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CMS Efforts to Ensure Network Adequacy and Alter Risk-Adjustment Payments

Posted by Susan Donegan on Fri, Sep 30, 2016

CMS is aware that some states may struggle more than others in developing strategies that ensure network adequacy, especially those with large rural populations. So, CMS is teaming up with Medicaid directors to create a guidance that will read more like a best-practices document, James Golden, director of the agency's division of managed-care plans, said at the Medicaid Health Plans of America conference. (Modern Healthcare, 9/22/16)

HHS’s proposed Notice of Benefit and Payment Parameters for 2018 could alter the way risk adjustment and other tenets of ACA exchanges work, but the provisions, to keep carriers on the exchanges or bring back those that have left, failed to impress Wall Street or ease concerns of insurers. One major analyst said the sheer complexity of the formulas used by HHS is one of the reasons few health plans make money on public marketplaces. (Health Business Daily, 9/20/16)

Urban Institute researchers found that, in more than three-quarters of states and 80 percent of the large metropolitan areas they studied, total premiums were lower in an average marketplace plan than in employer-provided plans. "It's not that these markets are necessarily outrageously expensive -- in the vast majority of cases they're not," said Linda Blumberg, a senior fellow in the health policy center of the Urban Institute. However, most people who receive health insurance through their employers directly pay only a portion of the premium each month. The rest is paid by the employer, as part of workers' compensation. (Washington Post, 9/19/16)

President Barack Obama urged U.S. insurers offering coverage next year on the exchanges to step up their efforts to enroll those who remain uninsured, especially younger and healthier Americans. His administration will help find and enroll those who still lack coverage, with a particular focus on enrolling young adults. (Fortune, 9/13/16)

Blues Plans Updates:

Blue Cross Blue Shield of Tennessee, the state’s largest health insurer, announced plans to exit the federal health exchanges in Nashville, Memphis and Knoxville next year. The insurer cited considerable losses and the ongoing uncertainties on the individual health marketplaces created under the Affordable Care Act (ACA) as reasons for the withdrawal. (Insurance Business America, 9/27/16)

Blue Cross Blue Shield of Nebraska (BCBSNE) plans to discontinue its ACA products due to poor financial performance threatening the payer’s responsibility “to remain stable and secure.” (Fierce Healthcare, 9/26/16)

Blue Cross Blue Shield of North Carolina (BCBSNC), has announced that it will continue offering ACA exchange plans. (Fierce Healthcare, 9/26/16)

Tags: Healthcare, health reform, ACA, healthcare exchanges, HIX

TPAs move beyond claims and eligibility

Posted by Laura McMullen on Thu, Jun 11, 2015

Large employer groups, unions, associations, and other plan sponsors are all looking for ways to minimize healthcare costs. Historically, one way is to self-fund to keep the administrative costs low and allow for customization of benefits offered. One of the ripple effects of the Affordable Care Act is that smaller groups are investigating self-funding as well. When groups self-fund, they commonly turn to third-party administrators to provide the services and expertise needed to establish and maintain the plan.


Third-party administrators and cost management experts work on behalf of employers and other groups to keep claims costs low. In addition to reporting on claims, eligibility, utilization, and other dimensions to help employers manage costs, they also aggregate and manage networks.Using supplemental networks can extend healthcare benefits to employees who don’t work in centralized locations and improve employee morale.

In 2013, Business Insurance ranked the largest TPAs that specialize in employee benefits. The top five were:

Third-party administrators commonly re-price claims by recalculating billed medical charges based on the rates and rules a PPO has negotiated with supplemental networks. They also directly negotiate with providers to ensure that all claims are discounted. These networks are often a combination of risk and non-risk PPOs, depending on the plans that are being offered to the group’s members. When there is a combination, it is important to make sure that all providers are properly contracted to offer discounts to members.

Another way that TPAs factor into the changing network landscape is to provide the claims administration, eligibility management, and other back office functions hospitals and health systems need when they start to sell to groups and individuals. This has become an important service in removing the barriers for new entrants into the healthcare market.

