Independent Contractors or Employees

There seems to be a great deal of confusion among small business concerning the classification of independent contractors when they are in fact employees in the eyes of the IRS.

Here is a useful IRS site (Wow! thats an oxymoron!) which goes into quite a bit of detail on the matter.

The owl in my planter

A few weeks ago this juvenile great horned owl took up residence in my wifes planter on the front porch. I had a teleconference that afternoon and we watched each other through the front door for about an hour.

Practicing What We Preach

Later today during an enrollment meeting I will without question be approached by a morbidly obese employee inquring about bariatric surgery. It happens every time I visit this company.
In fact it happens today at a lot of company's. My experience in speaking with employees about wellness shows they are interested in avoiding illness but many have simply not made the connection between their behavior and its inherent risks aside from smoking. So when I explain that 70% of health care costs are linked directly to lifestyle choices--what we eat, how much exercise we get, or do not get--I will observe lightbulbs going off in the room.

Personally I am down 23 lbs for the year and have a ways to go on my own goal. My hope is to be able to deliver my wellness message with a before and after picture that encourages behavioral change.

The Cenek Report has an interesting post today on obesity and wellness.

The Drug War

The National Community Pharmacy Association (NCPA) commented on a "bogus"
study released by The Pharmaceutical Care Management Association (PCMA)
in a spin war designed to garner support for H.R.971, the Community Pharmacy
Fairness Act of 2007. See if you can detect the hatred here;

The study paid for by the prescription middlemen lobby claims
that one of the main provisions of H.R.971, which allows
independent community pharmacists to join together in
negotiating lower prescription drug prices,would increase
health care costs.
In response, National Community Pharmacists Association(NCPA)
Executive Vice President and CEO Bruce Roberts, RPh, issued
the following statement:"Pharmacy benefit managers are
continuing to post record profits while many independent
community pharmacists are being driven outof business due
to anticompetitive PBM business practices. The nation's giant
PBMs are the subject of a slew of investigations and
prosecutions for deceptive business practices, but oppose state
and federal efforts to reform their business
practices and bring transparency to the PBM industry.
The statistics cited in the self-serving, self-funded report
are particularly questionable in light of the fact that PBMs
keep their business operations, upon which the conclusions are
based, a closely guarded secret. In fact, the giant PBMs
make much of their profits by taking kickbacks from drug
companies and through interest earned by delaying reimbursements
owed to community pharmacies.
"The report's figures are nothing more than an attempt by PBMs to put
Congress and the public on notice that they intend to hold American
taxpayers hostage if attempts are made to reform the PBMs'
anti competitive business practices.

The NCPA left out price spreads on generics--hey they want in on that action too.
But the NCPA is correct to call out the PBM's for keeping their reimbursement levels to retail pharmacies a secret even from the employers for whom they purportedly work as vendors. There ought to be a law against that and in short order I sincerely hope there is.

So I applaud the NCPA for pointing out the record profits PBM's are enjoying while telling their clients to shut up and take the pain. Employers all have a huge stake in this fight. By the way Iowa has passed a new law which awaits the governors signature which would regulate PBM's.

Dr Spin Medicine Woman

Kudos to Matthew Holt from The Healthcare Blog for turning up this Daily Show Episode where Dan Bakkedahl delves into the the wonderful world of pharmaceutical sales and interviews Miss Florida, who you guessed it, is in pharmaceutical sales

Mental Health Drives Indirect Absenteeism Costs

HR Web Cafe has a great post today on highlighting mental illness as the leading driver of indirect absenteeism costs for employers according to an Employee Benefit News Survey.

Of interest is that only 12% of employers screen for mental health and primary care providers are not compensated in many cases. Compounding the issue is the fact that managers and supervisors are not trained to recognize at risk employees.

Another reason employees may not be utilizing mental health benefits is that managers do not encourage it. Less than one-fourth of the HR-benefits directors surveyed believe the managers in their companies have an overall understanding of the toll mental health takes on a person and family members. Furthermore, only a third say their companies provide managers with education on mental health issues, and only 15% say they train managers in recognizing mental health problems and directing employees to treatment.

PBM Mail Fails Employers

For the last decade PBM's have actively engaged employers to move maintenance drugs to mail ostensibly for the lower costs available via that channel.

