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

S&S Benefits Consulting, Inc. 219 Darien, Dundee, IL 60118 Phone: 847-428-5353, Fax:847-428-9876,

Email: jseiler@ssbenefits.net www.ssbenefits.net May 2004 Issue

Based on interviews with 174 CFOs of large multi-national businesses, 86% of employees are facing increased healthcare contributions and 72% face rising deductibles. 87% of executives increased copays on Rx programs according to PricewaterhouseCoopers. 94% of executives rejected the idea of a single payer health plan for the nation.

Ceridian has acquired the COBRA administration of Cignaís clients. They will also handle retiree billing services for Cigna customers. United Healthcare is making a major foray into the Northeast with announced plans to buy once beleaguered Oxford Health Plans for $4.9 Billion.

According to the National Association of Dental Plans and Delta Dental, dental market growth has remained flat from 2001 to 2002, with indemnity enrollment dropping by 8% and PPO enrollment increasing by 7%. Employers decreased their share of contributions from 61.8% in 2000 to 58% in 2002.

Harris Interactive says that 51% of adult Americans (111million people) have researched health topics online this year.

The University of Michigan Depression Center reports that while 89% of depressed employees report having mental health coverage, 75% delay getting care and 36% receive only partial treatment. While 65% have access to an EAP, only 14% have ever used it. Depressing, isní t it?

As EDI transactions increase, there is fear that the electronic transactions without supporting documentation will increase the instances of fraud and abuse in health care claims payment. Administrations of claims are going to need more sophisticated software to detect providers that attempt to defraud by miscoding claims. A number of estimates say that fraud and abuse cost between 5% and 10% of the $1.6 Trillion price for healthcare in the U.S. Outright fraud is estimated as costing $50 billion annually according to an EBN article.

What is the cost to employers when employees come to work with illness, but donít perform? The situation is known as presenteeism. Cornell University studies claim the cost associated with presenteeism for certain illnesses exceed the medical expenses. Ten common ailments reportedly cost employers $255.08 per worker annually in lower productivity versus $72.07 for total medical expenses per worker for the same illnesses. The ailments studied were hypertension, heart disease, depression, arthritis, asthma, allergies, diabetes, headaches, cancer and respiratory infections.

Humana is piloting a four-tier drug plan that flips the copay principal. They provide an allowance based on the cost and type of the drug. Eighteen percent of their 3000 employees chose the plan that pays up to $40 for acute illness drugs (such as insulin and antibiotics), up to $30 for maintenance drugs, up to $20 for allergy medications and up to $10 for lifestyle drugs (acne, hair loss and sexual dysfunction). Employees pay the difference after the allowance.

Health Netís New York subsidiary will refund about $5Million to members and pay a $500,000 fine for using outdated R&C factors to reduce payments to out of network providers from 1999 to 2002. One wonders what the state of New York would think of the insurance carriers that offer only the network rates of payment to out of network providers?

Almost everyone is selling the concept. Insurance carriers are designing plans and banking arrangements to conform to the concept. Seminars are being held on the concept. Consultants are designing plans for the self-insured to fit the concept. Politicians are even touting the concept. According to most experts that are cited in the press, the concept will save employers money. Does the concept make sense for you? HSAs are hot now. They are almost as hot as HMOs 15 years ago. Letís take a look at a self-funded plan. Raise the deductible from $250 to $1,000. Thatís a $750 saving to the employer, IF the employee incurs the claims. Eliminate copays for doctor visits except for preventative care. Have the employer contribute to the HSA. How much should the employer contribute to the HSA? Studies cited in the sales of mini-medical plans from two large carriers are interesting. One carrier said that 92% of employees use less than $1,000 in benefits per year. Another carrier says that 86% of employees failed to meet a $500 deductible. So, for a self-funded employer, giving dollars to an HSA could very well raise costs, and will certainly raise fixed costs. Will stop loss carriers give credit on specific and aggregate rates for plan changes? The answer is no. Will claims on the HSA employer money count towards the specific stop loss? The answer is no. The concept may work for smaller employers that are fully insured with low deductibles and high rates or to replace HMO plans. Employer contributions to an HSA make very little sense for most self-funded employers. The introduction of HSA plans is really just self-funding for individuals. Before you believe all the malarkey, look at the facts as they relate to your plan. Think through the Concept, even if your broker/consultant doesnít.

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STREET TALK-WHY BE LIKE EVERYONE ELSE?