Health Care Employers Adjusting Benefits Due to ACA

Like many employers, hospitals are also feeling the effects of new health care benefit rules.

With the Patient Protection and Affordable Care Act (ACA) “Cadillac” excise tax looming, many hospitals feel increasing pressure to rein in health benefit costs.

The annual Cammack Health Benefits Survey of Hospitals found the tax could affect as many as two-thirds of health systems if no changes are made. Forty-six percent of respondents plan to make changes over the next few years—22% have changed the medical plan to lower the value of the plan.

Twenty-one percent of respondents have not analyzed potential liabilities for the Cadillac tax, while 17% are willing to pay some tax.

The survey also found an increase in spousal surcharges, with some employers opting to eliminate spousal coverage entirely. Cammack Health says this is a definitive shift for an industry that has typically been more generous, with historically lower contributions, more generous eligibility rules (often covering large segments of part-time workers), and richer plan designs than average employers.

The tendency to cover part-time workers helped hospitals when it came to complying with the employer mandate. However, 24/7 minimum staffing requirements force many hospitals to maintain a robust per diem workforce, and those workers leave many hospitals vulnerable to potential violation of the employer mandate’s 95% minimum coverage rule for employees working more than 30 hours, Cammack notes. This problem is particularly acute for health systems with multiple hospital locations, where one per diem employee may be working at multiple locations. Many hospitals found themselves forced to upgrade systems and improve internal communication to comply with the standards.

The survey found hospitals using different strategies to cope with the potential additional coverage extensions, including creating new plan offerings, reducing per diem hours, and upgrading internal systems to track hours more effectively.

Most hospitals (84%) continue to design plans with significant steerage to their own “domestic” facilities and physicians. Steerage is often in the form of waiving coinsurance or copays for facility claims. But more hospitals are now turning to a 3rd or 4th network tier to drive down costs. Some hospitals are choosing to create domestic tiers within tiers, incentivizing accountable care organization (ACO)-based or employed physicians within their domestic tiers. Others are choosing to exclude specific facilities, or put high-cost facilities in a new, separate tier, to de-incentivize their use.

The 2015 Cammack Health Benefits Survey of Hospitals includes more than 160 hospitals across 89 systems in New York, New Jersey, Delaware, Pennsylvania, Connecticut, Massachusetts and Rhode Island. Highlights may be downloaded from here.