Author Archives | Rick Ewers

About Rick Ewers

Mr. Ewers is an analytical consultant providing financial analysis, vendor evaluations, market & compliance analysis, as well as national industry trending for group employers.

Medicare Special Enrollment for Same-Sex Spouses

April 30, 2014


The Department of Health and Human Services (HHS) announced in early April that processing of requests for Medicare special enrollment of same-sex spouses will begin.

This action is reflective of the U.S. Supreme Court decision last year which overturned Section 3 of the Defense of Marriage Act (DOMA) thereby allowing legally married same-sex spouses access to Federal benefits.   As a result, same-sex marriage can now be used by Medicare in determining benefit eligibility.

“Today’s announcement helps to clarify the effects of the Supreme Court’s decision and to ensure that all married couples are treated equally under the law,” said HHS Secretary Kathleen Sebelius. “We are working together with SSA (Social Security Administration) to process these requests in a timely manner to ensure all beneficiaries, regardless of sexual orientation, are treated fairly under the law.”



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CMS Issues FAQ for Health Insurers on Same-Sex Spouses

April 29, 2014


In mid-March, the Center for Medicare & Medicaid Services (CMS) issued guidance to clarify earlier regulations relative to section 2702 of the Public Health Service Act (PHS Act) which requires health insurers to guarantee the availability of coverage for same-sex spouses.   This guidance was released in the form of a Frequently Asked Question as follows:

Q: If a health insurance issuer in the group or individual market offers coverage of an opposite-sex spouse, may the issuer refuse to offer coverage of a same-sex spouse?

No. Federal regulations at 45 CFR 147.104(e) provide that a health insurance issuer offering non-grandfathered group or individual health insurance coverage cannot employ marketing practices or benefit designs that discriminate on the basis of certain specified factors. One such factor is an individual’s sexual orientation. As CMS has used the terms in this regulation, an issuer is considered to employ marketing practices or benefit designs that discriminate on the basis of sexual orientation if:

    1. The issuer offers coverage of an opposite-sex spouse; and
    2. The issuer chooses not to offer, on the same terms and conditions as those offered to an opposite-sex spouse, coverage of a same-sex spouse based on a marriage that was validly entered into in a jurisdiction where the laws authorize the marriage of two individuals of the same sex, regardless of the jurisdiction in which the insurance policy is offered, sold, issued, renewed, in effect, or operated, or where the policy holder resides.

The purpose of this guidance is not to direct a group health plan to provide coverage which does not meet the terms of eligibility for coverage under the health plan.  It is strictly intended to clarify regulations which prohibit discriminatory action by an insurance provider to a plan sponsor or individual in the individual market on the basis of sexual orientation and to reinforce the policy of all individuals having access to health coverage.


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What is a Biologic?

January 21, 2014


In the course of a day most consumers encounter advertisements on television, magazines and other media for a host of pharmaceuticals. So it is likely you have heard the term “biologic” used in some of those ads.

Have you wondered what exactly a biologic medication is? Let’s learn more about these meds and how they differ from conventional drugs. Let’s also learn about the impact on the quality and cost of healthcare today.

Biologics, which are also known more formally as biological response modifiers, differ from conventional drugs in that they are manufactured using a living system such as microorganism, plant, or animal cells. The result of this process is a very large and complex molecule or mix of molecules. Some biologics are produced by recombinant DNA technology. This is in contrast to conventional drugs which are comprised of smaller molecules and are produced through chemical synthesis by combining chemical ingredients in a specific order. (How do Drugs and Biologics Differ?)

It is important to note the process used to create a biologic is the mechanism by which the medication is produced. “The product is the process” and it is proprietary to the manufacturer. The process must therefore be tightly controlled and monitored at every step of the way to insure the end product is produced as expected. Small process differences cannot be allowed to occur as this can result in an end product that varies significantly from the desired result. This facet is the biggest difference from producing a conventional medication. It also makes it difficult for another manufacturer to create an equivalent medication (known as a biosimilar) at the present time. (How do Drugs and Biologics Differ?)

Biologics are part of a growing drug class called specialty medications. Specialty meds are typically used to treat complex, chronic health conditions including but not limited to rheumatoid arthritis, Hepatitis C, multiple sclerosis as well as certain cancers.

Most biologic medications are delivered through injection or infusion and many require the intervention of a physician to administer them. The costs of these medications to a health plan are not only being incurred as part of the pharmacy benefit but in the medical benefit as well.

Advancements made in the development of specialty meds including biologics has been a godsend for individuals suffering from serious health conditions, however the medications are also typically quite expensive. Some treatments can cost hundreds of thousands of dollars per year for each patient. This creates challenges for insurance carriers and plan sponsors who are being called upon to cover the high cost of these therapies. It is a double-edged sword balancing the improvement of patient care while managing significant costs.

