Tackling Healthcare in the Post-Reform World. Hunter Hawes, VP, BB&T Insurance Services John Grove, VP, BB&T Insurance Services

Transcription

1 Tackling Healthcare in the Post-Reform World Hunter Hawes, VP, BB&T Insurance Services John Grove, VP, BB&T Insurance Services

2 Today s Agenda 1. U.S. HealthCare Realities 2. Employer Choices Moving Forward 3. Alternative Funded Employer Groups (10+ Employees) 4. Private Exchange (Defined Contribution) Plans 5. Taking Control of your Health Plan to maximize the probability of Long Term Success Guidance and interpretations relating to these matters are being released on a regular basis. BB&T Insurance Services is not providing legal or tax advice. To ensure compliance with requirements imposed by the IRS, any discussion of U.S. tax matters contained in this communication (including any attachments) is not intended and cannot be used by anyone to avoid IRS penalties. This material is for informational purposes only. 1

3 U.S. HealthCare Realities

4 U.S. HealthCare Realities The Expected & Unexpected Cost $2.6 trillion increasing 8-10% per year $10,000 PEPY going up $1,000 PEPY Stakeholders Government Insurance Carriers Health Systems Employer Employees Private Exchanges 3

5 U.S. HealthCare Realities The Expected & Unexpected Population 156 million people covered by Employer-sponsored plans Health Care Reform Legislate Eligibility, Affordability, Minimum Coverage Reduce Medicare $716B Payment Reform Transparency and Wellness Focus 105 (h) testing, additional compliance Challenges with access, design, communication and affordability Delays, Rulings, etc. State Exchanges and impact on group products 4

6 Health Risks Drive Medical Claims Source: Health Management Center, University of Michigan, Edington 5

7 Health Risks Drive Medical Claims Examples of health risks are: inactivity, poor diet, obesity, stress, tobacco, high blood pressure, and excessive alcohol Average Health Care Cost Per Employee Per Year $25,000 $20, risks $20,000 $18, risks $15,000 $10,000 $5,000 $0 $13,168 $6,864 $8,860 $10,175 $7,575 $3,676 $3,837 $5,041 $3,358 $4,319 $1,247 $1,515 $1,926 < Age Range 5+ risks 3 4 risks 0 2 risks 5+ risks Source: Health Management Center, University of Michigan, Edington 6

8 Employer Choices Moving Forward

9 Employer Choices Pre HealthCare Reform Employer Options 1. Fully Insured *2-50 market *51+ market 2. Self Insured *very large group market only 8

10 Employer Choices Post HealthCare Reform 1. No Coverage *Pay penalties Employer Options 7. Integrated Proprietary Solutions 2. Individual Policies *Guarantee issue 6. Captive Risk Pool 3. Fully insured *2-50 market *51+ market 4. Exchanges *Public Exchanges *Private Exchanges 5. Level Funded (partially selfinsured) 5. Alternative Funded 10+ EE s 9

11 The Question Where is the Employer group in the spectrum of choices moving forward? Rely on the Government? Wait and See (at the mercy of the market)? Take control of your plan? How much time and energy needs to be invested and what is the ROI? 10

12 Alternative Funded (Groups of 10+)

13 Advantages of Alternate Funding Available for groups with 10 enrolled employees 99 eligible employees Pre-ACA Rating Levers Medically Underwritten 10:1 Age/Gender Band Industry Factors Operates similar to a fully-insured plan with limited exposure Refund available if claims run better than funded First-year renewal cap on Wellness & Motions plans No terminal liability, lasering or deficit carry-forward

14 Simplified for Small Businesses EXAMPLE: All Savers Alternate Funding components: 1. Expected Claims 2. Stop-loss insurance from All Savers Insurance Company a. ISL $15K, ASL 125% of expected claims b. Employer funds Maximum Liability c. Incurred 12/60 Contract Period 3. Administrative services from United HealthCare Services, Inc.

15 Fully-Insured Plans Have Fixed Costs Expected Claims Fixed Cost Administrative, Commissions Taxes, etc.

16 All Savers Alternate Funding Has Variable Costs Variable Maximum Claim Liability Stop-Loss Insurance Fixed Cost Administrative, Commissions Taxes, etc.

