All posts tagged employers

Crackdown on Employers Who Shunt Employees onto Medicare

Portrait of two stressful, serious businesspeople. 


The Centers for Medicare and Medicaid Services (CMS) is stepping up efforts to root out employers who have improperly put workers who were eligible for the company’s group health plan into Medicare.

Under the law, employers are prohibited from offering incentives of any kind to a Medicare-eligible individual to enroll in Medicare instead of the employer’s health plan.

Companies with 20 or more employees may not encourage covered employees and/or dependents to make this change in coverage.

The fine for encouraging an employee or dependent to take Medicare is $5,000 per situation, but that’s not the largest potential penalty.

The larger penalty is the bill for any claims that Medicare paid as a primary payer versus what it should have paid as a secondary payer.

This claim can be huge depending on how much care an individual that should have been in a company health plan sought out while on Medicare.

And now the CMS has decided to step up its recovery of these improper payouts.

CMS aims to increase the number of successful recoveries from below 5% to nearly 100%.

It has joined forces with the Internal Revenue Service (IRS) and the Social Security Administration to specifically look for instances where an individual is enrolled in Medicare and is also an employee of a group.

They are checking when someone’s social security number is showing up both on the income tax withholding list for an employer and also on the Medicare rolls.

Recently, many employers have received letters from a Data Matching project sponsored by the Social Security Administration, the CMS and the IRS. The goal of this new project is to increase recovery of improperly paid Medicare benefits.

Whatever you do, don’t ignore this letter. It has a 30-day deadline for you to answer the questionnaire and you should take this exercise seriously. If you take a nonchalant attitude towards filling it out, you could be in for a heaping bill from Medicare later.


Calculating employees

If a company has fewer than 20 employees, it’s generally accepted that Medicare would pay first for a Medicare-eligible employee who is also on a health plan.

Employers on the cusp of this “20 or more” rule should calculate the average number of employees they had in the prior year, according to the CMS.

Under the law, an employer is considered to have 20 or more employees for each working day of a particular week if the employer has at least 20 full-time or part-time employees on its employment rolls each working day of that week.

This condition is met as long as the total number of individuals on the employer’s rolls adds up to at least 20 regardless of the number of employees who work or who are expected to report for work on a particular day.

Vehicle Crashes on and off the Job Cost Employers Dearly


The costs for businesses when their employees are involved in car accidents on and off the job are staggering, at $47.4 billion a year, according to a new study.

The “Cost of Vehicle Crashes to Employers – 2015” study, by the Network for Employers for Traffic Safety, looked at how much car crashes cost businesses in terms of workplace disruption and liability costs. While the costs to companies when their workers are in on-the-job automobile accidents are easily measured, the costs to businesses when their employees miss work after accidents while off the job are almost as steep.

Employers end up paying in some way for injuries to their employees on and off the job, and to their dependents. They also pay for injuries caused to third parties who are injured when an employee is involved in an accident while driving on the job.

In 2013, motor vehicle crashes killed 1,620 people and injured an estimated 293,000 while they were working, the study found. More than half of the injuries forced people to miss work.


The report, funded by the U.S. Department of Transportation, found that:

  • Costs totaling $20.6 billion were due to property damage, workplace disruption and liability costs.
  • Another $26.8 billion in costs to employers were due to health-related fringe benefits, including sick leave, health insurance and insurance covering work losses. They cover contributions to workers’ compensation

insurance, health insurance, sick leave, Social Security disability insurance, life insurance, and private disability insurance, as well as insurance administration and overhead.

  • Of those costs, fringe benefit costs of off-the-job crash injuries were $21.8 billion, accounting for 81% of the health-related fringe benefit bill.
  • The fringe benefits payments were split roughly equally between health care expenses and wage replacement, such as sick leave and life insurance, according to the report.
  • On- and off-the-job motor vehicle crashes involving employees or their dependents cost employers more than 1.6 million lost work days in 2013, and 90% happened outside of work, according to the analysis.


The top four causes of the accidents were speeding, distracted driving, driving under the influence of alcohol, and not wearing a seat belt.