Express Scripts advises specialty drug spending is expected to increase 67% by the end of 2015. Three of the four most costly drug therapy classes will be for specialty conditions. (Specialty Drug Spending to Jump 67% by 2015)

Express Scripts also reports the U.S. was expected to spend approximately $114.7 billion on specialty medications in 2014 with $4 out of every $10 spent on prescriptions covering the cost of medications for complex conditions. The company estimates $250 billion could be saved between 2014 and 2024 if just eleven biosimilar medications were allowed to enter the market during that period. However, as mentioned above, the process of creating biosimilars is challenging. This is due to the nature of biologics and also the current FDA regulations in approving these medications.

Currently, it is difficult to monitor the process of producing these medications vs. the manufactured end-result of traditional drugs. Express Scripts reports the large biotech companies which manufacture brand-name biologics have taken steps to protect their market share through lobbying and state legislation. The manufacturers claim they have taken these steps to protect the public from unsafe medications. (The $250 Billion Potential of Biosimilars)

In summary, this will undoubtedly be the subject of continued scrutiny which is hopefully resolved to the benefit of patients in need of these life-changing medications.

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IRS Releases Post DOMA Guidance

January 13, 2014


The Internal Revenue Service (IRS) issued Notice 2014-1 on December 16, 2013 providing guidance on Section 125 and Section 223 of the Internal Revenue Code as it relates to elections and reimbursements for same-sex spouses. Section 125 covers Cafeteria Plans and Flexible Spending Arrangements (FSAs) while Section 223 covers Health Savings Accounts (HSAs).

The Notice provides long-awaited additional guidance relative to the U.S. Supreme Court’s ruling last summer which deemed Section 3 of the Defense of Marriage Act (DOMA) unconstitutional as a result of a challenge brought in the case United States v. Windsor. The overturn of Section 3 afforded same-sex spouses the opportunity to gain federal benefits that previously had not been available.

For additional background on this landmark decision please reference our earlier articles at the following links

Notice 2014-01 provides formal guidance and essentially follows an FAQ posting released by the IRS in November, 2013. It contains a wealth of valuable information which warrants complete review, but here some of the highlights:

Mid-Year Election Changes

  • A cafeteria plan may permit a mid-year election change if the participant was legally married to a same-sex spouse as of June 26, 2013 (date of the Windsor decision) in the same manner as any other participant experiencing a change in legal marital status as allowed under the plan. For purposes of the Windsor decision, an election may be accepted by the cafeteria plan if filed any time during the plan year that includes June 26, 2013 or the plan year that includes December 16, 2013 (date of Notice 2014-01). A plan participant may also make an election change if the legal same-sex marriage occurred after June 26, 2013 as allowed under the plan for any change in legal marital status.
  • An election made by a plan participant who is impacted by the Windsor decision shall take effect as of the date allowed for any other acceptable change of coverage to a qualifying benefit offered on the cafeteria plan. The plan will not be held with failing to meet the terms of an election change between June 26 and December 16, 2013 as long as the election is made effective as per the plan’s usual procedure or within a reasonable time period after December 16, 2013. This is to accommodate the period of uncertainty that surrounded the Windsor decision prior to the publishing date of Notice 2014-01.
  • Pre-tax treatment of health benefits for a same-sex spouse under a cafeteria plan should be allowed no later than the date the change in marital status is required for federal tax withholding purposes or within a reasonable period of time after December 16, 2013. A plan participant may notify their employer of the legal same-sex marriage by electing spousal coverage through salary reduction under the plan or by filing a revised Form W-4.
  • If the cost of health coverage for the same-sex spouse of a plan participant has been withheld on an after-tax basis for any portion of the cafeteria plan year, the participant can exclude the after-tax funds from federal taxable income and the employer may also request a refund of any federal employment taxes paid.

FSA Reimbursements

  • Eligible FSA expenses including health, dependent care and adoption assistance may be reimbursed for a same-sex spouse or the same-sex spouse’s dependent if incurred during the cafeteria plan year that includes June 26, 2013 or includes the date of the marriage if that occurred later. The expenses of a same-sex spouse may be treated as covered on the FSA even if the plan participant originally elected coverage for themselves only.

Contribution Limits for HSAs and Dependent Care Assistance Programs

  • A same-sex married couple is subject to the maximum deductible contribution for a family made to one or more HSAs under a high deductible health plan (HDHP) in the amount of $6,450 for tax year 2013. This amount shall be adjusted for cost of living increases for subsequent plan years.
  • If the combined HSA contributions exceed the applicable annual maximum the contribution amounts may be reduced during the remainder of the tax year to remain within the maximum allowable amount. Excess contributions made to the HSA(s) of same-sex spouses after the end of the year may be distributed from the HSAs of one or more of the spouses or they will be subject to excise tax.
  • Same-sex spouses are subject to the $5,000 exclusion limit for a dependent care FSA. Any amount contributed in excess of this limit must be included in gross income but will remain in the dependent care FSA to reimburse allowable claims (subject to forfeiture rules).

Note that a cafeteria plan that already recognizes changes in election due to legal marital status changes generally will not require an amendment of plan language to accommodate changes made to the election status of same-sex spouses resulting from the Windsor decision. If an amendment to a plan document is needed to permit such election changes then the change may be retroactive to the first day of the plan year which includes December 16, 2013.

