The federal government would pay 65% of COBRA health care continuation premium for one year for eligible beneficiaries who have lost their jobs since Sept. 1, 2008, as part of a massive economic stimulus bill unveiled Thursday by the House Democratic leadership.

The bill also would allow other beneficiaries to hold on to COBRA coverage, for decades in some cases.

The COBRA premium subsidy is certain to increase the number of laid-off employees opting for COBRA. The subsidy is the same provided under a 2002 trade law to employees who lose their jobs due to foreign competition and to pension plan participants 55 years and older in plans taken over by the Pension Benefit Guaranty Corp.

Currently, only about 20% of those eligible for COBRA enroll, a low acceptance due in part to the high cost of coverage. Under law, employers can charge beneficiaries a rate equal to 102% of the cost of coverage offered to employees.

With a higher takeup rate, employer costs would rise since beneficiaries opting for COBRA on average use more medical services than other health plan enrollees, surveys have found.

House Democrats estimate the subsidy would cost the government a total of $30.3 billion. In addition, the stimulus package, which legislators are expected to consider next week, would significantly stretch out the period of time some beneficiaries can retain COBRA coverage.

Under the measure, employees 55 and older and employees who have worked for the same company for at least 10 years could retain COBRA until they are eligible for Medicare at age 65 or obtain health care coverage from a new employer. In the case of younger employees, that could mean they could retain COBRA for decades.

Under current law, employees who lose their jobs can purchase COBRA for 18 months. In other situations, such as death, divorce or martial separation, beneficiaries have a right to keep COBRA coverage for 36 months.

Tags: COBRA, government insurance subsidies

Prospects for health reform drop significantly when Americans hear potential financial trade-offs associated with expanding health insurance coverage, a poll indicates.

For example, nearly seven in 10 people say they favor the concept of requiring employers to provide their workers with health insurance or contribute into a fund that pays to cover the uninsured. President-elect Barack Obama has called for such an employer mandate for medium and large businesses.

But what if they heard the mandate would cause some employers to lay off workers? Support falls dramatically — to about three in 10 people, according to a new national survey conducted by the Kaiser Family Foundation and the Harvard School of Public Health.

Similarly, about two out of three people favor requiring all Americans to have health insurance. But when told some people may be required to buy insurance that’s too expensive or it’s something they don’t want, support for the individual mandate falls to 19 percent.

“As we have learned from past debates, public support looms for health reform largest at the beginning of the debate, but it’s relatively easy to chip away at that support with arguments about trade-offs,” said Mollyann Brodie, a Kaiser vice president.

Researchers said the economy is the overwhelming top concern in the United States — cited by nearly three quarters of the public. Health care is a top domestic concern too. But the survey suggests the public is split when it comes to a willingness to sacrifice financially to get more people insured.

About 47 percent were willing to pay higher insurance premiums or taxes, while 49 percent were not.

The study is based on a telephone survey of 1,628 adults conducted in early and mid-December. The margin of error was plus or minus 3 percentage points.

A new pet health-insurance guide for veterinarians was released at this month’s North American Veterinary Conference, representing the latest push by organized veterinary medicine to get practitioners on board with third-party payment systems.

“A Veterinarian’s Guide to Pet Health Insurance,” put out by Brakke Veterinary Practice Management Group and commissioned by the National Commission on Veterinary Economic Issues (NCVEI), is an eight-page promise that pet health insurance can bridge the gap between ever-increasing veterinary care costs and clients’ ability to pay for expensive treatments. Anecdotally, less than 3 percent of owners carry such policies, but backed by DVMs, a “whopping 41 percent” of owners polled indicated that they would purchase pet insurance if recommended by their veterinarian, the report says.

Research shows that veterinarians aren’t promoting insurance the way they might other products and therapies, Brakke senior consultant John Volk says.

“I don’t think a lot of veterinarians have been convinced that they have a stake in it because they can’t sell it, it has to be sold by an insurance company,” he says. “But insurance does have a material impact on people’s receptiveness to seek and pay for care. We think this is an opportunity for veterinarians looking for ways to strengthen their practices.”

After all, dental patients with insurance spend 70 percent more than their uninsured counterparts, and the “parallels between dentistry and veterinary medicine are obvious,” the report contends.

Yet while NCEVI and Brakke boast of pet insurance’s benefits to the profession, critics remain wary of such deals, especially in light of human medicine’s battle with the cost-control system of managed care. To that, the report states: “Pet insurance is not true medical insurance. It is similar to your auto or homeowner policies. …Insurance companies have no financial leverage in the veterinary community.”

