Health Reform

Papa Bear and the Goldilocks Health Plan

Papa Bear and the Goldilocks Health Plan

Before a knee injury, one of my annual traditions was running with my fellow Holmies in the annual Dallas Marathon corporate relay....

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Health Plan Analytics Stuck in the Wild West?

Health Plan Analytics Stuck in the Wild West?

Our family loves traveling to Colorado each summer. This year, we passed through Leadville and Minturn, two old mining towns that remind...

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Speaking Out On Transgender Benefits

Speaking Out On Transgender Benefits

I recently came across this article, published by Business Insurance with the following headline "Few employers offer transgender benefits".  This article, along with the growing news coverage around bathroom use for transgender, prompted me to investigate exactly what percentage of the population here is impacted.   According to two of  the largest surveys ever conducted on the topic, approximately .3 percent or 700,000 people in the United States identify as transgender.   

Sweet Advice from Hippocrates

"Let food be thy medicine and medicine be thy food." - Hippocrates When the father of western medicine, Hippocrates, gave us this quote back in the times of Ancient Greece, he was  providing one way of solving the public health crisis of our time.   I like what Dr. Albert Schweitzer said even better, "It's supposed to be a secret, but I'll tell you anyway. We doctors do nothing. We only help and encourage the doctor within."

Getting "Fed Up" / Trends Not Sweet

What the World Eats Almost 60% of the U.S. diet is made up of sugar and carbohydrate.   Since 1977, Americans have doubled their daily intake of sugar, lurking in processed foods like cereal and catsup.   Our sugar intake has lead to a corresponding rise in obesity, metabolic syndrome and chronic conditions that are the result of  a pancreas that eventually exhausts itself from producing the hormone insulin.

How could it be that from 1980 to 2000, fitness memberships doubled along with a corresponding doubling of the obesity rate?   If our willpower is to blame why do we have obesity in 6 year olds?   And of all the nutrients listed on a food label, how is it that sugar, a substance more addictive than cocaine, is the only nutrient that a food manufacturer does not have to disclose under the food label's  percentage daily recommended allowance guidelines?   Could it be that Americans were misled into believing that a "low-fat" diet was best for us based on junk science?   Could federal guidelines have been influenced by powerful food lobbies and corporate profits placed ahead of our  public health interests?

Realizing we now have an epidemic that we are not going to be able to exercise our way out of, the U.S. Preventive Task Force (USPTF) has recommended coverage for progams that have demonstrated clinical success in reversing symptoms of Metabolic Syndrome be covered under the Affordable Care Act (ACA) at 100% with no cost sharing.   In a future post, I'll share more about how and when employers must cover behavioral weight management as a benefit and what our  ACAP Health  subsidiary is doing to help companies reverse these metabolic trends  caused by sugar.

Our company will continue to endorse only programs that adhere to  evidence based guidelines from trusted voices like Dr. David Katz, Dr. Mark Hyman, Dr. Robert Lustig, Tim Church, M.D., M.P.H., Ph.D and Dr. David Kessler.  Please commit to watching "Fed Up", produced by Katie Couric and Laurie David.

Infographic Source: National Geographic: What the World Eats (Interactive Calories Over Time / Country Comparisons)

Accountable Care - Transforming Healthcare Delivery

At no other time in the history of our country has the healthcare delivery system so rapidly transformed as it has since the passage of the Affordable Care Act (ACA).   With healthcare consuming nearly 20% of our country's GDP, traditional fee for service medicine simply was not sustainable.   Accountable Care Organizations ("ACO's") hope to change that with the aim of improving population health, improving the care experience and reducing the per-capita cost. The Centers for Medicare and Medicaid Services (CMS) have very clear rules and definitions as to what might comprise an ACO for the Medicare market, but when it comes to what it means for the private sector, definitions vary. An ACO is a health care delivery system that has partnered with a payer or purchaser of health care to develop arrangements that align financial interests with the delivery of effective and quality care for a specific population.   However, if you have seen one ACO ... you have seen one ACO since success is contingent upon IT integration, physician-led affiliation, care coordination, access, prevention and convenience, and payment reform that aligns stakeholder interests.

