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UltraLink - FOCUS...on benefits
February 2005
Large Companies to Make Lower Cost Coverage Available to Uninsured Workers
Sixty Fortune 500 companies have agreed to offer voluntary, lower-priced health coverage to their workers who are ineligible for company-sponsored plans. By joining together, the companies will create a risk pool large enough to allow for substantially lower rates than those charged for individual plans. Coverage will be available to part-time and temporary employees, early retirees and dependents.
The agreement came about as a result of work done by the HR Policy Association, a group of senior managers of large corporations. The Association believes that employers already pay for care for the uninsured indirectly through higher rates charged by hospitals to cover uncompensated care. The number of uninsured workers is expected to climb over the next several years as the economy continues its shift from manufacturing to service jobs. Employers who offer early retiree health coverage also view the voluntary insurance as a way to entice baby boomers to stay on in part-time or consulting roles rather than taking early retirement, a key concern as the labor market shrinks with the aging of that generation.
Varying levels of coverage will be offered, ranging from a card that provides discounts from doctors, pharmacies and hospitals to high deductible major medical plans with a health savings account. UnitedHealth, Humana and CIGNA will administer the plans, which are to be offered in the Fall of 2005. Promotion of the programs will begin in April and May to 3 million eligible workers; the Association hopes that several hundred thousand people sign up initially.
Source: The New York Times, January 27, 2005
Promising Step Toward National Health Information Technology
Eight rival technology companies have agreed to collaborate on development of open, non-proprietary standards for a national health information network. The companies, which have formed an alliance called the Interoperability Consortium, include Microsoft, IBM, Oracle, Intel, Accenture, Cisco, Hewlett Packard and Computer Sciences.
In a report to Dr. David Brailer, who is leading the national effort to establish a national health information technology infrastructure, also recommended that the government create a non-profit entity to be the arbiter of health technology standards, and provide seed money and incentives to encourage doctors and hospitals to participate in a national health network.
The report was in response to Dr. Brailer's request for recommendations on how to build a national health network, which the Bush administration has said should be a priority for the nation.
Source: The New York Times, January 26, 2005
Non-Profit Hospital Merger Activity Under Scrutiny
Non-profit hospitals, which have been under fire for purportedly neglecting their community obligations as non-profits, may soon be facing increased scrutiny of their merger activity as well. The Federal Trade Commission, concerned that mergers have caused the rapidly rising hospital costs of the past few years, are seeking to undo the January 2000 acquisition of Highland Hospital in suburban Chicago by Evanston Northwestern Healthcare Corporation.
In a trial that will be heard and ruled on by the FTC administrative law judge, the FTC will attempt to show that the substantial price increases imposed by Evanston after the acquisition were the result of market power. They must also show that undoing the merger will be worth the expense and disruption involved. The FTC and the Justice Department, which share responsibility for antitrust enforcement in health care, have lost 7 consecutive cases in which they challenged hospital mergers. If they win the Evanston case it will likely slow hospital merger activity, which in 2004 was almost three times that of the average activity of the previous 3 years.
Evanston's non-profit status is a factor in the case, since federal courts in previous merger trials have cited that as a reason to let mergers proceed. Non-profit hospitals make up 82% of U.S. hospitals.
Source: The Wall Street Journal, January 17, 2005
Complicated Plan Designs Increase Processing Errors
Although the industry standard for health claims paid in error is 1%, Towers Perrin reports that in 2003 the actual rate was 3.3%. Customized and increasingly complex plan designs appear to often overwhelm even the most sophisticated electronic claims processing systems, and fewer staff are available for manual processing of complicated claims.
Among the most troublesome issues are coinsurance rates that vary with the circumstances; caps on the number of visit allowed, for instance, for physical therapy; and complex hospital bills. More employers appear to be resorting to audits to find and fix errors: Towers reports that their auditing work has tripled over the past 7 years. Other employers are turning to plans and administrators who market themselves as being particularly responsive to this issue. More errors are expected as employers fine-tune their health plans in an ongoing effort to manage costs.
Source: The Wall Street Journal, January 24, 2005
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