Tucker Administrators E-Updates April 2011

10 Essential Things Small Businesses Can Do To Promote Better Health*

The National Business Group on Health's recent survey found that 75% of workers turned to their employer and health plan for medical and health information in 2010.  In 2007, it was 54%.  It's no surprise, with the passage of the Patient Protection and Affordable Care Act (PPACA) on March 23, 2010 and the media circus that followed from Washington, DC. The survey illustrates an opportunity for employers to take advantage of that increased interest in health information by focusing on how employees and their families feel about their health.  Healthy employees are more productive, absent less, and incur less health plan claims. 

wellness imageThis article, from WELCOA’s Absolute Advantage Magazine* outlines 10 important things that small business leaders can do to improve the overall health and well-being of their employees.

Issue a letter of support from the CEO
It seems like such an obvious thing to do but many organizations fail to let their employees know that workplace wellness is a priority to the CEO. By issuing a letter or communiqué, employees better understand that there is support from the very top—and that helps to set the tone for the entire initiative.

Designate a company wellness leader
Once wellness has been communicated as an important priority for the organization, it’s essential that a company-wide wellness leader be appointed. To be sure, the wellness leader can be identified from within your already-existing group of employees. Many times, it’s appropriate for your Human Resource coordinator to take on these responsibilities—but that’s not necessarily
a hard and fast rule. Indeed, there are plenty of instances where the wellness leader is an administrative assistant or a passionate employee.

Conduct an employee health interest survey
Once the owners and managers have bought into the concept, and a company wellness leader has been designated, the next undertaking is to conduct an employee health interest survey. In addition to garnering buy-in, the health interest survey will provide your company’s wellness leader with important insight as to what specific programs employees are most interested in. By conducting an employee health interest survey, small businesses can learn a lot from their own people—and virtually guarantee that the wellness program will be embraced by all.

Provide an opportunity for health screening
This step is a critical one for small businesses because it provides employees with an important opportunity to assess and better understand their own personal health status. Without an opportunity to participate in an annual health screening, many employees will not adequately understand their “numbers” such as blood pressure, cholesterol, BMI, etc. And if your employees don’t understand their own health status, they place themselves at greater risk for experiencing problems—many of which could have been prevented.

Administer an annual physical activity campaign
If you want to have healthier employees, it’s critical to get them up and moving—and an ideal way to do it in a small business setting is by administering an annual physical activity campaign. Specifically, incentive campaigns are designed to increase the amount of time your employees are physically active during the day by creating a series of mini-challenges. And, if employees complete these challenges, they receive certain incentives. Fun and easy to coordinate, incentive campaigns should be considered an essential part of any small business wellness program.

"Regular health information can greatly assist employees in their quest to become healthier."

Hold lunch and learns
We believe that small businesses would benefit greatly by offering their employees healthy eating seminars. Not only are these seminars informative, but they can be a lot of fun as well. For example, imagine how your employees will respond when you bring in a healthy cooking chef that prepares a special meal right before their very eyes. Using healthy—but common—ingredients, the chef can educate your employees on how to prepare the dish, how to make it taste good, and how to make it nutritionally sound. Trust us on this one, this seminar will be a homerun.

Establish an in-house wellness library
Because good health is predicated on sound information, small businesses can take a significant step toward promoting better health by providing their employees with opportunities to learn more about prevention right at the workplace. A good library will include things like medical self-care books, health magazines, instructional DVD’s, audio books, and a variety of newsletters, pamphlets, and behavior change guides. To ensure that the information gets read, it’s a good idea to put the lending library in a commonly traveled spot. Comfortable chairs and good lighting are also highly recommended. Remember, the key is to get people comfortable and reading and/or watching and listening.

