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 COBRA Corner With the world's current events, this topic is being visited by many employers. While a call to active duty is considered a qualifying event under COBRA, there are several other options available to the reservist and their qualified dependent(s).
This is a difficult and stressful time for all involved. While COBRA must be offered to anyone who is eligible, who pays for the premium is up to the discretion of the employer. Some employers are continuing to charge the "employee" contribution to the member(s) while others are opting to continue the reservist's and his/her eligible dependent(s) coverage at no cost to the reservist. The feeling is that the employers wish to stand behind the reservist during this difficult time. For more information on the above options, please visit the Department of Labor website. Service Tips Timely Submissions Many carriers are tightening up their policies regarding the timing of receipt of premium payments, enrollment, and termination and change applications. Enrollment, termination and change applications must be submitted to the carrier within 31 days of the qualifying event. According to your contract with the carrier, they have the right to decline the application if the receipt is beyond that time. Regarding late premium payments, this is a tough lesson to learn. Again, per your contract with the carrier, they have the right to terminate your group policy if payment is not received by the due date on your monthly premium bill. Once your group policy has been terminated by the carrier, there is a snowball effect. Services and claims are denied, prescriptions cannot be purchased and confused employees line up on the HR Department's doorstep for answers. Getting the group policy reinstated is no easy task and usually requires a bank check for the late month's premium and the following month's premium payment. Once this is accomplished, a claims report will need to be run and the claims reprocess cycle begins. This can take up to a 3-5 week period. Most carriers will only allow a group policy to be reinstated once. And, as a foot note, employers or their COBRA administrators should track the termination dates for COBRA to assure that the drop off occurs when it should. Prescription Pre-Authorization We have begun receiving an increased number of calls concerning prescription issues. Some members are being told by their pharmacy that they need "prior authorization" for particular prescriptions. Most people are unaware of the carrier's requirements or what to do when faced with this "obstacle". When this happens at the pharmacy level, the doctor has missed a step in the process. All doctors receive a quarterly list of which drugs need "prior authorization" from each insurance company. When the doctor prescribes one of the medications, the doctor is required to notify the insurance company. Anthem, for example, provides all physicians with a toll free number for their Anthem Prescription Management (APM) unit. These units are staffed by pharmacists and therapeutic practitioners. They meet quarterly and review the characteristics of new drugs. Among other things, they pay particular attention to the potential for abuse of the prescriptions. They are responsible for keeping track of all new drugs that come on the market and for notifying providers and members. Members receive a quarterly list in the LANSDCAPE publication which is mailed to member's homes. When the doctor contacts the carrier's Prescription Management Unit, they need to be prepared to provide medical documentation about the patient and the medical reason for the prescription(s). They may even have to submit a letter of "medical necessity". This letter needs to detail that the patient has tried the "other" medications, but they were unsuccessful. If the doctor is successful at convincing the Prescription Management Unit of the need for the requested prescription(s), then the authorization is entered into the system and it will be dispensed by the pharmacy. This process may take several days to complete. The length of the process is heavily dependent on the involvement of the physician's office. If the doctor is unsuccessful with the unit, an alternate prescription will be prescribed to the patient. This alternate drug will be on the carrier's formulary list and may be a generic substitute for the original prescription. The member may also file an appeal with the insurance company. Some medications that may require preauthorization are: Vioxx and Celebrex. For more information on medications that require preauthorization, visit your carrier's website:
HIPAA Privacy Rules While most employers do not need to be compliant with the HIPAA Privacy Rules until April 14, 2004, employers and members will be working in an environment where insurers and providers are already subject to the law. As a result, employers need to be familiar with the operational aspects of being HIPAA compliant. A great on-line resource can be found at: US Department of Health & Human Services~ HIPAA Robert D.Noonan, Esq. will be New England Medical's guest speaker on May 2, 2003, addressing employer requirements relative to HIPAA. The following is an article written for employers: Medical Insurance Privacy Rules: It happens every day. An employer, uncertain as to whether an employee with a recent medical problem should be assigned to a particular job, calls the person who handles the company medical claims to get the lowdown on the employee's medical condition and, armed with the information, the company then calls the company's employment counsel to discuss the case. This garden-variety