What can you do?

The U.S. Centers for Disease Control has the following tips for employers:

  • If you have a fleet, implement a fleet driver safety program and maintain complete and accurate records of workers’ driving performance.
  • Check driving records of prospective employees and conduct periodic rechecks after hiring.
  • Ask your workers to periodically provide documentation of their insurance and to report any suspensions, revocations and convictions for vehicle-related offenses.
  • Establish schedules that allow drivers to obey speed limits and follow hours-of-service regulations where they apply.
  • Require newly hired workers to attend performance-based defensive driving courses, with mandatory refresher training at regular intervals.
  • Implement a driver safety program that emphasizes the link between driver safety at work and driver safety at home. Safe driving in the workplace benefits the worker’s family by reducing the risk of fatality or disabling injury. In addition, lessons learned on the job can increase workers’ awareness of the importance of safe driving outside of work hours.
  • In your training emphasize the need for wearing a seatbelt at all times.
  • Have a zero-tolerance policy for talking on the phone and texting while driving, both of which are already against the law in most states. Require that any employee who needs to make a call, pull over first when it’s safe to do so, regardless of whether they have a hands-free unit.



Telemedicine Can Reduce Premium Costs, Save Time

tele medicine

MORE AND more health plans and employers are embracing telemedicine as part of their health insurance offerings, in order to help enrollees who may live far from their doctor – and to save money.

A 2014 study by the consulting firm Deloitte calculated that there would be 75 million virtual doctor visits in Northern America that year, and another survey by Towers Watson in the same year found that 37% of employers planned to offer their workers telemedicine consultations in 2015 – with another 34% planning to do so by 2017.

More private insurers are paying for telehealth services, a trend experts say will grow as more people become accustomed to it.

Studies have found telemedicine can reduce the cost of delivering health care, particularly for routine office visits. After all, a $50 telemedicine visit to diagnose a sinus infection is much cheaper than a $500 trip to an emergency department.

This is also important when waiting times to see your doctor can be more than a week, by which time the infection may have worsened.


Fitting the digital lifestyle

One of the main benefits of telemedicine is that it can help rural health plan enrollees more easily access health services without driving some distance to the doctor’s office.

Also, telemedicine fits well into the digital lifestyle for Generation Y and others who prefer shopping online and ordering movies via Netflix.

Employers who have been surveyed about telemedicine say they want to offer modern conveniences to these connected employees, who expect on-demand services.

Insurers and employers alike are also hoping telemedicine will live up to its hype by keeping people out of more expensive health care settings.

Many large national insurers have been experimenting with telemedicine in various states to suss out potential cost savings.

The two issues they’ve been dealing with are what to pay doctors who are helping patients by live video chat, and what types of services can benefit from telemedicine and which ones should not be included.

And telemedicine is no panacea. Michael Radeschi, director of product management at HIghmark, a Blue Cross and Blue Shield affiliate in Pittsburgh, told the trade publication Modern Healthcare that technology can’t replace all of the nuances of in-person clinical care.

“If we found ourselves at 40% to 50% of professional services that were telehealth, we’d be a little nervous,” he said.


What can telemedicine cover?

Telemedicine includes everything from telephone consultations and live video feeds via Skype to digital CT scans and remote monitoring of intensive-care units. Here are some examples:

  • It can involve a primary care or allied health professional providing a consultation with a patient. This may involve the use of live interactive video or the use of store and forward transmission of diagnostic images, vital signs and/or video clips along with patient data for later review.
  • Remote patient monitoring, which uses devices to remotely collect and send data to a home health agency or a remote diagnostic testing facility for interpretation. Such applications might include specific vital sign data, such as blood glucose or heart ECG, or a variety of indicators for homebound patients. Such services can be used to supplement the use of visiting nurses.
  • Consumer medical and health information includes the use of the Internet and wireless devices for consumers to obtain specialized health information and online discussion groups to provide peer-to-peer support.


