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FMLA, ADA, Disability and PTO (Paid Time Off) leaves require proper sequencing in avoidance of fiscal waste, unlawful activity and costly confusion.  While there are certain acceptable conditions under which paid leave can be substituted for FMLA, HRS recommends sequencing leave with clear consistent policies.  As it is unlawful to penalize an employee in any way based upon his or her proper execution of legal rights or benefits, keep it clean and risk free. Beyond PTO and where permitted by law, leave concurrency should be clearly stated and practiced with consistency.

In terms of medical and disability leave, employers are strictly accountable to FMLA and ADA according to company size, location and unique definition of “undue hardship.”  Employers must create a distinctive policy whereby employee receipt of disability benefits does not necessarily constitute approved disability leave.  Consider the elective disability policies available.  While these may be a smart purchase for employees, employers must be consistent with available leave and need not recognize these private purchases as employer mandates. A few sentences in the employee handbook and a consistent practice accomplish these goals quite nicely.  Workers’ compensation lost time is treated in accordance with FMLA, ADA, DOL, EEOC and company leave policies. 
 
Customize a PTO policy which addresses your company’s unique needs. Consider benefits for using PTO during company preferred times such as periods of less activity. Contemplate blackouts for PTO during bottleneck activities. Take into account the minimum and maximum length of absence preferable, and structure a written policy in advance accordingly. Having created a custom policy that appropriately addresses unique company wishes, many employers will find value in requesting use of PTO prior to any unpaid leaves. Remember that legally entitled leaves require certification. That is, when you have a finite amount of leave certified, this needs not extend the total leave amount, and everyone wins. Most employers will find the following sequence most beneficial: PTO >> FMLA >> ADA Extension (if applicable) >> Company Elected Medical or Disability Leave (if any).  ADA extensions are still being shaped by case precedents, whereby 30 days beyond FMLA was recently determined a maximum.

Any company elected leave not legally mandated should be titled as such, creating clear distinction as to what is legally mandated and monitored and what is not. It is most definitely a lost opportunity to create company elective leave without proudly announcing this generosity of this benefit to treasured team members.  This announcement can optimize engagement and employer brand equity.
 
The legal compliance professionals at HRS are on call for policy establishment and implementation guidance.  Please consider us a valuable resource to any of the topics mentioned herein.  

Fueled by ADA, FMLA and countless ever-changing statutory concerns, employer confusion has sparked over-generosity.  Employers are giving against their will and caving in beyond necessity.  While competitive offerings remain critical to attracting, engaging and retaining the right talent, benefits that reach the greatest number of top performers are most valuable.  Disability benefits may or may not be integral to that mix, specific to the overall company offerings and keys to success. Disability leave, disability law and disability insurance are each distinctively different topics.  Accordingly, we have taken time to debunk the myths and blueprint the actual requirements.

ADA Leave: Recent legal precedents validate that employers need not provide “indefinite leave” nor any disability leave that produces “undue hardship.” According to circumstance, four weeks beyond FMLA entitlements has been a typical benchmark for ADA leave.

Employee Paid Disability Premiums: Where the company does not pay premiums or administer benefits, such disability insurance plans may be exempt from company benefit rules.  While it is unlawful to penalize employees for the allowable use of company benefits, benefits not provided by the company may be carved out.  Written distinction is mandated through a well-crafted policy.

Advance Notice:  Wage, hour and employment laws are quite clear that while an employer may be granted certain latitude in practice, advance notice to employees is critical to legal compliance.  Burden rests upon the employer to provide clear advanced notification of policies.  Again, a well-crafted proactive policy satisfies this requirement.

Benefits During Leave:  The company needs not pay benefits during leave not legally mandated.  In fact, the same is true during certain legally mandated leave.  Employers may craft policies that stipulate leave to be employment separation.  Such leave can then have its own consistently applied definition, eligibility for rehire and seniority recaptured, if so desired, upon rehire. Employees are eligible for COBRA as of the employment separation date, which becomes the qualifying event.

As with most employee handbook policies, one size does not fit all here and legal compliance can be complex.  HRS is available to weigh situations on their own merit and customize policies to unique company practices.

If you want to understand why anything happens in health care simply follow the dollars.

After having spent 35 years in the health care cost management field I am convinced that this is a true statement. The dollars influence and in some cases dictate hospital expansion, physician carrier choices, additional technology, administrative systems, insurance company plan designs, employer benefits and any other aspect of the health care field. This being the case, influencing the dollars will drive solutions to the industries problems.

