Additional Guidelines Pending on HRAs

IN THIS ISSUE:


? Additional Guidelines Pending on HRAs

? Press Reaction to KFF Study

? Excess Utilization in Florida

? Frustrated Doc in New York

? Independent Doc Relies on Phone Calls, E-mail

? More Choices for Employees


Additional Guidelines Pending on HRAs


The IRS will be issuing additional guidelines on HRAs within the next year. One of the clarifications it will make is on how HRA balances are treated in cases of divorce. We understand they are leaning towards applying FSA rules to this issue, which would mean the entire balance would have to be available to both divorcing spouses – effectively doubling the cost to the employer. This could amount to serious money and discourage employers from setting up HRA programs. A worker could build-up $10,000 in an HRA, with another $10,000 required if the former spouse elects COBRA continuation. This doubling of the benefit may not be as much of a problem with FSAs where the amounts are much smaller and are forfeited at the end of the calendar year. But it would make more sense to apply a “community property” standard to the HRA balance, so the unspent balances would be split evenly between the divorcing spouses. If this or any other glitches regarding HRAs concerns you, please contact Harry Beker in the IRS Office of Chief Counsel at 202-622-6060.


Press Reaction to KFF Study


The Kaiser Family Foundation survey of employer benefits we reported on last week has generated a lot of press. The articles generally use the basics from the report – 13.9% premium increases, higher cost-sharing in the form of deductibles, premiums and copays from workers – and then go on to emphasize particular aspects of the report, discuss local conditions, or look at solutions local employers are trying. Some examples:

? Writing in the “Dallas Morning News,” Robert Dodge emphasizes the impact on smaller employers. He notes that KFF reports smaller employer premiums have gone up 15.5%, versus 13.2% for employers with over 200 workers. He also says it is smaller companies that are dropping coverage – 65% offer coverage today, compared to 71% three years ago. He says, “there is little chance the causes (of health care inflation) will abate any time soon.”

? On the other side of the DFW Airport, Maria Perotin writes in the “Fort Worth Star Telegram” that, “Employees now are digging deeper into their wallets for all manner of medical expenses.” She says that north Texas saw even bigger premium increases than the national average, and adds, “In response to the rising costs, the Kaiser study found many employers are looking for alternatives to their current strategies, such as the ‘consumer-driven health plans’ that some are envisioning as the next wave of health care.” Locally, she says, “Cellphone giant Nokia offered its workers a consumer driven plan for the first time this year? and Plano-based J.C. Penney said in April that it also intends to offer such a plan.”

? In the “St. Paul Pioneer Press,” Jim McCartney also emphasizes the cost to workers, which he characterizes as “cost-shifting.” He says this is “one factor in the looming possibility of a strike by the 1,800 union clerical workers at the University of Minnesota.” He notes that some employers are adopting per-admission deductibles and others are trying to discourage dependent coverage: “Some employers, such as Boeing and Verizon Communications, charge extra for working spouses who can get comparable health benefits through their own employer, while other employers refuse to cover these working spouses at all. General Electric recently started charging more to cover large families than small ones.” He writes, “All of the major health care plans in the Twin Cities have added the consumer-driven model as an option in the past year or so?” And he cites Definity’s Chris Delaney as saying that “its health care premium costs were down this year and will be up in the single digits nest year.”

SOURCES:

The Dallas article ran September 10. Go to http://www.dallasnews.com/ and search the archives. 

I couldn’t find the Fort Worth article on its web site, but you may contact the author directly at mperotin@star-telegram.com

The St. Paul article ran on September 10. You may get it at the archives for a fee. Go to: http://www.dfw.com/mld/twincities/archives/.


Excess Utilization in Florida


Meanwhile, in the “New York Times” Gina Kolata reports on what happens when there are no cost constraints on consumers. The article takes its cue from Boca Raton, Florida, where it says physicians have to lock their doors to keep patients out during lunch. “Doctor visits have become a social activity in this place of palm trees and gated retirement communities.” Ms. Kolata says researchers agree that Boca Raton is “a case study of what happens when people are given free reign to have all the medical care they could imagine.” She goes on to describe a situation in which Medicare underpays primary care physicians and overpays specialists. So patients line up panels of a dozen or more specialists who are eager to provide all the services they could want. The article cites one patient who only wanted a cortisone shot for his finger, but instead, “I had diathermy. I had ultrasound. I had a paraffin massage. I had $600 worth of Medicare treatments to get my lousy $35 shot of cortisone.” A local internist is quoted as saying, “when you give something away for free, there is nothing to keep utilization down.”

