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Group Health Insurers Not Factoring In COVID-19 Effects in 2022 Pricing: Study

by Inoventive Solutions
July 29, 2021

In a glimpse of what we may expect in terms of premiums, a new study by the Kaiser Family Foundation has found that most insurers are not factoring in added costs or savings related to COVID-19 for their 2022 health coverage rates for personal health plans in 13 states and the District of Columbia.

The insurers expect health care utilization to return to pre-pandemic levels by 2022, according to the analysis by KFF.

While the analysis focused on the individual market, KFF found that insurers were making similar assumptions about how COVID-19 would affect their group market costs and pricing.

Despite them not expecting significant effects from COVID-19, there are other issues that are on health insurers’ radars that are likely to increase rates, including the costs of treatment that was delayed in 2020, the continued use of telehealth services and new federal regulations in response to the pandemic. A recent survey by PricewaterhouseCoopers found that employers are expecting an average rate increase of 6.5% for group health coverage.

It’s clear that most insurers are viewing the COVID-19 pandemic as a one-time event, with limited, if any, impact on their 2022 claims costs. KFF referred to the pandemic’s effect on rates as “negligible.”

The foundation looked at rate filings of 75 insurers and only 13 of them stated that the pandemic would increase their costs in 2022, but even then, most of them predicted an effect of 1%. The reasons those 13 insurers cited for the expected higher costs include:

  • Costs related to ongoing COVID-19 testing, treatment and vaccinations.
  • Anticipated vaccination boosters.

Delayed treatment, policy changes

While most insurers don’t expect to be paying out excessive amounts for treatments and medications related to COVID-19 infections, they are concerned about the increased flow of patients seeking treatment for procedures they postponed last year.

Those postponements have led to pent-up demand, driving higher utilization in 2021, which some health plans expect will spill over into 2022.

As a result, some insurance companies have filed rates that include a “COVID-19 rebound adjustment” to account for the services that were deferred in 2020.

Other carriers have filed for rate increases based on predictions that those delayed services will lead to an exacerbation of chronic conditions. Some are also predicting that COVID-19 “long-haulers” could push claims costs higher.

On top of all that, insurers this year have had to make decisions about benefits, network design and premium pricing in the face of the pandemic and federal policy changes that could dramatically expand coverage under the Affordable Care Act.

Other concerns

Some insurers are concerned about the costs associated with the explosive growth of telehealth services during the pandemic. These tele-visits boomed as people were avoiding doctors’ offices due to stay-at-home and social distancing orders and to reduce the chances of COVID-19 transmission.

Kaiser Permanente in one of its filings wrote: “We anticipate the high utilization of telehealth services to persist beyond the lifespan of the outbreak into the foreseeable future.”

Another insurer, MVP in Vermont, said that while it has seen costs associated with in-person ambulatory services increase this year and a return to in-person visits, it has not seen a reduction in use of telehealth services.

Finally, Blue Cross Blue Shield of Vermont in its filing predicted that the increased expenditures for mental health services (demand for which spiked in 2020 as people wrestled with isolation and depression aggravated by the pandemic) would continue in 2022 and beyond.

The insurer predicted that claims for mental health and substance abuse treatment would climb 20% from 2020 to 2022.

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Uncategorized

Few Health Plan Enrollees Know About New Price Transparency Rules

by Inoventive Solutions
July 20, 2021

Despite a new law requiring hospitals to post detailed pricing information for their treatments and procedures online, fewer than 10% of U.S. adults are aware of the requirement.

That’s a problem considering that a growing number of Americans have high-deductible health plans, which come with up-front lower premiums but with higher out-of-pocket expenses.

One of the driving forces behind HDHPs is that they give the enrollee more “skin in the game,” by incentivizing them to shop around for care since they will have to pay for it themselves up to their deductible.

But if people are not aware they can find pricing for medical services on providers’ websites, they may not know how to begin comparing prices.