How can you leverage your TPA relationships to expand your sales and/or network reach?

Tags: health insurance, Affordable Care Act, health reform, consumer choice, employee benefits, third party administrators, TPAs

The impact of integrated health care delivery systems is growing

Posted by Laura McMullen on Thu, May 28, 2015

Hospitals have always had informal networks of nearby physicians with admitting privileges as well as staff physicians. And some hospitals and health systems, particularly those that self-insure, have long required employees to access care within their organization to help control costs. With a new set of incentives in the Affordable Care Act that encourage providers to focus on outcomes instead of activity, these practices came together to reduce the barriers to entry in the health insurance industry and create new entities that compete for premium dollars.

Cutting Out the Middlemen

hospitalLarge hospitals and local or regional health systems have formed insurance companies that sell plans to employer groups and individuals, i.e. North Shore – Long Island Jewish Hospital’s CareConnect or UPMC in western Pennsylvania. Dr. Kenneth L. Davis, CEO and president of Mount Sinai Health System in New York, said, “Inevitably the large systems are going to move to take part of the premium dollar,” in an article in the Fiscal Times after the 2014 Health Care Forum in Washington, DC, sponsored by The Atlantic. He went on to discuss the importance of “retaining more and more of the health care premiums paid by consumers is essential to providing a full spectrum of care.” For example, St. Luke’s Hospital, part of the Mount Sinai Health System, lost $14 million in its psychiatric program in 2013 and needs to be subsidized by revenue from other parts of the system. Offering insurance coverage is another way to do that.

Partnering to Compete

Some insurance companies own hospitals, other facilities, and physician groups which are included in their networks, for example Kaiser Permanente or Willamette Dental Group. Others choose to create new companies such as the joint venture between Anthem and seven Southern California hospitals when they formed Vivity Health Plan. Vivity is priced below Anthem’s standard HMO plan and includes the big academic medical centers consumers want access to, according to the LA Times. This new market entrant could take business away from Kaiser Permanente in the large Southern California market.

Too Big to Fail?

Another approach is for hospitals to merge. There were 95 hospital mergers and acquisitions in 2014, according to The ObamaCare Effect: Hospital Monopolies in the Wall Street Journal. Two acquisitions are being challenged in state court:

How does this trend play out in your network? Does hospital consolidation make it easier to set up a narrow network? Or is this an opportunity to add more locations and providers through the physician groups that are included in integrated health care delivery systems?

Tags: health insurance, narrow networks, Affordable Care Act, health reform, consumer choice, insurance companies

Guest Blog: The Affordable Care Act Part 2 – What’s Ahead for Small Businesses?

Posted by Louis Balbirer on Wed, Sep 24, 2014

Louis BalbirerLouis Balbirer of Kaufman Rossin writes a guest blog post for NetMinder about changes related to healthcare reform. This is the second post in a two-part series discussing opportunities and challenges of the Affordable Care Act. The first part of this series focused on large businesses.

In the four years since the passage of the Affordable Care Act (ACA), there have been a number of changes that can make it difficult for small businesses to interpret their responsibilities under the law. 

At the latest C-Suite Breakfast Series, co-sponsored by Kaufman Rossin and Vistage, a panel of experts discussed changes for small and large businesses brought on by the Affordable Care Act. Specifically, panelists told us what’s better, what’s worse and what’s ahead for small business owners.

Panelists included:

What are some opportunities for small businesses?

Small businesses, defined under the healthcare law as having 50 or fewer full-time equivalent employees, are exempt from many ACA requirements. The Affordable Care Act presents many small business owners and their employees with opportunities for tax credits, lower insurance rates and more extensive coverage.