Telemedicine benefits

  • Improved access – It improves access to doctors and allows physicians and health facilities to expand their reach, beyond their own offices.
  • Cost efficiencies – Telemedicine has been shown to reduce the cost of health care and increase efficiency through better management of chronic diseases, shared health professional staffing, reduced travel times, and fewer or shorter hospital stays.
  • Quality – Studies have shown that the quality of health care services delivered via telemedicine is as good as that given in traditional in-person consultations.
  • Patient demand – The greatest impact of telemedicine is on the patient and their family. Using telemedicine technologies reduces travel time and related stresses for the patient.

ACA Auto-enroll Requirement Repealed


The Affordable Care Act requirement that large employers automatically enroll in a group health plan any employees that don’t respond when asked to choose a plan, has been repealed

The change came after the employer community had lobbied to have the provision repealed because of the lack of clarity in the law, particularly about how much discretion employers would have in choosing a plan for those workers.

Originally the ACA amended the Fair Labor Standards Act by adding a new section requiring employers with more than 200 full-time employees to automatically enroll new full-time employees in the employer’s health benefits plans and continue enrollment of current employees.

The enforcement of this section was pending regulations by the Department of Labor (DOL).

But, in November 2015, President Obama signed the Bipartisan Budget Act of 2015, which in small part repealed the auto-enrollment requirement.

The repeal does not bar employers from auto-enrollment. They may choose to voluntarily continue with automatic enrollment options, such as default or negative elections, but there is no obligation to do so.

Employers may still decide to use “default” or “negative” elections for enrolling employees into health plan coverage or certain other benefits. Under a default or negative enrollment arrangement, an otherwise eligible employee will be deemed to have elected a certain type and level of coverage, unless they timely return a written waiver of that coverage.

The Internal Revenue Service issued regulations in 2007 approving this approach. In fact, this same approach can also be used with health savings account contributions made under a cafeteria plan.

Under Section 125 of the Revenue Code, employers that implement default or negative elections must provide notice to employees about the coverage and cost, and provide the opportunity to opt out of the arrangement.

In many cases, negative or default elections will involve payroll deductions made without an affirmative election by employees to pay for the premiums with their wages.

Some state wage-withholding laws, however, have an express requirement that there be an affirmative election by the employee before any deductions may be made. But, the DOL has taken the position that in this context such wage-withholding laws are preempted by ERISA.

That said, if you do want to still use auto-enroll, you should tread carefully as the result could create a dispute with one of your staff. Fallout could include a run-in with the state labor commissioner, or in the worst-case scenario the threat of a lawsuit.

Before you go ahead with auto-enroll, please consult us or your legal counsel.





Bureau Recommends 12.2% Rate Cut for 2016

California’s workers’ compensation statistical agency will recommend that benchmark rates be reduced by an average of 12.2% for policies incepting at the start of next year.

The rate filing is actually for a 0.8% reduction, but that comes after benchmark rates were cut 10.2% on July 1, so that’s why the average rate reduction for January policies is higher.

The Workers’ Compensation Insurance Rating Bureau will file the recommendation with the state insurance commissioner, who has the final word on rates in California. He can either choose to approve or reject the rate, and if he does the latter he can set the rate himself on the advice of Insurance Department actuaries.

And this time he may actually go against the filing, because the employer and labor members of the Bureau’s Governing Committee recommended a rate reduction of 6% from July 1 levels, which would have translated into an 18% reduction for policies incepting on or after Jan. 1, 2016.

The filing will propose benchmark rates that average $2.45 per $100 of payroll, but that is an average across all industries and the rate change will vary from sector to sector depending on overall claims costs trends.

Also, whatever the benchmark rate is set at, insurers can still price their policies as they see fit. They use the benchmark rate as a guide for setting their own rates depending on their own experience.

The reason for the rate reduction is that the reforms that were ushered in by legislation in 2013 have proven to be more effective than originally anticipated, according to the Bureau’s chief actuary, Dave Bellusci.

