Category Archives: Self Insured Employers

Two Lawsuits. Two Issues. One Clear Message.

Posted on by • Posted in Business Practices, Community Benefit, Competition, Health System, Hospital, Hospital Industry, Lawsuit, Market Consolidation, Market Power, Pharmacy Benefits Management, Price Transparency, Profit Motive, Public Good, Public Trust, Self Insured Employer Liability, Self Insured Employers • Leave a comment
Two Lawsuits. Two Issues. One Clear Message.

Last Monday, two lawsuits were filed that strike at a fundamental challenge facing the U.S. health system:

In the District Court of NJ, a class action lawsuit (ANN LEWANDOWSKI v THE PENSION & BENEFITS COMMITTEE OF JOHNSON AND JOHNSON) was filed against J&J alleging the company had mismanaged health benefits in violation of the Employee Retirement Income Security Act (“ERISA”). As noted in the 74-page filing “This case principally involves mismanagement of prescription-drug benefits. “Over the past several years, defendants breached their fiduciary duties and mismanaged Johnson and Johnson’s prescription-drug benefits program, costing their ERISA plans and their employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth… Defendants’ mismanagement is most evident in (but not limited to) the prices it agreed to pay one of its vendors—its Pharmacy Benefits Manager (“PBM”)—for many generic drugs that are widely available at drastically lower prices.”

The issue is this: what liability risk does a self-insured employer have in providing health benefits to their employees?

Is the structure of the plan, the selection of providers and vendors, and costs and prices experienced by employees subject to litigation? What’s the role of the employer in protecting employees against unnecessary costs?

On the same day, in the District Court of Eastern Wisconsin, an 85-page class action lawsuit was filed against Advocate-Aurora Health (AAH) claiming it “uses its market power to raise prices, limit competition and harm consumers in Wisconsin:

  • Forces commercial health plans to include all its “overpriced facilities” in-network even when they would prefer to include only some facilities.
  • Goes to “extreme efforts to drive out innovative insurance products that save commercial health plans and their members money.”
  • Suppresses competition through “secret and restrictive contract terms that have been the subject of bipartisan criticism.”
  • Acquires new facilities, which then allows it to raise prices due to reduced competition

… without intervention, the health system will continue to use “anticompetitive contracting and negotiating tactics to raise prices on Wisconsin commercial health plans and their members and use those funds for aggressive acquisitions and executive compensation.”

The issue is this: is a health system’s liable when its consolidation activities result in higher prices for services provided communities and employers in communities where they operate?

Is there a direct causal relationship between a system’s consolidation activities and their prices, and how should alleged harm be measured and remedied?

Two complicated issues for two reputable mega-players in the U.S. health system. Both lawsuits were brought as class actions which guarantees widespread media attention and a protracted legal process. And each contributes directly to the gradual erosion of public trust in the health system since the plaintiffs essentially claim the business practices of J&J and Advocate-Aurora willfully harm the individuals they pledge to serve.

In the November 2023 Keckley Poll, I asked the sample of 817 U.S. adults to assess the health system overall. The results were clear:

  • 69% think the system is fundamentally flawed and in need of major change vs. 7% who think otherwise.
  • 60% believe it puts its profits above patient care vs. 13% who disagree.
  • 74% think price controls are needed vs. 7% who disagree.
  • 83% believe having health insurance that’s ‘affordable and comprehensive’ is essential to financial security vs 3% who disagree.
  • 52% feel confident in their ability to navigate the U.S. system “when I have a problem” vs. 32% who have mixed feelings and 16% who aren’t.
  • And 76% think politicians avoid dealing with healthcare issues because they’re complex and politically risky vs/ 6% who think they tackle them head-on.

The poll also asked their level of trust and confidence in five major institutions “to develop a plan for the U.S. health system that maximizes what it has done well and corrects its major flaws.”

Clearly, trust and confidence in the health system is low, and expectations about solutions fall primarily on hospitals and doctors. Lawsuits like these widen suspicion that the industry’s dominated first and foremost by Big Businesses focused on their own profitability before all else. And they pose particular problems for sectors in healthcare dominated by not-for-profit and public ownership i.e. hospitals, home care, public health agencies and others.

