Employee Benefits Report

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Health March 2020 Volume 18 • Number 3 States Actively Working Three Health Insurance Taxes Repealed; One Fee to Reform Health Care Reinstated Health care reform continues to be a hot resident Donald Trump topic during the 2020 presidential election. Psigned a bill into law that not only funds the federal govern- ven though health care ment through fiscal year 2020, reform continues to be a but also affects employers and hot topic during the 2020 employees’ health benefits. presidential election, the The bill repeals three taxes Epower to transform health care that were enacted to fund the this year may lie with the states 2010 health care reform act since Congress has not enacted known as Obamacare. The taxes changes. include: Health care was a major topic in many governors’ state of the Y Sec. 4980I — also known as state addresses in 2019 and nu- the Cadillac Tax — was a 40 merous states passed new legisla- percent excise tax on certain tion aimed at lowering heath care high-cost employer spon- costs and improving quality of care. sored health plans. These changes could foreshadow Y Sec. 4191 was a medical de- steps the federal government may vice excise tax that was im- eventually take — although not all continued on next page continued on next page Health Employee Benefits Report • March 2020 voters are in favor of federal or state-provid- and Maine, have implemented accountable posed a 2.3 percent tax on domestic ed health care. care organizations for their Medicaid pro- sales of medical devices. Here are some examples of current ac- gram to encourage providers to improve the Y Section 9010 was an annual fee on tions or proposed state laws that are making coordination of care and minimize unneces- health insurance providers. an impact on the health care industry: sary spending. Maine also requires some health plans to inform patients about lower- All three taxes previously had been Price Transparency cost providers when making referrals. postponed or suspended. Health care is unique because consum- Some states, such as Maryland, Penn- The bill also reauthorizes the Patient- ers often don’t know what the cost will be sylvania, and Vermont, use global budgets, Centered Outcomes Research Institute to see a doctor or undergo a procedure until which provide a fixed amount over a fixed (PCORI) fee on those who sponsor certain they receive the service. This lack of transpar- period of time per population groups rather types of self-funded health plans and on ency makes it difficult for consumers to shop than fixed rates for individual services or cas- fully insured carriers. PCORI had expired for health care. It also lessens competition es. The goal is to control volume by putting a for plan years ending after Oct. 1, 2019, among providers and removes the incentive cap on hospital spending. but now will run through 2029. to keep prices low. The fee helps fund the Patient-Centered Market Power To improve transparency, 16 states have im- Outcomes Research Institute (PCORI), a plemented mandatory All-Payer Claims Data- Some states are trying to create a more non-profit government-sponsored organi- bases (APCDs) to collect health care price and competitive marketplace and bring down zation charged with investigating the rela- quality information. However, only eight states health care costs. One of the ways they are tive effectiveness of medical treatments, make the information available to the public. doing this is by repealing laws limiting com- making health care more affordable and Another consequence of lack of transpar- petition. improving workplace productivity. ency is that patients often don’t know which For instance, in the 1970s, many states providers are out-of-network. This can cost implemented certificate-of-need (CON) laws. Y Implement legislation banning anti- significantly more money. Or, patients find CON laws limited the creation of health care competitive contract terms that some out after receiving services that their -insur facilities, because some legislators thought large health care systems and health ance only covers a portion of the costs — they would prevent overuse and keep costs plans have used to gain advantages over leaving them to pay the balance. More than down. Instead, it appears that CON laws have smaller competitors. half of the states have passed or expanded thwarted competition and contributed to laws to protect patients from these kinds of rising health care prices. Fifteen states now Cost Controls “surprise” or balance billings. have repealed CON laws. States have utilized a variety of measures In addition, some states want to: to try to keep health care prices low, includ- Provider Payments ing oversight commissions. In Delaware, Most current payment models reward Y Reduce provider scope-of-practice limita- Massachusetts and Pennsylvania, oversight providers for quantity of care instead of qual- tions, which have contributed to short- commissions analyze health care cost data ity. For instance, the more tests that are or- ages of primary care providers and led to and make recommendations. In Oregon, the dered, the more money the hospital or facil- higher costs and longer wait times for ap- Health Policy Board develops plans to im- ity receives. Some states, such as Colorado pointments. prove health care. The Rhode Island commis- continued on next page Employee Benefits Report • March 2020 Background Checks sion has regulatory control over insurers and limits providers to rate increases that don’t exceed the Consumer Price Index-Urban. Background Checks: The Fine Another tactic is using benchmarking to control costs. Bench- marking establishes a standard of excellence and measures how Line of Staying in Compliance well businesses of a similar type, such as hospitals, perform in com- parison. For example, the Massachusetts Health Policy Commission Background checks allow employers to get a clearer has set a benchmark for limiting growth of state health care costs picture of an applicant’s job and personal history. So, for all payers to 3.1 percent. Those who are not able to contain costs what happens if you find out that the applicant has a according to the benchmark must submit improvement plans. criminal background or has been convicted of drug use? ACA-Like Coverage Concerned that the Affordable Care Act (ACA) will be invali- dated, some states are reinforcing key ACA coverage provisions. Maine and Wisconsin are proposing that insurers provide coverage for individuals who have pre-existing conditions — a provision that already is law under the ACA. Pennsylvania and New Jersey are taking control of their ACA marketplaces from the federal government. New Mexico and other states offer public insurance options and Washington is considering a Medicare-like plan. Colorado and Washington are implementing public insurance options some be- lieve could be a model for Democrats at the federal level. Both plans would be privately administered, and would pay providers 160 per- enying an applicant a job based on what you discover dur- cent or more of Medicare rates. ing a background check — criminal or otherwise — has the California is working on an ambitious state-financed coverage potential of landing you in legal hot water. expansion. Title VII of the Civil Rights Act of 1964 requires employ- Ders to prove that past criminal behavior would directly impede a can- Un-ACA-Like Coverage didate’s ability to perform a job. In addition, the Equal Employment Not all states are working to keep ACA plans. Georgia is looking Opportunity Commission (EEOC) guidelines recommend that to avoid to eliminate the state’s marketplace and wants to allow healthier complaint issues employers should “eliminate policies or practices that consumers to choose pared down plans which do not meet all ACA exclude people from employment based on any criminal record.” Thirty- standards but are more affordable. five states prohibit employers from using criminal background checks Idaho is promoting short-term insurance plans as an alternative during the application process, although there’s no federal mandate re- to the ACA. These plans are temporary and do not offer the same quiring this practice. coverage as ACA. However, the plans are considerably less expen- Plus, there are other kinds of information you cannot use to base sive and targeted to individuals who are between jobs, have missed a hiring or firing decision. While EEOC and Federal Trade Commission open enrollment or are waiting to become eligible for Medicare. rules allow employers to check an applicant’s or employee’s work histo-