The following are some of the ways the ACA could benefit smaller businesses:

  • The Federal Small Business Health Options Program (SHOP) marketplace allows small business owners to control the coverage they offer to employees and the premiums they pay for coverage.
  • According to the panelists, the quality of insurance coverage and healthcare are expected to increase because the Affordable Care Act mandates a broadened scope of coverage for certain conditions that were previously uninsured.
  • The lack of penalties for dropping insurance and the availability of the Exchange for employees make it easier for small employers to save by choosing not to offer health insurance for their employees.
  • Additional delivery systems allow employers to choose how they offer insurance to their employees. SHOP, the Marketplace and private exchanges allow employers to veer from the traditional model (or continue with it) when selecting health insurance options for their business.
  • Small businesses with 25 or fewer full-time equivalent employees are eligible for a maximum 50% tax credit if they pay premiums on behalf of their employees enrolled in a qualified healthcare plan through SHOP.

What has the Affordable Care Act made more challenging for small business?

Although they are exempt from parts of the healthcare law, small businesses still face some challenges as a result of the ACA.

The following have been made more challenging since the passage of the Affordable Care Act:

  • Employers must participate by buying and paying SHOP fees even if only one employee participates in an insurance plan.
  • Some small business owners will need more resources (including more employees) to properly comply with the tracking and reporting requirements under the ACA.
  • Some employers are discouraged from hiring because they do not want to have to comply with the pay or play mandate required of businesses with more than 50 full-time equivalent employees. Employees who work 30 or more hours per week are considered full-time under the ACA.

What’s ahead for small business owners?              

Small business owners should prepare to comply with the upcoming reporting requirements under the healthcare law and consult their broker and accountant with any questions, including how ACA-related tax changes may affect their tax bill.

I spoke with Joy Batteen, director of human resources at Kaufman Rossin and a panelist at the C-Suite Breakfast Series, about important next steps for small business owners.

“If a small business is considering hiring a broker, but is concerned about the cost, now is the right time to make that move,” said Batteen. “Hiring a knowledgeable broker – someone you can trust – makes dealing with ACA changes much easier. The law will affect different employers in different ways; the most important thing businesses can do is be prepared.”

Louis Balbirer, CPA, is a director of tax services with Kaufman Rossin, one of the top CPA firms in the U.S He has 20 years of experience providing tax and accounting services to clients and can be reached at


Tags: NetMinder, health insurance, Affordable Care Act, Healthcare, healthcare reform, health reform, healthcare benefits, ACA, healthcare exchanges, insurance companies

Five Best Practices to Find the Right Provider Network for Your Customers

Posted by Laura McMullen on Thu, Jul 24, 2014

In a recent blog post entitled, Five Best Practices to Use Network Data and To Grow Your Business, we wrote about the ways carriers and network leasing companies can improve their position in network comparisons by better cleaning their data. Another point of view is from the brokers and consultants who use network analyses to help their customers choose the right benefit plans.

health insurance plansShopping for employee benefits is complicated and time consuming. Employers and other plan sponsors typically rely on a broker or consultant to help them through it. Brokers and consultants know that network issues can turn a satisfied customer into one that goes out to bid in the blink of an eye. Even if everything else is right: price, benefits, service, and timely and accurate claims payments can’t outweigh a network that doesn’t fit the employee population.

As we pointed out in our other post, the best networks:

  • Offer a wide range of choices: multiple general and specialty providers are included in the network
  • Are convenient to use: providers are located near home or work
  • Include popular providers and facilities: providers are the ones that members and their families want to use
  • Save employers and employees money: in-network providers offer meaningful discounts that reduce out-of-pocket expenses and claim costs

Depending on the number of employees your customers have, different types of network analyses are probably available from your carrier partners. Generally, we see four types of network analysis:

  • Network Counting – measure the quantity of providers in each network (available for groups of all sizes)
  • Accessibility Analysis – correlate network provider locations to employee home and work locations (available for groups of all sizes)
  • Disruption Reporting – match historical provider utilization and claims experience for a group to the providers in a different network (available for groups with at least 200 employees)
  • Repricing – compare cost of claims for all providers (in- and out-of-network) if a different network were in place to the cost experienced in the current network (available for very large or self-funded groups)

Download our whitepaper, The Network Analysis Pyramid, to learn more about each method.