My take

These lawsuits address two distinct issues: the roles of employers in designing their health benefits for employees including the use of PBMs, and the justification for consolidation of hospital and ancillary services in markets. 

But each lawsuit s predicated on a legal theory that prices set by organizations are geared more to corporate profits than public good and justifiable costs.

Pricing is the Achilles of the health system. Pushback against price transparency by some, however justified, has amplified exposure to litigation risk like these two  and contributed to the public’s loss of trust in the system.

It is unlikely greater price transparency and business practice disclosures by J&J and Advocate-Aurora could have avoided these lawsuits, but it’s clearly a message that needs consideration in every organization.

Healthcare organizations and their trade groups can no longer defend against lack of transparency by defaulting to the complexity of our supply chains and payment systems. They’re excuses. The realities of generative AI and interoperability assure information driven healthcare that’s publicly accessible and inclusive of prices, costs, outcomes and business practices. In the process, the public’s interest will heighten and lawsuits will increase.

P.S. Nashville is known as a hot spot for healthcare innovation including transparency solutions. Check out this meeting February 29: https://www.eventbrite.com/e/leaping-into-the-future-of-healthcare-2024-insights-tickets-809310819447

Resources

Lawsuit 119120873885 (documentcloud.org)

Microsoft Word – Aurora Class Action Complaint (FINAL filed Feb. 5 2024) (aboutblaw.com) February 5, 2024

16 Things CEOs Need to Know in 2023

Posted on by • Posted in Behavioral Health, CEO, Clinical Workforce Shortage, Consumer-Centric, Consumerism, Demand, Financial Goals, Financial Performance, Health Insurance Coverage Adequacy, Health System, High Cost Therapies, Home-Based Care, Hospital, Hospital Industry, Integrated Delivery System, Integrated Physician Enterprise, Risk-Based Compensation, Self Insured Employers, Senior Care, Strategy, Telemedicine, Telemedicine Strategy, Vertical Integration, Vertical Mergers • Leave a comment

https://www.advisory.com/-/media/project/advisoryboard/abresearch/brand-campaigns/soi/wf8632394-ab-16-things-ceos-need-to-know.pdf#page=38

Understand the health care industry’s most urgent challenges—and greatest opportunities.

The health care industry is facing an increasingly tough business climate dominated by increasing costs and prices, tightening margins and capital, staffing upheaval, and state-level policymaking. These urgent, disruptive market forces mean that leaders must navigate an unusually high number of short-term crises.

But these near-term challenges also offer significant opportunities. The strategic choices health care leaders make now will have an outsized impact—positive or negative—on their organization’s long-term goals, as well as the equitability, sustainability, and affordability of the industry as a whole.

This briefing examines the biggest market forces to watch, the key strategic decisions that health care organizations must make to influence how the industry operates, and the emerging disruptions that will challenge the traditional structures of the entire industry.

Preview the insights below and download the full executive briefing (using the link above) now to learn the top 16 insights about the state of the health care industry today.

Preview the insights

Part 1 | Today’s market environment includes an overwhelming deluge of crises—and they all command strategic attention

Insight #1

The converging financial pressures of elevated input costs, a volatile macroeconomic climate, and the delayed impact of inflation on health care prices are exposing the entire industry to even greater scrutiny over affordability. Keep reading on pg. 6

Insight #2

The clinical workforce shortage is not temporary. It’s been building to a structural breaking point for years. Keep reading on pg. 8

Insight #3

Demand for health care services is growing more varied and complex—and pressuring the limited capacity of the health care industry when its bandwidth is most depleted. Keep reading on pg. 10

Insight #4

Insurance coverage shifted dramatically to publicly funded managed care. But Medicaid enrollment is poised to disperse unevenly after the public health emergency expires, while Medicare Advantage will grow (and consolidate). Keep reading on pg. 12

Part II | Competition for strategic assets continues at a rapid pace—influencing how and where patient care is delivered.