Yet a study published in The Journal of Managed Care Pharmacy reveals mail relative to community pharmacy;

1. Generated lower generic utilization rates (37.7% Mail versus 49% Community Pharmacy);
2. Produced higher costs in roughly half the top 20 generic categories;
3. Plan sponsors were found to make higher payments per day of drug therapy for prescriptions dispensed via mail order for many therapeutic categories.
4. One plan sponsor paid higher net costs for generic drugs secured through mail
   

This study was conducted from claims data from two public entities in Texas covering over 637,000 members and 8.7M pharmacy claims. In other words it is we taxpayers in The State of Texas who get to pay for "failed mail". I call it failed mail simply because implementing a process that moves members who desire the low cost in therapuetic class generics could easily take the overall generic utilization rate at least to 49% and likely into the 70% range for some employers.

Assuming mail order is less costly may prove to be an expensive mistake.

Employers with a $250,000 annual drug spend can request a 12 month claim file from their PBM with the right data elements below and know with certainty whether they are getting the best deal.

Would it not make sense to bend your pharmacy trend into a negative direction before all the specialty drugs hit the market?

Cinco De Mayo Manana

For all music lovers my iMix "Cinco De Mayo" has been published in the iTunes Music store at:
http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewIMix?id=253708118

Song Name		Artist
No Ha Parado de Llover		Maná
Corona Con Lima		Larry Joe Taylor
Inna from Mexico		Jack Ingram
Smooth		Santana & Rob Thomas
Corazon Espinado		Santana & Mana
Hey Say May / Guacamole		Reckless Kelly
Sangria Wine (Live Version)		Jerry Jeff Walker

A Tale of Two Business Models

Human Resource Executive recently announced its best of the web including Blog's. HR & Benefits professionals working for employers routinely go to the web for rich content.

In contrast EmployeeBenefitAdvisor.com recently posted a poll on its website concerning blogs as a customer interaction/attraction tool with the following results.

• 97% of respondents do not read any blogs regularly.
• Only 3% of respondents write a blog and 5% were thinking about it.
• 19% of respondents indicated writing a blog had never crossed their mind

Now technology always out pace's pure science but in the era of Google and You Tube it is truly amazing to me so few purportedly independent benefit advisers can go about their business oblivious to all the rich content which is out there in the blogosphere just waiting to be surfed. Yet it does not really surprise me.

Several close friends have asked me why would you want to write a blog and let everyone else know what you think. Well thats easy--most competitors do not even read blogs as evidenced by the poll above.

Several consultants have asked me if the blog has brought in any new business and in that question lies some useful insight into the fundamental problems associated with many consulting and broker business models; There is simply no time for anything but billable hours or achieving revenue growth objectives at too many firms. To focus any energy on ideas with application for employers is the role of the firms thought leaders and the employees job is to sell or bill hours, or spend face time with your key accounts. The firm can produce powerpoint presentations and practice leaders on any number of technical subjects but the average employee interfacing with an employer is often incapable of thought leadership in many fields related to benefits. The firms thought leaders speak to the employees in the same outdated manner Judge Smails used in Caddyshack--"The world needs ditchdiggers too". When top talent is needed at executive levels they buy it or acquire it externally.This business model has outlived its usefulness.

Yet there is a new business model better suited to the information age which can be characterized by the values which guide our interactions with employer clients.

1. Client relationships rooted in performance over time are primary and revenue is simply a product of a job well done. It is secondary.
   
2. Seeking out best in class professionals precludes using just a single firm for all advice.
3. Providing opinions and counsel in real-time via access to Principals.
4. Putting ideas rooted in practical experience into the Blogosphere for employers seeking answers.
5. Aligning specific employer objectives with plan designs and vendors capable of achieving measurable results.

For the life of me I do not see how any professional intermediary could ignore the blogosphere and remain current on the best ideas available. But hey, thats just me and Judge Smails always struck me as a comic figure.

Now For Something Completely Different

This blog is long overdue to recognize some very fine work from several sites that provide rich content and that I read regularly. All of these sites are listed on my resource link to the right.

I have been reading Workers Comp Insider for years and believe it covers safety and Workers compensation better than any other site on the web.

John Mack at Pharma Marketing Blog covers Pharma better than anyone else on the web and does so with a fine sense of humor as exhibited here.

