Aetna and CVS Health Merger Would Make Healthcare History

Aetna and CVS Health Merger Would Make Healthcare History

12/11/2017

 

The announcement this past Sunday that CVS Health will move forward with plans to acquire Aetna, the United States’ third largest health insurer, marks the largest healthcare M&A transaction in 2017. The $69 billion deal is also historic in that it would bridge a healthcare benefits company with a drugstore giant for the first time, a move that the two companies say will make healthcare costs more manageable for both of their clients.

 

According to a joint statement from CVS and Aetna, “This transaction fills an unmet need in the current healthcare system and presents a unique opportunity to redefine access to high-quality care in lower cost, local settings whether in the community, at home or through digital tools.”

 

The news comes at a time of industry unrest—the result of ballooning medical and prescription costs, the Republicans’ looming tax plan and an uncertain future for the Affordable Care Act and government programs like Medicare—leading more consumers to take responsibility for their healthcare. Aetna and CVS, both headquartered in New England, say these consumers will benefit from a transaction that melds Aetna’s data and analytics with CVS’s local, human touch. Their merger, they say in their statement, will ensure that the two companies are better positioned to meet the health needs of the 50 percent of Americans with chronic conditions who account for more than 80 percent of all healthcare costs.

 

In the days since the announcement, media, investors and industry players have scrambled to predict what the merger would mean for the future of the healthcare industry and for primary care physician practices in particular. Healthcare DIVE calls it “the kind of deal that can upend an industry” while one Forbes contributor says it’s a “mortal threat to U.S. hospitals.” Moody’s has said that together the two companies will have “unsurpassed scale and reach in the industry and the potential to reshape the entire health plan market.” The New York Times said that the transaction “reflects the increasingly blurred lines between the traditionally separate spheres of a rapidly changing industry.”

 

Mark T. Bertolini, who is Aetna’s CEO, told the Times that by gaining access to CVS’s 9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics, Aetna will be better able to reach consumers by creating destinations for care. “It’s in their community. It’s in their home,” he said. “CVS has the draw. People trust their pharmacist.”

 

“We think of it as creating a new front door to healthcare in America,” said CVS Health’s CEO Larry J. Merlo.

 

Aetna serves an estimated 44.6 million people, while CVS Health claims nearly 90 million plan members through its pharmacy benefits manager.

 

The proposed acquisition must now face the federal government’s antitrust reviews. As a financial services executive told Fortune, “Given the prolonged regulatory process, we do not expect any changes (if any) in the competitive landscape until the 2020 coverage plan year.”

 

For more on the state of the healthcare industry, read why the latest healthcare reform defeat shouldn’t be a distraction from companies’ health benefits strategy.

What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

12/4/2017

 

If you’re an employer or benefits administrator, it’s likely that you’ve received your fair share of questions from employees this fall about coverage adjustments during open enrollment. Some of those employees who already have tax-advantaged health savings and flexible spending accounts are also probably asking for clarification on what to do with the sums in these accounts at the end of 2017 and whether or not to continue with their plans.

 

Now is the ideal time to help employees understand how these universally underutilized accounts work and what makes them so valuable. It’s particularly important to educate employees about their flexible spending and health savings accounts in their first year (or during the first year that a company has made an HSA or FSA available) and during the first two open enrollment seasons. Here are the key messages that every employee needs to hear about HSAs, FSAs and open enrollment at the end of the year:

 

All HSA dollars roll over at the end of the year; most FSA dollars won’t

 

While there are many similarities between HSAs and FSAs, some of their most important distinctions arise at the end of the year. Most important, HSA balances can—and ideally will—stay and continue to grow, rolling over into the next year. On the other hand, FSA balances are largely “use it or lose it” by year’s end. Since 2013, however, the IRS has permitted FSA accountholders to carry over $500 annually for expenses in the next year. (Prior to 2013, any unspent funds reverted to the employer’s coffers at year’s end.) Employers can now either allow employees to carry over the $500 to the next year or to spend the remaining funds during a grace period that lasts until March 15 of the following year.

