Action Alerts

Industry news has sounded the alarm on a projected 6%-8% increase in healthcare costs for 2025. PwC’s latest Medical cost trend: Behind the numbers report 1 urges HR to brace for the highest increase in nearly 13 years. The Business Group on Health’s 2025 Employer Health Care Strategy Survey revealed that employers face a cumulative increase of 50% higher costs on employee healthcare since 2017.2  The Congressional Budget Office is espousing a 60% increase in 2025 premiums “for job-based health insurance.” 3 WHAT IS BEHIND THE INCREASE? Facility-based care, inflationary costs, cancer treatments, a resurgence in musculoskeletal elective surgeries previously postponed from the pandemic, an aging workforce, chronic conditions, cardiovascular disease, costly biological gene therapies, the catapulting rise and expanded use of GLP-1 drugs and increases in mental health care are drivers of cost. A study released by KFF in August 20244, shows the U.S. spends twice as much per capita on healthcare in relation to  comparable countries without claiming better health outcomes. WHAT CAN YOU DO TO MITIGATE RISK? Collecting data from your healthcare carriers is a great place to start to make informed decisions and evaluate plan design changes. While many employers do not want to pass increased […]

BACKGROUND A recent brief on the future of health published by the American Medical Association (AMA) in 2023i found a large discrepancy in the coverages of digital medicine services across the commercial health plan marketplace.. With increased utilization of digital medicine solutions over the last decade, the AMA, in conjunction with other agencies, created over 20 digital medicine CPTii codes for various telephone/internet consultations and remote patient monitoring. These codes became effective from 2019 – 2022, however coverage of these codes continues to vary widely between Medicare, Medicaid and among commercial payors. WHAT IT MEANS FOR YOU Whether you are in the early stages of exploring point solutions, or have already implemented one or more, the central question is: Does the point solution deliver a return on your investment in either elevating the patient care experience, favorably impacting medical spend or increasing employee productivity? The variability in coverage coupled with a lack in coverage transparency makes it almost impossible for your employees to understand their benefits. Doctors who deal with multiple payors are also becoming confused with what digital health services are or are not covered and are unable to direct their patients toward the highest value care. For example, […]

Navigating the point solutions landscape DOWNLOAD THE ARTICLE BACKGROUND The patient care continuum is constantly evolving and expanding to both ensure that patient needs are met as well as to provide innovative cost containment strategies. In recent years, and especially during the COVID-19 pandemic, there has been explosive growth in healthcare point solution technologies. Services provided through electronic and digital communication apps have afforded targeted solutions to specific populations and specific health or well-being concerns. The advent of stay at home and remote working during the pandemic gave rise to thousands of third-party vendors offering newly developed tailored solutions to address not only diabetes and hypertension, but sleep, diet and exercise, mental health, low back pain, infertility, physical therapy, pelvic floor disorders, and many more. Some employers are offering up to nine point solutions at any given time. Below is a high-level summary of the prevalent terminology in this space: Virtual care: is a broad term that encompasses a wide range of healthcare services delivered through digital channels including: telehealth, digital health, online appointments, remote patient monitoring, and virtual visits with doctors or other healthcare providers. Virtual care can be provided synchronously or asynchronously.i Telemedicine or Telehealth: generally refers to [...]

The hottest trend in the 401(K) arena is not an exciting new product, but rather, a worrisome spike 401(K) lawsuits against plan fiduciaries. THE ISSUE 2023 was a banner year for 401(k) plan litigation, with suits filed by plaintiffs claiming excess fees, high cost/low performing investment options or a limited investment menu, etc. While much activity seems to be frivolous lawyer-driven class action suits, recently a settlement was struck in a high profile excessive fee suit against the Estee Lauder 401(k) plan. Is your organization prepared to stave off litigation? WHAT IT MEANS FOR YOUR COMPANY You may feel that your plan is immune from lawsuits (or audits, contribution recalculations or revisions, or other pitfalls). Bear in mind that the hundreds of companies serving as defendants in lawsuits likely felt the same way. Even if the suit is without merit, your time and resources will be taken away from your normal business operations and not properly focused on your benefits program. That’s why, in these situations, the best defense is a good offense. HOW WE CAN HELP Your plan may need a “checkup.” Optimatum offers a comprehensive Retirement Plan Checkup that willassess your plan and alert you to potential exposure […]

