9 Areas of Focus For Employers Right Now: Parts 3 and 4

We are back with more industry food for thought. We hope you caught #s 1 and 2, telework and workplace safety here. We are continuing on with more unique challenges HR, benefits and absence management professionals are still facing in light of the pandemic.

 

  1. Mental and Behavioral Health

Mental and behavioral health has long been a concern for employers, but COVID-19 complicated this area in a myriad of ways. Research shows that by the end of the year, it’s projected that someone will die by suicide every 20 seconds. This could be the next pandemic, in that COVID-19 will lead to PTSD and increased rates of depression. In conjunction with suicide, overdose rates are rising and alcohol sales have skyrocketed. Domestic violence is also of particular concern as many have been stuck at home in unsafe environments, and with children largely out of schools and programs, there are less opportunities to report issues.employee mental health

One DMEC presentation shared that 45% of employees surveyed reported their mental health being negatively impacted in some capacity by COVID-19, and that it is often more difficult for older adults, those working in healthcare, and those with pre-existing conditions. The rapidly changing news on public health and the crisis is further contributing to anxiety.  However, the number one stressor for employees across the board pertains to finances.

Non-job related factors affecting mental health right now include:

  • Childcare
  • Health of family members and self
  • Social disconnectedness
  • Postponing or canceling of events and celebrations
  • Grief/loss

Then, of course, there are job stressors that may come into play, such as career development and relationships at work.

Now that I’ve painted a very grim picture, let’s talk about what employers can do to mitigate these mental and behavioral health complexities. Here are some ideas:

  • Conduct manager sensitivity training
  • Understand what signs of depression might look like, especially in this virtual world. An example might be morning fatigue from lack of sleep
  • Offer flexibility when possible – this could mean scheduled breaks or a switch from full-time to part-time
  • Treat mental health as you would physical health problems
  • Ensure employees understand what resources are available, such as EAPs
  • Offer benefits like 401(k) and retirement planning, HSAs and/or flexible spending accounts, emergency hardship assistance, etc.
  • Offer thoughtful perks like noise-canceling headphones, as those dealing with depression will have a harder time focusing
  • Leverage your disability carrier for help

Confronting and assisting with mental and behavioral health problems is not only a compassionate move, but a sound business decision as well. An employee with a mental health or addiction issue will be about half as productive; a DMEC presenter stated that this level of lost productivity can cost a company with 1,000 employees a minimum of $2.4 million a year.

Essentially, those who were experiencing anxiety, addiction, or depression before are facing magnified conditions now, and we have a larger subset of people who were not struggling in these areas prior to COVID-19 but now are. Your employees could be worried their spouse is going to lose his/her job so they are putting in overtime to secure their own job. Others are dealing with pre-existing conditions, aging parents who need extra care, children at home, a lack of social life, and so on.

As mental and behavioral health problems continue to soar, everyone can benefit from an employer proactively addressing them.

 

  1. Travel

The vast majority of employers have banned non-essential business travel. For personal travel, quarantine policies may come into play. The future of business travel, business travel policythat is, in a post-COVID world, remains unclear. One DMEC presentation cited a poll that showed 28% of employers planning on reducing business travel after the pandemic, and 51% of companies are unsure what they will do. On the other hand, 62% of employees surveyed stated they would prefer to travel less when the pandemic is over than they did before it started.

 

Be sure to check back in for #5 and beyond!

Caring for Caregivers

Employees bring their whole selves to work each day which allows for the highly efficient, effective, and creative workforce we enjoy.  As Human Resource professionals we appreciatecaregiver benefits the diversity of our workforce and continue to adjust within our employee benefit programs to meet the changing needs of our employees and their families.  Top employers know that thinking more strategically about caregiving will help them fight for top talent and provide the corporate culture employees are seeking especially in this more complicated caregiving landscape brought on by COVID-19.

The concept of caregiving is not new but as our workforce evolves it is becoming more critical to consider caregiving as an area of opportunity within employee benefits.  This shift, further amplified by the pandemic, highlights a cavern between top tier employers who appreciate the multitude of responsibilities employees must navigate versus those that hire people despite them.