Many plan sponsors might first think an ACO of today is simply warmed over "HMO soup", reheated from the 1990's.   What's different is that we have advances in technology, larger systems of care with greater physician/hospital collaboration, bigger federal incentives and a decade of best practices to guide us.   Many systems will be smart to avoid the  mistakes made  during the HMO era when the market greatly underpriced  premiums, withheld care and failed to model risk accurately.   We're only in the first inning of the ACO era that will continue to  lead to pay for performance, bundled payments, episodic risk sharing and more fully capitated transfer of risk for health sytems.

According to Leavitt Partners latest study, there are over 600  ACOs now across the United States:

ACO's Across the Country

There are three considerations that should prompt employers of all sizes to  consider ACO's in their employee benefits portfolio:

1) Available Now  - Traditional health insurers, physician groups and health systems have been hard at work building partnerships that incorporate shared risk arrangements.   Last year, ACOs began rolling their products out to our  benefit consulting teams for us to share with our clients.   We were pleased to learn  the health systems and carriers are "eating at their own restaurant" by  enrolling their employees into their own ACO over the last couple of years.   For the early adopter seeking alternatives that promise greater value   with a narrower network or steerage mechanisms, ACO options are available now throughout the country.   Our firm has examples of clients who have deployed narrow network strategies in partnership with hospital based systems anchored in DFW.   One of the largests now boasts a network of approximately 50 hospitals, 500 patient access points and 6,000 affiliated physicians.

2) Geographic Density -  Since ACOs are about the delivery of healthcare at the local level, employers with great density (concentrations of a large number of employees) will fare better with this strategy.   In California for instance, CALPERS, one of the state's largest plan sponsors, had enough clout to form a direct contract with a upside  premium credit of nearly $16MM  with a physicians group, Blues plan and hospital system.   This alliance was formed to compete against the dominate player in the area, Kaiser of California.   If you are the major employer in an area, you and other employers have more clout than you might think in this new era of ACO alignment.

3) Show Me the Money -  The most fundamental change that ACOs may bring to the market is a substantial increase in the levels of collaboration among payors and providers.   So how will more integrated models prove to the private sector they can truly remove waste, impact steerage, align incentives with greater patient satisfaction?   These integrated systems realize they must offer up savings in the form of guarantees, ,risk-adjusted PMPMs and total cost guarantees for us to consider their offering.   Initial actuarial projections are targeting PMPM savings ranging from 5-10% off of current spending levels, as contracts mature.

But accountability is up to every organization and every body with a body. The ACO cannot foster health alone ... and that's why the early adopters must be prepared to lead with  executive sponsorship, design and contribution alignment to drive steerage, coordination and communications  that lend support to these exciting options. I am a voracious reader of  Benefits Quarterly,  a publication for peers in my industry.   This excerpt, written by Isabelle Wang and Michael Maniccia of Deloitte, provides a good primer for employers to consider on the topic of ACOs and is available on their website or download here:    

No Health Insurance - IRS Shows Us How Penalty Is Calculated

w2form-picIf your like me ... you may have thought the IRS penalties imposed for not having health insurance under the new ACA federal healthcare rules simply utilized the greater of 1% or $95 calculation by applying 1% times adjusted gross income.

This week, Ed Oleksiak, JD, Holmes Murphy's national compliance lead, walked our  consulting teams through how the the IRS will apply the penalty.   So the 1% individual penalty is not just 1% times your   income.   You actually subtract a base amount which is the minimum thresholds for being required to file a tax return determined by filing status and then the 1% is multiplied times the resulting net income amount.   The starting amount is household income.   We are including a definition and example below.

Household income is the adjusted gross income from your tax return plus any excludible foreign earned income and tax-exempt interest you receive during the taxable year. Household income also includes the incomes of all of your dependents who are required to file tax returns.

Example: Single individual with $40,000 income

Jim just plain does not like politics or federal mandates.   He is an unmarried gun-toting, iPhone 5s carrying young invincible   with no dependents.   He pays service fees each month to access his   account ... but feels paying monthly health insurance premiums does not help him with the ladies.   Jim  does not have minimum essential coverage for any month during 2014 and does not qualify for an exemption. For 2014, Jim's household income is $40,000 and his filing threshold is $10,150.

