S&S Benefits.....Opinion, Hearsay & News Review

Why be like everyone else?

United HealthCare of Illinois is the state’s second largest managed care plan. They have agreed to reimburse the government $2.9 million to settle allegations that it’s Medicare HMO over-billed for senior care.

The CHIP Plan is Illinois costs about $17M to cover the otherwise uninsurable, but they have cut off new applications and 2002 costs are expected to be $41M. The number of people with claims over $50K grew by more than 30% this year. Participants pay about 45% of the cost. It was only a matter of time as technology takes claims to new highs.

COBRA notifications are again coming to the forefront. Clarifications have come out that employers MUST provide plan participants with notice of their COBRA rights when coverage commences. The mere fact that an SPD is provided by hand to an employee does not relieve the obligation to provide spousal notification. The SPD (a single copy is apparently sufficient) needs to be mailed (if addressed to both the spouse and employee) at their last known mailing address to satisfy good faith requirements.

A study by the Center for Studying Health System Change (is that redundant?) says that Rx accounted for 44% of the total rise in healthcare costs. One third of that was attributed to higher costs while the rest was for new drugs and utilization. Doc fees made up 32% of the increase and hospital (in and outpatient) added 24%. In the meantime 400,000 HMO members left those plans in 1999 according to Interstudy Publications. The top 25 HMOs account for 36% of the HMO enrollment out of 568 plans (and dropping) with 4 of 10 HMOs being profitable.

If as an employer you contribute to an FSA, Segal reports the IRS (quietly) says that unspent Employer funds can be rolled over to the following year. The report says the IRS thinks when an employee retires or leaves they can spend the money in their account for COBRA or retiree health premiums (not cash). However, the "use it or lose it " rule still applies to employee contributions. PS…we are just reporting here what we’ve said all along, but not providing legal advice…..

EBRI’s year 2000 Health Confidence Survey shows that 22% of employees feel health care is the most critical issue facing America. 39% feel healthcare has gotten worse in the last 5 years. About 50% of employees covered by employer health plans are extremely or very satisfied, while 40% are somewhat satisfied. Ignorance breeds bliss. 90% of employees are covered by some form of managed care while 39% say they are not familiar with the concept and 61% think they have never been in a managed care plan!!!

Despite all the commotion over defined contribution plans, at least one other consultant has now joined us in publicly stating in Atlanta at the Corporate Benefits Conference that "no employer in its right mind" would establish a DC plan for employee health care. The major reason is there is no tax exemption for the contribution. Or, imagine the horror stories when some employee pockets the cash difference between a good plan and bad plan and then has insufficient coverage when an expensive procedure becomes necessary. If employees buy plans individually, who has clout? Mercer surveyed 276 companies and only 11 are likely to use this approach. More to follow…..Or look above for the ignorance is bliss section.

In the Nov.21 Federal Register the DOL issued it’s final claims regulations. For initial urgent care claims a decision is required in 72 hours with decision times of 15 days for other pre-service claims and 30 days for other post-service claims. Denied claims that are urgent need 72-hour decision on appeal. Decision time is 30 days for pre-service claim denial appeals and 60 days for post-service claim denial appeals. Claimants will have 180 days to file appeals.

The DOL regs will also require federally qualified HMO’s to issue SPDs. Among other things, the DOL will require all SPDs to describe the procedures for Qualified Domestic Relation Orders and Qualified Child Support Orders.

Business groups including SHRM have joined the fray against proposed ergonomics rules (to counter musculoskelatal disorders and carpal tunnel) by filing legal motions against OSHA. The rules are to go into effect January 13 with compliance required by October 14. The regulation includes wage replacement that appears to conflict with worker’s comp and runs afoul of FMLA and ADA. OSHA says the cost will be $4.2Billion a year for 10 years while others say the cost will be $900 Billion over 10 years! Gotta quit this newsletter now before we contribute to the cost!