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Missouri Allowing Joint Same-Sex Tax Returns

November 15, 2013


On November 14, 2013, Governor Jay Nixon signed an Executive Order making Missouri the first state in the Union to recognize same-sex marriages for income tax reporting purposes even though the state has a constitutional amendment barring same-sex marriage.

As reported in the Governor’s News Release, Gov. Nixon stated “Missouri is one of a number of states whose tax code is directly tied to that of the federal government and under Missouri law, legally married couples who file joint federal tax returns with the IRS must also file joint state returns with our state Department of Revenue.”

“As a result, accepting the jointly-filed state tax returns of all legally-married couples who file federal returns is the only appropriate course of action, given Missouri statutes and the ruling by the U.S. Department of the Treasury.”

The Governor affirmed his Executive Order applies only to the issue of tax filing status and does not change the constitutional amendment passed by Missouri voters in 2004 which defines marriage as only between a man and a woman.

The Executive Order does not authorize the availability of state-level tax deductions, credits and exemptions for same-sex couples which have been legally married in a jurisdiction allowing such marriage. However, any federal-level exemptions and deductions that a legally married couple can receive will be reflected in the federal adjusted gross income shown on the state tax return.

Gov. Nixon’s action is reflective of the U.S. Supreme Court’s decision this past summer which overturned Section 3 of the Defense of Marriage Act (DOMA) which denied federal benefits such as filing joint tax returns and Social Security benefits to legally married same-sex couples.

Please reference our previous articles for more information:

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Pharmacogenomics: Big Word with Big Impact

November 5, 2013


Pharmacogenomics is a relatively new field that couples pharmacology which is the science of drugs with the field of genomics which is the study of genes and their function. It became an area of study in the 90’s as a result of discoveries from the Human Genome Project.

As defined by the Merriam-Webster dictionary:

phar•ma•co•ge•no•mics (pronunciation: fär-mə-kō-jē-ˈnō-miks) a biotechnological science that combines the techniques of medicine, pharmacology, and genomics and is concerned with developing drug therapies to compensate for genetic differences in patients which cause varied responses to a single therapeutic regimen.

Suffice it to say pharmacogenomics is a big word which holds big potential to improve the outcome of patient care. At first glance it probably sounds very technical and complex based upon the definition above. And that is without even considering the initial difficulty in pronouncing a word of such length!

In all seriousness though let’s explore in simpler terms what exactly pharmacogenomics is. And learn about why it’s an important innovation in administering quality and cost-effective health care.

Through pharmacogenomics, scientists and health care providers are able to better develop and administer medications in a safe and effective manner based upon an individual’s genetic makeup. This is important because adverse drug reactions are responsible for a significant number of hospitalizations and deaths in the United States. Many of these adverse reactions are the result of an individual’s genetics causing variability in drug response and toxicity.

Essentially when a medication is created it is typically determined to be effective on a majority of the population to which it is prescribed. In other words, the assumption is “one size fits all”. However, just as with clothing, this assumption is not always the case.

A number of drugs have been found to produce a range of reactions with patients on one end of the spectrum exhibiting ineffective control of their health condition and patients on the other end experiencing adverse reactions and even death as a result of toxicity. This wide range is primarily due to a person’s ability to metabolize a drug in either a poor or ultra-rapid manner. And the range of metabolism is guided by a person’s genetic makeup.

The good news is the discoveries made in the field of pharmacogenomics have identified, and will continue to identify, genetic testing markers that can be detected in a patient before administering a drug therapy. This testing helps to predict the effectiveness or potential risks of a particular medication.

According to the American Medical Association, pharmacogenomics has the potential to provide tailored drug therapy that will mean:

  • More powerful medicines – Pharmaceutical companies will be able to produce therapies more targeted to specific diseases, maximizing therapeutic effects while decreasing damage to nearby healthy cells.
  • Better, safer drugs the first time – Recovery time will go down and safety will go up as the likelihood of adverse reactions goes down or is eliminated altogether.
  • More accurate methods of determining appropriate drug dosages – Current methods of basing dosages on weight and age will be replaced with dosages based on a person’s genetics –how well the body processes the medicine and the time it takes to metabolize it.

The AMA also advises pharmacogenomics can lead to an overall decrease in the cost of health care because of decreases in:

  • the number of adverse drug reactions,
  • the number of failed drug trials,
  • the time it takes to get a drug approved,
  • the length of time patients are on medication,
  • the number of medications patients must take to find an effective therapy, and
  • the effects of a disease on the body (through early detection).

