Tuesday, May 5, 2009
As major carriers change their "DME" costs, it's time to check the fine print of your employee health benefit plans
In the health insurance industry, a "DME" pays for the medical strips that diabetics use to test their blood levels. Until recently, the DME coverage had a cap of $2500. Now, the cap has been dropped to $500 with most carriers. With an average expense of $300 per month for these strips, the DME coverage is now going to provide almost two months of coverage.
Diabetics are not the only ones impacted by the change in coverage. If you have an accident like injuring your knee playing softball and the doctor prescribes a special brace, the typical cost for one is about $1500.
There are some solutions to this coverage. The insurance carriers will tell you that it will cost you an increase of four-percent for the entire policy to continue with the higher level of DME coverage of $2500 per person. However, the better solution is to ask your insurance professional about a MERP or a medical expense reimbursement plan. That way, when a worker needs his or her diabetic supplies or a knee brace they can have the MERP pay the costs over $500.
The insurance companies know that most of their customers will never read the fine print on topics like the DME. So, executives need to either read their policy or more importantly, hire an insurance agent that understands these unique clauses in their policy. Better yet, an intelligent insurance broker can provide them with the alternatives to provide a more effective type of coverage for their work force and their families.
Friday, May 1, 2009
This is a column submission for the San Antonio Express News that my friend and publicist, Matt Scherer, wrote for me. I wanted to share it with you before it gets published as the information is very timely and helpful.
Mark Twain once noted, “There are lies, damned lies and statistics,” and if Samuel Clemens was alive today, he would probably add health insurance professionals to this classic quip. As someone who has worked in health benefits for nearly 40 years, I am amazed at the half truths shared within my industry.
For example, one of the biggest misconceptions in my industry is that the cost of health insurance should increase by 10- to 15- percent annually.
The health insurance industry spends lots of money on advertising and publicity so most business decision makers accept an increase when their health insurance policy is up for its annual renewal. Yet, if most businesses audited their claims to premium dollar ratio, they would truly question the need for an increase within their policy‘s costs.
For most businesses, the normal ratio hovers around 30-percentage points. That means that for every dollar a business spends on health, dental and vision care, the insurance carrier clears 70 cents. Since most health insurance companies program their administrative costs at 20 to 21-percent, that leaves them with a healthy profit.
Business executives can negotiate the costs of their health care if they request their premium to claims ratio data about 60 days prior to renewing their policy. If they have a low claims to premium ratio, businesses have a bargaining chip with their agent or carrier.
For example, one carrier has a better coverage of doctors within a certain community or even zip code. By having their sick employees and/or family members use doctors in the network, a company can lower their costs. While understanding the premiums to claims ratio, businesses should also consider a medical expense reimbursement plan (MERP) as another option to decrease their health insurance costs.
With a MERP, companies can use a higher deductible for catastrophic claims to lower their costs. Using a MERP, a company can change the deductible from $1000 to $5000. With the savings from the higher deductible, the company then places the savings into their MERP account. When an employee or a family member needs to go to a hospital, the firm can then have their work pay the original deductible ($1000) and then pay the remaining amount ($4000) from the MERP funds.
As most companies have only 3-percent of their work force who annually need hospitalization, the risk is much lower than most would think. I’ve worked with companies to set up a MERP fund, and most have a large reserve within two years that they can then transfer the ongoing savings from their higher deductible plan into other financial reserves. Truthfully, I have had several firms that had claims within the first couple months of changing to a higher deductible, putting them into a position to have withdraw funds to pay for these unexpected medical emergencies. However, over the long-term, the companies were able to build up their MERP reserves to cover the cost of the higher deductible.
Businesses have some choices in selecting the best coverage based upon their willingness to accept risk. The educated executive team can truly lower their costs by understanding the risks involved and by sifting through the health insurance industry's "lies and statistics."
(Stephen Geri is the president of Diversified Employee Benefits Service, a Texas health benefits consulting firm.)
Saturday, April 18, 2009
With more doctors not taking Medicare payments, why would government health insurance work for all of us?
Writing in Friday's Wall Street Journal, Doctor Siegel noted: "Here's something that has gotten lost in the drive to institute universal health insurance: Health insurance doesn't automatically lead to health care. And with more and more doctors dropping out of one insurance plan or another, especial government plans, there is no guarantee that you will be able to see a physician no matter what coverage you have."
Siegel noted that recent market survey conducted by the Medicare Payment Advisory Commission has shown 28-percent of Medicare beneficiaries looking for a primary care physician are having trouble finding a primary care physician. Here in Texas, according to a 2008 survey by the Texas Medical Association, only 38-percent of primary care doctors are now taking Medicare patients.
The problem, Siegel adds, is that the government requires an extensive amount of documentation to file a claim. And it's not just a government issue. Dr. Siegel noted that 11-percent of his colleagues at NYU Langone are not accepting Aetna or Blue Cross because of the administrative requirements and what he terms "diminishing reimbursements."
