Category Archives: Healthcare

Can Employers Drop their Health Plan and Just Give Employees Cash Instead?

Contributed by Rebecca Dobbs Bush, July 23, 2019

stethoscope on cash cost of healthcare concept

Several years ago, a trend was emerging that consisted of third-party, private marketplaces where employers could have their employees purchase health care with an “allowance” of sorts. This “allowance” could be facilitated by an employer that set up a stand-alone Health Reimbursement Arrangement (HRA). The emerging trend was analogous to the way traditional pension plans evolved to 401(k)s. Then, before things could take off, the Affordable Care Act put a halt to it. Essentially, the ACA said that these stand-alone HRA plans broke the rules because they had annual limits. And, under the ACA, health plans were not allowed to have annual limits on the amount of benefits provided. So, employers moved on and tried to look for a different way to reduce the amount they were spending on health benefits for their employees.

Then, on June 13, 2019, the tide turned and the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued a coordinated set of final regulations that essentially said they changed their mind.

To clarify a bit, the regulations are complex and a business is certainly not free to just start handing out cash to their employees instead of a health insurance card.  However, with the right plan documents in place and the correct administration followed, an employer can set up a scenario where an employee has an “account” that covers all or part of the expense for that employee to purchase individual coverage on his/her own.  In other words, an employer electing this path should make sure he or she is guided by the right attorney, insurance broker, and human resources team.

Why would this arrangement be helpful?  Think of it in this scenario…. Each year most employers hold their breath just a bit while they wait for their renewal rates to be provided by their carrier.  There is almost always some type of increase.  And at that point, an employer must make tough decisions about how much of that increase, if any, they can absorb for the employee.  Worse yet, most employees never really seem to understand or appreciate the full dollar amount the employer is paying on his/her behalf.

Now, in contrast, think about how an employer reimburses employees for cell phone expenses.  The employee individually purchases whatever plan that they want, spending more if they want, buying a nicer phone if they want, etc.  Each month, the employer simply reimburses each employee the same amount – regardless of whether they picked the basic or pricey plan.  Most employees easily understand what cell phone benefits exist and exactly how much the company covers.  It certainly makes things a bit clearer for an employee when they are involved in that transaction each month.

If a company can now potentially treat its health plan expenses the same way?  It could be a game-changer in successfully managing health care expenses. 

What You Don’t Know Can Hurt You: Employee Background Checks at Skilled Nursing Facilities

Contributed by guest author Adam Doerr, with Suzannah Wilson Overholt, March 13, 2019

Skilled Nursing Facilities (SNFs) are responsible for shielding residents “from abuse, neglect, misappropriation of resident property, and exploitation.” 42 C.F.R. § 483.12. This regulation implicates the employment process, since SNFs are prohibited from employing “or otherwise engag[ing]” individuals who have been “found guilty by a court of law,” had a “finding entered into the State nurse aide registry,” or had “a disciplinary action in effect against his or her professional license” as a result of “abuse, neglect, exploitation, mistreatment of residents or misappropriation of their property.” 42 C.F.R. § 483.12(a)(3)(i)-(iii). One of the most important ways that SNFs can protect residents is by properly screening and monitoring their employees.

cv review flat illustration. hand with magnifier over curriculum vitae

There are no federal requirements for how a SNF should screen its employees. However, there is a variety of agency guidance that describes what a thorough screening process should look like. According to the State Operations Manual, Appendix PP, a facility should conduct a thorough “investigation of the histories of . . . prospective staff.” Any individual hired or otherwise engaged by the facility should be screened, including “the medical director, consultants, contractors, volunteers” and students in training programs. The screening must also be thorough, including checking the State nurse aide registry and licensing authorities, contacting previous employers, attempting to identify prior criminal prosecutions, and checking the HHS Office of Inspector General’s List of Excluded Individuals/Entities (“Exclusion List”). The Exclusion List is a searchable electronic database of individuals and entities who are excluded from participation in any federal health care program, including Medicare and Medicaid, for the commission of certain crimes and violations laid out in 42 U.S.C. § 1320a-7. A SNF may not receive payment from a federal healthcare program for any items or services furnished, ordered, or prescribed by an excluded individual or entity. If a SNF does receive payment for services provided by an excluded individual or entity, the SNF could be subject to civil monetary penalties. Because the consequences of hiring an excluded individual are so severe, CMS has issued letters to each state Medicaid director reminding them to have employers check the Exclusion List monthly. Certain states, such as Indiana, have made such monthly checks mandatory.

