographic coverage to offer a competitive insurance product. WellStar, with its presence in Atlanta's west and northwest suburbs, fits the bill. The two plan to offer commercial and Medicare insurance next year.
But jumping into the health insurance game is not a parlor game. Williams notes that decades ago hospitals and health systems lost a lot of money trying to take on capitation and broader risk.
Also, shifting from provider to provider-payer is a huge cultural change that involves thinking beyond managing facilities and capacity to a more holistic approach to patient care. "It's a different mindset," says Williams.
States that have declined to set up their own health insurance exchanges will receive additional funds to help individuals work through online health plan options.
In a surprise move Obama administration officials announced last week the addition of $13 million to the grant amount awarded to community groups that will help individuals "navigate" their way through the on-line health insurance marketplaces expected to begin operation on Oct. 1.
The 105 organizations selected will now share $67 million in grants rather than $54 million as was first announced in April. The increased funding, which officials stressed is not new money, was allocated to the Department of Health and Human Services from a prevention fund created by the Patient Protection and Affordable Care Act.
The grant recipients are from states, including Florida, Texas, and Tennessee, that declined to set up their own health insurance exchanges and instead will rely on the federal government to operate their exchanges.
While the reason behind the increase was not directly addressed, concern has been expressed from several quarters that navigator funding for the federal HIX pales when compared to the funding for state-based exchanges.
Certified application counselors, more commonly known as navigators, will provide hands on, in-person help to educate consumers—many from among the ranks of the uninsured—about the online health plan options offered through the marketplaces, the eligibility requirements, and the application process.
The grantees include community groups, a Catholic health system, universities, patient advocacy groups, food banks, and United Way and Planned Parenthood affiliates. The grant amounts range from $20,750 awarded to the Catholic Social Services-Archdiocese of Mobile (Alabama) to $5.9 million awarded to the United Way of Metropolitan Tarrant County (Texas).
In addition to funding concerns, the navigator program has come under fire from elected officials concerned about the training of navigators and their access to private consumer information, including Social Security numbers.
Last week attorneys general from 13 states sent an 8-page letter to HHS Secretary Kathleen Sebelius outlining their concerns about a lack of uniform background or fingerprint checks.
In her prepared comments, Sebelius stated that the navigators will be required to "adhere to strict security and privacy standards," including how to safeguard a consumer's personal information. Navigators will subject to federal criminal penalties for violations of privacy or fraud statutes, as well as relevant state law penalties.
To be certified a navigator must attend 20–30 hours of on-line as well as additional training throughout the year. The certification process calls for an annual training, and yearly re-certification.
Training is expected to begin later this month and navigators may begin outreach activities as soon as their training is complete, according to Chiquita Brooks-LaSure, deputy director of policy and regulation at the Center for Consumer Information and Insurance Oversight at HHS. Actual enrollment, however, will not take place until Oct. 1.
A recent survey from HealthPocket suggests that navigators will face an uphill battle in reaching out to younger consumers. Only 3% of respondents in the 18 to 34-year age group expect to get advice from a navigator. That group of younger, healthier individuals is needed in the HIX to bring balance to the enrollee mix and to improve the financial viability of HIX.
Private health insurance exchanges, embraced by both payers and employers, enable businesses to cap how much they spend on employee healthcare benefits. One report says enrollment in private HIX may exceed public by 10 million members in 2018.
Insurers and employers have historically squared off in an annual battle over premium costs. But as healthcare reform becomes more entrenched and pressure to reduce healthcare costs approaches a fever pitch, health insurers and employers are both embracing private health insurance exchanges as a way to affect healthcare costs by making a paradigm shift in how employers pay for employee benefits.
Private HIX can be used by employers to transition to a defined contribution strategy where the employer puts a cap on how much to spend on employee healthcare benefits. It works like this: Each employee receives a set amount to spend on the exchange to purchase the benefits that meet his or her needs.
Private exchanges are similar to public HIX, which are a central component of the Patient Protection and Affordable Care Act, only in that both are on-line marketplaces that will sell health insurance to individuals.