The Rosalynn Carter Institute for Caregiving recently released Caregivers in Crisis:  Caregiving in the Time of COVID-19.  This thoughtful piece attaches hard data to the burden we have all experienced over the last 6 weeks.  The data indicates that 83% of caregivers have increased stress since the start of the pandemic, and 42% have indicated that the number of other caregivers available to help them has declined.  Caregivers themselves – in addition to those requiring care – are experiencing an increased burden from isolation, stress, financial concerns, and general instability.

Defining Caregivers

AARP estimates that each year approximately 40 million American adults provide support to others with basic functions (i.e. activities of daily living).  Many of those, including 75% of millennial caregivers are working.

For millennials in particular the stress of caregiving can be more challenging since they are typically providing care for more hours in a week, making less money and having less support from other family members (i.e. reduced family size).  Also of note, millennials are the most diverse caregiving community to date (i.e. racially, ethnically and more likely to identify as LGBTQ+) which can be important to consider related to diversity and inclusion.

Employers that are new to the concept can consider caregiving solutions as a continuum or suite of solutions; not a one size fits all approach or something that has to be implemented all at one time.  A core offering typically includes:

  • Educational resources
  • Advocacy support
  • Self-service tools

Enhancements allow for 24/7 live support and paid time off when necessary to address caregiving emergencies.

It is important to think broadly about caregiving solutions.  In addition to introducing separate solutions, it is equally important to shift our mindset and expand common employer benefits that could be leveraged for extended family members (i.e. second opinions, medical guidance with challenging health diagnoses, etc.).  The term caregiving must also extend beyond elder care of medical conditions but include children struggling with online school or developmental disabilities or Medicare eligibility and financial planning when moving into retirement.  The goal of caregiving solutions is to support your employees as both caregivers and those needing care.

We have all heard the announcement on the airplane about putting on your own mask before helping others; employer sponsored caregiving is building on that logic and allowing your employees to more efficiently:

  • Find educational information related to their caregiving needs
  • Direct employees toward potential solutions
  • Provide tools to support decision making
  • Pair employees with short term and long-term caregiving solutions

Caregiving support as an employee benefit is still in its infancy.  Unfortunately, many employers do not realize the need, the impact on employee performance and the demand that exists at the employee level.  A 2019 Harvard Business School Study, The Caring Company, indicates that while only 24% of employers surveyed believed employee caregiving influenced their employees’ performance at work, 80% of employees surveyed admitted that caregiving had an effect on their productivity.  In addition, 32% of employees surveyed indicated that they left a job because of their caregiving responsibilities.

Employers who take a proactive position on caregiving support – along with the tools needed for successful roll out and measurement – will see a direct impact on attraction, retention, productivity, and corporate morale.

 

If your organization is interested in exploring caregiving support as an employee benefit, or is ready to identify partners for a best practice roll out, please reach out to our team.

9 Areas of Focus for Employers Right Now: Parts 1 and 2

2020 has been a crazy year, and guess what? It’s not over yet. While we are still dealing with unusual circumstances and different challenges, we have all, to some degree, learned to roll with the punches over the last six month or so.
But as we all devised solutions for issues we did not anticipate facing, questions still remain. As we reflected on DMEC’s annual (virtual conference) and our discussions with our employer clients and vendors, we started jotting those blurry areas, and came up with nine items that are top-of-mind for benefits, HR, and absence management professionals.

HR Lessons 2020

  1. Telework

For the most part, employees that are able to telework are still doing so, a practice largely encouraged or required by employers. This is a safer and, in some ways, easier alternative and we are lucky to have technology to support remote working. Each employee has a different home situation, and their preference for remote working versus office working will depend on things like:

  • Where are their more distractions – at home, or at the office?
  • Do they have children at home that they are also homeschooling?
  • Do they have at-risk individuals in their home?
  • Do they have adequate space for a work setup conducive to productivity?

As teleworking continues for many employers further into 2020 and possibly beyond, companies need to be thinking about:

  • Do employees in remote areas have sufficient internet access?
  • Do employees have the equipment and amenities they need to do their job?
  • How will long-term or permanent teleworking affect corporate culture and camaraderie? What about the impacts on mental health?
  • Rethinking communications and management strategies in a virtual world.
  • Work-life balance issues and difficulties with shutting off work when working from home.

