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You can also view last year’s video at http://www.intercaresolutions.com/holiday-2009.htm

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To effectively treat heart disease patients while controlling costs, Medicare has launched coverage for two innovative lifestyle programs. Both have impressive results in improving cardiac conditions. These two programs, the Ornish Program for Reversing Heart Disease and the Pritikin Program, are now approved treatment providers under Medicare’s new Intensive Cardiac Rehabilitation Program benefit. The implementation date of this groundbreaking change was October 25, 2010.

Medicare researchers rigorously analyzed studies in peer-reviewed journals before deciding to cover these two programs. Anecdotal evidence and unpublished data could not even be considered. Under Medicare regulations, the two programs were required to demonstrate the ability to:

1. Positively affect the progression of coronary artery disease
2. Reduce the need for coronary bypass surgery, and
3. Reduce the need for stents and angioplasty

But even more evidence was needed. The two programs also were required to demonstrate, through published studies, significant reductions in 5 or more risk factors related to heart disease:

1. Low density lipoprotein (also called “bad cholesterol”)
2. Triglycerides
3. Body mass index (this is a measure of weight)
4. Systolic blood pressure
5. Diastolic blood pressure
6. The need for cholesterol, blood pressure, and diabetes medications

Many of the studies Medicare cites as evidence to cover Ornish and Pritikin are multi-year trials that show long-term benefits. Often, patients graduating from these programs continue to improve over time, with less plaque clogging their arteries, shrinking waistlines, and other positive measures.

Dietary changes are fundamental to the Ornish and Pritikin Programs. Both use an eating plan based on whole plant foods: vegetables, fruits, beans, potatoes, whole grains, herbs, and spices. Patients are encouraged to eat all they want of these healthy foods, with no portion control. Nuts and other high-fat plant foods are limited in quantity, while low-fat animal foods, such as nonfat milk and egg whites, may be allowed on a very restricted basis.

Leaving out the animal foods altogether is allowed under the Ornish Program and encouraged by the Pritikin Program. Highly processed foods, especially oils, are excluded from both eating plans.

Exercise is a vital part of both approved programs. Patients learn the exercises tailored to their physical condition at the beginning of treatment. In addition, these programs train patients on effective stress reduction techniques and offer social support for lifestyle change.

Medicare covers only patients with established illness for Intensive Cardiac Rehabilitation. Beneficiaries must have experienced one or more of the following:

1. Heart attack within the prior 12 months
2. Coronary artery bypass surgery
3. Current stable angina pectoris
4. Heart valve repair or replacement
5. Angioplasty or stenting
6. A heart or heart-lung transplant

Medicare’s new coverage has important implications for group medical plans. Employers experience heart attacks, transplants, and bypass surgeries as large claims that do not occur with great frequency in an active population. However, related chronic conditions, such as high blood pressure, high cholesterol, and diabetes make up a high proportion of medical spend for most groups.

Rigorous studies show that significant lifestyle changes can prevent as well as reverse these kinds of chronic conditions. So insurers and self-funded employers can start taking advantage of effective lifestyle change programs to put a huge dent in their costs. While Ornish and Pritikin have limited geographic availability at this time, other programs that teach the diet and exercise essentials are available. Some can even be brought to the worksite. Plus Pritikin, at least, may expand to other locations.

In the 1980s, Medicare pioneered the use of Diagnosis-Related Groups (DRGs) to reimburse hospitals. Instead of reimbursing whatever services hospitals wanted to charge for, DRGs allowed Medicare to pay a fixed, predetermined amount based on a patient’s diagnosis. This was an incentive for the hospital to be efficient and render only necessary care.

DRGs blazed a trail for insurers interested in prospective payment systems. In this case, Medicare innovation opened new pathways for private insurance to effectively rein in hospital costs.

Intensive cardiac rehabilitation could well be a similar precedent – a Medicare innovation that will allow employers to save significant dollars on treating expensive chronic illness. While the process is just getting started, this is a development that employers may want to start exploring now. Significant employee lifestyle changes, especially dietary choices, can eliminate the roots of conditions such as heart disease and diabetes. Employers will benefit from both lower medical costs and a more productive workforce.

