UBP blog


New report from Attorney General sheds light on main health care cost driver in Massachusetts

Just last Friday, Massachusetts Attorney General Martha Coakley released a report pinpointing the main driver of the Commonwealth’s rapidly spiraling health care costs—the market clout of highest paid providers. Simply stated, Massachusetts insurance companies are paying certain doctors and hospitals significantly more than others for the same patient care.

Coakley’s year-long investigation leading up to this report revealed that a small group of roughly 10 hospitals statewide commanded anywhere from 10 to 100 percent higher payments than their competitors for similar work.

The study also found no evidence that this higher pay was due to better quality of patient care or treatment of more complex cases. In fact, the study revealed that:

  • Eight in 10 of the best paid hospitals in one insurer’s network were community hospitals. These hospitals tend to have less complex cases than teaching hospitals and also do not have the added cost of training future doctors.
  • One major teaching hospital that treats some of the Commonwealth’s sickest patients is paid significantly less than dozens of other hospitals that treat healthier patients.

Coakley’s team did discover that the hospitals commanding higher payments were able to do so because of market leverage from factors such as brand-name recognition and geographic isolation.

What the investigation has done:

At the end of the day, Coakley’s investigation had one major accomplishment. It shed light on the true cause of Massachusetts’ health care cost increases.  Over the past several years, it was revealed that provider rate increases, not higher patient utilization rates, were the main contributors to higher health care costs.

The Attorney General’s office will release the above as well as other related findings in a series of reports over the next several weeks.  From March 16 through the 31st, hearings will be held on the issue and state officials will ask hospitals, physicians, insurers, employers and consumer groups to testify on factors contributing to health care cost increases and what could be done to make health care affordable.

As the reports are released and hearings go under way, we’ll make certain to keep you up-to-date on all findings and developments you’ll need to know.


“Important Tax Document Enclosed”, now what?: FAQs on the 1099-HC and how to use it

Massachusetts requires all residents to have Minimum Credible health insurance Coverage or face a tax penalty. That’s why every year all employees covered on your health plan in the past year receive a 1099-HC.

Employees will get their 1099-HC forms in the mail this month and will use them to report their health insurance coverage on the Schedule HC form.

Since many Massachusetts employers will be entertaining employees’ questions on what to do with this “Important Tax Document Enclosed”, we’ve put together a few 1099-HC FAQs to help them out.

What is the 1099-HC form?

The 1099-HC is a required document for adult Massachusetts residents. It serves as proof that they had Minimum Credible Coverage* health insurance in the past year. 

*Effective January 1, 2009, all health plans sold in Massachusetts are required to meet the Minimum Credible Coverage standards set forth by the Commonwealth Connector.

Who will receive the 1099-HC?

All Massachusetts adult health insurance plan subscribers who had Minimum Credible Coverage in 2009 will receive the 1099-HC.  Medicare recipients automatically meet the requirements for qualifying health insurance and will not receive the 1099-HC.

Why will I receive the 1099-HC?

Using a Schedule HC form, Massachusetts residents are required to report on their health care coverage when filing their 2009 income tax returns. The 1099-HC contains all the information adult Massachusetts residents need to complete the Schedule HC.

When will I receive my 1099-HC and how will I know I’ve received it?

Health plan subscribers’ 1099-HC forms will be postmarked by January 31, 2010. The form will come directly from your health insurance carrier and the envelope will have the words “Important Tax Document Enclosed” written on the front.

What information will be printed on the 1099-HC for the 2009 tax year?

Your 1099-HC form will contain the following information:

  • Name of your Health Insurance Company
  • Federal Tax ID for your Health Insurance Company
  • Subscriber Name
  • Subscriber Date of Birth
  • Subscriber Member ID
  • Subscriber’s Address
  • Full-year coverage or monthly coverage designation *
  • Dependent (s) Name (s)  
  • Dependent (s) Date (s) of Birth
  • Dependent (s) Member ID (s)
  • Full-year coverage or monthly coverage designation for each listed subscriber and dependent*

*If you and your dependent(s) had Minimum Credible Coverage for the full year of 2009 the “Full Year Minimum Credible Coverage” box will be checked on the 1099-HC for you as well as all of your dependents. Otherwise, a check mark will appear next to each month that you or any of your dependents had Minimum Credible Coverage for 15 days or more.

What must I do with my 1099-HC?

If you are filing a hard copy (paper) return, your 1099-HC should be included in your tax return mailing. You should also keep a copy of it for your records.

If a tax advisor is preparing your 2009 income tax return, he or she should be provided the 1099-HC form along with your other records.

When and where can I get a copy of my Schedule HC tax form? Also, how do I complete the Schedule HC?

All Massachusetts residents should receive a Schedule HC as part of the resident tax package mailed to them. If any of your employees need an additional copy, they can visit the Massachusetts Department of Revenue’s website (http://www.state.ma.us/dor) where they’ll also find instructions on how to complete the form.


Three changes to Massachusetts Fair Share Contribution (FSC) law employers need to know effective 10/1/09

Effective October 1, 2009, the Massachusetts Division of Health Care Finance and Policy (DHCFP) has approved and adopted an amendment to the state’s Fair Share Contribution (FSC) regulations (114.5 CMR 16.00).

Among the amendments are several technical changes that clarify compliance requirements for businesses subject to the law (Massachusetts employers with 11 or more full-time equivalent employees). Although most of the amendments made are relatively minor, there are three notable revisions that employers should be aware of.