The consensus seems to be that regular communication, check-ins and different types of collaboration are a must. Employers may want to conduct surveys to gauge employee stress levels, the support they feel while teleworking, and family and home situations. One DMEC session reported that employers rated their teleworking experience as better than their employees did. Be sure to stay connected to ensure alignment.

Encourage employees to set boundaries and stick to them. Maybe they need an extended lunch hour to tend to their children’s needs, or they need a hard stop at the end of the day to ensure they disconnect from work, or they need 30 minutes a day to go for a walk to make sure they leave their house that day. Flexibility and compassion are key themes this year.

 

  1. Workplace Safety

To be clear, teleworking is strongly encouraged when possible, but depending on the job itself or the in

dustry of the employer, there are going to be people who cannot do their job remotely. When that’s the case, workplace safety takes on a lot more weight these days. Some of our recommendations are:

  • Creating a social distance plan, which could mean spreading out workspaces and/or designated one-way aisles for walking.
  • Requiring temperature checks each time an employee enters the building (this must be done confidentially and consistently for all employees). This might even include returning from a lunch or coffee break.
  • Installing plexiglass around workspaces.
  • Providing hand sanitizer, masks and thermometers for staff.
  • Installing antimicrobial door handles.
  • Propping doors open when possible so people can avoid high-touch areas.
  • Prohibiting non-employees from entering the office, such as vendors.
  • Implementing visual displays so people understand the proper distance to keep, where they should walk, where the high touch areas are, etc.
  • Assessing air ventilation in the office for possible improvements.

As a note, it is permissible for employers to require personal protective equipment (PPE) in the workplace, as well as to require testing for employees. In some cases, and when possible, some employers are going further and considering things like changing job responsibilities or moving the location of the job to a safer area. For example, perhaps you have a satellite office in a less infected region than headquarters that an employee can report to. Commuting concerns are something metropolitan businesses will need to address.

Some of these changes may be costly and timely, but some are simple. While the wellbeing of employees should always be top of mind for employers, there are other things at stake too. Failing to take preventative safety measures in the workplace could easily lead to workers’ compensation claims and OSHA lawsuits.

 

Stay tuned for #’s 3 and beyond…

Will COVID-19 Cause PTO Plans to Become Extinct?

The leave landscape has changed this year, yes, but our answer to this question, in a word, is no.

PTO plans have grown in popularity over the past 20 years with an estimated 50% of employers now offering this type of model compared to the traditional time off models that create separate banks of time based on reason (i.e. sick time, vacation time, etc.). The high adoption of PTO plans has been driven by the flexibility they provide to employees while lowering the administrative burden and decreasing unscheduled absences for employers.

With all the benefits of PTO, there is an inherent risk that employees won’t use their PTO time for illness, and instead will save it for vacation time. Before COVID-19 this was a small price to pay for most employers; however, this is no longer the case with so many companies leveraging its use. This potential risk, while critical to consider, should not cause significant concern for employers as there are ways to minimize it without sunsetting your PTO plan.

In this new landscape it is important for all employers – regardless of their PTO adoption – to hit the pause button to ensure their current time off offering remains optimal for their employee population, business model, COVID-19 response plan and strategic direction.

To determine if a PTO plan is still the right approach for your organization, consider the following:

  1. Utilization
    Although your time off data should not be the only thing you consider, it is a good starting point to understand how much time is used, by whom and when. Tracking utilization can help you to recognize absence patterns and discover where deficiencies exist. It can also help to identify areas of your organization that may not be accurately tracking time.
  2. Holistic Absence View
    For most employers, PTO is just one piece of their absence plan. Therefore, it is important to evaluate absence holistically. Plans like salary continuation, short term disability, quarantine leave, etc. are also pieces of the puzzle that must be part of the discussion. Thinking about both plan design and process for all absence plans becomes critical.
  3. Alternative Work Options
    Working from home decreases the likelihood that employees with mild illnesses will “go to work”. This flexibility is important for organizations with aggressive paid time off plans who do not have other paid time available for quarantining if COVID-19 is suspected. Not all organization have this level of flexibility; the key is to ensure care is taken to manage transmission of the virus at work to other employees and/or customers.
  4. Corporate Culture
    Regardless of written policies, corporate culture often dictates not only the approach to absence plans and process but utilization and tracking patterns. Ideally time off should be used to recharge and create balance, allowing greater productivity upon return.
  5. Benchmarks
    Understanding what your peer group provides from a time off perspective is paramount. The most optimal plan for your organization should be in line with benchmarks to attract and retain your top talent. Applicants and current employees will compare time off plans, and in some instances view the flexibility of PTO plans more favorably than separate banks with more days available.

