Wellness Plans: The Invasion of the EEOC Regulators A. Regarding Wellness: What the ACA Clearly Provides . A plan sponsor can use up to a 30% reward/discount or penalty/surcharge associated with a health standard based wellness program. A plan sponsor can use up to a 50% reward/discount or penalty/surcharge associated with a health standard program. MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators B. The 2015 EEOC Wellness Litigation Onslaught EEOC v. Honeywell (Minn. 2014) If an employee did not complete biometric testing, the employee would be required to pay a $1,500 premium surcharge for health coverage and would not be eligible for contributions (up to $1,500) that the employer would otherwise make to the employee’s health savings account. If an employee’s spouse also did not complete the biometric testing, the employee would be required to pay another $1,000 surcharge for health coverage. Court denies EEOC’s request for TRO and injunctive relief. MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators EEOC v. Flambeau (ED Wisc. 2015) (EEOC appealed to the 7 th Circuit) Court holds that that an employer did not violate the ADA by requiring its employees to participate in a wellness program, including by undergoing health risk assessments and biometric screenings, as a precondition of participating in the employer’s health insurance plan. ADA “safe harbor” for benefit plans applies. EEOC v. Orion (ED Wisc. 2015) The employer paid 100 percent of the cost of the health plan for employees who completed an HRA and a fitness test. If an employee did not complete an HRA, the employee was required to pay the full cost of the health plan premium. If an employee did not complete the fitness test, the employee was penalized $50. Summary judgment briefs filed. No decision yet. MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators Seff v.Broward County (11 th Circuit, 2012) An employee complained about a program in which the employer deducted $20 per biweekly paycheck from any employee who did not complete an HRA and biometric screening. Seff court sided with Broward County, relying on an exception under the ADA that provides that the rules on medical examinations do not prohibit employers from “establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks or administering such risks that are based on or are not inconsistent with state law .” The court reasoned that the wellness program fit within this exception because, among other reasons, the employer used aggregate data from the HRAs to classify various employee health risks and decide on the types of benefits that should be offered in the future to reduce plan costs. Court recognizes that the ADA has a “safe harbor” /carve out for medical plans. Court concludes that a bona fide wellness program is a critical part of a medical plan and is exempt form EEOC oversight. MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators C. May 2016 Wellness Regulations: Effective Day 1 of the 2017 Plan Year What Did the EEOC say about Flambeau, Orion and Broward County ? The safe harbor applies to actuarial based risk classification. “The Commission believes that the cases were wrongly decided…the agency has the authority and responsibility to provide its own considered analysis of the statutory provision…” MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators EEOC Issues ADA/Wellness Regulations Directed at wellness programs that require employees to ask disability related questions or udergo a medical examination to avoid a penalty/surcharge. Wellness programs need to be “voluntary.” New Notice and confidentiality requirements. A program is not voluntary if it is coercive. A plan sponsor looks to the size of the incentive to determine if the plan is coercive. Maximum incentive is 30% of the total cost of the lowest cost self only coverage if the wellness program is open only to the employee. Example : Total cost of self only coverage is $6,000. Maximum incentive is $1800. MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators EEOC ADA/Wellness Regulations and smoking cessation programs 30% cap on incentives apply if there are disability related questions or a medical examination is required. Can go up to 50% if simply asking the employee whether they are a smoker . EEOC Issues Genetic Information Nondiscrimination Act (GINA) Regulations Section 1635.8 Can offer an inducement to an employee whose spouse provides information about the spouses’ health as part of a health risk assessment. Cannot offer an inducement to an employee’s spouse to provide information about his/her health as part of a health risk assessment. Cannot offer an inducement to an employee to provide health information about their children. Cannot condition access to coverage to employee or spouse on making them provide health related information. (No gatekeeper plans). MARSH & McLENNAN AGENCY LLC