Insight #5

The current crisis conditions of hospital systems mask deeper vulnerabilities: rapidly eroding power to control procedural volumes and uncertainty around strategic acquisition and consolidation. Keep reading on pg. 15

Insight #6

Health care giants—especially national insurers, retailers, and big tech entrants—are building vertical ecosystems (and driving an asset-buying frenzy in the process). Keep reading on pg. 17

Insight #7

As employment options expand, physicians will determine which owners and partners benefit from their talent, clinical influence, and strategic capabilities—but only if these organizations can create an integrated physician enterprise. Keep reading on pg. 19

Insight #8

Broader, sustainable shifts to home-based care will require most care delivery organizations to focus on scaling select services. Keep reading on pg. 21

Insight #9

A flood of investment has expanded telehealth technology and changed what interactions with patients are possible. This has opened up new capabilities for coordinating care management or competing for consumer attention. Keep reading on pg. 23

Insight #10

Health care organizations are harnessing data and incentives to curate consumers choices—at both the service-specific and ecosystem-wide levels. Keep reading on pg. 25

Part III | Emerging structural disruptions require leaders to reckon with impacts to future business sustainability. 

Insight #11

For value-based care to succeed outside of public programs, commercial plans and providers must coalesce around a sustainable risk-based payment approach that meets employers’ experience and cost needs. Keep reading on pg. 28

Insight #12

Industry pioneers are taking steps to integrate health equity into quality metrics. This could transform the health care business model, or it could relegate equity initiatives to just another target on a dashboard. Keep reading on pg. 30

Insight #13

Unprecedented behavioral health needs are hitting an already fragmented, marginalized care infrastructure. Leaders across all sectors will need to make difficult compromises to treat and pay for behavioral health like we do other complex, chronic conditions. Keep reading on pg. 32

Insight #14

As the population ages, the fragile patchwork of government payers, unpaid caregivers, and strained nursing homes is ill-equipped to provide sustainable, equitable senior care. This is putting pressure on Medicare Advantage plans to ultimately deliver results. Keep reading on pg. 34

Insight #15

The enormous pipeline of specialized high-cost therapies in development will see limited clinical use unless the entire industry prepares for paradigm shifts in evidence evaluation, utilization management, and financing. Keep reading on pg. 36

Insight #16

Self-funded employers, who are now liable for paying “reasonable” amounts, may contest the standard business practices of brokers and plans to avoid complex legal battles with poor optics. Keep reading on pg. 38

A $200 surcharge for unvaccinated spouses? It’s coming to one Louisiana health system.

Posted on by • Posted in Employee Insurance Surcharge, Employees Unvaccinated, Health System, Hospital, Hospital Industry, Self Insured Employers, Unvaccinated, Vaccination, Vaccine, Vaccine Efficacy, Vaccine Fee Covid, Vaccine Fee Covid Spousal, Vaccine Hesitancy Rate, Vaccine Safety, Vaccine Skepticism, Vaccine Supply • Leave a comment
https://www.advisory.com/daily-briefing/2021/10/05/louisiana-surcharge?utm_source=public_db&utm_medium=email&utm_campaign=2021oct05&utm_content=public_headline_public_x_x_x_x&elq_cid=4778863&x_id=
Louisiana Health System to Charge Fee to Employees with Unvaccinated Spouses - The New York Times

As more companies consider implementing insurance surcharges for their unvaccinated employees, Ochsner Health plans to add a $200 monthly surcharge for employees with unvaccinated spouses and domestic partners covered by the organization’s health plan.

Unvaccinated employees face potential insurance surcharges

While many companies have relied on incentives to encourage employee Covid-19 vaccination, some have recently opted to implement penalties, such as premium surcharges, for those who remain unvaccinated instead.

Recent polling suggests that these surcharges could spur a significant portion of unvaccinated employees to get the Covid-19 vaccine. According to an Affordable Health Insurance poll of 1,000  unvaccinated individuals with employer-based health plans, nearly 75% said a health insurance surcharge could motivate them to get vaccinated, with 43% saying a surcharge would definitely motivate them to get vaccinated.

“As they say, the vaccine is not mandatory, but if people have extra charges with their insurance due to not being vaccinated, people will surely push themselves to be vaccinated,” Nick Schrader, insurance agent at Texas General Insurance, said.

So far, Delta Airlines is the largest employer to implement an insurance surcharge for unvaccinated employees, and it has already seen significant increases in employee vaccination.

In August, Delta announced unvaccinated employees would have to pay a $200 monthly health insurance surcharge to remain on the company’s health insurance plan beginning Nov. 1.