 

As with most benefit programs, time off is not one size fits all.  Comprehensive PTO plans remain a competitive option in the market even during and as a result of the COVID-19 crisis.  The key is to make sure you are taking a holistic view that includes time for  employees needing to take care of themselves or their family members.

To talk about your specific plans or gather more information, please contact Spring Consulting Group.

Spring Hits it Big in Captive International’s US Awards

The Spring team is delighted to announce that we have been recognized in a number of categories by Captive International through their US Awards. Captive International is one of the most well known industry publications, and we are honored to have made this list among such impressive company. We are proud of our team members for their commitment to excellence; they are truly deserving of this recognition:

  • Actuarial Firm – Highly Commendedcaptive insurance consultants
  • Actuary: Steven Keshner – Winner
  • Actuary: Peter Johnson – Highly Commended
  • Feasibility Study Firm – Winner
  • Feasibility Study (Individual): Karin Landry – Winner

We want to congratulate all firms and individuals who appear on this esteemed list, and to thank Captive International for the acknowledgement. As with all industries, our work and priorities shifted a bit this year, but we were glad we were able to offer captives as a unique solution to difficult circumstances for our clients.

The full list of winners can be found here.

Why All Businesses Need an Insurance Broker

“Why do I need a broker?” This is a question that surprisingly gets asked more than you would expect.  In today’s society of consumerism, the internet, and “do it yourself” mentality, tied with the desire to save money, this is a valid question. I would ask in turn – would you go to court without legal representation? Of course not.  It makes financial sense to use a broker as in most cases, you do not get charged for their services. Typically brokers are paid by the insurance carrier, the one that you jointly decide best meets your needs as an employer.  More importantly, brokers protect your best interests as an objective third party. There is no specific financial incentive for brokers to decide on one insurance provider over another.

An insurance broker acts as an intermediary between you and your insurer, lessening the administrative burden for you and negating the need for you to weed through complex policy jargon. We bring over 200 years of training and experience and our insurance know-how, and our goal is to always find a policy that best suits your coverage needs at the best possible price. Brokers do the shopping and analysis on your behalf, saving you the time of plodding through quotes from various carriers and trying to determine the optimal solution. We provide impartial advice based on the client’s unique situation.

Some of the benefits of using an insurance broker are as follows:

  • We review, listen, and understand to what you are trying to accomplish
  • We search the entire marketplace looking for the best coverage at the most affordable price
  • Once we find the ideal coverage, we review and discuss with you the cost, coverages, and exclusions in simple language so there are no misunderstandings
  • We walk you through the appropriate paperwork and submit it on your behalf to the insurance company
  • Once we have approval, we continually assist and advise you throughout the year to ensure you are getting the most from your plan
  • We assist with issues like billing and claims questions
  • We have compliance experts who will deal with issues like healthcare reform and COVID-19 regulations, ensuring your policies pivot as necessary
  • Come renewal time, we are there to negotiate for you and handle much of the legwork involved

These are very important considerations for you to take into account when deciding if a broker is right for you. The alternative is to spend a lot of your own time educating yourself, taking away valuable time from your day job and family. Insurance brokers go through strict educational and licensing requirements and have significant knowledge in the industry. Our deep understanding of your local market and the players involved ultimately yield enhanced, cost-effective coverage for you.