While public exchanges will be government operated, private exchanges are being developed by consulting firms, such as Aon Hewitt, Mercer, and Towers Watson, as well as retailers, such Walgreens, and even insurance brokers.
Health insurers are not only joining private HIX, some like Aetna and Cigna have plans to develop proprietary exchanges of their own.
A recent study from Accenture predicts that although enrollment will start slowly—with one estimated million enrollees in 2014—and trail public HIX for several years, private HIX enrollment will catch up by 2017 and even exceed public HIX enrollment by 10 million members in 2018.
There are two private HIX models: single-carrier and multi-carrier. The single carrier is probably the most familiar. The employer selects the carrier, say Aetna or Cigna, and the employee selects from among the benefit plans offered by that carrier. The multi-carrier model allows an employee to select from among several carriers and benefit plans.
Participating in a private HIX provides something of a win-win for insurers and employers. Both have been looking for ways to extract themselves from the annual uncertainty of renewing healthcare benefit contracts. The way that typically plays out is the company CFO waits each year for the insurance quote. Then the CFO has to decide if the company should shop around for a better deal or take other steps—increasing deductibles and copays—to lower costs.
"That's just not much of a strategy," says Austin Madison, vice president of group benefits at The Crichton Group, a Nashville-based insurance broker. The firm will launch its own private HIX on Oct. 1. Blue Cross Blue Shield of Tennessee has signed on to offer seven plans. Aetna and Cigna are expected to join by Jan. 1.
The advantage of defined contribution for employers is that it takes the guesswork out of budgeting for healthcare costs from year-to-year, says Madison. The employer might include an annual cost-of-living increase to the defined contribution but will no longer be "captive to waiting on the insurance company."
Private HIX allow health plans to retain "key employer relationships while transitioning those employers to defined contribution," says Richard Birhanzel, managing director of health exchanges for Accenture. There are also increased opportunities to offer members a broader array of customized products such as dental, life, and disability coverage.
It is too soon to tell if employees purchasing health insurance on a private HIX will reduce their healthcare costs. Consumer groups are concerned of course but employers and insurers are anxious for employees to have the proverbial skin in the game and become more cost conscious about their medical care.
Birhanzel says the marketplace will measure the success of private HIX in a number of ways, including the ability to reduce healthcare costs for employers and the ability to provide consumer choice that leads to more efficient and targeted use of benefits by employees.
The giant health insurer has learned much from its consumer engagement program. Lewis G. Sandy, MD, senior vice president for clinical advancement at UnitedHealth Group, shares some practical lessons.
Lewis G. Sandy, MD, senior vice president for clinical advancement at UnitedHealth Group
I consider myself an engaged patient. I keep my provider appointments, I ask questions, I'm honest about my efforts to improve my health, and I fill my prescriptions and take the medications as directed.
Yep, I definitely deserve a gold star. Alas, not all patients are like me. At one time that might not have mattered so much to payers or providers, but in the era of healthcare reform, recalcitrant patients can seriously mess up quality scores and outcomes. And that can translate to reduced income for physicians, hospitals, and payers.
So, patient engagement has emerged as a big part of the healthcare industry. The concept has been tweaked over the years. It's shifted from one-off efforts to encourage patients to complete health risk assessments or join gyms, to more deliberate data mining to close gaps in patient care and monitor high-risk patients.
Lewis G. Sandy, MD, senior vice president for clinical advancement at UnitedHealth Group, recently shared in Health Affairs some practical lessons the giant insurer has learned from its expansive consumer engagement program. In a telephone interview, he offered five tips for improving patient engagement:
1.Align with care delivery
Sandy says it is important to avoid siloed or one-off patient engagement programs that are disconnected from care delivery systems. UnitedHealth reached outside the healthcare industry for advice from industries such as banking and retail that have more experience with consumer messaging, especially the call to action.
"You have to have a program that is coherent to the person you are trying to engage," says Sandy. "If it is just a disconnected one-off program then the consumer has no way to understand how it fits into anything else they are doing with their health."
He adds that it is important to have the same message repeated and reinforced from multiple angles. UnitedHealth's HealtheNotes program, for example, sends simultaneous messages and reminders to the patient and doctor regarding important screenings such as diabetic eye screenings. "That way the doctor and patient can have a conversation about the same message."