As discussed in “Pharmacogenomics: Increasing the safety and effectiveness of drug therapy”, genetic testing has proven invaluable in safely and effectively prescribing a number of medications including:

  • Abacavir (Ziagen®) – a medication used to treat HIV infection which has been shown to cause a hypersensitivity reaction in 5–8 percent of patients. The hypersensitivity symptoms include a combination of fever, rash, gastrointestinal tract symptoms and respiratory symptoms that become more severe with continued dosing. A patient with this genetic variation would have to discontinue this medication and start a different therapy. Genetic testing can be used to identify patients for which the therapy would fail thereby avoiding adverse reaction and saving money on an expensive discarded medication.
  • Codeine – an analgesic (pain) medication that has the potential for reaction on both ends of the spectrum.
    • Some patients receive poor pain management from taking the drug,
    • Other patients are at high risk for reaching opioid toxicity which includes moderate to severe central nervous system depression. Breast feeding mothers with this genetic variation are in danger of passing high levels of morphine to their breastfed infants.
  • Clopidogrel (Plavix®) – is a blood thinner used to prevent dangerous blood clots. The medication has been shown to be ineffective in up to 25% of patients which puts them at higher risk of future cardiovascular events. Genetic testing could be used to identify those patients who are at risk of not benefiting from this medication.
  • Warfarin (Coumadin®) – is the most widely-prescribed anticoagulant used to treat and prevent thromboembolic diseases. Genetic variation causes some patients to have slow metabolism and a longer half-life of the drug, resulting in higher than usual blood concentrations and greater anticoagulant effect. Certain genetic variations result in reduced activity of the enzyme and subsequently reduced synthesis of coagulation factors. The combination of slow metabolism and reduced coagulation caused by gene variations increases the risk of bleeding during warfarin therapy. Genetic testing can assist in selection of the appropriate starting dose.

In addition, the National Human Genome Research Institute has identified research on the following medications:

  • Trastuzumab (Herceptin®) – is a breast cancer medication which is only effective for women whose tumors have a particular genetic profile that leads to overproduction of a protein called HER2.
  • Mercaptopurine (Purinethol®) – is used to treat patients with acute lymphoblastic leukemia. Some people have a genetic variant that interferes with their ability to process the drug which can cause severe side effects and increase risk of infection. The standard dose can be adjusted according to the patient’s genetic makeup.
  • Gefitinib (Iressa®) and Erlotinib (Tarceva®) – are chemotherapy agents used to treat lung cancer which have been found to be more effective in patients whose tumors have a certain genetic change.
  • Citalopram (Celexa®) – is a widely used antidepressant drug of the class “selective serotonin re-uptake inhibitors” (SSRIs). Clinical trials are now underway to learn whether genetic tests can used to predict if SSRI response can improve patients’ outcomes.

The medications above are by no means a comprehensive list of all drugs for which genetic testing can be used in guiding the administration of therapy. The complete list will continue to grow as research continues and additional discoveries are made.

At the present time, the field of pharmacogenomics has just scratched the surface of the benefits that can be achieved. The future holds exciting additional advances which will improve the quality of patient care along with reducing health care costs as new and safer medications are administered and developed.

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Developments on the Overturn of DOMA

September 20, 2013


It has been almost three months since Section 3 of the Defense of Marriage Act (DOMA) was overturned by the United States Supreme Court. As you may recall, the challenge to DOMA came as the result of United States v. Windsor. Please reference my earlier article on Defense of Marriage Act Overturned for more details.

Since the Supreme Court decision in June, a sea of questions and uncertainty has remained. Thousands of federal regulations are still in need of review and potential revision. However, significant announcements were recently made by the Internal Revenue Service (IRS) and the United States Department of Labor that bear mentioning.

At the end of August, the Treasury department announced that same-sex spouses that have been married in jurisdictions that recognize their marriage will be considered to be married for federal tax purposes. The jurisdictions conducting the recognized marriage ceremony include any of the 50 states which allow same-sex marriage along with the District of Columbia, U.S. territories and foreign countries.

The recognition of the same-sex marriage will be made based upon the “place of celebration” regardless of where the couple is now residing. The ruling applies to income taxes and also gift and estate taxes as well. Amended federal tax returns can be filed back to tax year 2010 and forward. The Treasury Department and IRS are expected to announce additional guidance at a future date. Questions remain on how state taxation will be handled in states that do not recognize same-sex marriages in light of the federal tax decision.

In addition, the United States Department of Labor released guidance in a News Release and in Technical Release 2013-04 on September 18, 2013 interpreting the Supreme Court’s decision stating “in general, the terms “spouse” and “marriage” in Title I of ERISA and in related department regulations should be read to include same-sex couples legally married in any state or foreign jurisdiction that recognizes such marriages, regardless of where they currently live”.

While additional interpretation is still needed on the Department of Labor announcement, the release seems to indicate same-sex spouses should immediately be recognized as benefit eligible under the terms of ERISA based medical plans that include coverage for legal spouses. It is important to note ambiguity remains on the full interpretation of the guidance released this week and additional information will be made available at the future.

In summary, some basic decisions are beginning to take shape, but a host of unanswered questions still remain on the overturn of DOMA. We will continue to wait and monitor the situation for significant developments.

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Defense of Marriage Act Overturned

July 1, 2013


On June 26, 2013, the United States Supreme Court released their decision declaring Section 3 (Definition of Marriage) of the Defense of Marriage Act (DOMA) unconstitutional. DOMA, which has been federal law since 1996, blocked the recognition of marriage and denied benefits at the federal level for same-sex couples in states allowing same-sex marriage.