At my company, we help our clients understand the network of physicians that accept their private insurance plans. When needed, we also help our customers get through the morass of claims denials and processes.
However, I hope someone in Mr. Obama's administration sends Dr. Siegel's op-ed piece to him so he can question how the government will change the claims acceptance process that will help the medical community get the payment they deserve for treatment. If Mr. Obama truly wants to make a change in the health insurance industry, he must first clean up the administrative processes within his government.
Friday, April 17, 2009
How Whataburger and other companies can offer entry level health benefits that work for most workers
More and more, companies are not using health insurance as a recruiting enticement. Yet, with the right management processes, health insurance can serve as an effective recruiting tool as well as a retention tool.
I have been working with several companies to design what I call "Mini Meds" plans for them. These programs typically are lower in cost, and they don't provide the same level of benefits as a plan from Blue Cross or Aetna.
To me, an effective employee policy provides a basic Mini Med plan after 30 or 60 days of employment. However, for those that stay with the company for a year or more, their employer can offer a more extensive plan.
With other forms of health risk management such as an emphasis on healthy lifestyle choices, a company can lower their workers' exposure to sickness and illness. Add a good generic drug plan that encourages people to use their meds, and most companies can provide an entry level health benefit plans to their workers that will save money and keep their employees on the job.
Saturday, April 11, 2009
One of the benefits from electronic medical records is that it eliminates errors in medical treatment. For example, a pharmacist can verify a doctor's decision to renew a prescription without having to fax it or call the doctor's office.
However, in time, EMRs could also notify a person to take a medication or to call into their doctor for a routine checkup. By setting up a request on a person's cell phone, a doctor can remind someone to take their meds.
As someone who has worked in health benefits, I know the power of people following a prescribed course of medication for treatment of ailments. Studies have shown that people who follow the prescribed course of medication typically remain in good health than those who don't continue their medical treatment.
Saturday, April 4, 2009
With health benefits proving a major factor in negotiations, ATT and union should address these issues to lower the cost of health benefits
According to an article in today's Wall Street Journal, the union is upset that management wants to charge them for health benefits. Until the contract expires tonight, union workers did not pay for their health insurance premiums. That may change if a strike settlement occurs.
As someone who has designed health benefits plans for major companies, I would bet that neither mangement or their union counterparts have looked at the details of their health insurance plan. In fact, I would guess that neither side could name the carrier that provides the union with their health, dental or vision plans.
A thorough audit of the plan and its coverages would help both sides understand the scope of the issue. Once they look at the costs, they should evaluate these factors to reach an agreement.
1) Most workers rarely need major medical hospitalization. Studies have shown that for most companies, only three-percent need major hospitalization. Having a higher deductible for each worker will lower the costs. With the savings from this program, ATT could establish a Medical Expense Reimbursement Plan that would pay for the small number of people who require hospitalizaton.
2) What has ATT done to promote a healthy lifestyle? Companies that promote healthy lifestyles tend to have lower health benefits claims than those who don't promote them. Having a gym onsite or educating a work force on diabetes and stroke prevention are just a few of the variables that could decrease the costs of health insurance.
3) Know that claims paid to premium ratio. As most companies hover at a 30-percentage range for the typical claims to premium paid ratio, ATT can negotiate with their carriers to keep them from increasing the cost of health coverage every year.
4) Understand which carriers provide the most "in-network" coverage for specific areas. By using regional plans with different carriers, ATT could lowers it costs. For example, AETNA may have the best network of medical providers in Georgia, while Blue Cross could provide a more extensive network of providers in San Antonio.
5) Communicate how the company is doing with its claims to premium ratio. If ATT union memebers have a high rate of claims redemption, management should stress healther lifestyle options in their corporate communications program.
ATT and the CWA are not unique organizations when it comes to health benefits. Few truly understand the risk or costs involved with their employee benefits program. Yet, companies could change this by bringing in an outside broker who can work with their financial and human resources team to help them comprehend the nuances of their corporate health benefits packages. This effort could help them lower their health benefits costs.
Sunday, March 29, 2009
While subsidies will help small businesses, understanding the true costs of health insurance can help firms save money
According to Jeffrey Young, a blogger/writer for The Hill, the coalition of special interest groups favors tax incentives for small businesses. While tax incentives could increase the capability of business owners to provide these benefits, a more important need is to educate them on the way health insurance professionals provide a smoke screen on costs.
For years, the health insurance industry has successfully targeted the human resource managers of small companies with misinformation about the need for increasing premiums. If more companies had their chief financial officer or accountant review their claims to premium ratio, they would question the need to pay more in premiums every year.
For most, a small company typically has a 30 percent ratio of actual claims paid for their premium dollar. That leaves most insurance companies with 70-percent of each dollar paid out to pay for its administrative cost and profit. As most insurance companies usually allocate 20-percent for the administrative cost, that leaves most carriers with a 50-percent profit.
With the focus on the rising costs of health benefits, business leaders must educate themselves on the terms of their policies. By taking the time to understand these terms, businesses can take the upper hand on lowering the costs of their health benefits for their workers.