Everybody is talking about weight-loss drugs. THE ISSUE When it comes to anti-obesity drugs, employers are facing what feels like an insurmountable challenge. On the one hand, they want to provide a comprehensive drug benefit that supports employees’ health needs. On the other, as always, they need to manage cost. And therein lies the struggle. The demand for pharmacological solutions to address the obesity epidemic can come at a steep price. Although these medications have been approved for several years, the recent media attention has brought these issues to the forefront. WHAT IT MEANS FOR YOUR COMPANY As you review options for anti-obesity medications, your ability to effectively manage your drug benefits program has become even more challenging. For example, semaglutide, is both an anti-diabetic and anti-obesity injectable drug. The main difference is the amount of semaglutide being prescribed. For antidiabetics, the brand name is called Ozempic, and it is available in 0.5 mg, 1 mg, or 2 mg dosages of semaglutide. For anti-obesity, the brand name is Wegovy, which can titrate to as much as 2.4 mg of semaglutide. The price of these drugs can vary widely, making it ever more important for employers to manage their drug benefit program […]

What Employer Sponsored Health Plans Need to Know EMPLOYER SPONSORED HEALTH PLANS NEED TO PLAN FOR THE END OF THE COVID-19 PUBLIC HEALTH EMERGENCY January 30, 2023 marked the 60 days’ advance notice from the Biden administration that the COVID-19 Public Health Emergency (PHE) will finally come to an end on May 11, 2023. Employers with Self-Insured Employer-Sponsored Health Plans will have the opportunity to decide what if any changes they need to make to their plans. PUBLIC HEALTH EMERGENCY BACKGROUND In January of 2020, the US Department of Health and Human Services (HHS) declared a Public Health Emergency due to the impact of the coronavirus. Multiple extensions of the PHE have occurred since 2020 and now, three years later, the final day of this declaration will be May 11, 2023. HHS has assembled a Fact Sheet titled the COVID-19 Public Health Emergency Transition Roadmap highlighting key areas that will be impacted by the end of the PHE, and serves as the guideline for plan sponsors. CONSIDERATIONS FOR EMPLOYER SPONSORED HEALTH PLANS Changes as of May 11, 2023: Change Decision Points Action Needed COVID-19 diagnostic testing, and related services without costsharing, prior authorization, or other medical management requirements will end. […]

BACKGROUND Along with several other new disclosure requirements, the Consolidated Appropriations Act enacted ERISA section 408(b)(2)(B), requiring brokers and consultants who receive at least $1,000 in direct or indirect compensation to disclose that compensation to the plan fiduciary. Although similar requirements have been in effect for more than 10 years in the retirement space, this regulation applies to ERISA covered self and fully insured health and welfare plans regardless of their size. The goal of these disclosures is to increase transparency especially for indirect compensation received from third parties. STEPS TO ENSURE COMPLIANCE Review the DOL Field Assistance Bulletin and consult your ERISA attorney to understand what service providers and plans are covered by this requirement. Revisit any service provider contracts signed, renewed or extended after December 27, 2021 to ensure the disclosure requirements abide by the new rules. Review your service provider’s fee disclosures to ensure they are in line with your understanding. ABOUT OPTIMATUM Optimatum is a vendor management firm that focuses exclusively on the HR supply chain with turnkey solutions that improve the financial, operating performance, transparency and accountability of HR Benefit programs while still maintaining existing vendor relationships. Our support of the HR workstream during the […]

