Robert E Goff

CHANGING NATURE OF HEALTH BENEFITS, HEALTH FINANCING, THEIR IMPLICATIONS AND HEALTH COLLECTIONS

The Uncomfortable RealityThat scares anyone that understands it

Health Insurance costs have been squeezed out of what would and could have been employee wage increases

Employee wages have been, adjusted for inflation, declining

Yet employee contributions to insurance premiums has been increasing - squeezing out other spending

Employer provided coverage is dropping

Small employers eliminate coverage offering especially for low paid worker

• If not subject to mandate – under 50

The nature of who pays for coverage is changing

Employers are moving to DEFIEND CONTRIBUTION

Away from DEFIEND BEENFIT

Offering a fix contribution, letting the employee decide the coverage levels, copays, deductibles, etc

How employer provided health insurance is sold is changing – private exchanges

Health Reform and what it brings

Health Reform Has Been Happening

2010 2011 2013 2014 2015-2017

• Small business tax credit

• Prohibitions against lifetime benefit caps & rescissions

• Phased-in ban on annual limits

• Annual review of premium increases

• Public reporting by insurers on share of premiums spent on non-medical costs

• Preventive services coverage without cost-sharing

• Young adults on parents’ plans

• Insurers must spend at least 85% of premiums (large group) or 80% (small group / individual) on medical costs or provide rebates to enrollees

• HHS must determine if states will have operational exchanges by 2014; if not, HHS will operate them

• State Insurance Exchanges

• Medicaid expansion• Small business tax

credit increases • Insurance market

reforms including no rating on health

• Essential benefit standard

• Individual requirement to have insurance

• Employer shared responsibility penalties

• Penalty for individual requirement to have insurance phases in (2014-2016)

• Option for state waiver to design alternative coverage programs (2017)

• Employer mandate kicks in 2015

•States adopt exchange legislation and begin implementing exchanges

•Phased-in ban on annual limits

In 2011 Health Insurance Companies Became Public Utilities

Insurers must spend on medical expenses at least

85% of premiums (large group) or

80% (small group/individual)

Or provide rebates to enrollees

Premium increases subject to state rate review and approval

Health Plansin the worst possible position

Public Policy demands premium “restraint”

If there is a surplus – must refund it

If there is a deficient – must absorb it

Better to have a surplus than a loss

Driving benefits for surplus

Cost of care controlsDeductiblesNarrow NetworksEnding OON

Try to grow revue outside of insurance

For providers its ugly too…..Hospitals - There is no future in bricks and mortar

One-third of hospitals will close by 2020

Number of self-employed physicians is declining

• Employed physicians are increasing

• Groups are increasing

• Consolidation of means of care delivery

Increasing number of physician extenders being utilized

• Physicians assistants

• Nurse practitioners

Nature of the provider community is changing

Increasing options to physicians services• Minute clinics• Telemedicine• Urgent care

Physician payments aren’t fairing much better

IMD – implantable medical devices

But its not about employers or providersits about the consumer

The end of junk policies• To be phased out, or eliminated now

Policies must contain “Essential Benefits”

But….• Exceptions

• Catastrophic plans

• Student health policies

• Self-insured benefits

• Fixed benefit plans / Indemnity plans (pay a fixed amount per encounter)

• Grandfathered – where allowed

Benefits: The Good News For Consumers

• Children to age 26 under parents policies

• No pre-existing conditions exclusions

• Removal of all lifetime limits or caps on health coverage

• No cancellation a policy without proving fraud

• No denial of claims without appeal

Benefits: Good News Essential Benefits close many holes in coverage Barriers to accessing policies removed

No cost sharing on preventive services

More Good news – Limits on cost sharing

Bronze Silver Gold Platinum

Deductibles

Individual $3000 $2000 $600 -0-

Family $6000 $4000 $1200 -0-

Out-of-pocket cap

Individual $6350 $5500 $4000 $2000

Family $12700 $11000 $8000 $4000

Up to $45,960

Up to $62,040

Up to $78,120

Up to $94,200

Up to $110,280

Subsidies will be provided to people with family income between 100% and 400% of the federal poverty level (The federal poverty level varies by family size. In 2013, it is $11,490 for a single adult and $23,550 for a family of 4.) The most that these families buying subsidized coverage in an exchange, will pay towards a health insurance premium will range from 2.0% of income at 100% of poverty to 9.5% of income at 400% of poverty

Still more Good News - Subsidies to purchase coverage

Family Size

• Bronze

• Silver

• Gold

• Platinum

• Differing deductibles

• Differences are• Price

• Network

Good News: Standard Benefits Packages

And now some bad newsReality

Some will find that subsidies lower the cost of their coverage.

Many will find increases in premium

Benefits: They are not complete

Health Exchange products Commercial products

Few carry a rider for Out-of-network benefits

No Out-of-Network Coverage (New York market)

Market adequacy standards in NY is the Medicaid standard

Bad News: Benefits are tied to narrow or in-networks of providers

And its even more than deductibles

Its deductibles and cost-sharing

Bronze Silver Gold Platinum

Deductibles

Individual $3000 $2000 $600 -0-

Family $6000 $4000 $1200 -0-

Out-of-pocket cap

Individual $6350 $5500 $4000 $2000

Family $12700 $11000 $8000 $4000

64% of commercial plans nationally carry a high deductible

($1,000 - $3000)

Major corporations are tying deductibles to income $3000 to $10,000

The most popular products of the HIX are expected to carry large deductibles

By 2015 30% Of Medical Costs Are Expected To Become The Responsibility Of The Patient

And the patient pays and pays….

INCREASING OUT-OF-POCKET – EVEN AFTER THE DEDUCTIBLE

80% of self-pay accounts are never paid in full

50% of patient financial responsibilities become bad debts

31% of physicians say they lose revenue due to uncollected patient responsibilities

The ability to collect the full amount of patient financial responsibility drops to less than 20 percent after the patient has left the physician’s office.

Increasing Patient Responsibility

29Robert E. Goff

By 2015 30% Of Medical Costs Are Expected To Become The Responsibility Of The Patient• Deductibles• Out-of-pocket under the cap• Non-covered benefits• Out-of-network services

• Every provider will have the issue of collecting that patient portion

What is there to collect

Payers are trying to get in on managing/collecting the patient portion

United/InstaMed®

Aetna – WellMatch®

Both of these combine registered credit cards of patients with automated identification and billing of the patient portion when the insurance portion is processed

Meet Your New Competition

What the future holds

Mass Confusion,

Mass Destruction

And/or

Mass Disruption?

Questions?

Robert E Goff

Robert.goff@nyumc.org

Thank you for your attention