Insurance exchanges in a rocky period

Some insurance companies are dropping out of insurance exchanges, but revenues for other companies may increase with rising premiums.

By Jeff Atkinson | Reform Recap | Spring 2016

 

Insurance exchanges under the Affordable Care Act (ACA) have hit a rough patch, as many insurance companies are choosing not to offer individual policies through the exchanges. The United States’ largest insurer, UnitedHealth Group, said it is reducing marketing for individual plans and may abandon the market entirely in 2017. UnitedHealth said it expects to lose as much as $500 million in the individual market in 2016.

A survey by the Associated Press of nonprofit insurance cooperatives set up to offer insurance under the ACA shows that of the 23 cooperatives initially created, 12 have already folded. The Associated Press reviewed the financial statements of 10 of the survivors and found that they lost, on average, more than $21 million in the first nine months of 2015.

The cooperatives were designed to offer more competition in the insurance market. The cooperatives, like other insurance companies, have faced rapidly rising medical and drug costs, as well as startup costs for building networks, marketing and technology.

On the other hand, Anthem (a licensee of Blue Cross Blue Shield) and Molina Healthcare (a Medicaid coverage provider) both report they are making money from the exchanges.

“Risk corridor” payments

Part of the problem for insurance companies in the exchanges is that a federal program for “risk corridor” payments did not work out as initially planned. The drafters of the ACA recognized that when setting up a variety of new insurance plans that were not allowed to discriminate on the basis of an enrollee’s health condition, some plans were likely to have enrollees with relatively few health care needs while other plans were likely to have sicker patients with more expensive needs.

To balance the risks and the funding of insurance plans, the risk corridor program was set up on a temporary basis (to be in effect from 2014 through 2016). The program compared insurance companies’ premiums received with the amount the companies paid for claims. If a company’s claims were less than 97 percent of its premiums, the company would make payments to the program. If the company’s claims were more than 103 percent of its premiums, the company would receive payments from the program. In 2014, most insurance companies were having an unprofitable year. So, there was less money available to be transferred from one company to another.

ACA administrators were hoping to have the flexibility of being able to transfer funds from other parts of the federal health program to make up the lack of funds in the risk corridor program. But Congress passed a law that the program had to be budget-neutral, meaning the risk corridor program could not receive money from other ACA programs.

The Centers for Medicare and Medicaid Services said that in 2014, insurance companies requested $2.87 billion in risk corridor payments, but only $362 million in funding was available from profitable insurance companies. Companies that expected to receive payments to make up for their losses received only 12.6 percent on the dollar, adding to their financial stress and resulting in the closure of some companies.

Smaller companies were most vulnerable because they had fewer reserves, less ability to spread the risk, and fewer resources to track medical information about their enrollees in order to calculate the company’s expected claims and risks with more precision. In addition, some companies may have underpriced their insurance policies to try to gain greater market share.

Rising premiums

Premiums for insurance available from the federal HealthCare.gov website have risen an average of 7.5 percent for 2016. Changes in premiums vary. Indiana premiums dropped the most (12.6 percent) and Oklahoma premiums rose the most (35.7 percent). The data regarding premiums are based on plans with the second-lowest cost available under the ACA, the “silver” tier.

Most people buying health insurance through the insurance exchanges will receive subsidies through the ACA. Subsides in the form of tax credits are available for people with income up to 400 percent of the poverty level. The Department of Health and Human Services reports that 80 percent of returning consumers obtaining insurance through exchanges will be able to purchase a policy for less than $100 per month after tax credits.

Insurance difficult to afford

Nonetheless, payments for health insurance and medical expenses are difficult for some to afford. A survey by the Kaiser Family Foundation and The New York Times found that 20 percent of working-age Americans reported having problems paying medical bills during the last year. In that group, 63 percent reported using up all or most of their savings, and 42 percent took on an extra job or worked more hours.

For those with insurance, common problems include high deductibles, high copayments and higher-than-expected charges for out-of-network care.

For those who go without insurance, penalties will increase. In 2014, the first year in which there was a penalty, the penalty was $95 per adult or 1 percent of family income, whichever was greater. In 2016, the penalty rose to $695 per adult, plus $347.50 per child, up to a maximum of $2,085 per family or 2.5 percent of family income in excess of the 2015 tax filing thresholds—whichever of those two amounts is greater.

The insurance exchange market is in a period of uncertainty as companies struggle to break even or make a profit at a time when there is considerable pressure to hold down health care costs. The election of 2016 adds its own layer of uncertainty for the exchanges—and for Obamacare.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.