As evidence of this, look at the expansion of PPO type plans over the past 20 years. Offering employees a benefit incentive to use one doctor or hospital over another has resulted in the largest change in buying habits ever recorded, with over 90% of today’s health care being provided through PPO type plans. Even HMO’s have re-packaged their services into PPO type plans.
There are three changes that can be made to the existing system that will reduce costs, significantly limit cost increases, improve quality, improve access, streamline administration and expand insurance coverage. All three changes are made in the private sector and require no government intervention or additional taxes.  

1. Price Transparency:

Today we do not know the true cost of even the most routine procedure (normal deliveries). As a result of multiple PPO, HMO and government contracts the price has been distorted. In Milwaukee 38 procedures represent 65% of the dollars spent at the hospital. The price range of each procedure among Milwaukee hospitals is at least 100%, with 300% and 400% variances common. Each hospital should be required to disclose the average private sector revenue for the top 20 procedures. Because this is an average confidential contract pricing is not disclosed.  

2. Change the PPO and HMO contracts:

In the mid 1990’s most hospitals were reimbursed a set dollar amount per day of hospital stay. As a result the cost increases for benefit plans in 1995 and 1996 was virtually “0” according to the Mercer study on health care costs. In the latter 1990’s competitive pressures and improved hospital negotiating skills resulted in a move to a percentage off billed charges. The control of the cost of health care was turned over to the providers. From the late 1990’s to about 2006 cost increases were in the low to mid teens each year. A return to fixed pricing is essential to controlling costs. Both hospitals and physicians should be reimbursed according to a fee schedule.

3. Change Benefit Plan Designs:

Price transparency and a change to schedules under contracts allow the designers of benefit plans to create plans that embrace the schedules. The cost of this service ranges from $1000 to $4,000. The benefit plan will pay $2,500. These are the providers who will accept this price or less.

4. Create Global Services:

Fixed pricing allows the formation of Global Services. Under these services all of the parts of a procedure are contained in a single contracted price. For example a Global surgery would include the surgeon’s fee, assistant surgeon (if necessary), anesthesia, radiologist, facility, drugs, tests and any other items required to provide that service. This is the way that health care is provided when benefits are not involved. Most cosmetic surgeries are presented to the patient set fees are patient (who is going to pay the bill) as a single fee with all the necessary parts included.
 
These four changes would result in an immediate cost reduction (fixed prices are used and providers have an incentive to control costs since it will increase their profits), improve quality (the main differentiation factor is now quality of care and patient satisfaction), improve access (if providers know they will be reimbursed they are more likely to offer services in areas they might otherwise ignore), streamline administration (more efficient administration increases profits) and expand insurance coverage (better priced insurance products can be afforded by more companies and individuals).
 
These changes can be implemented by the end of this year with no government intervention or expense. If consumers demand better benefit plans they will be delivered.
 
On the flip side the current proposal of a government sponsored “public plan” will increase Medicare taxes by 20% to 30% within two years.
 
The “public plan” is based on fees that Medicare has negotiated with hospitals, physicians and other health care providers. These rates are often 60% below billed charges and according to a recent study 20% to 30% below provider costs. The only reason that the provider community has been able to tolerate these low reimbursements is because they can increase their costs to the private sector. A study by the Lewin organization estimates that if the “public option” were offered 85% of the private sector would move to this option within two years because of the lower cost to companies and individuals. This would effectively kill private sector helath benefit plans.
 
If there is no private sector there is no one to whom costs can be shifted. Medicare would have to increase reimbursement to at least cost or hospitals and doctors would go out of business. This would require a 20% to 30% increase in Medicare reimbursements and a similar increase in Medicare taxes. It would also result in limitations on services available and probably result in hospitals and doctors opting out of the “public” plan with their services being available to only those who could afford to bay the bill.
  
We have the ability to control health care costs in a fashion that benefits patients, providers and payers. The question is do we have the resolve to implement the changes.

 

This article was contributed by Richard L. Blomquist, Esteemed Member of the HRS Advisory Board
Mr. Blomquist's Bio and Contact Info 

Sending wholehearted gratitude to those and their families who paid the ultimate price defending their country against socialism, the false propaganda in this country threatening blind allegiance and subserviance to socialist principles needs also to be defended against.  Some proponents of the universal health care movement are now using socialism labels… and this is an unnecessary extreme to create the much needed change.  Nations choose their political systems carefully and defend them tenaciously.  The US has fought tenaciously as well and shouldn’t easily abandon longstanding beliefs.

Those who think they understand socialism need to visit a socialist nation and spend time truly analyzing its affects.  Socialist principles can be altruistic and often attractive in theory.  Like many political systems, the rollout of socialism yields outcomes completely contradictory to its perceived intention.   In the US we are entitled choice, and in that, let’s please remember that for which our founding fathers and millions of US military have shed blood.  Hitler and Mussolini also are also connected with socialism.  Think carefully.

