The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

Employers Need to "Do the PPACA Math"

By Chris Justice/Thursday, June 27, 2013
Chris Justice imageIn the June 16, 2013 issue, The Wall Street Journal asked,Will Companies Stop Offering Health Insurance Because of the Affordable Care Act?” Truven Health Analytics has worked with a number of employers to analyze this question using it’s proprietary Patient Protection and Affordable Care Act (PPACA) impact model and the employer companies’ premium and premium contribution rates, benefit design data, and employee-level wage, demographic, and cost detail.

For employers in low-wage industries (retail, hospitality, etc.), our modeling has shown that there can be a purely economic argument for an employer to walk away from existing group health arrangements. In this situation, the employer would pay penalties and perhaps provide some sort of after-tax, defined dollar contribution to help defray at least a portion of the employees’ cost to purchase health insurance exchange coverage. For these low-wage employees, the premium and out-of-pocket subsidies available through an exchange can be significant, they may currently pay relatively high contribution rates for relatively meager benefit designs. So the PPACA can offer a win-win for both the employer and the low-wage employees. More generously compensated individuals may, however, lose out in this scenario as they will not be eligible for much, if any, subsidy and they stand to lose proportionally more in payroll/income tax savings if group health benefits are eliminated.


For Company ABC, with 261 employees, with an average 2014 wage of $17,522, the federal premium subsidies available are estimated to be worth roughly $6,700 per employee per year in 2014, and the low-wage employees are additionally eligible to have their out-of-pocket costs capped — thus eliminating what would otherwise be an unfavorable cost shift to go from richer group health benefits to a “silver” exchange plan. It is therefore possible to develop several “Pay” scenarios that provide a “win-win” for employees and employers in 2014. However, depending on trend assumptions for exchange-based benefits relative to group health, this picture may or may not hold in 2015 and beyond …

For employers in higher-wage industries, the picture is typically quite different. In our example below, Company XYZ has 825 employees and average 2014 wages of $46,369 per employee.

This company’s relatively higher-earning employees lose more in tax savings and are projected to enjoy much less favorable federal subsidy and out of pocket limitations compared to Company ABC. There are no obvious “win-win” scenarios for Company XYZ using the model; there are just different ways of allocating the costlier provision of benefits through an exchange.

Employers need to “do the PPACA math,” because the combination of corporate tax rates, wages, benefit design and employee contribution strategies make for a very dynamic cost environment and the PPACA regulations and emerging exchange environment have created both opportunity and hazard. Utilizing a tested and proven model is essential as employers make their decisions. Employers choosing to “stay the course” with group health for the foreseeable future still need to evaluate the potential for their lower-wage employees to access subsidized care in the case their group health plans are not deemed “affordable.” Market changes will also dramatically impact the math, 2014 is just the beginning…

Chris Justice
Senior Director, Practice Leadership

Officials Prepare For 'Biggest Open-Enrollment Season We've Ever Seen'

By Anita Nair Hartman/Wednesday, June 26, 2013
Anita Nair-Hartman imageA recent Kaiser Health article documents the opportunities and challenges the healthcare market faces for public exchange open enrollment in October of 2013.   We at Truven Health Analytics firmly believe that supporting consumers in navigating exchanges is the most critical component for success. From our experience with supporting employers during open enrollment time, we know that consumers need robust information to manage their enrollment process. 

For public exchanges, the additional complexity for consumers to understand eligibility, subsidies, enrollment rules and processes, along with the specifics of Qualified Health Plan (QHP) design provisions can be overwhelming.  The public exchanges must ensure that their infrastructure supports a consumer-friendly system for helping consumers select the best plan for their situation.  Consumers who have more information and are better educated on their health plan choices begin the journey to better healthcare engagement which is critical in this new marketplace.  The promise of large numbers of consumers enrolling in October will only be fully realized if we ensure that consumers have a great customer experience right from the start.  The success of these new marketplaces is riding on that!

Anita Nair-Hartman
Vice President, Market Planning and Strategy  

Enhancing Analytical Capability

By Robert Sutter/Tuesday, June 25, 2013
Robert Sutter imageWith the advent of electronic health records healthcare providers are in the midst of an unprecedented digital revolution - They are becoming awash with data. The question they face is: How to harness all of this data in a manner that facilitates enhancing organizational performance?

The first step to answering this question is to perform an organizational assessment to understand the current state of the organization's analytical capabilities relative to the five stages depicted in Table 1. With that accomplished, the organization can plot a course to advance to the successively higher stages of analytical competency - which will facilitate achieving higher levels of organizational performance.