The challenge to DOMA came as result of United States v. Windsor. Edith Windsor and Thea Spyer were married in Canada in 2007 after being partners for over 40 years. Ms. Spyer died in 2009 and Ms. Windsor was forced to pay $363,053 in estate taxes which she argued would not have been owed had the couple been husband and wife. She argued the Defense of Marriage Act violates the principles of equal protection incorporated in the Fifth Amendment and prevented her from being considered Ms. Spyer spouse thus costing her $363,063.

Now that Section 3 of DOMA has been overturned, same-sex spouses have the opportunity to gain benefits that have long been afforded to heterosexual spouses. However, it is important to note the court’s decision does not make same-sex marriage the “law of the land”. Couples living in states that allow same-sex marriage will soon begin seeing these benefits. But those residing in states that do not will most likely find they are navigating a patchwork of varying state and federal agency standards.

As discussed in NPR’s article After DOMA: What’s Next For Gay Married Couples, some federal agencies use the “place of celebration” standard which means no matter where a couple has been legally married the union will be recognized in determining federal benefits. While other agencies use the “place of residence” standard which requires the marriage to be recognized in the place the couple is living in order to be eligible for spousal benefits. Agencies using the latter include the Internal Revenue Service and Social Security Administration.

One thing is certain a considerable effort will be needed before all outstanding issues of implementation are resolved. In the short term, let’s explore what can be expected in the coming days in regard to the impact on the cost of healthcare, Social Security and government revenue.


On the surface, the overturn of DOMA is likely to have little impact in contributing to the rising cost of healthcare. Recognition of domestic partners, both same and opposite sex has long been included in the provisions of many group health insurance plans. While DOMA is likely to require health plans to recognize same-sex spouses, it is more probable many of these individuals are already being covered on the health plan. Uncertainty remains at this point as to what regulations will be put into place to require employers to offer coverage.

Other questions have arisen on how the overturn of DOMA will play out with regard to the Affordable Care Act. The Washington Post recently questioned whether or not it will be in homosexual couple’s best financial interest to be married under the Affordable Care Act when it comes to determining income thresholds and eligibility for subsidies in the state exchanges.

Social Security

The court’s decision essentially grants the same benefits and protections to same-sex couples that have been provided to heterosexual couples under Social Security. Initial concerns from the opponents of the court’s ruling are warning of the higher costs that will be experienced. As discussed in Will The Overturning of DOMA Bankrupt Social Security? by the Center For Economic Policy Research, most of the impact on Social Security will come from the spouses of same-sex unions becoming eligible for retirement benefits as a result of marriage.

The test of entitlement at retirement is gauged by a spouse being eligible to half of their married partner’s benefit if this would be larger than the benefit they would receive based upon their own work history. Also, after a spouse dies, a surviving retiree is entitled to the greater of either their own benefit or their spouse’s. The addition of same-sex couples to the eligibility for these benefits could potentially lead to higher benefit payouts.

The larger gap in earnings between men and women make meeting the benefit eligibility more likely for heterosexual couples. However, this gap tends to be smaller relative to the earnings of two men or two women in a same-sex marriage; therefore the likelihood of meeting the wage-based eligibility is reduced. Also, the time period of payout will probably be shorter given the tendency of same-sex couples to be closer in age without the gender-based life expectancy differences. Restating in simpler terms, the similarities in the salaries and ages that are more common among same-sex couples will probably lessen the likelihood of collecting significant Social Security benefits.

The Congressional Budget Office estimated that the cost to Social Security in 2014 from recognizing same-sex marriages in 2004 would be $350 million which represents .04 percent of the projected $875 billion pay out for next year.

Government Revenue

Earlier this year, USA Today’s article on Who wins, who loses if Defense of Marriage dies advised same-sex couples won’t be the financial winners and the U.S. Treasury won’t be the loser if DOMA was overturned. The benefits gained by same-sex spouses include being able to file joint tax returns, estate tax exclusions, Social Security and veterans benefits, civil service and military pensions. However, a 2004 study by the Congressional Budget Office estimated that recognizing same-sex spouses through the overturn of DOMA would increase revenues by almost $1 billion a year over 10 years. The reason being a two-income same-sex couple with relatively equal earnings would pay more in taxes, not less.

In summary, same-sex marriage will undoubtedly continue to be an issue of much discussion on a number of fronts. As with any new and complex policy change, further determination is needed to assess the long term impact as we move forward with implementation. While still too early to begin postulating on the long term financial impacts, little is like to change in at least the short term with regard to items such as healthcare, Social Security and government revenue.

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Update 2013-Electronic Medical Records-What’s next?

June 28, 2013


Earlier this year in my article on “Electronic Medical Records in the Age of Reform” we explored why the Federal government is in support of the implementation of Electronic Medical Records (EMRs) along with how EMRs are created and maintained as well as the advantages and disadvantages. At that time uncertainty remained as to how successful efforts would be in prompting doctors and hospitals to adopt this new technology.