 

Further, employees can change how much they contribute to their HSA at any point during the year, but can only adjust their contribution amounts to FSAs during open enrollment or with a change in employment or family status. The bottom line: HSAs are for saving money for healthcare expenses, and FSAs are for spending it. HSAs are only for employees with high-deductible healthcare plans, while employers can make FSAs available to any employee.

 

Opt for an HSA during open enrollment to save for long-term healthcare expenses

 

HSAs are widely misunderstood. Many people think that these accounts are designed primarily to pay for out-of-pocket medical expenses in the near future (as is the case with FSAs). But the long-term savings value of HSAs is what makes them the most valuable, and during open enrollment, they should be presented to eligible employees as an important part of saving for future medical expenses and retirement.

 

According to a new report from the Employee Benefit Research Institute (EBRI), two-thirds of account holders ended 2016 with positive net contributions, and over 90 percent of HSAs with individual or employer contributions in 2016 ended the year with funds to roll over for future expenses. EBRI’s report also found that the average HSA balance among account holders with individual or employer contributions at the end of 2016 was $2,532, up from $1,604 at the beginning of the year.

 

In 2018, contributions to HSAs will be capped at $3,450 for individuals or $6,900 for families, up from $6,750 in 2017.

 

Opt for an FSA during open enrollment to cover short-term health expenses

 

A flexible spending arrangement, which employers offer to employees at their discretion, can help cover expenses not covered by an employee’s health plan, including deductibles, copayments and prescription costs.

 

In 2018, contributions to FSAs will be capped at $2,650, $50 more than the limit for 2017.

 

More important end-of-year HSA tax information

 

Not all HSA contributions have to be made by Dec. 31 for an employee to claim a tax deduction. Employees and employers can make contributions to an HSA up until April 16, 2018, for 2017.

 

Further, as long as an employee was eligible to contribute to an HSA as of Dec. 1, they are considered to be eligible for the whole year and can still make a maximum contribution for the full year. However, they must remain eligible for an HSA through Dec. 31, 2018. If they don’t, they will have to include the amount over-contributed in income and pay taxes and a 10 percent penalty on it.

 

How should employers communicate the value of FSAs and HSAs to employees? Find tips and ideas in our two part series here and here.

By the Numbers: The Latest in Mobile Payments Data

By the Numbers: The Latest in Mobile Payments Data

11/20/2017

 

By most accounts, consumer adoption of the mobile payments trend has increased steadily, as consumers grow to understand its value and their concerns about security are assuaged. While some analysts say that B2B and retail can be expected to embrace mobile payments in the greatest numbers in the years to come, companies across industries, including healthcare, have used 2017 to explore emerging mobile payments opportunities, capabilities and challenges.

 

Some recent stats on mobile payments:

 

  • 83 percent: Percentage of U.S. consumers who owned a smartphone in June 2017 as compared to 79 percent in October 2016 (JPMorgan)

 

  • 360.4 million: Number of mobile payments users in 2017; this is expected to nearly double by 2021 to 663.8 million users (Statista)

 

  • $622.75: How much the average mobile payments user will have spent on mobile payments in 2017; this is expected to grow to $1,303.85 by 2021 (Statista)

 

  • 41 percent: Percentage of consumers who are likely to try digital wallets in the next year (JPMorgan)

 

  • 64 percent: Percentage of consumers who plan to use a mobile wallet in 2020 (Accenture)

 

  • 61 percent: Percentage of consumers who welcome open access to their finances so they can see checking account or credit card balances when paying with any mobile app (Accenture)

 

  • 25 percent: Percentage of U.S. retailers that currently have terminals that accept mobile payments. Apple Pay and PayPal are retailers’ two most widely accepted digital payment methods, though Android Pay is gaining in popularity with retailers and can be expected to overtake Masterpass by Mastercard within the next 12 months. (Statista)

 

  • 83 percent: Percentage of healthcare providers who plan to meet the rise in patient consumerism with more retail-like technology solutions and practices (Black Book)

 

  • 62 percent: Percentage of medical bills that were paid online in the first half of 2017 (Black Book)

 

  • 95 percent: Percentage of consumers who would pay online if a healthcare provider’s website had the option (Black Book)

 

  • 71 percent: Percentage of patients who say that mobile pay and billing alerts have improved their actual satisfaction with a healthcare provider (Black Book)

 

Mobile payments are likely to be critical to the future of healthcare benefits, as deductibles and out-of-pocket maximum costs rise, resulting in millions of dollars of unpaid medical bills. Through the WEX Health Cloud platform, members can streamline the funding, purchasing and payment processes required for informed healthcare financial decision making.

