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The Families First Coronavirus Response Act + A Churchillian Quote

Since my last blog on March 16, thanks to the coronavirus pandemic, much has changed in the world, let alone Iowa. Listing the changes here would be futile, so I will not attempt to do so.

I will, however, share new federal legislation. The Families First Coronavirus Response Act (FFCRA) that was signed into law on March 18, provides paid emergency family leave in limited circumstances, in addition to paid sick leave for people affected by COVID-19.

According to the Kaiser Family Foundation, the relatively quick overview of the FFCRA includes the following:

  • The emergency paid-leave provision applies to businesses with fewer than 500 employees. However, there are some exceptions available for small organizations that employ health care workers. These provisions take effect April 2 and are set to expire on December 31.
  • As for Paid Family Leave, the legislation updates the Family and Medical Leave Act (FMLA) to provide employees with up to 12 weeks of job-protected leave when they cannot work – either onsite or remotely – because their minor son’s or daughter’s school or child care service is closed due to a public health emergency.
  • The first 10 days of leave can be unpaid. It appears, however, than an employee can opt to substitute accrued vacation, personal or sick leave during this time, but an employer may not require an employee to do so.
  • For the remaining 10 weeks, eligible employees must receive two-thirds of their regular rate of pay, which is capped at $200 a day – $10,000 total.
  • For Paid Sick Leave, many employers will have to provide up to 80 hours of paid sick-leave benefits if an employee:
    1. Has been ordered by the government to quarantine or isolate because of COVID-19.
    2. Has been advised by a healthcare provider to self-quarantine because of COVID-19.
    3. Has symptoms of COVID-19 and is seeking a medical diagnosis.
    4. Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a healthcare provider to quarantine or self-isolate.
    5. Needs to care for a son or daughter whose school or child care service is closed due to COVID-19 precautions.
    6. Is experiencing substantially similar conditions as specified by the secretary of health and human services, in consultation with the secretaries of labor and treasury.
  • Paid Sick Leave must be paid at the employee’s regular rate-of-pay, or minimum wage, whichever is greater, for leaves taken for reasons 1-3 above.
  • Employees taking leave for reasons 4-6 may be compensated at two-thirds their regular pay rate, or minimum wage, whichever is greater.
  • Part-time employees are eligible to take the number of hours they would normally work during a two-week period.

It is important to note that employers cannot:

  • Require an employee to use other paid leave before using the paid sick time provided by this new legislation.
  • Require an employee to find a replacement to cover his or her scheduled work hours.
  • Retaliate against any employee who takes leave in accordance with the act.
  • Retaliate against an employee who files a complaint or participates in a proceeding related to the act – including a proceeding that seeks to enforce the act.

The Department of Labor issued guidance on this new law, which can be found here.

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Since our blog this past week, a handful of organizations responded to our invitation to share their workplace practices due to the COVID-19 pandemic.  A quick summary follows:

“As with others, CV-19 has wiped out a robust schedule of events and programs we had planned over the next 30 days. A small workplace of six employees, four were offered the option of working from home, with the other two “splitting time” in the office to cover business. Closed the office physically, but still working in it, and remotely. Our priorities in order are to: 1) Protect the staff’s well-being, 2) Protect our donor well-being (many being in the 65 and over category), and 3) Preserve the Foundation’s resources.” 

  • A healthcare & social services organization shared the following:
    1. We have carefully assessed which administrative employees are able to telework and still provide essential business function support. These employees were engaged in telework effective March 16 (2020).
    2. For those administrative employees who are not able to provide essential business function support from home, they continue to work in one of our administrative locations, practicing strict social distancing, hygiene, and workplace cleanliness guidelines.
    3. All administrative locations have been closed to unscheduled guests.
    4. All team meetings have either been cancelled, postponed, or moved to a virtual environment.
    5. All non-essential travel has been cancelled through April 30.
    6. Visitor restrictions at our service locations have been put in place.
    7. Daytime services have been closed per governor’s order.
    8. Active task force groups have been implemented for problem solving and strategic action moving forward with all information funneled for review by our Executive Leadership Team.
    9. Regularly updated inward-facing and outward-facing communications have been put in place.
  • A few other organizations mentioned similar protocols to those mentioned above.

Because organizations are now a week or two into the changes being made due to the COVID-19 pandemic, and measures taken have been shared through local and national media, we will discontinue our invitation to share the practices of Iowa organizations. Thank you to each organization that shared their practices with us!

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This past week, my Mom (age 88) emailed her numerous grandchildren sharing her experiences growing up during the Great Depression and the hardships that she and others encountered. She ended her message with the following:

“Now we are faced with another crisis. You/we have tasted a good life and now you/we are experiencing some of the difficult times that we (my generation) have experienced many years ago. This is what life is all about, and by working together like a family, we too, shall conquer!”