SOURCE: http://www.nytimes.com/2003/09/13/business/13BOCA.html


Frustrated Doc in New York


On the other hand, the “Washington Post” ran an op-ed by a New York internist who is so frustrated with Medicare and managed care he could burst. The article is a series of stories about how the payment system prevents him from spending enough time with his patients, which will be made even worse by a pending 4.2% cut in Medicare payments. He says, “I considered dropping managed care altogether and accepting only payment up front as some of my colleagues have done,” but many of his patients would not have been able to afford to see him. He calls the tug-of-war between giving patients the time they need and moving enough patients through the office to make a living, “a daily back-and-forth struggle.”

SOURCE: http://www.washingtonpost.com/wp-dyn/articles/A3664-2003Sep12.html


Independent Doc Relies on Phone Calls, E-mail


Jill Elswick writes of one Virginia physician who has opened a practice, “that relies on the telephone and e-mail to deliver much of its care.” Dr. Alan Dappen has dropped out of all insurance networks and “gets paid, not by an insurance company, but by his patients, many of who followed him to the new business.” The article says, “Managed care made Dappen feel like a ‘treadmill doctor.'” It adds that he only provides remote services to patients who have been in to the office for a traditional visit and medical history — “A careful history is the trunk of the tree,” he says. After that, “Roughly two-thirds of people can get what they need within 10 minutes of calling me.” Dr. Dappen adds, “The only way to save the American health system is to get consumers more directly involved with the cost of health care. All of us need to be out-of-pocket for a period of time, so that the doctor has to look you in the eye and say, ‘this is how much you owe me.'”

SOURCE: The article was in the September 15 edition, which is not on-line at this writing. Check www.benefitnews.com in a few days to find it.


More Choices for Employees


Tania Anderson writes in the “Washington Business Journal” that, “many businesses are responding to employee desires by offering more choices and more flexibility. However these companies often also require workers to foot more of the bill.” She quotes Aetna’s Jeff Lucht as saying, “getting the consumer more engaged in the actual process of understanding what health care costs and perhaps making better choices about how they consume health care? may result in employers saving money.”

SOURCE: washington.bizjournals.com


Please send all comments/questions directly to me at gmscan@aol.com.


“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.



SHARE THIS ARTICLE

About the author

IN THIS ISSUE:


? Additional Guidelines Pending on HRAs

? Press Reaction to KFF Study

? Excess Utilization in Florida

? Frustrated Doc in New York

? Independent Doc Relies on Phone Calls, E-mail

? More Choices for Employees


Additional Guidelines Pending on HRAs


The IRS will be issuing additional guidelines on HRAs within the next year. One of the clarifications it will make is on how HRA balances are treated in cases of divorce. We understand they are leaning towards applying FSA rules to this issue, which would mean the entire balance would have to be available to both divorcing spouses – effectively doubling the cost to the employer. This could amount to serious money and discourage employers from setting up HRA programs. A worker could build-up $10,000 in an HRA, with another $10,000 required if the former spouse elects COBRA continuation. This doubling of the benefit may not be as much of a problem with FSAs where the amounts are much smaller and are forfeited at the end of the calendar year. But it would make more sense to apply a “community property” standard to the HRA balance, so the unspent balances would be split evenly between the divorcing spouses. If this or any other glitches regarding HRAs concerns you, please contact Harry Beker in the IRS Office of Chief Counsel at 202-622-6060.


Press Reaction to KFF Study


The Kaiser Family Foundation survey of employer benefits we reported on last week has generated a lot of press. The articles generally use the basics from the report – 13.9% premium increases, higher cost-sharing in the form of deductibles, premiums and copays from workers – and then go on to emphasize particular aspects of the report, discuss local conditions, or look at solutions local employers are trying. Some examples:

? Writing in the “Dallas Morning News,” Robert Dodge emphasizes the impact on smaller employers. He notes that KFF reports smaller employer premiums have gone up 15.5%, versus 13.2% for employers with over 200 workers. He also says it is smaller companies that are dropping coverage – 65% offer coverage today, compared to 71% three years ago. He says, “there is little chance the causes (of health care inflation) will abate any time soon.”

? On the other side of the DFW Airport, Maria Perotin writes in the “Fort Worth Star Telegram” that, “Employees now are digging deeper into their wallets for all manner of medical expenses.” She says that north Texas saw even bigger premium increases than the national average, and adds, “In response to the rising costs, the Kaiser study found many employers are looking for alternatives to their current strategies, such as the ‘consumer-driven health plans’ that some are envisioning as the next wave of health care.” Locally, she says, “Cellphone giant Nokia offered its workers a consumer driven plan for the first time this year? and Plano-based J.C. Penney said in April that it also intends to offer such a plan.”