According to Delta, the surcharge will protect the company from lost revenue due to unvaccinated employees being hospitalized with Covid-19—which costs the company an average of $50,000 for each case.

Henry Ting, Delta’s chief health officer, said almost 20% of the company’s unvaccinated employees received the Covid-19 vaccine in the two weeks after the surcharge was announced. In addition, the company did not see any employee turnover or resignation due to the announcement, Ting said.

Ochsner Health’s ‘spousal Covid vaccine fee’

Ochsner Health, Louisiana’s largest health system with nearly 32,000 employees and more than 4,500 physicians, plans to implement a $200 monthly surcharge for employees with unvaccinated domestic partners and spouses on the organization’s health insurance plan, the Associated Press reports.

Ochsner is the first health system to apply insurance surcharges to unvaccinated family members, not just employees. Other Louisiana health care organizations, such as Our Lady of the Lake Regional Medical Center and LCMC Health, said they would ask families of employees to be vaccinated, but did not plan on implementing a surcharge for unvaccinated spouses or partners, the Times-Picayune/New Orleans Advocate reports.

According to a letter sent from Ochsner leaders to employees, the surcharge, called the “spousal Covid vaccine fee,” will begin in 2022 and could deduct up to $2,400 a year from an employee’s paycheck. The surcharge will only apply to domestic partners or spouses, not other dependents covered by an employee’s health plan like children.

Warner Thomas, Ochsner’s president and CEO, said the surcharge for unvaccinated spouses and partners is similar to a surcharge for tobacco users and will be used to help keep health premiums low for employees. As a self-insured organization, Ochsner is responsible for the cost of Covid-19 treatment for patients on its health insurance plan, the Associated Press reports.

“The reality is the cost of treating Covid-19, particularly for patients requiring intensive inpatient care, is expensive, and we spent more than $9 million on Covid care for those who are covered on our health plans over the last year,” Thomas said.

“We know that Covid-19 vaccination dramatically reduces transmission, severity of symptoms, hospitalizations, and death. Approximately 90% of those hospitalized with Covid in our facilities have been unvaccinated since vaccines were approved in December 2020,” he added. “Widespread vaccination is critical to stopping the spread of Covid-19, and we hope this change will encourage even more community members to get vaccinated.”

Thomas also clarified that unvaccinated spouses and partners are not required to be vaccinated because of the surcharge. “This is not a mandate as non-employed spouses and domestic partners can choose to select a health plan outside of Ochsner Health offerings,” he said.

Unvaccinated spouses and partners can also apply for medical or religious exemptions for the Covid-19 vaccine, Thomas said. Currently, around 300 Ochsner employees have applied for medical or religious exemptions, the Times-Picayune/New Orleans Advocate reports.

How insurers are covering COVID-19

Posted on by • Posted in American Hospital Association (AHA), Clinical Testing, Coronavirus, Health Insurance Coverage Adequacy, Health Insurance Industry, Out of Pocket Expenses, Periodic Interim Payments (PIP), Prior Authorization, Rev Cycle Management, Self Insured Employers, Underinsured • Leave a comment

https://www.healthcaredive.com/news/how-insurers-are-covering-covid-19/575372/

Private Health Coverage of COVID-19: Key Facts and Issues | The ...

Insurers are weighing how best to respond to the outbreak of the novel coronavirus as cases swell in the U.S. Here is a tracker to follow the latest policy and coverage decisions from the nation’s largest insurers.

The nation’s health insurers are responding to the coronavirus pandemic with changes to coverage associated with COVID-19 as the number of cases continues to swell across the U.S.

The biggest payers have said they will waive patient cost-sharing — copays, coinsurance and deductibles — for testing. Although some, such as Cigna and Humana, have gone farther by eliminating cost-sharing for all COVID-19 treatment.

In addition to coverage decisions, insurers are weighing the ways they can reduce administrative barriers to promote quicker access to care for those infected with the novel coronavirus. All are cutting back on prior authorization in various ways to ease access to care.

Hospitals say that’s not enough, and are calling on the biggest payers to follow actions taken by Congress and CMS to help resolve cash flow issues, by accelerating payments or opting into releasing interim periodic payments. The American Hospital Association also is urging payers to eliminate administrative burdens such as prior authorizations.