Wellness Plans: The Invasion of the EEOC Regulators GINA and Inducements… 30% limit of the total cost of the lowest cost self only coverage on inducements for participation in Wellness program. Example: Total cost of family coverage is $14,000, self only is $6,000. If employee and spouse participate in wellness program, the max inducement for the employee is $1,800 and $1,800 for the spouse. (30% of $6,000). If a health plan offers several self only coverage options, the 30% is based on the lowest cost option. MARSH & McLENNAN AGENCY LLC
Wellness Rewards and Taxes MARSH & McLENNAN AGENCY LLC
Wellness Rewards and Taxes April 2016: IRS Publishes General Counsel Memo Regarding Taxation of Wellness Rewards. Chief Counsel Memo Number: 201622031. A. Cash Rewards. The memo sates that any reward, incentive, or other benefit that is not medical care is included in an employee’s income unless it is an excludable fringe benefit under Code § 132. Code § 132(e) defines an excludable de minimis fringe benefit as any property or service the value of which is so small as to make accounting for it unreasonable or administratively impracticable. IRS reaffirms that cash benefits are never excludable as de minimis benefits, so cash wellness rewards—regardless of the amount—must be included in the employee’s gross income. Note: IRS previously has stated that, under this rule, gift cards are treated the same as cash MARSH & McLENNAN AGENCY LLC
Wellness Rewards and Taxes B. Gym Fees and Other Nonexcludable Rewards . The IRS recognizes that there may be rewards, such as T-shirts, that qualify as de minimis rewards that can be excluded from income. Payment of an employee’s gym membership fees, however, would not be excludable from income because it is a nonexcludable cash benefit. The fair market value of any nonexcludable reward must be included in income and subject to employment taxes C. Reimbursement of Premiums Paid Tax-Free Through a Cafeteria Plan. In IRS Revenue Ruling 2002-3,the IRS previously addressed the reimbursement of health insurance premiums paid tax by salary reduction and concluded that the exclusions for health coverage and health benefits from an employee’s income would not apply. The IRS concludes that the result is no different if the premium reimbursements come in the form of rewards under a wellness program. MARSH & McLENNAN AGENCY LLC
New ERISA Violation Penalties Announced: Effective August 1, 2016 MARSH & McLENNAN AGENCY LLC
New ERISA Violation Penalties Announced: Effective August 1, 2016 Form 5500 Filing Failure. The current penalty of up to $1,100 per day for failing to file a timely Form 5500 will increase by almost 100% to a maximum of $2,063 per day. Multiple Employer Welfare Arrangements (MEWAs) . The current penalty for not including a Form M-1 with the annual Form 5500 will increase from up to $1,100 per day to a maximum of $1,502 per day. Group Health Plan Notice. Failing to inform employees of CHIP coverage opportunities will result in a penalty of up to $110 per day, up from $100 per day. The penalty for failing to furnish the Summary Benefits Coverage notice will increase from up to $1,000 to a maximum of $1,087 per failure. Here is the point: Be aware of your responsibilities and deadlines! MARSH & McLENNAN AGENCY LLC
Proposed Revision to Form 5500 Regulations: Would Apply to 2019 Plan Year MARSH & McLENNAN AGENCY LLC
Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year Form 5500 Annual Return/Report is the primary source of information about the operation, funding, assets, and investments of pension and employee benefit plans. In addition to disclosing important information to plan participants and beneficiaries, the Form 5500 Annual Return/Report is an essential compliance and research tool for the federal government. MARSH & McLENNAN AGENCY LLC
Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year A. More information will be required concerning 401K and pension plans. The asset breakouts on the balance sheet component of Schedule H (Financial Information) would be modified to add more investment categories and subcategories. I. Require plan administrators to disclose more detailed information about the nature of plans’ administrative expenses. II. New reporting subcategories on Schedule H would be designed to capture amounts paid for salaries, audit, legal, recordkeeping and actuarial fees, and other plan expenses. III. Small plans eligible to file on Form 5500-SF (covers fewer than 100 participants) would be required to provide certain additional information about the plans’ investments. Plans will be required to categorize the plans’ investments into one of eight categories, which include cash/cash equivalents, money market funds and publicly traded stock. If a small plan is not invested in one of the eight listed categories, it would not be eligible to file on Form 5500 MARSH & McLENNAN AGENCY LLC
Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year B. IMPORTANT ! : DOL will eliminate for group health plans the current exemption from Form 5500 reporting for small insured and self-insured welfare benefit plans (less than 100 plan participants). MARSH & McLENNAN AGENCY LLC
New Cause of Actions: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights MARSH & McLENNAN AGENCY LLC
New Cause of Action: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights Section 510 of ERISA prohibits an adverse employment action being taken against employee for “…for the purpose of interfering with the attainment of any right to which such participant may become entitled under an employee benefit plan.” To establish a prima facie case, a plaintiff must demonstrate that he or she: (1) was eligible for benefits under an ERISA-covered plan; (2) was qualified for the position; and (3) was discharged or denied employment under circumstances that give rise to an inference of discrimination. Dister v. Continental Group, Inc., 859 F.2d 1108 (2d Cir. 1988) MARSH & McLENNAN AGENCY LLC
New Cause of Action: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights Dave and Buster’s Class Action (2015)… (Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-03608) The lead plaintiff alleges that the company slashed her weekly hours from more than 30 to about 17 in order to avoid the ACA's employer mandate. According to the worker, following the reduction in hours, Dave & Buster's dropped her from its health plan, because she failed to work a sufficient number of hours to be eligible for coverage. She also saw her weekly wages cut nearly in half. In the complaint, Dave and Buster’s recent filings with the Securities and Exchange Commission were referenced, pointing to passages in which the company voiced concerns that ACA compliance would increase corporate expenses. February 2016 Development: Court Denies Motion To Dismiss U.S. District Judge Alvin K. Hellerstein holds that employee Maria De Lourdes Parra Marin, adequately plead that her reduction in hours by her employer “[interfered] with the attainment” of her benefit entitlement as prohibited by ERISA. MARSH & McLENNAN AGENCY LLC
MARSH & McLENNAN AGENCY LLC
Surviving the Storm: Employee Benefit Compliance & Law Update September 15, 2016
Today’s Presentation • The Affordable Care Act and Financial Considerations • What Goes Into Setting a Long-Term Benefits Strategy? • Is Self-Funding Right for Our Organization? • Pharmacy Solutions – What’s Behind the Curtain? • Trends in Worksite Wellness and Health Management 46 MARSH & McLENNAN AGENCY, LLC
Affordable Care Act Impact Analysis Strategy for managing costs, compliance and employee benefits in the ACA marketplace. The Affordable Care Act’s financial impact to our clients’ bottom line can potentially alter the overall business plan, beyond just the employee benefit program’s budget. MARSH & McLENNAN AGENCY, LLC
What we hear from our “How do I make the ACA clients… work for my business?” “Help me understand the ACA and manage its financial “My CEO and CFO have impact on our business.” requested a complete review of our company’s ACA exposure. I need a model that I can trust.” “How can we be sure that our technology partners have the proper reporting in the event we are audited?” “I need a partner that can map the right course for us based on our specific ACA analysis results.” 48 MARSH & McLENNAN AGENCY, LLC
ACA (“Pay or Play”) Impact Analysis Identification of risks and exposures to penalties for non-compliance or future excise tax Budget and strategy recommendations for cost impact management Audit to ensure ACA compliance 49 MARSH & McLENNAN AGENCY, LLC
Validation of Your ACA Strategy Final ACA strategy and client recommendations are reviewed and approved by ERISA and ACA attorneys. 50 MARSH & McLENNAN AGENCY, LLC
What the Numbers Tell Us: A Benchmark Analysis of the ACA Employers plan to stay in the game. 5% Only 5-7% are likely to terminate plans in the next 5 years 2 out of 5 employers added a CDHP or took 40% steps to build enrollment in an existing plan to reduce excise tax exposure Mercer: Living With Healthcare Reform, 2016 Survey Results 51 MARSH & McLENNAN AGENCY, LLC
SAMPLE OUTPUT ABC Company “Play or Pay” Analysis Potential Employer Penalty Exposure Employee Eligibility Employee Sufficiency & Affordability 50 25 40 Currently Enrolled in 60 Eligible for Premium Major Medical Assistance - Not Currently Enrolled Currently Waiving Major Medical Potentially Eligible for Premium Assistance - Currently Enrolled Employees Who Would Need to Become All Other Employees Eligible under the ACA 290 335 *400 full-time (30 or more hours/week) employees *0 part-time (<30 hours/week) employee ⇒ Penalties are only triggered if an employee is not enrolled in the employer plan and receives premium assistance to purchase marketplace coverage; however, not all those eligible for assistance will actually purchase marketplace coverage ⇒ Future contributions will determine the true potential impact based on coverage selection. MARSH & McLENNAN AGENCY, LLC