2.Target the message
Sandy says, "you have to target the message not only for what is most important for health, but also for what is the most actionable for that consumer. What do we want people to focus on that will have a maximum impact on their health? How can we make this important step easy for the consumer to do?"
He points to the Rewards for Health program offered to the insurer's employees, who earn points for specific actions, such as having a health screening or lowering their cholesterol. By completing the health assessment the employees qualify for premium reductions of up to $1,200 per family.
3.Understand human behavior
Sandy says health plans can learn lessons from the world of behavioral economics. "People like feedback," says Sandy. Without feedback, filling out a health risk assessment is just a "nice activity."
To be effective, people need to know what their assessment responses mean for their health, where they stand, and what they need to do to improve. He notes that people also like to keep score, which is why the Rewards for Health program is based on points and provides report cards that track progress toward achieving incentives.
At the end of the day, wellness is about people feeling empowered to do the things that help them maintain and enhance their health. Sandy calls it "patient activation," which happens on what might be called a commitment continuum.
To activate change, he says, "you have to be precise in targeting the amount of information" to where the patient is on the continuum. For example, someone early in the continuum probably is not ready to activate change. Sandy says providing specific information and details at this point "will just go over their head."
4.Look beyond the medical model
The task to help people improve their health is not only within the confines of the physician-patient relationship. "We think that there are many other ways that other stakeholders can play a role in enhancing health."
For example, UnitedHealth has developed a model with the YMCA for a community-based weight management program for families. Join for Me began in 2010 and is now underway in 10 communities. It is an incentive that employers can offer to their workforce that is delivered at the community level rather than through the medical care system.
5.Keep tweaking
Implementing successful patient engagement requires ongoing refinement. Sandy says it is important to experiment and try new things especially as technology evolves and "new opportunities for engagement" present themselves.
Fifty-five percent of employers surveyed about the impact of the Patient Protection and Affordable Care Act report increased business costs in the range of 1% to 4%.
Many employers have waxed eloquent about the effect of the Patient Protection and Affordable Care Act on their business costs. Their statements often include dire warnings about layoffs and large premium increases. But when employers actually put pen to paper (or fingers to keyboard) they are discovering that the impact may actually be less dramatic.
Survey results show that 69% of employers who offer health insurance benefits have analyzed the impact of healthcare reform on those benefits. About half of the respondents assigned a dollar value to the impact and of those, 55% reported increases from 1% to 4%, according to the 2013 results from ACA'S Cost Impact: Employer-Sponsored Health Plans.
In a telephone interview, Julie Stich, research director for the Milwaukee-based International Foundation of Employee Benefit Plans, said the large share of employers doing ACA cost analysis indicates that employers are "moving forward" in terms of ACA implementation. "They are looking at their direct costs, assessing the impact on their bottom line, and looking for ways to cuts costs."
Among the survey surprises: about 51% of small employers (fewer than 50 employees) reported healthcare benefit increases between only 1% and 6% in 2013, while 28% said the increase was more than 15%. Another 17% said there was no change in costs.
The small employer is something of a poster child for PPACA opposition with pundits often predicting that the costs of healthcare reform will put small businesses out of business.
Employers identified the top three PPACA cost drivers in 2013 as: the Patient-Centered Outcomes Research Institute (PCORI) fee (38%), general administrative costs (35%), and costs associated with resources necessary to communicate with employees about the PPACA provisions (28%).
The PCORI fee will cover the costs of research into the quality and effectiveness of care. In 2013 the fee was $1 for each of the annual average number of covered lives in a self-insured plan. The fee will double to $2 in 2014. Large employers, which tend to be self-insured, will clearly feel the effect the most. More than 40% of employers with more than 500 employees named PCORI as the top cost driver of the ACA.
To counter the cost increases employers are turning to the tried and true. Among the top methods: cost shifts to employees (53%), reduce the level of health benefits coverage (29%) and shift to high-deductible health plans (28%).
Stitch noted that increasing preventive measures such as wellness, value-based healthcare, and disease management was selected by 36% of employers. That is a sign that employers "recognize the importance of healthier employees in the workplace and in their health plans. Encouraging healthier behaviors has a positive impact both on the bottom line and on healthcare costs."
