Trying to Understand SBG

I was asked some very interesting questions;
We are trying to better understand what an organization such as yours keys on when evaluating providers.
Would you mind sharing what are the most important factors you use when evaluating healthcare providers?

Here is my answer.

The key has been employer engagement at the top levels of leadership.

We are about cost containment.
That comes about in four ways; negotiation on price, plan design, quality, and community improvement.
We have been practicing value based purchasing from the beginning of the Coalition establishment.

Another unique thing about our employers is they do not use insurance carriers.
They use TPAs and access a local provider network associated with the primary health system.

The last thing we want to hear is complaints.
No matter how good the provider if we get complaints it won’t work.

We develop a plan design (VBID and VBBD) and a network to improve patient’s overall health.
We want employees at work, safe and productive.
The area of great savings is proper care using evidence based guidelines.

We know the physicians cannot do it all but teaming together; physician, employer and the hospital.
We can build a medical community that supports the patient.
Compliance with the care plan is crucial.
The providers need to listen and work with us, as partners.

A main area of our RFP proposal evaluation is management and leadership style.
We avoid vendor relationships that are inflexible and rigid.
We want partnerships, with integrated management teams with common goals , frequent updates and adjusted targets.
We prefer long term agreements; 5 to 10 years, so we can establish goals and work on them.

Cancer, Cost and Life

No one likes being told they have cancer. Luckily there are many new treatments and a large number of patients can live very long lives with cancer. Some cancers are so treatable that they are becoming like chronic diseases; visit the doctor, do a scan and some labs once a year as a followup.   Treatment costs for a surviving cancer patient have risen over $4,000 a year, with no change to treatment protocol, since 2012.

there are some cancers that are hard to treat and many have no effective treatment. Cancer drugs have been in wide spread shortage and the prices have been going up, huge increases sometimes over 500%. A study showed the cost of a new cancer patient in 2012 compared to a new patient in 2015 has risen over $17,000.

Breast cancer treatment is one of the cancers whose treatment is rapidly become more effective. Recently the addition of pertuzumab has increased life expectancy for HER2 positive breast cancer patients by 15.7 months.  But the cost is $713,219.  That’s $45,000 for each addition life month.

Someone is paying for these drugs.  The insurance company and the patient. As high deductible plans grow in use what patient can afford the deductible of $5,000 to begin treatment or the 20% co-insurance of $10,000?

More info-graphics on the drugs increase can be found here.

An article about the costs of drugs and quality of life years can be found here.

ACA Cadillac Tax

The ACA Cadillac Tax (Excise Tax) – is a tax on excess health benefits. The government has decided that no employer should provide more than a certain amount of benefit to an employee. If your health benefit costs exceed the annual limit of $10,200 for single coverage you will pay a 40% tax. The limit for self and spouse (i.e. family) coverage is $27,500. (However they will be looking at this each month starting in 2018.)

They will use the “COBRA equivalent” to determine the cost of coverage for self-funded plans. Here is a calculatorthat the employee coalition in Madison, Wisconsin (The Alliance) has online that will help you determine your risks. I highly recommend that you plug in your current numbers and see where you stand.

Do you charge a COBRA premium for single coverage in excess of $10,000?
If you do then you will be paying the tax!

Here is the link to the IRS pamphlet about the tax.

Kaiser Family Foundation estimates 25% of employers will pay the tax. For a detailed report from Kaiser go here;


Small employers are looking for alternative funding solutions

Yes small businesses are looking for alternatives to the existing health care cost issue.

If you are a small business in the Savannah area and are looking for a health plan cost solution – we are it. This is the whole reason for the existence of SBG – cost containment – and we have been successfully doing this for over 30 years. We have partners ready to sign you up today.

A recent article in the Employee Benefits News describes the problem.  SBG is the solution.

88 Physicians and Growing

There are now 88 physicians – all primary care physicians – in Savannah that work in a certified Primary Care Medical Home; according to the list published by NCQA – the national organization that certifies medical homes.