A new study by the Kaiser Family Foundation found that only 9% of those surveyed were aware that hospitals are required to publish the prices for their services online, in line with new price transparency regulations that took effect Jan. 1, 2021.

The price transparency rule, implemented by the Trump administration, requires hospitals to post on their websites:

  • A plain language description of each shoppable service and item.
  • A description of charges, including:
    • Payer-specific negotiated charge, or the price a third party payer such as a health insurance company would pay.
    • Discounted cash price, or the price a patient would pay without insurance.
    • Gross charge, or the charge absent any discounts.
    • De-identified maximum and minimum negotiated charges for each.
  • Any primary code used by the hospital for purposes of accounting or billing.

Here’s what the survey found:

  • 69% of respondents were unsure whether hospitals are required to disclose the prices of treatments and procedures.
  • 22% believed hospitals are not required to disclose this information.
  • 9% were aware hospitals are required to disclose the prices of treatments and procedures on their websites.
  • 14% said that they or a family member had gone online in the past six months to research the price of a treatment at a hospital.
  • Younger adults (ages 18 to 49) were more likely to say they or a family member had searched for the price of care online.

Educating your staff

Employers with HDHPs should inform their staff about the price transparency rule so that they can research pricing ahead of any procedures they may have. Most health system websites should be posting their pricing by now, but it may take some digging to find them. 

If they have been ordered to get a certain procedure, they can start by going to each provider available to them through their health insurance and researching the pricing on their website. If they can’t find the information, they should call the provider to get the information. They will need the negotiated price between their health plan and the provider.

Prices can vary dramatically between providers, and your staff need to make sure they are comparing the exact same service between them.

They should also consider calling the providers and inquiring about the cash price for the services. In some instances, the cash price may end up being even less than their deductible or copay.

One problem: Many hospitals have not published their rates and there has been a lack of consistency between providers in terms of how they are providing the information.

This has prompted the CMS to audit hospitals’ websites and complaints, and it recently started sending out notices to hundreds of hospitals that are not complying with the transparency regulations.

Finally, many insurance carriers offer searchable online databases for their enrollees where people can research the approximate cost of certain procedures among all the providers available to them.

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Uncategorized

Attention Employers: IRS Ramping Up ACA Compliance

by Inoventive Solutions
July 13, 2021

There are signs that the Internal Revenue Service is starting to step up its enforcement of the Affordable Care Act employer mandate.

During the past six months, there’s been an uptick in the number of employers receiving initial notices stating they may be out of compliance with the requirement that they offer their workers coverage. 

Also, the IRS has announced that it will no longer provide “transition relief” to employers that file incomplete 1094/1095C forms, make mistakes on them or fail to file them. 

Notices were recently sent out for the 2018 tax year. Many of the proposed assessments would result in penalties that are in the millions.

The IRS is charged with ensuring that employers with 50 or more full-time or full-time-equivalent workers comply with the employer mandate, which requires them to offer them health coverage that is affordable and covers 10 essential benefits, as per the ACA. These “applicable large employers” (ALEs) are subject to penalties for not complying.

For 2021, the fines are as follows:

Internal Revenue Code Section 4980H(a) violations: $2,700 per employee. This penalty applies when an ALE does not offer coverage or offers coverage to less than 95% of its full-time staff (and their dependents), and when at least one full-time employee receives a premium tax credit to help pay for coverage through a marketplace exchange.

Internal Revenue Code Section 4980H(b) violations: $4,060 per employee.This applies when an ALE offers coverage to at least 95% of its full-time employees (and their dependents), but at least one full-time worker receives a premium tax credit to help pay for coverage through a government-operated marketplace.

This can occur if the employer did not offer coverage to that particular employee or because the coverage they were offered was either unaffordable or did not provide minimum value.

What the IRS is doing

No statute of limitations for 4980H violations — At the end of 2020, the IRS Office of Chief Counsel issued a memo that stated there is no statute of limitations for employers to avoid penalties for violating Section 4980H.