To determine his payment using the income formula, subtract $10,150 (filing threshold) from $40,000 (2014 household income). The result is $29,850. One percent of $29,850 equals $298.50.

Jim's flat dollar amount is $95.

Because $298.50 is greater than $95 (and is less than the national average premium for bronze level coverage for 2014), Jim's shared responsibility payment for 2014 is $298.50, or $24.87 for each month he is uninsured (1/12 of $298.50 equals $24.87).

Jim will make his shared responsibility payment for the months he was uninsured when he files his 2014 income tax return, which is due in April 2015.

2014 Federal Tax Filing Requirement Thresholds

Filing Status


Must File a Return If Gross Income Exceeds


Under 65


65 or older


Head of Household

Under 65


65 or older


Married Filing Jointly

Under 65 (both spouses)


65 or older (one spouse)


65 or older (both spouses)


Married Filing Separately

Any age


Qualifying Widow(er) with Dependent Children

Under 65


65 or older


The One Thing Needed for Exchanges to Succeed

Young people are the most coveted of all participants to have enrolled in a health insurance plan.   It is the concept that underlies group underwriting to have those with fewer health risks to help offset the cost of those who are older and have greater medical needs.   Dallas ranks as one of the largest communities of uninsureds in Texas at 31% compared to a 26% state average. Many of these uninsureds are young people (ages 18-35) who have relied on our public health system to be there if things do not go as planned.

The very success of the Affordable Care Act (ACA) will depend upon convincing these "young invincibles" that health protection is worth purchasing.   If only the public exchanges could be as inviting as an Abercrombie & Fitch, Hollister or a Juicy Couture. The federal government is projecting enrollment in the exchange system to be around 7-8 million by the end of 2014.   As the law intends, the cost of insuring the most expensive users of the system must be offset by around 2.7 million of young invincibles between the ages of 18-35 for it to work. In the first month of enrollment, 26,794 people selected a health plan on the federal exchange website. The makeup of these enrollees has not been released by the federal government, but a demographic match to the patronage of a cafeteria restaurant is to be expected.

As exchange enrollment begins to materialize in 2014, public officials may wish to revisit the following if they hope to enroll the most coveted young adults:

1. A Retail Experience That Works - When the standard young people are used to is designing their own Nike shoes online or ordering Uber's transportation service at the push of a button, will find itself quickly falling off the browser's  "favorites" list.   In a November survey by USA Today, many young people will not try again until December and cannot even comprehend calling a 1-800 number for service.   We all like using intuitive technology that works ... but young people demand it even more ... a problem plaguing for the foreseeable future.

2. Changes to Employer Plan Dependent Definition  - Many employer plans used to only cover dependent children up to age 19 or 26 (if a full-time student).   On January 1, 2014, all employers (grandfathered and non-grandfathered) will be required to extend coverage to dependents up to age 26.   The chief actuary at CMS is likely regretting the legislature's decision to extend dependent coverage to age 26 for employers.   With 60% of American's covered by employer-based plans, this leaves a smaller group of of younger adults to enroll under the public exchanges.

  3. Affordable Coverage -  Older Americans will pay a higher rate than younger Americans, but the community rating is tiered using only three different age group bands. AARP lobbied strongly for this and it is an absolute boon to the baby boomers and a real shaft to Generation X, Y, and millennials who will bear the brunt of the top third-oldest risk tier by age. Age rating bands of 3:1 will prevent insurers from charging an adult age 64 more than three times the premium they charge a 21-year-old for the same coverage. As a result, young Americans will see higher premiums under the Exchanges than when they could have purchased coverage (Pre-ACA) in the private market when they used age rating bands of 5 to 1.

The Obama administration's federal study found that if all 50 states had expanded their Medicaid coverage the way they were supposed to when the law was passed, almost 90 percent of single Americans under 35 years could get coverage that cost less than $100 a month. They did not count on a Supreme Court ruling that enabled 25 states to opt out of expanding Medicaid coverage. This created unexpected "cracks" in the system when many young people who were to have qualified for Medicaid coverage will find they do not earn enough for subsidies under the Exchange.