What You Need To Know BACKGROUND The Consolidated Appropriations Act (CAA) is a new federal reporting regulation that requires health insurers offering group or individual health coverage and self-funded group health plans to report drug utilization and spending trends annual data to the Tri-Agencies. In an effort to understand pharmacy/prescription costs, the Tri-Agencies will review submitted data and publish reports on their findings (submitted data will not be publicly posted). This legislation is referred to as the RxDC reporting (or Pharmacy Benefit and Drug Costs Reporting) (filing instructions are contained within this document) DOES THIS APPLY TO YOU? All fully insured commercial, self-insured commercial (ERISA included), Exchange, and FEHB Plans must comply with this regulation APPLICABLE TIMEFRAMES The data collection period is August 29, 2022 thru September 30, 2022 The first compliance date is December 27, 2022 for reporting years 2020 and 2021 Future years reporting will be due June 1 annually (2022 data will be due June 1, 2023) The first submission is for reference years 2020 (containing 2019 and 2020 data) and 2021 (2020 and 2021 data) CMS Enterprise Portal for submission is https://portal.cms.gov/portal/ YOUR ROLE Engage with your PBM vendor to ensure appropriate and timely data collection. […]

Retirement Plan Lawsuits Aren’t Just for 401(k) Plans Can 403(b) Plan Lawsuits be Far Behind? DOWNLOAD THE ARTICLE Over the last 10 years, there has been a rise in breach of fiduciary duty lawsuits against 401(k) plans including recent large payouts from Boeing ($57M) and Wells Fargo (32.5M). These lawsuits challenge Plan administration fees, the appropriateness of the fund lineup, fund fees, and the governance process that oversees the Plan. BUT WHAT ABOUT 403(B) PLANS? Similar to 401(k) plans, we have begun to see comparable lawsuits and payouts (e.g. Cassell v. Vanderbilt ($14.5M)) filed against 403(b) Plans – a trend that is expected to continue following a recent unanimous decision by the US Supreme Court in Hughes v. Northwestern University making it harder for lower courts to dismiss excessive fee lawsuits. Per a report by the US Government Accountability Office (GAO) the large volume of 403(b) Plan assets and wide range of fees has raised suspicions: 1. More than $1T in 403(b) Plans assets (almost twice 401(k) assets subject to ERISA). 2. 1 bps to 2.01 bps in 403(b) record keeping and administration fees 3. 1 bps to 2.37 bps 403(b) investment fees 4. Funds with Assets Under Management (AUM) [...]

An Update on New Legislation If you have employees that reside in Maryland, you should be aware that paid leave legislation has recently been enacted. The first stage of the implementation process starts in 2023. BACKGROUND Despite the Governor’s veto, Maryland now joins 9 states and the District of Columbia that have enacted a paid leave program for employees with the passage of the Time to Care Act. The bill provides employees up to 12 weeks of partially paid leave for specified personal family circumstances such as: 1) Care of a sick relative 2) Welcoming a new child 3) Dealing with a military deployment The bill also includes employee job protections from retaliation or termination for using leave. Both full and part time employees who have worked 680 hours within a 12-month period are eligible. The law and contribution requirements apply to both for profit and not for profit employers with 15 or more employees. There are also special provisions for self-employed individuals as well as employees in small firms of less than 15. The Maryland Secretary of Labor will establish the Maryland Family and Medical Leave Insurance Fund by June 1, 2023. Funding of the pool is set to […]

Coronavirus Update Moderna and Pfizer-BioNTech COVID-19 vaccines for children age 6 months and older approved by the FDA CMS VACCINE UPDATE: June 17, 2022: The FDA approved both Moderna and Pfizer-BioNTech COVID-19 vaccines for children age 6 months and older under the “emergency use authorization (EUA)” Moderna was approved for children age 6 months through 17 years of age Pfizer-BioNTech was approved for children 6 months through 4 (already approved for ages 5 and older) COVID Vaccine: What Parents Need to Know Johns Hopkins, June 22, 2022 MASK UPDATE: Federal government-operated aircraft, boats, and marine transportation require masks, commercial airlines ended mandates with the Florida Federal Judge ruling against the mandate on April 18, 2022 State by state masks for “high-risk individuals” are either required or recommended, specifically in healthcare settings Please bookmark COVID-19 Policy Dashboard for quick access to state by state mandates, policies and vaccine status. CORONAVIRUS UPDATE: OMICRON VARIANTS CONTINUE TO EVOLVE The vaccine does not prevent a vaccinated person from being infected with Omicron nor the sub variants however it may reduce the severity of the symptoms depending upon the length of time between the vaccine and the infection They are 15% more contagious than their […]