17 Best Case: The Group Saves Money Maximum Liability Actual Variable claims cost Variable cost Surplus Reconciliation credit 2/3 Deferred fee 1/3 Fixed cost Fixed cost Stop-Loss Insurance Agg 125%, Spec $15,000 Administrative costs, taxes, commission

18 End-of-Year Reconciliation Low Claims Maximum Funding Stop-loss insurance premium $14,000 Administrative and other $11,000 Claims $27,000 Total budgeted (max liability) $52,000 Actual Stop-loss insurance premium $14,000 Administrative and other $11,000 Claims (paid and IBNR) $9,000 Total actual $34,000 Claims paid by stop-loss insurance $0 Total surplus $18,000 Employer reconciliation refund Refund check sent after reconciliation $12,000 Deferred fee $6,000 *Refund not available for groups not in force at time of reconciliation

19 Worst Case: You re Already Covered Maximum Liability Variable claims cost Actual Claims overrun Variable claims cost We Pay Stop-Loss Insurance Covers Overrun Fixed cost Fixed cost

20 End-of-Year Reconciliation High Claims Maximum Funding Stop-loss insurance premium $14,000 Administrative and other $11,000 Claims $27,000 Total budgeted (max liability) $52,000 Actual Stop-loss insurance premium $14,000 Administrative and other $11,000 Claims (paid and IBNR) $40,000 Total actual $65,000 Claims paid by stop-loss insurance ($13,000) Total surplus $0 Employer reconciliation refund $0

21 Reporting

22 Reporting: Executive Summary (Example cont.) Medical/Drug Excess Loss Summary Month Paid Medical/Drug Claims Specific Excess Loss Reimb Agg Excess Loss Reimb Actual Liability Expected Liability Maximum Liability 03/ , , /13 4, , , , /13 8, , , , /13 7, , , , /13 11, , , , /13 09/13 10/13 11/13 12/13 1/14 2/14 Medical/Drug Excess Loss Liability Total $33, $33, $33, $54, $67,901.83

23 Reporting: Utilization (Example) Utilization In-network vs. out-of-network claims Stop-loss claims

24 Private Exchanges (Defined Contribution)

25 CHANGE IS COMING FAST Very few employers (accounting for just 5% of employees) plan to drop employer-sponsored coverage in the future. - Oliver Wyman 2012 survey of 1,300 employers A large percentage of businesses plan to offer their employees benefits through a private exchange in the next few years. 80% of employers are willing to choose a private exchange model in the future. - Oliver Wyman 2012 Survey 47% of employers plan to move to a private exchange model. - J.D. Power and Associates 2012 Study Companies will pick broker led exchanges to carrier led exchanges by a 2:1 factor -Oliver Wyman 2012 survey 24

26 Private Exchange projections 25

27 BENEFITS TO EMPLOYERS AND EMPLOYEES 26

28 WHY IS THE DEFINED CONTRIBUTION AND EXCHANGE MODEL BENEFICIAL FOR EMPLOYEES? An exchange is the vehicle that enables a defined contribution funding strategy to work to the employees advantage Puts control over a personal decision in the right hands Only individuals know (and should know) the important factors that determine what type of protection is right for them, such as health history, intent to have a baby, healthcare utilization, and wealth Allows flexibility from year to year With a variety of plan options to choose from, individuals and families can move from plan to plan over the years as their personal situation changes Provides comprehensive coverage ( total protection ) Medical coverage alone does not address the range of employees potential risks. Combining different types of benefits can reduce overall costs of coverage while improving protection Leads to smarter utilization of benefits When people choose their own benefits, they understand them better and use themmore wisely

29 Small Group Strategy Involves Two Possible Structures: 1. Group to Group Exchange (Available now) 2. Group to Individual Exchange (Coming soon) Employer Employer Defined Contribution $ Status: Progressing Status: Pending Defined Contribution $ Private Group Exchange Section 125 Selection Tool Selection Tool 28 $ HSA Account FSA Single Carrier Multiple Medical Plans Ancillary Beneifts Premium Reimbursement Account (PRA) Health Savings Account (HSA) Flexible Spending Account (FSA) HRA Voluntary Beneifts 28 Private Individual Market Exchange Individual Market Government Exchange

