Montana’s Experiment with Reference-Based Pricing

From Benefitspro:

To cut its health costs, Montana implemented a reference-based pricing model with its 60 hospitals, which accounted for 43 percent of employee health care costs.

Instead of starting with the hospital’s list price and negotiating down for discounts, the state began telling these facilities how much it was willing to pay — a “reference price” — for each type of hospitalization. State officials used generally conservative Medicare rates as a baseline and starting point for the discussion.

While other states and some private employers have set prices they are willing to pay for some standardized procedures — such as colonoscopies or hip replacements — Montana’s experiment is more sweeping, covering all hospital services, and it uses Medicare as a common yardstick.

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Despite Shorter Stays, Medicare Advantage Improved Skilled Nursing Outcomes

From Skilled Nursing News:

Maggie Flynn writing in Skilled Nursing News says that “patients enrolled in Medicare Advantage (MA) plans had a shorter rehabilitation stay in a skilled nursing facility and were more likely to be successfully discharged to the community, compared with patients on fee-for-service (FFS) Medicare, according to a new study published in PLOS Medicine.”

“Our study results suggest we can reduce length of stay by five days, and if you convert that into the money and the costs, it’s almost $3,000 to $4,000 per patient,”  Amit Kumar, of Brown University, one of the researchers on the study told Flynn.

The study shows that more care isn’t necessarily better, Kumar explained.

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The Black Hole of Financial Planning: Health Care Costs

From InvestmentNews Retirement 2.0 Blog:

Mary Beth Franklin cites the annual health care survey from Nationwide Retirement Institute released Monday writing that “affluent older adults are worried about what health care costs, including long-term care expenses, could do to their carefully laid retirement plans. Yet only about half of those who work with a financial adviser have discussed their fears because they consider health care a personal matter, according to a new survey.”

Franklin notes that the survey found that most future retirees are taking steps to save for health care costs in retirement, including building up their savings accounts (59%), investing (56%), increasing their 401(k) contributions (46%) and paying off credit card debt and loans (36%).

“But while nearly half of employed affluent adults have access to a health savings account (HSA) through their employer, only 30% contribute to the HSAs, and few fully leverage HSAs’ triple tax break. Of those who do contribute to an HSA, only 10% maximize the accounts by using them as long-term savings vehicles. Unused HSA funds can be rolled over from year to year and can be used tax-free to pay for future health care costs in retirement, which in turn can reduce future income taxes and possibly reduce future Medicare premiums.”

Franklin concludes that “advisers can help clients by creating personalized health care costs estimates, projecting savings needs for those costs and recommending funding sources such as HSAs, insurance, Social Security, and Medicare. Advisers should also suggest that clients discuss potential health care needs and costs with family members to create a truly holistic retirement plan.”

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When Retail Giants Like Walmart and Amazon Invade Healthcare

From HealthLeaders:

Steven Porter writes in HealthLeaders that “healthcare executives and industry analysts alike say greeting these (Walmart and Amazon) disruptors with blanket resistance would be counterproductive, largely because hospitals and health systems seem to need what these retailers have to offer.

“I think that there’s a real opportunity for a place like Walmart to start building healthcare delivery in lower-acuity settings that move beyond the kind of clinics inside the stores where you’re basically doing flu shots … and relatively simple, straightforward stuff,” Matthews says. “I think you could start moving to more of an urgent care model, where you start dealing with patients that have somewhat more complex but still basically primary care needs.”

“These new entries into the market, quite frankly, are forcing us to either change and to become much more consumer-savvy or—at least in my professional opinion—many of us will not survive,” says Donald H. Lloyd II, president and CEO of CHRISTUS St. Patrick Health System, based in Lake Charles, Louisiana, and licensed for 277 beds.

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Hulu Binges on Tuition Benefits for Employees

From EBN:

Yasemin Sim Esmen writes in EBN that streaming media company Hulu is teaming up with student loan repayment provider to offer relief to its employees plagued by college debt obligations.

