Evergreen Being Forced to Pay Nearly $22 Million Under Risk Adjustment Costs

June 3, 2016

Evergreen Health Cooperative could be forced to pay nearly $22 million to CareFirst BlueCross BlueShield as part of an Affordable Care Act provision that was initially designed to level the health insurance playing field.

The fees are part of what's known as risk adjustment costs. The provision requires insurers who take on healthier patients to pay insurers who have sicker clients.

Evergreen Health Cooperative may have to pay CareFirst almost $22 million in fees under a provision of the Affordable Care Act.

For health insurance co-ops across the country, including Maryland's Evergreen, this could mean paying tens of millions of dollars to the largest insurers in the country. Evergreen's payments for 2015 could hit $22 million, with most of it being owed to CareFirst, the largest insurer in the state. Cooperatives are expected to get their final risk adjustment estimates on June 30. Prior to that date, Beilenson said Evergreen is exploring all of its options, even in the form of litigation. Otherwise, having to pay out would be "damaging."

Evergreen is one of 24 insurance cooperatives in the U.S. under the Affordable Care Act that was intended to create more competition in the marketplace. The co-op had to pay $2 million in risk adjustment fees last year for 2014, a year in which Evergreen had approximately 2,000 members. It now has almost 40,000 members.

Peter Beilenson, the CEO of Baltimore-based Evergreen Health, said he's appealed eight different times to the Centers for Medicare and Medicaid Services to have the federal government either lower the risk adjustment payment or develop a payment plan, but he says the feds are refusing to budge.

"They're telling me they can't change the rules in the middle of the game," Beilenson said.

Specifically, Evergreen is asking CMS to place a cap on the size of the risk assessment payments. In this case, $1.6 million. Beilenson also said he'd like to see payments phased in over the next two or three years so that newer providers have time to get patient information up to date and balance the formula.

Jonathan Munshaw
Digital Editor, Baltimore Business Journal

MEDICARE PART B AND WHEN TO ELECT

Turning 65 and being eligible to elect Medicare coverage can be a tricky time.  If you have medical coverage through your employer, you may want to delay the election of your Medicare Part B coverage as this costs money.  Medicare Part A is free.  In certain circumstances you will not want to wait to elect Part B.  When you employer has over 20 employees, Medicare is secondary, meaning it pays after your employer coverage. However, if there are less than 20 employees, Medicare is primary.  Why this is important is that if you wait to elect Part B because you have coverage through your employer, it may come back against you.  Part A covers Hospitalization and Part B covers the Physicians. Since Medicare is primary, all claims will go there first and then to the employer based plan. If you don't have Part B, those claims can't go to Medicare and will not be sent to the carrier, they will stop. Effectively you will have no coverage for anything that would have been paid through Part B, namely any physician fees. Therefore, if your employer has less than 20 employees and you or your employee is eligible to elect Part B, elect it.  You have three months prior to your effective date, the month of you effective date and three months after to sign up for Part B. 

For more information you can call Social Security at 1-800-772-1213 or go to the Social Security website .

Exchange Notice Requirement Under ACA

FLSA section 18B, added to the labor statute by the Patient Protection and Affordable Care Act (PPACA), requires employers that are subject to the FLSA (most employers) to provide to each of their employees, and to all new employees at the time of hiring, a written notice.  The notice is to remind employees of the availability of the health insurance exchange.  

The notice must be provided to each employee, regardless of plan-enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or retirees, but an employer's obligation to provide the notice may extend to its independent contractors and leased workers, depending on the nature of their relationship with the employer as determined under the FLSA's "economic reality" test.  Below is a link for a Model Notice that can be used to satisfy the requirement.

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

IRS Delays 1094/1095 Reporting

 January 31st, 2016 for statements given to employees/individuals and February 29th for transmittal's filed to the IRS (and WAS March 31st if you are filing over 250 employee statements to employees).  Keep in mind, this is the information that the IRS will use to penalize the individual or the employer if they are not offering appropriate and affordable coverage and is used by the individual when preparing their personal tax returns. 