Finally, the Office of Inspector General has also issued guidance urging healthcare providers to check the System for Award Management (“SAM”) database maintained by the General Services Administration. The SAM database includes a list of suppliers, vendors, and individuals who are excluded from receiving contracts or other financial assistance from the federal government. Thus, checking this list should be part of any screening process for prospective employees.

Conducting thorough screenings of all prospective employees is important in a SNF’s ongoing efforts to protect residents from abuse or mistreatment. Following state and federal guidance and regulations is the best way to ensure that screenings are appropriate.

The Importance of Documenting the Failure to Document

Contributed by Suzannah Wilson Overholt, February 20, 2019

Doctor, medical charts

One of the biggest challenges faced by health care providers is ensuring proper documentation in patient charts. Shortcomings in charting can result in lost revenue due to third party payers’ assigning a lower CPT code or refusing to pay a claim. Even worse, poor charting may prompt an equally poor survey result. 

Convincing employees to stay on top of charting can be difficult and frustrating but taking appropriate action against those who fail to do so and documenting that action is critical. A recent decision by the U.S. District Court for the Western District of Wisconsin illustrates the manner in which an employee’s failure to chart should be properly documented through the disciplinary process, and how such effective documentation may be used to defend against claims for discrimination and/or wrongful termination.

In Blumentritt v. Mayo Clinic Health System – Franciscan Healthcare, Inc. (W.D. Wis. Feb. 6, 2019), the district court granted summary judgment in favor of the Mayo Clinic due, in part, to its well-documented history of disciplinary action against Mr. Blumentritt for his failure to complete charting in a timely manner. The following best practices were used by the Mayo Clinic:

  • Charts were audited for completeness;
  • When an audit revealed an employee with a significant number of incomplete charts, the supervisor had a coaching session with the employee and established clear, achievable goals for the employee;
  • The supervisor monitored the employee and, when he failed to meet the goals, gave him a performance counseling;
  • The supervisor took the employee off of performance counseling and provided positive feedback for his accomplishment when he improved;
  • When the employee backslid, the supervisor gave him an improvement plan with specific objectives and due dates for achieving those objectives, as well as a warning that failure to complete documentation according to established policies or adhere to the timeline would result in termination;
  • The supervisor revised the timeline for the improvement plan when the supervisor’s schedule interfered with the deadlines;
  • When another audit revealed the employee again failed to complete patient charts, the supervisor gave the employee a last chance warning; and
  • When a follow up audit revealed that the employee’s charting was incomplete and the employee failed to correct the problem after being given an opportunity to do so, he was terminated.

The one weakness in the process appears to have been the Mayo Clinic’s failure to take action against Mr. Blumentritt when he did not meet the deadlines set in the performance improvement plan.  On the flip side, a real strength is that the Mayo Clinic did not restart the disciplinary process when the employee backslid, and instead resumed at an appropriate level given the prior infractions. The well-documented disciplinary measures against Mr. Blumentritt were critical to the Mayo Clinic’s ability to defend against his claim that he was terminated because he was a gay male. 

The takeaways from this decision are to act on audit results, document action taken, follow through, and keep the pressure on the employee to perform. (Also worth noting is that the court did not question the Seventh Circuit Court of Appeals’ decision in Hively v. Ivy Tech Comm. Coll. that discrimination on the basis of sexual orientation is prohibited by Title VII of the Civil Rights Act of 1964.)

Basics of the HIPAA Privacy Rule for Employers

Contributed by Rebecca Dobbs Bush, July 30, 2018

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) addresses, among other things, the use and disclosure of individually identifiable health information, referred to as “protected health information” or PHI. Many employers are confused as to how the HIPAA Privacy Rules apply to them. With requests for FMLA and accommodations for disabilities, employers are handling very sensitive and private information about their employees on a daily basis. While it is impossible to thoroughly address the multitude of issues within the HIPAA privacy rules in a short article, following are some basic points that should help most employers in navigating compliance with HIPAA privacy rules.