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Firms Push Wellness by Jilian Mincer of the Wall Street Journal

After you read this, please comment.

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Due to expected increases in health care premiums, employers are once again considering CDHPs as a viable health plan option. The following reviews the various types of CDHPs, and updates the information with health reform provisions and effective dates.

Making it Personal

Personal health accounts placed limited health care decision-making in the hands of the consumer. The earliest personal health accounts were Flexible Spending Accounts (FSAs), introduced in 1978, and Medical Savings Accounts (MSAs) introduced in 1997, now called Archer MSAs.

The CDHP model evolved to give even more control to the health care purchaser through Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs). Notable differences between an HRA and HSA include the following.

A Clear Cry for Transparency

A rallying cry for CDHPs and health care reform is the need for transparency. The principle behind CDHPs is providing the consumer with more transparency in cost and quality of care to increase competition and enable informed health care decision-making.

The transparency requirements from the health reform law focus primarily on health care providers and manufacturers including drug and medical device manufacturers, pharmacy benefit managers, skilled nursing services and ancillary services of physicians.

How much transparency have CDHPs provided? Many industry experts feel it is too early to tell. In a recent Issue Brief, Employee Benefit Research Institute (EBRI), a nonpartisan research organization, stated, “…there are many unanswered questions about these plans.” So far, the studies show no impact on the utilization of preventive services for CDHPs and some impact on prescription utilization, including:

• Decrease in overall use of brand name drugs
• Increased use of generic drugs
• Increased use of mail-order prescriptions
• Some decrease in adherence to prescribed medication for certain conditions

Part of the information problem, however, has been that much of the focus centered on Health Reimbursement Accounts (HRA), with little research on Health Savings Accounts (HSA). That is unfortunate, as the trend has seen a rise in HSAs in recent years.

HSAs on the Rise

A census survey, conducted by America’s Health Insurance Plans (AHIP), targeted HSAs with data collected from 93 health insurance companies and showed 10 million people enrolled in HSAs.

The EBRI Issue Brief reports a combined enrollment for HRAs and HSAs of 19.1 million people.

The AHIP survey also shows that HSAs are not limited to a specific market. HSAs accounted for 11 percent of all new health insurance sold in January 2010 in the individual, small and large group market.

EBRI suggests CDHPs need further research, particularly HSAs. An area not yet explored is what impact various levels of contributions have on spending and the use of services. Are consumers more likely to increase utilization with higher contributions or save funds for more serious health issues?

Health Reform and Personal Health Care Accounts

In the early debates on health care reform, there were discussion on eliminating Flexible Spending Accounts (FSA) and Health Reimbursement Accounts (HRA). Like many early proposals, that action did not make it to the final legislation. Some industry experts think that may still happen; however, for now, all of the options remain in place.

Some provisions of the health reform law apply to all personal health care accounts, while others affect specific types of accounts.

Applies to All Personal Health Care Accounts

The following new provisions apply to FSAs, Archer MSAs, HRAs and HSAs.

• Qualified Medical Expenses – There was a change in the definition. Many over-the-counter (OTC) medications are no longer eligible expenses, unless there is a doctor’s prescription. Recently, the Internal Revenue Service (IRS) issued Notice 2010-59 that provides guidance on the definition. Effective Date: January 1, 2011
• Excise Tax – Employer contributions to personal health care account plans are included when calculating the benefit value for high-cost “Cadillac health plans.” Effective Date: 2018
• Maximum Contribution – The new law added a cap of $2,500 annually for contributions to an FSA health care account.  Effective Date: January 1, 2013
• Tax Penalty– The tax penalty for account funds used for non-qualified or non-health expenses increased from 10 percent (HSAs) and 15 percent (Archer MSAs) to 20 percent.  Effective Date: January 1, 2011

Applies to FSAs Only

• Maximum Contribution – The new law added a cap of $2,500 annually for contributions to an FSA health care account.  Effective Date: January 1, 2013

Applies to HSAs and MSAs

• Tax Penalty– The tax penalty for account funds used for non-qualified or non-health expenses increased from 10 percent (HSAs) and 15 percent (Archer MSAs) to 20 percent.  Effective Date: January 1, 2011

Other Things Employers Need to Know About CDHPs

When considering CDHPs, there are certain requirements in addition to those already discussed. First, an employee cannot enroll in both an HSA and FSA or HRA, except for a “limited purpose” or “post-deductible” FSA/HRA.