SAMPLE OUTPUT ABC Company “Play or Pay” Analysis – 2017 Potential Employer Cost Scenarios Graph $3,500,000 $3,000,000 $1,189,286 $2,500,000 $2,030,466 $120,357 $2,000,000 $1,500,000 $2,201,850 $2,108,074 $2,041,952 $1,000,000 $1,189,286 $1,189,286 $500,000 $0 Current State in 2017 Compliant Eligibility Compliant Strategy w/ Drop Coverage and Drop Coverage without Strategy Penalty Reduction Adjust Compensation Adjusting Compensation Plan Cost Penalties Additional Penalties* Compensation Adjustment ⇒ The numbers used are estimates based on the current guidance of PPACA. If new guidance is issued the numbers could fluctuate materially. Plans that do not meet the transition relief test of 1/3 eligible or 1/4 enrolled (or 1/2 full-time eligible or 1/3 full-time enrolled) in this analysis might be eligible for limited transition relief, depending on facts and circumstances. MARSH & McLENNAN AGENCY, LLC
ABC Company “Cadillac” Tax Analysis Plan Cost Timeline Exhibit Employer Plan 1 $35,000 $30,000 Family Threshold $25,000 Family 4% Family 6% $20,000 Family 8% $15,000 Individual Threshold Individual 4% $10,000 Individual 6% Individual 8% $5,000 $0 2016 2017 2018 2019 2020 2021 2022 Estimated Excise Tax 4% Trend 6% Trend 8% Trend Employer Plan 1 $0 $0 $0 2020 All Plans $0 $0 $0 Employer Plan 1 $0 $0 $0 2021 All Plans $0 $0 $0 Employer Plan 1 $0 $0 $0 2022 All Plans $0 $0 $0 • Excise tax estimates are rounded to nearest $5,000 • Trend lines are inclusive of fund amounts • Projected costs are grossed up by the corporate tax rate where applicable MARSH & McLENNAN AGENCY, LLC
CASE STUDY Implement benefit plan changes to reduce cost while leveraging opportunities available through the Marketplace The The The Challenge Solution Result The Client: Employer was Continuing to offer Over 500 facing a significant group health plan employees enrolled Non-Profit Health increase to their but establishing in the Marketplace. Services Provider health plan due to unaffordable their employee contribution profile and the strategy triggering a 3300 employees Annual Client requirements of the qualifying event for Savings: ACA. the exchange. Estimated 26% of Robust $2,997,425 (YR1) full time employees communication $1,368,000 (YR 2+) would find more campaign to make affordable coverage employees aware of Savings calculated after The Objective at the gold plan coverage options Employer ACA penalty To implement benefit plan strategy to level. on the Marketplace reduce plan costs and leverage and leverage Annual Employee opportunities available through the enrollment resources to federal Marketplace while maintaining Savings: support employee company group plan for those who prefer interest. to stay on company health plan. Between $504 - $3,336 55 MARSH & McLENNAN AGENCY, LLC
Strategic Forecast Model A powerful tool to illustrate future strategies. Used to develop a 3-5 year strategic plan for a client’s: Medical plan Prescription drug plan Dental plan Vision plan MARSH & McLENNAN AGENCY, LLC
What we hear from our “Healthcare is the only area clients… of our business that we are forced to manage on an annual basis. We need a longer term plan.” “We need to understand how trend and plan changes will impact when/if we trigger the Cadillac tax in 2020.” “We want the ability to understand (real time) how different strategies impact our short and long term healthcare costs.” “I need to understand the cost reduction levers available to us and the financial impact of each.” 57 MARSH & McLENNAN AGENCY, LLC
Interactive healthcare strategy tool reveals client’s funding gap. Assist in the development of a multi-year healthcare strategy Interactively illustrates probable future plan costs Illustrates the glide assuming that no changes are made to address cost Provides a perpetual planning platform 58 MARSH & McLENNAN AGENCY, LLC
Forecast Analysis Drives Future Strategies MMA underwriting team will load our Strategic Forecast Model with current plan values, contributions, expected trends and various cost management strategies that could be leveraged by the client. 59 MARSH & McLENNAN AGENCY, LLC
Cost Management Options MMA and the client hold work Opportunity Pyramid sessions to review the cost management options and the economic impact. Long Term Strategies Strategic changes can be built for 3, 4 Consumerism or 5 year periods. Health Each cost management strategy Management category has multiple options and associated cost impact data pre- Vendor loaded. Contributions Management Short Term Strategies Funding Method Plan Design Core Plan Management 60 MARSH & McLENNAN AGENCY, LLC