Mom, Winston Churchill could not have framed our ‘new world’ any better than you have.

To each of you, be safe during this unprecedented and challenging time.

To stay abreast of employee benefits, we invite you to subscribe to our blog.

Employers and the Coronavirus Crisis

Given the escalating local and worldwide coronavirus (COVID-19) outbreak, we are now inviting Iowa organizations to complete an unscientific ‘survey’ on this website. We hope to learn more about what precautions and business practices employers are taking to avert potential disruptions to the workplace. One example is mandating that a certain classification of employees work remotely. From this information, I will then periodically share personnel practices that have been implemented by Iowa organizations.

In just one day, I’ve been contacted by two friends and an Iowa business on what employers are currently doing to help alleviate the growing concern about this ‘epidemic.’ Because the COVID-19 is both fresh and fluid in our local communities as well as worldwide – so many decisions are being made on the fly as to how to handle and protect employees within the workplace.

Examples of National Employers

How are some key employers locally and around the U.S. responding to COVID-19? Employers have an obligation to notify their employees (and customers) who may have been in contact with a sick employee. Employers should encourage sick employees to stay home – using paid time off benefits or perhaps short-term disability coverage. If no leave is available, the employer may also choose to pay employees – even when they are not sick. This is one way to avoid exposure to COVID-19.

Walmart, effective March 10, began an emergency leave policy after an associate tested positive for the illness. Walmart will allow employees to stay home if they are unable to work or feel “uncomfortable” at work. According to a memo seen by Bloomberg News, employees will need to use regular paid time off options. If their workplace is placed under quarantine, Walmart will pay employees for up to two weeks, and this absence will not count against attendance.

If a Walmart employee is affected by this virus, in addition to receiving two weeks of pay, the retailer will pay “additional pay replacement” beyond the two weeks (if needed), up to 26 weeks for both full-time and part-time hourly associates.

Paid leave and workplace practices are front and center now for employers, and critical for retailers and restaurants. Paid sick leave is much less common for lower-wage employees who work in the leisure and hospitality sector. These employees typically interact with the public, such as in the restaurant industy.

Organizations like Twitter Inc., Microsoft Corp. and Amazon have instructed thousands of employees to work from home, if possible. Whereas Costco Wholesale said that corporate employees cannot work remotely unless there is concern about employees being at high risk. If this should happen, the employee could use vacation or sick time to stay at home.

Wells Fargo, the third largest bank in the U.S., indicated that 62,000 of its 259,000 employees worked from home on Monday, March 9. One employee in San Francisco tested positive for the virus and Wells Fargo learned of this diagnosis two days earlier. Other financial institutions are also taking precautions.

Google, in order to mitigate the potential spread of COVID-19, has sent out a memo to employees across North America to work remotely. Just hours later, Google is extending this recommendation to include all workers in the United Kingdom, Europe, the Middle East and Africa.

Nationwide Mutual Insurance Co. will have many of its 3,300 employees in Des Moines begin working from home, beginning on Monday, March 16. The goal is to have half of its employees working at home at any given time.

An insightful SHRM piece, written by Stephen Miller, regarding employer health, wellness and leave benefits and COVID-19 can be found here.

Centers for Disease Control and Prevention (CDC)

The CDC has a webpage that provides resources for businesses and employers when preparing for COVID-19. It provides a good beginning to address interim guidance for employers, in addition to cleaning and disinfection recommendations. Employers are advised by the CDC to “ensure that your sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies.”

The Centers for Medicare & Medicaid Services (CMS) just sent out a document that contains useful information on measures to keep workplaces, schools, homes and commercial establishments safe.

Summary

Within the span of writing this particular piece, new emails and updates about COVID-19 are coming in with a flurry. One might expect this will be the new normal for a while.

We live in a world that requires vigilance both at home and at work. Despite this evolving environment, remaining calm and gathering as much trustworthy information as possible is the best solution to navigate through this ‘season’ of the unknown.

Again, completing our informal online survey will allow us to share various organizations’ business practices and policies.  As a reminder, our official 2020 survey will be covering many components of paid time off and paid parental leave benefits.

To stay abreast of employee benefits, we invite you to subscribe to our blog.

Comparing Private Payer Prices to Medicare Rates

Private Payer Prices Relative to Medicare RatesTrust, but verify” is a memorable quote that President Ronald Reagan used while negotiating nuclear disarmament with the Soviet Union in the 1980s. According to Wikipedia, this quote was derived from a rhyming Russian proverb, Doveryai, no proveryai.

Trust, but verify” comes to mind in today’s healthcare environment, specifically as it relates to third-party price negotiations between commercial payers (insurance companies) and health providers. Since the prices we pay for non-government medical care are largely secretly negotiated in the backroom by insurers and providers, the TRUE payers (e.g. taxpayers, employers and consumers) often assume they are paying competitive prices for medical services. But they never really know just how much money is being left on the table – it’s anyone’s guess.