? In the “St. Paul Pioneer Press,” Jim McCartney also emphasizes the cost to workers, which he characterizes as “cost-shifting.” He says this is “one factor in the looming possibility of a strike by the 1,800 union clerical workers at the University of Minnesota.” He notes that some employers are adopting per-admission deductibles and others are trying to discourage dependent coverage: “Some employers, such as Boeing and Verizon Communications, charge extra for working spouses who can get comparable health benefits through their own employer, while other employers refuse to cover these working spouses at all. General Electric recently started charging more to cover large families than small ones.” He writes, “All of the major health care plans in the Twin Cities have added the consumer-driven model as an option in the past year or so?” And he cites Definity’s Chris Delaney as saying that “its health care premium costs were down this year and will be up in the single digits nest year.”

SOURCES:

The Dallas article ran September 10. Go to http://www.dallasnews.com/ and search the archives. 

I couldn’t find the Fort Worth article on its web site, but you may contact the author directly at mperotin@star-telegram.com

The St. Paul article ran on September 10. You may get it at the archives for a fee. Go to: http://www.dfw.com/mld/twincities/archives/.


Excess Utilization in Florida


Meanwhile, in the “New York Times” Gina Kolata reports on what happens when there are no cost constraints on consumers. The article takes its cue from Boca Raton, Florida, where it says physicians have to lock their doors to keep patients out during lunch. “Doctor visits have become a social activity in this place of palm trees and gated retirement communities.” Ms. Kolata says researchers agree that Boca Raton is “a case study of what happens when people are given free reign to have all the medical care they could imagine.” She goes on to describe a situation in which Medicare underpays primary care physicians and overpays specialists. So patients line up panels of a dozen or more specialists who are eager to provide all the services they could want. The article cites one patient who only wanted a cortisone shot for his finger, but instead, “I had diathermy. I had ultrasound. I had a paraffin massage. I had $600 worth of Medicare treatments to get my lousy $35 shot of cortisone.” A local internist is quoted as saying, “when you give something away for free, there is nothing to keep utilization down.”

SOURCE: http://www.nytimes.com/2003/09/13/business/13BOCA.html


Frustrated Doc in New York


On the other hand, the “Washington Post” ran an op-ed by a New York internist who is so frustrated with Medicare and managed care he could burst. The article is a series of stories about how the payment system prevents him from spending enough time with his patients, which will be made even worse by a pending 4.2% cut in Medicare payments. He says, “I considered dropping managed care altogether and accepting only payment up front as some of my colleagues have done,” but many of his patients would not have been able to afford to see him. He calls the tug-of-war between giving patients the time they need and moving enough patients through the office to make a living, “a daily back-and-forth struggle.”

SOURCE: http://www.washingtonpost.com/wp-dyn/articles/A3664-2003Sep12.html


Independent Doc Relies on Phone Calls, E-mail


Jill Elswick writes of one Virginia physician who has opened a practice, “that relies on the telephone and e-mail to deliver much of its care.” Dr. Alan Dappen has dropped out of all insurance networks and “gets paid, not by an insurance company, but by his patients, many of who followed him to the new business.” The article says, “Managed care made Dappen feel like a ‘treadmill doctor.'” It adds that he only provides remote services to patients who have been in to the office for a traditional visit and medical history — “A careful history is the trunk of the tree,” he says. After that, “Roughly two-thirds of people can get what they need within 10 minutes of calling me.” Dr. Dappen adds, “The only way to save the American health system is to get consumers more directly involved with the cost of health care. All of us need to be out-of-pocket for a period of time, so that the doctor has to look you in the eye and say, ‘this is how much you owe me.'”

SOURCE: The article was in the September 15 edition, which is not on-line at this writing. Check www.benefitnews.com in a few days to find it.


More Choices for Employees


Tania Anderson writes in the “Washington Business Journal” that, “many businesses are responding to employee desires by offering more choices and more flexibility. However these companies often also require workers to foot more of the bill.” She quotes Aetna’s Jeff Lucht as saying, “getting the consumer more engaged in the actual process of understanding what health care costs and perhaps making better choices about how they consume health care? may result in employers saving money.”

SOURCE: washington.bizjournals.com


Please send all comments/questions directly to me at gmscan@aol.com.


“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.



SHARE THIS ARTICLE

About the author