By Ann Gergen, Executive Director
Benefit pools are providing early indicators of the overall impact and cost of COVID-19 on local public entities and the broader pooling community. Here are a few of the most notable coronavirus-related trends, influences and service impacts among benefit pools:
1. COVID-19 testing and oftentimes treatment is fully covered.
Under the Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security (CARES) Act, and some state laws, all COVID-19 testing in the U.S. must be covered without subscriber cost-sharing. In many cases, health pools are also covering COVID-19 treatment as in-network and not subject to copays or coinsurance.
Health and workers’ compensation pools alike have discussed the policy ramifications of these coverage requirements. Work comp presumption laws have in some cases shifted medical care costs for public entity employees from one system to the other and created additional public employer obligations for wage replacement and related benefits.
2. COVID-19 diagnosis and treatment rates are very low.
Most health pools have less than one percent of covered lives tested for or diagnosed with COVID-19, with very few or no hospitalizations. As a result, the overall costs borne by health pools for COVID-19 treatment have thus far been manageable.
However, this incident rate reflects only those individuals diagnosed and treated under health coverage provisions. You would also have to look at workers’ compensation coverage data to get a full picture of the COVID-19 incident rate (and costs) within local public entities. In some pools, the incident rate might be greater than one percent as a result of subscriber demographics and work comp presumption laws.
3. Non-COVID health claims have significantly decreased in number and cost.
Because most health care has been significantly curtailed under statewide stay-at-home restrictions, most health pools are experiencing very low claims volume and overall costs, although pools report pharmacy costs have been higher than usual.
The big question is: How long will this last? As state restrictions loosen and subscribers needing care begin to actively seek it, many pools are carefully monitoring claims to reasonably project when a “return to normal” is expected. For some pools, total medical costs have actually already rebounded to pre-pandemic levels.
It’s also unclear whether delayed health care consumption will result in a bubble of claims above historical levels as patients seek to catch up on care they missed. Nor is it clear whether or how much systemwide costs will increase as a result of subscribers postponing preventative care during the pandemic.
Some health pool actuaries suggest they do not expect rebound claims to significantly vary from prior claim trends. That said, they also acknowledge the lack of direct prior experience upon which to base projections.
4. Telehealth utilization has increased.
As medical providers have moved to online service delivery (including for basic health care, preventative medicine, mental health and other services), subscribers have been quick to embrace these options.
Many pools report their subscribers are highly satisfied with telehealth interactions and virtual visits. Some providers and patients may choose to continue or expand use of telehealth beyond the pandemic, thereby changing the very nature of health care delivery.
More broadly speaking, telehealth utilization is a crossover issue impacting both benefit and work comp pools. Increasing acceptance of telehealth services, including for mental health care, will have implications throughout the health care delivery system.
5. Stop-loss coverage availability, terms and pricing are varying considerably.
AGRiP member health pools are having mixed experiences in the stop-loss market. Total cost increases for pools upon stop-loss coverage renewal range from 3 to 60 percent. Those pools seeking new stop-loss relationships report varying degrees of interest from potential providers.
Importantly, current claims and cost decreases due to COVID-19 appear to be having a relatively minor impact on stop-loss renewals. By contrast, prior non-COVID claims history (which would have impacted a pool’s renewal under normal circumstances) remains a large influence on both availability and pricing.
6. Pools are finding it challenging to determine appropriate contributions for health benefit renewals.
All the new factors already outlined are challenges for health pool rate-setting activities, especially timing of a return to prior levels of care, potential additional costs resulting from delayed care, the impact of telehealth, and stop-loss costs.
As health pools look at current performance and consider future claim and cost trends, they’re also recognizing that members and subscribers need some predictability over the medium term. With public entity revenues expected to be significantly reduced and employee compensation likely to be suppressed, pools know it’s important to keep contributions as steady as possible amid uncertain conditions.
7. Impacts to dental, vision and other ancillary benefit programs are more easily managed.
Although all the same trends in terms of claims, costs, delayed care and telehealth exist in ancillary coverage lines like dental and vision, the visit or coverage limits often already in place make the impacts easier to manage and the future easier to project.
Some pools are considering methods to offset contributions for dental or vision programs due to the current low utilization of benefits. However, specific pool or employer provisions for employee cost-sharing of contributions might make an offset difficult to implement.
8. Employee assistance program benefits are critically important.
The coronavirus crisis has magnified the importance of stress management and overall mental health. Many pools report increased use of employee assistance programs (EAPs) and are actively encouraging members and subscribers to fully engage with EAP resources.
The short- and long-term benefits of EAP services are intuitive, but use data is just becoming available to pools for further analysis.
9. Pools are providing public entity employers with increased help at the intersection of benefits rules and HR policies.
Benefit pools are always active when it comes to assisting members and subscribers with enrollment processes. Many benefit pools also already assist their members with benefit regulations and associated compliance (e.g., with HIPAA, COBRA, FSA and HSA provisions). Pools in general also often provide employment-related guidance into coordination of federal and state leave laws, including FMLA.
There have been coronavirus-related changes and challenges to all these elements of benefits and leave coordination. For example:
- The IRS has updated rules allowing for employee changes to FSA contributions and expenditures as well as provided parameters for enrollment changes in employer-sponsored benefit plans.
- The Families First Coronavirus Response Act includes provisions for emergency paid leave and expanded FMLA eligibility. These new rules combine with shifting employment practices within local public entities – e.g., furloughs and layoffs, employees who need time off to care for dependents or other family members – to create a complex set of regulations and employer decisions relating to things like leave and benefits continuation.
- The Coronavirus Aid, Relief, and Economic Security Act contains specifics about use of HSA and FSA funds, payment for telehealth services, and other cost-sharing provisions for health benefits. It also contains unemployment benefit extensions and payment provisions which may come into play for some public entity employers.
Benefit and leave coordination details were already difficult for small public entities to navigate because they don’t typically have full-time HR professionals. Benefit pools have increased the degree to which they provide benefits regulation and coordination assistance for members, in some cases significantly. Pools are consulting with and guiding members toward important decisions of compliance and employee support.
Benefit pools will continue to be an initial source of key information on the costs and other effects of COVID-19. They are also providing critical early support to public entity employers and employees navigating changes relating to HR and benefit policies and practices. Ultimately, the insights being gleaned by benefit pools provide useful perspective about the magnitude and impact of the coronavirus within the local public sector.
To discuss these and other issues with benefit pool peers in an informal setting, join and participate in AGRiP’s Health Pool Resource Group.
Ann Gergen is AGRiP’s executive director and a former pool administrator. She has worked closely with and for pools, public entities, reinsurers and related service providers throughout her career.
Each week, Ann will offer insight into COVID-19 issues AGRiP members are experiencing and related trends to monitor. For more, access the full series of COVID-19 perspective posts.
Access AGRiP’s COVID-19 Resource Center for coronavirus information, links and news relevant to pools. Email us with questions or comments, or connect with us on LinkedIn, Twitter, YouTube and Facebook.#PoolingPerspectives