With a few exceptions, transparent medical pricing is virtually non-existent. For example, a family member of mine is scheduled to have a knee-replacement performed during this month, but despite our requests to learn the negotiated costs between our insurer and this provider, we were unable to obtain the true cost of the surgeon’s fee, in addition to many of the ancillary costs associated with this particular procedure. My mindset is quite simple: if we have to ask more than once about how much this will cost, then something is clearly not right with our supposedly ‘consumer-centric’ high-deductible health plan – supplemented by a health savings account. We have a $10,000 deductible, so we SHOULD know the true cost, right? But we don’t.

Additionally, we were offered the ‘choice’ between using the outpatient surgical center (owned by our surgeon’s group practice) versus having this procedure performed at a nearby West Des Moines hospital. When we asked the gracious office lady employed by the group practice about the price differential between the center and hospital, we received a blank stare that was followed with a promise that someone would be contacting us ‘soon’ with answers. Over two months later, we are still waiting for that promised phone call. But because we have insurance, our desire to become true ‘consumers’ is not that urgent. This will be fodder for future blogs!

To date, transparency-hype serves as a smokescreen to protect the status quo of pricing opaqueness. A great primer regarding opaqueness in healthcare pricing can be found at The Powers Report Podcast found here.

Linking Private Payment to Medicare Rates

In March of last year, I attended a conference in Indianapolis hosted by the Employers’ Forum of Indiana. The conference centered around a RAND Corp. research report that revealed a national employer-led initiative comparing private (commercial) reimbursements with known Medicare payments. In other words, how do privately-negotiated rates compare to the lower Medicare rates determined by our federal government? Claims data from almost 1,600 hospitals in 25 states were gathered and analyzed by RAND Corp. Iowa, by the way, was NOT represented in this study*.

Because there is little-to-no price transparency in the private/commercial payment sphere, RAND was forced to gather claims data from three types of data sources:

  1. Self-insured employers who chose to participate in the study.
  2. State-based, all-payer claims databases from Colorado and New Hampshire.
  3. Health plans (insurers) who chose to participate.

The key finding from the RAND study (comparing prices from 2015 to 2017) was that relative prices (which represent the allowed amount paid as a percentage of what Medicare would have paid for the same services) rose from 236 percent of Medicare rates in 2015 to 241 percent of Medicare rates in 2017. Put another way, assume that Medicare prices are at 100 percent, private reimbursements were well over double what Medicare pays hospitals for the same services.

Medicare payments are tied to average hospital costs. Some hospitals, due largely to efficient internal practices that result in lower costs, break even or make money on Medicare patients, while many less-efficient hospitals lose money.

The private reimbursement rates range widely from state-to-state, even when states are next to one another. For example, the RAND study found the average Michigan commercial payer price was 156 percent of Medicare rates, yet, their neighbor to the south, Indiana, was highest of all states with 311 percent of Medicare rates. Suffice it to say, Indiana employers in attendance at this conference where both shocked and upset about overpaying for care when compared to other employers outside Indiana.

Employers, specifically self-insured employers, have a fiduciary responsibility to spend prudently and are justifiably frustrated with ever-escalating healthcare costs that do not add value to their bottom line. Because of this, the RAND report is causing a snowballing effect with employers who wish to take a much more active role in directly negotiating and contracting with medical providers for better, more reliable and effective care. Employers are hoping to narrow the large gap between commercial and Medicare payment rates.

According to RAND, the implications of knowing this information allows employers new “opportunities to redesign their health benefits to better align hospital prices with the value of care provided. Employers can exert pressure on their health plans and hospitals to shift from discounted charge contracts to contracts based on a multiple of Medicare or other prospective case rates.”

What About Iowa Commercial Rates?

Because there were no self-insured employers from Iowa participating with RAND during the 2015 and 2017 studies, there is no information on how commercial payments in Iowa compare to Medicare rates and to other states. This, however, can certainly change if a few large, self-insured Iowa employers would voluntarily share their claims data with RAND* for future analysis. Sharing such data would provide proof that the commercial rates being paid in Iowa are competitive (or not) with other states when using Medicare rates as the measuring stick. Very large national organizations participating with RAND evidently trust that their claims data are highly guarded by RAND and will not be compromised due to HIPAA privacy concerns, etc.

In a perfect world, having completely transparent negotiated rates between commercial payers and providers would eventually become a game-changer on knowing just how competitive the prices are in Iowa and elsewhere. It is telling that research is necessary in order to learn whether or not the prices we pay to our healthcare providers are trusted to be appropriate. As President Reagan indicated a few decades ago, verification is a sound strategy.

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*Self-insured Iowa employers, if interested, can become part of the RAND Hospital Price Transparency Project for 2020-2021.