As the primary users of network analyses, brokers and consultants are in a unique position to influence the requirements of each type of analysis. Keep these five best practices in mind as you work with carriers on your customers’ behalf:

  1. Insist on clean, accurate data so you get clean, accurate reports.
  2. Clearly identify required fields and formats in all file requests.
  3. Obtain claim data from the incumbent carrier whenever possible.
  4. Choose a consistent counting method for all reports to ensure that you are comparing apples to apples.
  5. Evaluate key specialties separately from the overall network based on your client’s needs.

With all of the changes from the Affordable Care Act, employers and other plan sponsors are relying on brokers and consultants more than ever.

How do you evaluate networks today?


Tags: compare networks, data management, market comparison, network metrics, dental network, network providers, health insurance, Affordable Care Act, network comparison tool, disruption reporting, data analysis, network change, Healthcare, healthcare reform, health reform, ACA, healthcare exchanges, provider networks, health insurers

Network Emerges as Key Differentiator in Health Insurance Purchasing Process

Posted by Laura McMullen on Tue, Jul 08, 2014

As intended, the consumer demand created by the Affordable Care Act is expanding the insurance marketplace, as reported in Inside Health Insurance Exchanges and reprinted in Health Business Daily (free registration required) on June 24, 2014. Some examples of new entrants include:

  • Co-ops in states where Blue Cross Blue Shield plans dominate, like Kentucky Health Cooperative in West Virginia and Montana Health Co-op in Idaho
  • Local plan expansions from nearby states like Harvard Pilgrim and Minuteman Health in Massachusetts moving into New Hampshire
  • Health system-based networks in densely populated areas like North Shore-Long Island Jewish Hospital and Health System in New York

With more plans to choose from that offer the same mandated benefits and guaranteed issue requirements, the provider network is a key decision point for consumers and employers. “Many carriers’ rates ‘look good on paper, but when you pull back the layers,’ consumers are wary. In the end, ‘it really comes down to the network,’ since consumers don’t want to give up existing providers when they switch insurers,” said Kyle Kautzman, GBA, an insurance broker with EBNY Insurance Services, Inc., in a Health Plan Week article reprinted in Health Business Daily on May 12, 2014 (N.Y. Small-Group Market Isn’t Suiting United’s State of Mind (with Table: Top 10 Health Plans in New York's Commercial Risk Market). Mr. Kautzman was commenting on the New York State small-group market but the observation applies to any area in the US.

narrow networks definedEmployer groups and consumers are grappling with the term “narrow networks.” What are they really? McKinsey & Co. define narrow networks as “having at least 30 percent of the 20 largest hospitals in a geographic area not participating in the exchange’s silver plan.” Perhaps a simpler way of looking at it is typical narrow networks include providers who agree to lower prices with the expectation that patient volume will grow. Insurers then pass some of the savings on to consumers. Starting to sound similar to an HMO, right? Carriers have been using network size to reduce rates for quite some time; the ACA rules simply accelerated the trend.

Narrow networks seem to be most successful in areas where providers are plentiful so that carriers can choose providers with lower rates and better outcomes. For example, Health Net is seeing success in California. They offer narrow, or tailored, networks in five southern California counties and use their existing PPO network everywhere else. According to Health Net spokesperson Brad Kiefler, in an AIS’s Health Reform Week article reprinted in Health Business Daily on May 5, 2014, entitled Calif. MD Supply Concerns May Boost Networks, Reimbursements, enrollment in tailored networks is 38% of the commercial total enrollment reflecting demand from employer groups as well as consumers from Covered California, the state exchange.

Kiefler went on to say, “So in Southern California, where there is significantly more competition among providers – there are 80 hospitals in LA County – insurers have been able to create these narrow networks and demand relatively lower reimbursements from providers. In the parts of the state that are dominated by a particular provider system, the rates are consequently higher.” In densely populated places with many providers, like Los Angeles, market forces drive costs and rates down so even though networks are narrow by choice, consumers still see reduced costs. In sparsely populated areas with fewer providers, like central California, networks are naturally narrow and competition doesn’t exert pressure on costs or rates.

What do narrow networks mean for you and your customers? How will you monitor changes in the network landscape on the exchanges and off?  