30 Small Employer Options Employer Objective Keep Current Coverage Single Carrier Plan Choice ER Defined Contrib. Multi Carrier Plan Choice ER Defined Contrib. Multi Carrier Plan Choice No ER Contribution Drop coverage Best Option Carrier Direct ER Sponsored Group Exchange ER Sponsored Individual Exchange Non Sponsored Individual Exchange Funding Employer Funded Defined Contribution Defined Contribution Section 125 Funding Employee Section 125 Funding Vehicle Private Group Market Exchange Private Individual Market Exchange Private Individual Market Exchange Individual Marketplace Individual Market Government Exchange Individual Market Government Exchange Individual Market Government Exchange 29

31 Specialty ( non-health ) Benefits A variety of partner carriers to meet client needs: Assurant Guardian Lincoln Natl Met Life Principal Reliant Std Standard Ameritas Assurant Guardian Lincoln Natl Met Life Principal Reliant Std VSP Standard Allstate Humana Dental Vision Accident Assurant Guardian Lincoln Natl Met Life Principal Reliant Std Hartford Standard Assurant Guardian Lincoln Natl Met Life Principal Reliant Std Hartford Standard Assurant Guardian Lincoln Natl Met Life Principal Reliant Std Hartford Standard Allstate Humana Life Short Term Disability Long Term Disability Critical Illness 30

32 HERE S A WAY TO SORT IT OUT Who runs it? Exchange Type Public (Ind & SHOP) Private Hybrid What are the products in the store? Insurance Type Store Offering Providers Individual Group Medicare Medical Only Health All Benefits Open/Multi Closed/Single Selective What s the shopping experience? Location Tools Support Clicks Decision Support Administrative Bricks Education Billing Year-round Portal Personal Where s the money coming from? Funding Personal Paycheck Defined Contribution Subsidies 31

33 WHAT DO YOU FIND IN AN EXCHANGE? Key Components of an Exchange: 1. Integrated Defined Contribution Strategy 2. An Expansive Array of Choice 3. Decision Support Technology 4. Enrollment Technology and Comprehensive Support Services

34 DECISION-SUPPORT GIVES EMPLOYEES THE TOOLS TO PICK THE RIGHT PORTFOLIO FOR THEM 33

35 RECOMMENDATION ENGINE 34

36 TAKEAWAYS FROM ~150K TRANSACTIONS IN 5 YEARS ~100% Different benefits package ~80% Different health insurance plan 90% buy something cheaper People rarely cluster into one or two plans ~75% Dental Insurance Even distribution across plans ~70% Disability Insurance (40% STD; 45% LTD) Even distribution across plans ~65% HSA qualified plans 90% open HSAs ~45% Vision Insurance ~40% Life Insurance Dramatic increases in policy amount ~30% Supplemental Health Insurance (accident, CI, hospital) ~10% LTC, Pet, Tele-Doc, Wellness Programs, etc. In Year 2, 65% keep things the same, 25% evolve, 10% make radical changes 35

37 EMPLOYEES HAVE DIFFERENT NEEDS. A ONE-SIZE-FITS-ALL SOLUTION DOESN T MEET THEM Everyone gets a POS plan, basic dental and company-paid life. My son has asthma, so we see the doctor often. I don t want to think about how much I spend each time. I need to protect my family in case something happens to me. Doctors I don t go much. I want to spend as little as possible on premiums. I haven t built up much in savings, so if I get sick and I m not getting paid, I need a source of income. My favorite doctor doesn t accept insurance. I d like to stop smoking, and I do worry about cancer as it runs in my family. Chris & Family Cost $1,800 Tom Cost $650 Alicia Cost $650 36