Since 2015, when Boeing agreed to pay $57 million to settle a lawsuit in which employees accused the company of mismanaging their 401(k) retirement plan, there’s been an alarming rise in breach of fiduciary duty complaints.i DOWNLOAD THE ARTICLE Most recently, in April 2022, Wells Fargo agreed to pay $32.5 million to settle a lawsuit where they were accused of investing in funds affiliated with the company, overlooking their high fees and underperformance measured against comparable retirement products. Similar claims across all industries include challenging Plan administration fees, the appropriateness of the fund lineup, fund fees, and the governance process that oversees the Plan. CURRENT SITUATION In addition to new tools and legal precedent, a 2022 Supreme Court ruling in Hughes v. Northwestern University has paved the way for lawsuits against 401(k) Plan sponsors to continue. With over 15 years of legacy issues to learn from, plan participants and their high-powered law firms have become more informed and sophisticated in their approach. With the development of new databases and analytical tools, fees and fund issues which were previously obscured, can quickly be identified and quantified. This has made it easier for legal firms who specialize in ERISA to file lawsuits [...]

For Employer Sponsored Health Plans As we enter the tenth month of the global pandemic, the socio-emotional impact of COVID-19 on businesses and families continues to take its toll. The human psyche struggles to simultaneously maintain resilience and retain hope amidst breaks in the supply chain for goods and services, business and school closures, loss of wages and homes for workers, and the daily reminder of lives lost due to this virus. The pandemic has resulted in workers across the spectrum including C-suite executives, human resources, frontline healthcare professionals, educators, work-at-home and essential workers experiencing overwhelming emotional fatigue and social isolation. Emotional and/or pandemic fatigue is characterized by feelings of physical and mental exhaustion, stress, sadness, loss of sleep, loss of control, grief, feeling disconnected and decreased productivity. The holiday season further exacerbates these feelings. Prolonged loneliness can amplify chronic conditions including depression, heart disease and diabetes. It is critical that employers increase their awareness of employee mental health and social connectedness. When left untreated, loneliness, depression, stress and anxiety can result in higher medical, pharmacy, disability and worker’s compensation costs. STEPS YOUR COMPANY CAN TAKE NOW Ask your healthcare vendor if they have a COVID-19 report card that tracks […]

The Pfizer-BioNTech COVID-19 Vaccine received FDA approval on August 23, 2021. Marketed as “Cominarty,” it is the first FDA approved vaccine for individuals 16 and older to prevent the COVID-19 disease. Employers can now mandate that employees receive the COVID-19 vaccination and can provide incentives to their employees if they follow the Equal Employment Opportunity Commission’s (EEOC) guidance released May 28, 2021. The EEOC’s updated guidance requires employers to abide by the laws governing ADA compliance, and Title VII of the Civil Rights Act of 1964. In July, the Biden Administration reached out to employers to encourage vaccine mandates and offer incentives to motivate people to be vaccinated against COVID-19. WHAT YOU NEED TO KNOW Self-Vaccination This type of information is categorized as “medical information” and must be treated as confidential and protected health information and not be filed as part of an employee’s personnel record. Be sure to have a safe and protected area in which to keep these records. Incentives and Penalties If you choose to join a growing body of employers looking for a more assertive option The penalty or surcharge cannot be considered substantial to the point that it can be considered coercive. The EEOC did […]

On October 1, 2014, the Equal Employment Opportunity Commission filed a lawsuit against the Wisconsin-based plastics manufacturer, Flambeau Inc., over their company wellness program. Is your company at risk? The suit alleges that Flambeau, Inc. canceled an employee’s medical insurance and shifted the entire premium cost onto the employee after he failed to complete a voluntary health-risk assessment and test under the company wellness plan. This is not the first suit that the EEOC has filed in federal court over wellness plans, as another suit was filed against Orion Energy Systems, Inc., who had also canceled an employee’s benefits for failing to complete voluntary medical exams and answer disability related questions. In both suits, the EEOC asserts: Biological testing and health risk assessments are not job related or in line with business necessity. These tests were not truly voluntary under the American Disabilities Act as each employees suffered termination of their health insurance and the penalty of absorbing the entire cost premium for failure to comply. WHAT THIS MEANS FOR YOUR COMPANY As many employers continue to struggle with the soaring cost of healthcare, they are keen to try multiple strategies to reduce the impact. In a recent industry study, […]