Bellusci identified some of the factors contributing to the reduced indicated pure premium rate:

  • Medical costs for injured workers continue to fall.
  • Costs for claims that involve payment of indemnity (wage replacement) benefits and medical treatment are not increasing as rapidly as expected.
  • A move to a new pricing schedule (called the Resource Based Relative Value Scale) has resulted in higher than anticipated costs savings.
  • Increases in projected wage growth in California due to economic expansion.


These positive developments, however, were somewhat offset by one trend in particular: insurers’ costs of adjusting claims continue to rise due to increased compliance requirements.

The average charged rate for employers in California has slowly been edging upwards since hitting a low of $2.10 per $100 of payroll in 2009. Since then, the final rates employers are charged on their policies have slowly crept up – and they hit $3.07 in January.

With this upcoming rate filing, there is hope that the rates most employers pay in the state will come down.


Average Insurer Filed Rates per $100 of Payroll


Transportation and utilities:            $14.28

Construction:                                     $12.95

Agriculture and mining:                   $10.96

Administrative & other services      $9.71

Wholesale & retail:                            $8.15

Hospitality & entertainment:           $8.03

Manufacturing:                                 $6.95

Education and health:                      $3.83

Finance and real estate:                   $2.53

Information & professional serv.:    $0.99

Clerical and outside sales:                $0.84



Court Lets Injured Workers Sue for Their Opioid Addictions

A new state supreme court decision allowing patients to sue doctors and pharmacies for contributing to their opioids addiction could spill over to the workers’ comp arena, legal experts say.

Workers’ comp experts told the trade publication <i>Business Insurance</i> that insurers and employers should put measures in place to reduce the chances of overprescribing of the highly addictive and potent painkillers to injured workers.

In the case at hand, 28 people filed eight lawsuits in West Virginia, alleging that medical centers and doctors had prescribed and dispensed drugs that led them to abuse and become addicted to opioids, according to court documents.

The doctors allegedly prescribed drugs like Lortab, Oxycontin and Xanax to the plaintiffs, who had been injured in automobile accidents or at work.

The state’s Supreme Court of Appeals ruled that plaintiffs could sue the medical centers and the physicians for contributing to their addictions to prescription opioids.

Interestingly, the court made the decision despite the fact that the patients admitted to abusing these drugs prior to going to these medical centers, and that they had engaged in “illegal activities associated with the prescription and dispensation of controlled substances.”

The defendants had filed a motion for summary judgment asking that the cases be thrown out based on the “wrongful conduct” rule, which states that a person can’t sue “when his or her unlawful conduct or immoral act caused or contributed to their injuries.” The court rejected the argument.

While the decision opens up the clinics, doctors and pharmacies to lawsuits, experts say that it could have an effect on workers’ comp payers. If injured workers who are addicted to painkillers and are overprescribed can sue as well, it could make settling their claims more difficult and costly.

And it could open up employers to lawsuits outside the workers’ comp system. If that is the case, employers could be swept up in legal disputes that their workers’ comp insurance may not cover.

Besides the new threat of lawsuits, opioids can often have a detrimental effect on workers’ comp claims in general. It’s been noted in a number of studies that the opioids can interfere with an injured worker’s recovery.


Why You Should Be Concerned

  • Opioids account for 23% of all prescriptions in California workers’ comp cases, according to the California Workers’ Compensation Institute (CWCI).
  • Opioid prescriptions account for 24% of all prescription costs in California, according to the CWCI.
  • The average cost of claims with a short-acting opioid (Percocet, for example), is $39,000, compared to just $13,000 for claims without an opioid prescribed, according to the National Council on Compensation Insurance (NCCI).
  • The average claim cost with a long-acting opioid – e.g., OxyContin – is $117,000 (900% above the average), according to the NCCI.
  • Between 2001 and 2008, narcotics prescriptions as a share of all drugs used to treat workplace injuries jumped 63%, according to the NCCI.
  •  When prescriptions for certain opioid painkillers were included in workers’ comp claims, it was nearly four times more likely that a catastrophic claim would develop. This is according to the study “The Effect of Opioid Use on Workers’ Compensation Claim Cost in the State of Michigan.”
  • Claims involving long-acting opioids were 3.94 times as likely to have a total cost of $100,000 or more compared with claims without any prescriptions.



