In a value-based plan, the idea is to reward staff for seeking treatments that promote wellness.

The more clinically viable the treatment, the less an staff member compensates out of pocket for it.

Example –  Women over 40 and younger personnel with a family history of breast cancer pay less for a each year mammogram than personnel for whom the test isn’t as necessary.

Value-based plans often work better than high-deductible plans when used in combination with standard wellness program features such as health risk appraisals.

Five target areas

As reported by the May 2008 issue of Simply Well, there are four quality-of-care criteria that have emerged as key benchmarks of the quality of care – healthcare management, preventive screenings and treatments, member service and access to care.

Areas of care that are of particular concern -

o  Employees’ dependents receiving appropriate and timely childhood/adolescent immunizations

o  Breast cancer screenings for female health plan enrollees, ages 52 to 64

o  Diabetic staff receiving hemoglobin A1C and LDL-C testing

o  Members receiving proper referrals and treatment for psychological health issues (e.g., main care physician refers a patient to a expert to ensure proper prescription and management of an anti-depressant medication)

o  Pregnant workforce receivig time and appropriate prenatal and postpartum care, and prevention of antibiotic treatment in adults with acute bronchitis.

The quality of care for many of the aforementioned issues can suffer when personnel foot too much of the bill out of their own pockets.

The hope for value-based plans is that staff get some cost relief and obtain treatments that will reduce costs in the long run.

As scary as they seem at first glance, complying with health insurance portability and accountability act (HIPAA)’s privacy rules may be relatively painless.

Contrary to common belief, the rules â.” with several key exceptions â.” apply only to a fraction of the medical information Benefits handles.

As long as the company remains legally “hands off” of employee’s private medical information, you can dodge most of the HIPAA bullet.

For HIPAA privacy purposes, your firm is considered “hands off” even when you obtain de-identified personal information, aggregate claims data and routine enrollment info.

Bottom line – When your organization’s heath plans are fully insured and the claims administered through a TPA, the insurance company â.” not your firm â.” bears the brunt of the health insurance portability and accountability act (HIPAA) privacy compliance responsibility.

One major exception –  medical cafeteria plans. In most cases, you’ve two compliance choices -

o  Process reimbursement requests first through your TPA, with the TPA making sure the claim qualifies underneath the terms of the cafeteria plan before your firm reimburses it, or

o  Develop a written cafeteria plan privacy policy, issue a notice to workers, appoint a privacy officer and amend your plan documents.

Rarely affects FMLA

Many individuals  â.” including healthcare providers â.” misunderstand how health insurance portability and accountability act (HIPAA) affects medical certifications for FMLA leave.  The key – health insurance portability and accountability act (HIPAA) only applies to personal information that filters through your health plan, not certifications obtained from a doctor.

Under FMLA, you’re permitted to obtain the minimum information you need to approve and administer leave. Likewise, health insurance portability and accountability act (HIPAA) doesn’t apply to most workers’ comp, return-to-work notices or disability claims.

Even so, it compensates to be careful how you ask for and use the information. Other state and federal privacy laws often protect the same kinds of info individuals  assume falls under HIPAA.

Following procedures

The health insurance portability and accountability act (HIPAA) privacy rules are heavy on paperwork and procedure.

But since your firm follows  the info-gathering process spelled out in your health plan documents, the HIPAA privacy rules ought to present few major obstacles.

A lot of firms are still missing an opportunity to trim some health plan expenditures.

Generic versions of high-cholesterol drug Zocor have been on market for two years now, but a fair share of business pharmacy plans have yet to make the switch.

When your PBM gives generic Zocor favored status on the formulary, now’s a good time to remind employees -

o  most individuals  on cholesterol-control meds will get the same therapeutic value from generic Zocor as from the label brand and the more potent â.” and still patented â.” Lipitor

o   they are able to save $10 to $50 (or more, depending on your drug plan design) on their co-pay by switching, but

o   they ought to ask their doctor first. People  with cholesterol levels over 200 and/or family histories of  ultra-high cholesterol might  be better off staying on Lipitor.

Reason –  It takes four times the amount of a Zocor-type medication  to equal one dose of Lipitor.

When it comes to health-coverage laws, there’s often a domino effect.

As individual states require insurers â.” and in some cases, corporations â.” to cover or offer coverage of specific people  and procedures, similar laws can spread quickly to other states.

The effect on plan sponsors –  Some mandates can increase your costs by 20 percent to 45 percent.

Small firms targeted, too

States are no longer targeting  just the Wal-Marts and other giant corporations anymore.  The pressure has increased on businesss of all sizes.

That’s namely true for the new “universal coverage” laws passed in Massachusetts and Vermont.