That might not be true for organized veterinary medicine, where groups such as the American Veterinary Medical Association’s (AVMA) indemnity arm, the Group Health and Life Insurance Trust (GHLIT) stand to gain if pet insurance spikes in popularity.

Last July, GHLIT unveiled a partnership with Pets Best Insurance during AVMA’s annual convention. Since then, leaders have taken heat from veterinarians and competitive insurance companies who criticize the deal, characterizing it as a wildly inappropriate use of a membership body to promote a private insurance agency. AVMA and GHLIT officials respond that their respective bodies operate autonomously and clarify that the deal involves the trust, Pets Best and their mutual underwriter, Aetna Inc. — not the AVMA membership group. GHLIT, according to the agreement, will receive a percentage of royalties from Pets Best policies, which leaders say will pay for additional staff needed to market the program.

But what really has critics clamoring is GHLIT CEO Libby Wallace’s familial tie to former AVMA Executive Vice President Dr. Bruce Little, who sits on Pets Best’s board of directors. To that, Wallace, Little’s daughter, explains that she was hired months after the GHLIT-Pets Best deal already was underway (see related timeline, attached). She issued the VIN News Service the following statement:

“Libby Wallace went through the interview process with several other interested candidates for the position of CEO. As the former vice president of national accounts with Coventry Health Care, her many years of service in the health-insurance industry made her a qualified candidate for this position.”

“Many members of the AVMA are aware of her family heritage,” the statement adds.

Still, questions remain concerning whether pet health insurance is good for the profession and whether alleged ethical issues stemming from GHLIT-Pets Best deal tarnish the reputation of AVMA, and by extension, veterinary medicine. To date, AVMA, GHLIT and Pets Best officials point to the transparency of the partnership, which they hope will raise the bar for pet insurance industry standards.

AVMA-approved standards for pet insurance were issued last July in a white paper, just as GHLIT announced the Pets Best arrangement. Yet in November, the Executive Board rescinded its support of the paper, based on advice from the group’s Council on Veterinary Service.

While AVMA still endorses a third-party payment system that “provides coverage to help defray the cost of veterinary medical care,” the white paper was more prescriptive and specific than an AVMA policy should be, according to an article in the Dec. 15 issue of the Journal of the American Veterinary Medical Association.

“Also, the council believed that the provision calling for veterinarians to educate clients about pet insurance implied it was the practitioners’ responsibility to help owners decide how to pay for services,” the article states.

Is the move an attempt by AVMA to distance the association from the GHLIT-Pets Best arrangement? AVMA officials did not respond to VIN News Service requests by press time to answer that question. But in a VIN message board post directed at quelling members’ dissension, Executive Vice President Dr. Ron DeHaven, spells out the AVMA/GHLIT connection, stating that “while AVMA GHLIT is a separate entity from the AVMA, the AVMA Executive Board has some control and responsibility. The GHLIT charter is issued and amended by the AVMA and the AVMA Executive Board appoints the GHLIT trustees. However, the GHLIT trustees operate independently and are accountable to the members of GHLIT, not the AVMA.”

He continues by adding that while AVMA “is supportive of the GHLIT’s involvement with pet insurance … AVMA does not endorse any individual pet insurance company.”

Tags: pet insurance, Pets Best Insurance

As employers nationwide struggle with rising health care costs, many have implemented a variety of cost saving initiatives. A recent health care survey found the majority of public sector employers are working to control costs by implementing disease management and wellness programs, instead of introducing consumer-driven health plans (CDHPs).

Over half of the public employers who responded to the survey indicate they have implemented a disease management (69%) or a wellness program (65%). A much smaller percentage, only 17%, have a consumer-driven health plan in place.

“Although CDHPs have become common in the corporate environment, many public sector plans do not see CDHPs as a good fit for their organization – perhaps because the greater out-of-pocket costs associated with CDHPs could result in employees delaying needed care,” said Sally Natchek, Senior Director of Research at the International Foundation of Employee Benefit Plans. “Instead, public employers are working to control costs by implementing wellness and disease management programs and building a foundation for individual responsibility.”

Conducted by the International Foundation of Employee Benefit Plans, the study titled Health Care Cost Control: Industry Approaches and Attitudes, reports responses from 1,054 U.S. benefit plans sponsors, trustees, and others who serve in the employee benefits industry. Survey results break down respondents answers based on four unique employee benefit sectors: corporate plans, public/governmental plans, multiemployer benefit plans, and professional service firms serving the employee benefits industry.

The survey found that 64 percent of public employers are taking an incremental approach to overall cost-management, with only a small minority, 5 percent, indicating they are making significant, dramatic changes. Public employers identified promoting individual responsibility for health as the major factor shaping their health care strategies.