In an astute political move, the Obama administration pushed back the requirements to release projected increases in health premiums for 2015 until after the November 2014 elections. In 2014 our young adults will eventually have to make a decision to pay the federal penalty (the greater of greater of $95 or 1% of AGI annually) or buy health coverage. Here's betting their XBox One they pay for neither.

Struck by Turtle? There's a Code for That













The U.S. health care system will be implementing a new coding system called ICD-10 that is scheduled to take effect on October 1, 2014.   The Centers for Medicare and Medicaid Services (CMS) will require the code sets be used by any covered entity under HIPAA (Health Insurance Portability Accountability Act).   Whenever we are treated for medical care, a code is assigned to designate our illness or injury.   These diagnosis codes are meant to help providers and payers better track what happened, how much it should cost and what follow-up care is needed.

The ICD-10 codes will not impact coding for outpatient procedures and physician services. There are around 13,000 codes under the current ICD-9 code set and an additional 55,000 coming next year. While the new 68,000 codes will yield enhanced reporting, the real beneficiaries in 2014 will be the IT providers who will charge more to implement the new CMS standards in their EMR systems.   These costs will get passed along to payers and consumers in the form of higher prices for treatment.

Since our U.S. government is providing plenty of comedic fodder, it seemed like a good time to pile on and share some of our favorite codes:

  • Struck by turtle, initial encounter: W5921XA
  • Struck by turtle, subsequent encounter: W5922XD
  • Hurt at the opera: Y92253
  • Stabbed while crocheting: Y93D1
  • Walked into a lamppost: W2202XA
  • Walked into a lamppost, subsequent encounter: W2202XD
  • Submersion due to falling or jumping from crushed water skis: V9037X

One of my favorite groups of codes relates to the rampant incidence of space-related injuries we often hear about. Thank goodness there are over ten codes for when a spacecraft goes out of control and plays a role in an injury.   If you collided your spacecraft the first time use V9543XA.   Do it once more and the hospital staff needs to use V9543XD for a subsequent encounter. How about codes for injuries with Macaws, Centipedes ... and others animals with from fur to feathers ... are available  here.

Over 40 medical specialty groups, state organizations and the American Medical Association (AMA) have written letters to CMS recommending they cancel the implementation of ICD-10.   The concern is that the new codes will "create significant burdens on the practice of medicine with no direct benefit to individual patient care."   Additionally, the letters cite the burden of code implementations on top of a growing list of challenges doctors and hospitals have with the 2014 implementations of federal and state health care reforms.

So the next time you're injured from the dangers that lurk within the Winspear Opera House or you suffer a "burn due to flaming  water-skis" ... just know that your federal government has you covered.

Photo Courtesy of PBS Newshour

Consumer Reports - Health Exchange Guidance


It seems ironic that we are on the eve of the October 1st, 2013 launch of the largest public open enrollment of health insurance in U.S. history and we are one day away from a government shutdown.   While the rest of Washington D.C. tries to get its act together, we recognize that our friends in human resources may need a trusted resource to help navigate consumers through the impact of the Affordable Care Act (ACA). This year only, the health exchange marketplace open enrollment period will run from October 1, 2013, through March 31, 2014.   In subsequent years, open enrollment will run from October 15th through December 7th, for a January 1st effective date.   After this initial year only, the October 15th open enrollment schedule will match up with that of   Medicare.

The older I get the more I rely on unbiased experts who can save me time and have my best interests at heart.   This is why I am a subscriber to Consumer Reports.   In the November 2013 issue, I was pleased to find a well constructed explanation of the ACA and how it might impact three different groups: someone who gets insurance through work, who buys insurance on their own, or who is Medicare eligible.

With over twenty years of benefits consulting experience, I thought I would put the Consumer Report's online guide called  to the test.   I am  giving it an enthusiastic thumbs up and hope you share it with those who come to you for help.   It is a free resource that offers an easy to follow questionnaire that guides consumers through a personal decision making process on what to do. Consumer Reports is a national nonprofit organization with one and only one mission: to take the side of consumers wherever they may need it.   Since  the new health law is the biggest change in the American health care system in more than a generation, they created the Health Law Helper to give consumers accurate and unbiased information about the law and how it affects them.