Disseminate a quarterly health newsletter
Regular health information can greatly assist employees in their quest to become healthier. A good health newsletter will cover a variety of topics like physical activity, weight management, stress reduction, tobacco cessation, and medical self-care. It helps if the newsletter is available in full-color and is easy-to-read—preferably a 6th or 7th grade reading level. To make sure that the newsletter gets absorbed, you may want to consider offering a brief quiz that asks a variety of questions about the information contained in the actual newsletter itself. The participant can put their name on the quiz and submit it to be registered as part of a drawing for something special. For example, if you have 45 employees, you could very well get an 80% response rate to your health quiz and the winner could walk away with something like dinner for two at a healthy eatery. Implement health promoting policies.

Because company policies can have an enormous impact on employee health status, we would recommend implementing healthy policies and procedures into the actual policy manual.
By incorporating healthy policies and procedures into your business operations, your company further demonstrates its commitment to the concept of providing a safe and healthy workplace for all. Specifically, every small business should consider four basic policies at a minimum. Although not traditionally thought of as important, healthy policies should not be overlooked by small business leaders who are attempting to improve the health and well-being of their company. These policies include: 

• mandating a tobacco-free workplace
• promoting an alcohol/drug-free environment
• requiring seatbelt use by all, and
• formulating safety/emergency procedures in the event of a disaster
Promote community health efforts
A final way that small businesses can promote healthier behaviors is by supporting community events. Needless to say, there are numerous events like fun-runs, health fairs, and educational seminars (just to mention a few) that can be promoted and communicated to your employees. This is very important just due to the simple fact that most community health events are usually best kept secrets. By establishing a listing of health promoting events each month, small businesses can take important steps toward increasing the health and well-being of their most valuable asset—their employees

Hunnicutt, D. (2008).  The Art of Implementing A Great Worksite Wellness
Program In A Small Businesses Setting.  WELCOA’s Absolute Advantage Magazine, 7(1), 3-9. www.welcoa.org

Breast Pumps and Related Equipment Now Approved for FSA Purchase

FSA checkIn February 2011, the IRS ruled that the cost of breast pumps, and related equipment, will now be considered as tax-deductible medical expenses.  This new ruling means that pre-tax funds from flexible spending accounts (FSA) and health reimbursement arrangements (HRA) can be used for the purchase of these supplies.
Therefore, we have updated the FSA/HRA Eligible & Ineligible Expenses (Rev. April 2011) to reflect this significant change (under “OBSTETRICS”).     
Please note that in order to purchase breast pumps and related equipment with your Benny™ pre-paid debit card at:
A pharmacy location – the pharmacy merchant must have modified their point of sale system to recognize these as eligible items during the check out process.  If that has not yet happened, the cardholder will have to make the purchase at a pharmacy that has made the update, or, pay out of pocket and submit a reimbursement request.
Other merchant location (e.g., medical equipment supplier)  - the benefits debit card will work as long as that merchant falls into one of the health care related categories allowed by the IRS.
We believe that this addition provides a great opportunity to reach out to participants to promote the added value of using FSA/HRA dollars and the card to purchase these important items.

If you have any questions about this new FSA-approved purchase, please call Tucker Administrators at 704-525-9666.

Clinical Correlation and Persistence -- an AWAC® Asset

The following is an actual incident that demonstrates why Tucker Administrators selected AWAC® as a business partner for our self-funded group health plans.

AWAC® received a request to look into the pricing and negotiate replacement for a cochlear implant at a PPO facility. The PPO provider is the only network facility in the area and stated that their charge -- just for the device -- was $74,000.  In preparing for the negotiation, Dr. Dumich, AWAC®’s board certified otorhinolaryngologist noticed the audiologist stated that the device was out of the warranty period.

Digging deeper, Dr. Dumich learned that the warranty period was 10 years. The warranty expired 11/4/06. The confirmation of device failure was listed as 12/1/06. Dr. Dumich then made a few phone calls to providers in order to find out exactly when the child starting having trouble. In pursuit of this information / documentation, Dr. Dumich even obtained copies of emails between the mom and the school audiologist. Reviewing this documentation, he discovered that the problem actually began in October, but no one attributed the problem to the implant’s failure until December. moneypuzzlepiece.jpg

Dr. Dumich called the implant manufacturer, and went from customer service to the warranty department, and finally to the sales manager. The local sales manager said their legal department determined that the device was out of warranty. Not satisfied with this answer, Dr. Dumich spoke with the company sales director in California.  He told him the whole story, and how it appeared to him that the device actually failed back in October, before the expiration date. The sales director agreed with Dr. Dumich, and the manufacturer subsequently made the decision to cover the entire cost of the implant.