transaction and others like it are soon to be greatly influenced with the advent of the Privacy Rules under the Health Insurance Portability and Accountability Act, HIPAA. The HIPAA Privacy Rules will dictate the rights of patients, the obligations of medical practitioners, insurance plans, and other "covered entities" and the restrictions on their ability to use and disclose medical information without the permission of the individual. Compliance Deadlines Slated to take effect on April 14, 2003, the HIPAA privacy rules apply to a broad range of "covered entities". They are "group health plans", including both larger insurance plans and employer group health plans; "health care providers" such as doctors, pharmacies, labs, and "health care clearing houses", organizations that provide such services as medical billing or coding. In the strictest sense, employers are not among the covered entities, but any employer that sponsors an employee welfare benefit plan covered by ERISA, as long as the plan has 50 or more participants or is administered by a third-party organization, must comply with HIPAA's strict privacy provisions. Note, however, that small health plans (those with less than $5 million in gross receipts), have an additional year to comply. In addition, the Bush administration has proposed an additional year for the covered entities to enter into contracts with their "business associates." The Basics of the Rule The basic privacy principle of HIPAA is simple: organizations that possess personal information related to an individual's health care (or payment for health care) can not disclose it, except in the following limited circumstances:
What information is Protected? The key characteristic of protected information is that it is health related and it can be linked to a person by name, social security number, employee number, or other identifiers outlined in the regulations. Summary information, such as information concerning the entire workforce, can be disclosed provided it cannot be linked to any specific individual. But the definition of "protected health information" includes any information, in any form (electronic or otherwise), created or received by a provider, health plan, insurer, or employer, that relates to past, present, or future health care or payments. Any such information, if it can be personally identified, falls under the domain of HIPAA. Disclose only the minimum necessary. Even where individually identifiable health information can be disclosed, the covered entities must now make a reasonable effort to limit the release of health information to the minimum amount of information necessary to accomplish the purpose for which the disclosure is needed. This requirement does not apply to disclosures to or requests by health care providers for treatment purposes. Nonetheless, the "minimum necessary" disclosure requirement will force insurers and employers to revamp their systems and procedures regarding what, why, and to whom protected health information is released. Failure to Comply The civil penalties include $100 for each violation, up to a maximum of $25,000 for violating a particular requirement of the law. Keep in mind that a global release of information on multiple employees would likely trigger the $100 penalty for each employee. The law also stipulates criminal penalties, ranging from $50,000 and one year in federal prison for wrongful disclosure, up to $250,000 and ten years in prison for a deliberate offense with intent to sell protected health information. Additional Requirements and Administrative Safeguards In addition to the restrictions on the disclosure of information, the rules also require covered entities to take several administrative steps to safeguard medical information. These additional steps will require a significant amount of planning and effort as the medical and insurance communities have discovered as they have begun taking steps to comply with the privacy rule prior to the implementation date. Less aware of these obligations, employers will also need to undertake several steps to bring their group health plans into compliance. At the very least, they will need to ensure that their medical plans do not disclose health information to facilitate employment decision-making. In addition, HIPAA requires employers, technically their health plans, to assign staff to develop and implement HIPAA policies and a privacy notice to be distributed to employees. In addition, they must appoint a Privacy Officer (who may or may not be a new employee) with overall responsibility for HIPAA privacy issues. They must also develop a disciplinary procedure and document violations. In addition, HIPAA requires employers to train responsible employees on appropriate uses and disclosures of their protected health information. Employers will need to reconfigure their administrative, technical, and physical safeguards for health care data. This will likely include significant changes to information systems and the creation of a "firewall" between plan-related uses of health information and employment-related uses of information. In effect, the rules ask the employer to distinguish between the employer and it's own health plan, as if they are separate entities. However, as a practical matter they are not and so the rule provides that where the plan will be sharing medical information with the employer, plan documents will need to be amended to specify permitted uses and disclosures of health information to the employer/plan sponsor and there must be certification of the changes. Downstream Advisors-Attorneys, Accountants, Insurance Agents The rules will also have a pronounced impact on