As Cases of Opioid Abuse Continue to Rise The number of people filling prescriptions for powerful, addictive pain killers is increasing at an explosive pace. A portion of the individuals dependent on these prescriptions could be sitting in your company — a problem that many organizations are hesitant to address or discuss. Recent alarming trends include: Insured opioid abusers incurred eight times more healthcare expenses than non-abusers. Rapid growth in schedule II opioid prescriptions have come from a relatively small percentage of medical providers, half of which were for minor back injury claims. New York City’s volume of prescriptions for oxycodone, an opiate-based pain reliever, doubled in the last three years. One prescription for every eight people in the city is cited. WHAT THIS MEANS FOR YOUR COMPANY The goal of any company’s benefits program should be to manage the underlying conditions while ensuring the delivery of the right care, at the right time, in the right place, for the right price. Critical to achieving this proposition, a pharmacy benefit management (PBM) vendor should have processes in place that minimize opportunities for filling addictive prescriptions that could lead to dependency or abuse. Without systems in place, companies do experience both […]

Administrator Sentenced for False Statements on Form 5500 Starting in 2011, companies will be motivated to make 5500 compliance a priority. The last quarter of 2010 witnessed likely the first ever significant jail sentence related to a false statement on a Form 5500. The owner of Philadelphia Pension Planning Corporation (PPPC), which managed the profit sharing plan for Bustleton Landscaping Co. Inc., pleaded guilty to significantly overstating the assets of the plan to hide major losses. She was sentenced to 15 months in prison, three years of supervised release and ordered to pay more than $715,000, as announced by the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration in late November of last year. WHAT THIS MEANS FOR YOUR COMPANY In the past, the DOL has not been known to strongly enforce 5500 compliance and frankly, it has often been a lower priority for many financial executives as a result. This recent case involving PPPC indicates that the DOL is paying more attention to Form 5500, subsequently, financial executives will need to as well. In addition, it highlights the vulnerability of a company that does not have proper vendor management procedures in place. NEXT STEPS We recommend that companies […]

In May 2014, the 6th US Circuit Court of Appeals affirmed the district court’s grant of summary judgment, in the case of Hi-Lex Controls, Inc. vs. Blue Cross Blue Shield of Michigan (BCBSM), and awarded over $6 Million to Hi-Lex Controls, Inc. In affirming this, the court: Rejected BCBSM’s argument that it was not an ERISA fiduciary. Found that BCBSM violated its fiduciary duties under ERISA by self-dealing. According to the court’s opinion, under BCBSM’s original Administrative Services Contract (ASC) with their client, BCBSM agreed to process healthcare claims for Hi-Lex’s employees and grant those employees access to BCBSM’s provider networks. In 1993, BCBSM implemented a new system whereby it would retain additional revenue by adding certain mark-ups to hospital claims paid by its clients. These new fees were charged in addition to the “administrative fee” that BCBSM collected from Hi-Lex under a separate portion of the ASC. Thus, regardless of the amount BCBSM was required to pay a hospital for a given service, it reported a higher amount that was then paid by the self-insured client. BCBSM retained the difference between the amount billed to the client and the amount paid to the hospital through a new system known […]

How Companies Can Get More from Their Insurer David Neikrug, chief executive officer of Optimatum, talks about how companies are managing to cut their healthcare costs in ways that don’t involve shifting costs directly onto employees. ABOUT OPTIMATUM GROUP Optimatum Group LLC is a vendor management firm that focuses exclusively on the HR supply chain. Our turnkey solutions improve financial and operational plan performance through our multidisciplinary approach, including forensic analysis and maintaining existing vendor relationships, while increasing transparency and accountability. Through our Employer-sponsored Health Care Group, clients reap direct efficiencies of 10-12% of their health care costs within one year, and 5-7% in subsequent years.For organizations with an edict of expense management, coupled with a culture of strong vendor management, Optimatum drives solutions at a time when wastefulness is a luxury we can all no longer afford.