In comparison to the other employment sectors, public employers were significantly less likely to offer CDHPs. Corporate respondents stated they offer CDHPs at more than double the rate of the public sector (39%), while professional service firms are more than three times as likely to have a consumer-driven plan in place (59%).

The main reasons stated by public employers for not offering a CDHP include: poor fit for organization (35%), don’t favor shifting costs to employers (20%), waiting until CDHPs are proven effective (18%), and expect low participation (18%). In addition, nearly three-quarters, 74 percent, believe that there is a lack of good data about the cost-effectiveness of CDHPs and 79 percent stated that wide acceptance of CDHPs is unlikely until they become simpler to navigate.

“Public sector respondents are implementing disease management programs not only to improve health care costs, but also to improve the quality of health care,” said Natchek. “A majority, 81 percent, believe offering a disease management programs improves the quality of health care for their plan participants.”

Public employer respondents were the most likely to state that helping workers enjoy better overall physical health was a reason they offered a wellness program. The most common wellness initiatives they offer include health screenings, health risk assessments/appraisals, flu shots, smoking cessation programs, health fairs, and wellness education.

Interestingly, public employers appear to be among the first to offer disease management and wellness programs with 26 percent stating they had had a disease management program in place for more than five years and 39 percent stating their wellness program has been in place five or more years.

Tags: health care costs, wellness programs

Like most companies, RedPeg Marketing offers perks to its employees. The Alexandria, Virginia, experiential marketing firm hands out trophies for good performance and provides breakfast at staff meetings. Employees can compete in an annual Connect Four tournament as well as participate in lunchtime training sessions. Open the company fridge, and you’ll find cold beer.

RedPeg co-founder Brad Nierenberg, however, has been known to go above and beyond with company perks. He shells out $17,000 a year to rent a three-bedroom house in Dewey Beach, Delaware, that the company’s 48 employees can sign up for year round. “That’s one of the perks I’ve kept even in the downturn,” says Nierenberg, 42.

He once walked into the office carrying a briefcase containing $38,000 in cold, hard cash and presented each employee–38 of them at the time–with $1,000 for meeting company goals. “I thought, ‘I’ve got to make a big deal out of this; I can’t just put it in their checking account because that’s not as fun,’” says Nierenberg, who saw sales of $18.5 million last year. “I thought it would be cool for them to see $38,000 in cash.”

But Nierenberg has also taken perks away. He ditched employee use of a Mercedes for a whole month, free gas included, because he felt it was an expense that wasn’t necessary. He also stopped a company program that allowed employees to take off a certain number of Fridays during the summer because business was picking up and the company needed to make up ground after a few slow quarters. “You definitely can take a perk away,” Nierenberg says, “and you should if it’s affecting your business.”

But wait a minute: Conventional wisdom says it’s a bad idea to pull a perk once it’s out there. Yank away something employees have come to expect, and you’re setting yourself up for rampant conspiracy theories and angry employees. Google learned that the hard way last spring when it announced it would charge employees 75 percent more for its in-house day-care program. Employees with children didn’t take the news well, and some reportedly started to cry. Google has since reduced the price and will take more than a year to phase in the cost adjustment, but at what cost to morale? “Anytime somebody is receiving something and then, all of the sudden, they’re not, clearly they’re going to be upset,” says Deb Cohen, chief knowledge officer at the Society for Human Resource Management, an HR membership organization.

Of course, there’s a difference between the perks employees structure their lives around, like insurance, day care and flextime, and the frivolous perks, like bagels on Monday. And it’s these types of perks Google has also trimmed down to cut costs without affecting employees significantly: In October, the New York City division instituted limits on cafeteria hours and food selections. “No one is going to quit because they can’t get free coffee or pastries,” says Bob Nelson, an employee motivation and management consultant and author of 1001 Ways to Reward Employees. But the risk you run, he says, “is a panic that if the company can no longer afford coffee, it must be headed for disaster.”

It’s this perception that entrepreneurs want to avoid. Last Year, Expedite Group, a 7-year-old Cary, North Carolina, concierge company, debated whether to decrease the 401(k) matching contribution it offers its 17 employees. “We’ve struggled with matching it at times,” admits founder Nancy Piepho, 39.

She decided to leave the match alone, however, because lowering it might create doubt in employees’ minds. “We want the employees to have confidence in what we’re doing,” Piepho says. “That was one of the reasons I was like, ‘It’s not going to be easy, but it’s not a lot [of money] and it’s the right thing to do.’”