Want more? Read why consumers are turning to their smartphones for health information.

The 3 Biggest Threats to Data Security and Privacy in Healthcare Today

The 3 Biggest Threats to Data Security and Privacy in Healthcare Today

11/08/2017

by Jesse Braasch & Jason Langston

 

According to a new report on healthcare data breaches in 2017, the three greatest threats to data security and privacy this year have been human error, hacking/malware and insiders. To prevent breaches, all industry players need to ask themselves if they are vulnerable to these threats and ensure that their software systems are updated.

 

  1. Unintended Disclosure: 41 percent (the large majority) of breaches are the result of unintended disclosure, a.k.a. user mistake or human error. These incidents can come in the form of emails inadvertently sent to the wrong recipient or emails that contain protected health information (PHI). Discharge instructions may be given to the wrong patient, or a server containing PHI can be accidentally left open to the public. Workforce training and education can go a long way to diminish incidents of unintended disclosure.

 

  1. Hacking or Malware: Hackers have continued to disproportionately target healthcare organizations in 2017, organizing significant and sophisticated attacks that account for 15 percent of breaches so far this year. Phishing attacks on hospitals, insurance providers, medical equipment suppliers and others have resulted in the leaking of tens of millions of patient names, social security numbers, medical records, diagnoses, treatment information and other clinical data.

 

  1. Insiders: Disproving the old-fashioned theory that the best way to protect data is to keep it close to home are continuing reports of employee snooping or physical theft of on-site devices and data, which account for 15 percent of breaches (physical loss can be blamed for another 8 percent). Typically this can involve an employee viewing records without a work-related reason. Of note, the number of breaches attributed to employees are on the rise, but they are generally easier to mitigate than external threats.

 

Though the healthcare industry was slower to adopt cloud computing than other industries, but most healthcare providers and employers now overwhelming believe that patient and employee benefits data is safer being managed by a software-as-a-service (SaaS) company than it is with on-premise software. SaaS platforms are also more likely to have data engineers and software experts dedicated to continuously monitoring and guarding accounts for the above threats.

 

How can a company know if a SaaS provider can be trusted to provide secure custody of data? Verify that they understand the regulatory requirements and are strictly compliant with HIPAA, SSAE 16 and PCI.

 

 


Jesse Braasch

Vice President of Infrastructure and Operations at WEX Health

Jesse Braasch is the Vice President of Infrastructure and Operations at WEX Health, the largest Software as a Service (SaaS) company in the healthcare payment market today. His favorite saying is, “The most dangerous phrase in the English language is, ‘We’ve always done it this way!’” In the ever-changing, always dynamic world of consumer directed healthcare, Jesse’s dedication to innovation and excellence will continue to keep WEX Health at the forefront of the current healthcare revolution.

As the consumer driven healthcare industry grows exponentially, Jesse will help ensure WEX Health’s technical ecosystem has best-in-breed features, stability, security, and quality of service so the company is able to scale in parallel with the industry. Jesse’s passion is delivering creative yet rock solid technologies that truly solve the needs of the customer and enable speed to market.

Regarded as a veteran of the technology industry, Jesse has over twenty years of experience working for industry leading SaaS corporations and Fortune 500 companies. Most recently Jesse was Director of Infrastructure for XRS Corporation, a SaaS company providing trucking fleet management solutions, where he led server, storage, database, and IT operations teams. Prior to working at XRS, Jesse held technical and team leadership positions at Target Corporation, Fair Isaac Corporation, and Travelers Indemnity Company.