As the result of AWAC®'s Dr. Dumich's persistence (4 "No" answers before he got the implant charges dropped), the group health plan charges were adjusted:

• Implant charge $74,000
• Payment ............ $0
• Savings            $74,000

This is the kind of scrutiny Tucker Administrators' self-funded clients receive every day.  AWAC® has been named a Finalist in the 2011 Case In Point Platinum Awards, sponsored by Dorland Health, the publisher of Case In Point, Case In Point Weekly, and the Case Management Resource Guide. Call us at 704-525-9666 and we will explain in detail the hard and soft dollar plan savings through the AWAC® early detection and monitoring capabilities of the claims surveillance system.

 What is the Difference Between Generic and Brand-Name Drugs?

A generic drug is defined by Food and Drug Administration Center for Drug Evaluation and Research as one comparable to a brand name drug in dosage form, strength, route of administration, quality and performance characteristics, and intended use. Sometimes, generic versions of a drug have different colors, flavors, or combinations of inactive ingredients than the original brand-name drug. Trademark laws in the United States do not allow the generic drugs to look exactly like the brand-name preparation, but the active ingredients must be the same in both preparations, ensuring that both have the same medicinal effects.generic rx

Generics cost substantially less than brand names.  Why? Drug companies incur the cost of drug discovery, proving safety and efficacy, clinical trials, and marketing their brand-name drugs.  Although generic drugs must go through FDA approval process like brand-name drugs, the end product is much less expensive to bring to market than the brand-name.  In addition, when multiple companies begin producing and selling a generic drug, the competition can also drive the price down even further.  The bottom line is the cost to the group health plan and to the employee is much less when a generic drug is purchased.  Most prescription schedule of benefits steer the participant to use the generic by offering a lower copay or coinsurance than the brand name drug.

A 2006 study by the FDA shows that estimated savings through generic drug use is $67 per retail prescription or $10 billion a year.  Another $7 billion would be saved if everyone used an available generic.

Why, then are there still physicians and patients using brand name drugs if a generic is available?  Some common reasons are:

      •        Some patients have adverse reactions to the inactive ingredients in a generic
      •        Doctors are generally are not in a position to know each patient's prescription benefits, and are not affected financially by the drug prescribed.
      •        Patients are not familiar with their prescription formulary.
      •       The prescription benefits schedule does not provide an adequate financial disincentive to keep patients from using a brand-name drug.
      •       Doctors and patients may not be familiar with a generic. A drug manufacturer doesn't give a generic a big marketing campaign. A generic drug name is a simplified version of the chemical name that describes the actual molecular structure, which could be more difficult to pronounce and therefore not as easy to remember. In contrast, a brand-name drug has a strong, big-budget marketing campaign with names created specifically for marketing purposes-short, easy to pronounce and easy to remember.
      •       Doctors and patients may think that generic drugs are manufactured in poorer-quality facilities or are inferior in quality to brand-name drugs. There is no truth to that. The FDA applies the same standards for all drug manufacturing facilities, and many companies manufacture both brand-name and generic drugs. In fact, the FDA estimates that 50% of generic drug production is by brand-name companies.
      •       Another common misbelief is that generic drugs take longer to work. The FDA requires that generic drugs work as fast and as effectively as the original brand-name products.

Maximum use of generic drugs is critical to the employer's group health plan budget.  Plan design, education about generic drugs and effective communication on how to use the prescription drug benefit can ensure that all employees are aware of the financial savings for themselves and the employer.  Tucker Administrators can discuss the prescription benefit schedule with you and/or your broker to look for additional savings opportunities.