While only about six months have passed, the Department of Health and Human Services (HHS) recently announced that more than half of physicians’ office and 80 percent of hospitals that provide Medicare or Medicaid will have EMRs in place by the end of this year. This translates into greater than three out of four physicians using the technology. (UBM Medica US) This development puts the administration on target to meet both of the goals set for 2013.

Kathleen Sebelius, HHS Secretary announced in May, 2013 “we have reached a tipping point in the adoption of electronic medical records”. And Farzad Mostshari, National Coordinator for Health Information Technology at HHS stated “in four years, they’ve made more progress than in the previous 20 years”.

Achievement of these goals is due in large part to government incentives by which physicians and hospitals are eligible to receive payment for meeting the “meaningful use” standard. The Centers for Medicare & Medicaid Services (CMS) reports making $14.6 billion in incentive payments since the program started in 2011. Keep in mind expiring incentive payments will eventually be replaced with penalties for providers that have not adopted the technology.

As discussed in my earlier article, EMRs are expected to improve patient care and allow better information sharing between health care providers. But much more can be accomplished. So now that the goal on EMR adoption rates has been reached, what can we expect next?

A stage has been reached at which providers must show they can store data and track it as well as be able to report quality measures and engage patients electronically. EMR adoption is viewed as a critical step in the transition of America’s healthcare payment system to one that pays for outcomes rather than services. In order to demonstrate quality, providers need access to the data collected by EMR systems. (UBM Medica US)

As discussed in the 2013 Physicians Practice Technology Survey , the early years of EMR implementation were about getting data into the system, but in the past few years the focus has turned to effectively getting data out. Many health care providers have implemented EMR technology but are not using the reporting tools that came with their systems to deliver analytics and eventual predictive analytics. System vendors are an invaluable resource in gaining full implementation of the capabilities that exist. These capabilities will allow providers to more thoroughly track and monitor patient care, identify high-risk patients and improve care while reducing costs.

An excellent example of the predictive analytics possibilities that exist can be seen in recent work by the Centers for Disease Control and Prevention (CDC) on An Algorithm That Identifies Coronary and Heart Failure Events in the Electronic Health Record.

The 2013 Physicians Practice Technology Survey further states as the capabilities of EMRs are realized and physician practices continue to embrace additional new technologies, we can expect:

  • Increased physician access to health information using mobile devices including tablets and smartphones while in or out of the office.
  • Increased implementation of patient portals allowing more convenient and efficient access to new tools that will be used for items such as booking of appointments, viewing test results and refilling prescriptions.
  • Increasing use of social media by physicians. The number of physicians using social media almost doubled from 17% in 2011 to 33% in 2013.
  • Increased participation in health information exchanges making access to information more instantaneous across a network of providers in a secure and interoperable way thereby allowing access and coordination of patient care rendered at other health care facilities.
  • Expanding the use of telemedicine services to meet the needs of an aging population and greater focus on preventative care.

In summary, the adoption rate of EMRs has progressed at a pace that meets or exceeds expectations for 2013. Improvement in patient care and reduction in healthcare costs are anticipated as we move into the next steps of implementation. As EMR technology becomes more commonplace it will pave the way for additional healthcare technologies which will benefit and provide convenience for both doctor and patient alike.

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Electronic Medical Records in the Age of Reform

January 16, 2013

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The American Recovery and Reinvestment Act (ARRA) of 2009 included major funding devoted to HITECH (Health Information Technology for Economic and Clinical Health). In fact, this legislation included $19.2 billion focused on the implementation and expanded use of Electronic Medical Records (EMR) in the offices of physicians, hospitals and other providers of health care.

Why is the Federal government willing to spend such a large sum of money to implement Electronic Medical Records? What is an Electronic Medical Record anyway? How are EMRs created and maintained? What are the advantages and disadvantages?

Let’s explore these questions in more detail.

Why is the Federal government willing to spend such a large sum of money to implement EMRs?

The expenditure of over $19 Billion as a stimulus is anticipated to bring long-term savings. Savings is expected to come by reducing redundant medical care, speeding patient treatment, improving safety and keeping patients healthier. Health care providers are expected to reap advantages from EMRs as well. The Administration states savings of $12 billion over the next 10 years can be anticipated while the RAND Corporation, a global policy think tank, estimates the saving of about $80 billion a year for the healthcare sector when they move towards paperless medical records. The disparity in these savings numbers lie in the different assumptions used regarding the future of the health care industry. (Will Electronic Medical Records Implementation Save Me Money? –

What is an Electronic Medical Record?

An Electronic Medical Record (EMR) which is also sometimes referred to as an Electronic Health Record (EHR) is simply a patient’s medical record in a digital format instead of the traditional paper file typically found in a physician’s office or hospital. The EMR is stored in a secure database and can be remotely accessible from anywhere through a network.

In a perfect world, EMRs allow all of a patient’s information to be accessible in one place including the results of a routine examination to the findings on an x-ray from an emergency room visit across the country as a result of an accident while on a business trip.

How are they created and maintained?

In order to make EMRs a reality physicians with office based practices will have to buy a combination of hardware and software estimated to cost about $20,000 per physician. In a study published in the March edition of Health Affairs, researchers put the first-year expense of installing an EMR package and training staff at more than $230,000 for a five-physician office.

