Daily Insurance Report - October 24, 2023
📣 Calling All Licensed Insurance Professionals 📣
Earn 3.00 CE’s + Network at Atlantic City’s Ocean Casino Resort for FREE.
Hear from former IRS Deputy Associate Chief Counsel (Employee Benefits) and Special Counsel for the US Department of Treasury on not one but two Legislative Update sessions:
Understanding the Dynamic Federal Employee Benefits Legislative Landscape
Understanding the Dynamic Legislative LTC & “Junk Insurance” Landscape
Lastly, join us for a fast-paced presentation The Medicare Minefield & Medicare Decoded in which we’ll cover all the elementary components of Medicare Part A through Part D. We will also cover the nine most misunderstood facts of Medicare, and all the mistakes and pitfalls that most seniors and their caregivers are typically unaware of.
AHIP: Proposed Mental Health Parity Rule Should Not Be Finalized
By Marissa Plescia - AHIP, an advocacy organization for insurers, believes that the mental health parity rule proposed in July has several “flaws” and should not be finalized, it wrote in a Tuesday comment letter to the Departments of Health and Human Services, Treasury and Labor. Read Full Article…
VBA Article Summary
Introduction and the Proposed Rule: The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 requires health plans to provide the same level of coverage for mental health benefits as they do for physical health benefits. The newly proposed rule seeks to further the implementation of this act by requiring insurers to review the results of their coverage policies, focusing on matters like payments to out-of-network providers and the frequency with which prior authorizations are denied.
Insurer Opposition and Recommendations: Two prominent health insurance organizations, AHIP and BCBSA, have raised concerns about the proposed rule. AHIP argued that the rule contains legal, policy, and operational flaws and suggested that it will not enhance access to mental health care. Their recommendation includes withdrawing the rule and restarting the consultation process with stakeholders. BCBSA warned that the rule might push health plans to eliminate essential safeguards ensuring that patients receive safe and necessary care. They also recommended expanding telemental health services and allowing cross-state practice for behavioral health providers.
Support and the Wider Implications: Contrary to the insurers, the American Medical Association has voiced support for the rule, emphasizing its importance in rectifying longstanding compliance issues with MHPAEA. Dr. Jesse Ehrenfeld, the president of the AMA, linked non-compliance and lack of enforcement of MHPAEA to the ongoing mental health and substance use disorder crisis in the country, further worsened by the pandemic.
The burden of healthcare costs just keeps growing for American businesses
By Grete Suarez - The average cost of an employer-sponsored health insurance premium for families rose 7% from last year, reaching nearly $24,000, according to the latest survey of 2,133 employers by KFF, a health policy research nonprofit. Read Full Article…
VBA Article Summary
Rise in Health Premiums: The average health premium has surged significantly with employers paying, on average, $1,036 more than last year for each family plan, while employees are paying $500 more. Over the past five years, premiums have risen 22%, consistent with wage growth at 27% and inflation at 21%. The increase also aligns with the 5.2% rise in worker wages and 5.8% rise in inflation compared to the previous year.
Impact on Different Businesses: About 153 million Americans rely on employer-sponsored coverage. However, lower-wage employees, especially those in smaller firms with less than 200 employees, face the most noticeable spikes in premium costs. In contrast, 83% of covered workers are in plans that are self-funded by large firms, but only 18% from small firms have such plans. Recruiting and benefit affordability issues are evident, particularly for lower-wage positions.
Effect of Obesity and Weight Loss Drugs on Premiums: The obesity epidemic has become a significant concern for healthcare coverage. Insurers are aware of the rising obesity rates, with 41.9% of US adults considered obese as of 2020. The introduction and increased usage of weight loss drugs like Ozempic and Wegovy, priced at almost $1,000 for a month's supply, are projected to further push health premiums. Currently, 46% of large employers cover weight loss drugs, and more might include them in the future, which would inevitably add a shock to premiums.
Profitable Growth Top of Mind for Executives in the Life Insurance Industry
By LIMRA - A new study reveals profitable growth is the most important challenge on the minds of C-suite executives in the life insurance industry, followed closely by talent management. Read Full Article…
VBA Article Summary
Shift in Priorities and Challenges: From 2019 to 2021, executives transitioned from being concerned about change management to a stronger focus on technology, driven by the need to address evolving customer demands. By 2023, the key issues identified by life insurance C-suite executives revolve around profitable growth, technology adoption, and the integration of digital automation, data science, and analytics.
Investments and Strategies for Growth: A significant 66% of surveyed executives prioritized investing in customer service technologies, including chatbots and AI. There is also an emphasis on modernizing legacy systems and streamlining business processes. Many executives are exploring narrower focuses on higher-profit margin products and modernizing technology to tap into new markets and find operational efficiencies. Moreover, there's a notable emphasis on enhancing tools for advisors to better serve clients and prospects.