 PPACA: Prohibition Against Rescissions

A part of the Patient Protection and Affordable Care Act (PPACA) that became effective September 23, 2010 isPPACA the prohibition against rescission of coverage. It prohibits all group health plans and plans offering individual coverage from rescinding coverage except in the case of fraud or an intentional misrepresentation of a material fact.  A plan may still cancel coverage retroactively for failure to timely pay required premiums or contributions towards the cost of coverage, but it is not under the definition of rescission.

The interim final rules were published in the June 28, 2010 in the Federal Register. This rescission rule takes effect for plan years beginning on or after September 23, 2010, whether or not the plan is grandfathered.

To maintain PPACA compliance, the three important aspects of the Prohibition Against Rescissions every plan sponsor needs to know are:

1.  How is a rescission defined under PPACA?  A rescission is a cancellation or discontinuance of coverage that has retroactive effect.  For plans that are not grandfathered plans, rescission of coverage may also trigger the requirement for a notice of adverse benefit determination.

2.  A cancellation or discontinuance of coverage is NOT a rescission if:

     • the cancellation or discontinuance of coverage has only a prospective effect; or

     • the cancellation or discontinuance of coverage effective retroactively is due to a failure to timely pay required premiums or contributions towards the cost of coverage.  As stated above, a plan may still cancel coverage retroactively for failure to timely pay required premiums or contributions towards the cost of coverage, but it is not defined as a rescission.

3.  A rescission retroactively canceling coverage is permitted if:

     • an individual performs an act, practice, or omission that constitutes fraud, or

     • the individual makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage. An inadvertent disclosure failure do not qualify for rescission.  The interim final rule provides this example.  The health plan questionnaire included the following question:  "Is there anything else relevant to your health that we should know about?" The interim final rules view a failure to disclose based on this general question as inadvertent and not intentional and therefore not permitting a retroactive rescission.

     • having satisfied the criteria for rescission, the plan provides at least 30 days advance written notice to a participant before retroactively canceling coverage.

Scenarios to clarify some aspects of the interim final regulations were covered by HHS, the Department of Labor and Treasury in question and answers, and tri-agency webcasts in the Fall of 2010.  Below are responses from the agencies regarding specific situations that can arise:

Administrative Error where Premiums are Paid – A plan administrative error will not permit a retroactive termination. For example, an employee changes to a part-time position and consequently is no longer eligible for coverage.  The plan mistakenly continues to provide health coverage, collecting premiums from the employee and paying the employee’s claims. According to the interim final rule, the plan may cancel coverage for this employee only prospectively, subject to other applicable Federal and State laws.

Administrative Delay where Premiums are Not Paid – The agencies addressed a scenario of administrative delay where the human resource department reconciles lists of eligible individuals with their plan once per month.  According to the Q&A, if a plan covers only active employees (and those subject to COBRA) and an employee pays no premiums for coverage after termination of employment, the Departments do not consider the retroactive elimination of coverage back to the date of termination of employment, due to delay in administrative recordkeeping, to be a rescission. However, this doesn’t address a mid-month termination.  Premiums would have been paid for the full month at the beginning of the month, typically through salary reduction (pre-tax or post-tax) or employer contributions.           

Divorce Notice Delayed - It is a frequent occurrence when an employee or spouse forgets about their obligation to notify the plan when there is a divorce.  The plan continues covering the spouse under the plan and many months later the plan finds out about the divorce.  Russ Weinheimer of IRS thought that plans could cancel retroactively in this case, taking advantage of the rescission exclusion for failing to pay premiums. He reasoned if the spouse had been timely terminated and elected COBRA, the cost of COBRA coverage would be more than the cost paid for dependent coverage and therefore the plan was not timely paid the accurate premium amount. In a Q&A released jointly by the agencies in the Fall of 2010, they supported this interpretation in saying that the “Departments do not consider a plan’s termination of coverage retroactive to the divorce to be a rescission of coverage.”    To avoid violating the rescission rules, tie the retroactive termination to a failure to pay premium, if possible. 

