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Editor’s Letter

Adapting to the New Order in Employee Benefits Things have changed significantly in the employee benefits world. It’s not just rising healthcare costs and other benefits costs along with PPACA legislation, but the global recession taking place that never seems to go away.

Jonathan Edelheit

Employers have cut back on the number of employees they have, and cut back on the benefits they offer, and employees don’t have the disposable income to spend on their insurance. Times are tough. Everyone is feeling the pinch; the employer, the employee, the agent or consultant, the insurer and industry service providers are all taking a hit. But some of this hardship is going to make us in the end more competitive and leaner.

President, Editor-In-Chief

Employer Healthcare Congress

Sometimes though, this is a wakeup call and as an industry we need to “adapt.” Hardship brings about ways on how to increase productivity and efficiency. It forces us to innovate and adapt. America’s innovation is what has always made us a leader in the world. Some American companies are looking to bring back jobs to the US because of a weakening US dollar and rising salaries in developing countries US companies had previously outsourced to. Now is the time for us as a country to implement creative solutions that keep costs down, and to embrace alternatives concepts and thoughts. More importantly, the one area we should not be cutting back on now is investing in ourselves, our employees and our infrastructure. This is the time to invest and encourage innovation within our own organizations. Many people in our industry are not trying to adapt or change things; they are hoping and waiting for things to turn back to the way they were before the recession. That’s not going to happen for years to come. Charles Darwin once said “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” As an industry let’s start opening our minds and start embracing new concepts, ideas and ways we can become more efficient, offer better benefits and more importantly, affordable benefits.


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table of Content Corporate Wellness Magazine Articles

Editorial Staff Editor-In-Chief Jonathan Edelheit

Assistant Editors



The Impact of the Affordable Care Act on Corporate Wellness Programs Good, Bad or Unknown?

Megan Chiarello

2011 Corporate Wellness Magazine Leadership Awards Winners...........................................................6

Jenny Dodson

Saving Lives: The Power of Health Risk Assessmets.......................................................................... 14 Comprehensive Wellness Management Changes Behaviors................................................................18

Sarah Hunt

Voluntary Benefits Magazine Articles

Associate Editor Landen R. Zumwalt Advertising Sales

Graphic Designer


Tercy U. Toussaint

Feature Health Culture at Work Promotes Loyalty and Drives Savings 2011 Voluntary Benefits Magazine Leadership Awards Winners..........................................................31 Open Enrollment Effectiveness Crucial In Curbing Workers’ Costly Benefit Mistake..........................32 Gain a Competitive Edge with Critical Illness.......................................................................................38 Managing the Increasing Cost of Specialty Drugs............................................................................... 44

Self Funding Magazine Articles

For any questions regarding advertising, permissions/ reprints, or other general inquiries, please contact:



Feature Surviving Healthcare Reform~10 Critical Issues Employers Should Address With Their Brokers ‘People Strategists’ Reveal Key C-Suite Secrets to Bend the Trend....................................................52 Our Three Piece solution......................................................................................................................60 Pharmacy Benefit Manager Contract Language that affects Plan Sponsors Costs............................ 66 Fund Your Rx Program.........................................................................................................................70

561.792.4418 Fax


Healthcare Reform Magazine Articles

E-mail Copyright © 2011 Benefits Live Magazine. All rights reserved. Benefits Live Magazine is published monthly by Global Health Insurance Publications. Material in this publication may not be reproduced in any way without express permission from Benefits Live Magazine. Requests for permission may be directed to Benefits Live Magazine is in no way responsible for the content of our advertisers or authors.


Feature Health insurance exchanges: Let’s do them right Healthcare Reform: The Good, the Bad and the Ugly...........................................................................80 US Health Insurance Medical Tourism Market Update..........................................................................82

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Taking Place Wednesday, October 26th from 5:30 PM- 6:00 PM in the Exploration Exhibit Hall.

Corporate Wellness Magazine Leadership Awards The Corporate Health and Wellness Association (CHWA) in conjunction with the Corporate Wellness Magazine (CWM), recognizes a select group of individuals each year whose achievements have enhanced and brought innovation to the corporate health and wellness industry. Award recipients are dynamic individuals that have helped launch the industry forward in a positive direction. This award recognizes a leader in the wellness industry for providing an exemplary program or innovation consistent with the vision of the Corporate Health and Wellness Association’s goals; to advance health and wellness, initiate health improvement and education by engaging plan members, promote proven strategies, and advocate for the cause of wellness amongst their plan members. The award also honors an individual whose professional accomplishments embody such qualities that drives the health and wellness industry forward.


Dr. Raj Anand

Chana Bannister

John Casey

Deborah Deters

Executive Director, Center for Nutrition Policy and Promotion

Health Promotion & Fitness Manager

Director, International Benefits

Senior Vice President, Human Resources

S.C. Johnson & Son

Google, Inc.

Hub International Limited


Cheri Fisher

Wellness Program Director Honeywell

Allison Golding

Susan Hannegan

Pamela Grove

Sr. Director, Total Rewards

Director, Benefits & HR

Program Manager -Health Management

Premier Inc.

Land O’ Lakes

Jack in the Box

Judy Hearn

Alisa Marks

Jolene Moore

Sandra Morris

Health & Welfare Manager

Director of Human Resources

Wellness Administrator

Senior Manager Benefits Design


Rose Paving Co.

City of Highland Park

Dan Rigato

John Neuberger

Dan Pikelny

Director of Client Partnerships

Director, Health & Productivity

Employee Benefits Administrator


City of Las Vegas

Quad Graphics

Julie Tatum

Sr. Manager of Benefits

OfficeMax Incorporated

Procter & Gamble

Erin Smith

VP of Total Rewards and Employee Services Bally Total Fitness

Cathy Weber

Director of Human Resources St. Johns School District


Health&Wellness Asso ciat ion Creating a Corporate Culture of Engagement

Corporate Health&Wellness Association Creating a Corporate Culture of Engagement W W W. H E A LT H A N D W E L L N E S S A S S O C I AT I O N . C O M

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Health&Wellness Association W W W. H E A LT H A N D W E L L N E S S A S S O C I AT I O N . C O M O C T. 2 6 T H - 2 8 T H 2 0 1 2 | S O U T H F L O R I D A


Wellness Association Health Benefits Live&Magazine | 2011 Creating a Corporate Culture of Engagement W W W. H E A LT H A N D W E L L N E S S A S S O C I AT I O N . C O M

O C T. 2 6 T H - 2 8 T H 2 0 1 2 | S O U T H F L O R I D A


The Impact of the Affordable Care Act on Corporate Wellness Programs

Good, Bad or Unknown? Written By Greg Justice

“Concerns about the erosion of employees’ privacy were voiced frequently prior to the passage of the Act.”

Written By Greg Justice MA owner of AYC Health & Fitness

One of the major thrusts of the Patient Protection and Affordable Care Act (PPACA) is an increased focus on prevention and wellness, as opposed to a historical federal focus on responding to disease and injury as they become apparent and reach epidemic proportions. Although there are many unknowns, both in the application of the PPACA, and the effect of prevention and wellness programs on individuals making lifestyle choices, wellness programs are seen as one of the few constructs available that might modify behavior and result in a healthier population overall. Only time will tell whether the intersection of the PPACA and the concept of employer-sponsored wellness programs net a discernible benefit or interrupts current momentum in the growth of such programs. The Affordable Care Act certainly acknowledges the existence and benefits of employer-based wellness programs. From 2011 to 2015 the Act provides $200 million in grant funds to assist small employers with the implementation of wellness programs. “Small employers” are defined as those with fewer than 100 employees working 25 or more hours per week. The grants are eligible only for those employers who have not already embarked upon a wellness program, and other criteria apply. In addition to these grants, the PPACA provides for technical assistance to employers seeking to implement and manage a wellness program


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and will be conducting surveys and studies regarding wellness program structures and results throughout the nation. Another provision in the Act increases the health insurance premium discounts an employer can extend to employees who participate in wellness programs. Prior to the passage of the Act, such discounts were limited to 20 percent of the cost. Under the Act, the discount can now be up to 30 percent, and may even reach 50 percent under some circumstances. Providing discounts to participants can be seen as a punitive measure taken against non-participants, and employers are required to adhere to guidelines that assure a nondiscriminatory implementation of such incentives. An acknowledgement of the importance of workplace wellness programs is implicit in their inclusion within the healthcare law. However, there are some provisions, which may not be interpreted as being quite so favorable. The PPACA establishes prevention and public health outreaches that would appear to compete with employer-based programs. These outreaches are community-based and will be funded more aggressively than the workplace-related programs, starting at $500 million in 2010 and increasing to $2 billion in 2015. Employers will continue to fund wellness programs predominantly on their own, whether directly, or through their health care insurance premiums. These community-based

programs may compete directly with employers and reduce participation in the employer-sponsored program. For the employees and their families, this is of little consequence, and more choice is generally a good thing for the consumer. The employees will choose the program that suits them the best, and will use it as they see fit. But for the employer, reduced participation in their workplace program could have a negative effect on their insurance pricing, even though the employees themselves are becoming healthier. Some insurance carriers require a certain percentage of employees participate in a wellness program in order to allow a discount in the company’s healthcare insurance premium. If discounts are available to individual employees, and employee utilizing a program outside the employer may not be eligible. The employees that choose to use a community-based program may also be creating hardship for other employees by not participating in the employersponsored plan. Employers may also find themselves thwarted in their attempts to provide wellness programs through their insurers. The PPACA mandates minimum percentages of premium dollars to be spent on clinical or quality services. A wellness program will likely not qualify as either, althoug h the law does not specifically define those services at this time. Many insurers will need to extract their wellness programs from their suite of free value-added services and provide them only at a cost, or will terminate them altogether in order to comply with these mandates. Employers will then need to pay the insurance company separately for wellness program services or will need to contract with wellness program vendors. Either way, they will be incurring additional costs. If an employer is faced with this decision regarding funding of the workplace wellness program at a juncture where the program has not yet proven its value in reduced absenteeism and increased productivity, it is quite possible the employer will not continue to provide such a program. And, unfortunately, since the employer was already engaged in a wellness program offering, it would be unable to qualify for one of the Act’s grants to offset these increased costs so that it could continue with its program. The Affordable Care Act also provides for a nationwide study of wellness programs, which could result in statistically meaningful information regarding outcomes, productivity, absenteeism, improvement in health characteristics and other metrics. Unfortunately, several of the metrics to be monitored by the administrators of the national study to produce this valuable information are beyond the scope of what is currently considered proper and respectful of employees’ privacy regarding healthcare information in the work place.

Section 4303 of Title IV of the Act indicates the following metrics will be assessed: Employees’ health behaviors, health outcomes and health care expenditures; and Changes in the health status of employees, absenteeism, productivity, rate of workplace injury, and medical costs incurred by employees. In order to avoid even the appearance of impropriety, and to avoid any implication of discriminatory behavior, many

employers studiously avoid knowledge of several of the above metrics. Employees’ fear of being taken to task regarding such issues as health outcomes, health care expenditures and health-related absenteeism is a concern that works against employee acceptance of a wellness program in the first place. If the employer has a selfinsured plan, human resources personnel take care to avoid employee-specific cost analysis to ensure employee privacy. If the plan is a commercial one, the human resources personnel tend to have less of an opportunity to come into contact with employee-specific information in the first place. Even with workers compensation claims, employee medical information is closely guarded, and the employer receives only those details needed to determine the duties to which the employee may be returned, and the probable time frame in which that return may occur. Employees gain a significant level of comfort with wellness programs when they understand that their participation is completely voluntary, that they won’t be judged for good or ill based on whether they choose to participate, and no one is watching over them to ensure that their health improves due to participation. This federal study will compromise the painstakingly developed reinforcement of employees’ privacy in these regards and could well have a chilling effect on their desire to participate in their employer’s program, even if they have been participating previously. The downside to this is obvious and multi-faceted. The employees will lose the benefit of their participation in a wellness program, regardless of how marginal that benefit may have been. The employer will lose the benefit of that employee’s participation in the program. And the study will be skewed by the employees who prefer less intrusion into their healthcare specifics being under-represented in the demographic studied. This does not bode well for a statistically sound result from the study. Concerns about the erosion of employees’ privacy were voiced frequently prior to the passage of the Act. Reconciling those concerns with the required metrics and analysis seems a nearly impossible task. By contrast, the community-based programs sponsored by the Prevent and Public Health Fund do not specify metrics to be gathered from subject individuals. The pertinent subsection of Title IV, Section 4003 indicates that the Community Preventive Services Task Force has the duty to assess, every five years, “…the health effects of interventions, including health impact assessment and population health modeling…” Between the kinder, gentler evaluation of communitybased programs, and the extraordinary disparity in funding, it’s not hard to imagine that workplace wellness programs will quickly be eclipsed by their communitybased counterparts. For those employers that participate in PPACA-established state insurance exchanges, wellness programs may net no benefit related to insurance costs. The state insurance exchanges are allowed to utilize only very limited criteria in establishing their premium rates. Participation in wellness programs does not appear to be an authorized criterion at this time.

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“The grants are eligible only for those employers who have not already embarked upon a wellness program�

The criteria could be subject to change, as the exchanges are not yet active, and many rules, regulations, procedures and details have yet to be formulated and promulgated. Overall, the impact of the PPACA upon the implementation and continued use of workplace wellness programs appears to be a mixed bag. The Act is generally supportive of wellness programs, encouraging and supporting them in the workplace, the community, and for persons insured by individual plans. But the Act also brings unique pressures to bear upon wellness programs in the workplace by requiring intrusive metrics for federal analysis and creating and significantly funding competing programs.


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LabCorp Corporate Solutions Programs to Support Workplace Health and Wellness Initiatives LabCorp’s Workplace Health and Wellness Services are designed to complement employee wellness programs and encourage lifelong healthy habits. Options include on-site workplace events and remote screenings. For more information, visit us at booth 111, contact, or 800-343-8974.

