Long Term Trend Forecast for 2017 to Be 6.5% According to PwC

PwC’s Health Research Institute is a projecting a 6.5% increase in the medical cost trend for 2017, the same number that was projected for 2016 and a slower growth than the industry has seen in previous years. But healthcare is still outpacing the general economic inflation, according to the report. ...
[What is causing this moderation?]

• More than 40% of employers surveyed are considering implementing high-performance networks with more limited provider choices and outcomes-based payments.

• Employers are also narrowing their pharmacy formularies to one treatment option....

• At the same time, no specialty blockbuster prescription drugs are expected to hit the market with high costs next year....

  Source: Employee Benefit News. 

Transgender Health Benefits Required Under New HHS Guidance

From Mary Bauman writing over at Employee Benefit Advisor:

New ACA regulations issued by the Office of Civil Rights at the U.S. Department of Health and Human Services may require employer group health plans to provide coverage for transgender surgery and other transgender health benefits.  This new requirement takes effect as of the first day of the first plan year beginning on or after Jan. 1, 2017. 

The new regulations prohibit discrimination on the basis of race, color, national origin, sex, age or disability under a health program or activity receiving federal funds.  As part of this ban on discrimination, blanket exclusions in group health plans for all care relating to gender dysphoria or gender transition will no longer be permitted.  Rather, transgender surgery and other transgender health benefits must be provided on a nondiscriminatory basis.  For example, if a group health plan provides coverage for a hysterectomy for a female participant experiencing medical issues during menopause, then it would also be appropriate to cover a hysterectomy for a participant whose physician recommends it to treat gender dysphoria. 

Not all employer group health plans are subject to the new regulations.  Employer group health plans which must comply include:

• Plans sponsored by hospitals, home health agencies, nursing homes and other health care providers receiving funds under Medicare Part A or Medicaid;

• Fully insured group health plans (sponsored by any employer) where the insurer is offering coverage on an exchange; and

• Self-funded group health plans (sponsored by any employer) administered by an insurer offering coverage on an exchange.

In the regulations, OCR explains that while it has jurisdiction over an insurer offering coverage on an exchange (even with respect to its business of administering self-funded plans), it does not have jurisdiction over employer-sponsors of self-funded group health plans. However, OCR indicates that if such a self-funded plan is discriminatory, it may refer the matter to EEOC to pursue an employment discrimination claim against the employer sponsoring the plan. ...

 

Out-of-pocket Hospitalization Costs up 37% After PPACA Passage

This is from Shelby Livingston writing at Business Insurance:  

Out-of-pocket spending on inpatient hospitalizations increased 37.3% in the years following passage of the health care reform law, a new study shows. 

From 2009 to 2013 among those receiving health coverage through the private sector, total out-of-pocket spending, also known as cost sharing, on hospitalizations grew from an average $738 to $1,013, according to a study published Monday by JAMA Internal Medicine. 

The study conducted by researchers with the University Of Michigan at Ann Arbor examined claims data compiled by the Health Care Cost Institute for about 7.3 million hospitalizations of adults enrolled in employer-sponsored group or individual market health plans who were hospitalized over the four-year period. ...

“We found that the growth in cost sharing was driven primarily by increases in the amount applied to patients’ deductibles, which rose by 86%, and by increases in coinsurance, which grew by 33% during the study period, rather than by copayments,” according to the study. 

Coinsurance related to hospitalizations increased from $518 in 2009 to $688 in 2013, and the amount applied to patients’ deductibles rose from $145 in 2009 to $270 during the four-year period. ...

 

Payments Made to Employees in Lieu of Health Benefits Must be Included in the Regular Rate for Overtime Purposes under the FLSA

Yet another reason to eliminate your cash in lieu plan.  This is from the California Public Agency Labor & Employment Blog:

The Ninth Circuit’s Holding On Inclusion of Cash In Lieu Benefits in the Regular Rate 

The primary issue on appeal was whether the City’s cash in lieu payments were properly excluded from the City’s regular rate. In its June 2, 2016 opinion, the Ninth Circuit held that cash payments made to employees in lieu of health benefits must be included in the hourly “regular rate” used to compensate employees for overtime hours worked. The City argued that the cash in lieu payments were not payments made as compensation for hours of employment and were not tied to the amount of work performed for the employer, and therefore were excludable from the regular rate of pay as are payments for leave used and expenses. The Ninth Circuit disagreed, finding the payments were “compensation for work” even if the payments were not specifically tied to time worked for the employer. 

The Ninth Circuit also held that the cash in lieu payments could not be excluded from the regular rate as payments made irrevocably to a third party pursuant to a bona fide benefit plan for health insurance, retirement, or similar benefits pursuant to section 207(e)(4) of the FLSA since those payments were paid out directly to employees. Thus, those payments must be added into the employee’s regular rate of pay for the time period that they cover for purposes of determining the employee’s FLSA overtime rate.