Will COBRA administration need to be changed to accommodate the rescission provision?
In the tri-agency webcast in September 2010, Mr. Russ Weinheimer of IRS explored this issue.  The 1999 COBRA final regulations give plan administrators a choice of how to handle coverage during a COBRA election period and during each grace period for a premium payment. The final regulations provide that plans can either maintain coverage and then if, either the coverage is not elected or the premium is not paid timely, then the coverage may be retroactively cancelled; or a plan administrator may cancel coverage and then if the coverage is elected or the premium is paid timely, the coverage may be retroactively reinstated.  Is this a prohibited rescission under PPACA?

According to Mr. Weinheimer, there is not regulatory language to give complete comfort, but he thought there is a work around.  The rescission provision includes an exception when premiums are not paid timely (as discussed above).  Mr. Weinheimer thought this exception works for the COBRA premium grace period, where the plan can argue that coverage was cancelled retroactively because the individual failed to pay the premium.  

The following questions were posed to tri-agency regulation writers at the Society of Professional Benefits Administrators (SPBA) conference in September 2010:

An employer mistakenly fails to terminate the coverage of an employee when the employee’s employment ended.  May the plan terminate coverage retroactively and request a refund on claims paid out?

Reg Writer Response:  If the person did not pay premiums, then the plan could terminate coverage retroactively and seek a refund on claims already paid. 

An employer seeks a mid-month coverage termination, but the administrator receives notice of the request for the termination at the end of the month.  May coverage be cancelled retroactively?

Reg Writer Response:  As long as the plan did not accept premiums, the plan could terminate coverage retroactively.   However, currently the regulations reflect if the plan pays 100% of the premium at the beginning of the month, this will not be an option since the premium has already been paid. 

Not many situations, including clerical errors, will fit the narrow criteria for a retroactive cancellation of coverage.  As a result, employers must monitor employee and dependent eligibility aggressively to ensure rescission compliance

Do the rescission rules prevent a plan from recouping money for claims that were paid in error, but where the participant remains eligible to be covered under the plan?

Reg Writer Response:  No.  

The overview of the rescission regulation above shows it will be difficult for plans to cancel coverage retroactively.  Not many situations, including clerical errors, will fit the narrow criteria for a retroactive cancellation of coverage.  As a result, employers must monitor employee and dependent eligibility aggressively to ensure rescission compliance. 

While these conversations have been helpful with specific scenarios, please keep in mind that the verbal comments of the regulation writers reflect their personal thoughts and are not binding on the agencies. 

Call Tucker Administrators at 704-525-9666 with any questions you may have about this part of the PPACA.

 About Tucker Administrators, Inc.

Tucker Administrators is a full-service TPA in Charlotte, NC. Founded in 1976, we provide a comprehensive portfolio of employee benefit products to serve the employer, broker and consultant community. Tucker Administrators is more than a claims payer. As experts in employee benefit risk management, we use predictive modeling, claims surveillance technology, wellness and clinically-based medical management with proven results that may slow or even reverse the rising trend of claims costs.tucker_logo_Garis.png
Why Tucker Administrators? Our focus is on those factors that drive the total health risk management model, not just fixed costs. Large individual claims are the most expensive costs of a health plan. Our firm has the technology to focus on claims cost control. 
As an AWAC® Alliance member, we are one of a select number of TPAs in the US to use a system to screen all of our self-funded clients' claims and prescription data using more than 80,000 clinician-produced algorithms. AWAC® has the capability to identify at-risk claimants before they become catastrophic, resulting in earlier diagnoses that are both life-saving and money-saving.  Here is a list of our services:
  • Total Self-Funded Health Plan Services
  • Health Risk Assessment integrated with the group health plan
  • Wellness Programs integrated with the group health plan
  • On-Site Physician Programs
  • Regulatory Compliance Support
  • Group Employee Limited Self-Funded Plans
  • Group Employee Fully-Insured Health Plans
  • Group Employee Ancillary Plans
  • FSAs-Medical, Dependent Care and Transportation with debit cards
  • Consolidated Billings Services

We can show you how to control plan costs while encouraging better health for your employees and their families. Call us at 704-525-9666, and visit our website at http://www.tuckeradministrators.com/.