For more information, scan me to visit our Web site. ©2011 Laboratory Corporation of America® Holdings


All rights reserved. 9616-0811

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Y L L U B BLOCKING AT WORK Evelyn M. Field � Australia’s leading expert in bullying behaviour has combined years of clinical experience with meticulous research to create an indispensable compendium on workplace bullying. Michael Carr-Gregg, psychologist Available now $29.95 Including GST Postage and Handling $5.00 216 pages ISBN 9781921513442

No one goes to work to be humiliated, abused, ostracised, subjected to rumours, or assaulted. Yet this is the reality of a working day for more than one in six workers. Bullying extends far beyond the schoolyard into our adult lives. Its psychological and financial costs to a working nation are immense. Bullying causes billions of dollars in lost productivity, expensive mistakes, employee replacement costs, and health and welfare rehabilitation expenses. Most workplaces currently have few resources and systems to deal with the problem, leaving the victims to sink or swim, and the bullies to remain professionally incompetent. Bully Blocking at Work is a self-help guide for readers to understand and confront bullying within their workplace. Appropriate for reference at any stage, before, during or after bullying, it provides a research-based, balanced and comprehensive approach which focuses upon respect and responsibility for all concerned and deals with both prevention and treatment. It features a range of real-life stories, humour, questionnaires, cartoons, sample retorts and useful quotations to guide the reader to a positive outcome. â?™ This book is a wonderful resource for anyone who is experiencing bullying or trying to manage a bully at work. Hadyn Olsen, bullying consultant,

Evelyn Field is a practising psychologist, professional speaker, media commentator and author with extensive clinical and personal experience in dealing with the trauma of loss and abuse. She has been helping workplace bullying victims for over 30 years, as well as training and writing about both workplace and school bullying. She regularly presents at international conferences and workshops. Her previous books on school bullying, Bully Busting and Bully Blocking are both bestsellers, and now published in five languages. Evelyn lives in Melbourne, Australia.

Purchase this title online via our secure website

w w w. a a p b o o k s . c o m

Saving Lives: The Power of Health Risk Assessments Written By John O’Rourke


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“Dozens of employees had no idea that they were diabetic or developed prostate cancer until participating in a health screening.�

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“ When I heard the details of this story and how grateful the employee was, saving money seemed so trivial compared to saving lives. ”

Written By John O’Rourke

Vice President of Human Resources for SCA America

A chill shot up my spine when I read the e-mail from an employee who would have died had he not agreed to take a health risk assessment (HRA) during the annual company-sponsored health fair at the factory where he worked. When SCA implemented its wellness program a few years ago, one of the initial objectives was to help put the brakes on spiraling health care costs. I knew that we might be saving lives, but when I heard the details of this story and how grateful the employee was, saving money seemed so trivial compared to saving lives. It was then that the gravity of his situation and others like it finally hit me. Ed’s story was one of several medical dramas that have since unfolded across our workplace. Dozens of employees had no idea that they were diabetic or developed prostate cancer until participating in a health screening. Many others would be prescribed medications for the first time to manage high cholesterol and hypertension. In many ways, Ed is a typical employee: a middleaged factory worker with no known medical issues or a regular family physician. His health was just fine – or so it seemed, which is why Ed nearly decided at the last minute that a medical screening wasn’t necessary.


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The HRA revealed that this presumably healthy man, in fact, was a ticking time bomb. One of the first steps was to test Ed’s blood pressure. As a nurse took the first reading, she was alarmed at what she saw and asked Ed to just sit back for a few minutes while she called the doctor over for a second reading. It showed an alarmingly high 220/140 when the “normal” range is about 120/80. After a few questions, Ed was taken to a local hospital where he was prescribed some medication for hypertension and it was suggested that he not work for a couple of days to be sure that his blood pressure was under control. The company physician and site nurse asked Ed if it would be okay to follow up with him. As a next step, Ed was encouraged to choose a primary care physician, as well as consider seeing a cardiologist for further evaluation. He followed up as suggested and was given a stress test, which was subsequently followed a short time later with a heart catheterization. The angiogram showed one blocked coronary artery. The bad news was that the blockage was in the left anterior descending artery (LAD), known in the medical community as “the widow maker.” Ed’s LAD was about 93 percent blocked. Another 7 percent and it is likely that he not only would have had a heart attack, but left behind a widow.

It was then that I saw Ed’s e-mail to the company nurse, which noted how the cardiologist told him and his wife what a close call he had. He went on to say that without a doubt, attending a company-sponsored health fair saved his life. Not everyone agrees that companies should be concerned about employees’ health. I have heard from individuals around the country who consider their health a personal matter. But don’t corporate leaders have both a business and moral obligation to be concerned about the well being of the individuals within their organization? Could you imagine a commanding officer in a military environment saying that he doesn’t care about the health and wellbeing of his troops? How is it any different in a corporate environment? SCA has invested hundreds of millions of dollars in new factories over the past few years. So why shouldn’t our company encourage the men and women who are operating those factories to care for their health and be “fit for duty?” By no means is a company wellness program attempting to pry into employees’ personal medical issues. Rather, the purpose of such an effort is to ensure that no employee is “medically homeless” and, instead, has a relationship with a family doctor who can identify medical problems early and is helping with the management of any chronic illnesses. In visits to our plants in the U.S., many employees were honest in saying that they either didn’t have a family doctor or they hadn’t seen one in years. Just like Ed. Ed isn’t among those who feel that employees’ health is none of the company’s business. In fact, the closing comment of his e-mail was, “I am so glad that SCA cares enough about their workers to have a health fair and to try and to protect the health of their workers.”

About SCA: SCA, based in Stockholm, Sweden, is a global hygiene and paper company that develops and produces personal-care products, tissue, packaging solutions, publication papers and solid-wood products. Sales are conducted in 100 countries. SCA has many well-known brands, including the global brands TENA® and Tork® which are made and sold in the U.S. and globally. In the United States, SCA operates manufacturing facilities in five states and is headquartered in Philadelphia. Sales in 2010 were $15 billion. SCA has approximately 45,000 employees. More information can be obtained at www.

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Comprehensive Wellness Management Changes Behaviors Joe Kuchera and fellow management at Western New York’s Unifrax I LLC knew not to expect an immediate return on investment when infusing nearly a quarter of a million dollars into a yearlong workforce wellness program for employees plus their spouses.

Written By Shawna R. Dosser MS, CWPM, CLSSGB, is founder and president of BWI Health Promotions

Regardless, one year after the program was introduced by a third-party health promotion provider, the percentage of people at risk of health complications due to nutrition, exercise, weight and stress decreased. And little by little, the first signs of a culture shift started appearing – from the employee who committed himself to a weight-loss program after originally intending to be just a program observer, to company leaders who sat beside their employees to learn about health topics and hit the pavement for companysponsored walks. Wellness is not a 100-yard dash. Quick fixes don’t work, nor do haphazard programs with few resources or little foresight. Comprehensive Wellness Management is the answer.


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Why Comprehensive Wellness Management? A Comprehensive Wellness Management program is:

Results-oriented • •

Dependent on data (through assessments) to identify needs and set goals Proactive, stressing prevention through education and one-on-one counseling (through health coaching) Inclusive of incentives to encourage healthy behaviors and lifestyles

Combined, these tools not only provide a wellrounded approach, but a powerful foundation for implementing a successful behavior modification infrastructure, which is necessary for sustained lifestyle changes. Comprehensive Wellness Management is the best way to create a culture whereby individuals do not feel pressured to take action, but comfortably ease into attending educational sessions or fitness

“Comprehensive Wellness Management empowers employees.�

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classes, or seek the counsel of an expert on their own accord. Individuals are encouraged to make change for themselves. Comprehensive Wellness Management empowers employees.

Unifrax’s Story Unifrax seeks long-term lifestyle behavior changes to decrease health risks. Changes begin at home, so it made sense to include spouses in a program. Recognizing that they needed to provide a supportive environment, officials designed a program with three primary features: health factor awareness and incentives, wellness education and health coaching, and policy changes. The initiative would also focus on three “modifiable” risk factors that have the most critical impact in leading to potential health hazards: tobacco use, blood pressure and cholesterol ratio. Health promotion professionals are typically the force behind shaping a company’s wellness program. However, Unifrax proved to be a true intellectual consumer by researching what works and what doesn’t, and came to the table knowing exactly what they wanted to achieve.

“The most successful component of the program proved to be one-on-one health coaching.”


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For delivery, they turned to the expertise of a Western New Yorkbased company offering the gamut of health promotion services, from health data gathering to health coaching. It was important for employees to be engaged through in-person interaction with

an accessible, flexible multidisciplinary team of health professionals. The program kicked off in February 2009, one year after a pilot launched at an Indiana Unifrax facility.

Assessing Health All employees – including both full-time and part-time – and their spouses were eligible to participate. Every participant initially underwent a 45 to 60 minute health assessment to obtain real-time data in capturing a snapshot of personal health. Data is integral to not only raise awareness of health status, but to identify the changes needed for improvement and determine personal goals. An accurate view was gained through the following assessments administered by the professional third-party team: Biometric screening to determine blood pressure, glucose and cholesterol levels Fitness assessment to gauge physical fitness through weight, BMI (body mass index), body composition, girth measurements, lung volume, flexibility and strength Health risk appraisal (HRA) to analyze overall wellness through self-reported data, including physical and emotional factors, and possibly unlock clues to health concerns Individuals received a personalized, comprehensive 12 page report of their biometric data. Each person met confidentially with a health professional to decipher the results and have questions answered. Immediate discussion of the collected data provided an “educational opportunity” – an essential step in successful behavior change. Nutritional habits were discussed, ideal weight was calculated and short- and long-term goals were set. Participants were urged to start a personal health file and share it with their physicians. Reports contained an overall wellness score based on

a 0 to 100 scale. Scores were also assigned to eight health factors: weight, exercise, nutrition, stress, smoking, cancer risk, cholesterol and blood pressure. Less than 80 in any category placed the individual “at risk” for adverse health outcomes, such as cardiac issues, cancer or other significant illness. Assessments were used to increase awareness about overall employee health among company executives, who were provided aggregate data that compared risks appearing companywide with national averages, such as high blood pressure or the occurrence of being overweight. This data was delivered blindly – reported as a whole through scales and percentages, and not connected to individuals.

Impacting the Individual Pre-assessment findings prompted the offering of hour-long classes targeted at nutrition and eating sensibly, diabetes risk, tobacco and physical activity. An injury prevention program was delivered based on the high occurrence of employees visiting doctors for musculoskeletal problems. Kuchera said that the most successful component of the program proved to be one-on-one health coaching. Sixtyfour percent of individuals who received attention from health coach-advisors rated it as “excellent,” while 29 percent found it to be “very good.” The service was optional for those deemed to be within the top 50 percent of being at risk for health issues. Qualified individuals received 20 minutes each month of confidential health advisement from credentialed health professionals and were provided access to open office hours if extra time was needed. Health coaching institutes a layer of accountability, and delves into personal health issues, behavior concerns, family health history and risk factors. Health coach-advisors ask the right questions and listen to build trust. They break down barriers to address the underlying causes obstructing positive choices, whether the culprit is family habits or a lack of knowledge, and point participants toward resources in the community. Sometimes, they are simply a nonjudgmental sounding board. Most importantly, health coach-advisors empower individuals to identify their own pathways, making for a stronger approach more likely to result in sustainable change. Although not everyone responded on the same level, many individuals were actively engaged in the program and attended the coaching sessions each month, whether through in-person appointments, phone calls

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or communicating via email. Less than 2 percent of the eligible population initially declined involvement and, overall, 90 percent continued to receive health coaching for one year.

Championing the Program If Unifrax was to expect participation, its leaders needed to buy into the program. Not only did they involve themselves alongside employees, but the company joined the “eat well live well” challenge – a free, online, eight-week program designed by grocer Wegmans to encourage healthier living. The company’s top decision-makers also gave a large boost to the program by rewarding participants who successfully met targeted goals. A married couple could potentially earn $700, deposited in their health savings account. Each participant received $50 for solely participating in the assessment. Thereafter, the post-assessment completed six months later determined the incentive payout. Participants earned $100 for each of the following criteria met: •

A blood pressure of 120/80 or less

A cholesterol ratio equal to or under 4.5


Short-term Results Health professionals returned six months after the program start, in September and October 2010, to conduct a posttest. A meta-analysis of literature on costs and savings associated with worksite wellness programs, published in the February 2010 issue of “Health Affairs,” found that medical costs fall by about $3.27 for every dollar spent. Absenteeism costs decrease by about $2.73 for every dollar spent. The findings are a result of the study “Workplace Wellness Programs Can Generate Savings,” conducted by Katherine Baicker, David Cutler and Zirui Song, all of Harvard University. In the case of Unifrax, $250,000 was invested. Applying the above formulas, it is estimated that medical costs would fall by $817,500 and absenteeism costs would decrease by $682,500. A shift in individual and corporate behavior/mentality is evident, from one of treatment and cure to one concentrated on prevention and improved well-being.


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Changing Behaviors So what can we learn from Unifrax? 1. Ensure that upper management understands and supports the goals of a wellness program. It is a longterm culture change, and it may take years before the company sees the benefits. 2. Because it is difficult for people to change, it is important to include some form of incentive for motivation purposes. 3. Enlist the help of a third-party health promotion provider, which should be composed of health professionals (dietitians, educators, exercise physiologists, nurses) trained in prevention, health education and behavior change, and who create personal relationships with employees and spouses. Employers have immense power to shape the future health of our nation by providing information and tools for change. Now is the time for them to help their employees make better lifestyle choices, which ultimately leads to a healthier workforce and healthier country.