those professionals who provide services to health plans and providers-they are "business associates." Covered entities will need to enter into contracts with "business associates" with whom they share protected health information and to assure they also conform, in varying degrees, to the privacy rules. For many lawyers, accountants and insurance agents, this means that it will be far more difficult to obtain information concerning an employee's medical condition, for example, in the determination of whether an employee was disabled within the meaning of the Americans with Disabilities Act without first addressing the impact of the HIPAA privacy rule. Getting Started - A Practical Approach With less than a month to go before the compliance date, the race for HIPAA compliance appears to be underway among the medical community and large insurance plans, but with comparatively little awareness being shown by the employer community on the impact of the rules, however. Perhaps this should be expected because the rules themselves do not apply directly to employers but rather their health plans. Nonetheless, the question that must be anticipated by attorneys who work with employers is "how do we get started so that we can comply with the privacy rules?" There are three recommended elements in beginning the compliance process. The first is to recognize that these rules will result in fundamental changes in the relationship between the employer's health plan and the rest of the organization, particularly employment decision makers. Next, appoint a task force of people who can address the compliance issue from the standpoint of information technology, administrative procedures, and human resources issues. Each of these spheres of operation will be impacted by the rules. Third, have the organization undertake an audit of its collection, use and disclosure of health information now. This audit of current practices will enable the employer to determine the degree of organizational control it needs to establish for compliance. Employers who have conducted health information audits have been surprised to find that employee health information is routinely provided to people over the phone without verification of their identity, routinely faxed without any precaution taken by the person faxing or receiving information, and often shared with others within the organization regardless of purpose. In the final analysis, the HIPAA privacy rules will bring significant legal, operational, and technical changes in how doctors, insurance carriers and employers with employee benefit plans handle health care data. For attorneys, particularly those who deal with employer-matters related to employee health, these rules will bring a new and somewhat uncertain level of complexity. Federal Legislation: Association Health Plans One of the health care priorities of the Bush administration is the passage of legislation permitting the establishment of Association Health Plans. AHP's would allow individuals and small groups to join together with health insurance companies to negotiate for lower rates and better plans. There are over 50,000 non-profit national and state associations chartered in the USA. Most of these groups are small organizations such as Chambers of Commerce and church organizations. However, they also include large associations like AAA, NRA, or even AOL members who might be capable of forming mega-groups of hundreds of thousands of members. There is an interesting coalition of 55 diverse members opposing the plan. Those opposed include groups who would rather see a universal national single payer system such as Families USA and the AFL-CIO. Another group of coalition members represented by The Blue Cross Association and Health Insurance Association of America (HIAA) is opposed because the creation of AHP's would be exempt from state regulation, creating further disruption in the non-group and small group market place. Senator Judd Gregg is the Chair of the Health, Education, Labor and Pension Committee (HELP) where S39 has been assigned. The bill has not had a hearing and it is unclear when it will. Senator Gregg has some concerns about the current proposal. The bill is titled "Promoting Healthcare Purchasing Act." Our view is that, although this legislation has a lot of support in the Republican controlled House of Representatives, the passage through the Senate is less likely. In addition, Senator Gregg's reservations would indicate that the proposal may not see action until later this year. Senator Gregg's office welcomes comments on this and other pieces of legislation. His office in Washington can be reached at 202 224 6670. The email address for the person responsible for following the AHP proposal is kim_monk@labor.senate.gov A report by The Congressional Budget Office in January 2000 follows. An analysis by the Congressional Budget Office (CBO) found that most small employers and workers would pay higher premiums if a preemption from state law for Association Health Plans (AHPs), as contained in S39, is enacted. The report reveals that AHPs would save costs by skimming the healthy from the existing state-regulated small group market, making coverage more expensive for the sick. Specifically, the report found that: AHPs would not significantly reduce the number of uninsured: Contrary to proponents' claims that AHPs could cover up to 8.5 million uninsured, the CBO estimated that coverage would increase by only 330,000 individuals. However, CBO also notes that the overall number of individuals insured would be lower, "because some of those who gained coverage through AHPs and HealthMarts would have otherwise obtained coverage