All that said, it’s important to note that not all brokers are the same. Some have specialized services and products or are focused on specific markets.  For example, there are brokers with expertise in the property and casualty or life insurance areas but that just dabble in health insurance. Today some payroll companies are even offering employee benefit services as well but again, their bread and butter is payroll, not benefits. To offer an analogy – you would not go to a foot doctor to address a heart condition, so make sure your broker’s core competencies are the ones you need.

In summary, your insurance needs are best met by a broker who works for you and not by an insurance company, who have their own interests to look out for. Brokers yield more choices, usually at a much lower cost to you and your business. Unless you happen to be an expert in insurance plans, why risk the headache and lose the resources needed to do it on your own? Further, a consultative broker like Spring will take the time to truly understand your business so we can constantly be on the lookout for new and innovative solutions that will align with your objectives.

People are typically the largest investment a company makes. Taking care of those people through employee benefits is a niche area of your business, and you need an insurance broker who has the training and expertise necessary in today’s complicated and competitive marketplace. Spring’s approach to brokerage is collaborative and strategic, but we ultimately remove the legwork for you and ensure you have the best plan options available.

DOL Issues Updated FFCRA Regulations In Light Of Recent Federal Court Decision

On September 11, 2020, the U.S. Department of Labor (“DOL”) released a temporary rule updating certain FFCRA regulations.  The temporary rule is scheduled to be published on September 16, 2020, and will be effective immediately through the expiration of the FFCRA’s paid leave provisions on December 31, 2020.

COVID-19 law

The temporary rule updates FFCRA regulations issued in April 2020 in response to a recent federal District Court decision which found four portions of the initial regulations invalid:  provisions related to whether the FFCRA applies if employers do not have work available for employees; the timing for which employees must request the need for leave; the definition of health care provider; and the availability of intermittent leave.

While many anticipated that the DOL would appeal the decision, the DOL elected to reaffirm and clarify its position on some of these issues, while choosing to revise or update others. Thus, while the court’s order was limited to companies operating in New York (or potentially only those in the Southern District of New York), the DOL’s revisions to the regulations apply to all employers subject to the FFCRA (inside and outside New York).

The District Court’s order and the updated regulations are discussed in more detail below.

New York Federal District Court Decision

Soon after the FFCRA regulations were implemented, the State of New York sued the DOL in the United Stated District Court for the Southern District of New York claiming the DOL exceeded its authority when it implemented several provisions of the FFCRA regulations. The District Court agreed in part and, in August, the court issued an order invalidating several portions of the FFCRA regulations.

  • Work Availability Requirement – The original regulations limited the availability of emergency paid sick leave and expanded FMLA leave to certain situations where theemployer’s business is open or the employer has work for the employee, but employee is unable to work due to a COVID-19 qualifying reason.  The court vacated this requirement, making the FFCRA available even if the employer does not have work for the employee, such as situations where the employee is furloughed or the business is closed.
  • Documentation – The FFCRA statute requires employees to notify an employer of the need for leave “after the first workday” during which an employee requires paid sick time; however, the initial FFCRA regulations required documentation to be provided to the employer before any sick time is taken. The court determined this was beyond the scope of the statute and vacated this requirement. The content of the documentation and the need for documentation was not eliminated, just the timing of when it must be provided.
  • Definition of Health Care Provider – The initial FFCRA regulations used an expansive definition of health care provider, which included individuals who work in support of health care operations, such as cleaning staff, food service professionals and cooks, maintenance workers, IT staff, or other administrative support staff who support health care operations.   The district court vacated the definition of health care provider, finding it overbroad.
  • Intermittent Leave – The initial regulations allowed employees to take intermittent leave in certain situations with employer approval/agreement.  The court found this inconsistent with the statute and rejected this aspect of the regulation as an impermissible limitation on the availability of intermittent leave.