Highlight of Potential Strategic Initiatives Funding Method • Evaluate funding, if fully insured, option to reduce cost based on risk and tax / fee savings • Evaluate pharmacy aggregate purchasing consortiums for better underlying financial terms • Negotiate and market stop loss • Increase SSL threshold (based on evaluation of risk and predictive modeling using Verisk) Plan Design • Align value-based design with health improvement initiatives • Consider CDHP design options to drive consumerism and cost awareness • Balance current plan designs with benefits philosophy & objectives Vendor Management • Market all vendors to leverage MMA national agreements and competitive landscape • Measure and evaluate current disease and large case management programs Contribution Strategy • Use contribution credit incentives in health improvement strategy • Evaluate dependent tier contribution strategies • Consider defined contribution approach with or without Private Exchange option Strategic Communications • Establish/reinforce both benefits and health improvement branding • Reinforce the importance of good health and value of personal lifestyle behavior change • Make employees aware of company sponsored benefits and health improvement programs & resources 61 MARSH & McLENNAN AGENCY, LLC
CASE STUDY Strategic Forecast Model: Long Term Benefit Planning The The The The Challenge Solution Result Client: Sr. HR Officer was MMA obtained the The client was able not pleased with banks benefit data to see the different Banking Industry their reactionary and loaded our cost reduction planning to annual Strategic Forecast strategies available 800 employees benefit cost Model. to them. increases. MMA and banking Client could group agreed on observe (real time) The group did not certain trend the cost impact of feel that they had assumptions. each potential the right tools to strategic change. project future MMA and banking The Objective benefits costs. group determined Based on these the target employer findings, the client Develop a multi-year benefit budget HR team was annual cost change. developed their tasked by finance to that accurately depicts annual cost strategic plan and develop a multiyear A formal 5 year pro- increases. used this data to benefit budget. forma of costs and populate their long the funding gap term benefits were developed. budget. 62 MARSH & McLENNAN AGENCY, LLC
Medical Plan Funding Alternatives Accurate Data + Quality Modeling = Sound Decision Making Methodology and data accuracy is the underlying foundation for effective planning. MARSH & McLENNAN AGENCY, LLC
Fully Insured Plans Subject to Additional Costs • As a fully insured plan, insurance carriers build the fees below into premium rates • By transitioning to a self-insured funding arrangement, the client would avoid most of these additional costs • Estimated savings could be used to offset reserves, which should be factored in to account for unexpected claim activity Component % Impact Projected Cost Description Impact 1 Risk Charge 2 3% $216,500 Charge built into premium to cover insurer’s profit and risk management Premium Tax ~2% $55,500 Fully-Insured PPO plans are subject to state taxes $272,000 Total 4-5% Total estimated cost attributed to fully- insured plan Notes: 1 Projected cost impact based on the client’s estimated 2016 medical budget of $7.2M 2 Profit is built into the risk charge 64 MARSH & McLENNAN AGENCY, LLC
Fully Insured Plans Subject to Additional Costs • In a self-insured arrangement, the client will have the ability to influence plan design and costs, and avoid some Health Care Reform mandated fees – Patient Centered Outcomes Research and Reinsurance fees will apply, regardless of funding type – Health Insurance Industry fee, the largest fee of the three, applies to fully insured plans only and could be avoided in a self-funded environment - Caveat: This is forgiven in 2017 for fully insured groups, but may return in 2018 - Health Insurance fee will increase in later years to 3.5%-4.0% Health Care Reform Fee Fully-Insured Self-Insured Component Patient Centered Outcomes $2,500 $2,500 Research Fee (PCORI) Health Insurance Premiums $144,200 $0 Assessment @ 2.0% Transitional Reinsurance $32,800 $32,800 Assessment Total $179,500 $35,300 Self-Insured Savings 1 $144,200 1 In addition to savings referenced on previous slide; estimated based on the client’s 2016 medical budget of $7.2M and estimated membership of 1,204. 65 MARSH & McLENNAN AGENCY, LLC
