New ACO Rule To Delay Penalties

A new rule proposed in December by the Center for Medicare and Medicaid Services (CMS) would, among other things, delay penalties for poor performance by participants in Accountable Care Organizations (ACOs) for up to three years. This would create greater incentive for participation in ACOs, as it would give new adopters time to iron out errors and inefficiencies.

The CMS defines ACOs as doctors, hospitals, and other health care providers who come together voluntarily to give coordinated high-quality care to their Medicare patients while managing costs. The reward for ACO providers that save money while also meeting quality targets is that they get to keep a portion of the savings to the Medicare program.

According to the 19th Annual Towers Watson/National Business Group on Health (NBGH) Employer Survey on Purchasing Value in Health Care, 28% of employers surveyed said it was likely that employer-sponsored health care will be delivered through highly coordinated provider models such as ACOs over the next five years.

Said CMS Administrator Marilyn Tavenner, “This proposed rule is part of our continued commitment to rewarding value and care coordination – rather than volume and care duplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings program.”

John Barkett on Employers and the ACA

John Barkett, Director of Policy Affairs for Towers Watson Exchange Solutions, was a guest on Wharton Business Radio this month. He was interviewed by his former professor, Arnold Rosoff, Professor Emeritus of Legal Studies and Business Ethics at the University of Pennsylvania’s Wharton School of Business, on the topic of the employer perspective on the Patient Protection and Affordable Care Act (PPACA). The segment was called “The Business of Healthcare” and it’s available for on-demand listening to subscribers of Sirius XM radio.

In case you don’t have a subscription, here are selected questions and answers from John’s interview:

On employers’ option to “play or pay”

John: I think the question of how employers are responding to the ACA is something that’s on everyone’s mind, especially because the ACA relies on employers to continue offering coverage as part of the overall makeup of the policy. The ACA has employers doing several things to support it.

First, it asks employers to “play or pay.” They can continue offering coverage to their workers, as most employers have done, especially large employers, or they can pay a penalty.

And, for the most part, those who have studied the bill and the law have suggested that employers will continue to offer coverage, and that’s certainly what we’ve seen among our clients. The vast majority of them plan to continue offering coverage.

On new compliance burdens

John: The compliance burdens that employers face right now have gone up dramatically because of the Affordable Care Act.

We’re talking about reporting requirements, new communications that they have to provide to their employees and new rules around waiting periods and working hours. All of these things have combined to give employers a lot of angst about the ACA in general, even if they agree with its policy goals, because it’s asking them to do a lot more.

On competition, choice, and the private exchange

John: One thing that has changed is employers have looked at the ACA’s public exchanges and said “Hmm, this exchange concept, choice and competition among insurers, maybe that is something that we could bring into our own benefits package.”

And so you’ve seen private exchanges start to come onto the scene. Private exchange providers run a marketplace for employer populations and allow employees to have choice.

On enrollment assistance

John: Most people need a lot of help to find the plan that best meets their needs, budget, and lifestyle.

Figuring out how to enroll in a health plan on the public exchanges is like being asked to do your taxes for the first time. So people are seeking help just like they do when they fill out their tax returns. They ask an accountant, they look for benefit advisors, they look for brokers, they look for navigators, they look for application assisters, there’s a whole host of programs out there that are going to help people go through the process. We’ve seen that the vast majority of consumers are willing to take up that help.

On the future of employer sponsored insurance

John: Employers offer health benefits to attract and retain top talent and that incentive is not going to go away. They’re still going to do everything they can to get the best people into their companies.

Now, the way they offer and administer benefits might change. They might choose someone else to administer the coverage, perhaps a private exchange. Or they might send some people to the individual market. But they are still going to fund benefits.

Affordable Rates, If You Do Your Research

The second Patient Protection and Affordable Care Act open enrollment period began on November 15th with just moderate rate increases for plans on the federal exchange. An influx of new plan offerings on the federal exchange was a main driver of the lower increases. In general, this year 90% of consumers buying plans through Healthcare.gov have a choice of at least three plans, compared to 75% last year.