Tags: narrow networks, Affordable Care Act, healthcare reform, health reform, healthcare benefits, ACA, healthcare exchanges, provider networks

Narrow Networks Add Complexity to the Health Insurance Business

Posted by Laura McMullen on Thu, Apr 24, 2014

narrow networksThere’s been a lot of buzz in the media lately about narrow networks in health insurance plans on the federal and state health insurance exchanges. This has prompted a larger discussion about network adequacy and the trade-offs between cost control and choice. Carriers Defend Use of Narrow Networks as Fair, Market-Driven Options for Consumers, an article from Health Plan Week reprinted in AIS Health Reform Week on April 4, 2014, sums the situation up well, discussing network adequacy, consumerism, and transparency.

Here are some questions to think about when you are comparing provider networks, whether you are managing a network, selling insurance plans to employers, or purchasing a plan for your company or family.

1. Are the right types of providers in the network? When provider networks get narrower, the definition of network adequacy shifts from the size of the network to the types of providers that participate. Employers and other group benefit sponsors are asking questions like: Are there enough PCPs or optometrists? What about cardiologists or oral surgeons? How many radiologists or ER doctors are near my members? (Download our whitepaper All Provider Networks Are Not Created Equal for more.)

2. Is the carrier financially and administratively reliable? Narrow networks reduced one of the barriers to entering the health insurance market, namely the need to have a large provider network. Many new entrants to the market raise questions about financial solvency and claim payment speed. 

    • In the dental insurance industry, we’ve seen established brands like Prudential come back to the market with a leased network and outsourced back office only to exit after a few years. (See our blog post Prudential Exits Dental Benefits Market; Others to Follow? for more.) 
    • In the health insurance industry, more than 50% of hospitals and health systems responding to a June 2013 Advisory Board Co. survey said that they planned to launch a health insurance plan by 2018 or they already had one. (See our blog post More Health Systems Becoming Payers for more.)

3. Are the right providers in the network? From the consumer perspective, all networks are narrow – they only include the providers they use! Many people are accustomed to the large PPO networks that have been popular in employer-sponsored plans over the last several years, so they may be surprised by narrow networks that don’t include popular providers and academic medical centers. Communicating early and often, like B2C companies do, could make a big difference here. For more about how consumers look for health care information online, see our blog post Consumers Seek Real Data Online for Health Decisions.

Key questions for the Department of Health and Human Services in the coming weeks and months will be which types of providers are essential and how large is an adequate network. As they work on the answers for plans on the exchanges, carriers will be watching closely to see what the impacts are for plans off the exchanges.

How will you assess your network and your competitors’ networks?

Tags: compare networks, market comparison, network providers, health insurance, narrow networks, Affordable Care Act, healthcare reform, health reform, healthcare exchanges

More Health Systems Becoming Payers

Posted by Aaron Groffman on Thu, Sep 05, 2013

More than 20 percent of hospitals and health systems in a recent survey said they are planning to launch a health insurance plan by 2018.

Another 34 percent of respondents said they already own health plans. The June 2013 survey was conducted by by the Advisory Board Co., a Washington, D.C.-based research and consulting firm, and included more than 100 U.S. hospitals and health systems.

Health insurance exchanges, the aging boomer population, increasing cost and reimbursement pressures and an industry-wide move toward population health are driving many health systems’ decisions to become payers, despite the risk of that move in the continually changing healthcare industry.

North Shore-LIJ Health System, a Long Island, NY-based hospital system, plans to offer its health plan called CareConnect on the state health insurance exchange beginning October 1st.

Providers that offer health insurance typically offer a narrow network composed of their own hospitals and affiliated physicians. But in order to be successful, a network must include enough facilities and physicians to provide access and member convenience. Therefore, some health systems are joining forces to create health plans with stronger networks than either could offer on its own.

For example, Piedmont Healthcare and WellStar Health System, two Atlanta-based systems, are partnering on a health plan called the Georgia Health Collaborative that will offer commercial and Medicare Advantage products starting in 2014.