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Health Culture at Work Promotes Loyalty and Drives Savings Written By Laura Karkula

Vice President of Product Management, Wellness, OptumHealth

An increasing number of companies are implementing wellness programs in an effort to help employees adopt healthy behaviors, increase productivity and tame medical costs. But these programs are often rolled out with little understanding of employees’ attitudes about health in the workplace – their expectations, motivations and concerns. Before developing a wellness initiative, or tweaking an existing program, employers should ask themselves a more fundamental question: “Does our workplace really support a culture of health?” This question goes far deeper than deciding whether or not to offer incentives for workers to join the local health club. Companies with a culture of health have an environment that supports healthy behaviors. That support may take a variety of forms: providing an onsite workout facility, offering incentives to lose weight or quit smoking, promoting the use of stairs over elevators, encouraging parking further away from the office, supplying healthy food alternatives in vending machines and cafeterias, and implementing compassionate sick-leave policies. Beyond that, key ingredients of a culture of health include: buy-in and support from senior management, continually making workers aware of available programs, and strongly encouraging participation. To get a better appreciation of employees’ views of their companies’ culture of health, OptumHealth and GfK/Roper surveyed over 1,400 employees, split evenly between white collar and blue collar occupations, at both large and small businesses. A large majority of respondents had been with their employers for several years. Respondents’ demographics covered a wide range of ages, races, education and income levels. Employees affirm wellness benefits. Among the key findings was that employees recognize distinct differences between organizations that have a culture of health and those that do not. Health-focused companies not only tend to have healthier workers and fewer absences due to illness, they also derive important intangible benefits. Workers at these firms feel they have a valued partner in addressing their health concerns, which in turn influences how they feel about their jobs.


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“Health-focused companies not only tend to have healthier workers and fewer absences due to illness, they also derive important intangible benefits.�

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“Over eighty percent of employees who worked at companies with health and wellness programs said such programs would encourage them to stay longer with their employer.”

For example: Close to nine in ten employees believe it is appropriate for employers to encourage workers to take steps to be healthy. More than eight in ten employees believe that workplace health and wellness programs show that an employer really cares about their employees. Over eighty percent of employees who worked at companies with health and wellness programs said such programs would encourage them to stay longer with their employer. Nearly three-quarters of employees feel that the availability of a gym or exercise program at work would increase productivity. The environment at a company and the degree to which it promotes a culture of health is just as important to workers as the actual healthrelated programs themselves. For example, those who worked in organizations emphasizing health felt that they had more control over maintaining a healthy lifestyle at work than those who did not (92 percent versus 79 percent). Of course, tangible results matter too. Six in ten people surveyed — those who had successfully lost weight or quit smoking — reported that a workplace program was very helpful to their success. Compared with employees at firms that don’t stress a culture of health, higher percentages of workers at health-conscious employers view weight loss programs, wellness coaching, and health fairs as useful.


One company’s positive experience. A large financial services provider with a deeply embedded culture of health achieved a solid return on investment from its wellness and disease prevention initiative through a combination of health behavior improvements, productivity increases, and lower health care costs. In designing and implementing its program, the company followed established best practices: securing visible leadership support, assessing the employee population, tailoring offerings to its employees, focusing on specific health behavior change, and rigorously tracking results. Key aspects of the program included: • A comprehensive communications strategy for building member awareness and enrollment, delivered through a combination of outreach and follow-up, promotional campaigns, and an extensive employer toolkit. • Cash participation incentives to change behavior. • Use of five separate data streams - online health assessments, onsite biometric screenings, medical insurance claims analysis, employee self-identification and program referrals—to identify at-risk members for proactive engagement and coaching. • Wellness coaches, cross-trained in exercise, stress, tobacco cessation, weight management, nutrition and heart health counseling, who work closely with employees to achieve lifestyle improvement and behavior change. Now, three years into the program, the company continually promotes wellness to all its employees as part of its ongoing culture of health. Overcoming obstacles to wellness. For companies seeking to develop a culture of heath, today’s work environment can pose a challenge. Indeed, employees report that lack of time, lack of self-discipline, stress, and easy access to unhealthy foods are the chief obstacles to staying healthy on the job. Here again, our research shows that health-conscious companies stand out. For example, workers at these companies were less likely to say that stress prevented them from maintaining a healthier lifestyle, compared with those at firms that don’t promote health. Employers with a culture of health also do a better job of recognizing employees’ needs. For example, over twothirds of workers at these firms say it is acceptable to take breaks for exercise, compared with only 44 percent of those at companies not emphasizing health. Health-conscious employers are also more generous about letting employees leave work for a doctor’s appointment or to care for a sick child. They also are less tolerant of smoking – only forty percent of employees at firms emphasizing health say that smoking is acceptable, compared with 53 percent of those at firms not focusing on health. Huge communication gap.

The research uncovered a remarkable perception gap between employers and employees as to the availability of workplace wellness programs. In an earlier survey of 400 large and small businesses across the United States, OptumHealth asked employers about their wellness offerings. Three-fourths of companies with 3,000 or more employees said they offered health risk assessments. Yet in the more recently completed employee survey, only nineteen percent of workers at companies of this size said that they were offered HRAs. This significant difference clearly underscores the need to make a much more concerted effort to communicate wellness programs. Another chasm between workers and employers concerns wellness coaching – twothirds of large firms said they offered it, compared with only seventeen percent of employees at large firms who said it was available. At some companies, low awareness among employees of wellness programs is particularly acute at satellite offices which may be the result of not receiving thorough benefits communications from headquarters. Understanding employees’ desires. Employers who want to create a culture of health should constantly assess their wellness programs to determine which offerings have the most impact. According to the survey, health kiosks, flu shots, lunchtime exercise programs, smoking cessation programs, and interactive online coaching programs on healthier living and diet are viewed by employees as the most helpful in helping them become healthier. The survey research offers insights for companies looking to boost their wellness programs. Those employees who don’t have workplace wellness offerings, or who have them available but don’t currently participate, cited several initiatives that they would find helpful, including: •

Incentives for participating in counseling coaching and achieving certain outcomes;


Workplace gym;

More healthy foods in vending machines or cafeterias.

There is no one-size-fits-all approach, but one of the most effective ways managers can promote healthier lifestyles among employees is to foster a culture of health throughout the company. Communicating the benefits of healthy living is just the beginning. To show they are really serious, senior managers should make it clear to all employees that taking time during the work day to exercise, for example, is acceptable. There are no short cuts to developing a workplace culture of health. It takes resolve and discipline to institute a well-thought out initiative tailored to employees’ unique needs, championed by leadership and supported by a comprehensive foundation of communications and incentives. But the potential rewards – motivating employees to lead healthier lives, and enabling them to be more productive and loyal - are well worth it.

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Taking Place Wednesday, October 26th from 1:00 PM- 1:45 PM in the Exploration Exhibit Hall.

Voluntary Benefits Magazine Leadership Awards The Voluntary Benefits Association (VBA), in conjunction with the Voluntary Benefits Magazine (VBM), recognize a select group of individuals each year whose achievements have enhanced and brought innovation to the voluntary benefits industry. Award recipients are dynamic individuals that have helped launch the industry forward in a positive direction. This award recognizes a leader in the Voluntary Benefits industry for providing an exemplary program or innovation consistent with the vision of the Voluntary Benefits Association’s goals; to advance Voluntary Benefits, initiate improvement and education by engaging plan members, and promote proven strategies. The award also honors an individual whose professional accomplishments embody such qualities that drives the voluntary benefits industry forward.



Benoit & Associates

Christina Harmon

Director of Benefits Administration

Amy Hollis


Hollis Consulting

Ruby Tuesday

Dori Hummel

Manager, Employee Benefits Benoit & Associates

Emil McCulloch

Principal, Employee Benefits

Jo Johnson

Benefits Director ABM Industries Inc.

Robyn Piper

President & CEO Piper Jordan, LLC

Edgewood Partners Insurance Center

Walter Sprang


Employee Benefits & Communications Company

Jason Krouse

Vice President Specialized Markets Univers Workplace Benefits

Robert Shestack

Managing Director Employer Benefits Marsh U.S Consumer

Pani Tademeti

HR Manager- Total Compensation

Office of State Personnel for North Carolina

Hunter Whittington

Division 3 President Benefits Technologies

3rd Annual

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Open Enrollment Effectiveness Crucial In Curbing Workers’ Costly Benefit Mistakes Written By Ron Agypt

Written By Ron Agypt Aflac’s Senior Vice President of Market Development and Broker Sales, U.S.

Open enrollment this year might prove to be more confusing for workers than ever before and could result in added costly mistakes when it comes to benefit decisions. According to the 2011 Aflac WorkForces Report1 the majority of employers (57 percent) will make changes to their health care options this year, such as offering a Health Savings Plan as an alternative to traditional major medical insurance, implementing a high deductible major medical plan or reducing the number of major medical plan options. These changes in health care options might exacerbate existing challenges for employees when it comes to open enrollment, namely wasting money. Alarmingly, 4 out of 10 workers say they wasted money each year because of mistakes they made regarding their insurance benefits. Given the financial strain many American workers face in today’s economy, they simply cannot afford to make the wrong benefit elections or decisions this open enrollment season. Aflac recently examined the issue of open enrollment with U.S. workers and uncovered several trends that illustrate the need for better communication and efforts during open enrollment and throughout the year.

Challenge: The majority of workers make mistakes, and waste money, when choosing their benefits options during the open enrollment process.

communications program. Some of the best practices for companies include diversifying materials to encompass print, web, email, face-to-face meetings; hosting multiple in-person meetings throughout the year and including spouses in the decision-making; and utilizing social and mobile media to remind workers of upcoming open enrollment deadlines via text, Twitter, and Facebook. Tailor your communications program to fit the needs of your company structure and industry. For example, a manufacturing plant may put up posters in break rooms or in the cafeteria, whereas retailers with multiple locations might consider direct mailers to workers’ homes.

Challenge: Deductible costs confuse workers and contribute significantly to financial waste and strain. According to the Aflac study, only one-third (33 percent) of workers say that when selecting an insurance product they always have a full understanding of the deductible costs. In fact, most (54 percent) only sometimes or rarely have a full understanding of the deductible costs. Unfortunately, the result is that more than four out of 10 workers always or sometimes exceed their deductible costs contributing to more out-of-pocket expenses and financial strain.

Nearly half of workers (47 percent) say they have made mistakes or have regrets, such as putting too little in their flexible spending account (FSA), or not electing available benefits coverage like voluntary, dental or vision; or chose benefits they didn’t need or the wrong level of coverage.

As HR decision-makers prepare for the 2012 open enrollment season, it’s important to simplify the language of benefits communications, including clear explanations of health care jargon. Often, employees are embarrassed to admit they don’t understand concepts such as deductibles or copayments. Giving workers examples of realistic scenarios based on each benefits plan’s options can help crystallize just how much out-of-pocket expenses they may be responsible for as a result of each enrollment choice. Some companies offer their workers customizable worksheets to plug in their own individual information and calculate their potential medical costs for the year.

Although open enrollment periods come around once a year, the brevity of benefits decisions requires a comprehensive, year-long education and

Lastly, employers should use the same terminology and clear explanations in every communications vehicle, keeping benefits materials consistent.

The Aflac study found that 77 percent of workers have admitted to making mistakes about benefits coverage during their open enrollment process. This left many employees feeling negatively at the end of the year about the process, including feeling stressed, confused or regretful.

Benefits Live Magazine |



Challenge: Most workers don’t understand their insurance policies and, therefore, choose same benefits year after year.

For example, unlike major medical insurance, voluntary benefits pay cash benefits directly to the employee, unless otherwise assigned, to be used however he or she may choose.

Nine out of 10 workers say they typically choose the same benefits (e.g. medical, dental, vision) year after year, according to the Aflac study. Yet, most employees don’t fully understand their policies. For example, 74 percent of workers say that when thinking about their choices for major medical insurance coverage, they only sometimes or rarely understand everything that is covered by their policy. Furthermore, 58 percent say they are only sometimes or rarely aware of the changes in the policies each year.

Challenge: Poor benefits decisions result in personal sacrifices for many workers.

This uncovers a growing need for HR decision-makers to not only educate its workforce about insurance policy ins and outs, but also how benefits work together. Most employee populations don’t fully appreciate the importance of ancillary or voluntary benefit options beyond major medical, when in fact these types of policies are core components of a comprehensive financial protection plan.

In a time when American workers are already learning how to do more with less, the need to make further sacrifices as a result of inadequate benefits coverage is like rubbing salt on a wound. Yet, that is a reality for some 65 percent of workers who have had to make sacrifices due to the high cost of unexpected out-ofpocket medical costs, such as:

40% 34%

say they have cut back on social activities (e.g. going out to dinner, movies, drinks with friends)

cut back on buying luxury items (e.g. designer clothes, jewelry, electronics)

Given that most workers underestimate the amount of deductibles and copay costs, HR decision-makers can demonstrate to employees how pairing a supplemental insurance policy, such as critical illness or accident, can work together to offset those out-of-pocket expenses.


cut back on gifts


not take vacation


21 percent work more hours

Particularly when it comes to voluntary insurance, employees often misunderstand key distinctions of these types of policies.


19 percent increase use of credit cards/line of credit


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“63% of Workers don’t participate in an FSA”

Although employees must do their part in dedicating the time and energy to these important benefits decisions, HR executives can help foster more engagement among workers. Making enrollment materials attention-grabbing or even holding mandatory enrollment meetings can help capture the busy and easily distracted employee’s attention. Don’t underestimate the power of creative design in making workers stop and engage. Use catchy headlines or relevant questions to drive home the importance of benefits choices, such as “Do you know how much you spent on medical out-of-pocket costs last year?”