continued on next page Employee Benefits Report • March 2020 Telecommuting ry, education, criminal record, financial A social media search can help history, medical history or use of social you verify a candidate’s skills and em- How to Stay in media — this type of information can- ployment history. It also can uncover not be used to deny someone a job. whether an individual appears to be Compliance When Federal laws protect applicants and abusing alcohol or using illegal drugs or employees from discrimination based has posted racist and sexist messages. on: However, like background checks, Employees Work social media searches and how you use Y Race, color, national origin, sex or that information must be handled fairly Remotely religion and must follow EEOC guidelines. Here Y Disability are a few things you can do to stay in As telecommuting continues to gain Y Genetic information (including fam- compliance when using social media to popularity with it comes a new set of ily medical history) do your research: Y Age (40 or older). compliance challenges for businesses. Y Do not require job applicants to give You also must stay in compliance you access to their private accounts. elecommuting occurs when employees do with the Fair Credit Reporting Act Y If you discover an applicant’s gen- some or all of their work away from the (FCRA), which regulates how credit re- der, race, sexual orientation or dis- company’s main office. Computers, laptops porting agencies can collect, access, abilities, you cannot use this infor- and cell phones, and the availability of high- use and share the data they collect in mation when making your hiring Tspeed internet connections and secure servers, make consumer reports. States and munici- decision. You are only allowed to working from home, hotels, airports, libraries or coffee palities also have laws regarding back- consider information that applies to shops much easier. ground reports. the job they’re seeking. According to the 2017 “State of Telecommuting in the One of the most important things Y Check your state’s laws to make sure U.S. Employee Workforce Report,” almost three percent you can do is remember to treat all ap- you’re running the check at the right of U.S. employees worked from home at least half of the plicants and employees equally. And, time in the hiring process, which time. This is a 115 percent increase in telecommuting if you plan to do a background search, usually is after you have invited the jobs since 2005. Globally, the percentage of employees tell the applicant or employee in writing applicant for an interview or have who work away from the office is higher. In 2018, IWG, a you might use the information to make given them a conditional job offer. Switzerland-based service office provider, reported that decisions about his or her employment. Y Any research that is conducted must 70 percent of professionals work remotely at least one You must get their permission in writ- be done by someone who is not in- day a week, while 53 percent work remotely at least half ing. volved in the hiring decision. of the week. Telecommuting’s appeal to employees is that the in- Social Media A good way to control compliance crease in flexibility creates better work-life balance and Conducting a social media search on risk to some extent is to purchase Em- the decrease in travel time means less time on the road someone you may want to hire carries ployment Practices Liability Insurance. and less wear and tear on their vehicles. similar challenges.