CASE STUDY Historical Review Reveals Opportunity to Save Healthcare Dollars The The The The Challenge Solution Result Client: Medical loss ratio Conduct an Average annual was consistently historical funding savings over a 4- outperforming the analysis to evaluate year historical High Tech target loss ratio. the possibility of review was future cost savings $880,000 or 13.5%. 500 employees Paying for the by moving from fully Health Insurance Annual Health insured to self Premium Insurance Premium insured. Assessment at ~2% Assessment of of claims or Create appropriate ~$144,000 was $144,000. working rates to eliminated fund the plan and Fully insured rates Working rates build reserves. resulting in a resulted in no projected Excise Evaluate impact on projected Excise Tax. future Excise Tax Tax liability. . 66 MARSH & McLENNAN AGENCY, LLC
Choosing a Funding Arrangement Self-Funded Advantages and Disadvantages Advantages Disadvantages Self- • Improved cash flow – claims funded as paid • Budgeting more complex – claims expense fluctuates monthly Funded • Benefit if experience is better than expected • Need for more frequent financial tracking / claims; stop loss reimbursements • Employer holds reserves • More complicated legal framework – ERISA requirements • Earn interest on reserve liability • May need to audit carrier for claim payment • Improved flexibility in designing/customizing quality benefits plan • Since the liability is not fully-insured, costs may be higher if claims experience worse • Escape premium tax and insurance carrier’s than expected ( can be hedged through purchase of risk charge aggregate stop loss insurance) • Exposure to catastrophic claims (can be hedged • Exempt from state mandated benefits through purchase of individual stop loss insurance) • Typically, fiduciary liability is the client’s • More flexibility in administering/interpreting responsibility (but can be “sold” to carrier) benefits • Avoid some health care reform taxes • PCORI and Transitional Reinsurance Feel Remittance, as well as 6055/6056 Reporting • Access to improved reporting on claims is the client’s responsibility 67 MARSH & McLENNAN AGENCY, LLC
MMA Rx Solutions Pharmacy Benefits Management A unique approach driving transparency and best in class employer service levels. MARSH & McLENNAN AGENCY, LLC
“How do I know I am really getting Pharmacy questions the most competitive pharmacy needing an answer… benefit management (PBM) arrangement for my company?“ “Is it possible to compare my current PBM to other PBM’s in the market?” “How can I ensure that my pharmacy strategy is not just helping lower costs, but also promoting healthier programs for “Will I have to change my PBM or my employees?” carve out my pharmacy program to find savings?” “How can I guarantee my PBM will keep their promised pricing?” MARSH & McLENNAN AGENCY, LLC
The Pharmacy Landscape: 2015 and Beyond Market Conditions 2016 2015 2010-15 Specialty drugs U.S. drug spending Pharmacy increases to $498 billion, represent benefits represent an increase of 40% 20% 148% of pharmacy of cost from 2005 spending MARSH & McLENNAN AGENCY, LLC
The Approach Supporting Deep Dive Analytics clients regardless if they are Pharmacy Contract Expertise on a carve in or carve out contract. Employee Engagement Platform MARSH & McLENNAN AGENCY, LLC
What drives prescription costs? Rx COSTS = UNIT COST x UTILIZATION Unit Cost Utilization Plan Decisions Employee Decisions Choice of lower cost PBM Contract drugs Discounts Generic utilization Rebates Choice of pharmacy Plan Design Engagement MARSH & McLENNAN AGENCY, LLC
Analytics and Expertise Decision Results Detailed PBM Process Summary Comparison Audit & Components Analysis Extensive In-depth audit of Client to review. Request info from current contract summary of audit Ongoing support performance vs current PBM and analysis with additional contract along with current results, as well as analysis as terms/guarantees, plan design, formulary needed. as well as reporting, client disruption analysis, comparison of details, and claim limited network current performance file. vs national PBM options, and offers. clinical recommendations. MARSH & McLENNAN AGENCY, LLC
CASE STUDY Pharmacy Savings Through Market Intelligence The The The Solution Result Challenge The Frustration with the - Engaged MMA Rx Multiple PBMs submitted Client: pharmacy spend Solutions bids with over $100,000 trend increase worth of savings Health Care - Evaluation of PBM experienced over contract Current PBM adjusted 600 employees the last four years contract and pricing to with PBM. retain the case Exposure to Excise Reduced exposure to the Excise Tax Tax Savings The Objective $125,000.00 PBM 1 Evaluate the current $120,000.00 pharmacy arrangement and PBM 2 $115,000.00 decrease the steadily rising $110,000.00 PBM 3 $105,000.00 pharmacy spend. $100,000.00 Incumbent $95,000.00 MARSH & McLENNAN AGENCY, LLC
Wellness and Health Management Integrating Health Promotion with Health Protection. Leading organizations to a culture of health and improved wellbeing. MARSH & McLENNAN AGENCY, LLC