Challenge: Workers overlook ways to save money through benefit elections. The Aflac study found that 63 percent of workers don’t participate in a FSA. And of those who do, 43 percent say they usually or sometimes contribute too little, and 23 percent say they contribute too much. Only three of 10 workers say they contribute the right amount to their FSA. FSAs are a valuable benefit for employees and employers, but only when they are used effectively. With low participation levels comes missed opportunity for both worker and employer to keep money in the form of payroll tax savings. The average health FSA account balance is approximately $1,340, and a typical employee, based on industry averages, can expect to save about 30 percent in combined federal, state and local taxes. That means that the employee saves roughly $420 annually and employers could save an average of around $100 based on a 7.65 percent FICA rate.2

With financial incentives for both company and employee, HR executives have good reason to focus on educating workers about FSAs and how they work. Equally important is to guide employees in determining the right amount to put into their FSA to ensure the measure saves them money and not wastes it.

Conclusion With health insurance growing more and more complex by the day, many industry veterans and HR decision-makers themselves are struggling to keep up. Imagine then the difficulty for workers to effectively choose among the array of insurance options that are touted, yet often not understood. A heightened challenge this year is limited disposable income for many American workers, presenting companies and their HR benefits team with greater challenges of improving benefits communications and education strategies, and implementing a more effective enrollment process. Ron Agypt, a 34-year insurance industry veteran, is Aflac’s senior vice president of Market Development and Broker Sales, U.S. He is responsible for setting corporate strategy, and for developing market and broker growth through a team of dedicated professionals. Ron leads Aflac’s Broker Development team, which includes 15 Market Development vice presidents and more than 115 dedicated broker specialists. Visit, call 1-888-861-0251 or send an email to to learn more.

1 “2011 Aflac WorkForces Report,” a study conducted by Harris Interactive for Aflac, September 2010 2 “Best Practices in Enrollment Communications,” An Executive Briefing by SHPS, September 2010;

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READY. SET. GROW HEALTHY. © 2011 United HealthCare Services, Inc. Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare company. UHCEW552337-000 36 Benefits Live Magazine | 2011

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Gain a Competitive Edge with Critical Illness According to a 2009 study by Harvard researchers, 62 percent of personal bankruptcies in the United States in 2007 were caused by health problems and 78 percent of those filers had health insurance. As healthcare costs continue to rise faster than household incomes, patients with a serious medical condition might turn to credit cards to pay for their care.

Written By Thomas (TJ) Gibb Practice Leader of Specialty Benefits for Humana


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Benefits Live Magazine |



“As employees assume more responsibility for their health and welfare, voluntary benefits will continue to increase in popularity.”

Twenty-nine percent of low and middle-income households with credit card debt used their plastic to pay off medical expenses, according to a 2007 study by the Annie E. Casey Foundation along with other public foundations. It’s unfortunate enough when someone gets sick or is diagnosed with a chronic condition, but that person shouldn’t have to worry about the bills or even the risk of losing their home on top of it all. One benefit option can offer peace of mind as well as a sense of financial security during a crisis: critical illness coverage. Employers are becoming increasingly aware of how important critical illness benefits can be for employees. Eighty-one percent of human resources professionals say their organizations review their benefit programs annually, according to the Society for Human Resource Management. Since most companies will review their options, it’s important to understand how critical illness coverage can align with a company’s current benefit offerings.

Cross and Blue Shield reveals that employees enroll in voluntary benefits for a variety of reasons. The top three determining factors are cost savings (54 percent), greater protection for their families (50 percent) and ease of mind (44 percent). What makes critical illness benefits unique is that these funds can be allocated at the individual’s discretion – whether it is for co-pays, out-of-network specialists, or normal living expenses, such as a mortgage, car payments, utilities, groceries, tuition, and child care – providing maximum flexibility. Another important differentiator is that the benefits are paid in one lump sum, which eliminates the need to deal with ongoing paperwork or submit doctor bills and receipts.

Make the Case: Positioning Critical Illness Coverage

When introducing this coverage option to employers, it’s important to position it as a protection for the future. Critical illness coverage helps to ensure that certain standards of living are met. However, instead of only being available at retirement or during a terminal illness, funds are available once a covered condition is diagnosed. Critical illness benefit amounts typically range from $10,000 to $20,000 and provide benefits during working years.

It is important to review your entire benefit program before recommending critical illness. Take time to understand employee demographics and any unique situations with the employees or the employer. This discovery process will help you build a more successful strategy. It’s important to determine how much, if any, employer funding is available since some critical illness plans can be purchased by the employer for their employees.

In 2010, an estimated 1.5 million new cancer cases were diagnosed and cardiovascular disease affected tens of millions of Americans. However, advances in healthcare are helping people live longer and survive these serious illnesses. According to the American Cancer Society, the five-year survival rate for all cancers diagnosed between 1999 and 2005 is 68 percent, up from 50 percent in 1975 to 1977. By being able to cover a variety of expenses with this


Benefits Live Magazine |


financial protection insurance, the beneficiary and their family can focus on what’s important: their health and making a full recovery.

Enable Employers to Make Decisions As employees assume more responsibility for their health and welfare, voluntary benefits will continue to increase in popularity. Benefits need to be targeted to each organization. For example, some plans can be offered to companies with very few employees while plans that focus on larger employers provide the opportunity for more substantial guarantee issue and large benefit amounts. Be aware of plan features that all employees can use, such as health screenings and blood tests. For example, annual mammograms would be a valuable health benefit for an employer that has a predominantly female workforce. Colonoscopies, stress tests, and cystologic screenings (Pap smears) are also commonly covered in a critical illness benefit. These benefits allow the plan to pay up to a certain amount for costs relating to the exam including childcare and transportation. It’s important to highlight those valuable critical illness benefits when featuring the robust plan offerings to employers. It’s also vital to provide a seamless enrollment process by offering communication options that suit a variety of needs including onsite meetings, call centers, and online tools. Conducting a comprehensive educational process is also essential so that employees understand the value of critical illness benefits and can make informed decisions about their coverage.

Through the Eyes of an Employee It’s necessary for your senior leadership team to support the benefit offering and facilitate information sharing with the employees. Typically, the most effective way to educate employees is to use a professional benefit communication firm. It is a competency that can help you determine how critical illness can complement existing benefits, reach employees most effectively, and offer a positive experience for your clients. It’s important to work with your benefit advisor to build a benefit strategy and select plan options that best suit the employees’ lifestyles. For example, an employee who is married or has a family may want to know whether the critical illness benefit covers their spouse and children or just themselves. Employee and their families will find the plan more appealing if it can be tailored and if you can show how it can be adjusted easily based on any changes that may occur. On top of the day-to-day stress of work and family life, deciding on benefits may not be high on a person’s to-do list. Since this may seem like a daunting task, a great deal of assistance is provided by the insurance carrier and benefit advisor. Employees should know that assistance is available every step of the way. In addition to offering your expertise, encourage employees to use

all communication vehicles that are available including new Web based tools. When you make employees aware of what assistance is available, they will have the resources to explore plan options and determine which one suits their lifestyle.

Final Thoughts on Critical Illness Coverage People who are diagnosed with a critical condition are affected physically, emotionally, and financially – with unexpected illnesses and injuries causing 350,000 personal bankruptcies each year. Critical illness makes up for what regular insurance doesn’t cover even if a company offers a robust health insurance plan. That’s why it is essential for brokers to explain the value of this important benefit to employers and encourage them to offer this coverage to their employees.

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Managing the Increasing Cost of Specialty Drugs The specialty pharmaceutical market has grown substantially over the last decade. With the increasing number of patients using specialty drugs and the increasing number of specialty drugs approved for more common conditions, cost containment is a top concern for patients and plan sponsors.

Written By Debbie Echlin Clinical Pharmacist for(Serve You) The HandCrafted PBM


As the trend in specialty drug dispensing continues to move from the medical benefit to the pharmacy benefit, affordability is crucial to benefit design. It is a balancing act to craft a plan design that adequately distributes the cost share between the patient and plan sponsor, while structuring patient cost share to encourage compliance and discourage abandonment of therapy. The addition of a specialty drug tier to the existing multi-tier formulary co-pay structure is one strategy employed by plan sponsors. Simply put, the goal is to assign a cost share more reflective of the actual cost of specialty drugs.

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This strategy generally manifests itself in the creation of a 4-Tier formulary structure where all specialty drugs are assigned to Tier 4 of the formulary. Prescriptions for Tier 4 drugs are assigned the highest patient cost share amount compared to prescriptions for drugs on Tier One, Two or Three. Cost share amounts are typically structured as either flat-dollar co-payments (for example, $100 per Rx) or as percentage coinsurance (for example, 20 percent of the price of the drug). Percentage coinsurance plan designs are increasingly popular, as they are believed to foster better patient decision making and also help recoup some of the burden associated with drug price inflation, which grossly outpaces inflation overall. The potential pitfall with implementation of a coinsurance plan design is the failure to also implement reasonable perRx maximum amounts. Multiple recent well-designed studies show that as patient cost share on prescription drugs increases, adherence to prescribed therapy decreases. For example, a large managed care organization examined the association between out-of-pocket (OOP) expense and new therapy prescription abandonment for multiple sclerosis (MS) specialty drugs, and demonstrated that MS medication OOP expense greater than $200 per claim was associated with a 6-fold higher rate of abandonment compared with OOP expense less than $100. [1] Another study examining claims data from 45 large self-insured employer plans found members were 8 percent more likely to stop therapy for every $10 increase in weekly OOP expense.[2] With this and other data in mind, the Serve You account team works with our clients at implementation and renewal to optimize plan cost share structure to meet each plan’s goals and objectives. Another increasingly common method used to manage specialty drug costs is the implementation of a “per family” or “per member” deductible across the entire plan. This method helps the plan sponsor recoup some of the additional costs associated with specialty drugs while not burdening individual patients, and still providing a robust prescription drug benefit.

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Surviving Healthcare Reform: 10 Critical issues Employers Should Address With their Brokers

Writen By Adam Bruckman

President and CEO of Atlanta-based Digital Insurance


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Health care reform has America’s employers scrambling to ensure they will be in compliance, scratching their heads about certain provisions and secretly wondering if their company is prepared for what comes next. Is your broker taking an active role in this process? Even more important, how do you determine if his or her firm is equipped to help you navigate this uncharted territory? This new era demands sophisticated expertise and technology from employee benefit advisers. These 10 critical questions – and your broker’s responses - can help make sure the right captain is at the helm to guide your company into the future.

1. What assistance should brokers provide their clients in response to health care reform? Today’s innovative brokers are at the top of their game, serving as guides to help employers navigate through health care reform. This legislation has made a complex industry even more complicated. Savvy businesses are turning to brokers who have invested in personnel and communications platforms that deliver the right information on a timely basis to their customers. Webinars, e-mail advisories, newsletters, handbooks, Q&As and updated timelines about the topic are now mandatory resources that employers should receive.

2. Compliance assistance has become an enormous challenge for companies. What kind of support is available? Compliance assistance is essential and has become one of several important services employers should expect. Keeping up with regulatory requirements is a challenge, particularly for small businesses. Leading brokers are committed to regularly alerting clients about all regulatory/compliance matters to keep them informed and help manage organizational risk and exposure. Annual compliance reviews (e.g., HIPAA, ERISA, COBRA, HCR, etc.) should now be routine, as well as assistance with IRS paperwork and filings, including Form 5500 preparation. The goal is to eliminate confusion related to compliance (and any potential deficiencies) with upfront education and counsel about copious state and federal issues.

3. What are the three most important questions employers should ask their brokers NOW? Ask about strategies and offerings to address long-term health insurance affordability issues. There are many options to consider including self-funding, consumer-driven plans and voluntary products. The best brokers spend time getting to know their clients and help design a strategy with customized plans to address an employer’s needs and budget over a period of several years. Inquire how the firm stays abreast of continually changing regulations related to health care reform – and what tools and resources are available to clients. Push to understand all the services offered and how the broker differentiates their services from other advisers in the market. Explore how they help educate customers’ employees about wellness and preventive care – so that these individuals can become better health care consumers. Access to online information and resources, health risk assessment tools, a customer advocate center and communication materials are excellent indicators that you are receiving maximum value.

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4. What do you predict will be the greatest challenges for employers and when will they occur? What solutions and resources can guide them through these obstacles? Employers are challenged to find a long-term strategy that provides affordable health insurance for their employees. Brokers must identify ways to address this crisis and help clients bend the costcurve on employee benefits. Data analytics, consumer-focused approaches, integrated benefits (voluntary products), defined contribution expertise, transparency tools and a high-performing technology platform are among the tools and offerings that brokers will need to properly address this issue. Without a strong adviser providing creative and innovative solutions, businesses will continue struggling to provide affordable employer-sponsored benefit options.

5. What do you predict will be the greatest challenges for employees, and when will they occur? What solutions and resources can guide them through these obstacles? Today’s economy presents monumental challenges for the American workforce. At the same time, health insurance policies have become increasingly difficult to understand. Employees -- not just their employers -- need more from a broker: more expertise, more guidance and more tools. Firms that have invested in technology, resources and training for their customers’ employees set themselves apart from the pack. Leading consultants not only design comprehensive plans, but offer a communication platform to help roll out and advise individuals about their benefits options. More frequently, through voluntary products and defined contributions plans, employees will make their own decisions about what insurance to purchase for themselves and their families. Top brokers will provide services and information about these options to each worker through technology, educational tools and enrollment capabilities. Advisers clearly need to address these issues and are already devising solutions that go well beyond the employer.

6. What innovative approaches are brokers taking to ensure their clients are well informed about reform updates? The Patient Protection and Affordable Care Act (PPACA) was passed on March 23, 2010. With more than a thousand pages of rules, regulations and effective dates, businesses are faced with the daunting task of digesting the act’s complexities. Leading consultants in the employee benefits industry are committed to helping their customers comply with these mandates, as well as other regulatory and legislative requirements. The industry’s best brokers are well-equipped to serve as trusted advisers. They provide their clients with a wide array of health care reform communication tools, including frequent advisories, webinars, seminars, newsletters, handbooks, tax credit assessments and calculators – and comprehensive online resources.