The Massachusetts law requires every firm with 11 or more staff members either to cover or contribute toward everybody’s health coverage, or else pay an annual fee of $295 per employee to a state fund.

Vermont’s similar version sets the annually fee at $365 per full-time equivalent employee.  The Vermont law also requires all uninsured, low-income hourly workers to have access to a state-subsidized plan (called Catamount Health) sold through private insurance organizations.

It’s up to businesss to deduct the monthly premiums â.” $60 to $135, depending on the person’s wages â.” and send it to the state.

There are rumblings in at least 10 states about lawmakers pushing for universal-coverage laws. Several have formed committees to study the Massachusetts law and see if a version can be modified to their state.

Here are three proactive steps to consider now. These could potentially save money, time and compliance headaches later -

o  look into offering mini-med or similar lower-cost programs to satisfy minimum coverage requirements for uninsured staff. Monthly premiums range from about $25 to $200

o  educate low-income staff members about the earned income-tax (EIT) credit the federal government offers. This can make a mini-med plan free or nearly free to eligible staff members, and

o  use flexible spending accounts to develop a tax savings on premiums for other workers and your firm.

Required procedures

The universal-coverage laws draw national headlines, but far more companys are currently affected by state laws requiring coverage for certain types of procedures. Three of the biggies -

o  diabetes self-management. Nineteen states require your medical plan to cover all the steps employees with diabetes take to control their condition, including nutritional therapy (if prescribed by a doctor)

o  in vitro fertilization. This big ticket service adds 3% to 5% to your premiums, and is now a required benefit in 15 states, and

o  cervical cancer screenings. In the last year, four more states have required all employer plans to cover each year cervical cancer screenings for all covered female workforce, spouses and dependents age 18 and older. That brings the sum to 24 states.

The good news about the diabetes management and cervical cancer mandates is they can reduce your  long-term costs, even if they increase them in the short-term.

Here’s a good resource  for keeping abreast of mandatory coverage trends around the country.  The site also features  state-by-state breakdowns of changes in insurance laws  mandating the coverage of different treatments and conditions.

For example, this report from 2006 is the most robust coverage-mandate study that I’ve ever seen.

Who worries more about medical costs –  lower-paid or higher paid employees?

Answer –  Both groups worry equally about their out-of-pocket health costs, according to a PNC Services Group survey of 1,485 employees. Nearly 52% of all respondents â.” regardless of income â.”cited the unpredictability of health expenses as their No. 1 financial-planning concern.

Other common financial-planning fears that affect staff members of all salary levels -

o  eldercare. Over half the respondents with children were afraid their offspring may be forced to pay for the parents’ long-term care, and

o  financial stability. 47 percent of mid- to high-salary personnel said they were concerned about sustaining or increasing wealth.

It might be easier than you think to eliminate a major reason workers sue.

How? Well, roughly 75% of employee lawsuits happen because of accidental disconnects between an corporation’s internal policies and procedures, and what’s written in the plan documents.

Here are two areas where some the costliest errors lurk, and three steps your fim can take to catch and correct the mistakes before you’re ever sued.

1. Policy/coverage discrepancies

A lot of firms’ written benefits policies and plan documents are like siblings who start to drift apart as they grow up.

In the benefits realm, nonetheless, the plan sponsor has the “parental” power â.” and legal responsibility â.” to be sure written policies and plan documents remain close as they grow and change.

As a routine practice, firms should be sure changes in their benefits policies are also written into the formal plan documents, as reported by benefits attorney William Wright.

If push comes to shove in court, any inconsistency with plan documents can prove fatal for the corporation. Example – Senior management passes a new rule that workers must work 30 hours a week to be eligible for the health plan.

Benefits and HR then write the new coverage policy into employees’ benefits  handbooks and hold meetings with staff members to explain the change.

Now suppose an worker drops to part-time status. Are you legally protected if the worker challenges the loss of benefits?

Not necessarily. for the policy in  the handbook to stand up in court, the plan documents must also say there’s a 30-hour-a-week eligibility requirement.

Same thing goes for disputes over run-out coverage.  Suppose it’s your firm’s policy to carry over coverage for a terminated staff member during the COBRA election period, but the requirement was never written into the plan document.

A few weeks later, the staff member has a major health claim.  The TPA denies it, saying coverage had expired. Reason –  the plan document says “active employees” are covered, but doesn’t specify that the insurer pay claims until the end of the month.

The likely result –  the ex-employee sues, saying the business is liable for the mistake.

2. Coordination of benefits

Watch out for cases where an employee’s claim might  be covered under two or more policies (e.g., your firm’s plan and one from a spouse’s company).