  1. Removal of the majority of time rule: The FSC regulations originally stated that, for the purpose of calculating the percentage of full-time employees enrolled in their health plan, employers would count an employee who worked both full-time and part-time hours during a given quarter as either full-time or part-time based on whether they were full-time or part-time for the majority of the quarter. The new FSC rules delete this confusing provision and now simply require employers to report both the number of full-time employees enrolled in their health plan and on their payroll as of the last day of the quarter under review.
  2. Group Health Plan Documentation Requirement: Under the FSC regulations, employers who offer and contribute to their employees’ group health plan must maintain documentation on it. This documentation must include a written plan description for each plan offered as well as copies of all written communication to employees about plan offerings. This documentation must contain information on benefits eligibility (including the minimum number of hours employees must work in order to be eligible for benefits) and information on premium contributions. Also, the written plan description must give evidence that the group health plan was in place during the quarter under review.
  3. Premium Reimbursement Arrangements are now recognized as group health plans: However, this is only true provided that employers have written documentation designating specific insurance plans for use by employers.

As mentioned earlier, these new FSC regulations are now in effect and employers will need to immediately take all necessary steps to ensure compliance with them.

Employers can find the full text of the newly revised FSC law on the Division of Health Care Finance and Policy (DHCFP) page of www.mass.gov.


“What’s fair is fair” may not always be the case

Two years after Massachusetts’ landmark health insurance law became effective in 2006, the state’s 4 Division of Unemployment Assistance auditors began knocking on business’ doors.

Their targets were employers who provided incomplete or inconsistent information to the state in earlier reports on their offering of and contribution to employees’ insurance.

As most of us, if not all of us know, the Commonwealth of Massachusetts requires companies with 11-50 full-time employees to either:

  • Have at least 25% of full-time employees enrolled in the employer’s group health plan

-or –

  • Offer to pay at least 33% of health plan premium costs for full-time employees working 90 days or more. 

Companies with 51 or more full-time employees are required to meet both of the above requirements or have at least 75% of their full-time employees enrolled in their group health plan.

As of late, the Commonwealth has audited 426 companies and found 172 (or 40%) had violated the above requirements and thus owed an additional $5 million to their workers’ health insurance premiums.

But is it really their fault?

The easy answer to this question is “yes”, however, the issue we are dealing with here is a complicated one. Here are a couple of reasons why.

Laws are confusing for employers:

Fair Share Contribution rules are so confusing that employers are having a very difficult time complying with them. 38 of the 172 companies who failed the audit have appealed.

On top of keeping their businesses afloat in a downturn economy, employers need to stay on top of very dynamic Federal and State laws and very often find themselves in way over their heads.

Some industries (and companies) have a harder time complying than others:

Companies in the staffing, restaurant and retail industries are among those struggling the most to comply with this law. Here’s an example how for some businesses it can be difficult, if not nearly impossible, to comply with these rules.

Let’s say you’re the owner of a local restaurant chain with 3 locations in Massachusetts and a total of 55 full-time employees as defined by the Commonwealth. Of these 55 employees, 28 are students and young adults still covered under their parents’ plans and 13 are ages 65+ and covered by Medicare. Of the 14 remaining employees, more than half are married to spouses that have employer-sponsored insurance.

What this all means is that employers such as this restaurant owner could offer to pay anywhere from 33 to 100 percent of employees’ premiums but if just one of the 14 employees not covered under their parents’ plans or Medicare waives coverage, they will not be in compliance with just a bit shy of 24% plan participation.

Consumer advocates are encouraging the state to make exceptions for employers that cannot entice 25% of their workforce to enroll in their plan but the state has yet to follow their advice. What are your thoughts on this?

Should employers be “penalized” for hiring workers that are covered elsewhere?


Will preparation and health care proxy; two services employees need to know about

Everyone needs to know about wills and healthcare proxies. These documents are there to ensure that, in the event of an untimely severe illness, injury or death, all important decisions are taken care of for you in a way that you’d want them to be made.

Many carriers offer free will preparation services that help you create, execute and store your will.  A healthcare proxy is an important legal document that employees should know about and complete.

The following will tell you a little bit more about what will preparation and the healthcare proxy are and why they are important for your employees.

Will Preparation Services:

Will preparation services are there to help you create two important types of wills, your simple will and your living will. You create your simple will to designate and ensure who will get access to your property and all other financial assets, who will become the guardian of your children and who will manage your estate.

Your living will allows you to specify in advance your end-of-life decisions and name a health care surrogate to make medical decisions on your behalf in the event that you are unable to do so. This document will help you ensure that your wishes are being carried out, for instance, when deciding whether you will be on artificial life support should you become terminally ill, are in an irreversible coma or in a vegetative state.

Healthcare Proxy:

The healthcare proxy is a simple, yet important legal document that everyone should have even if they are perfectly healthy. Under Massachusetts healthcare proxy law (Massachusetts General Laws, Chapter 201D), “any competent adult 18 years of age or over” may complete this document and appoint someone to be their Health Care Agent.

The Health Care Agent you appoint becomes authorized to make healthcare decisions on your behalf in the event that you’re unable to make them yourself. When this happens, your Agent’s decisions regarding your healthcare will have the same authority as yours would (if you were able to make them) and will be honored over those of any other person. If you give your Agent full authority to act for you, he or she may refuse or consent to any medical treatment for you, including treatment that would keep you alive.

Your Agent’s decisions will be on your explicit wishes or his/her assessment of your wishes, so it’s vital that you communicate with your Agent and inform them of decisions you’d want them to make for various situations.

Not sure if your providers offer will preparation services? Just give us a call at (617) 859-1777 for a list of providers that we know offer them.

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