This means that ALEs who fail to comply with the ACA can be hit with penalties at any time in the future once the IRS discovers the violation.

Ceasing its ‘good faith transition relief’ — This was intended to temporarily give employers more time and a break on penalties when they report incomplete or incorrect information on their 1094/1095C forms. Last year was the final year this good faith transition relief would be offered. The IRS explicitly noted that it would not be extended again.

The relief available to employers who needed it included a 30-day extension for meeting the deadline to file IRS Form 1095-C, as well as good faith relief from penalties for making mistakes, filing incomplete or not filing the ACA-related forms with the IRS or not filing on time.

What to do

The IRS has been sending out notices of ACA non-compliance for the 2018 policy year.

If you receive one of these notices — a Letter 226-J — you need to act quickly to avoid penalties as you have just 30 days to respond. If you need more time, the most that the IRS will likely grant you is a 30-day extension.

Regardless of if you’ve received a notice, you may want to review your 2018 ACA filings. If you identify any mistakes in them, you can correct the filings before the IRS will issue a Letter 226J penalty notice or another type of penalty.

To avoid penalties related to the annual filings of the 1094/1095C forms, make sure that you stay on top of filing deadlines. Also, ensure that the forms are correct and complete to avoid penalties. You can expect the IRS to be diligent in reviewing these forms.

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CMS Issues New Rules Barring Surprise Billing

by Inoventive Solutions
July 8, 2021

The Centers for Medicare and Medicaid Service in late June released a series of new regulations targeted at banning surprise billing in most instances, taking aim at a scourge that ends up costing many covered individuals thousands of dollars even when they are treated in-network.

The goal of the rule, slated to take effect Jan. 1, 2022, is to ensure that health plan enrollees are not gouged for out-of-network billing and balance billing for most services unless divulged to the beneficiary and approved by them in advance. 

Balance billing ― when a medical provider bills a covered individual for the difference between the charge and the amount the insurer will pay ― is already prohibited by Medicare and Medicaid.

The interim rule will cover people who are insured by employer-sponsored health plans and plans purchased through publicly operated marketplaces. The new regulations are being implemented as required by the No Surprises Act of 2021, which passed through Congress with bipartisan support.

The effects of surprise billing

Surprise billing happens when people unknowingly get care from providers that are outside of their health plan’s network, which can happen for both emergency and non-emergency care. Examples of surprise billing include:

  • Someone breaks their leg in a fall and has to go to the nearest emergency room, which is not part of their insurer’s network. They are billed at market rates as their insurer doesn’t cover the service.
  • Someone has an operation in a network hospital but one of the providers treating them (an anesthesiologist or radiologist, for example) is not in the network, so the covered individual is billed at market rates.

Two-thirds of bankruptcies are caused by outstanding medical debt, and out-of-network billing is partly to blame for that.

Studies have shown that more than 39% of emergency department visits to in-network hospitals resulted in an out-of-network bill in 2010, increasing to 42.8% in 2016. During the same period, the average amount of a surprise medical bill also increased, from $220 to $628.

What the regulations do

The new regulations:

  • Ban surprise billing for emergency services, regardless of where they are provided. That means if a person has no choice but to go to an emergency room that is out of network, they can only be billed at the same rate they would be charged for services at an in-network hospital.
  • Bar health insurers from requiring prior authorization for emergency services, and they can’t charge their higher out-of-pocket costs for emergency services delivered by an out-of-network provider. They would also be required to count enrollees’ cost-sharing for those emergency services toward their deductible and out-of-pocket maximums.
  • Ban out-of-network charges for ancillary care at an in-network facility in all circumstances. This happens when there is an out-of-network provider working at an in-network hospital.
  • Ban other out-of-network charges without advance notice.
  • Require providers and hospitals to give patients a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill at the higher out-of-network rate.

What’s next

This is an interim final rule that is still out for public comment. It may be changed after the CMS receives comments.

More than likely it will take effect at the start of 2022, mostly intact.

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