Chronic Disease Leading Cause of Death & Disability in the United States • Examples: Heart disease, stroke, cancer, type 2 diabetes, obesity, arthritis, etc. • As of 2012, about half of all adults —117 million people—had one or more chronic health conditions. • 1 in every 4 adults have multiple chronic conditions (Schiller, 2014) • 75% of all heath care expenditures are a result of a chronic disease (CDC, 2015) • Results from a PricewaterhouseCoopers survey found that indirect costs (e.g., days missed at work) were ~4X higher for individuals with chronic disease. (PricewaterhouseCoopers, 2010). • Gaps in care, over-utilization, failure to coordinate care = 34% of healthcare costs (Don Berwick, 2015) 76 MARSH & McLENNAN AGENCY, LLC
An Epidemic of “Lifestyle Disease”… 77 MARSH & McLENNAN AGENCY, LLC
The Solution… Health Management Evidence shows that workplace health programs have the potential to: • Promote healthy behaviors • Improve employees' health knowledge and skills • Help employees get necessary health screenings, immunizations, and follow-up care • Reduce workplace exposure to substances and hazards that can cause diseases and injury. Employee Culture Retention Well-Being Source: US Department of Labor: http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html 78 MARSH & McLENNAN AGENCY, LLC
“Wellness” vs. Health Management • Generic vs. Targeted • Idea-based vs. Evidence-Based • Focus on Culture vs. Focus on Outcomes • Separated vs. Integrated 79 MARSH & McLENNAN AGENCY, LLC April 25, 2017
High Performing Health Plans - Sample Criteria for Evaluation Consumerism & Behavior Health Improvement Exchanges Communication EAP Cost Transparency Tool Rx Carve Out Spousal Surcharge Case & Disease Management Carve Spousal Carve Out Out Voluntary Benefits Strategy Claim Audit • Consumerism and Health Advocate Dependent Audit Behavior: Telemedicine Centers of Excellence – 14 out of 36 Funding HDHP with Account Verisk Health Funding Level of Account Health Risk Assessment & Biometrics Incentive Contributions Health Contingent Wellness Premiums Value Based Design • Health Improvement: Health Contingent Account Reference Based Pricing Contribution – 25 out of 46 Tiered Benefits Tobacco Free Workplace Health Contingent Tobacco Surcharge Participatory Wellness Premiums Wellness Budget Participatory Account Contribution • Total: Formal Wellness Program Participatory Tobacco Surcharge – 39 out of 82 C-Level Employer Engagement Financial Education Spousal Access & Participation Communicatio n Onsite Fitness Facilities Onsite Medical Facilities = In place today 80 MARSH & McLENNAN AGENCY, LLC
Types of Employer-Sponsored Health Management Programs Company Health Participatory Policies Contingent Rewards for: Rewards for: Tobacco-Free Workplaces Health Tobacco Non-Use Assessments Flex-time for BMI or Blood Biometric Physical Activity Pressure Criteria Screenings 81 MARSH & McLENNAN AGENCY, LLC
Health Management at Marsh & McLennan Agency Best Practices Personal Preventive/ Lifestyle & Meaningful Biometric Tobacco Health Routine Behavior Screening Cessation Incentives Assessment Care Change Best Practices Reasoning: Best Practices • Provide employees and their dependents with individualized feedback on their health status and Personal Health recommendations for reducing health risks Assessment • Provide employers with a mechanism to identify wellness program needs and evaluate change in the population's behavior • Allows employers to collect more accurate and objective measures of employee health and offers the Biometric Screening potential for identifying individuals with undiagnosed conditions Preventive/ • Builds relationship with physician, encourages regular care so conditions are caught earlier and health is maintained Routine Care Tobacco Cessation • Tobacco use is the single most preventable cause of disease, disability, and death in the United States. Lifestyle & • Implementing programs that address specific population health or lifestyle risks is crucial to measurable Behavior Change outcomes of a program over time. • Carrot vs. Stick: Carrots are anticipated desirable rewards to influence the performance of a group, Sticks are negative consequences for undesirable behavior or actions-used to motivate Meaningful Incentives • Participation and engagement is higher when incentives tied to the health plan are implemented (i.e. healthcare premium reductions, premium holidays, HSA/HRA contributions) 82 MARSH & McLENNAN AGENCY, LLC
What’s Next for Wellness? • Data-driven, customized approaches to population health management. • “Carved out” wellness initiatives ‒ Distinct wellness budgets; third party vendors • Using technology to engage employee populations (especially remote/disperse employees) ‒ Wearable devices; Mobile applications; telemedicine • Integrating wellness programs with medical plan design and premium differentials • Redesigning workplaces ‒ Standing desks, Relaxation rooms • Making smoking cessation a priority ‒ Worksite policies; surcharges • Promoting overall well-being ‒ Financial wellness, Stress management; etc. 83 MARSH & McLENNAN AGENCY, LLC