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“The right decision-support tools can more effectively evaluate plan alternatives and establish a long-term strategy.”

7. Escalating costs remain a challenge and many predict health care reform will not resolve this issue. What are your thoughts on the matter, and what approaches do you recommend to help control costs? Escalating insurance costs remain a reality. No one can accurately predict the future, but it is likely that health premiums will continue to rise unless major changes are made by all stakeholders in our health care system – insurers, providers, employers and employees. Wellness, lifestyle management and employee engagement are crucial to bringing rising costs under control. Innovative brokers are rolling out tools to help clients and policy holders embrace these concepts, and many are utilizing advanced technology and analytic tools to help employers and their employees with key decisions about plan options. The right decision-support tools can more effectively evaluate plan alternatives and establish a long-term strategy. Better information equates to improved decision-making, less internal analysis and optimal plan results, which maximizes value for everyone involved. The right technical tools can quantify the value differences among plan features, enabling employers to make solid, cost-saving business decisions based on clear, actionable information.

8. How can I determine if a broker is capable of guiding my company through this transformation? First and foremost, make sure your broker truly understands your business, your culture and your financial situation. Ask around. Get references. Ensure the firm has the capability to communicate well, plan ahead and effectively implement

and follow through. Ask about their technology platform. In addition, you want a representative who makes employee benefits simple – and minimizes surprises. Top-notch advisers are skilled at helping employers and employees do more with less. The right mix of benefits at the workplace has a direct impact on employee health, satisfaction and financial security. Seek a client service model that enhances closer relationships between you and your employees. It’s also important to keep in mind that health care reform will require more from your adviser, so determine whether their firm has the resources, capital and expertise to thrive during these changing times and can meet your new and evolving needs.

9. Health care reform is still evolving. What’s the latest news from Capitol Hill? Health care reform is definitely a moving target. Courts across the nation are challenging it, politicians are battling over it, and insurers are trying to influence the interpretation and implementation of several provisions. Some recent amendments deal with changes to certain aspects of health care reform, but not much seems to be happening right now as the focus on Capitol Hill is soundly on our country’s debt and deficit.

10. There are still threats of repealing health care reform. What do you predict will happen, and how will it impact employers? No one can predict the ultimate outcome. Instead of taking a “wait-and-see” approach, employers should prepare, remain educated and stay abreast of the ever-changing health care reform landscape. A great broker will help any business do just that.

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‘People Strategists’ Reveal Key C-Suite Secrets to Bend the Trend Written By Les Meyer


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Written By Les Meyer Health Care Strategist and Vice President for HealthNEXT, LLC

Necessity Prompts Strategic Adaptation

wellbeing people action plans to sustain a competitive advantage. Strategic Business Process Improvement

Since maximizing resources for enhancing worker capacity and sustaining a competitive edge is more important than ever before, HR professionals need to become “people strategists” who are capable of aligning the workforce with key business objectives. One critical mission is to tame runaway employee health care costs, but industry practitioners have found that current methods no longer work. The next generation of solutions can be found in the notion of “value realization.” Success depends on insightful decision-making and problem solving, as well as an intuitive ability to lead their strategic business unit to create self-sustaining environments and support infrastructure wherein employees and their dependents consciously and subconsciously make healthier lifestyle choices. People strategists have a unique definition of value, which they consider the glue that galvanizes the workforce. In their view, value better aligns the interests of each organization’s leadership with employees to maximize individual peak performance for results that collectively improve a company’s bottom line. The bleeding edge of this thinking can be found in the C-Suite emergence of “disruptive innovation” (DI), a business term used to describe how a more nimble or entrepreneurial approach to creating value and sustaining a competitive advantage can disrupt certain markets.

DI is the bedrock of strategic business process improvement (SBPI), an effective continuousinnovation approach to align processes with disciplined execution of an organization’s strategic goals to optimize underlying systems and structures to advance focused program integration convergence to achieve more efficient results.

People strategists understand the power and potential of creative execution and DI, which has a new application regarding how organizations can rethink many of the age-old assumptions about the human resources business model and deepen their investment in people through high-value workforce wellbeing initiatives. The DI mindset can be used to create “People Innovation Centers” that serve as an information clearinghouse for benchmarking the business of sustainability. People strategists strive to consistently match highvalue workforce wellbeing designed to step up employee involvement in adopting healthier lifestyles with what is entrepreneurially and culturally feasible in the workplace. They know it’s not about employee behavior change. It is, in fact, about the wise health behaviors people embrace. People strategists are constantly looking for creative business models, real-world impact, farsighted risk taking opportunities and paradigm-busting execution. More importantly, they adeptly convert satisfied customer experiences, as well as valuable workforce investments and meaningful achievements, into corporate profits. As CEOs continue to reconfigure HR seats in the C-Suite, they will be more inclined to embrace businesscentric people strategists to focus on value-realization achievement. Key components will include high levels of sales, profits, customer satisfaction, production of high quality products, improved reputation and brand-equity status and business growth driven by the inextricable link between DI strategies and thriving


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Clayton M. Christiansen, M.D., defines DI in “The Innovators Dilemma: When New Technologies Cause Great Firms to Fall” as: “innovation that transform an existing market or creates a new market through simplicity, convenience, accessibility or affordability.” To paraphrase his premise, DI is about profound change in the C-Suite. It is not just the magnitude of the advance. If it works to sustain the status quo, it is not disruptive. The key is a change in approach to one that better addresses critical business issues in the C-Suite and the demands to create and sustain “customer value.” What’s different about DI leadership is that it moves from being an occasional episodic management by objective shortcoming to a breakthrough balanced measurement system achievement. It paves the way for the CEO to create C-Suite solidarity and a united culture of innovation and comprehensive health promotion achievement in the company. People strategists judiciously converge on C-Suite leadership engagement techniques and incentive alignment SBPI action plans to precisely execute optimal measurement systems designed to determine gaps. This information is prioritized for a guided program planning and evaluation strategic roadmap to instate a sense of balance and achieve leading-edge best practices. A balanced view of the business requires continuous predictive data analytics for insight. Value realization of corporate benefits administration reporting in the C-Suite has not been meaningful, far-reaching or productive. Legacy benefits administration reporting is “aggregated” but not “integrated” and includes “data” versus actionable “information.” It also is not intelligible, accessible, consistent, precise, or reliable to the C-Suite. Susan R. Meisinger, former president and CEO of the Society for Human Resource Management and a board director for the National Academy of Human Resources, recently wondered: “Is it possible that we think we’re playing an important role in driving innovation in our organizations just because of how hard we’re working and not because we have any data to support that conclusion? Perhaps.” The time has come for a major paradigm shift that enables pioneering employers to simultaneously realize greater employee trust, talent engagement

“People strategists understand the power and potential of creative execution and disruptive innovation.”

and customer value realization, as well as prevent spiraling health care costs and actually bend the trend. According to Kathleen Yeager, a senior professional human resources (SPHR) specialist and leading strategist on chief organizational effectiveness: “SBPI and DI spotlight creative execution and encourage organizations to focus on critical talent management [people] challenges and related ‘customer value realization’ issues and begin to embrace proactive constructive change in the HR operating model.” Profound change will not happen without constructive conflict. “The new value-centric HR professional who has a DI mindset would be an ideal role model and business leader in the C-Suite to promote the meaningful use of HR systematic performance improvement processes and best practices,” further states Yeager. It is clear that C-Suite distinctive competency discussions, recommendations and value realization optimization barriers cannot be tackled or resolved if there are no solid metrics to analyze and compare valuable employee engagement investments alongside comprehensive culture-of-health programs that emphasize high-value workforce wellbeing under the health promotion umbrella.

Strategic productive advantage from comprehensive health promotion, high value workforce wellbeing improvements can be achieved only if understood and embraced at the C-Suite level. To achieve optimal engagement, people strategists have created nextgeneration SBPI C-Suite level benefits administration reporting dashboards and scorecards. Value realization materializes when action is taken on SBPI measurement insights.

Cracking the Code Many ideas aimed at improving comprehensive health promotion, high value workforce wellbeing fail to deal with DI and improving the business value of health in the C-Suite. People strategists understand and decode the inner workings of C-Suite critical thinking behaviors and linkage between employees, customers and profits by isolating perceptions and attitudes of health promotion investments and the business value of workforce wellbeing dividends that drive strategic SBPI business plans. Value realization encompasses several areas and requires relevant on-site, corporate level and company-wide reporting as defined by C-Suite leaders and front-line managers. What gets measured gets improved. The role of the people strategist is to

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determine what is important for the C-Suite team to measure. The undertaking is intended to rapidly shape and mold the SBPI process created to help pioneering employers answer: 1.

How are we doing (versus benchmark employers)?


How can we improve (to the point to “bend the trend” on curtailing employee health care costs)?


What if (involving simulation capabilities scenarios for planning and budgeting)?

An evidence-based measurement process provides the CEO with objective insight into comprehensive health promotion, high-value workforce wellbeing issues and processes. It also gives them the ability to objectively identify and help C-Suite leaders manage their company’s health risks, and provide an early detection mechanism and feedback loop resolution option involving identified workforce well being problems.

The Sustainability Imperative Keeping people healthy is a critical business strategy and serious economic imperative. People strategists are adapting in the C-Suite and getting down to business. They bring together thriving wellbeing people, as well as execute strategies and action plans that result in trust, engagement, incentive alignment, use of relevant information and distinct choices by the workforce. There is a strong consensus that sustainability related issues are having a significant impact on how people in the C-Suite think and act. Business is driven by value and value creation. No value? Then no sustainability. It’s that simple. But customer value cannot be effectively delivered without people strategists who recognize as their companies grow, they will need a SBPI system to continuously analyze, intertwine and refine their workforce engagement processes and high-value workforce wellbeing best practices. According to Michael E. Porter, Ph.D., a Harvard Business School professor and leading authority on competitive strategy: “Value — neither an abstract ideal nor a code for cost reduction — should define the framework for systematic performance improvement. Rigorous, disciplined measurement and improvement of value is the best way to drive system progress. Yet value remains largely unmeasured and misunderstood.” People strategists realize that measuring, reporting and benchmarking results are the most important steps toward rapidly improving company value streams to help CEOs make distinct choices about improving the bottom line and sustaining a competitive edge. The Importance of Critical Thinking in the C-Suite People are the biggest source of a sustainable competitive advantage. And people strategists realize that engaging, deploying and optimizing a fluid company-wide systems improvement initiative entails hard work. More importantly, the final step is to prepare a SBPI business plan that reinforces the company’s focus on DI and doing whatever is needed to go on delighting its customers. If you look at the most important issues for CEOs, they reveal the need for: 1) evidence-based, high-value workforce wellbeing standards of practice; 2) proven high-touch, employee engagement (health behaviors) return on investments that are integrated


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with high-value workforce wellbeing results; 3) keen insights into comprehensive health promotion and neighborhood health assurance business models; 4) know-how to replicate ”experience curve” efficiency gains and bend-the-trend investment output effort; and 5) expertise of informed physician executive leaders as front-line people strategists whose integrated role enables them to be more effective and focused. Critical thinking is not driven by answers but by questions. The driving forces in the people strategists’ critical thinking process are the questions, which can lead to a better understanding of C-Suite leadership behaviors and how to create meaningful connections between employees and customers to achieve high profit margins. What are the secrets people strategists employ to command their CEO’s full attention? The answer can be found in six pointed questions to ask C-Suite executives in order to conform to the CEO’s reality (see Exhibit A). The CEOs C-Suite SBPI Survey Overview For more insight about the way to assess C-Suite awareness, knowledge and engagement in a comprehensive workforce wellbeing program, consider the experience of a $15 billion multinational manufacturer with double digit annual health care cost trend growth in self-insured plans. The entire senior management team met with HR professionals during an annual leadership conference to focus on business issues to sustain a competitive edge. That effort required gauging the team’s awareness of employee health care issues and the cost of that care. The hope was to elevate these concerns beyond the benefits department and into the C-Suite. Another goal was to provide an objective benchmarking tool to track program progress internally and relative to other employers. The initiative was based on an optional multiple-choice, self-assessment survey of senior manager awareness of the current state and impact of company health care trends. The C-Suite survey tool was designed around commonly known leadership statistics, such as annual budgeted revenue growth. Nuggets of Perception Reveal C-Suite Realities This research process is based on a simple premise, which is that an employer’s senior management is critical in the development of an effective environment for improving workforce wellbeing corporate cultures of health in the C-Suite. Indeed, too few C-Suite executives are aware that employee health care costs have both a direct and indirect impact on profits or that workplace environment affects workforce health care costs. The message to senior leaders is that they can help reverse the health care cost trend in their organization, but that they also cannot delegate this goal or accountability to others. A small, albeit growing, number of employers are achieving flat or declining health care cost trends — considerable achievements that not only steer clear of short-sighted, cost-shifting strategies or benefit reductions, but also by expanding access to care in some cases where such a move is warranted. One common denominator among this elite group of organizations is how well their C-Suite scored on tests to gauge their knowledge of this topic.

Key Research Findings The large manufacturer’s findings revealed a steep learning curve among members of the leadership team, who did better at choosing the right answers for traditional business questions than workforce

being that nearly half the senior management team thinks that their health care costs are not direct business expenses. Perhaps equally egregious was the C-Suite’s impression that the workforce was significantly healthier than the reality of the company’s situation. Asked to estimate the percentage of covered lives considered to be well, at risk, chronic and catastrophic, 34 percent of the executives did not even bother to answer this question. And of those who did answer, the average responses were 42 percent said employees were well when, in fact, only 8 percent fell into this category. In addition, 32 percent believed there was more than one risk factor when, in fact, that number was 70 percent, nearly 18 percent chose the chronic description, a close estimate to the actual 20 percent figure, and 6 percent said there were catastrophic illnesses in the workforce, whose number was 2 percent.