What you can do

If you have an injured worker who is being prescribed opioids by the treating physician, you should work with us, the insurer’s claims adjuster and the doctors to make sure that the physician is using a prescription drug monitoring program, in order to see whether other doctors are also prescribing opioids to the same worker.

If the treating physician is not accessing an abuse database, they are failing to abide by best practices for deterring opioid abuse.



The Most Prescribed Opioids*

  • Vicodin (hydrocodone with acetaminophen)                    46.1%
  • Ultram (tramadol)                                                                         14.7%
  • Percocet (oxycodone with acetaminophen)                      13.6%
  • OxyContin (oxycodone)                                                                8.3%
  • Tylenol with codeine (acetaminophen with codeine)        3.8%
  • All others                                                                                            13.5%


Source: Express Scripts Inc.

* 2013


Exchanges Send Employers Coverage Notification Letters

By now you should be aware of the various penalties that can be levied against employers for not providing health insurance to their full-time employees once the employer mandate takes full effect.

But are you aware of another liability contained in the Affordable Care Act – the whistleblower complaint?

The ACA prohibits an employer from discharging or in any manner discriminating or taking retaliatory action against any employee because the employee or an individual acting at the request of the employee has:

  1. Received a credit or a subsidy for purchasing health insurance coverage on a public exchange;
  2. Provided, caused to be provided, or is about to provide or cause to be provided to the employer, the federal government or the state attorney general, information regarding a violation of Title I of the ACA;
  3. Testified or is about to testify in a proceeding concerning an ACA violation. Or if they assisted or participated, or are about to assist or participate, in such a proceeding.
  4. Objected to, or refused to participate in, any activity, policy, practice or assigned task that the employee reasonably believes was in violation of any provision of the ACA.

The task of investigating whistleblower complaints is the responsibility of the federal Occupational Safety and Health Administration. Employees that feel they’ve been wronged in terms of the ACA have 180 days to file an administrative complaint with the OSHA Whistleblower Directorate.

So far there have been no Department of Labor (DOL) administrative tribunals for an ACA whistleblower complaint. That’s not surprising since the employer mandate has partly taken effect only this year for employers with 100 or more full-time or full-time equivalent employees.

While there have been no tribunals, the OSHA has received one complaint that was thrown out. Nonetheless, the complaint could be a reflection of what a complaint might look like in the future, after the employer mandate is fully implemented.


The case:

A woman employed as a “durational employee” by the Housing Authority of Columbus, Georgia, filed an ACA whistleblower complaint in August 2014.

She alleged that she was terminated in January 2014 – four months after she’d refused to sign and acknowledge that she understood “and agreed” with the terms of the company’s policy on health coverage for employees.

Those were laid out in a letter she’d received in September 2013, which stated that durational employees were ineligible for participation in the employer’s group health insurance plan and that only regular, full-time employees were eligible.

She said that after she had refused to sign, she received her first unsatisfactory performance evaluation and a significantly lower annual bonus based on the unsatisfactory review.

She alleged that adverse employment actions were the result of her refusal to accept the terms.

OSHA dismissed the complaint, on the grounds that it was filed to late – more than 180 days following the date of termination.

The woman appealed the decision to the DOL Office of Administrative Law, claiming that her complaint was timely because she had attempted, unsuccessfully, to file timely complaints within the 180-day limitations with other federal agencies, as well as with the White House.

But the administrative law judge threw out the complaint, saying the employer could not be held liable for retaliation prior to the effective date of the employer mandate.


The takeaway:

The case illustrates the most likely scenario under which an employee may gain ACA whistleblower protection after this year.

Other whistleblower complaints likely to surface in 2016 would concern complaints of adverse employment actions taken after an employer receives notice that one or more of its employees qualified for a tax credit or a subsidy for purchasing health benefits through a public exchange.

However, all complaints must be filed within 180 days of an adverse employment action.