In July 2011, we issued an action alert highlighting the potential dangers of a growing problem involving prescription drug abuse, which impacts benefit plan costs and administration as well as workplace safety. More than two years later, this continues to be a major issue for employers. While there has been an overall decline in the share of workers testing positive for drugs, a study by Quest Diagnostics revealed there has been a dramatic spike in the number of employees testing positive for highly-addictive drugs, including: Vicodin and OxyContin positive results increased 172% and 71%, respectively, from 2005 to last year Amphetamines, including Adderall, showed a doubling of positive tests since 2002 Despite the threat posed by the abuse of these drugs to workplace safety, up to 80% of these positive tests may be disregarded because the user has a valid prescription. Plan sponsors have valid concerns about the impacts of abuse of opiates and other prescription drugs, and purchase services including medical management programs and drug utilization reviews designed to protect against overuse of prescription drugs. Many assume that their Pharmacy Benefit Managers (PBMs) are successfully utilizing these tools to identify and halt abuse of these dangerous medications. However, these […]

Aetna announced on July 27, 2010, that it has awarded CVS Caremark with a 12-year contract to administer approximately $9.5 billion in annual drug spend to 9.7 million of its members, effective as of January 1, 2011. Aetna will retain its PBM and will continue to manage clinical programs, protocols and oversight of its pharmacy benefits business, while outsourcing the following functions to CVS Caremark: Administration of Aetna’s retail pharmacy network and management of pharmacy customer and member service functions. Management of purchasing, inventory management, and prescriptions fulfillment for Aetna’s mail order and specialty pharmacy operations Aetna maintains that this arrangement will lead to enhanced clinical capabilities, improved pricing and products, and improved customer service and member experience. ABOUT OPTIMATUM GROUP Optimatum Group LLC is a vendor management firm that focuses exclusively on the HR supply chain. Our turnkey solutions improve financial and operational plan performance through our multidisciplinary approach, including forensic analysis and maintaining existing vendor relationships, while increasing transparency and accountability. Through our Employer-sponsored Health Care Group, clients reap direct efficiencies of 10-12% of their health care costs within one year, and 5-7% in subsequent years.For organizations with an edict of expense management, coupled with a culture of […]

For Pharmacy Benefit Management (PBM) Services On June 10, 2013, Cigna announced that it has entered into a strategic partnership with Catamaran to provide PBM services. Catamaran was created as a result of the merger between Catalyst Health Solutions and SXC Health Solutions in 2012. Once fully integrated, Catamaran will provide services to all of Cigna’s commercial pharmacy business – approximately 8 million members. Catamaran had previously been responsible for the Medicare business of HealthSpring, whose acquisition by Cigna was completed in January 2012. Under the agreement, which is estimated to take two to three years to implement: Cigna will continue to manage the drug formulary, sales and marketing, product development, and customer and client service functions. Catamaran will provide the technology platform, back-end processing, drug procurement, inventory, retail pharmacy contracting, and mail-order services. WHAT THIS MEANS FOR YOUR COMPANY According to the press release from Cigna, “Clients and customers will realize greater value through enhanced affordability from combined scale, continued high quality clinical care, and an exceptional service experience.” Clients should hold Cigna accountable to deliver improved pricing, enhanced network access, and the other promised benefits of the agreement. Realizing these benefits that result from the agreement between Cigna […]

CVS Caremark and Walgreens announced last Friday, June 18, 2010 that they have reached an agreement on terms under which Walgreens will continue to participate in the CVS Caremark PBM network. The announcement came following a two week dispute between the companies which began when Walgreens released a statement on June 7, 2010 saying that it would no longer participate in the CVS PBM network as a result of disagreements concerning reimbursement rates. WHAT THIS MEANS FOR YOUR COMPANY Financial executives, in their ongoing quest to help their companies control current and future health care costs, need to be aware of and ensure against any issues disrupting their employees’ pharmacy benefits. A disruption to your employees’ PBM network poses a number of significant issues, such as logistical problems with converting prescriptions as well as medication compliance. These issues will be particularly acute in areas that do not offer a wide variety of pharmacies, as employees who rely on the major pharmacy in their area will be left without viable alternatives if their pharmacy is no longer part of the PBM network. Although a network disruption was averted in this situation, it highlights the potential for disruptions in the future. Financial […]