Moving from an employer-sponsored plan to a Medicare plan does not have to be complicated. Money magazine talked with Mercer’s Kristin Parker and came up with five tips for retirees. A few of them raise interesting considerations for those about to retire that could result in waiting for Medicare coverage to get treatment.
- There is no family plan in Medicare. So if you and your spouse have different medical and prescription drug needs, you can each enroll in the plan that is best for you.
- Cap on out-of-pocket costs isn’t automatic. Original Medicare pays 80% of covered expenses, with no cap on what you might have to pay. Medigap and Medicare Advantage policies have out-of-pocket safeguards. It is important to understand that component of the Medicare supplement policy.
- Be strategic in scheduling some procedures. Those about to retire should compare out-of-pocket costs for a needed procedure under employer coverage versus Medicare. You may fare better with Medicare’s hospitalization coverage, for example, than with your current commercial plan.
- Wellness features may be different. Medicare’s programs tend to offer more in-person care from health professionals, while commercial programs often depend on telephone advice services.
- Research may help limit drug costs under Medicare. Most people can use a Medicare tool to compare the plans offered where they live to find the best fit for individual needs. Doing your Part D homework might provide better and cheaper coverage than through your employer plan.
Changing medical insurance upon retirement is a big deal to retirees. Employers who are looking to ease the transition for retirees can direct retirees to a resource to help them consider their options. Fifteen percent of employers contract with a retiree exchange to provide personalized support to Medicare eligible retirees. In addition, the States have established Senior Health Insurance Information Programs (SHIIP) to help seniors. Educational tips and personalized support can go a long way to helping a new retiree feel confident about their healthcare choices and decisions.
This month, the International Federation of Health Plans (iFHP) released its 2015 Comparative Price Report, a look at medical prices per unit in private health plans in seven OEDC countries, including the US. While you can guess that most procedures, tests and scans cost more in the US, you might be surprised at the size of the discrepancies. Let’s take a look at the most common surgical procedure performed in the US – the appendectomy. According to the iFHP, the average cost of an appendectomy in the US is almost double the cost in the UK and quadruple the cost in Australia. While the report doesn’t explain the higher average US cost, it does offer a clue by showing how widely prices for this surgery vary within the US – from about $9,000 at the 25th percentile to about $33,000 at the 95th percentile. This degree of cost variation – when it doesn’t result in better outcomes – is why US employers have turned to transparency tools, reference-based pricing, and value-based care.
The report also showcases extreme pricing discrepancy for seven specialty prescription drugs, with the US typically paying much, much more. A well-researched article in the Wall Street Journal that appeared late last year does a great job of explaining how other countries manage to keep their drug spending under control. A lot of it comes down to bargaining power. Government-run health systems in countries like the UK and Norway have substantial negotiating clout with pharmaceutical companies. In the highly fragmented U.S. market, payers range from employers to insurance companies to federal and state governments – and Medicare, the largest payer for prescription drugs, is by law unable to negotiate pricing. For Medicare Part B, pharmaceutical companies report the average price at which they sell medicines to doctors’ offices or distributors; by law, Medicare adds 6% to these prices before reimbursing the doctors, and the plan member pays 20% of the cost. According to the article, “The arrangement means Medicare is essentially forfeiting its buying power, leaving bargaining to doctors’ offices that have little negotiating heft.”
Another piece of the equation is being willing to not cover a drug that doesn’t offer enough of an advantage over an existing, lower-cost drug. For example, England’s National Institute for Health and Care Excellence, or NICE, will conduct analyses and make recommendations to the public health system about whether or not to cover a drug based on its value. If a drug is rejected, its maker will sometimes offer a discount – and then hope to make up the difference in the US?? From the graphs showing cost differences in the report, it sure looks that way. And, by the way, what’s your PBM doing to maximize the value of your drug spend?
There has been much focus lately on the dramatic differences in the cost of services from hospital to hospital and market to market, and questions about the lack of price transparency abound. But even more concerning is the variation in quality. According to a May 2016 study by the National Center for Health Statistics, CDC mortality statistics don’t tell the whole story. If “preventable medical errors” were on the list of the leading causes of death in the United States, they would rank 3rd, claiming more lives than diabetes, strokes, and respiratory disease each year. To add to this, we know that the patient experience is sub-optimal at best and, in healthcare, we know there is no known relationship between cost and quality. All of this makes a strong case for Centers of Excellences, or COEs.