in the individual market." The full report, entitled "Increasing Small-Firm Health Insurance Coverage through Association Health Plans and HealthMarts," is available at CBO's Web site: www.cbo.gov Caps On Liability Insurance On March 13, 2003, The House of Representatives passed a bill that would limit provider liability for medical malpractice claims to $250,000 for non-economic (pain and suffering) damages. Out of pocket costs for medical bills and lost wages would not be affected. The bill will now advance to the Senate for a vote which may not take place until fall. Passage there is not considered certain as the trial lawyers have considerably more influence with Democrats who oppose the bill. The bill is considered necessary by medical groups. Malpractice insurance rates have increased substantially in recent years. In fact, many specialists have left their practices in the face of $100,000 premiums and there have even been work stoppages by doctors in some communities. Insurance companies are also supporting the legislation, as passage will help reduce the increase in health insurance premiums. President Bush has indicated that he would sign the bill if it is passed by The Senate. A Billion Here, a Billion There ... As with most people, when dollars are expressed with more than six zeros, we tend to glaze over as the numbers become incomprehensible. Try the cost of health care in 2001:
This total averages over $5,000 for every American for the year 2001, or more than 14% of the domestic gross national product. These numbers mean our healthcare culture is either in great shape or terrible shape depending on whether or not you are a patient or a just a premium payer. NH Legislation NH Senate Bill 110 Small Group Reform (As we are about to hit the send button on this newsletter, the Senate Insurance Committee has passed the bill on to the House Commerce Committee. The bill was amended to change the definition of small group to 1 to 50 versus 2 to 50. In spite of this change, both Fortis and Starmark have maintained their commitment to return to the New Hampshire market if the bill is made into law.) The intense interest in this health care proposal is the one against which all others are measured. The proposal is a continuation of last year's reform of the non-group market from which NH created a high risk pool and added other underwriting rules consistent with what most of the other states in the county have. It is too early to tell about the success of last year's bill, SB119, but the law has attracted at least one additional insurance company back into the state to provide additional competition. The line-up of pros and cons is about the same for the small group proposal. Anthem is opposed and doing an excellent job of pointing out the trouble spots in SB110. Most other insurers, many insurance brokers, and the Governor' office are in favor of the changes that would come about as a result of the passage of SB110. Among controversial provisions, the one getting a lot of attention is the reintroduction of geographical rating. This would allow insurers to charge more in areas where the hospitals charge more. This means the Seacoast and the North Country areas would likely see higher rates than other parts of the state because the hospitals in these regions charge higher fees. Our view is that this would be a good thing, as it would focus consumer attention on the cause of high insurance premiums. As a culture, we are about to enter an age where the consumer of health care services will be more connected to the cost of care. The age of co pays is coming to an end. If premium rates are to become more affordable, the consumer must be in the fight with the providers. SB110 will help create a healthier dynamic in the market. The Coalition for Affordable Health Insurance which is made up primarily of Producer groups provides this summary: SB 110 SB 110 Will:
Key Provisions of SB 110:
NH Health Care Legislation: BIA Report BIA Legislative Review HUMAN RESOURCES
The Fight against Medical Errors Continues One of our editorial policies for editing this newsletter is to look for signs of improvement in our medical care systems. WE assume that a better healthcare system will mean lower cost and, therefore, lower premiums. One of the first such clues that we found that good things are happening came from the Business Round Table when they created the 'Leap Frog' program in 2000. Leap Frog was designed to reduce the number of preventable medical mistakes in hospitals. Medical errors account for up to 100,000 deaths in hospitals at a cost of over $2 billion per year. Along with Leap Frog, The Department of Health and Human Services, and many other concerned organizations, The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is also promoting specific changes in health care practices through its accreditation function. JCAHO issued its "National Patient Safety Goals" for 2003. JCAHO reviews and accredits over 17,000 healthcare providers nationwide. The 6 goals are:
Newsletter Note: The above information is offered to our clients and prospective clients as a service. It is a compilation of pertinent articles we have read, information we have collected from seminars attended and general trend information. It is not to be taken as legal or tax advice. If you have any questions about the information contained in this newsletter, please feel free to call us. Before acting on any legislative or law changes, you should consult your legal and/or tax advisor. View the February 2003 NEMIA Newsletter View the January 2003 NEMIA Newsletter View the August 2002 NEMIA Newsletter |
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