Increasing Demand for Life Insurance: The demand for life insurance surged, witnessing near-record premiums in 2021 and 2022. The 2023 Insurance Barometer Study indicated that over 100 million U.S. adults are underserved regarding life insurance. With the evident rise in consumer interest, there's a significant opportunity for insurers to bridge these protection gaps globally. The 2023 study aims to shed light on the priorities and challenges that life insurance leaders face amidst these emerging opportunities.
An epidemic of medical debt is devastating American families as health insurers ratchet up out-of-pocket demands
By Trudy Lieberman - In 2006, the Commonwealth Fund, one of the country’s prominent health-care foundations, published an important study with the ominous title, “Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families.” It’s a headline as true today as it was 17 years ago. Read Full Article…
VBA Article Summary
Industry Consolidation and Shift of Financial Burden: After the Affordable Care Act promised more inclusive insurance coverage, the health insurance landscape shifted dramatically. With industry consolidation leading to a few dominant companies, insured individuals found themselves shouldering significantly more of their healthcare expenses, sometimes up to $20,000 annually, before their insurance coverage kicked in. Many insurance payouts have been insufficient to cover the high costs of medical care, drastically altering the fundamental insurance structure.
Rise of Medical Debt and Exploitation: The aggressive shift towards a consumerist system in healthcare has led to a concerning rise in medical debt for many Americans. A multi-part investigation by KFF Health News uncovered that 41% of U.S. adults, or around 100 million people, are overwhelmed by medical debt, often hidden in credit cards, personal loans, or payment plans. Furthermore, uninsured and out-of-network patients often face charges significantly higher than in-network insurers, echoing findings from six decades ago which highlighted that the poorest Americans often paid a "poverty penalty".
Lack of Addressing Core Health Care Costs: Despite the passage of time and the introduction of legislation like the Affordable Care Act, core issues around the rising costs of healthcare have not been effectively addressed. Premiums and overall medical costs continue to rise year after year. Consolidation in the healthcare industry has led to non-competitive pricing, with major health-care systems employing a majority of doctors. Additionally, the Affordable Care Act did not adequately tackle the primary issue of soaring healthcare costs, leading to a scenario where huge amounts are still being spent on health care without substantial improvements in affordability or outcomes.
Pharmacies and wholesalers, not just PBMs, rely on spread pricing
VBA Article Summary
Medicare Part D Spending on Generic Drugs: A recent analysis published in JAMA Health Forum on October 20 revealed that Medicare Part D spends an average of $22.50 per claim on generic drugs. The distribution of the resulting gross profit includes $9.18 for pharmacy benefit managers (PBMs), $3.87 for pharmacy gross profit, $2.71 for wholesaler gross profit, and $6.73 for manufacturer revenue. The study highlighted the reliance of various entities in the pharmaceutical supply chain on spread pricing, including but not limited to PBMs.
Legislation Targeting PBMs and Spread Pricing: Recognizing the challenges presented by spread pricing, there has been bipartisan consensus in Congress to curb such practices. The Senate Finance Committee introduced the Modernizing and Ensuring PBM Accountability (MEPA) Act in September, addressing spread pricing as one of its major components. Meanwhile, the House has proposed legislation seeking to ban spread pricing in Medicaid and disallowing PBMs that collaborate with managed care organizations from using spread pricing.
Concerns and Limitations: The analysis pointed out that while curbing PBMs' spread pricing practices might reduce their claim-level revenue from generic drugs, the absence of adequate market competition could push PBMs to increase administrative fees, thereby keeping their revenues intact. Consequently, the impact of reforms targeting only PBMs on overall drug spending and the robustness of the generic pharmaceutical supply chain is still uncertain. The study also recognized limitations like the unavailability of specific data on remuneration and the proprietary nature of agreements, which made it challenging to assess the actual spread pricing and net profits.
Why earned wage access should be part of your retention strategy
By Amanda Schiavo - Having access to pay as needed, rather than just on payday, is an enticing prospect for many employees. About three-quarters of employees say it’s important that employers offer earned wage access (EWA), aka on-demand pay, according to ADP data from December 2021 to January 2022. Over one-third of Americans either want to or already have access to their pay as they earn it, according to PayrollOrg’s 2023 “Getting Paid In America” survey. Read Full Article…
VBA Article Summary
Transparency and Accessibility in Payroll: Tom Hammond from Paychex emphasizes the importance of transparency in the payroll process, quick access to earned wages, and self-service technology options. These elements play a critical role in strengthening the employer-employee bond in today's workforce.