Conclusion The DI SBPI decision-making process for strategic adaptation depends on a solid understanding of C-Suite attitudes, beliefs and behavior patterns while improving the linkage between employees, customers and profits. When members of the senior management team in a multinational manufacturer do not know key health care cost statistics for their business or the fact that they’re selfinsured, something is seriously amiss in the C-Suite. Without a clear understanding of how to stem rising employee health care costs and what is driving such expenses in any given workforce, employers that remain stuck in neutral on this issue will suffer a competitive disadvantage.

wellbeing. For example, only 38 percent of the 56 executives and front-line managers who completed the questionnaire answered correctly how much their company spent on health care, with 80 percent of those who got it wrong underestimating that spending and more than half believing the figure was more than 50 percent below the actual tab. There were several other indicators showing a serious lack of understanding. Just 34 percent were able to translate the number of incremental cases of product required to cover expected annual employee health care cost increases and only 20 percent were able to correctly determine how many full-time employee positions would have to be eliminated to cover those increases. Of those who incorrectly answered this question, 46 percent underestimated the number of positions that would be required. With regard to their company’s disability incidence rate, a mere 16 percent gave a correct answer. Of those who guessed wrong, all of them underestimated the actual rate and 63 percent picked a rate that was less than half of the correct answer. When asked to describe the kind of health plan coverage their company offers, 40 percent gave answers that only fit fully insured programs — the implication

Perhaps equally egregious was the C-Suite’s impression that the workforce was significantly healthier than the reality of the company’s situation. Asked to estimate the percentage of covered lives considered to be well, at risk, chronic and catastrophic, 34 percent of the executives did not even bother to answer this question – suggesting that they did not have a clue. And of those who did answer, the average responses estimated that 42 percent of the covered lives when, in fact, only 8 percent fell into this category. Collectively they believed that 32 percent were at risk with more than one risk factor when, in fact, that number was 70 percent. (They were better able to gauge the chronically and catastrophically ill cohorts with figures of 18 percent and 6 percent while the actual figures were 20 percent and 2 percent respectively.) Beauty is NOT in the eye of the beholder. Teachable moments in the C-Suite may truly predict future bottom line profits. The disconnect revealed in the unique “C-Suite Active Engagement Survey” between awareness and understanding of traditional C-Suite critical business issues and financial key performance indicators is profound. Many times the complete lack of understanding [and engagement behaviors] in the C-Suite can be brilliantly transformed into beautiful profits, for the very C-Suite engine that powers the business might just be HR. People strategists who embrace an HR application of DI along the road to attaining high-value workforce wellbeing will be able to help drive success in the C-Suite and reserve a permanent seat at the corporate leadership table. The secret weapon is a simple leadership survey that HR practitioners can use to highlight this issue in ways that garner much more support from senior leaders to engage in culture of health solutions the same way they would in other resource efficiency programs.

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BENEFITS ADMINISTRATION. It’s what we love to do.


We’re passionate about providing easy-to-use services that allow employers to offer the best employee benefits while maximizing their savings. We’ve developed innovative solutions to help employers face the challenging landscape of health care reform, including our COBRA Transition Assistance Program and Retiree HRA Medicare Exchange Program. Visit us in booth #84 to learn how we can help you save.

h COBRA h HIPAA Notices h Direct Bill Services h Flexible Spending Accounts h HRAs and Retiree HRAs h Medicare Exchange Program h Commuter Benefits h Premium Only Plans


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©2011CONEXIS Benefits Administrators, LP. All Rights Reserved. CONEXIS is a Word & Brown Company.

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Call 800.514.2080 / VBM1011

or email: Visit our website at:

*Or 20% of eligible lives whichever is greater. Policy Forms Series SL-VERSEC, SL-VERSEP not available in all states. For authorized agent use only. Not for public use. This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. 59 Benefits Live Magazine | 2011


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Our Three Piece

Solution Written By Dr. Rick Cartor and Debbie Gray

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“Inviting one of the local competing health care providers to provide primary care was a lot like asking the fox to guard the henhouse.”

Self-funding is a great way to understand healthcare costs and provide a company the opportunity to benefit from any savings that a health care strategy might generate. We found out that reducing your healthcare costs when fully insured does not necessarily produce the benefits that you may hope for or expect. A few years ago we reduced our healthcare costs by 8 percent and received a 22 percent increase in our premiums for the next year. At that point we decided we needed to do something dramatically different with our healthcare plan! What we’ve settled on since those days is a very effective and cost efficient system that relies on three inter-dependent pieces. The first is self-funding, the second is a very active wellness system that rewards health, and the third component is an on-site clinic. Because the system did not evolve as a single blinding flash of insight, it’s probably easiest to explain it based on how it evolved. Like every company, we’ve struggled to keep rising healthcare costs from eating into our profitability. Passing the increasing costs along to the employees has never been considered an option for us, one of the unique benefits we provide that differentiates us from other employers is having employees contribute only $1 per month for their healthcare coverage.


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In 2007 when the company faced rising healthcare premiums, we knew we reached a point where we needed to get more innovative, so we created our own “think tank” for healthcare. About a dozen employees from all levels and areas of the company volunteered to research the existing literature and report to the group any ideas about how companies deliver their healthcare benefits. We not only got a wealth of ideas, we also got ownership, and an increased understanding of the healthcare landscape and its many challenges. Starting small that first year (for the 2008 calendar year), we used the input of the committee to design and implement a health education and wellness program to help our 200 or so employees better understand how best to use our healthcare, how to stay healthy and maybe reduce their health care costs as well as those of the company. Through our High Deductible Health Plan, the Health Savings Accounts (HSA) and the wellness and education efforts we had in place at the time, we saw an eight percent reduction in our overall healthcare costs. This is the year our progress was rewarded with a proposed 22 percent increase in our premiums! So for the 2009 plan year we made the leap that our healthcare group had been discussing the previous year: we dropped our health insurance and became self-insured.

We kept the outline of the High Deductible Health Plan we had the year before, but switched from an HSA to a Health Reimbursement Account (HRA). This meant that instead of dividing more than $300,000 amongst every employee on our plan as we did with our HSA, we reimbursed only a limited portion of the healthcare dollars employees spent above their deductibles and the company “got back” whatever was reserved but not used. The idea was that we’d pay less in the HRA plan. Although the HRA did require fewer dollars than the HSA plan ($225,000 versus $300,000), it was not an optimal solution and we continued to search for a way to use those dollars in a more strategic manner. Without really knowing, we had put into place two important pieces of our three part solution, we had started down the path of trying to keep people healthy and we’d adopted self-funded healthcare strategy. The third component to our model emerged from studying our data – which being fully self paid allows you to do with greater detail than if you’re fully insured. When we analyzed where our 2008 healthcare dollars went, we saw that we had nearly 1800 primary care visits, each costing in the $125-150 range. We also found that a relatively high proportion of our expenses went towards prescription medication. Because our workforce would soon grow to nearly 300 employees, we knew that as our employee base grew we’d see a corresponding linear increase in these fixed costs. One way to control these expenses would be to find a provider willing to offer lower cost primary care or contract the services at a fixed rate rather than a variable rate. We also knew we’d have to find a way to avoid the astronomical markups on the costs of medication. In 2009 we more aggressively researched the on-site “doc in a box” strategy. While we liked the concept, we did not like that the providers of these on-site clinics were all based out of town. They didn’t know local healthcare or even the doctor they’d select for the clinic. The clinic manager would run several regional facilities from a remote site. This all meant that for the provider it was a very low risk business venture. Unfortunately, for us it felt like an enormous gamble! If we were going to put a clinic on site, we wanted a partner who was just as motivated to make it successful as we were. Around this same time our broker, BB&T Insurance Services, had been meeting with all the healthcare providers in the region with the goal of finding a partner for a slightly different model they’d been working on. BB&T understood that our goal in researching an on-site clinic was to address three inter-related issues: •

encourage employees to practice preventive medicine,

reduce the costs associated with primary care visits, and

better manage the costs of our prescription medications.

BB&T introduced us to key people at a major caregiver in our region, the Baptist Health System. They liked the onsite clinic idea and were very interested in partnering with us to expand their HealthWorx and Immediate Care Center strategy at the Appriss facility. Our immediate reaction could not have been more negative!

Inviting one of the local competing health care providers into our company to provide primary care (and be the source of referrals to other specialists) was a lot like asking the fox to guard the henhouse. We had many serious concerns, such as: •

Could a healthcare provider understand what we were trying to achieve?

If so, would they be willing and able to help us drive down primary care costs and substantially reduce the cost of medications?

Would every visit to the onsite clinic lead to a referral? Would they ever provide referrals to any caregivers outside of their own network?

Will they share their expertise to provide proactive preventive care in order to keep our people healthy and OUT of the very kinds of healthcare facilities they operate?

It took months of communication and planning for us to become convinced that they not only understood what we were trying to do, they were every bit as committed to making it successful as we were. After much discussion, it became apparent that our health care strategy was their overall business strategy. When we opened the Appriss/Baptist 800 square foot onsite clinic in early 2010, we had the third key component of our model. We had become self-funded, we were highly focused on wellness and preventive care and we had an on-site clinic. Our clinic was the first of its kind in the Louisville area, designed to be a full service primary care, wellness and medical home to Appriss employees and their families. The convenient location increases the likelihood of preventive care for employees and their families and the free visits and free generic medications provide great incentives to use it. The logic behind the clinic lies in the simple fact that there’s a fairly low breakeven point between the fixed costs of the contract versus the employer’s share of outside primary care visits. In other words, because the per visit costs are less at the clinic, you don’t have to have that many patients substitute clinic appointments for outside appointment before your cost of primary care comes down. Clearly the success of the clinic depended upon its utilization. Our goal was to get over 35% of our primary care visits to switch from outside doctors to the clinic so we’d pay for the costs of the professionals and the clinic supplies. Assuming only a slight increase in total primary care visits, any percentage above 35% would have actually represented a decrease in the primary care cost portion of our total healthcare spend. If we were to achieve about 70-75% transfer of primary care visits to the clinic in the first year, we’d not only pay for the contract and the supplies but also the reconstruction costs incurred to house the clinic. After opening on April 14, 2010, the clinic has had 298 visits by 268 patients. Ninety (90) percent of the appointment times have been filled. Over 85 percent of the Appriss employees eligible to use the clinic or a family member have used the clinic. Of those who’ve used it 96 percent report a favorable experience and would recommend it to others. Because of the immense

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impact of the clinic, our overall healthcare spend decreased almost 10 percent while the size of the workforce increased. Another advantage of having the clinic on site is that it serves as the headquarters for our Health Incentive Program, which will provide a longer term payoff for both employees and Appriss. Our goal is to promote higher levels of employee engagement in their health and well-being, so we can all stay healthy for a longer time. To encourage these behaviors we crafted a plan where part of the money we save on healthcare is shared with people who maintain their biometrics. Twice per year every employee on the plan (and his/her spouse or partner) has the chance to earn cash rewards for maintaining or improving their current level of health as measured by four key predictors of chronic illness (those being blood pressure, bad cholesterol levels, body mass and glucose levels). The goal is to keep people healthy and to avoid the slide into any predictable chronic illnesses caused by simple neglect. An employee can earn $50 for each of the factors that do not get worse between semi-annual assessments, or stay in the healthy range. That’s a potential $400 in “health dividends” each year. If there are two adults on the plan, they can each earn $400 annually. With this plan we financially reward healthy behaviors. We see these incentives as a better investment of the dollars we had previously been giving away (through our HSA) or using to


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supplement only the greater users of healthcare (as in our HRA). In our most recent assessment, we paid out $80,000 (or about 80 percent of the maximum possible) for maintenance of the key biometrics. At that rate, we’d invest $160,000 annually to reward healthy behaviors, rather then distributing 250,000 to 300,000 dollars in HRA or HSA plans that do not shape desired behaviors. Appriss offers a number of other benefits and initiatives that support our overall health effort such as on-site fitness programs, reimbursing half of employees’ gym memberships, providing healthier food and snack selections at meetings and in vending machines, nutrition and wellness classes, and convenient onsite delivery of a healthy foods through a Community Supported Agriculture (CSA) program. With the constant changes in health care policy, practices, rules, and regulations we cannot predict whether or not this approach to health care will continue to be successful. For us, for now, the three piece solution appears to be a very effective strategy. We know that it has been well received, has had a favorable impact on overall health care costs, focuses on the employees’ health and well being, and the on-site clinic is highly used and greatly appreciated by many employees and the families. And…can you think of anything else that an employer can offer, is perceived by the employees as a benefit and can actually save the company money?




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Standard Life and Accident Insurance Company

A Member of the American National Family of Companies, Galveston Texas

Call 800.514.2080 / VBM0411

or email: Visit our website at:

Policy Forms Series SLA-GACAN-P-10 not available in all states. For authorized agent use only. Not for public use. This document has not been 65 approved under the advertising laws of your state for dissemination to individual purchasers. Benefits Live Magazine | 2011

President of Seneca Consulting Group The pharmacy benefit management (PBM) industry is on the verge of significant transition. The PBM market place is being consolidated as two of the largest players merge to a form an organization serving over 100 million members. While there is considerable discussion concerning what the implications of the acquisition are in terms of market dynamics, pharmacy negotiation power and client pricing, there are often overlooked implications that will have significant impact on plan sponsor pharmacy benefit costs. One such aspect is common PBM contract language that may seem innocuous but in reality may give the PBMs financial advantages that do not translate to savings for plans sponsors. After conducting thousands of pharmacy benefit audits, as well as PBM request for proposals, we have found that most plan sponsors do not understand how PBM contract language can affect the PBM’s discount guarantees, and ultimately their pharmacy plan costs. The following is a summary of some of the common PBM contract language we suggest every plan sponsor become familiar. We will focus on explaining the impact of the following three sections frequently found in a PBM service agreement.