HIPPA RegulationsHIPAA privacy rules generally do not directly affect employers unless they are a “covered entity” as defined under HIPAA. Covered entities typically include health plans, health care clearinghouses, and most health care providers. Even a health care provider may not be directly subject to HIPAA Privacy Rules in their role as an employer. HIPAA regulations provide an example involving a health care employee: When a clinic employee visits a doctor for treatment, her medical file is PHI. However, when that employee takes the doctor’s note she received during her visit and turns it in to HR for attendance purposes, the document is now part of her employment file and is no longer PHI in that setting.

Avoid receiving PHI from your group health plan.  If you do not maintain a self-insured health plan you can minimize the need to comply with HIPAA privacy rule requirements simply by restricting your insurer from sharing the information. Generally an insurer should not be sending PHI to the employer unless the plan document specifically states which employees may receive PHI and for what purposes. Your plan document should not unnecessarily designate employees to receive PHI. It is a good idea to review insurance contracts and plan documents and make sure they limit the role the employer plays in administering the group health plan.

Outsource Administration of group health plans, including flex spending accounts.  If you have a self-insured health plan and/or a flex spending plan, you need to make sure those plans are administered in compliance with HIPAA privacy rules. However, if you hire a third party administrator, you can and should shift the flow of the PHI to the third party administrator who will be handling the claims. This step greatly simplifies what an employer has to do to be in compliance with HIPAA as it greatly limits the amount of PHI the employer receives. Instead, you can focus on making sure you have a Business Associate Agreement in place with the third party administrator.

As with everything, there are exceptions to these basic points. For example, the privacy rules contain special provisions relating to workers’ compensation laws allowing for an employer to obtain PHI directly from a health care provider when “necessary” to comply with workers’ compensation laws. Another exception exists in the privacy rules excluding self-administered plans with fewer than fifty (50) participants from being subject to HIPAA privacy regulations. It is always best for an employer to consult with counsel on any of these issues.

 

Association Health Plans Expanded Under DOL Final Rule

Contributed by Kelly Haab-Tallitsch, July 10, 2018

12837750 - stethoscope wrapped around health insurance policies, soft focusOn June 21, 2018, the US Department of Labor (DOL) published a final rule making it easier for a group or association of small employers to band together to buy health insurance.  The rule allows employers that previously could only purchase small group health coverage to join together to purchase insurance in the less-regulated large group market.

The rule broadens the definition of an “association” that can act as a single “employer” to sponsor an Association Health Plan (AHP) under the Employee Retirement Income Security Act of 1974 (ERISA). Employers that pass a “commonality of interest” test based on geography or industry can form an association for the sole purpose of offering an AHP to their employees.

Under the new rule employers can show a commonality of interest if they are:

  • In the same trade, industry or profession throughout the United States; or
  • In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.

Potential Benefits

In most states employers with less than 50 employees must purchase health coverage in the small group market, which is subject to greater regulation (a few states set the cut off at 100 employees). Under the new rule, an association of employers with a total of 50 (or 100) or more employees among them will have access to the large group market. Why does this matter? Large group plans are exempt from some of the regulatory requirements imposed on small group health plans by states and the Affordable Care Act (ACA), including the requirement to provide coverage for 10 essential health benefits.  This will allow an AHP to offer a “skinnier” (and cheaper) plan than those available in the small group market.

AHPs may also help employers leverage the bargaining power of a larger group and reduce administrative costs through economies of scale. The regulations also enable AHPs to self-insure, subject to state oversight, an option not previously available to most small employers. Sole proprietors may also participate in an AHP.

Considerations

AHPs are still subject to nondiscrimination regulations. Coverage of an individual cannot be restricted based on any health factor or denied based on a preexisting condition.

Because AHPs are not subject to the same rules as small group health plans, employers must read the fine print and understand the details of the coverage they are purchasing.  AHPs are closely regulated by state and federal regulations and compliance will continue to be complex. AHPs are a type of a multiple employer welfare arrangement (MEWA), which are generally required to file a Form M-1 and a Form 5500 annually unless otherwise exempt.

Implementation Timeline

The new rule will be phased in beginning in September 2018, at which time fully-insured AHPs may begin to operate under the rule. Existing self-insured AHPs may begin to operate under the new rule on January 1, 2019 and new self-insured AHPs can begin on April 1, 2019.