After serving in the United States Marine Corps, Jesse earned his Bachelor’s Degree in Information Technology from Capella University, and is currently pursuing his Masters of Science degree in Security. Jesse, his wife, and two teenage sons live in Maple Grove, MN, where he is an active volunteer in the community’s youth ice hockey association.


Jason Langston

Vice President of Infrastructure and Operations at WEX Health

Jason Langston leads the Enterprise Architecture and Application Security team at WEX Health. This team works closely with the IT Security, Compliance and Fraud teams to ensure the robust security and scalability of WEX Health Cloud. They run the software security assurance program, performing various tests, scans, attack models and reviews to identify, fix and prevent security issues. Jason has worked at WEX Health for 13 years and in the tech industry for almost 20 years in various technical and leadership roles, with a strong focus on architecture and security.


IRS Issues Guidance on Small Employer HRAs

IRS Issues Guidance on Small Employer HRAs

11/03/2017

by Chris Byrd

 

This week, the IRS released guidance (Notice 2017-67) addressing qualified small employer health reimbursement arrangements (QSEHRA).

In the form of 79 questions and answers, the IRS explains the rules and requirements for providing a QSEHRA under section 9831(d) of its code, the tax consequences of the arrangement and the requirements for providing written notice of the arrangement to employees. A qualified small employer HRA may be offered by employers that have fewer than 50 full-time employees and do not offer group health plans to any of their employees.

The proposed guidance attempts to respond in part to President Trump’s executive order of Oct. 12, which called for expanded availability and permitted use of HRAs. It should be noted, however, that the response is only in the context of QSEHRAs and does not address potential further expansion of HRAs. The primary purpose of the proposed guidance is to address many questions that have arisen since QSEHRAs were created last December.

The guidance is intended to be incorporated into proposed regulations to be issued by the IRS and Treasury Department. It provides for public comments on the guidance and the proposed regulations through Jan. 19, 2018.

Chris Byrd, WEX Health’s executive vice president of operations, says, “The IRS ruling is proposed and not final. It answers many, if not most, of the questions that the industry had asked it to. That’s good, as it eliminates some of the uncertainty about how these accounts are to be administered, which should help adoption of QSEHRAs. Much of what is outlined is helpful, but it’s not perfect, and I would expect we and other industry participants will provide input during the comment period.”

HRAs were created by the IRS in 2002 to allow employers to fund medical care expenses for their employees on a pre-tax basis. In December 2016, the 21st Century Cures Act additionally created QSEHRAs, amending the IRS code, Patient Protection and Affordable Care Act and other laws to exempt QSEHRAs from certain requirements that apply to group health plans.

To read the IRS’s notice in full, go here.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


Retirement Savings Account Limits to Increase in 2018, as Tax Reform Brings Talk of Capping 401(k) Contributions to Forefront

Retirement Savings Account Limits to Increase in 2018, as Tax Reform Brings Talk of Capping 401(k) Contributions to Forefront

10/27/2017

 

Last week, two notable retirement savings stories made the news: First, the IRS announced that it would increase the annual 401(k) contribution limit to $18,500—up $500 from this year’s limit. To reflect an increase in the cost-of-living index, new contribution limits will also apply to 403(b), most 457 plans and the federal government’s Thrift Savings Plan. Continue reading

IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

10/26/2017

 

The IRS has announced tax year 2018 cost-of-living adjustments for inflation for more than 50 tax provisions, including increasingly contribution limits slightly for Qualified Small Employer HRAs and FSAs. HSA limits had been announced by the IRS back on May 4, 2017, as part of the  Revenue Procedure 2017-37, which included inflation-adjusted HSA contribution limits effective, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs must be coupled with. Continue reading

Employers, This Is the Comparative Data You Should Use to Evaluate Your Benefit Plans 

Employers, This Is The Comparative Data You Should Use to Evaluate Your Benefit Plans 

 10/23/2017

 

Just as more patients are taking control of their health information by bringing personal data from their cell phones or activity trackers into their doctor’s appointments, more employers are using mobile, data analytics and personalized consumer portals to engage with employees and evaluate the effectiveness of the benefits plans they offer. Continue reading