continued on next page Telecommuting Employee Benefits Report • March 2020

The principal appeal to employers is that less office space is needed, meaning lower facility and infrastructure costs. Global Work- place Analytics reports that a typical business can save about $11,000 per person in re- duced office space and associated costs when employees telecommute. As good as that might sound, there are legal issues surrounding telecommuting. Con- sider talking to an employment law attorney to put in place a formal company policy be- fore starting your telecommuting program. Workers’ Compensation Here are a few of the compliance issues ing off-the-clock. you might face: In addition to possibly using an electronic Employees who are injured on the job system to track hours, mangers and supervi- — even when working at home — can file Time and Compensation sors should communicate regularly with em- worker’s compensation claims because em- Although findings from the Champlain ployees who work off site. ployers are responsible for the safety of their College’s Online Masters in Law degree pro- employees. To reduce the possibility of inju- Company Property gram indicate that salaried workers are more ries, it’s helpful to have employees set aside likely to work remotely than nonexempt em- If you require your employees to use com- the part of their home used as office space ployees, that doesn’t mean you don’t need to pany-owned equipment, such as a computer and reduce fatigue by designating set times monitor employees’ productivity. It’s particu- or cell phone, you should determine ahead of for breaks and lunch. larly important when nonexempt employees time who will be responsible for any damage ADA and FMLA Laws telecommute. The Fair Labor Standards Act or theft of the equipment. Have your employ- (FLSA) requires employers to keep accurate ees sign paperwork acknowledging their re- Employees who are disabled often are records of the hours employees work, as well sponsibility and whether the equipment can better accommodated when they work from as to pay employees for all hours worked — be used for personal reasons. home. These employment situations are gov- including overtime for more than 40 hours erned by the Americans with Disabilities Act; per week. Telecommuters also must be al- Security the Family and Medical Leave Act (FMLA); lowed rest and meal breaks. Businesses that deal in confidential and state workers’ compensation laws; privacy Human resource experts recommend em- proprietary information must ensure that re- concerns; and workplace safety. Your manag- ployers have a written telecommuting policy mote employees are working from a secure ers and supervisors must ensure they are pro- that employees sign off on. The policy can connection or through a VPN. Employees also viding reasonable accommodations and are in include the number of hours expected to should secure access to company information compliance with those rules and regulations. be worked each day or week and how hours by using encryption, passwords and network For more information on compliance is- are recorded. It also should stress that non- firewalls and avoid the use of personal devic- sues and telecommuting, please contact us. exempt employees are prohibited from work- es for company business. more on next page Drug Benefits Employee Benefits Report • March 2020 The Role of Pharmacy Benefit Managers Does your health benefit plan have a pharmacy benefit manager (PBM)? If so, it’s important you understand how a PBM affects your and your employees’ access to prescription drugs, as well as controlling your out-of-pocket costs.

BMs manage prescription drug benefits for health insurers in sev- Peral ways: Y Working directly with the drug manufacturers to negotiate rebates and lower costs. Y Determining which drugs members can purchase without having to incur additional out-of-pocket costs; and maintaining lists, or formularies, of covered medications. Y Contracting directly with individual pharmacies for lower costs.

Representatives for the federal Centers for Medicare and Medic- in 2016, which partially offset price increases. PBMs say that they are aid Services say that in the last three years PBMs have helped lower passing along a larger share of the rebates to insurers. drug prices and slow the growth of drug spending by negotiating re- Critics suggest that PBMs start receiving greater scrutiny and sug- bates directly with the manufacturers. While some PBMs pass along gest requiring PCMs to: the rebates to the insured members, some don’t and some may even recommend higher-priced drugs in order to earn larger rebates. Em- Y Be more transparent about rebates ployees with high-deductible plans must pay high copays based on Y Discontinue spread pricing, to ensure insured members and em- the drug’s list price. ployers are not overpaying PBMs for prescription drugs. Drug manufacturers argue that the rebates PBMs demand force Y Require PBMs to give 90 percent of the rebates to payers or to them to raise prices. The Commonwealth Fund, a private company patients. devoted to promoting the common good, reports that manufacturer Y Reorient their business model away from securing rebates and rebates to PBMs increased from $39.7 billion in 2012 to $89.5 billion more toward improving value in pharmaceutical spending.

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