Rates vary depending on the market in each state and on the level of coverage purchased, size of family, and age of the individual purchasing the plan. According to Washington Post data, 25 of the 34 states that opted to use the federal exchange, rather than create their own state run exchange, had higher premiums on average than this time last year for silver tier plans. Nine states had lower premiums.

However, even when premium rates are higher, the average premium rate increase was modest. The Centers for Medicare and Medicaid Services (CMS) recently released extensive data on approved rates by state and premiums by state.

Analysis of the data estimates the average premium would be $381 for a lowest-cost silver plan for a 50-year-old nonsmoker, and $307 for a bronze plan. These rates are just 4% and 3% higher than last year.

An important caveat: Health care consumers could miss out on low premium rate increases if they default to a new feature this enrollment season: automatic re-enrollment. The Department of Health and Human Services (HHS) announced on June 26, 2014 that individuals who purchased plans on the federal exchange last enrollment would be automatically re-enrolled in the plan they selected last year if they did nothing.

Because plan offerings have changed, and in most cases more plans have been added, individuals who default to auto-reenrollment could see on average a 7% increase, or pay approximately $34 more a month for silver plans. At the highest tier of coverage, the platinum plans, rate increases those who chose to auto-reenroll were even higher: a 15% rise, or about $111 per month.

This data says that consumers who shop around will see more affordable, and more, plan options this open enrollment period as compared to last year. Smart buyers will take notice and act accordingly.

For a state-by-state analysis of health insurance premiums, click here.

For more on the effect of competition among insurance carriers on premium rates, see our October post, “When Insurance Carriers Compete, You Win.”

Towers Watson Is Founding Member of Web Broker Consortium

Towers Watson and three other prominent web brokers (eHealth, GetInsured, and GoHealth) have announced the formation of the Association of Web-based Health Insurance Brokers (AWHIB). Towers Watson had previously gained distinction as one of the first companies to secure a web broker entity agreement with the federally facilitated marketplace in the lead-up to the first ACA open enrollment period.

The purpose of the group is to “advocate for key technical changes to enable the private sector to better facilitate the efficient enrollment of Americans in state and federal health insurance exchange marketplaces.”

The group will educate a broad range of audiences about the important role web brokers play in helping millions of Americans evaluate and select plans that best meet their needs and economic situations. AWHIB will reach out to consumers, insurers, regulators, lawmakers, and other industry groups to develop technologies and inform policy in order to provide Americans with access to the best health insurance products and services.

“Towers Watson helps employers connect employees and retirees who might not qualify for employer-sponsored insurance with public exchanges,” said Joe Murad, managing director with Towers Watson Exchange Solutions. “Our exchange works with these employees and retirees to examine their options, determine whether they qualify for subsidies and enroll in plans.”

“Through this association,” added Murad, “We will work with other leading web brokers to continually improve access to health insurance under the ACA so that more Americans can have the peace of mind that comes from knowing their health care and financial futures are protected.”

Advice to Employers Adopting Exchanges: Don’t Let Employees “Go It Alone”

As more employers and individuals adopt health insurance exchanges as delivery platforms for health insurance plans, it has become clear that enrollment assistance is essential. This is especially the case for individuals who may be choosing their own health plans for the first time.

An analogy can be drawn between this experience and being asked to do one’s own taxes for the first time, said John Barkett, Director of Policy Affairs for Towers Watson Exchange Solutions, during a recent interview on Wharton Business Radio. Much like seeking tax help from a certified tax preparer, people choosing health plans on exchanges are looking to application assisters, navigators, and brokers to help them enroll in the right health plan to meet their needs.

Barkett detailed the benefits of enrollment assistance, whether in person, over the phone, or online, in a recent bylined post for the Institute for HealthCare Consumerism. Said Barkett, “Providing individuals with the right kind of assistance could be the “x factor” for exchanges – the wildcard variable that could make the difference between success and confusion.”

In light of the recent trend of empowering employees as “health care consumers,” Barkett provided a series of steps for employers to support their employees enrolling in plans on an exchange. Among them are educating your employee population and taking into account size and demographic of your workforce.

For the complete list of tips, click here to read Barkett’s byliner on the IHC website.