A Tough Year

Next Level Café, a St. Paul, Minnesota, technology management firm, saw 2007 as a great year. But 2008, not so much. “It’s been a tough year,” says CEO and co-founder Rich Anderson, 38. “We haven’t been growing as much.” Morale was falling, so last autumn, Anderson began tracking morale through a weekly survey that he plotted on a graph. He met with the company’s 25 employees and told them the truth: The company wasn’t at risk of failing by any means, but it wasn’t a great year and that meant fewer bonuses and perks.

Anderson, who co-founded the 7-year-old company with Stephen Weiler, 43, also started sharing some information about the company’s budget. He revealed that 75 percent of the service company’s expenses are salary-related, and he explained how a drop in clientele affects the expense side. An enlightening moment came when Anderson asked employees to guess how many clients the company had won and lost to date in 2008. “Every single person on the team underestimated,” he says. Now the company posts the names and revenue of new and former customers on a wall–a daily reminder of where the company stands. Morale is on an upswing, and the company closed 2008 with $2 million in sales.

Entrepreneurs shouldn’t fear pulling a perk, but they should fear doing it without employee involvement, Anderson warns. “As soon as you do it without having employees involved in the process, they’re going to resent it and fight back. They’re going to use it as a reason to leave if they’re looking to leave,” he adds. “If you get them involved, they’ll support the decision. They’ll embrace the world that they helped create.”

Central to a good communication plan is anticipating how employees will react when a perk is taken away and who will be most affected. You’ll also have to decide what kinds of low-cost perks could replace what’s gone. “Think about how you can offer the same or similar kinds of benefits in a different fashion that won’t cost you so much money,” says Cohen.

PerkSpot, a perks management company that creates customized portals where employees can go for discounts on a wide range of consumer goods, is seeing large companies implement its service to offset other benefit cuts they’re making, including insurance coverage. In one case, a national retailer rolled out PerkSpot when it announced it wasn’t giving anyone a raise. Says founder and CEO Christopher Hill, “They wanted to introduce PerkSpot to help soften the blow.”
Linking perks to performance

Cohen sees companies moving toward flexibility and other unique benefits that promote work-life balance. “That’s really been dictated by the work force,” she says.

Nelson, however, thinks now is the time for companies to link perks to performance. This way, companies don’t create cultures of entitlement where employees feel the company owes them just for showing up. “Smart companies are offering perks to the performers who have earned those perks,” he says.

Expedite Group has its share of softer perks, from Wii nights to beach trips to potlucks. Piepho, however, is most concerned with keeping her best performers happy, so she tailors perks to them. She’s letting one employee with an infant work flexible hours from home, while a rising star in the company is getting greater responsibilities. “What do pivotal employees need to thrive? That’s what you should focus on,” she says. “I know who my stars are, and I’m going to focus on them.”

There are still high expectations, however, particularly from the company’s Gen Y employees experiencing a recession for the first time. “It’s not their fault; they haven’t had the different experiences that us hugely older people have had,” Piepho says, laughing. “Recently, [we said], ‘This is what the pay range is, and if you’re not happy with it, go forth and be happy.’” Employers in a lackluster economy could find that sharing their blues is better than sinking into the red.

AARP, the largest U.S. membership organization for people 50 and over, was accused in a lawsuit of breaching its duty to members who enroll in group-endorsed health care plans.

The group collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies, according to a complaint filed in federal court in New York. Because of the group’s “relentless appetite for royalty revenues,” AARP permits insurers to make excessive increases in the insurance premiums charged to its members, the suit says.

“By 2007, the royalties from AARP-endorsed health care providers generated 60 percent of the revenue of AARP,” according to the complaint. “AARP received nearly $500 million in royalties.”

The suit, by AARP member Lucille Roussin, who lives in New York, seeks unspecified damages and asks to be designated as a class action, or group, lawsuit on behalf of others.

A spokeswoman for Washington-based AARP, which was formerly called the American Association of Retired Persons, didn’t immediately return a call. The not-for-profit group has a membership of 38 million people who are 50 or older, according to the complaint.

The case is Roussin v. AARP, 09-cv-586, U.S. District Court, Southern District of New York (Manhattan).

Tags: aarp, AARP Insurance

Fertility Center of Illinois (FCI) is terminating its contract with WIN Fertility, a subsidiary of WIN Healthcare, effective February 28, 2009. WIN is working on a transition plan with FCI and will notify Blue Cross and Blue Shield of Illinois (BCBSIL) HMO members who are affected by this network change. Letters that include information on treatment options, such as requesting Transition of Care services, will be sent to these members. Also, BCBSIL’s online fertility directory in the HMO Provider Section has been updated.