 

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Does your CV have a home?

Create and send your CV with PracticeLink while you’re in job‑search mode; save and store it when you’re not.

By Brian Brown | PracticeLink Tips | Spring 2016

 

PracticeLink is not only your partner when it comes to finding your first or next practice; it’s also an excellent way to keep your CV up to date and build valuable relationships with recruiters nationwide. Building both relationships and a profile on PracticeLink helps you advance your career and prepare yourself to contact employers representing opportunities in which you are interested.

Building your CV

Fully developing your profile into a comprehensive CV takes time but is well worth the effort. Make sure you’ve entered your education, training, awards, etc., so you can present a complete picture to hiring organizations.

If you choose to become a registered PracticeLink user, we make it easy to not only keep this information up to date, but also to save it and send it to hiring recruiters. When you’re out of job-search mode, simply “hide” your profile so you stop being contacted by hiring organizations and from receiving notifications of new opportunities until you are ready. Or, if you’d like, keep your eye on your specialty’s market with the PracticeLink Job Messenger, a twice-weekly alert of new or updated opportunities in your desired areas.

PracticeLink gives you the ability to quickly toggle from active search mode to inactive. Even when your profile is inactive, you still have the ability to update your CV and save important recruiter responses and contact information. Then, when it’s time to look for another full-time, part-time, locum or moonlighting opportunity, you will be ready to apply!

Managing your job search

Once you have your CV and cover letter in order, it’s time to look at the available opportunities on PracticeLink.com. Doing so will help you survey the landscape and prepare for your search. You’ll also be able to easily connect with and respond to the recruiter representing the opportunity, and send your CV to opportunities in which you’re interested.

Be prepared for a lot of interest in return. You have the privilege of being in a highly sought-after profession, where recruiters will be clamoring for your attention.

PracticeLink makes contacting recruiters easy. The contact person for any opportunity is accessible from any job posting, whether you’ve registered with PracticeLink or not. We give you direct access to both in-house recruiters (employed by the hiring organization) and agency recruiters (contracted by the hiring organization). Our goal is to help you connect with the most opportunities in the easiest way.

If you choose to register with PracticeLink.com, you also have the ability to block individual recruiters from accessing your profile or messaging you. This is a convenient way for you to excuse yourself from communications without “poisoning the well.”

Building relationships

While reaching out, be aware that you’re doing more than just requesting information—you’re building relationships. Though some opportunities presented by recruiters may not be right for you now, they might be in the future. Or maybe the opportunity could be a perfect fit for a colleague who is also searching.

Keep in mind that recruiters talk and discuss candidates just as you discuss opportunities with your colleagues. Always remain professional, even with recruiters who barrage you with unwanted solicitations. Recruitment is a network, and recruiters at different organizations often work together to help facilitate placements. If the recruiters to whom you’ve reached out don’t have the right opportunity, they may be able to connect you to other opportunities in the area.

Remember, building strong relationships will be your biggest asset not only when it comes to your job search, but when it comes to your career as a whole.

Brian Brown is the manager of PracticeLink’s physician relations team, which offers free job-search help.

 

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Planes, trains and automobiles: Who pays for what?

Just like in dating, there’s not a hard-and-fast set of rules about who picks up the tab throughout the physician interview process. But here’s a start.

By Bruce Armon | Legal Matters | Spring 2016

 

Who pays for a first date? How about the second? As a relationship progresses, there can be traditional or expected protocols to follow. Same with the job interview process, which also can feel like a dating game.

As a physician considering a new opportunity—whether it’s your first job after training or you’re seeking the next step up on the professional ladder—it’s important to understand your and a potential employer’s role in paying for transportation, lodging, meals and related expenses during the interview process. These are the first “dates” that are the building blocks of your professional relationship.

It’s also helpful to know that those building blocks are variable. There are no absolutes as it relates to these expenses and any other initial start-up costs employers may incur when bringing in new physicians.

Planes, trains, automobiles and lodging

If you’re traveling for an interview, determine in advance what the prospective employer will pay.

If you’re traveling by car, log the related miles and tolls. (There is an IRS-approved rate of reimbursement for each mile traveled that may be used as a benchmark.) If you rent a car for the trip, ask for and retain the receipts. In either case, confirm in advance whether the prospective employer will pay for those expenses.

Traveling by train? Don’t book a business class or first-class ticket without prior authorization from the prospective employer, and don’t forget to record any cab expenses to the train station or parking garage.