A “limited purpose” FSA/HRA covers things like certain preventive care, vision and dental expenses, but not medical expenses. A “post-deductible” FSA/HRA only reimburses medical expenses after satisfying the minimum annual deductible set by the IRS.

Any change to an existing plan requires modification of plan documents, including the new definition for qualified over-the-counter medication.

Employee Communications – The second critical consideration for CDHPs is employee communication. Not only is communication required for the changes from health reform, but also employee engagement communication for CDHPs is critical.

One of the best examples of the impact of effective communication is a recent six-year study conducted by Aetna. Over a 5-year period, employers offering Aetna’s CDHP obtained $7 million per 10,000 members in savings. Those employers that offered the CDHP alongside best-in-class strategies for engaging employees saved $23 million per 10,000 members in savings. An additional savings of $16 million is certainly worth the investment in communications.

CDHPs have many moving parts. Throw in the health reform changes and it underscores the need for careful consideration. It requires planning, focus and ongoing monitoring – but, then employers that sponsor health plans understand that all too well.

Notice of Disclaimer –Intercare Insurance Solutions is not an attorney or tax firm and cannot provide legal or tax advice. The information provided is for your general background only, and is not intended to constitute legal or tax advice as to your specific circumstances. We recommend you review legislation and tax issues with your legal or tax counsel.

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The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was signed into law July 2010. While the Act focuses principally on banks and other financial companies, key items such as compensation claw back policies, enhanced compensation disclosure, say-on-pay and governance reforms will affect all publicly traded companies. Similar to the introduction of Sarbanes-Oxley (SOX) in 2002, Dodd-Frank forces an examination of the value of the D&O insurance contract and buying philosophies.

Dodd-Frank has led to dramatic changes within the D&O insurance market. The changes involve coverage terms to primary public D&O policy forms focusing on greater protection for the directors and officers versus the organization. Historically, some of these coverage amendments were only found under Side A Difference In Conditions (DIC) policies; however will now amend the primary layer as well. It’s important to identify the specific provisions and dynamics involving a claim and Side A DIC pricing. Presently, not all D&O insurers are offering the newer terms and conditions. Those that are willing to offer the terms are doing so on a case-by-case basis and may or may not charge an additional premium. It’s important to understand the value behind each amendment and whether it is a fit with your buying philosophy. Again, these are changes to the primary policy so understanding the remaining value of a Side A DIC layer is also key.

Topics of focus should be:

1. Discussion of each coverage amendment; how does it change your primary policy?
2. How these amendments may conflict with a Side A DIC policy.
3. What happens in the event of a claim that triggers both a primary and Side ADIC Policy.
4. How Side A DIC pricing may be impacted.
5. Discussion on whether these changes are a fit with your buying philosophy.
6. What’s the impact on Directors? Officers? The entity?
7. Identify the insurers that are offering these amendments. Who may charge for the coverage? Who is offering on a case-by-case basis?

Below are a few amendments to consider:

• Inquiry Costs: – Coverage for the costs associated with a D&O appearing at an interview or producing documents at the request of the organization or an enforcement agency.
• Definition of Loss: – Includes coverage for SOX 304 and Dodd-Frank 954 costs.
• Presumptive Indemnification Removed: – Advancement of costs for individual insured persons if the organization does not indemnify them for any reason. Response from the carrier within 60 days.
• Insured versus Insured Exclusion: – Now limited to Organization versus Insured exclusion with exceptions for derivative claims and bankruptcy claims.
• No Pollution Exclusion: – Coverage for cleanup costs.
• Prior Notice Exclusion: – Triggers only if the notice was accepted by the prior insurer.
• Conduct Exclusions: – Includes a carve back for defense costs.

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Judges for the Adviser of the Year recognized Mike for Intercare’s innovative negotiations and adjustment to changing market conditions during a tough economic period.