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Mail service discounts based on 100 unit package size

Exclusion of Single Source Generics from the generic discount guarantee

Inclusion of Zero Balance Due claims for discount guarantees

Mail Service Discounts Based on 100 Unit Package Size: Most PBMs include contract language which states that mail service discount guarantees are based on 100 unit package sizes (or lower). Package size language may be found in the pricing section or as a definition within the PBM service agreement. The language is contrary to how mail service pharmacies purchase medications. The goals of mail service pharmacies to purchase medications in the largest package size available to take advantage of volume price points where greater

discounts are offered by the pharmaceutical manufacturer. Through the use of this language, PBMs can increase the Average Wholesale Price (AWP) discount offered to the plan sponsor by as much as 3.5 percent for generic medications. To support this conclusion, we compare the average package size for retail claims to the average package size used for mail service claims when auditing client data. Below is a sample analysis. This client example demonstrates that the average generic package size submitted through mail service is 42 percent smaller than the average package size submitted through retail channel. By comparing the top 500 generic medication’s actual unit costs (cost per pill) for retail versus mail service unit costs, we determined that the actual unit costs for mail service are the same as the retail generic unit costs. The difference between retail and mail from a unit cost basis is only 1 percent (Refer to Table).

typically the existing brand manufacturer that launches the first generic version. If the new generic, only has one manufacturer, that manufacturer will establish the cost of the generic at a price point only slightly lower than the existing brand. Once a generic medication is introduced, it will take between 9 to 18 months before the generic costs will decrease significantly as generic prices are dependent upon the number of generic manufacturers competing in the market. Since the unit cost of a new generic is not much lower than the existing brand medication, PBMs prefer to exclude these new generic medications from their overall generic effective discount guarantee. The reality is, the PBMs are not going to obtain the same AWP discounts for new generic medications as they would for generics that have been in the market place for years where competition is prevalent. Further, with the large market share these medications represent, if PBMs do include SSG in the client’s discount guarantee, they will struggle to meet the guarantee. Looking specifically at the brand medications that are losing their patient protection in 2011 to 2015, the impact is significant. By reviewing client clams data, we project plan sponsors can expect over 30 percent of their existing brand claim utilization to transition to generic medications in the next five years (Refer to Table).

In this example we determined for this client that the actual generic costs for mail service are virtually the same as retail generics. The PBM mail service discount guarantee set forth in the PBM contract based on 100 unit package size is greater than the retail discount guarantee, but the costs are the same (Refer to Table). If the PBM generic pricing terms included SSG, the PBM will realize an approximate 13.2% reduction in the overall effective generic discount guarantee (Refer to Table). Unfortunately most of the larger PBMS have structured their mail service operations to utilize 100 unit package size, and are resistant to removing the 100 unit package size language. Plan sponsors with high mail utilization should consider the requirement of MAC (maximum allowable cost) pricing for mail service generics. PBMs develop aggressive MAC pricing to be used to price retail generic claims to prevent the retail pharmacy from using similar pricing. With that said, requiring the PBM to use the same MAC pricing at mail service will lessen the impact of the 100 unit package size language and generate greater cost savings for the plan sponsor.

Exclusion of Single Source Generics (SSG) from the Generic Discount Guarantee: In the next 5 years the pharmaceutical marketplace will see a significant increase utilization of generic medications as a result of many highly utilized brand medications losing their patent protection. Once a brand medication is available as a generic, the unit cost savings does not occur immediately. Generic medication pricing is much like any businesses where supply and demand plays a crucial role in price. Once a brand medication loses its patent protection, it is

It is obvious why PBMs want to exclude SSG from their overall generic effective discount guarantee. The PBM language excluding SSG from the overall generic effective rate is not the problem. Our concern with this language is how SSG are defined. Most PBM contracts allow the PBM to define what is a SSG, and how long the SSG are excluded from the discount guarantee. In our experience we have found large variations with regards to SSG definitions, and in many cases, SSG are not defined at all. Plan sponsors should understand that through 2015 they can expect their generic utilization to increase approximately 10 percent. Currently we see plan sponsors generic utilization at approximately 70 percent. In 2015 generic utilization should approach 80 percent. It is commonly understand that the majority of the PBMs traditional revenue is the pricing spread for Generics. In the next 5 years, plan sponsors need to focus in generic discount language, and how it will impact their costs.

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Our recommendation to plan sponsors is require your PBM to provide a definition of SSG medications, a list of the SSG drugs that will excluded from the discount guarantee with regular updates, and the length to which SSG are excluded from the generic discount guarantee. Only by defining SSG, monitoring which SSG drugs are excluded from the generic discount guarantee and auditing to determine of the PBM accurately applied the SSG provisions of the contract, will a plan sponsor be able to validate their PBM’s generic discount guarantee.

Inclusion of Zero Balance Due Claims for Discount Guarantees:

In reviewing client data, we estimate that ZBD claims may represent as much as 25 percent of retail claims and 11 percent of mail service claims. The impact to plan sponsor AWP discounts is between 1.5 and 2.0 percent and primarily applies to retail generic medications (Refer to Table X). Since ZBD claims only benefit the PBM, and in most cases are not representative of the PBM network negotiated discounts, we recommend plan sponsors require the exclusion of ZBD claims from the PBM AWP discount guarantees.

Zero Balance Due Claims (ZBD) are defined as claims were the member cost share (copay) pays the full cost of the prescription drug claim and the plan sponsor is billed $0. As an example, if the cost of a generic drug is $4 and the member’s copay is $5, the copay would cover the entire cost of the drug and the plans sponsor would incur no claim cost under most benefit plans. The volume of ZBD claims are a function of the plan sponsor’s plan design. As member copays increase, the number of ZBD claims also increase. Conversely, plan sponsors with benefit plan designs with low member copays have fewer ZBDsclaims. For many years, it was the industry norm to exclude ZBD claims from calculating PBM discount guarantee. The rational is if an auditor determined a ZBD claim paid in error, there are no damages to the plan sponsor because the plan sponsor paid $0 for these claims. The inclusion of ZBD claims in calculating plan sponsor AWP discount guarantees, have become the norm. In the past few years many retail pharmacies are provided $4 generic programs. The retail pharmacies have offered these medications in some instances at or below their cost for the purpose of increasing traffic to their retail pharmacy locations. Many if not most of these medications result in a zero balance due claim because the $4 member copay is less than the plan sponsors copay.


By including these claims, the PBM is taking credit for the retail pharmacies decision to offer these medications at or below their acquisition cost. The savings impact of ZBD claims is not a result of the PBMs discount negotiations with retail pharmacy chains, savings is strictly a function of plan design and retail pharmacy pricing practices. As a result ZBDs should be excluded from the calculation of PBM discount guarantees.

The Pharmacy Benefit Management service agreement language highlighted in this article is an example as to how often ignored contract terms can affect AWP discount guarantees and plan sponsor costs. Now and in the future it is important for the plan sponsors when reviewing potential PBM vendors, understand how PBM contact language can affect their plan costs, and the savings generated by the PBM discount guarantees.


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Point Your Recoveries in the Right Direction

Rawlings Group The | 877.426.4174

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Fund Your Rx Program Written By Crystal Williams


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“Some employee benefits professionals and employers don’t stop to think about these ‘claims and premium nuances’. ”

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It’s a fact. One of the key items an employer can realize by going into any kind of an ERISA selffunded employee benefit program is that the employer can control the benefits that are inherent to that program. And by controlling the benefits, plan costs are also controllable. This is particularly true concerning the outpatient prescription drug card program.

Written By Crystal Williams President of RxReins, Inc.

On the proverbial “other side of the coin”, when buying a fully insured medical benefit program -- this product will include an outpatient prescription drug component - - the employer is literally inheriting the carrier’s existing product as far as eligibility, plan co-pays, covered drugs, together with other benefit plan provisions and limitations-both good and bad. And, the unfortunate part about living with the carrier’s existing prescription benefit plan is that, in layman’s terms, you generally end up with the blue four-door when you might have preferred the green station wagon or a red convertible. So, to reiterate for emphasis, by going into a selffunded prescription drug program, the employer can really control this benefit plan as the employer establishes the plan specifications including covered and excluded drugs as well as deductibles and plan co pays. Further, when the employer elects to self-fund any part of the employee benefit program, many of the carrier’s expenses (overburden) can be eliminated.


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The employer is going to save money on premium tax, carrier’s fees and profits, and underwriting reserve margins. Additionally, the employer won’t be paying for that insurer’s large and expensive home office.

Main Issues Those cost factors are always the main issues since, let’s face it, claims are claims. Also, insurers as well as employers have plan administrative expenses. So, since claims are claims, and administration is administration, it seems a reasonable view that the carrier’s profits, margins, premium tax and overburden can and should be eliminated. Premium tax is approximately 2 percent of premium. Most carriers’ overburden, which includes some profit, is going to be 5 to 7 percent or more of premium. So, doing the math, you can assume that there is probably 10 percent in the premium bottle for these costs. And it’s that layer of cost that an employer can reasonably expect to save when the employer elects to self-fund. The next major point is that if the employer has already made the leap to go self funded, in all probability the employer has purchased Specific and hopefully aggregate stop loss insurance. To reduce the premium costs for this insurance, eliminate outpatient prescription drug expenses from the medical stop loss policy and have this exposure written under a separate aggregate

stop loss policy. In so doing, the employer should expect to be able to reduce the medical stop loss premium, or the deductible amount, or both. Basically, what it comes down to is accenting the positive and eliminating the negative. And within this recommended change for a better way, the following factors should be considered: • Active employee groups typically have outpatient prescription drug. Costs in excess of $100 per member per month. And some employers, with very rich prescription benefit plans, see costs substantially in excess of this number. • Employers with retiree participants can expect outpatient claim costs for these individuals to be in excess of $300 per member per month. Therefore, to further illustrate, if outpatient prescription claim costs are approximately 15 to 20 percent of the cost of medical claims, and these expenses are eliminated as a covered expense under the medical stop loss policy, it’s reasonable to presume that the employer may expect savings of 10 to 15 percent-and often more-on either current medical attachment factors and/or stop loss premium costs. And, the premium for an aggregate stop loss policy that covers out-patient prescription drug costs, with an attachment point equal to 125 percent of expected claims, should cost less than 2 percent of expected claims. So, if the employer is saving from 10 to 15 percent on the medical stop loss premium and adding the cost of the less expensive

prescription Aggregate stop-loss policy to the budget, the employer is going to save some significant money.

Fact Forgotten Unfortunate, but true, some employee benefits professionals and employers don’t stop to think about these “claims and premium nuances” and the cost or savings associated with them. And, more often than not, the fact is forgotten or ignored that by excluding outpatient prescription claims, it’s possible to reduce either those medical stop loss premiums and/or reduce those medical stop loss deductible amounts. Further, many stunningly continue to believe that eliminating prescription drug claim costs from the medical stop loss and covering this risk under a separate stop loss policy creates an added layer of cost when, in actuality, it’s a reduction in total stop loss premium costs. Next, employee benefits specialists and employers should come to appreciate the fact that if the medical stop loss carrier is agreeable to as little as a 10 percent reduction in the employer’s medical stop loss premium-and the premium for a separate Prescription Aggregate that covers this risk is approximately 3 percent of expected claims–then there’s the potential for the employer to save some real money! Bottom line, if prescription drugs costs are excluded as a covered expense under the medical stop loss insurance policy, the employer or his representative has significant leverage when dealing with the medical stop loss carrier. So the advice is to “carve-out” from the employer’s medical stop loss those outpatient prescription drugs that probably represent from 15 to 20 percent of the employer’s health

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“Get those prescription costs and expenses into a frame work that the employer can control.” care costs. That should translate to either a significant reduction in the price of the stop loss premium, or as an alternative, a reduction in the medical stop loss deductible amount. Then add aggregate stop loss to cover the outpatient prescription risk (it costs a fraction of the corresponding medical stop loss premium), and the employer will be on the way to saving some substantial money without materially altering the employer’s total financial exposure. It’s really quite basic-if claims go down, premiums go down.

Another Consideration Now consider this: There has been a surge in the number of large employers moving to self-insured medical plans, opting to bear the financial risk themselves, according to HealthLeadersInterStudy, Nashville, Tenn., the leading provider of managed care market intelligence. And many medium to smaller employers are following suit. So, once more with feeling, the employer should strongly consider the following: •

By being self-funded, the employer can control benefits and need not be dictated to by either an insurer or those nasty mandated state benefits.

By being self-funding, the employer’s cash flow is improved as money held by the insurer may be utilized by the employer in expanding the business.

By going self-funded, the employer should be able to save on the carrier’s profit margin and risk charges. And, many employers find that the insurer’s charge for administration is often greater than that fee charges by a professional Third Party Administrator [TPA].

If the employer has an insured medical program, get that prescription drug card component out of the insured medical program and request a premium credit. If the employer is currently self finding and has specific and aggregate stop loss insurance, get those prescription costs out of the medical stop loss and request a premium credit as well as reduced attachment factors. Get those prescription costs and expenses into a frame work that the employer can control.

And, once the employer decides to takes the prescription drug costs out of the employer’s exiting medical financial bucket, the employer can then buy an aggregate stop loss policy to limit the employer’s financial liability for this risk. aggregate stop loss insurance for a prescription program is very inexpensive when comparing costs to either an insured or existing medical stop loss programs.

Who could ask for anything more?


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Chief Executive Officer of UMB Healthcare Services

Regardless of the ongoing debate, healthcare reform is now the law of the land, and we need to begin the process of developing meaningful consumer-oriented products and solutions. After all of the political wrangling and “cleanup” changes to the 2010 law, the critical issue will remain:

How well prepared are we to execute on expanding health insurance to add tens of millions more people? In 2014, the most significant changes of the health care overhaul are scheduled to take effect, including: federal coverage mandates, premium subsidies for incomequalifying consumers (133 to 400 percent of the federal poverty level) and new platforms to help individuals and small businesses buy health insurance.