If you need to take a plane to meet with a prospective employer, don’t book anything other than a coach ticket without approval first.

You also shouldn’t book a flight that lands only a short time before the beginning of the interview. Flight delays are out of your control and can cause both you and your prospective employer unnecessary angst.

Plan to grab the latest return flight home if same-day travel is planned, or opt to stay overnight so you have ample time to meet as many prospective colleagues as possible. Be sure to ask about the timing to get to and from the airport, too. Will you need to take a cab or rent a car?

If you’re staying the night during the interview, ask your recruiter which lodging to use; there might be a preferred hotel. Don’t expect your prospective employer to pay for room service or in-room entertainment expenses.

If you’re invited to make multiple visits as part of your interview process, confirm before each visit that the expenses will be reimbursed as you’re anticipating.

Your relocation and related expenses

As part of the contract negotiation process, consider the expenses you will incur before the first day of employment. If possible, coverage of these expenses should be built into your employment contract.

House-hunting expenses. It may take multiple visits to find housing, and you may need to bring a spouse or partner along on at least one of the visits. Discuss with the employer which house-hunting expenses, if any, will be reimbursed.

Housing expenses. An employer may consider offering an allowance for short-term housing or for a down payment on a house.

Moving expenses. It is common for an employer to offer a defined amount to help physicians with moving expenses. Call several moving companies to understand the expected fee range.

Review the employer’s policy related to moving expenses. An employer may not, for example, pay to help you relocate a boat or a horse, or pay for two pick-ups as part of the same move. Storage facility costs may also not be covered.

If the allowance that an employer is offering for moving expenses is more than the actual cost of the move, ask if you can use the excess dollars even without direct associated expenses.

Signing bonus. To attract a physician to the job, a prospective employer may offer a signing bonus to help pay for incidental expenses. These expenses may be used to pay your COBRA health insurance expenses, for example.

Student loan expenses. Some employers offer monthly, quarterly or annual payments directly to lending institutions to reduce your student loan balance.

License expenses. You’ll need to have an active license to practice in the state where your new employer is located. Each license may cost several hundred dollars. And if you’re practicing as a locum tenens, you may need medical licenses in many states.

In addition to the costs for the medical license, you’ll also have a DEA registration. Many states have their own DEA-equivalent license that a physician also must obtain.

Your employer’s related expenses

You’re not the only one. Employers, too, incur significant costs before new physicians can begin employment.

An employer may need to hire additional staff, purchase additional supplies or acquire more equipment. Larger or additional office space may be needed.

Considerable staff time will be spent getting the new physician credentialed with each of the employer’s third-party payers and securing hospital or facility privileges. Many hospitals and facilities charge an expense for the privilege of being credentialed by that institution.

An employer also may need to secure an additional electronic medical record license, or purchase a laptop for you.

Protecting the investment

Employers expect to have a return on investment when hiring physicians. That investment may be measured by the clinical dollars you generate, the number of papers you publish, the quality of your teaching or the caliber of your research.

But not all employment relationships turn out as predicted.Some employers may quantify the costs incurred in hiring you—house-hunting and related travel, moving expenses, licensure fees, signing bonus, etc.—and include a clause in the employment agreement that requires repayment if you’re not employed there for a defined period of time.

If a provision like this is included in the draft of your employment contract, understand how each individual cost and the total was calculated, the length of time you must remain employed, and any exceptions to the repayment provision. Exceptions could be related to the reason for termination, whether you generated a “profit” during your time employed, the amount of your account receivables by the date of termination, or other factors.

There are no “rules” when it comes to who pays for what throughout the dating—err, interview—process. Remember, the upfront costs incurred by an employer may be significant, so understand any circumstance in which you may be expected to repay the expenses.

Clearly addressing these issues is a good practice for both physicians and employers and can be used to establish clear parameters once the “dating” is complete and actual employment begins.

Bruce Armon, Esquire, is a partner and chair of Saul Ewing’s health care practice group. Bruce regularly speaks to physician audiences regarding health law legal issues and has helped hundreds of clients with contract issues.

 

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Why cover letters matter for physician job-seekers

Share your personality—and why you’re a good fit for the position—in your cover letter.

By Anish Majumdar | Job Doctor | Spring 2016

 

Hate small talk? Is chatting about yourself as appealing as getting a root canal? You’re not alone. Many of the physicians I work with have real trouble expressing themselves if the conversation doesn’t relate to their specialty. Unsurprisingly, they are also often the ones who will question the necessity of a cover letter during the search process: “No one reads them!” “It’s just fluff!” “Why can’t I just send the CV and call it a day?”

