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HR Elements October 2012

Employers Take Another Look at CDHPs

While consumer-driven health plans (CDHPs) have been shown in the past to generate savings for employers and workers alike, the CDHP movement now might be losing some steam, according to a pair of industry studies.

CDHPs — high-deductible health plans (HDHPs) often paired with health savings accounts — made up 22.5 percent of all health care plans offered in the U.S. in 2012, according to the latest release from the UBA Health Plan Survey. That figure compares with 22.9 percent in 2011 — the first decline since 2007.

There’s no shortage of research that points to the positives of these types of plans. A recent study by the Kaiser Family Foundation found that HDHPs had average premiums of just under $5,000 for single coverage in 2012 — about 15 percent less than preferred provider organization (PPO) plans, according to a report in MarketWatch. Another report by the RAND Corp. noted that patients with CDHPs tended to see significantly lower overall medical costs and used fewer brand-name drugs.

Statistics like those — and a challenging economic outlook — have moved more employers to offer CDHPs, said Helen Darling, president of the National Business Group on Health, in the MarketWatch report.

“Now that there’s been this economic crunch and wages are flat, the increased costs of health care are harder to take,” Darling said.

Yet at the same time, employers are starting to see some downsides to consumer-based care, the RAND study notes. Patients with chronic conditions often see much higher out-of-pocket expenses than those without a chronic disease. The plans also may discourage employees from obtaining medical care, which can lead to bigger costs down the road.

“The concern is that [those enrolled in CDHPs are] forgoing care that they need,” said Amelia M. Haviland of the Carnegie Mellon University and co-author of the RAND study in MarketWatch.

CDHPs also aren’t achieving as much first-year savings for some employers. The 2012 UBA Health Plan Survey found that the savings created by CDHPs in their first year over the plans they were replacing averaged 1.75 percent in 2012, a significant reduction from prior years.

Still, the survey spotted a few bright spots for these types of plans. The negative trend of CDHPs renewing at higher rates compared with other plans did not repeat in 2012, and CDHPs continue to remain popular in particular regions of the U.S. — especially in the Northeast, where 27.8 percent of all plans were CDHPs.

Ruling May Give Wellness Programs a Boost

A recent federal ruling likely will ease some compliance worries for employers sponsoring wellness and disease management programs.

The 11th Circuit Court of Appeals recently upheld a lower-court ruling that a wellness program in Florida does not violate the Americans with Disabilities Act’s (ADA) prohibition of required health exams and disability-related questions because the program falls under a safe harbor for “bona fide” benefit plans — that is, the plan’s terms are based on “underwriting risks, classifying risks, or administering risks” and not “a subterfuge” to evade ADA requirements, according to a report in Human Resource Executive Online.

For employers, the ruling means that at least in some circumstances, an employer can offer a “nonvoluntary” wellness program without running afoul of ADA.

“The court said that if you have your wellness program as part of your standard health plan, you can fit this under a new exception that does not violate the ADA and doesn’t require voluntariness,” Brian Pinheiro of the law firm Ballard Spahr said in HREO.

Teresa Jakubowski, partner with Barnes and Thornburg, added that the ruling will give employers more flexibility when using “penalty-based” wellness strategies.  “There are the carrot and the stick approaches, and the court approved the stick in this case,” Jakubowski told HREO.

Employers, however, should still take caution with their wellness compliance as it relates to ADA, warned Nina G. Stillman and Andy R. Anderson of Morgan Lewis in a recent article for Employee Benefit News.

While the ruling likely will give employers some breathing room, it is unclear how the Equal Opportunity Employment Commission (EEOC) — which is responsible for enforcing ADA — will interpret this ruling, the Morgan Lewis attorneys noted.

In the meantime, employers would be best served to keep their wellness initiatives voluntary by “focusing on providing positive incentives for participation rather than negative consequences for nonparticipation,” Stillman and Anderson wrote.

Employers also should remain aware of wellness-related regulations that still apply outside of the ADA, including the privacy and nondiscrimination rules in HIPAA, the Genetic Information Nondiscrimination Act and the health care reform law, Stillman and Anderson noted.

Despite the compliance hurdles, employers continue to turn to wellness as a way to reduce their overall health care costs and help their workforce remain productive and healthy, according to a new survey by Humana and the National Small Business Administration. The survey, as reported by LifeHealthPro, found that three of four small businesses that offer wellness initiatives say the programs “positively impact their bottom line.”

Employees Seek Better Pharmacy Services

Mail-order pharmacy programs promise savings and convenience for employees, but some workers are starting to miss the face-to-face time with their local pharmacist, a new report suggests.

J.D. Power and Associates’ 2012 U.S. Pharmacy Study finds that overall satisfaction for mail-order pharmacies dipped to 792 (on a 1,000-point scale) in 2012, a decrease from 806 last year.

The study found that consumer satisfaction levels among mail-order pharmacies dropped in cost competitiveness, delivery, ordering and customer service.