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Creation of state health insurance exchanges in 2014 — expected to bring some 30 million uninsured Americans under the umbrella of privately provided health insurance — is one of the keys to determining the direction health benefits will take in the future. Quality of implementation will drive success or failure of the exchanges. If the exchanges fail to satisfy a broad range of consumers and employers, disappointment could propel the nation toward a single-payer government system. If the exchanges succeed, tens of millions of newly-covered individuals will have access to health care, and we may all come to embrace the concept.We urge all stakeholders including business leaders, regulators and consumer groups to join the planning and implementation, to ensure success when the health insurance exchanges go “live.”

Designing exchanges for success A major theme of health insurance exchanges is that they are market oriented. The goal is for consumers to enter an open marketplace, see their health insurance options and make purchases. Sounds simple. However, for an exchange to be successful, the design must generate enough competition and choice to drive significant participation. This would thereby mitigate adverse selection and reduce administrative costs —critical factors for achieving longterm sustainability.

consumers, we encourage policy makers to focus on these four success factors for the exchanges: •

One-stop centralized marketplaces with transparent information on all aspects of health insurance

High-quality consumer experience with emphasis on simplicity and ease of use

Array of competitive choices to meet diverse needs of consumers, small employers and brokers

To date, much of the attention on exchange design has focused on the regulatory requirements. But states and the industry need to provide equal emphasis on how well the exchanges will work for users. Attracting and retaining a large number of enrollees is the ultimate determinant for success.

Integration of core competencies to ensure a costeffective, seamless flow of eligibility, enrollment and payments

Based on extensive experience serving health plans and

Concepts for the state exchanges range from minimalist websites listing hyperlinks for eligible insurance plans to one-stop shopping places that enable consumers to compare, select, enroll and pay for their health plans, all on one platform.

Creating centralized marketplaces

We believe centralized markets are the way to go. Each state or region’s exchange should offer one-stop service for consumers, employers and insurance brokers. An exchange should be integrated—not a shallow, fragmented portal sending consumers off in all directions to gather information from insurers.

Emphasizing consumer experience Much of the insurance exchange discussion so far has been about regulatory issues. While fairness and other concerns are important, we believe consumers should be the focal point in designing exchanges.

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Plain English rather than legalese

Broad range of products with design and price variations

We urge policy makers to select robust technologies that support seamless end-to-end processes. Non-subsidized individuals and small employers will be more likely to embrace exchanges that include these characteristics: •

Simplicity and ease of use

Plain English rather than legalese

Broad range of products with design and price variations

Clear navigation path from shopping to payment to service

Providing competitive choices

use presentation, transactional and customer service platforms •

Financial institutions—payment systems, best practices and efficient disbursements

Doing health insurance exchanges right will come from investing time and energy to design them well. Success will require drawing upon all of the skills in industry to design an exchange that will attract large pool of participants into a competitive marketplace that is simple to use, provides a wide array of choices and is in one integrated service delivery model. States should design exchanges in partnership with industry to draw upon relevant systems expertise in the various fields, including: Insurance companies—risk, management systems




Much as a retail store attracts customers by offering a broad line of merchandise, health insurance exchanges should provide a diverse range of health benefit plans and ancillary products to meet the needs of consumers, small employers and brokers.

Administration and technology firms—robust, easy-to-use presentation, transactional and customer service platforms

If states take an overly controlling position that limits options, users will find the exchanges unattractive. Consumers or employers are not all alike, so the new marketplaces should enable choices among an array of options, such as traditional insurance, managed care plans and consumerdirected options.

Doing health insurance exchanges right

Consumer-Directed Health Care (CDHC) plans should have a presence in these exchanges. This category includes Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs), which are generally paired with higher deductible policies. Consumer-directed plans, with their emphasis on individual decision making, demonstrably improve health care costs, efficiency and wellness. These important outcomes should be addressed among the options offered in the new exchanges.

Integrating core competencies Given the complexity of health insurance decisions, it is critical to incorporate all core competencies to make each exchange a fully functioning system.States should design exchanges in partnership with industry to draw upon relevant systems expertise in the various fields, including: •

Insurance companies-risk, management systems

Administration and technology firms—robust, easy-to-



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Financial institutions—payment systems, best practices and efficient disbursements

will come from investing time and energy to design them well. Success will require drawing upon all of the skills in industry to design an exchange that will attract large pool of participants into a competitive marketplace that is simple to use, provides a wide array of choices and is in one integrated service delivery model.

“Doing health insurance exchanges right will come from investing time and energy to design them well.”

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By Christy Yaccarino

Benefit Manager for Ambrose Employer Group

Now that the Patient Care and Affordability Act, otherwise known as healthcare reform, has been circulating for a while, we are seeing different aspects come to light – as the good, the bad and the ugly of health care reform begin to take shape. Some aspects of the bill are good, and do put a focus on prevention and protecting the regular employee/consumer. But other provisions of the bill are bad, and some are downright ugly.

The Good The good parts of the health care reform law are the following: Preventative Care Covered at 100 Percent: Though this part


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of reform will initially add costs to plans, I do think it is a good provision. The only way to truly lower costs over the long term is to keep people healthy. And the way to keep people healthy is to ensure they get their screenings so problems can be detected early – while they can be treated with less cost.

Removal of Lifetime Maximums: Again, even though

it will add costs to plans, I do think this is a good provision. If someone is going to hit a $1 million or $5 million maximum on a plan then they are seriously ill and should a plan then be allowed to just cut them off at that point when they truly need the coverage? The point to having insurance is for it to be there when you need it – and this provision allows just that.

“If they do make it up and running, the exchanges will add tons of notification requirements and give many an incentive to no longer offer employee’s coverage.”

Removal of Preexisting Conditions – First for Children, Then in 2014 for Everyone: Another one that may add costs

to plans, but is a good provision. We should not deny coverage to a child for a pre-existing condition they have, and if we deny adults coverage for pre-existing conditions we will never get rid of the uninsured problem. However those with pre-existing conditions should be rated accordingly by the insurance carrier.

Nondiscrimination Requirements: Though this affects only

non-grandfathered plans to start with, eventually it will affect all plans, and I do think it is a good provision. I don’t think it’s a bad thing to no longer allow key employees to have better benefits or costs than other employees.

The Bad

forcing an office visit when not necessary in order to obtain the prescription.

The Ugly And now for the ugly. These are parts of the bill that make you say what were they thinking?, and include:

Flexible Spending Account (FSA) cap of $2,500 in 2013: At a time when we are asking employees to pay more

out of their paychecks for medical coverage, and more out of their pocket for deductibles, coinsurance and copays, limiting the FSA is not helping them. You’re now taking away the one pretax benefit so employees are not only being asked to pay more for their medical coverage but they are also being asked to pay more in taxes.

As for the bad parts of the health care reform law, they include:

Dependent Coverage Until Age 26: Extending coverage

to age 26 with virtually no requirements is ridiculous. Under this law, a dependent can be married and still remain on their parent’s plan – and if the plan is not grandfathered they can even be employed with their own coverage and still remain on their parent’s plan. There should have been more restrictions under this provision – such that you could not be married, could not have your own coverage available and had to be a full time student. It shouldn’t have been made the free-for all that it was.

Adding Cost of Medical Insurance on Employee’s W2 Beginning in 2012, for W2’s Issued in 2013: This is just an administrative nightmare for employers. There could have been a requirement made that once a year you have to notify employees of the cost of the medical insurance – but not on the w2. Employers are scrambling to ensure their systems are updated to allow this, and this is adding more cost to the employer. Removal of over the counter drugs from Flexible Spending Accounts (FSA) reimbursement without a prescription: Removing over the counter drugs from allowable FSA reimbursements will drive employees to use higher cost medications that they can reimburse from their FSA. If they have to go to their doctor to get a prescription for an over the counter drug, they are most likely walking out instead with a prescription for a higher cost drug. This provision also increases medical plan costs by now

“Cadillac Tax” in 2018: This provision levies a 40 percent

nondeductible tax on the annual value of health care plan costs for employees that exceed 410,200 for single coverage and $27,500 for family coverage beginning in 2018. Given the cost of medical inflation, by the time 2018 comes around, most plans will hit this threshold – even if they are not truly “Cadillac” plans. The threshold needs to be raised significantly if this is truly a “Cadillac” plan tax. Otherwise it just looks like another way to hit employees with a new tax, or significantly higher out of pocket expenses as plans will be forced to slash benefits to be under the annual value requirement.

Health Care Exchanges: This is a BIG ugly provision. Since every state is being left on their own to develop these it will be interesting to see how they play out. Carriers are not being forced to join the exchanges – so I wonder how many will choose to? If they do make it up and running, the exchanges will add tons of notification requirements onto employers and give many an incentive to no longer offer employee’s coverage – they can just send them to the exchanges. And let’s be serious, has the government ever implemented any program well? There is still hope that these bad and downright ugly provisions will get modified as the fight against this bill continues in Washington….but I don’t think we should count on it. It seems that most – if not all – of the health care reform bill’s provisions are here to stay – for now anyway.

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US Health Insurance

Medical Tourism Market Update Written By Jonathan Edelheit

The industry had a lot of momentum in 2009 as many insurance companies moved forward with their plans,but was derailed when Obama brought HealthcarEReform into the picture which caused insurance companies to stop all new programs/initiatives and to focus on fighting for survival. Many employers are still sitting on the bench on the sidelines watching the fight between insurance companies and the US government unfolds under healthcare reform, waiting to see what the final result was and how it really affected them.

A Year Later Over a year after Healthcare Reform became law, finally US employers and insurance companies are comfortable with healthcare reform. What that means is that they aren’t necessarily completely happy with it, but they finally understand how it affects them and how they need to comply with it. The reality of it for employers it that the majority of them understand, Healthcare Reform isn’t going to lower costs. Some smaller employers are already seeing the effects and are being hit with health insurance rate increases of 40% or higher. With health insurance rates already too high, constant increases to the cost of health insurance just make the market unsustainable. It will become extremely unsustainable starting in 2014 when sick people pay the same costs as healthy people and insurance companies are forced to accept sick people at any time and cover all their conditions immediately at the same costs


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as a healthy person. This is when insurance really no longer is insurance, meaning you calculate from the risk what the costs will be.

implementing medical tourism. Those in the industry who pay close attention will have seen the news over the past 6 months popping up on

Rochester’s Doing It

Google alerts of US Self Funded Employers and Third PartyAdministrators implementing Medical Tourism, as well as Governmental Entities like the City of Rochester, New York.The reasons why they are implementing it is either the cost savings or because of ethnic employees. The Mayor of Rochester and the Rochester Chamber of Commerce will present at our annual event in Chicago about the entire city plan surrounding this initiative.

Now that employers and health insurers are comfortable with healthcare reform and realize costs are going to continue to rise, many are turning back in the direction of medical tourism anew. It is very exciting to see all of the activity going in Medical Tourism in the US with both private sector companies and public sector companies

As more and more US employers become open to the idea of medical tourism, a much larger trend will develop and movement that will pick up steam and energy in 2012. Several of the biggest US health insurance companies have already implemented medical tourism or are announcing their plans shortly, quietly going through the request for proposal (RFP) process and not raising any flags.

“Several of the biggest US health insurance companies

have already implemented

medical tourism.� Benefits Benefits Live Live Magazine Magazine | | 2011 2011


Domino Effect Dental Clinics around the world should be very excited because it looks like two of the largest dental insurance companies in the United States will soon be allowing their insured to take their dental benefit overseas. Everyone has been waiting for dental tourism to take off with the US insurance companies, and the time has come. Several smaller health insurers in the US with under a million lives are also in their Request for Proposal (RFP) Process and once it is concluded will be implementing their medical tourism programs. What’s really exciting about it all this isn’t just that several of the biggest carriers and employers are now back on track and moving forward again with implementing medical tourism after the delay from healthcare reform, it’s what will happen once they implement it. When they do, it is going to cause a chain reaction domino effect. When one dental insurance company allows their American insured to travel overseas and use their dental benefit, all the competing dental insurance companies in the US will have to implement it also, or they will no longer be competitive and they will lose their edge.

Others to Follow The same holds true for US health insurance companies, once these companies or a big employer goes public with their new medical tourism plans, their competitors know they have to invest and move forward in this space. An example is if Insurance Company “A” implements medical tourism and Insurance Company ”B” doesn’t, any employers who are interested in medical tourism for their employees becauseof the cost savings, or any employers who have high ethnic populations who want to travel back home for healthcare, they will have to switch from Carrier B, to Carrier A who covers medical tourism. Insurance companies don’t want to lose their employer groups or the profits that come with it. Employers from around the country are going to closely follow the first large employers implementing medical tourism and once they see that first employee travel and the costs savings, it is going to create a revolution with US health insurance benefits. This year at the MTA’s conference in Chicago a private luncheon for US employers will be held for an open forum for collaboration on how the MTA can support employers through education and other initiatives and how it can help US employers increase awareness amongst their employees of medical tourism and to help increase utilization and engagement of the medical tourism benefit by employees. The MTA will be focusing on its initiative of consumer awareness, by helping employers understand obstacles employees must overcome in order to travel for healthcare and helping them provide the employee education on the quality of healthcare that is missing from many existing medical tourism programs in place in the US.


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w w w. B e n e f i t s L i v e M a g a z i n e . c o m


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Benefits Live Magazine  

Beneffits Live Magazine: Corporate Wellness magazine, voluntary Benefits Magazine, Self Funding magazine, and healthcare Reform Magazine.

Benefits Live Magazine  

Beneffits Live Magazine: Corporate Wellness magazine, voluntary Benefits Magazine, Self Funding magazine, and healthcare Reform Magazine.