The good news is most of the cost of implementation will be covered by the government if the office meets the not-very-rigorous “meaningful use” standards.

The bad news is each doctor, according to the Health Affairs study, will need about 134 hours to learn how to properly use the system. This presents a great deal of time away from patients especially for a doctor that feels the technology is being forced upon them. (The Era of Electronic Medical Records – US New and World Report)

What are the advantages and disadvantages of EMRs?

The advantages of Electronic Medical Records include reducing errors caused by illegible handwriting, misspellings and variable terminology. EMRs can be retained in a safer manner vs. paper records that can be lost or destroyed. EMRs consolidate all of the data in one place thereby improving efficiency in accessing the data. They allow coordination between health care providers and translate into better health care for patients. Patients will have the ability to view their own medical records thereby gaining greater control over the content.

The disadvantages include the potential for intrusion into patient privacy. Another concern is the loss of the human touch seen in paper charts as doctors move toward checking off boxes on electronically created forms. Electronic Medical Records have been charged with not being very efficient as systems being used today are not always standardized and compatible with systems being used in other facilities.

Also, Electronic Medical Records may not be safe and secure from the potential for misuse in this age of data hacking and identity theft. As an example, even the high security databases of banks and credit institutions fall victim to compromise. EMRs could be more secure by using implantable RFID chips but the idea in general has been met with strong opposition as a major threat to privacy and civil liberties. (Electronic Medical Records: The Pros and Cons – Health WorldNet)


In summary, the evolving technology of Electronic Medical Records will continue to improve which will enable better patient care, reduce costs and bring greater patient control of their own records. The Federal government is committed to expanding this technology. Increased data security and assured patient privacy are hurdles which need to be addressed to gain the confidence of the general public as EMRs become commonplace.

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Clinical Trials and the Cure of Childhood Cancer

July 24, 2012


Significant medical advances are often achieved through research studies called clinical trials. Clinical trials are conducted to determine if new treatments are safe and effective. Some trials test combinations of existing treatments along with new approaches to radiation therapy or surgery. Other research studies look for new ways to alleviate symptoms and treatment side effects and also for ways to prevent cancer.

Clinical trials are responsible for significantly improving the cure rates of childhood cancers in the past several decades. For example, acute lymphoblastic leukemia had a 4% survival rate in the 50’s and 60’s. The survival rate has now risen dramatically to 85 to 90% as of 2010. It is estimated that 75 to 80% of pediatric cancers patients are put on a clinical trial and this frequently leads to a cure. (Employee Benefit News, June 2012)

As discussed in Employee Benefit News, Dr. Beverly Bell, medical director of the oncology program at InVentiv Medical Management speaking in regard to clinical trials for children states, “That is their best hope. Treatment is not reinvented every time. It’s a regimented approach where if you do this, you get that. Generally, if you put a patient who meets eligibility criteria on a clinical trial, you get a cured patient.” Dr. Bell advises employers could help the entire cancer cure effort by supporting appropriate clinical research efforts.

However, the issue of employer support of clinical trials, especially in regard to childhood cancer, can be multi-faceted. Employers can implement a number of benefits that are of great assistance to an employee when faced with this crisis.

One of the complexities regarding clinical trials comes from the funding of procedures and from the fact that most health insurance plans will not cover a treatment that is determined to be “investigational” or “experimental”.

For self-funded employers, coverage comes at a cost and amending plan language to cover clinical trials for childhood cancer can present challenges. One such challenge is the perception of discrimination relative to not covering the same treatment for adult cancer treatments. There is also a concern that the stop-loss carrier of a self-funded plan may not reimburse the plan for services that are determined to be “investigational” or “experimental”. (Employee Benefit News, June 2012)

It is important to note that many states have implemented legislation to provide some level of coverage for routine patient care costs based upon the phase of the clinical research study.

Also Health Care Reform as of January 1, 2014, will place a restriction on an insurer’s ability to limit or drop coverage for an individual choosing to participate in a clinical trial. This applies to clinical trials treating cancer and other life-threatening diseases.

The clinical trial mandate under Health Care Reform will create yet another significant expense, even more so with the PPACA’s removal of all lifetime and annual limits on essential benefits. This will be modified by additional regulatory guidance yet to come from federal regulators. As a result, employers will have to weigh the cost benefit return potential of these new treatments when designing sustainable plans. To address this, employers will need to insure their risk management strategies are ideally positioned to comply with the mandate and support their employees effectively.

Beyond paying for treatment, effective employer support can be provided through a number of additional services including:

  • Disease management program that includes specialty nurses and subspecialty of pediatric oncology nurses.
  • Employee Assistance Program guiding employees to appropriate behavioral health services and general support along with financial counseling and health navigation services. Assistance in guiding parents through the health care and insurance system during a very complex time can be of great value.
  • Transportation to pediatric oncology services which tend to be limited to certain areas of the country. Coverage for transportation costs can be extended beyond the usual coverage of bone marrow and organ transplantation. This can be an invaluable benefit to an employee dealing with a child with cancer and can be provided at a minimal cost to an employer.
  • Donation of employee leave and job sharing/flexible hours support an employee requiring increased time away from work to tend to a sick child.(Employee Benefit News, June 2012)

In summary, the work community can be of substantial support to an employee as they face the difficult diagnosis of a child with cancer. Employer support and advances achieved through clinical trials will continue to have a dramatic impact in improving the outcome for these families.

