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Updates & tips
AM Best Reaffirms Group Benefit Services (GBS)
AM Best Reaffirms Group Benefit Services (GBS)designation of “Expert Insurance Service Provider” Springfield, Missouri (January 28, 2013) – Group Benefit Services (GBS) announcestoday that AM Best, a worldwide insurance-rating and information agency with more than 100 years of history, reaffirmsGBSprestigious designation of“Expert Insurance Service Provider”. This year marks the ninth (9) consecutive year that GBS has earned this designation from AM Best. James M. Deren, President and CEO of GBS said, “We are very proud of the hard work our staff and business partners provide that enable us to maintain the designation provided to us by AM Best.” Mr. Deren further said, “In this era of post-PPACA, we continue to steadily grow by providing solid cutting-edge solutions that help employers continue to succeed in the PPACA environment.” Group Benefit Services, Inc. (GBS) is an insurance claim technology organization headquartered in . GBShas a variety of resources to provide a premier quality of employee benefit programs helping to deliver what Plan Sponsors want most – improved savings, optimal quality, and positive member experience. “Quality People & Technology, Delivering Best in Class Performance.” Web Address:www.gbs-tpa.com -End-
PPACA Medical Loss Ratios for Employer Groups & Self-funding
The Patient Protection and Affordable Care Act (PPACA)Medical Loss Ratios for Employer Groups&Self-funding By: James M. Deren January-2013The Patient Protection and Affordable Care Act (hereinafter PPACA or the Act) provision under §1001, requires insurance companies to spend at least 80% of the premium dollars they collect on healthcare expenses and improving quality of healthcare. This is called the 80/20 rule or Medical Loss Ratio (MLR). The balance of premiums in excess of 20% that are used to pay administration expenses are to be refunded to the plan participants based upon each plan participant’s percentage of premium contribution(United States Congress, 2010).[1] Many sources indicated that the minimum loss ratios depicted in the Act could further limit the number of insurers in a specific insurance market. In fact, a study from American Medical Association (AMA) stated that only one or two health insurers offering fully-insured health plans dominate many health insurance markets in the United States. The research also revealed that in 48 percent of the metropolitan areas, at least once insurer had 50 percent or more of the markets’ share(Mills, 2011).2 According to testimony provided by Edmund F Haislmaier to the United States House of Representatives on May 18, 2012, minimum loss ratios will cause more insurers to exit the health insurance market. He further stated, “the minimum loss ratio regulation is likely to not only spur increased consolidation in the health insurance industry, but to also drive that consolidation toward a market dominated by a few, very large, for-profit insurers”(Haislmaier, 2012, p. 5).3 It is a reasonable assumption to expect fewer choices for employers who purchase traditional health insurance in the future. Self-Insured Health Plans are exempt from the Medical Loss Ratio provision On April 20, 2012, the Insurance Standards Bulletin Series from Centers for Medicare & Medicaid Services published issues related to MLR regulations for clarification. It stated that “A self-funded plan (sometimes referred to as a self-insured plan) is not a health insurance issuer, as defined by §2791(b)(2) of the PHS Act, and thus is not subject to MLR requirements. It does not matter if the self-funded plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA) or if it is a non-ERISA plan”(Cohen, 2012, p. 2).4 Instead of purchasing a fully-insured plan with higher administrative fees and added regulations, a self-funded health plan with proper reinsurance to mitigate large claims can help employer(s) create a high quality health program, and build adequate reserves to meet the future needs of their employees’ healthcare. In fact, consistent with Aon Hewitt 2011 Health Insurance Trend Driver Survey5, self-funded health programs tend to rise less dramatically than fully insured plans over time. Kaiser Family Foundation also published a report, which reflects that fully-insured health insurance plan premium adjustments increase at a higher pace than the self-insured plans (2011).6 Since self-insured health plans are exempt from many provisions under PPACA, and the pace of increases are clearly lower over time, a self-funded health plan (with proper reinsurance) becomes a vital option to consider in the post-PPACA healthcare economy. 1H.R. 3590: The Patient Protection and Affordable Care Act. (U.S. Congress, 2010). 2 New AMA study finds anti-competitive conditions exist in 4 of 5 U.S. health insurance markets. (Mills, 2011). 3Congressional Testimony: Health care consolidation and competition after PPACA. (Haislmaier, 2012). 4Department of Health & Human Services: Centers for Medicare Services: Insurance Standards Bulletin Series – CCIIO technical guidance: Questions and answers regarding the medical loss ratio regulation. (Cohen, 2012). 2011 Health insurance trend driver survey (Hewitt, A. 2011). Employer health benefits: The Kaiser Family Foundation and Health research & educational trust: Annual Survey (The Kaiser Foundation and HRET, 2011).
How will Modified Community Rating (MCR) affect my business?
The Patient Protection and Affordable Care Act (PPACA)How will Modified Community Rating (MCR)impact my employees, and is there an alternative? By: James M. Deren January 2013 The Patient Protection and Affordable Care Act (PPACA or the Act) provides basic guidelines that insurers must follow regarding health insurance coverage and pricing to individuals and businesses. Section 2701 of the Act contains provisions on Fair Health Insurance Premiums that prohibits discriminatory premium rates.[1]The Act allows insurers to vary premiums by the use of “Modified Community Rating (MCR)” to calculate premiums based only on very basic criteria; family size, geographical location, tobacco use, and age. Beginning January 1, 2014, all states must begin using MCRguidelines to set health insurance premium rates for individuals and small employer groups. Small groups are employers with 100 or fewer employees. However, each State has the option to treat 50 employees or fewer as a small group prior to 2016. Beginning January 1, 2016, according to the Act, small groups will be defined as employers with at least one (1) but not more than 100 employees (United States Congress, 2010). What does it all mean for employers? It means employers with 100 or fewer employees, with traditionally much higher than average (indexed) costs for traditional health insurance due to consistently high claims, will see a reduction in their premiums. In addition, if an employer’s group risk indexing is average to healthier than average and as a result, the current health insurance cost is average to lower than average for that employer; then there will be a moderate to sharp increase in that employers health insurance premiums. In other words, the less than healthier groups will see reduction in their premiums, and the healthier groups will see an increase in their premiums. In fact, several studies and history have shown that states where these guidelines were already implemented, health insurance premiums for the average to healthier than average employer groups increased by as much as 20 to 50 percent . Self-Insured Health Plans are exempt from the Modified Community Rating If you are an employer with more than 50 eligible employees with a risk level of average to healthier than average, providing your health plan through a partially self-funded arrangement could save your firm a substantial amount of money. Reinsurance carriers in this market space traditionally base your quoted rates and risk factors on your current and renewal premiums. If you are an employer within this category, you could financially benefit by converting your health insurance package over to a partially self-funded programbeforeyour MCR guideline renewal premiums becomes available (mid-year change) from your carrier. [1]H.R. 3590, The Patient Protection and Affordable Act, §2701.(United States Congress, 2010) 2Oliver Wynman: Impact of the Patient Protection and Affordable Act on costs in the individual and small- employer health insurance markets.(Grau&Giesa;, 2009) 3The impact of guaranteed issue and community rating reforms on States’ individual insurance market. (Wachenheim & Leida, 2012) 4The Affordable Care Act and its effect on health insurance market segments.(Central for Health Research& Transformation, 2012)