Here’s why: When asked what the most important factor was in distinguishing a high-quality physician, 59 percent of Americans said “physician-patient relationships” and “personality.” Only 11 percent said “ability to accurately diagnose and fix a problem.” (The study was done by The Associated Press-NORC Center for Public Affairs Research.)

Your ability to engage on a human level matters to both patients and recruiters. And it’s an element that health care institutions are placing an increasingly heavy emphasis on during the hiring process. This is where a cover letter can help: by offering a glimpse of the person behind the credentials, and encouraging a connection.

The exploratory letter

Having gone through the med school and residency application process, you’re probably familiar with the rigid structure of CVs. Throw all of that out the window for your cover letter! Consider it a blank canvas on which to create a fantastic first impression. This goes double for those situations when you’re not applying for a specific position, but rather initiating a dialogue.

Here are some questions to ask yourself as you begin to write:

  • What appeals to me about this institution?
  • Why, specifically, do I want to work there, and what will help me to succeed?
  • With whom am I connected at this institution? An easy way to answer this question is to go to LinkedIn, search for the institution name in the search bar, and check out the “How You’re Connected” section on the top-right corner of the page.
  • Why am I a good fit with the culture of this institution?
  • Why do I practice medicine? How does my personal history relate to the work that I do?

Now that you’ve got some great information for the letter, let’s take a look at a general structure you can customize:

Dear Dr. Doe [use a first name if “Dr.” is not applicable]:

I am currently completing my [insert level of training and experience] and believe that [institution name]’s forward thinking in [areas you’ve identified through research] would make for an excellent fit. I received my [degree] from [institution name] and am highly experienced in [insert a few key procedural details or specific areas of interest].

Key qualifications:

Working with [insert patient population] to improve their lives and foster meaningful change is at the heart of what I do. During my [previous position or appointment] I faced a unique set of challenges in [what successes are you most proud of?]. I’d like to bring this experience to your institution, and know that I can be an asset to furthering the goals of the [specialty] department.

In researching [institution name], I realized that we share a connection with [person you’re connected to]. I had a chance to [mention any history you have with this person] and am confident that he can provide more insight into who I am.

Growing up in [mention hometown] I had an experience that opened my eyes to the immense potential we have as healers to effect positive change. [Mention aspects of your personal story that made you want to become a physician here, and why it continues to inspire you today.] I wish to continue to learn alongside leaders in the field, and serve as a mentor to the next generation of physicians.

Beyond the excellent reputation enjoyed by [institution name], I [mention lifestyle reason that appeals to you based on research]. A copy of my current CV is enclosed. I look forward to hearing from you to further discuss. Thank you in advance for your consideration.

Sincerely, [Your name]

The position-specific letter

Cover letters for a specific position need to explicitly communicate fit. With that in mind, it’s important to evaluate the job posting to identify the top one to two qualifications that are essential for success.

For example, a high-level academic position could hinge on demonstrating excellence in medical education and organizational development.

Here’s a general structure you can use:

RE: [POSITION TITLE AND INSTITUTION NAME]

Dear Dr. Doe [use a first name if “Dr.” is not applicable]:

How can we [directly address the long-term priorities of the institution based on research] and succeed within a rapidly changing health care environment? Answering these questions have been at the heart of my career to date, and is the primary reason behind my desire to join your institution. I am [mention your most impressive credentials].

A leader in [Insert number-one qualification necessary for success]

My areas of interest in [mention key aspects of your experience] have been shaped through a range of academic and clinical appointments. At [mention specific position], my duties included [describe aspects of the job that tie into number-one qualification]. Prior to this, I [mention other work and training that helps to establish credibility for number-one qualification].

Broad experience in [Insert number-two qualification necessary for success]

[Use the same approach as previous paragraph. If you lack experience in this area, use this space to talk about your strong interest, and how exactly you’re planning to bolster your capabilities.]

My roots in medicine began [mention personal history], and my progressive experience over the past few years have done much to illuminate the way forward. In the following years, I see myself as [describe your biggest dream for the future, and how this position is integral to it].

My CV is attached. Thanks for your consideration, and I look forward to continuing this discussion in person.

Sincerely, [Your name]

Anish Majumdar is a career strategist, certified résumé writer and founder of ResumeOrbit.com. He specializes in helping physicians land dream positions in less time.

 

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Is it time for a financial self-exam?