Updated Regulations

In the updated regulations, DOL reaffirms its regulations related to the work availability and intermittent leave requirements, but provided further clarification or explanation of its regulations.  The DOL revised regulations related to the definition of “health care provider” and notice requirements.  The rationale and changes are discussed more fully below:

Work Availability

Specifically, for purposes of the work availability requirement, the DOL affirms that neither emergency paid sick leave nor expanded FMLA under the FFCRA may be taken unless the employer has work available for the employee (the “work availability” requirement).  The FFCRA statute provides that leave under the FFCRA is available if an employee is unable to work (or telework) “because of” or “due to” a qualifying reason under the FFCRA.  The DOL cites to U.S. Supreme Court authority that interprets “because of” or “due to” language to create a “but for” test or analysis. Thus, FFCRA leave must be the “but for” cause of the employee’s inability to work.  Furthermore, the DOL reasons that the plain meaning of the word “leave” in this context, and based on longstanding DOL interpretation, means that someone has to be absent from work at a time the employee would otherwise be working. Thus, the DOL stands by its original regulation and provides that an employee cannot take FFCRA leave if there was no work available from the employer for the employee to perform.

Finally, the DOL explains that this requirement was intended to apply for all qualifying reasons under the FFCRA, not just those that were initially listed in the original regulations.

Intermittent Leave

The FFCRA is silent about the availability of intermittent leave, but as the DOL notes in the preamble to the updated regulations, the DOL was given broad authority to develop rules under the law.  Thus, consistent with FMLA regulations, the DOL interpreted the availability of intermittent expanded FMLA leave for employees working onsite similar to how it applies for purposes of FMLA, which may also require employer approval.  For emergency paid sick leave, however, there is opportunity for spreading COVID-19 in the workplace.  Thus, it would be contrary to the purpose of the FFCRA to allow someone to take emergency paid sick leave intermittently (unless caring for a child whose regular day care provider is unavailable due to COVID-19). Therefore, for employees working on-site, the DOL reaffirms its decision to only allow intermittent leave for expanded FMLA leave purposes.  The DOL confirmed, however, as originally provided, that intermittent leave may be available for any FFCRA qualified reason if an employee is teleworking, as there is no risk the employee would spread COVID-19 at a worksite.  In any intermittent leave context, however, permission from the employer is still required.

Health Care Provider Definition

In an effort to ensure the public health system could maintain its necessary function during COVID-19 pandemic, the FFCRA allowed employers to exclude employees who are “health care providers” or “emergency responders” from eligibility for expanded FMLA leave and emergency paid sick leave.

The DOL took an expansive approach in defining “health care provider” in its initial FFCRA regulations to ensure health care operations would not be hampered, such as ensuring maintenance to health care facilities, trash collection, food services for hospital workers, and other similar services.  The District Court found this approach to be overly broad and, therefore, per the District Court’s order, the DOL opted to revise its definition of health care provider.  In the updated regulations, health care providers include employees who are health care providers under existing FMLA regulations and “any other employee who is capable of providing health care services such as diagnostic services, preventive services, treatment services, and other services that are integrated with and necessary to the provision of patient care and, if not provided would adversely impact patient care.”

This could include a variety of health care practitioners other than doctors, including nurses, nurse assistants, medical technicians, and laboratory technicians.  The preamble and rule provide numerous examples of what would constitute diagnostic, preventive or treatment services, and services integrated with these that are necessary for patient care, such as bathing, dressing, or feeding patients, among several others.  Food service professionals, IT professionals, building maintenance workers, HR professionals, or other individuals who do not provide health care services even though their work impacts health care services are no longer included in the definition of health care providers.

Employees falling within the new definition of health care provider can work in a variety of settings including, but not limited to, hospitals, clinics, doctor’s offices, medical schools, local health departments, nursing or retirement facilities, nursing homes, home health providers, laboratories, or pharmacies.

Notice of the Need for Leave

In the updated regulations, the DOL clarifies that notice of the need for emergency paid sick leave must be provided as soon as practicable (instead of before emergency sick leave is taken), which is consistent with the position the plaintiffs took when they challenged the original regulations.

Additionally, the DOL revised the regulations regarding notice of expanded FMLA leave.  For a foreseeable need to expanded FMLA leave, the employee must provide notice as soon as is practicable, which may mean the employee may have to provide advance notice of the need for leave if the facts and circumstances support prior notice.  Prior notice is not required for unforeseeable need for expanded FMLA leave.  Finally, the employer may require an employee to substantiate the need for leave as soon as practicable, which may be at the same time notice is provided.

The DOL also updated its FFCRA FAQ’s consistent with the updated regulations.