Although satisfaction levels for brick-and-mortar pharmacies also dropped, the data suggest that the appeal of mail-order prescription services is diminishing.

“Acceptance of mail-order programs grew by offering customers convenience and lower costs,” said Rick Millard of J.D. Power and Associates in the company’s press release. “While this has been a successful approach, the mail-order business needs to continue to adapt and meet customers’ increasing needs.”

Customer service has increasingly become an advantage for brick-and-mortar pharmacies, Millard said. “The pharmacist is at the heart of that service,” he added.

The survey notes that mail-order pharmacies can still save time and money if they’re the right fit. J.D. Power offers a few tips for employers and employees to maximize their drug benefits, including:

  • Do your homework: Check the National Association of Boards of Pharmacy for a list of reputable sources before selecting a mail-order or brick-and-mortar vendor
  • When in doubt, ask: Don’t hesitate to get information from a pharmacist if a question arises about a drug
  • Go generic:Encourage employees to ask their doctor for generic alternatives.

Generics have proven to be an especially powerful driver of savings, according to a separate report by the Generic Pharmaceutical Association (GPhA). The research, reported in Employee Benefit News, notes that savings from generic drugs equals about $1 billion every two days in the U.S. — totaling $193 billion in 2011.

The majority of generic savings (57 percent) stems from nervous system and cardiovascular drugs, the study found.

What You Need to Know

A recent federal action may signal an uptick in HIPAA enforcement, according to the law firm Spencer Fane Britt & Browne LLP. The Department of Health and Human Services (HHS) recently settled a case with the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates, Inc. (collectively MEEI), in which MEEI agreed to pay $1.5 million to settle possible HIPAA Security violations. Recently, HHS has operated in “compliant-driven” mode regarding HIPAA, Spencer Fane notes, but this recent case suggests a stricter HIPAA enforcement may be on the horizon.ARE YOU SBC’D?
The new summary of benefits and coverage (SBC) rules took effect on Sept. 23 for plans that start on or after that day. The rules call for a “standardized written description of health insurance policies and coverage so that participants and consumers can better understand their coverage and compare it with other health insurance options on the market,” according to SmartHR Manager.FLU TIME
The Centers for Disease Control and Prevention (CDC) is recommending all Americans older than six months be vaccinated against the flu. Although last year’s flu season was relatively mild, the CDC warns that Americans should not be complacent about the flu. It recommends that people be vaccinated in October, before the flu season kicks into full gear. During the 2011-12 flu season, 128 million Americans (or 42 percent) received a flu shot.SLOWED COSTS
The cost of employer-sponsored health care increased at a rate of 4.6 percent in 2011, the slowest rate in five years, according to Truven Health Analytics. The study predicts that costs will grow at a moderate rate of 4 percent to 5 percent in 2012 and 2013.

The IRS is, for the second time, delaying for at least a year the effective date of new rules regarding cash balance pension plans. The proposed rules allow plan sponsors to use a “market rate” to credit interest to participants’ accounts.

New research suggests that online tools can improve the outcome of a weight-loss campaign. A study by Brown University researchers found that Internet-based weight-loss sessions improved outcomes and helped participants keep the weight off afterward.

More employers are turning to electronic delivery of health plan communications, according to a HighRoads report. Eight of 10 polled employers said they used some form of electronic distribution, with websites being the most popular. Thirty-seven percent said they planned to distribute future summary plan descriptions electronically.

A new survey finds that total fees for defined contribution (DC) retirement plans dropped in 2011 compared with 2009. The Investment Company Institute and Deloitte Consulting LLP found that the median plan fee (including administrative, recordkeeping and investment fees) was 0.78 percent, or about $248 per participant.


EAPs in the Workplace
Thursday, Nov. 1

2 p.m. ET / 11 a.m. PT

To a large degree the “roots” of the employee assistance program (EAP) profession emerged and gained energy from the early occupational alcoholism programs. The evolving EAPs of today provide their customers with a wide variety of services to address employee performance and well-being.

This webinar, presented by United Benefit Advisors and led by Mutual of Omaha, will review best practices to consider when purchasing services and establishing a relationship with your EAP provider.

Preparing for 2014: Should an Employer Pay or Play?
Tuesday, Nov. 13
2 p.m. ET / 11 a.m. PT

Health care reform’s “main event” (at least for employers) arrives in 2014. That’s when employers with 50 or more full-time employees will have to either “pay” (a substantial tax penalty) or “play” (by offering “affordable” health coverage of at least “minimum value” to their full-time employees).

The agencies charged with implementing health care reform have issued guidance designed to help employers determine whether they are subject to this “pay or play” requirement (by defining “full-time employee” in the seasonal and variable-hour contexts) and then calculate any penalty that might be due for failing to provide appropriate coverage.

In this 90-minute webinar, attorneys from Spencer Fane Britt & Browne LLP will address this agency guidance. The webinar also will present approaches for avoiding or minimizing any penalty.  Some of these may require action as early as January of 2013.