The Impact of Financial Stress: Research by financial planning firm Savology indicates that financial stress can profoundly impact an employee's work life. Symptoms range from increased absenteeism and stress leaves to higher claims on benefit plans and even reduced work quality. Importantly, employees under financial duress can negatively affect a company's bottom line.
The Growing Demand for Earned Wage Access (EWA): According to an ADP report, both employees and employers see the value in offering earned wage access (EWA). Major retail corporations such as Target, McDonald's, and Walmart have already implemented EWA, betting on its potential to improve employee retention. Additionally, the ADP report highlights that a significant majority of employees desire EWA, with approximately eight out of ten opting for it when given the choice.
ASRM publishes a new, more inclusive, definition of “infertility”
VBA Article Summary
Comprehensive Criteria for Diagnosis: Infertility is now recognized not only based on the inability to achieve a successful pregnancy from various factors such as medical history, age, and diagnostic tests, but also the necessity for medical intervention like using donor gametes or embryos. The initiation of evaluations for infertility varies based on the female partner's age, with shorter waiting times for older women.
Inclusive and Diverse Focus: The definition stresses that all individuals, irrespective of their relationship status, gender identity, or sexual orientation, should have equal access to reproductive medicine. It underlines the fact that infertility can be caused by a multitude of reasons and that every case warrants sincere attention and care. Dr. Jared Robins, ASRM CEO, emphasized this inclusive approach, ensuring equitable access to infertility treatments for all.
Endorsement and Future Plans: This updated definition of infertility has been approved by the ASRM Board of Directors and will be featured in the esteemed journal, Fertility and Sterility. The leadership at ASRM has expressed gratitude to those who contributed to framing this definition and has plans to collaborate with members and policymakers to make this definition widely accepted.
Express Scripts conspired to overcharge pharmacies, class action says
By Brendan Pierson - A group of pharmacies has filed a proposed class action lawsuit accusing Cigna Group's (CI.N) pharmacy benefit manager unit Express Scripts Inc of conspiring with another company to charge higher fees and reimburse pharmacies at lower rates. Read Full Article…
VBA Article Summary
Antitrust Accusations: Four retail pharmacies have lodged a complaint in federal court in Milwaukee, Wisconsin against Express Scripts, alleging that a 2019 collaboration agreement with Prime Therapeutics was a smokescreen for setting fixed reimbursement rates and fees without providing any tangible benefits to customers. Prime Therapeutics, though involved in the agreement, has not been named as a defendant.
Background of PBMs: Pharmacy Benefit Managers (PBMs) like Express Scripts and Prime Therapeutics play the role of intermediaries, negotiating drug prices among drugmakers, health insurance providers, and pharmacies. As per a March 2022 report, Express Scripts held the second-largest market share of U.S. PBMs, while Prime Therapeutics was ranked fifth. The complainants emphasize that prior to the 2019 agreement, Express Scripts capitalized on its larger market share to charge higher transaction fees from retail pharmacies compared to Prime Therapeutics.
Lawsuit Details and Broader Context: The plaintiffs argue that the Express Scripts-Prime Therapeutics collaboration lacks genuine efficiency or competitive advantages in the market, dubbing it merely a means to limit price competition concerning reimbursements and transaction fees. This lawsuit, asserting violations of the federal Sherman Act, falls amidst increased scrutiny of PBM operations. Previously, states like Hawaii and Ohio have sued Express Scripts and other prominent PBMs, with CVS Health's PBM, Caremark, also under legal fire in Washington.
Caring for Our Companions: Pet Wellness Month Spotlight
By Rachel Alfred - October is a special month for our furry friends as it marks Pet Wellness Month, a time to celebrate the health and happiness of our beloved pets. Additionally, we also observe Pet Cancer and Pet Diabetes Awareness months in November. Read Full Article…
VBA Article Summary
Importance of Pets and Financial Challenges: Pets are integral members of many families, providing unconditional love and companionship. However, their care can come with significant financial responsibilities, especially during unexpected illnesses. Such challenges can even impact an employee's work performance.
PlanSource Partner Marketplace Solutions:
Pet Insurance - Offers financial protection for veterinary expenses, covering both emergency treatments and routine care. This not only gives peace of mind to pet owners but can also boost job satisfaction.
Financial Wellness and Education - Tools and resources that assist pet owners in budgeting for pet-related expenses effectively.
Mental Health - Benefits aimed at helping pet owners manage stress related to pet ownership.
Paid Time Off Perks - Allows employees flexibility with their unused paid time off, catering to various needs including pet-related emergencies.
Pet Wellness Month: A dedicated time to emphasize the importance of pets and the need to support their well-being. Employers are encouraged to stay informed about pet health issues and to consider enhancing their benefits package to support both their employees and their furry family members.