In the US please consider rejecting all programs cloaked with the word “socialism” and “socialized” unless you really believe pure socialism is the answer... and you believe the US needs to reject its longstanding principles and overturn that for which many have given their lives.   There are many things to attempt here in the US short of socialism before overturning our guiding principles in such an extreme.  Many believe through research that true socialism simply eliminates the middle class… making the rich richer and the poor poorer.   

Whether you are for or against more government intervention in our BIG health care problem, socialism is not the next step in progression… and please don’t let much needed hope for betterment allow such a tricky movement to sneak past the great people of this country. 

We have the tools to effectively control excessive health care costs and improve the quality of health care. In order to address the damaging impact of these costs it is necessary that we understand the underlying cause of the problem and implement three fundamental changes. The goal is to have health care services of acceptable quality, reasonably priced and available to our citizens.

Where We Are...

Health care costs are one of the largest expenses of many families. In the past few years they have risen to represent the largest source of personal bankruptcy.

For corporations the cost of health benefit plans typically represent the second or third largest expense after payroll and raw materials. Today GM, Ford and Chrysler would not be facing potential bankruptcy if they did not have to sustain health benefits for employees and retirees.

For local, state and federal governments these expenses are forcing the increase in taxes and limitation of other services.

In all cases these expenses represent the most inflationary expense typically increasing from 8% to 15% or more. They are several times the increased cost of other goods and services.

Why The Problem...

Volumes have been written in an attempt to identify the reasons for health care cost increases. Technology, malpractice insurance expenses, defensive medicine, aging population, administrative inefficiencies, the uninsured, insurance company greed and a medical arms race among integrated health systems have all be advanced as the culprits. These are all symptoms of a deeper and more pervasive underlying situation.

At the core of our health care cost dilemma is an economically dysfunctional system. This system has evolved as a byproduct of employer based health benefit plans and government social programs. These two systems today represent about 95% of health care purchases in the United States. They have resulted in a system where those who need the service are different from those who order the service and both of these groups are different from those who pay the majority of the bill. Each of these groups has different needs and incentives which results in a dysfunctional system.

Let me present an example. Discretionary cosmetic surgery is typically not covered by benefit plans. The doctor presents the services, the risks and the cost, "That nose job will be $5,000." All services, surgeon, assistant surgeon, anesthesiologist, pathologist, lab work, facility cost, pre-surgery care and post-surgery care are included in one "Global" fee. The patient makes the final decision to have the surgery and pays the bill.

This is a normal customer – provider relationship. The patient can compare costs and through references obtain quality information.

If a health benefit plan is involved, a dramatically different presentation occurs. The patient may elect to have the surgery and select the surgeon but the other components are independent and are factored in as the system requires. Each will result in a separate charge which may be aggregated or submitted separately. The patient and the patient’s insurance will not know the cost of the service until the end of the day when all the bills have been submitted. This system has been driven by the nature of the health insurance contract where each component of health care is treated separately.

This is similar to the difference between buying a dinner and purchasing each component of the dinner separately. With the latter the steak is one charge, the potato another, the peas are a third and determined by how many peas you want, if you want a plate… that is additional, as are the knife and fork. The napkin is considered unnecessary and will not be covered by insurance.

Add to this confusing system two other elements. First, each service is subject to a discount which will most likely vary between insurance company, PPO, HMO and government contracts. A service may have a 60% discount from billed charges for Medicare, a 50% discount for one HMO and a 40% discount for a PPO. Even patients without insurance get a discount. No one pays billed charges anymore.

Second, the price of a single service will vary widely from provider to provider. In 1984 prior to the Medicare program moving from cost plus 5% to Diagnostic Related Groups (DRG), the price variance was about 10% in a given metropolitan area. Today, of the top 38 hospital procedures the variance is at least 100% and can reach 400%. A $2,000 service at one hospital will cost $8,000 at another.
 

What Can Be Done...

There is no other industry in the world where a dysfunctional system of this magnitude occurs. No individual, corporation, industry group, consumer group or government can effectively address this problem. Changing the underlying economic model, however, will result in a thousand responses by the market that will effectively address the problem.

For this to occur, three steps must be taken.

These three actions will change the economic foundation on which we as a society provide and purchase health care services. Costs will be contained and reduced and quality will be emphasized. If quality care is more affordable it will also be easier for various programs to provide care in more challenging inner city and rural areas.

The first step is for state and federal governments or corporations through existing contractual relationships to require average price disclosure (net of all discounts) by each hospital.

 
This article was contributed by Richard L. Blomquist, Esteemed Member of the HRS Client Advisory Team
Mr. Blomquist's Bio and Contact Info