38 FINDING THE RIGHT PROTECTION IS ABOUT COMBINING THE RIGHT PORTFOLIO OF PLANS FOR THAT PERSON OR FAMILY Chris & Family Previously $1,800 With Bright Choices cost is $1,300 Tom Previously $650 With Bright Choices cost is $550 Alicia Previously $650 With Bright Choices cost is $675 (includes her monthly metrocard) Everyone got what they wanted and total savings are $575 37

39 CASE STUDY NJ PROFESSIONAL SERVICES FIRM Before Bright Choices With Bright Choices POS $$$$ POS $$$$ HMO 1 $$$ HMO 2 $$ POS HSA $$ HMO HSA $$ HMO HSA $ DENTAL LIFE LONG TERM DISABILITY VISION DENTAL 3 OPTIONS LIFE 10 OPTIONS LONG TERM DISABILITY 3 OPTIONS SHORT TERM DISABILITY 6 OPTIONS CRITICAL ILLNESS ACCIDENT TELEMEDICINE WELLNESS 3 OPTIONS PET 38

40 CASE STUDY NJ PROFESSIONAL SERVICES FIRM Without Bright Choices Total $404k With Bright Choices Total $281k $299k Premium cost for 23 employees in a POS Plan $342k Annual Renewal had they done the same old $62k Dental, Life, LTD $209k Cost for 23 employees in plan of their choice $72k Dental, Life, LTD plus Vision, Accident, CI, STD, Wellness, Telemedicine and Pet - Employer avoided a $43k rate increase - Employees saved $55k in payroll deductions (+ gain $24k in their HSAs) $24k assumed spent from HSA $185k in premium costs 39

41 BENEFITS TO EMPLOYER Helps you attract and retain customers: Provides an answer to rising healthcare costs Gets you off the sidelines and engaged prior to PPACA Gives you an innovative offering Eliminates the dance of shaving copays & deductibles year after year Makes your life better: Puts you in the center of the sale Provides ease of doing business with a turn-key solution Diversifies compensation/income stream 40

42 EVERYONE WINS Employers save money and get out of the benefits business Carriers get higher persistency, lower MLR, and more business Employees get more choice and better coverage for their needs Broker partners get more business and higher loyalty 41

43 Taking Control of your Health Plan to maximize the probability of Long Term Success A Large employer (51+) group model for success!

44 What Impacts Health Insurance Costs? Health Insurance Premiums Admin, 15% Claims Claims, 85% Admin (claims processing/ payment, overhead, reinsurance, etc) Did you know?: Claims = Employees/Families going to Doctors/ER/Hospital, using RX drugs, etc Employees/Families can engage in Wellness, and play an active part in their health care consumption (i.e. ask questions about why tests/xrays/lab work have been ordered, use/ask for treatment cost estimator, read bills/eob s carefully, dispute charges if applicable, etc) Reduced Claims = Reduced Costs! 43

45 Ingredients to a Health and Wellness Program s Success Executive Sponsorship Shared Commitment Culture of Health Engaged Employees Enabling Platform Business Analytics It's Successful Shared Commitment Culture of Health Engaged Employees Enabling Platform Business Analytics It s Not Important Executive Sponsorship Culture of Health Engaged Employees Enabling Platform Business Analytics It's Not Valuable Executive Sponsorship Shared Commitment Engaged Employees Enabling Platform Business Analytics It's Not Possible Executive Sponsorship Shared Commitment Culture of Health Enabling Platform Business Analytics It's Not Sustainable Executive Sponsorship Shared Commitment Culture of Health Engaged Employees Business Analytics It's Not Manageable Executive Sponsorship Shared Commitment Culture of Health Engaged Employees Enabling Platform It's Not Effective 44

46 Building an Employer Culture of Wellness Engaged Employees Can Make a Difference! A Culture of Wellness is a Competitive Employer Advantage Wellness has a far reaching impact Increase Employee Productivity Minimize absenteeism Reduction in Health claims, Work Comp and Disability claims, etc Improved Retention Improved Quality of Life 45