The Eisenhower office of St  Joseph’s Candler is the latest group to join this prestigious list.   Also on the list as Level 3 ares Memorial Health University Physicians, and Southcoast Health with Curtis V Cooper as Level 1.

The list can be found here:

Exchange subsidy ruling

So what does the June 26th US Supreme Court ruling on the question of state versus federal exchange subsidies really mean to employers?

Employees who have employer sponsored health care benefits available are not eligible for subsidies.  The employer mandate was never under review and still stands.

What I think will happen is those states that are running exchanges have now received confirmation that subsidies will continue in the federal exchange and will dump their state exchanges. There are only 14 of them. Why should a state finance an exchange when the federal government will do it.  The plan designs are federally mandated, the premiums will not change, subsidies are available, and there will be no budget requirements.  A huge win for states.

What states will be first? I think Hawaii, Vermont, Minnesota, Washington, New Mexico, Nevada, and Oregon will lead the way if not already in talks with HHS.  (That is seven of the 14.)

21st Century Diabetes Management –

Diabetes has been a growing issue for employers for many years.  The number one reason for diabetes these days is being overweight and obese.  Complications associated with diabetes included heart problems, amputations, and blindness.

A new report – Transforming Diabetes Management: New Directions for Employers – published by the Northeast Business Group on Health offers some very useful information about the different types of intervention programs; the pros and cons.

  • Traditional Management
  • Patient Centered Medical Homes
  • On site/near site clinics
  • Pharmacy led
  • Center of Excellence
  • Digital Tools
  • Luckily in Savannah we have an excellent diabetes management center located at Candler Hospital.  It has been operating with 21st Century diabetes management techniques now for over 10 years and is SBG’s primary center for engaging diabetics.

64.2% Rate Increase

What increases are insurance carriers asking for in Georgia?

There are 27 plans on the Georgia healthcare marketplace.  The lowest requested increase is 10.2% and the highest is 64.2%.  The average is 20.1%.

This is a huge change considering it had been 1% when the Marketplace opened.  Some states had bragged about zero percent increases.  Before the ACA annual national increases were about 10%.

What is driving these increases?  The American Academy of Actuaries states that the main driver is the composition of the risk pool. They state that medical trends increases are being driven by per unit costs of services and increased utilization .

The insurance commission has not ruled on the increases. We will have to wait.

SBG’s annual increase averages 3% and has for over 15 years. The Coalition strategy works.

Employer Excise Tax for PCORI

Employers will be submitting the first payment of the PCORI fee on IRS Form 720 –  Quarterly Federal Excise Tax. Yes that’s correct; PCORI is right there with fishing rods, arrows, boats, and tanning salons.





First PCORI Fees Due by July 31st for Employers Sponsoring HRAs and Other Self-Insured Plans
The IRS has revised Form 720, Quarterly Federal Excise Tax Return, for employers sponsoring certain self-insured health plans to report and pay new fees imposed under Health Care Reform to fund the Patient-Centered Outcomes Research Institute (PCORI).

Affected Employers PCORI fees are imposed on plan sponsors of applicable self-insured health plans for each plan year ending on or after October 1, 2012, and before October 1, 2019. Applicable self-insured health plans generally include health reimbursement arrangements (HRAs) and health flexible spending arrangements (FSAs) that are not treated as excepted benefits.

Calculating the Fee
The fee for an employer sponsoring an applicable self-insured plan is two dollars (one dollar for plan years ending before October 1, 2013) multiplied by the average number of lives covered under the plan. For plan years ending on or after October 1, 2014, the fee will increase based on increases in the projected per capita amount of National Health Expenditures.

How to Report and Pay the Fee
Form 720 must be filed annually to report and pay the fee no later than July 31st of the calendar year immediately following the last day of the plan year to which the fee applies. Note that the regulations do not permit or include rules for third-party reporting or payment of the PCORI fee. According to a recent IRS memo, employers may deduct PCORI fees as ordinary and necessary business expenses for federal tax purposes.