A COE is an organized offering around a specific disease condition or procedure by a hospital or health system ensuring superior clinical outcomes and fewer complications, an improved patient experience and a better cost profile. In a COE program, employees with complex conditions that need a non-emergent procedure are directed to facilities that are most likely to produce the best outcomes. Clinical focus areas for COEs include cardiac, spine, hip/knee, bariatrics, transplant, and cancer treatments. Potential advantages for employees include access to the highest quality medical providers and facilities; in many cases no travel costs and minimal out-of-pocket expenses; evidence-based care; personalized care management; and a lower risk of complications and readmissions. On the employer side, there are a number of benefits that make COEs attractive: price transparency, easier administration, lower healthcare costs, reduced absenteeism, improved employee satisfaction (as evidenced by extremely positive feedback), leading to strengthened employer-employee relationships.
That said, COEs are not without their issues. Without standard metrics or performance benchmarks, the definition of “excellence” is a subject of debate – sometimes a COE branding by an organization is more of a marketing tactic. For this reason alone, we encourage employers to “look before they leap” and understand the criteria used to designate any facility as a COE so that they can realize the benefit of a COE. Employers should evaluate data and metrics not just for the larger COE population but also the impact on their specific population, in terms of quality, safety, patient satisfaction, and outcomes. Still, we expect COEs to continue to gain momentum. Mercer’s National Survey of Employer-Sponsored Health Plans 2015 found that among large employers, 25% currently offer a COE program and an additional 24% are considering it. Among the largest employers (5,000 or more employees), 43% already offer COEs and another 33% are considering it – and just as importantly, nearly 8 in 10 employers that currently use a COE are considering expanding their COE offerings. With employer interest so high, we anticipate that the numbers of COE designated facilities and targeted conditions will increase. In this evolving market, it will be extremely important for employers to identify the right COE and develop the right set of contractual elements for the relationship.
The move from fee for service to payment for value is real. This blog post on the Health Affairs site provides a glimpse into the progress being made with this new approach to contracting with providers. I was struck by one sentence in particular – Patients are the most underutilized resource to help reach positive medical outcomes. Since 155 million Americans are covered by employer-sponsored health plans, employers are in a unique position to be able to influence patient behavior. With the advent of consumer-directed health plans, health advocacy and other well-being programs, we have made strides in promoting consumerism and empowering patients. While we have a long way to go to get plan members more comfortable and confident in this role, there’s a big potential upside.
Last week, an employer I was speaking with on my favorite subject, value-based care, made the comment, “None of my carriers are charging me any ACO fees.” I didn’t want to be a wet blanket, but I had to point out that unfortunately this was most likely not the case. So how does it happen that an employer might not know about fees for value-based care? And what should they do about it?
The national carriers all have Accountable Care Organization (ACO) or Patient Center Medical Home (PCMH) contracts with physician or provider groups embedded within their broad PPO networks. Members who frequently utilize physicians from these groups are deemed “attributed” to the group, and their plan sponsor is assessed a care-coordination fee and/or shared-savings payments. In some cases these charges appear on an invoice, but in other cases they are deducted directly from the employer’s ASO bank account. Many employers are not even aware that this is happening.
So what should you do? The answer is simple – ask!
- Request a summary report listing the number of attributed members and value-based care charges paid (typically care coordination fees and shared savings bonuses)
- Request reporting on the cost and quality outcomes for members who are attributed to an ACO or PCMH
- Obtain carrier agreement to provide this reporting on a routine basis, for example, as part of quarterly dashboards or annual plan reviews
- Ask what guarantees are available regarding performance of these provider groups; some carriers will refund care coordination fees
The first step is asking the right questions. Don’t give up if you have trouble deciphering the responses. You have the right to know what you are being charged and if you are getting value for the money.
This post is part of our 2017 Planning Checklist series.
I recently sat down with Lenny Sanicola from WorldatWork to discuss what’s trending in employer-sponsored health plans. We discussed telemedicine, consumer directed health plans, centers of excellence and more. Listen in to learn more about the future trends and drivers identified by Mercer’s national survey.
Often when discussing health benefit design, cost management strategy, and compliance requirements, one aspect can get lost – the patient experience. Being a patient can be incredibly time-consuming between network provider searches, making appointments, filling prescriptions and making sure your physician(s) have the appropriate referral forms, medical records and insurance information, not to mention time spent on hold or waiting for a call back from the doctor’s office. This recent article by Vox’s Sarah Kliff outlines the frustrations she encountered – and the time she wasted – in trying to access care for an injury. She calls patients “the health care system’s free labor”. Electronic medical records and data interoperability should – someday – lighten the administrative load. But right now, in the face of a fragmented health care system, how can an employer help their employees spend less time and effort getting the care they need? One option to consider is a health advocacy program. In the best programs, employees have a dedicated health advocate who can advise employees wherever they are on the health spectrum. For serious health issues, the advocate should be trained to help the member navigate the system to get to the right providers and even take on reconciling medical bills to ensure everything has been processed appropriately, which can go a long way in not only reducing frustration for the employee, but also increases the odds that they will continue to take steps to manage their health knowing they have help along the way.