Reference-Based Pricing: A Unique Self-Insured Option for Employers

From ChamberChoice and Smart Business Pittsburgh

It’s no secret that health care pricing varies widely and has a direct impact to the bottom line for employers of all types and sizes.

As health care costs continue to increase, employers have sought innovative and creative strategies to lower expenses. One strategy, which has gained momentum, is referenced-based pricing (RBP). The RBP approach typically doesn’t involve a
traditional insurance company or provider network negotiating covered services for the health plan. Instead, RBP sets limits on the amount a plan will pay for certain medical services.

Smart Business spoke to Michael Galardini, director of sales at JRG Advisors, to break down how RBP works and whether it might be right for you. 

How does RBP work with health plans?

RBP sets limits on the amount a health plan pays for procedures or services performed in hospitals and free-standing surgical centers without the use of a PPO network. For physician charges, a national PPO platform is utilized. The limits are based on a percentage above the amount that Medicare pays, which is based on the cost that each facility files with the U.S. Department of Health and Human Services.

The limits are selected by employers in consultation with their benefits advisor, to provide a reasonable and fair profit to the provider. A good RBP model considers both Medicare reimbursement and the actual cost to deliver the service; and adds a fair profit margin for the provider.

If the employee is balance billed for the difference, the RBP provider assigns legal counsel to the employee, at no cost, including defending the RBP payment in court.

Employers often partner with a third party administrator (TPA) to establish the best limits for a given medical procedure. The TPA helps conduct market research and negotiate the most appropriate deals with providers. Finding a reliable TPA, which works well with your company and the RBP provider, is crucial for negotiating the best price for your employees.

What are the advantages of using RBP?

Because there is no assigned network for hospitals and surgical centers, covered individuals may seek treatment at any facility they desire. RBP generally provides anywhere from 60 percent to 70 percent savings from billed medical charges. Typical PPOs only provide 40 percent to 50 percent from billed charges.

Hospital billed charges are taken from a charge master that each hospital maintains. The charge master is a list of the retail price of services that the facility charges for patients without insurance, or network discounts. The charge master changes from time to time, however, generally the charges are about 800 percent to 1,000 percent above the amount that Medicare pays the facility. Even after PPO discounts are applied, employer health plans are paying 400 percent to 500 percent above the amount that Medicare pays.

Are there any drawbacks to RBP?

Given the complexity of RBP, employers and employees need to carefully consider a number of things and be properly educated on how RBP will work for their employees. It is vital to work with a trusted partner that is reliable and experienced in the RBP process.

Furthermore, not using an experienced partner (and its legal advocacy) could potentially leave you and your employees vulnerable to providers attempting to balance bills. While the potential for payment disputes between employers, participants and health care providers always exists over RBP, there has been little RBP litigation to date. Litigation is always a potential threat to both the employer and employees, but disagreements over these issues are typically resolved by negotiation.

RBP can be an innovative strategy for lowering health care costs. As the market continues to evolve, employers are seeking cost reductions. The RBP option is unique in its ability to potentially reduce costs and create informed consumers. Is your business ready to investigate this innovative approach?

Are You an Applicable Large Employer?

From ChamberChoice

An employer who employed an average of at least 50 full-time employees per month during the prior calendar year is an applicable large employer (ALE) for Affordable Care Act (ACA) purposes. ALE status must be determined each year, and ALEs are subject to the ACA employer shared responsibility and information reporting provisions for offers of minimum essential coverage to employees. There are many items to consider in determining whether an employer is an ALE. The first question an employer must consider is how are full-time employees defined under the ACA? Full-time employees include an employee who works 30 hours or more per week or employees working 130 or more hours in a calendar month.

Employers must also include full-time equivalent employees in the count of full-time employees. Full-time equivalent employees are not full-time employees; instead, the number of full-time equivalent employees is determined by combining the number of hours of service for all part-time and variable hours employees working 120 hours or less during the month and dividing that total by 120. This number only counts towards the total number of full-time employees for that month for determining if the employer is an ALE – it will not change an employee from part-time to full-time status for purposes of whether an offer of coverage must be made.

Employers who exceed 50 full-time employees (including full-time equivalent employees) are not considered ALEs where the employer employs seasonal workers if certain conditions apply. First, the employer’s total workforce must only exceed 50 full-time employees for 120 or fewer days during the year. Second, the employees who exceed 50 full-time employees during those 120 or fewer days must be seasonal workers. Seasonal workers are generally defined as employees who work on a temporary or seasonal basis, such as retail employees who work during the holiday season or summer staff at a swimming pool.

Companies with common ownership may be part of a controlled group which requires employers to aggregate the total number of employees across the group in order to determine whether included companies are ALEs. The employees of every company within a controlled group determine whether any company within the controlled group is an ALE. Also, for a calendar year in which an employer is an ALE, the regulations applicable to ALEs apply to each company within the controlled group regardless of whether the individual company has 50 or more full-time employees or full-time equivalent employees.