Only 2% of employers plan to drop health insurance benefits as a way to deal with increased costs.
Looking to 2014 employers are most concerned about transitional reinsurance fee costs (18%), followed by the costs of providing health benefits to employees who previously did not have coverage (13%), general ACA administrative costs and costs associated with the excise tax on so-called Cadillac health plans (both 10%).
In 2014 the transitional reinsurance fee will be a hefty $63 per covered life in self-funded health plans. The money will be used to fund reinsurance payments to insurers that cover high-risk members in the individual market.
The online survey was conducted in June 2013. The 728 respondents include benefit and human resources professionals and other industry experts.
In a move seen as a "shadow vote" on the recently announced merger between Health Management Associates and Community Health Systems, HMA's largest shareholder has pushed out the sitting board and replaced it.
Glenview Capital Management, a New York City-based hedge fund, has unseated the board of Health Management Associates.
Late Monday afternoon Glenview Capital announced that it had submitted to the "appropriate representatives of HMA" documentation confirming that a majority of HMA stockholders had voted to remove all of the current HMA board members and replace them with a Glenview-backed board.
The action is considered by some observers as a "shadow vote" on the recently announced merger between HMA and the Nashville-based Community Health Systems, which would create the largest for-profit hospital system in the U.S. For its part CHS released this statement: "Our definitive agreement to acquire HMA remains unchanged. We look forward to working constructively with the new board of directors at HMA to complete this strategic transaction."
In a statement issued late Monday, HMA said "The HMA board is committed to ensuring an orderly transition if the written consents delivered by Glenview are validated by the independent inspector of election.
Glenview, HMA's largest shareholder, with 14.6% of the stock, has been a strong critic of the merger. In a press statement commenting on the merger the firm said the $7.6 billion CHS proposal "establishes an important floor value" for HMA shareholders to evaluate. "As the sitting board has entered into a sale agreement concurrent with management vacancy, disappointing results, and a reduced outlook, it is difficult to assess whether the value offered… represents full and fair value or the price offered by an opportunistic acquirer to a distressed seller."
The board succession is expected to take place this week. Steven Shulman will be the new chair. Shulman, currently a senior advisor at a private equity firm, is a former chair and CEO of Magellan Health Services, Inc. where he is credited with spearheading a turnaround and restructuring following bankruptcy.
The shareholder vote is considered a "very rare event" according to CRT Capital Group analyst Sheryl Skolnick. "Shareholders typically don't take action on their own behalf," but in this instance "they drew a line in the sand and said 'we're taking control of our company.'"
"I'm not surprised by the vote, though. I think HMA has worked hard to make sure shareholders voted against the sitting board," Skolnick said in a telephone interview.
She noted that any shareholder who might wonder if they did the right thing need only read the SEC form 8-K filing made on Monday by HMA. In it the board announced the adoption on Aug. 6 of a retention bonus and severance plan, commonly known as golden parachutes, for "certain members of key management," including Kelly E. Curry, executive vice president and CFO; Robert E. Farnham, senior vice president-finance; and Steven E. Clifton, senior vice president and general counsel.
Many institutional investors are required to have an independent assessment of how they should vote on shareholder issues. The ISS endorsement was "the last piece of what Glenview needed," Skolnick said.
How will the board change affect the CHS/HMA merger? According to Skolnick, the deal was always going to be a tough sell because it requires the approval of 70% of HMA shareholder and not everyone is enamored with the $13.78 per share price.
Having a new HMA board in place will potentially make everything more challenging for CHS as it tries to move forward on a shareholder vote on the merger. Skolnick notes that the new board will need time to assess "what is going on inside of HMA" and how long it will take to fix things.
In addition, an interim CEO from Alvarez & Marsal, a consulting firm that specializes in turnarounds and interim management, will be put in place. An ongoing federal investigation into HMA's patient admission practices is another complication.
Ultimately, Skolnick expects CHS to stick with the deal. "I think [CHS] wants to become the largest hospital company—in terms of the number of hospitals—in the U.S."