Health+Benefits

Employers Rethink Healthcare Delivery

Benefits renewal season is here, but the focus is not on rates (yet).
By Katie Oberkircher Posted on September 13, 2021

Their approach to healthcare and benefits programs represents a course-correction after a turbulent two years navigating social, business, political and public health challenges stemming from the pandemic. As benefits renewal season begins, employers have a series of difficult decisions to make about their workforce.

Benefits leaders are thinking about these top trends.

Vaccinations are now a workplace safety issue.

President Biden reframed them as such during an announcement to require employers with more than 100 employees to mandate COVID-19 shots. It could impact more than 80 million workers.

Biden directed the Department of Labor (DOL) to prepare a rule requiring all companies with 100 or more employees to get vaccinated or face weekly mandatory COVID testing. The Department of Labor’s Occupational Safety and Health Administration (OSHA) is drafting an emergency temporary standard to implement the requirement, according to the White House. DOL will also require companies to offer paid time off to get vaccinated. 

However, OSHA’s authority does not mean it will not face pushback or lawsuits challenging the order, particularly as some states move to curb vaccine mandates through executive orders or legislation.

The issue has been a delicate balance for employers in recent weeks–mixing politics, health and privacy together in the workplace.

When the FDA issued formal approval of the Pfizer vaccine, employers were encouraged to require vaccination. In turn, executives at major corporations deployed a wide range of strategies: requiring proof of vaccination, mandating the vaccine for all or some employees, increasing COVID testing, imposing insurance surcharges and providing various incentives.

Prior to the FDA announcement, a Mercer survey of 400 employers found that only 14% of employers had issued a mandate or were planning to issue one. The FDA announcement, as well as President Biden’s plea to employers to make inoculations mandatory, successfully encouraged more employers to consider vaccine mandates as they pined to return to some normalcy at work. A Willis Towers Watson survey conducted last month found that 52% of 961 companies planned to have one or more vaccine mandates in place by Q4. Many major corporations, including Disney, Facebook, Walmart, McDonald’s, and Google, have already issued vaccine mandates for some or all employees.

While many companies are on board with vaccine mandates, there is still some pushback from workers. The aforementioned Mercer survey found that while 66% of workers wanted their employers to implement a vaccine mandate, 21% did not and 9% were unsure. These 30% of workers who are either on the brink or strongly opposed to vaccine mandates make up a sizable chunk of the workforce.

Biden’s new directive now takes the difficult decision off the table for employers. It also levels the playing field particularly within service industries where employers were more reluctant to push out vaccine mandates because they feared losing talent.

There is still much to unpack, though. Employers will need to tackle costs and administrative burdens related to testing options and additional paid time off. Plus, vaccine exemptions may end up causing more concerns than employers and the Biden administration are anticipating.

The role of on-site medical clinics is increasingly important, even as virtual health gains popularity.

Employers are increasingly considering adding on-site clinics over the next couple of years, both to manage COVID-19 testing and vaccinations and to track employees’ chronic conditions. A recent Business Group on Health survey found that almost 57% of employers are considering the addition of an on-site clinic by 2024, compared to 44% of employers pre-pandemic.

Employee willingness to use such services is largely dependent on the way employers handle data transparency and employee privacy. This makes the new territory of corporate vaccine mandates a high stakes area to handle well to setup future innovation in healthcare delivery. This dynamic presents an opportunity for tech-enabled primary care players, like One Medical, Crossover Health and Amazon Care, who have the infrastructure to successfully deliver services through on-site clinics, in-home care as well as virtual options.

These blended care delivery strategies have already become a big hit among massive employers like Apple, Facebook, LinkedIn, Google, and Lyft, and are likely to pick up traction down market with mid-to-large employers.

Amazon Care is newest to the scene, piloting at its Seattle headquarters a blend of virtual visits, in-person primary care visits at patients’ homes or offices, and prescription delivery services. The care delivery arm of the tech behemoth opened up to employers around the country by offering its virtual care service to companies in all 50 states. Its expansion efforts include directly targeting employers with its in-person care benefit.

Another notable employer-centric effort is JPMorgan, whose partnership with Vera Health focuses on outcomes-based healthcare. With Vera, companies pay a flat monthly fee per patient, and primary care doctors are tasked with coordinating all their users’ care. Care teams are paid a salary plus bonus, and that bonus is tied specifically to patient outcomes.

The Department of Labor increases mental health equity enforcement.

Two settlement agreements filed in August have broken ground for mental health equity. They mark the first instance of litigation initiated by the DOL to enforce the Mental Health Parity and Addiction Equity Act (MHPAEA) in the 13 years since the passage of the statute.

United Healthcare and United Behavioral Health (collectively, “UHC”) will pay more than $15.6 million to settle allegations following an investigation by the DOL’s Employee Benefits Security Administration. The investigation found that in its management of mental health claims in its insurance business and self-insured TPA business, UHC engaged in several practices that violated MHPAEA.

Issues included reduced reimbursement rates for out-of-network mental health services and denials of payments to participants undergoing mental health and substance use treatments, dating back to at least 2013.

Although the settlement amounts are small relative to UHC’s total profits, the agreement demonstrates the DOL’s commitment to enforcing MHPAEA and the growing political momentum surrounding mental health equity. The agency’s commitment also extends beyond legal action. The DOL has created a self-compliance tool to help plans and insurance companies meet the law’s requirements.

Acting Assistant Secretary for Employee Benefits Security, Ali Khawar, emphasized the importance of parity, stating, “Plans and insurance companies cannot place special hurdles in the paths of workers and their families when they seek mental health and substance use disorder benefits. We are committed to vigorously enforcing the law’s requirement and making sure workers in need of help are treated fairly.”

The Consolidated Appropriations Act of 2021 (“CAA”) amended MHPAEA to create new compliance documentation requirements, such as nonquantitative treatment limits (NQTL) comparative analysis documentation. Enforcement will focus on factors like in- and out-of-network reimbursement rates.

Katie Oberkircher Director, Health Policy & Strategy Read More

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