Table 1

Analytical Objective
Analytical Process
1:Analytically Impaired
None established
Adverse to fact based decision making
2: Localized Analytics
Sparse, not integrated or aligned
Narrow focus, fragmented
Isolated, minimal
Isolated, not uniform
Craves for more and better data
3. Analytical Aspirations
Organizational performance metrics established
Fragmented, not aligned
Analysts to produce dashboards
Early stage of awareness of the advantages of analytics
Senior management support for fact-based decision making
4: Analytical Company
Develop an integrated analytics program
Some integrated, aligned analytics
Analysts with moderate skills but not aligned
Generalized senior management support
Change management underway to transform into fact-based culture
5. Analytical Competitor
Well developed and focused
Fully integrated, aligned analytics
Advanced: predictive modeling, data mining
Genuinely committed
Fact-based decision making is the way business is conducted

In order to be successful at becoming an analytical competitor an organization must have a senior management team that is genuinely committed to fact-based decision making. In addition, a well defined strategy is required to provide direction on the goals to be accomplished, the analytic questions to be answered and how to allocate analytical resources.

Robert Sutter, RN MBA MHA

Lowering ED Visits — How to Redirect Consumers to the Right Site

By Linda MacCracken/Thursday, June 6, 2013
Linda MacCracken imageThe demand for the Emergency Department (ED) is likely to climb and surge even further with the population gaining insurance under the Affordable Care Act. With more than 65 percent of current ED visits presenting as urgent (not emergent) visits, the anticipated demand surge from newly insured individuals will exacerbate the existing problem of patients using one of the most expensive care sites in our system.

What an opportunity! An opportunity to engage ED super-users and redirect them to better sites for their care. An opportunity to engage consumers pre-ED visit and integrate them to other sites of care. An opportunity to introduce Emerging Care to non-emergent sites of care. To find out how big the opportunity might be, we priced out a proposal made in a Health Affairs article to redirect 20 percent of ED visits to other sites of care — it created a national savings of $4B annually. How much could we save locally and how would we go about it? The following lists some of the solutions I’ve seen — which I offer for consideration to the healthcare community, in the call for redirecting consumers to the right care site, at the right time, for the right reason: 

  • Redirect Super-Users: Direct personalized messaging about the right sites to use for any individuals with 5+ visits/year.
  • Let ‘em come — on a schedule: Face it. Some consumers love the ED. Love the assurance of the best trained doctors taking care of the scary stuff. Let them book appointments at the ED clinic.  
  • Learn to Self Manage: For those with risk factors — send them personalized ED-prevention care messages to remind them to take care of themselves.  
  • Call v. Show Up for the Curiously Considering: Nurse- or extender-staffed call /live chat lines to discuss impulse driven reasons for the ED to take preventive steps.
  • Next time — to the Doctor: Employ a discharge patient coach who schedules patients into physician practices or the federally qualified community health center.
  • Open Door to the Fast Track: Provide mobile applications showing wait times and a way to reserve time for the walk-in patients.
  • Send Them to the Store: Since 85 percent of retail users have primary care providers (PCPs), I wonder how many of them split their time in EDs? Optimize the experience between PCP and ED for primary care, planned, urgent, and emergent care. 

Linda MacCracken
Vice President

"Wellness Checks" for Your Health Plan Administration

By Marie Bowker/Wednesday, June 5, 2013
Marie Bowker imageWe all know how important it is to stay current with preventive screenings and wellness visits to ensure our personal good health. But “wellness checks” for your health plan administration are also critical to the financial well being of your plan.  After all, you want to be confident that your claims administrator is paying claims correctly and in compliance with your contract and benefit plan designs so there are no big surprises down the road.
Yet I’m always surprised when I talk with a benefits manager who has worked for a company for 5 to 10 years, and they can’t recall ever conducting an audit of their claims administrators.  A claims audit is an important wellness check that should be conducted every year, and it should be a priority for every plan sponsor who wants to reduce wasteful spending caused by administrative errors and fraud and abuse.

Most administrative contracts put restrictions on the time period of claims that can be audited and limit how far back they will pursue recoveries for errors.  The longer a plan sponsor waits to conduct an audit, the more dollars they forfeit from a recovery perspective.  More importantly, failing to regularly conduct audits allows continued wasteful leakages from plan funds because errors are not identified and corrected soon enough.

As the old business adage goes, you can’t manage it if you don’t measure it.  So add an annual health plan claims audit to your calendar of wellness checks. I know from my experience that this is the only way you can be confident you’re maximizing the financial performance of your healthcare benefit.

For more information on improving payment accuracy and reducing cost trends, download the Top Seven Money Errors Made by Plan Sponsors Insights Brief.

Marie Bowker
Senior Director of Practice Leadership