Tags: Fertility Center of Illinois

Blue Cross Blue Shield of Illinois announced improved pricing with PrimeMail, their contracting mail service pharmacy. Pending regulatory approval, they begin implementing this pricing for non-HMO business in February 2009.

The new pricing will use the same maximum allowable cost (MAC) reimbursement methodology for generic drugs that is used for the retail pharmacy network, thus eliminating any pricing discrepancies between retail and mail service and making mail service an even better value for our customers. The use of MAC pricing establishes a maximum reimbursement amount for a generic medication regardless of the manufacturer.

The change to MAC pricing at mail will improve overall discounts on generic drugs by an average of 9 percent and reduce total mail-service costs by approximately 5 percent. While the vast majority of members will pay less out-of-pocket as a result of this change, some members’ prescriptions may be more expensive. Letters will be sent to those members who may experience an increase in out-of-pocket expense under this new arrangement.

A new report shows that Delta Dental maintains the largest network of dentists in the nation, a position the nation’s largest dental benefit system has held for more than five decades. The report by NetMinder, an independent firm that provides data on providers and managed care networks to the healthcare industry, indicates that the Delta Dental network has more than 123,000 dentists, totaling more than 62,000 dentists than the next closest national competitor.

“Having the largest network of dentists in the nation is tremendously important because it offers cost savings to employers and employees through negotiated discounts, as well as convenience to our 51 million subscribers,” said Kim Volk, president and CEO of Delta Dental Plans Association. “Our network helped employers save more than $6 billion in decreased claims costs last year.”

Additionally, Delta Dental’s network is locally developed and controlled exclusively by its member companies, said Volk.

Delta Dental offers comprehensive benefits packages that combine cost-saving managed care features with flexible plan designs. Enrollees realize significant out-of-pocket savings from its “no balance billing” provision. Under this provision, dentists in the Delta Dental network accept negotiated fees as payment in full, and can’t pass costs along to patients for any differences between submitted charges and the charges allowed under Delta Dental’s contractual agreements. Enrollees seeking services from network dentists only have to pay deductibles and copayments required by their plans.

In addition to maintaining the largest network in the country, Delta Dental also regularly audits its network to ensure that all participating dentists meet comprehensive credentialing standards.

The not-for-profit Delta Dental Plans Association (www.deltadental.com) based in Oak Brook, IL, is the leading national network of independent dental service corporations specializing in providing dental benefits programs to 51 million Americans in more than 93,000 employee groups throughout the country.

Tags: delta dental

MINNEAPOLIS (January 15, 2009) – UnitedHealth Group (NYSE: UNH) announced today that it has reached an agreement to settle class action litigation related to reimbursement for out-of-network medical services. The agreement resolves class action litigation filed on behalf of the American Medical Association (AMA), health plan members, health care providers and state medical societies.

Under the terms of the proposed nationwide settlement, UnitedHealth Group and its affiliated entities will be released from claims relating to its out-of-network reimbursement policies from March 15, 1994, through the date of final court approval of the settlement. UnitedHealth Group will pay a total of $350 million to fund the settlement for health plan members and out-of-network providers in connection with out-of-network procedures performed since 1994. The agreement contains no admission of wrongdoing. UnitedHealth Group believes it is in the best interests of the company to resolve these matters and move forward.

The company believes that this retrospective settlement, coupled with the prospective agreement with New York Attorney General Andrew Cuomo announced earlier this week, resolves the issues that have been raised by the AMA and the New York Attorney General concerning the company’s two physician charge databases.

The company will pay for this settlement with cash on hand, and the accrual will be included in financial results for the Fourth Quarter 2008, as part of operating costs for GAAP accounting.

Mitchell Zamoff, General Counsel, UnitedHealthcare, said, “We are pleased to have reached an agreement that provides closure on these matters.”

Reed V. Tuckson, M.D., executive vice president and chief medical officer, UnitedHealth Group, said, “We are pleased to put these issues behind us so that we can focus on the important work of assisting physicians in their effort to provide the best possible, quality health care to their patients. We are excited about working to meet the needs of physicians and patients to meaningfully enhance both the quality and efficiency in health care delivery.”

The proposed settlement is subject to preliminary and final court approval. In addition, the company has the right to terminate the settlement under certain circumstances, including in the event that a certain number of class members elect to opt-out of the settlement.

An independent administrator will be selected prior to court approval of the settlement agreement, and class members can expect to be notified by mail or publication by that independent administrator.

Tags: unitedhealthcare lawsuit