Now, the IRS announced that it will be giving employers additional time.  According to Notice Notice 2016-4, the IRS is delaying filing deadlines to allow employers, insurers and other providers additional time to get information together for the reporting.  The NEW deadlines are:

• Statements given to employees/individuals is now March 31, 2016 (Two Additional Months)

• Transmittal's filed to IRS (Paper) is now May 31st, 2016 (Three Additional Months)

• Transmittal's filed electronically in now June 30th, 2016 (Three Additional Months)

Hope you find this information helpful and Happy New Years!

Repeal of the "Cadillac Tax" under ACA

The Cadillac tax is slated to take effect in 2018 for individuals with health insurance plans worth more than $10,200 a year or families with plans worth more than $27,500. That's $850 for an individual plan and includes other things like Employer HSA contributions, Employer HRA Contributions, Wellness plans, pre-tax policies for specific disease or illness plans (Cancer Policy). The tax itself is a 40% non-deductible excise tax on any amount above these thresholds.  Under the tax, those plans that are fully insured, employers calculate and insurers pay the tax, for Self-funded plans, the employers calculate and "the person who administers the plan benefits" pays and under HSA's and HRA's Employers calculate and employers pay.

The tax was included in the law to curb the highly comprehensive, highly expensive health plans as well as help raise funding for the ACA, an estimate 87 Billion over the next ten years.

Now that we are getting closer to point of impact, even democrats are no longer supporting the tax because it's not really a tax on "Cadillac Plans" but many mid-level plans simply because of the rising cost of health care.

"The 'Cadillac Tax' will raise barriers that would deprive patients of needed cancer screenings, diagnostic tests and lifesaving treatment," said Rep. Joe Courtney, D-Conn., who is the sponsor of a House bill to repeal the tax.  "We must repeal this onerous tax before it diminishes the progress we have made since enactment of the ACA."   

Repeal of Definition of Small Employer Group back to 1-50 Employees under ACA

On October 8, 2015, the federal government repealed the legislation that had redefined employer groups with 51 to 100 full-time-equivalent employees as small groups for 2016 health insurance coverage.

However, the federal legislation still allows individual states the option to expand the definition of small group from 1 to 100 employees in 2016, which is the definition currently set by the Virginia and District of Columbia legislatures.

Following the federal announcement to repeal the decision to redefine employers with 51-100 employees as small groups, Maryland issued bulletin (15-27) stating that Maryland's definition of small group will align with the federal changes and remain at the 1-50 employee level.

Bulletin 15-27 states, "Since Maryland law has been drafted to follow the federal law, for plan years that begin on or after January 1, 2016, small employers will be those that during the preceding calendar year employed an average of not more than 50 employees.”

Excerpt from Kaiser Foundation Health plan

This is good news as groups over 50 Full-Time and Full Time Equivalents were being pushed down to small group which historically has had higher rates and more ACA mandates.

Insurer Mega Mergers: What It May Mean To You

Not too long ago Coventry was gobbled up by Aetna, then Aetna grabbed Humana and now Anthem making a deal to purchase Cigna.  With these mega-mergers what should we expect?  Will rates rise because we have less competition?  Will, the now, larger insurers decide to merge and move us even closer to a socialist single-payer system?  


Excerpt by Chad Bray, NewYorkTimes 7-24-15....

The health insurer Anthem said on Friday that it had agreed to acquire its rival Cigna for $48.3 billion in a deal that would further concentrate the United States market to just a few major players.The combined company would have estimated revenue of about $115 billion and serve more than 53 million people with medical coverage.A flurry of deals are reshaping the industry. Earlier this month Aetna agreed to acquire Humana, the smallest of the big five insurers, for $37 billion in cash and stock. If both transactions are completed, the number of major health insurers in the United States will shrink to three.Health insurers are seeking to consolidate to gain greater scale to reduce costs and capitalize on growing opportunities in the government and individual markets. A major force has been the Obama administration’shealth care overhaul, which has bolstered revenues. But greater transparency in pricing and less generous funding of government plans have also put profit margins under pressure.
It is possible that regulators in the United States could block some mergers: Antitrust officials at the Justice Department and the Federal Trade Commission have shown an increasing willingness to do so if they believe the alliances could hurt consumers.
Analysts have said that antitrust regulators would probably allow only some deals to go forward, and that they could stop others if they decided that too much power was being concentrated in too few hands.