47 Engaged Employees Can Make a Difference! How can I help to reduce healthcare costs? Take a personal online Health Risk Assessment (HRA) Understand your health risks Members can participate in telephonic coaching programs that help them develop a personalized plan to address wellness topics such as weight, stress, nutrition, exercise, diabetes, heart health and tobacco cessation. Keep striving to be a wise health care consumer Have a primary care physician; get annual physicals/screenings Take advantage of FREE Preventative Care Services Buy Generic Drugs Take advantage of 90 day Maintenance Rx & Mail Order Rx Avoid using the ER for non-emergencies Use carrier tools, including online (i.e. treatment cost estimator) Exercise & Eat Right Utilize your FREE services EAP...Financial, emotional and legal support counselors NurseLine.Routine illness, consultation, self-care info, prevention 46

48 Our CarePlus Approach A Proven Winner! Establish 3-5 year strategy aligning company stakeholders around: Cost management Risk mitigation Operational excellence Positive employee experience Establish key milestones to track value quotient Understand claims profile and population health risk factors Build program around: Access Affordability Quality Choice Establish migration strategy to align enrollment with risk factors Improve value for all key stakeholders and gain control of cost and risk 47

49 Marketplace Defined Benefit Carrier renewal Client budget Procurement options Reaction-based management How is CarePlus Different CarePlus Defined Contribution Business & HR priorities Health improvement focus Integrated solutions Metrics-based management Plan Design Promote Consumer Accountability Funding Basic Strategies Contributions Change Employee Behavior Advanced Strategies Make Better Decisions Vendors Integrate Systems and Data Management CarePlus works proactively while the other plans work reactively. 48

50 BB&T (CarePlus) Results and Marketplace Comparison Engagement Market Norm CarePlus 2012 Results Health Assessment 20% 65% Biometric Screening 10% 60% Health Coaching 2% 25% Condition Management 5% 35% Case Management 20% 55% Health US Population CarePlus 2009 CarePlus 2012 Total Cholesterol 34% 35% 31% HDL 37% 36% 33% Blood Pressure 31% 31% 26% BMI 66% 65% 59% Key Factor Market Norm CarePlus 2012 Results Cost Management Carrier focused ER and EE focused Cost Trends 9 12% 2 5% Reporting Metrics Limited Extensive Communication Strategy Plan usage Behavior and lifestyle change Health Management Carrier driven ER sponsored and EE incentive focused Source: CarePlus

51 Wellness Program: Multi-Year Roadmap Year 1 Year 2 Year 3 and Beyond Phase/Theme Lay Foundation Engagement and Incentives Goals Culture of Health Program Employees Incentives Metrics Considerations Organize current and proposed initiatives to build solid foundation Create identity Branding Senior management intro Ongoing communications newsletters, e cards, posters Health Risk Assessment (HRA) Lifestyle programs for smoking cessation, weight management and exercise Flu shots Survey Educate/motivate Create buzz Incentives to support awareness, including HRA Establish baselines through survey Readiness to change Measure success of program roll out Coordination of on site biometric screenings in conjunction with HRA launch Employee participation Provide tools Create momentum Environment (food policy, onsite activity, etc.) Ongoing senior management publicity Focused messaging Biometric screenings in largest locations Weight Watchers Corporate food policy Educate/motivate Engage in program activities Recognition and celebrate successes Expand to activity, screening, participation Focus: Smoking cessation and weight management Track health status change (biometrics and HRA) Participation Claims, disability, productivity Evaluation of carrier health promotion Integration of wellness with clinical care management programs Gift card Incentive Program Continued Improvement: Behavior Based Premiums Demonstrate and reward results Include spouses and dependents Senior management reports results Integrate with hiring, departmental performance Coaching (lifestyle and chronic illness) Integrate with care management Educate/motivate Improve health Enjoy rewards Biometric screening participation Completion of coaching or programs Payroll based incentives Improved health status Program results Risk reduction Impact on business results Expanded incentive focus to include premium differentials for participating in action based program 50

52 The Employer Experience High-Tech meets High-Touch ABC INC. Designated Benefits Administration Team Solutions, Support, and Technology That Will: Ease burden of essential, but tactical, benefits administration work Provide metrics to measure success Increase accessibility to real-time information Leverage decision-support tools and self-service Automated data flow 51

53 The best way to predict the future is to create it. Peter Drucker 52