Use your last year of residency or fellowship to develop a game plan for your financial future.

By James McNaughton, CFP | Financial Fitness | PracticeLink Tips | Spring 2016

 

Contract negotiations. Family considerations. Personal finances. Your anticipation of the end of residency can easily be stymied by the overwhelming stress of finding a job and all that it entails.

Understanding the basic financial planning concepts for physicians will arm you with the knowledge you need to conduct an efficient interview with a financial professional and hopefully minimize any mistakes or unnecessary products or fees. In this Financial Fitness article, we’ll touch on some general concepts of retirement planning, life insurance, disability insurance and recommended estate documents.

Retirement planning

There are three phases of an individual’s financial life cycle: asset accumulation, conservation or protection, and distribution.

For most professionals, asset accumulation begins in their early- to mid-20s and tends to last 25 to 30 years. Physicians start their asset accumulation phase much later than the average person—in some cases as late as their mid-30s. To overcome the late start, it is important to understand the value of compounding interest over time. Allow yourself to reap the rewards of your hard work, but understand that time is your best asset.

Most people will require 60 to 80 percent of their preretirement income to maintain a similar lifestyle in retirement. Work with an adviser who will assist you in calculating your future nest egg, and remain proactive with your plan. At a minimum, request annual or semi-annual meetings to review performance. It is much easier to alter your plan early in your career than a few years before retirement.

Life insurance

One of the most common questions I encounter from young physicians is, “How much life insurance do I need?” Unfortunately, there is no simple answer to that question. The amount of coverage needed depends on factors such as income or cash flow needs; expenses and debts; and spousal or dependents’ needs.

One of the most popular approaches used to determine an amount is the capital retention approach.

This method provides a death benefit amount that, along with other assets, is sufficient in providing a level of investment income that covers the projected needs of the family without invading the death benefit principal. If other income-producing assets are available, this would reduce the required death benefit.

“Term” is usually the most appropriate type of life insurance for young physicians, as it allows you to purchase the most death benefit while minimizing your premium. For example, if you purchased a $2.5 million term policy and your spouse could safely withdraw 4 percent ($100,000) without invading principal, would this amount of income be adequate to maintain a comfortable lifestyle? The ability to communicate between spouses regarding a gloomy topic is important.

Disability insurance

Disability insurance is a way for you to insure one of your most valuable assets: your income. After years of medical education and training, you now have the ability to maximize your income.

Disability insurance will pay if you meet the insurance company’s definition of disabled. This is very important for a young physician who has not had the time to save for retirement.

As you interview for jobs, your prospective employer may or may not offer disability insurance. Most employer-offered policies are “plain vanilla” policies that may not contain language needed for your specialty.

For example, if you’re interviewing as an orthopedic surgeon and your employer does not offer an own-occupation disability policy, it may be in your best interest to purchase one. This will allow you to receive benefits if you are no longer able to perform the duties of an orthopedic surgeon but still earn income while working in another occupation or medical specialty. Generally, disability insurance should replace 60 to 70 percent of your gross income.

Estate documents

One of the most overlooked aspects of financial planning is the creating or updating of simple estate documents, all of which can be drafted by an attorney. Three documents to consider are:

Wills. This is a legal document that provides the will maker (the “testator”) the opportunity to control the distribution of property. This document is extremely important for young families as it can name a guardian for minor children.

Living will or advance directive. This document can be drafted when in full capacity, giving personal directions to a physician regarding health care in the event of being severely disabled or suffering from a terminal illness.

Durable power of attorney for health care. This is a written document executed by one person (the principal) authorizing someone else to make medical decisions on the principal’s behalf. This power takes effect when the principal cannot give informed consent to a medical decision and not just in the event that the principal has a terminal illness.

Before you leave residency, examine your existing situation to establish a starting point. Educate yourself on the products and services you’ll need, and find an adviser who can help guide you through these decisions.

James McNaughton, CFP, is a partner at Siouxland Investment Group, LLP and financial adviser for Premier Physician Agency, LLC, a national consulting firm specializing in physician job search and contracts.

(Disclosure: James McNaughton is a registered representative and registered investment adviser representative of SWS Financial Services, Inc., a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. Views and opinions expressed herein are solely the author’s, and SWS Financial Services, a member of FINRA and SIPC and a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH), with headquarters at 1201 Elm St., Ste 3500, Dallas, TX 75270 (214-859-1800). Premier Physician Agency, LLC is not affiliated with SWS Financial Services, Inc.)

 

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