“Starting this summer, Hulu will pay up to $1,200 a year per employee to match their student loan payments, says Taunya Post, Hulu’s director of human resources operations.”

A growing problem

Esmen reports that “Americans now owe more than $1.52 trillion in student debt, versus $619.3 billion 10 years ago, according to data from the Federal Bank of St. Louis. Collegedata, a high education advisory site, reports that the average tuition is $34,740 at private colleges and $9,970 for public colleges. And tuition has grown 35% in the last decade, finds The Center on Budget and Policy Priorities.”

Editor’s Note: It should be pointed out that student loan repayment benefits are not considered tax-free by the IRS and are subject to income taxes.

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10 Reasons Why Employers — And New Ventures — Won’t ‘Disrupt’ U.S. Healthcare

From Forbes:

Dan Munro writing in Forbes lists 10 reasons why this latest health care venture involving industry titans Amazon, Berkshire Hathaway and JP Morgan Chase (ABC) – or really any group of employers – can’t fundamentally change or ‘disrupt’ U.S. healthcare.

Here is reason number 1:

                            “Employer Sponsored Insurance (ESI) isn’t the product of 

intelligent system design. In fact, there’s no clinical, fiscal 

or moral argument to support this unique financing model at all. It’s quite literally an accident of WWII history and America is the only industrialized country that uses employment as the governing entity for health benefits. We could have changed this accidental system design decades ago, but we never did.”

Read More.

Trump Officials Roll out New Rule for Small Business Health Insurance Plans

From CNN:

Tamy Luhby reports that the Trump administration took the final step Tuesday in its plan aimed at making health insurance policies cheaper for some small businesses.

“The administration released its final rule governing association health plans, which allow small businesses and the self-employed to band together based on their industry or location and buy health insurance. The rule stems from an executive order that Trump signed in October aimed at providing alternatives to the Affordable Care Act, which it is bent on dismantling.”

The CNN report says that the rule allows association health plans to be regulated in the same way as large employer policies. That would free them from having to adhere to some of Obamacare’s rules, particularly the one requiring insurers to offer comprehensive coverage. Plans can start being offered as soon as September 1.

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Technology Puts Insurance at Crossroads

Winston Thomas writes in CDO Trends that, “The insurance industry is facing an identity crisis. Known for its ability to pool risks, it is now experiencing a fresh onslaught of challenges that demands insurers to take risks on new IT paradigms.

“Companies like Amazon and Facebook have made it easier to connect, shaping customer expectations. The problem is many insurers are still behind when it comes to customer convenience and engagement.”

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More Employers are Self-Funding Health Benefits

Nathan Solheim writes in Employee Benefits Advisor that  “today, more than 90 million em­ployees get health benefits through self-funded plans. Their employers have been spurred to self-insure by benefit advisers seeking ways to reduce and give their clients greater control over their healthcare spend.”

“A look at some recent numbers shows how self-insurance is gaining traction among smaller employers. A February study by the Employee Benefit Research Institute found that the percentage of smaller employers who self-insure rose between 2015 and 2016, while it declined somewhat from 60% to 57.8% among employers overall.”

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Fidelity Finds Little Knowledge about HSAs

Lee Barney writes in PlanSponsor that Fidelity says that 25% of employees with access to an HSA are using one. When employers offer only an HSA-eligible health plan, 46% of workers add this savings benefit.

Fidelity notes that the contribution limits for 2018 are $3,450 for individuals, $6,900 for a family, and $1,000 in catch-up contributions for those over age 55. However, last year, individuals contributed an average of $1,800 and family account owners, $3,800

Nearly 40% of people are unaware that the money in an HSA can carry forward. Instead, they think if they don’t use it, they will lose it at the end of the year. Additionally, 46% of HSA account holders are unaware they can invest their contribution, and a mere 7.7% actually do invest the money.

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