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The Expanding Landscape of Defined Contributions in Healthcare

April 11, 2012


“Defined Benefit” and “Defined Contribution” are terms that have historically been used in conjunction with retirement plans.  Defined benefit retirement plans afford employees with a pre-defined monthly benefit at retirement; however the employer assumes the market risk in meeting the obligation to the employee.

History of Defined Contribution Retirement Plans
Defined benefit retirement plans became less common in the 1980’s as defined contribution plans rose to the forefront.  In the mid-80’s, about 80 percent of full-time employees in the United States were enrolled in some sort of defined benefit plan for retirement.  And by 2006, this percentage had dropped to only around 20%. (Miller, 2011)

As defined contribution plans grew in popularity the employer realized greater control of retirement plan costs by making a contributing payment to supplement the employee’s retirement plan in lieu of the guaranteed benefit payable under the defined benefit plan model.

Expansion into Healthcare
The concept of defined contribution for employee health insurance was first introduced in the 1990’s. In the business climate of today, the topic of defined contribution has again become a frequent subject of discussion for the funding of employee health plans.

As with retirement plans, defined contribution health plans are being recognized for allowing the employer greater control of expenses by dedicating a certain dollar of contribution to an employee’s health plan funding instead of a specific health plan benefit offered under the defined benefit approach.

In its simplest form, the defined contribution health plan gives the employee a specific dollar amount to use in the purchase of health insurance.  This may sound like a reasonable way for employers to control skyrocketing health care costs, however the actual implementation in the real world brings its own set of unique challenges which will be discussed later in this article.

As discussed in “Shifting Responsibilities – Models of Defined Contribution” produced for The Robert Wood Johnson Foundation, it is important to understand that defined contribution in health care is not a single arrangement, but instead a general approach presented across a continuum of models. (Martin, 2002)

On one end of the spectrum, the employer pays a specific dollar amount to the employee who alone becomes responsible for choosing their coverage. This has been referred to as the “voucher” approach. The employee chooses an insurer to provide health coverage and there is no formal accountability on behalf of the employer. In this scenario, the employee is at a higher financial risk and the employer has very little involvement in the administrative component of the employee’s health coverage.

On the opposite end of the spectrum, the employer and health plan work together to package a pre-determined set of benefits that will be made available to the employee.   The employer chooses the health plan and decides upon the dollar amount that will be paid to the employee.  Risk is spread between the employer, the employee and the health plan.  The health plan and the employer bear most of the administration of the plan.

An example of this model can be illustrated by the employer selecting one or more insurance carriers to offer a multi-option plan arrangement with employee funding geared around a base plan typically with a high deductible.  The employee is given the opportunity to “buy-up” to higher levels of coverage in the optional plan(s) that are available.

As with the shift in retirement plans of the 1980’s, the defined contribution approach can afford businesses the opportunity to reduce health care costs with Health Care Reform likely to hasten the implementation.

Real world application of this implementation has the potential to take shape in a variety of arrangements which mirror the continuum of models discussed above. Examples include:

  • The State-level health insurance exchanges which are coming online as part of the Patient Protection and Affordable Care Act (PPACA).   The implementation of these exchanges could partner well with and speed along the basic idea of the employer contribution component of the defined contribution health plan (Meulemans, 2012).
  • Plans marketed as “Consumer-Driven Health Plans” (CDH Plans) combining a high deductible or catastrophic insurance plan with an account-based reimbursement component.   This account-based reimbursement has potential to be shared by the employer and employee and is designed to cover some of the costs of the deductible, coinsurance or other claims.  

Advocates of the defined contribution model promote the concept of being “Consumer-Driven” thereby making the healthcare consumer more proactive in selecting their own services given the greater level of financial interest in the outcome.   However, the success in shopping for the best price in healthcare currently presents challenges which make it impractical or impossible in today’s healthcare market.

Some challenges and criticisms to the approach include limited cost control of only small to mid-dollar claims with high-dollar claims remaining unchanged.  Another is the possible increase in adverse selection as younger, healthier employees opt for lower cost plans while older and sicker populations gravitate toward richer benefits.

In summary, the defined contribution approach to health care will undoubtedly continue to evolve and expand in partnership with the implementation of healthcare reform.  The road to expansion will undoubtedly be marked by an extended period of adjustment for both the employer and employee alike.

As the landscape of healthcare continues to be re-shaped we will learn if the defined contribution model is effective in controlling the upward spiral in healthcare costs or be a shift toward the employee becoming increasing responsible for paying for higher levels of health care.  Ultimately, one of the main determinants of the success of the defined contribution approach will likely be whether or not the decision-making process of the healthcare consumer can truly be shaped into a new long-term behavior.

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