 

Amazon, Berkshire Hathaway and JP Morgan Name CEO in New Venture that Could Change Healthcare for Employers

Contributed by Suzannah Wilson Overholt, June 20, 2018

As promised earlier this year, we have an update regarding the new health care company being formed by Amazon, Berkshire Hathaway and JPMorgan Chase, which still lacks an official name.  In February, Warren Buffett announced that a CEO would be named within a year.  The group later announced that a search was underway, and then, in early June, announced that a new CEO had been identified and would be named in two weeks.

12837750 - stethoscope wrapped around health insurance policies, soft focusTrue to their promise, on June 20, 2018, the triumvirate of Warren Buffett (Berkshire Hathaway), Jeff Bezos (Amazon) and Jamie Dimon (JPMorgan Chase) announced that Dr. Atul Gawande will serve as CEO of the new company starting July 9.  Dr. Gawande currently practices general and endocrine surgery at Brigham and Women’s Hospital and is a professor at Harvard’s School of Public Health and Medical School. He is also the founding executive director of Ariadne Labs, which, according to the Ariadne Labs website, is a joint center between Brigham and Women’s Hospital and Harvard’s School of Public Health.  Its mission is to “create scalable health care solutions that deliver better care at the most critical moments in people’s lives, everywhere.” The web site indicates that Dr. Gawande is also chairman of Lifebox, “a nonprofit reducing surgical deaths globally.” CNBC reported that Dr. Gawande will not be giving up his positions at Harvard or Brigham and Women’s Hospital and is transitioning to the position of chairman of Ariadne Labs.

When initially announced in January, the primary purpose of the new company was portrayed as an effort to reduce health care costs for employers. The appointment of Dr. Gawande adds a bit more insight into how that goal may be achieved. According to Bloomberg, the selection of Dr. Gawande has led analysts to conclude that the new company will take an expansive look at how to approach fixing health care.  In a letter to his shareholders, Dimon indicated that the new company’s agenda will include aligning incentives among doctors, insurers and patients; reducing fraud and waste; giving employees more access to telemedicine and better wellness programs; and figuring out why so much money is spent on end-of-life care. Some have been critical of his statements, indicating that they are focused on the wrong issues.

The new company will be headquartered in Boston, most likely because that is where Dr. Gawande is located. Bloomberg reported that additional details such as the size, budget and authority of the new company are still not available. However, it will be “an independent entity that is free from profit-making incentives and constraints.”  We will continue to monitor this and provide updates.

“Cadillac Tax” on Health Plans Delayed Until 2020

Contributed by Kelly Haab-Tallitsch

Employers are receiving a temporary reprieve from the controversial “Cadillac Tax” on health plans as part of a large spending and tax bill signed into law by President Obama on Friday, December 18, 2015. The Consolidated Appropriations Act (the “Act”) delays the effective date of the Affordable Care Act’s (ACA’s) excise tax on so-called high cost health plans, known as the “Cadillac Tax,” until January 1, 2020.

The Cadillac Tax, previously scheduled to take effect on January 1, 2018, is a 40% excise tax on employers and insurers who offer health insurance plans that exceed specified high-cost limits ($10,200 for individuals and $27,000 for families for 2018). The 40% tax applies to the cost of the plan above these thresholds.

In addition to the delay, the Act makes the Cadillac Tax a tax-deductible expense for employers, somewhat cushioning its impact. The Act also calls for an examination of suitable benchmarks to be used for the adjustment of the excise tax thresholds in future years.

The delay comes after mounting criticism of the Cadillac Tax from employers, insurers, labor unions and lawmakers. Critics argue that the tax, which was expected to affect an estimated 25% to 30% of employers in 2018, and as many as 50% within the next 10 years, unfairly penalizes employers and unionized workers and will ultimately lead to employees paying more out of pocket for medical expenses.

What Does this Mean for Employers?

While opponents of the Cadillac Tax are citing the delay as the first step towards a repeal of the tax, employers must remain cautious and plan for the tax to be implemented in 2020. Employers should continue evaluating the costs of the health coverage offered to their employees and begin to consider alternatives to reduce exposure to the tax in 2020. Additionally, employers should review the accounting consequences of the now deductible Cadillac Tax.