If you were starting a health plan, how would your network compare to your competitors?

Tags: network growth, network providers, health insurance, Affordable Care Act, Healthcare, Healthcare, healthcare reform, health reform, healthcare benefits, Obamacare, health insurers

Is the Health Insurance Company a Good Friend?

Posted by Aaron Groffman on Fri, Mar 08, 2013

Medical 000005787159Medium(2)The next decade will be about bringing down the costs of health care in the U.S., says venture capitalist and blogger Todd Hixon, in a recent Forbes article titled “The Health Insurance Company Is Your Friend.” The biggest drivers of healthcare spending in the U.S. are the over-utilization of advanced medical care and the high earnings of the providers of that care, he says.

It’s payers versus providers, and health insurers are in the payers’ corner.

Hixon shares one of his own healthcare experiences in which “the insurance company paid about 30% of the face value of the bill, due to a combination of lower negotiated prices and striking off major billing errors and duplications.” 

The takeaway for insurers is that finding the right network providers is more important than ever. Insurance companies can help keep healthcare costs down by shifting away the high-end risk as well as building provider networks with good value for the cost, Hixon says in his follow-up article. Look for providers who offer good discounts, have a good utilization track record, and who participate with other networks so they know what’s expected. 

This is the right dynamic: how the insurance company becomes a better friend.

Tags: network providers, health insurance, Healthcare, dental insurance, health reform, health insurers, payers

Guest Blog: What Would Happen if Congress Taxes Health Benefits?

Posted by David Merzel on Thu, Feb 07, 2013

David Merzel of Kaufman Rossin CPAs

David Merzel of Kaufman, Rossin & Co. writes a guest blog for NetMinder about the effects of a possible tax on health benefits.

If Congress decides to start taxing employer-provided healthcare benefits as a way to raise revenue and tame the federal deficit, it could prove costly to U.S. workers, insurers and even providers.

Employees often overlook the tax-free benefits of receiving all or part of their healthcare benefits paid by their employer.  This has been referred to as the biggest tax break allowed in the U.S., far surpassing favorites like the mortgage interest deduction, charitable contributions and many other itemized deductions.

The past reaction to similar taxes has been for taxpayers to cut spending on purchases of discretionary items, such as certain healthcare benefits. In fact, recent research by the Employee Benefit Research Institute shows that more than half of U.S. workers would either drop coverage or shop around for a less costly plan should the government tax health benefits.

Dental and vision insurance have long been thought of as added perks and not as essential as primary health care insurance. If health benefits become taxable, workers might drop these additional types of coverage or they may cut back on or delay dental and vision check-ups and services, which would in turn affect insurers’ and providers’ bottom lines. 

How much would a tax on employer-based health coverage cost the average taxpayer? Let’s look at an average U.S. family of four using the following annual assumptions. The premium amounts listed below represent the employer contribution, based on an employer paying 70% of the total insurance premiums and the employee paying 30%:

Household income* $52,762
Medical insurance** $10,832
Dental PPO*** $420
Vision insurance**** $143
Effective tax rate 15%
Tax on healthcare benefits $1,709

* [Median U.S. household income—U.S. Census Bureau]
** [Kaiser Family Foundation and Health Research & Educational Trust survey]
*** [2012 Dental Benefits Report: Premium and Benefit Utilization Trends—National Association of Dental Plans]

**** [Average composite annual premium for typical insured vision plan—OptumInsight]

It’s easy to see that with a total additional tax burden of more than $1,700, optional benefits such as dental and vision coverage may be on the chopping block for the average American.  The result is a taxpayer with reduced benefits and one more obstacle for dental and vision insurers and providers, who are already feeling the pain from consolidation and price pressure.


David Merzel, EA, is an accounting principal at Kaufman, Rossin & Co., one of the top CPA firms in the country. He is a New York State licensed CPA and a federally licensed IRS Enrolled Agent. David can be reached at

Tags: health insurance, Healthcare, dental insurance, Vision insurance, healthcare reform, health reform, healthcare benefits, employee benefits





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