The final item to consider is the definition of a common law employee. Common law employees are generally defined as workers whose work schedule is controlled by the employer (rather than the worker or another employer). Employers should closely review the job duties and expectations for workers from temporary staffing agencies and who are classified as independent contractors because their employment status can be easily confused, and they may be considered common law employees who count towards an employer’s full-time employee or full-time equivalent employee number. Failure to correctly account for these employees can result in a false conclusion as to whether an employer is an ALE.

Compliance is a critical component of any successful benefits plan. Contact our Compliance Team by email or at 888-279-5150 for help with ACA and ERISA requirements that may impact your business.

This article gives a basic overview of recent regulation as in effect on the date this notice was created. Please be aware that the determination of the requirements and the application of these rules to each employee welfare plan may differ for a number of variables. Nothing in this notice should be construed as legal advice.

New certificate from Penn State targets improving business strategy

From Penn State World Campus

Note: Employees of all Columbia Montour Chamber members, their spouses and dependents are eligible for a 5% discount on tuition through the PSU World Campus. 

A new graduate-level certificate from Penn State can help managers and leaders improve their organizations through business architecture, a growing practice that bridges business strategy with tactical implementation.

Penn State is accepting applications for the nine-credit graduate certificate in business architecture, which is being offered online through Penn State World Campus and the internationally recognized Smeal College of Business. The courses also may be used as a stepping stone toward one of several master’s degrees online through Penn State.

“Business architecture is the bridge between high-level business strategy and tactical execution,” said Brian Cameron, faculty director for the certificate program and associate dean for professional graduate programs at Smeal. “The business architecture discipline is growing rapidly today and this graduate certificate addresses a need for more university-based education in this field. The interest so far has been great.”

Cameron said studies show many organizations do not successfully execute their business strategy because they do not have a clear picture of the state of the organization and how they can achieve their goals. Cameron said the practice of business architecture will reveal an organization’s actual structure and the changes necessary to carry out the strategic objectives to reach the goals.

The certificate was designed to help a wide range of professionals, such as business analysts who aspire to move into planning and execution or those working in information technology who want to move into a strategy role.

The curriculum consists of a course in strategic business architecture; a course that explores the emerging trends, technology and corporate innovation; and a course on the foundational concepts of enterprise modeling.

Students who complete the certificate may apply the credits toward one of three master’s degrees offered online by the World Campus: enterprise architecture and business transformation, the online MBA, and corporate innovation and entrepreneurship.

The Penn State certificate in business architecture is the first graduate-level program of its kind in the country. The University is offering it online so that business professionals who want to advance their career with this credential do not have to leave their jobs.

“This certificate provides individuals the opportunity to enhance their knowledge and earn a credential in an emerging area,” said Shubha Kashyap, director of academic affairs at Penn State World Campus. “As our students seamlessly transition between their roles as professionals and students, the immediate applicability of new skills to their careers can enrich their education and professional advancement.”

Visit the Penn State World Campus website for more information about the new certificate.

Chamber and Chamber Foundation to Host PA Free Enterprise Week Information Session

Over the past 21 years, the Columbia Montour Chamber and its members have been supporters of the Pennsylvania Free Enterprise Week (PFEW).  This unique educational summer program provides students from across the state the unique opportunity to learn about business and manufacturing.  Thanks to continued generous support of Chamber members through The Foundation of the Columbia Montour Chamber, 167 local students have been able to experience running their own simulated company.

For those who may be interested in learning more about the program, the Chamber will host a PFEW information session at on Wednesday, Jan. 23, 2019, at 7:30 a.m. at the Greenly Center, located at 50 East Main St., Bloomsburg. A free continental breakfast will be served at 7:30 a.m.

We are inviting students who participated from local schools, their teachers, and PFEW sponsors. We also want to extend the invitation to all Chamber members to join us in hearing about the experiences of our students and what PFEW has meant to them.

Hearing the stories from the students themselves is truly inspiring. Please join us to hear what PFEW does in opening a young person’s eyes to the possibilities of their own future and how it might relate to our free enterprise system. It is crucial that the future workforce has an understanding and appreciation of the challenges that face the business community. At PFEW, myths about business unravel as students and business people work together, gaining fresh insights into the intricacies of our free market system.

The meeting will be held from 8 a.m. to approximately 9:30 a.m., and there is no cost to attend.  Please RSVP to the Chamber at 570-784-2522 by email or online.

Preparing for Windows 7 End of Life

From MePush

January 14, 2020. 

Why is this date important? That is the date that Microsoft has listed as the “End of Extended Support” for both Windows 7 and Windows Server 2008R2. 

This is important to note because of the the security risks that become extremely severe after support is dropped. The dropping of support from Microsoft means that no NEW security patches will be released and because of that, no open vulnerabilities in the operating systems will be patched.

What to do next

There are two approaches that can be taken to get your infrastructure to a more modern platform/operating system. Replace or upgrade. Most workstations and servers that are running either Windows 7 or Server 2008R2 are old enough that they should be outright replaced but there are exceptions. 

Contact MePush or one of the other IT service providers among our membership for more information on what to do to prepare for the end of Windows 7 in 2020.