Please pass it along to anyone who needs advice from a trusted organization with the consumer's best interest at heart.



Health Exchange Marketing - Finding SuperMan or (Woman)?


October 1st, 2013 marks the official kick-off of the open enrollment window for eligible Americans to enroll for health insurance through state exchanges for a January 1, 2014, effective date.   The hope of course is that 40 million uninsureds sign up or they will face a penalty of the greater of $95 or 1% of adjusted gross income.   The odds makers are projecting somewhere between 7-8 million enrollees will hit the buy button for 2014. While federal navigators and the administration will be touting how to enroll ALL Americans, the insurance carriers who have selectively chosen their markets will take a different tactic.   If history repeats itself, the last mass public-private health enrollment push dates back to the Bush-era when Medicare Advantage plans first became available to the over 65 crowd.   A regulatory official once shared with me they had to take enforcement actions against an insurance company promoting their Medicare Advantage plans after learning the carrier held their informational meetings on the top floor of a strip mall with stair-only access.   Ask yourself if you would rather insure a senior citizen that can walk up a flight of stairs or one that rolls onto an elevator in the latest personal electric transport chair endorsed by Burl Ives? This post is not meant to judge our for-profit businesses for pursuing legal tactics that enhance profitability for their shareholders.   Profit or perish is the maxim for any business.   The far greater concern is what happens when public and private insurance pools go after the best customers. History shows us that private enterprise usually wins out when it comes to marketing consumer goods and services.

The big five health carriers are poised to spend $1 billion or more to attract millions of new customers who never have payed health premiums before.   Despite the appeal of a glossed-up "Kathleen Sebelius flyer" produced by the Secretary of Health and Human Services office for "Navigator" distribution, finding "Superman" will not be a fair gunfight for the public Exchanges.   Let's face it ... the   Madison Avenue-style advertising budgets funded by the largest insurance carriers will be playing in a different league.   If you haven't noticed ... the largest health carriers are now sponsoring more marathons, cycling teams, triathlons, mob and ultra events than ever before.   It's health marketing 101, the audience there is worth the brand impression.

Don't expect to see a carrier-sponsored exchange ad next time you're picking up your blood pressure meds at the local CVS. Instead, check inside a Men's Health or Seventeen magazine to find out how to enroll ... or better yet ... run a local 10k and post your results on your Facebook timeline.   The chances are in this new digital economy, there is already enough "big data" that is aggregated on you to predict your health risk. You will know your health status by how aggressively you are sought after.

Where Will You Choose to Swim Next Summer?


As the summer winds down, I could not help but be thankful for the fun we had in our backyard pool.   It suddenly dawned on me that our private swimming pool provided many analogies as it relates to the direction of our federal health care reform initiatives. Many Americans, like my younger sister, will be the first to benefit from affordable coverage without any restrictions for preexisting conditions on January 1, 2014.   The Affordable Care Act ("ACA") allows older Americans to pay a higher rate than younger Americans, but the community rating band will be broken down by only three different age groups.     AARP lobbied strongly for this and it is an absolute boon to the baby boomers and a real shaft to Generation X, Y, and Millennials who will bear the brunt of the top third oldest risk tier by age.   As an example, state exchanges will have age rating bands of 3:1 that will prevent insurers from charging an adult age 64 or older more than three times the premium they charge a 21 year old for the same coverage.   Many believe the bands will be modified to reflect more of a 5:1 ratio as the individual market typically uses today.

Roughly 60% of Americans receive private health coverage through their employer.   Think of each one of these employers as having their own swimming pool.   When I look out at my own pool, our crystal blue waters are meticulously maintained by a cleaning crew that our family gets to select.   When the job doesn't get done, we simply hire another supplier to get better results.   We also get to decide who goes in and out of our family oasis (aside from a random duck that finds his way every year or so to the deep end).   We have control over the environmental factors of our pool like if I want a salt-water or a chlorine pool.   Additionally, we use brushers, skimmers and a Polaris as preventive measures that keep the water clean and healthy.   This is not any different from an employer that sponsors their own corporate health and wellness plan.