The latest recognition adds to an award shelf that already holds two 2010 Top Power Broker Awards from Risk & Insurance Magazine. The risk management publication awarded the prestigious awards to Mike and Intercare’s Chief Wellness Officer, John Kahle, earlier in 2010. Intercare is the only firm in the nation to win 2 Benefits Power Broker awards in one office.

In addition to the three awards from 2010, Intercare received additional accolades, demonstrating Intercare’s commitment to innovation, integrity and service, including:

• 2010 Fastest Growing Privately Held Companies, San Diego Business Journal
• 2010 San Diego’s Best Places to Work, San Diego Business Journal
• 2010 Employee Benefit Adviser of the Year, Honorable Mention, Employee Benefit Adviser Magazine
• 2010 Women who Mean Business
• 2009 Apex Award, Hub Magazine
• 2009 Women Who Mean Business, San Diego Business Journal
• 2009 Top Influentials, San Diego Daily Transcript
• 2009 San Diego’s Best Places to Work, San Diego Business Journal
• 2008 Power Broker, Risk & Insurance Magazine
• 2008 Employee Benefit Adviser of the Year, Employee Benefit Adviser Magazine

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April Labrador, Human Resources Manager

April joins Intercare with over 12 years of human resource experience in a variety of industries, including telecommunications and financial services.  As a true generalist, April has experience in several areas of HR including recruiting, benefits, performance management, employee relations, and training.  Prior to her HR career, April worked for several years at a large auto/home insurance company in a variety of roles including underwriting, customer service and management.

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Dino Palavicino, Member Services Representative

Dino comes to Intercare with several years of customer service and accounting experience.  Prior to Intercare, Dino worked at Unitrin Direct Auto Insurance as a Customer Service Agent and most recently at Experian Services in Santiago, Chile as an auditor/accountant.  Dino is bilingual in Spanish and received his Bachelor’s degree in Business Administration.

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Crystal Winters, Account Representative

James Teters, Information Technology

James Teters comes to Intercare with over 13 years of experience in Network and PC support. He began his career as a Maintenance Management Clerk in the United States Marine Corps and then held positions in printer/customer support with Toshiba and Xerox. Prior to joining Intercare, James was the System Assistant at Higgs, Fletcher and Mack LLP for over 8 years.

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Matt Creighton, Associate Vice President, Employee Benefits

Matt joins Intercare with over 13 years of insurance expereince.  Matt has an extensive benefits background and has spent time working for Willis Insurance, Unum, and KMG America (acquired by Humana) and Aetna.  Matt received his Bachelors of Arts in Health Sciences with a Concentration in Health Services Administration from James Madison university in Harrsionburg, VA.

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Steve Kessler, Vice President, Employee Benefits

Steve joins Intercare with over 19 years of employee benefits experience.  Steve has an extensive benefits background working with regional and national carriers on the medical, behavioral health, benefits administration, and consulting side of the business.  Most recently Steve led the national business development team of the 5th largest human resources consulting firm in the country.  With his well rounded background, Steve is able to identify key business issues and provide strategic solutions to meet his client’s benefits objectives.

Suzy Betterly, Account Executive

Suzy comes to Intercare with over 13 years of experience in health care consulting.  Prior to joining Intercare, Suzy worked at several national brokerage/consulting firms.  Suzy works closely with organizations to help control health care costs while keeping employees healthy and productive.   In addition, Suzy is well versed to provide advice on strategy, design, financing, delivery, ongoing management and communication of health and group benefit programs.

Suzy received her BA in Mathematics from Arizona State and just recently graduated from the University of San Diego where she obtained her MBA with an emphasis in Finance.

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Houston Office

Ken Choi, Senior Accountant

Ken joins Intercare as a Senior Accountant. Ken has over 7 years of accounting experience and a Bachelor’s degree in Accounting and Finance from the University of Houston. Ken has worked for a variety of other companies with his most recent role at an entertainment company.

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Kenesha Bell, Associate Benefit Analyst/Accounting Administrator

Kenesha recently joined Intercare as Associate Benefit Analyst/Accounting Administrator and brings with her over 5 years of experience in employee benefits and human resources. Prior to joining Intercare, Kenesha worked as a Pension & Benefits Administrator where she assisted in the implementation of a Employee Service Center.

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