The Affordable Care Act requires employers to notify their employees of the existence of health benefit Exchanges.  Originally, the notification was to be issued by March 1, 2013; however, last Thursday that requirement was postponed to late summer or fall of 2013 to coordinate with the open enrollment period for Exchanges. The notice requirement was delayed for a couple of reasons.  First, the notice should be coordinated with the educational efforts of the departments of Health and Human Services (HHS) and the Internal Revenue Service (IRS) guidance on minimum value. Second, the departments are committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time. The Department of Labor is considering providing model, generic language that could be used to satisfy the notice requirement.

Are you able to spot the areas traditional Pharmacy Benefit Managers hide cash flow from third-party payers (i.e. employers)? Click to Enlarge Here are just three areas traditional PBMs hide cash flow from unsuspecting third-party payers.  A third-party payer may include an employer, insurer, HMO, union and others. 1.  Contractual Relationship - this is #1 because it permits or makes possible revenue to the PBM that is not transparent.  Fee-for-service, shared [risk] savings and capitated contracts often lead to excessive overpayments. 2.  Share of Rebates -  often times the share is too low.  Payers should receive 100% of all rebates and/or any incentives earned due to their prescription drug purchases. Typically, rebate payments amount to $2.00 - $3.00 per script. 3.  Ingredient Costs - in many cases the amount is too high.  A payer should always remunerate to the PBM the exact amount reimbursed to network pharmacies for the same dispensed prescription medication(s).  A difference in these payments is referred to as a spread.  It is not uncommon for traditional PBMs to realize spreads as high as $25 on a single prescription! I won't waste time discussing transparent and/or pass-through pharmacy benefit managers because all PBMs will communicate in one way or another that they're fully transparent and pass-through.  Not that they're wrong, but it depends upon how one defines transparency.  The definition is ambiguous at best.  However, there is no ambiguity in the definition for fiduciary. For clarification purposes, I must distinguish between traditional and fiduciary pharmacy benefit managers.  It is simple; a fiduciary PBM must [legally] put its clients' interest before their own and a traditional PBM does not. Click here to register for: "How To Slash PBM Service Fees, up to 50%, Without Reducing Benefits or Shifting Costs to Employees." If your PBM promises full transparency and pass-through yet has not agreed to a fiduciary role request they put the pen where their mouth is.  If your PBM resists ask yourself, "what are they hiding?"  You now know the answer...

In regulations and other pronouncements issued toward the end of 2012, the government has provided further details on new taxes and fees introduced by the Patient Protection and Affordable Care Act.  Health plan sponsors will be particularly interested in the amounts that they will be assessed to fund various PPACA programs. This guidance includes: Regulations, a fact sheet, and a technical fact sheet on Premium Stabilization Programs for the individual and small group health insurance markets Regulations on Funding for the Patient-Centered Outcomes Research Institute (PCORI) Regulations and FAQs on the Additional Medicare Tax on high-income individuals The assessments to fund these programs will affect insurers, plan sponsors, and employees. Premium Stabilization Programs Beginning in 2014, PPACA requires insurers in the individual health insurance market to offer coverage regardless of an individual's health status or pre-existing conditions, making coverage available to individuals who currently have none. This looming influx of newly insured individuals creates uncertainty for the risks that insurers will assume. To reduce that uncertainty and its possible effect on health insurance premiums, PPACA establishes three specific programs. Building on guidance that it issued in 2011, the Department of Health and Human Services has issued proposed regulations governing these programs. Risk Adjustment Program This permanent program provides increased payments to health insurers that enroll higher-risk individuals. The program applies state-by-state to health plans in both the individual and small group markets, with exceptions for plans that are grandfathered under ACA and certain types of benefit arrangements. The new regulations establish a process for approving a state risk-adjustment program and describe rules that HHS will follow to operate a program in the event that a state does not obtain federal approval or chooses not to operate its own program. The program is funded through a transfer of amounts from plans that enroll lower-risk individuals to plans with higher-risk enrollees. Risk Corridors Program This temporary, federally administered program limits the extent of an insurer's gains and losses from 2014 through 2016. The program applies to qualified health plans offered through an exchange in the individual and small group markets. A cost target is set for each plan, and an acceptable risk corridor is established around that target. Plans with unexpectedly low costs (below the risk corridor) will pay amounts to HHS. Plans with unexpectedly high costs (above the corridor) will receive funds from HHS. The new regulations make adjustments to prior guidance on the program, such as accounting for certain taxes and profits in establishing the corridors. Transitional Reinsurance Program This temporary reinsurance program applies to commercial health insurance in the individual market. The program is funded through required contributions by insurers and self-funded group health plans. It will be in effect from 2014 through 2016. The new regulations establish that HHS will operate the program, paying reinsurance amounts from the program and collecting contributions from insurers and self-funded plans to fund those reimbursements. Under current guidance, it is expected that insurers and self-funded group health plans will be required to contribute $63 per covered life for 2014. That contribution may…