Conclusion

As mentioned previously, the DOL’s updated regulations impact all employers subject to the FFCRA, not just those with employees in New York. Thus, all impacted employers should familiarize themselves with the updated regulations and administer them accordingly moving forward.

To the extent an employer has employees impacted by the revised regulations, such as individuals previously included in the DOL’s broad definition of health care provider or employees who were denied emergency paid sick leave for failing to provide advance notice, they should consult directly with counsel to discuss how to address those specific situations.

About the Author.  This alert was prepared by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Danielle Capilla (danielle.capilla@aleragroup.com) with questions.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2020 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Make Better Healthcare Decisions Through Claims Repricing

Background

As healthcare costs skyrocket, we know that employers struggle especially with high medical claims; how to fund them, mitigate them, and understand how they impact their plan. However, it has become increasingly difficult to accurately compare costs across different health plans and networks due to low transparency and complicated relationships among employers, brokers and bidders.

What is Claims Repricing?

This is where medical claims repricing comes into play. Using a third-party actuarial expert will enable a fair comparison through a rigorous data collection process and a systematic, objective analysis.

Repricing provides clients with an objective view of medical claims cost repricing based on actual claims data to help them pick the best network for containing costs. The purpose of repricing is to choose the best network providing desired provider coverage at the lowest available cost. It can be used to evaluate reference-based pricing as well as more traditional networks.

Why Claims Repricing?

Medical claims repricing helps clients compare medical claims costs across different health plans/networks on the same basis. It gives them a clear view of their options. The primary benefit of the repricing exercise is to provide an objective and actuarially sound analysis of claims cost comparison among different networks.

An accurate repricing analysis requires bidders to reprice each procedure performed by each provider according to their contracts. Without clear instructions and rigorous practice, bidders usually provide analysis on an aggregate level that does not reflect the demographics and experience of the client. Therefore, bidders’ self-reported results usually provide an apple-to-orange comparison and could be very misleading.

Medical Repricing Case Study

Client Challenges

Spring recently conducted this repricing process for a client in the dairy industry with over 1,500 employees and four manufacturing sites across different states. They were looking to understand if their carrier rates were competitive:

  • Would utilizing reference-based pricing (RBP) save costs?
  • Would it make sense to switch to a new carrier?
  • Did performance vary by state and major service category?

Spring Approach

Spring assists clients with choosing the right network. This will often be included in a formal Request for Proposal or handled more informally.  Spring facilitated the process using the following approach:

  • Requested detailed claim data from the incumbent including billed, allowed and paid amounts
  • Forwarded detailed instructions and claim data excluding allowed and paid amounts to prospective networks for repricing
  • Provided client with an independent actuarial repricing analysis by region and major service category

Our Solutions

Spring’s actuarial team conducted a rigorous medical repricing exercise and provided client with the following solutions:

  • Spring analyzed potential savings from utilizing a reference-based pricing vendor and determined that while moving to reference-based pricing would save on facility charges, the increase in other medical costs would outweigh these savings.
    • We did note that pairing the reference-based pricing solution for facility claims with a stronger non-facility network could potentially save money.
  • Spring also looked at claim charges for two other prospective networks and found that the incumbent carrier offers the highest overall discounts on claim charges, as illustrated below. In this case, switching entirely to either network will mean higher costs.


Medical Repricing

  • However, Spring provided further insight by state and major service category. Even though switching to bidder A means higher claim costs in total, the inpatient cost of bidder A was 26% lower than the incumbent in one state resulting in 10% overall savings for that state.

Medical Repricing

  • Spring recommended a national network solution carving out one state to maximize savings and minimize disruption.

 

Client Result

This analysis was valuable to the client in their consideration of carrier changes in certain regions:

  • Spring identified competitiveness of the incumbent carrier’s claim charges by state and service category
  • Spring’s analysis helped the client to make an informed decision not to move ahead with the reference-based pricing vendor as significant savings on facility costs were offset by increased physician and other medical costs
  • Recommended a new carrier in one state saving 10% of claim costs

As you can see, a repricing analysis can shed light on a slew of different factors at play within your network across different states and help you make the most cost-effective decision.