“This crisis is challenging for all of us, and everyone has a role to play,” AHA said in its letter to the nation’s largest insurers. “You could make a significant difference in whether a hospital or health system keeps their doors open during this critical time.”

Despite the policy changes by payers, employers with self-funded plans can opt out of these policies. A majority of workers are covered by self-insured plans, which essentially allow employers to decide coverage decisions given they’re paying for the claims and having insurers simply perform administrative services.

Below is a tracker with the latest coverage decisions for the nation’s largest insurers.

Blue Cross Blue Shield Association

The BCBSA is eliminating cost-sharing for COVID-19 diagnostic testing. It will also waive cost-sharing for treatment at in-network or Medciare rates through May 31, including inpatient stays.

BCBSA will remove prior authorization requirements for testing and for services that are medically necessary to treat an infected patient. BCBSA also is waiving limits on early refills to make it easier to access medications and expanding access to telehealth services.

Molina

Molina is halting cost-sharing for testing and treatment. That policy applies to Medicare, Medicaid and marketplace members nationwide.

Aetna (CVS)

Aetna will waive cost-sharing for certain members admitted to an in-network hospital with COVID-19 or complications from the disease. The policy applies to all of Aetna’s commercial plans, though self-insured members can opt out. The policy will apply to admissions through June 1. Aetna also is waiving cost-sharing for testing and associated visits, including telehealth.

Aetna also is attempting to make access to hospitalization faster for those with COVID-19 by easing prior authorization requirements, particularly in areas hard hit by the outbreak like New York and Washington.

Anthem

The nation’s second largest commercial insurer will waive cost-sharing for COVID-19 treatment and will reimburse providers at either in-network or Medicare rates through May 31. The policy applies to Anthem’s fully insured, individual, Medicaid and Medicare Advantage members. Self-insured plans can opt out. Anthem also is waiving cost-sharing for COVID-19 testing and in-network visits associated with testing whether it’s conducted at a physician’s office, urgent care or ER.

Anthem also is easing its limits on early refills for 30-day prescriptions. Anthem said it would waive cost sharing for telehealth visits, including those for mental health for a period of 90 days starting March 17. Self-insured plans have the option to opt in the new virtual care policy.

Centene

Centene will waive cost-sharing for COVID-19 related screening, testing and treatment for its Medicaid, Medicare and Marketplace members through June 30.

Centene also will eliminate prior authorization requirements for care for all its Medicare, Medicaid and Marketplace members. The company is also working to supply federally qualified health centers with personal protective equipment and assistance in providing small business loans to behavioral health providers and long-term service support organizations.

Cigna

Cigna will waive cost-sharing for all COVID-19 treatment, including testing and telehealth screenings through May 31. The policy applies to Cigna’s fully-insured group plans, individual coverage and Medicare Advantage plans. Self-insured plans can opt out.

Cigna will reimburse providers either at in-network or Medicare rates depending on the member. Cigna also is easing access to maintenance medication by offering free shipping for a 90-day supply. Cigna is easing prior authorization requirements for patients being discharged from the hospital to post-acure stays.

Humana

Humana is waiving cost-sharing for testing and treatment, including hospital admissions for COVID-19 cases. The policy applies to its Medicare Advantage plans, fully-insured commercial plans, Medicare supplement and its Medicaid plans. The policy is indefinite with no current end date. Cost-sharing will be waived for all telehealth visits and members can opt to refill prescriptions early.

Humana also is easing administrative barriers to allow infected patients to easily move from a hospital to post-acute care settings. It’s suspending prior authorization and referral requirements and requesting notification within 24 hours. It’s also implementing an expedited claims process to reimburse providers faster, Humana said.

UnitedHealthcare

The nation’s largest commercial insurer, will waive cost-sharing for COVID-19 treatment through May 31. The policy applies to its fully-insured commercial, Medicare Advantage and Medicaid plans. United also is waiving cost-sharing for COVID-19 testing at approved locations in accordance with Centers for Disease Control guidelines. There will be no cost-sharing for visits related to testing including at physician offices, urgent care, ERs and telehealth visits. The policy applies to United’s commercial, Medicare Advantage and Medicaid members.