Be sure there’s a clear-cut coordination-of-benefits policy in all your plan documents. Typically, if a plan contains no instructions for coordination of benefits, it’s expected to pay first. Two key areas to check -

1. Make certain there’s a statement that says only the amount actually compensated by each plan are going to be charged against the maximum benefit, and

2. Make sure that the order of benefits determination spells out which plan compensates first for a covered child when the worker is divorced from his or her spouse.

Likewise, if your firm offers domestic partner coverage, make certain there’s a coordination-of-benefits statement for dependent and non-dependent partners.

Three best practices

On an ongoing basis, you are able to cut your lawsuit risk by 75% when you -

o  gather all materials related to specific plans into a binder, including renewal letters from providers and materials distributed to employees

o  perform a each year self-audit, checking to see if plan-document wording matches your current policies, and

o  pay special attention to keeping benefits descriptions up to date.

Reminder – If you don’t have a formal plan document, your contract with the provider legally serves as the “control document” for the plan. By law, all staff members must have access to the plan document and be notified in writing of any alterations, including minor ones.

Nine of 10 HR managers polled by Colonial Life feel that personnel have at least a vague notion that benefits are a valuable part of working at a corporation.

Nonetheless, the same study found that only 21% of those corporations believed their staff had a strong understanding of the workings of their own benefits.  and 5% believed that their staff didn’t know anything about their benefit options.

Implication –  the greater emphasis placed on employee education, the more likely staff understand the role of benefits in total compensation.

Incorrect billing from medical insurance carriers is more common than you might think.  The average plan sponsor can get overcharged by 5% a year, as reported by brokerage and consulting firm Corporate Synergies Group.

Like most businesses, insurance carriers rarely keep perfectly up-to-date records on their clients.  As a result, plan sponsors often get charged for individuals  who shouldn’t be covered on the health plan. Here are two areas to watch -

Claims vs. enrollment

It’s common to have terminated staff members still in the carrier’s claims eligibility system â.” even after they’ve been taken off your enrollment list.

Reason – A lot of carriers use separate computer systems for tracking enrollment and claims â.” and the two systems use different technologies that don’t “talk” to each another.

Carriers have no incentive to upgrade their systems, according to CSG president Eric Raymond, because doing so would cost the insurers money.

Leaving things as is, carriers simply charge clients when they put through claims for ineligible staff members and dependents.

That’s why an annual claims audit is a must –  That way, you won’t get charged fees for claims the carrier accidentally put through.

Even when your firm outsources the work (it’s a rather time-consuming task when performed in-house), you’ll ordinarily see several percentage points of savings on your total health care costs.

Dependent eligibility

Poor carrier record-keeping also can be the cause for employees’ ineligible dependents not being taken off the enrollment files.

Few carriers have systems that automatically integrate with your Payroll department and your current enrollment forms (including the electronic “employee self-service” kind). Instead, data entry people  employed by the carriers input the information in the vendors’ system.

Human error by the carriers’ staff costs plan sponsors another several percentage points. Solution –  annual dependent audits.

With the downturn in the economy, it seems like most businesses are shifting their focus when it comes to employee benefits and compensation.  The current situation is also very stressful on benefits managers.

In times like these, it’s critical for colleagues to share their concerns, experiences suggestions. A few weeks ago, HRBenefitsAlert.com ran a special report on calming employees’ 401(k) fears.

The reader comments revealed that many benefits pros were just as afraid as staff members, and people ‘s frustration led to some unfortunate carping back and forth between a few readers.

The purpose of the comments section, apart from giving individuals  the opportunity to react to the story, is to provide a forum for benefits managers to interact.

It’s my hope that we can generate an exchange ideas that have (and have not) been working at readers’ companies during the current situation. Specifically -

o  What are you doing to manage health benefits costs as budgets are either frozen or shrink?

o  Have you noticed a dip in morale or productivity with all the doom-and-gloom in the news?

o  How’s your business attempting to calm employees’ fears about salary freezes or layoffs, 401(k) losses, medical cost shifting and other issues that get a lot of mainstream media focus?

o  What are you saying to staff members to deliver the news they need to know but also keep morale high?

Thank you in advance for your willingness to share your expertise and personal experiences. Everybody benefits in the long run.

Few businesss benchmark their flu programs, a published study  from the Disability Management Employer Coalition finds. But those that do often discover room for improvement.

Nearly 80% of companys provide employees access to flu shots, either on-site or at a local clinic.  And 72% cover some or all of the cost (typically compensating between $10 to $20). But -

o  At 89% of firms, fewer than half of personnel actually get a flu shot

o  At 38% of businesses, fewer than 25% of workers participate

o  only 6 percent of firms can get at least 75 percent participation

o  87% of survey respondents said  they never measure absenteeism during flu season, and

o  75% never tracked whether workers who get flu shots are actually absent less often.

The firms that get best results are those that actively educate staff, track flu-related absenteeism and send sick staff home.