On January 1, 2014, there will be another option - a public pool.   When I was little I used to go to our community rec pool and my mom would pay to gain entry or buy a summer pass.   Twenty-seven states (27) have agreed to run a community pool but do not really want to manage it.   This leaves the cleanup and maintenance to a much larger pool cleaning company called the Federal Government.   While Kathleen Sebelius and others will try hard to sell annual passes to younger Americans with lower health risk, there are three groups that will likely end up donning their swimming caps and jumping into the water:

a. Early retirees - This pre-Medicare eligible group is one of the most costly to have on your health plan with claims costs that are actuarially equivalent to three times that of the normal working population.   A report by the Employee Health Benefit Research Institute (EBRI), shows around 17% of employers offered such coverage.   The number of non-working early retirees who enroll through their employer is around 2 million lives.    In a recent Aon Hewitt Survey, nearly a third of employers who provide early retiree coverage plan to direct them to the individual exchange market.   Minnesota based 3M company is exhibit A here after eliminating their group plan for early retirees in favor of redirection to the public exchange pools in each state in 2014.   This is typically done through transition credits through a health reimbursement arrangement (HRA).   Not to blame 3M, as this  is a rational market response when comparing premiums under three-tiered banded rates.

b. State continuation enrollees - As the insurer of last resort, state continuation enrollees and participants in the federal Pre-existing Condition Insurance Plan  will be another group that will contribute to the losses in the state exchanges.   About a quarter of a million Americans fall into this category with more than a dozen states declaring intentions to close their plans in the first six months of 2014.   ACA provides a three-year transition period during which the costs of these programs will be shared across the market.   However, many feel the $5 billion appropriation will not be enough to help states offset the costs through ACA.

c. Low-income Americans - There are numerous studies that unfortunately show a direct correlation between low-income wage earners who are uninsured and the propensity to be obese, have chronic illness and pre-existing conditions.   This group will continue to be attracted to the community pool and have higher health risks when compared to their private plan cohort.   While those who qualify for subsidies (household incomes of between 100-400% of the federal poverty level) are the ones who need it most, their risk factors should predictably drive costs higher each year over private plans.   Over two-thirds of enrollment (CBO estimates) in the exchanges are anticipated to come from those receiving premium credits.   This is something for employers contemplating "pay or play" moves should consider as a one year cost comparison may prove to be short-sighted without thinking through the tax implications and future trends of wading through the public waters.

What is the x-factor that will help keep public exchange costs in check? - those young invincibles ("Young-ens") with no claims who are predicted to enroll.   Lets not count on them rushing in for fear of an underfunded IRS staff that will struggle to collect a paltry penalty (the higher of $95 per year or 1% of family income) from the uninsured.   Keep in mind that ACA is a law whose details are unfamilair to two-thirds of Americans.   Unless the IRS blocks access to the Young-ens X-Boxes until they join an Exchange, this group is going to take awhile to put on their swimming suits.   Those of us who studied actuarial science and risk management in college know that  the dreaded "death-spiral" can occur when younger healthier risks avoid the pool as costs go up leaving behind poorer risks with costs escalating higher each year.

Advice for Tending to Your Own "Swimming" Pool

An August 2013 Towers Watson survey confirmed that 98% of employers surveyed will retain their active medical plans for 2014 and 2015.   The rationale given was that they view maintaining their own health plan (or swimming pool) as an important part of the employee value proposition and a competitive advantage for their companies.

My advice to my colleagues in senior level HR and Benefits who serve as the "lifeguards" of their private pools:

Hire the right crew and invest each year in preventive measures that deliver crystal clear waters.


White House Launches Website for Employers


Keeping up with the changes regarding health care reform is becoming a full-time job as key provisions have been delayed and legislatures are seeking ways to defund the law.   To combat the information circulating on the web, The White House launched a new website for employers on health reform. The new site is located at   The purpose of the site is to explain how key provisions of the Patient Protection and Affordable Care Act will work and impact health plan sponsors.   This is one to bookmark to your favorites list whether you reside in a blue or red state.