UnitedHealthcare is opening a special enrollment period for some of its commercial members who opted out of coverage during the traditional enrollment period with their employers. This enrollment period will end April 6. The insurer also is easing prior authorization requirements through May 31, suspending prior approval for post-acute care and switching to a new provider.

 

 

 

Why State Efforts to Mandate Coronavirus Testing Will Fall Short

Posted on by • Posted in 2020 Election Issues, ACA, Coronavirus, Employee Retirement Income Security Act (ERISA), Essential Health Benefits, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Self Insured Employers • Leave a comment

Why State Efforts to Mandate Coronavirus Testing Will Fall Short

Image result for ERISA

To cope with incipient coronavirus outbreaks, Washington and New York have announced emergency directives requiring insurers to cover COVID-19 testing without cost-sharing. The states recognize that high deductibles and other out-of-pocket payments discourage people from getting tested, which in turn threatens public health.

Both states have acted pursuant to laws governing the regulation of insurance. In Washington, for example, the state insurance commissioner is empowered to issue orders addressing “medical coverage to ensure access to care” when the governor declares an emergency. Similarly, New York’s Superintendent of Financial Services says that it will issue an “emergency regulation” to require insurers to cover testing without cost-sharing (though the precise authority to issue that regulation is a little vague).

But the directives are more limited in scope than they appear, and will provide no help at all to the approximately 100 million people nationwide who receive coverage through self-insured employers. As with so many problems that arise in health law, the reason is the Employee Retirement Income Security Act of 1974 (ERISA).

When Congress adopted ERISA, it wasn’t thinking very hard about health insurance. It was thinking about pension plans, which many employers had chronically underfunded, leaving retired employees high and dry. So Congress adopted ERISA to offer some basic protections for employees. In exchange, Congress preempted any state laws that “relate to” employee benefit plans.

Congress carved out an exception to ERISA’s broad preemptive scope for laws regulating insurance. That’s a domain that’s traditionally been left to the states. Washington and New York can thus tell private insurers—including those that offer employer-sponsored coverage—to abide by their emergency rules.

But lots of firms don’t actually buy insurance for their employees. Instead, larger firms usually “self-insure,” meaning that they pay for their employees’ health expenses themselves. (Odds are that, if you’re employed, you work at a self-insured firm—61% of people with employer-sponsored coverage do.) And ERISA clarifies that employers, when they self-insure, aren’t to be treated as insurers.

The upshot of this convoluted scheme is that the states can’t regulate self-funded employer plans. They’re regulated, instead, by the U.S. Department of Labor under ERISA. But because Congress didn’t think of ERISA as a regulation of health insurance, it didn’t authorize the kind of emergency health regulations that Washington and New York are now drawing on.

That’s one reason the federal government has looked so feckless when it’s tried to say that it will guarantee access to testing. Vice President Pence, for example, said yesterday that testing is an “‘essential health benefit,’ which means the test will be covered by health insurance plans, Medicare and Medicaid.”

But the EHB rules don’t apply at all to large employers or to Medicare. Even if they did, insurers can (and do!) impose cost-sharing for EHBs, and could do so for a COVID-19 test. It’s a completely meaningless statement.

Nor can the federal government slide coronavirus testing into the part of the Affordable Care Act that requires coverage without cost-sharing for high-quality preventive services designated by the U.S. Preventive Services Task Force. Not only is that task force ill-equipped to move quickly, but the ACA says that its recommendations can only take effect after a “minimum interval” that “shall not be less than 1 year.” That’s much too late.

Unless I’m missing something, the federal government simply does not have the legal power to require employers to cover coronavirus testing without cost-sharing. The Association of Health Insurance Plans has said that its members may voluntarily waive cost-sharing, but they may not, and in any event AHIP doesn’t represent employers, who get to make the final call on what they do and don’t cover.

Congress will have to act—and it should act immediately to assure swift, reliable, and no-cost access to testing services. The broader lesson, though, is that Congress’s blunderbuss approach to preemption under ERISA has led to a situation in which neither the states nor the federal government is equipped to regulate the coverage practices of large, self-insured employers. That gap in legal authority could have pernicious consequences in the coming months.