CASE STUDY A Total Workplace Wellness Program The The The Challenge Solution Result Program lacks clear The Increased emphasis A personal health outcomes and on low/medium risk scorecard and Client: incentive employee incentive program has opportunities for all population. motivated participants participants. to improve their Municipality Incorporation of health. A 17% spouses to foster Insufficient reporting positive change was 350 employees wellness at –health observed in the overall work/home. measurables health of the City’s obtained but lack Development of a employees and their trend aggregate multi-year outcome spouses. data necessary to based incentive. monitor progress. Being able to accurately track the The Objective The availability of A minimal focus on wellness tools health risk trends of its low to medium risk including onsite employees the City Implement an increased focus employee screenings, health observed that 24% of on low to medium risk population. scorecard, access to employees improved employees, as well as a online wellness their health continued focus on the high risk A missing resources, and an measures , 69% correlation between population. onsite health coach. stayed the same and wellness activities 7% worsened. and health care costs. 84 MARSH & McLENNAN AGENCY, LLC
A Recap • ACA – Identify risks, set strategy for cost management, and audit for compliance • Long-term planning reveals important funding gaps, allowing your team to be strategic and proactive • Self funding is viable for most employers and an important component of benefit planning due diligence • A thorough review of PBM contractual terms often reveals big opportunities for savings • Healthier Workforce Lower Costs & Higher Productivity PROFITABILITY 85 MARSH & McLENNAN AGENCY, LLC
Surviving the Storm: Employee Benefit Compliance & Law Update September 15, 2016
Corporate Counsel Clinical Externship Program Connecting Law Students with Companies for a Real-World Educational Experience
Goals Within RWU Legal Education: “The Transactional Training Experience” • Deep, practical knowledge of the corporate counsel practice setting, the internal client, corporations and business, relevant substantive law and skills, transactional practice • Problem-solving , exercising judgment, drafting and negotiating contracts, writing for business, communicating and presenting, collaborating, advising and counseling, and developing cultural competence • Professional development through self-directed learning, goal-setting, learning from experience, networking, and working effectively with supervisors • Professional identity , professionalism, confidentiality, ethics
2L or 3L Law Student, enrolled Supervising Lawyer, 4+ Director /Full-time Faculty Member
Student Learning Goals & Professional Field Training: Development “Substantial Lawyering Experience” 2, 3, or 5 days For credit Fall/Spring, 15 weeks
An Externship Education: Accountable STUDENT Meaningful projects Intentional & aware Regular feedback Self-assessing Hands-on Active Fullest exposure Reflective SUPERVISOR Contextual Role-modeling Mentoring Modeling
15+ Participating Companies 100+ Program alums 15 student cap per semester, fall & spring
Companies here - Companies anywhere Textron Fenway Sports Group Moran Shipping Agencies IGT Sensata Technologies Domenica Maritime CVS Health FGX International Care New England Gilbane Amica Insurance IDC/Newport Experience Swarovski
Substantive Projects , U.S. and International in Scope Corporate governance Energy Business contracts Procurement & Sales Intellectual Property Real Estate Data and cybersecurity Litigation Compliance (employment, FCPA, healthcare) Transportation Health Environmental Construction Ethics Antitrust Mergers & Acquisitions Maritime/Shipping
Benefits to the Companies Direct: Weekly resource to look at issues more closely, keep more current on law Fresh perspective and approaches to legal and business issues Useful legal research, writing, and drafting products Intrinsic: Partnership with RI’s only law school Interaction with local legal community & its newest members Teach and mentor about industry, in-house practice, current role of attorneys Help new lawyers develop as professionals and legal thinkers Help new lawyers network with broader legal community
See. Plan. Do. Law GRAD PREPARED to add value Day-to-day Exposure to Intersection of Law & Business
Please contact me with any questions: Cecily Banks Professor of Experiential Education Director, Corporate Counsel Clinical Externship Program Roger Williams University School of Law 401.254.4563 cbanks@rwu.edu
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