The following sites were recently recognized by Human Resource Executive as best of the web after, ahem, first being listed here as resources.

HR Webcafe is a very welldone blog that covers HR and EAP's in particular very well.

The Cenek Report By Robert Cenek does fine original work by a longtime HR veteran.

John Nail at The Industry Radar provides outstanding News aggregation spanning the entire HR & Benefits space.

I have been reading Benefitslink for years so imagine my smile when shortly after starting this blog I got an email from Dave Baker at Benefitslink complimenting me on my trout at the bottom of the page. There is no better source particularly for qualified plans.

On a lighter note here are a few other good ones.

I do not know how this site missed the HRE but maybe the exec's did not appreciate seeing all the cartoon strips wallpapered over their cubicle farms. Imagine what Scott Adams uncensored would look like? But wait this is it.

I know I bag on The Houston Comical quite a bit but some of their sports blogs like this one are quite good with the possible exception of the writer who covers The Fighting Texas Aggies--can we change that please Comical?

John Kerry To The Rescue With Reinsurance

John Kerry has written an op-ed piece in The Boston Globe outlining how re-insurance is the solution to high health plan costs and the uninsured.

Fully reforming the healthcare system will require that the federal government begin shouldering some of the burden to help alleviate costs. One percent of patients account for a quarter of healthcare costs. By the same token, 2 out of 10 patients account for more than 80 percent of all healthcare costs. . To make healthcare more affordable, there must be a better way to share the immense burden of insuring the chronically ill and seriously injured.

Part of the reason that businesses and health plans today fail to cover their workers is an aversion to risk -- a fear that they will be saddled with a sick employee whose high premiums will bankrupt them. Take a small business with just five employees, for example. If one worker has a major heart attack, the cost of care for the other four shoots up, potentially causing the company to drop health coverage entirely.

But there's a way to combat these costs. And Washington should make employers and healthcare plans an offer they can't refuse.

It's called "reinsurance." Reinsurance means that if employers agree to offer all their workers preventative care and quality coverage, then the federal government will reimburse them for a significant portion of the costs of their chronically ill employees.

It's simple: If the federal government can help small and large businesses bear the burden of cost in the most expensive cases, we'll dramatically improve the health of everyone.

John Kerry has all the answers. Brilliant! A federal re-insurance backstop for health claims over $50,000. The US Treasury(read the US Taxpayer) as the payer as the payer of last resort. And how long before the US government as the re-insurer demands lifestyle adjustments (see my post on Preventable Disease and Health Care Costs ) and puts the IRS in charge of auditing behavior which is unhealthy, or worse you are denied a lifesaving operation because the QALY ROI is insufficient according to Government rationing guidelines?

Pardon my brevity, I think I need to explore a Roth 401(k) and do more research on setting up a cyber bar in the Caribbean where my meager retirement savings may one day provide sustenance free from the coming 80% tax rate that inevitably follows intelligentsia like Mr Kerry writing bills.

Pay or Play Law For City of Houston Contractors

So the City of Houston has passed an ordinance requiring contractors doing $100,000 or more of work with the city to provide health care for workers or pay as reported here by The Houston Comical.

Contractors with more than $100,000 of business with the city must provide their employees with health insurance or pay a penalty fee starting in July under an ordinance approved by the City Council on Wednesday.

The requirement is largely symbolic since most city contractors already provide health benefits, but officials said it will serve as an example for other employers across the city.

``(It) hopefully will encourage other public entities - and I already have my letters ready to go to Metro and to the port - to encourage them to do the same thing,'' said Councilwoman Carol Alvarado, who has pushed the measure for about a year.

``I think we can also use this as leverage to encourage the private sector to do this as well.''

As I read Councilwoman Alvarado's comments I was reminded once again what we should expect from politicians regarding health care and that is political correctness ,and always bear in mind the definition of the term.

"Political Correctness is a doctrine fostered by a delusional, illogical liberal minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end."

Only one council member, Councilwoman Addie Wiseman, opposed the ordinance and hit the nail squarely on the head with these comments;

``This will only add to our costs, and the taxpayers will be paying,'' Wiseman said. ``We have no business telling businesses how to conduct their business.''

So in a week where Hugo Chavez took steps to nationalize the property of Houston Based Conoco Phillips we have more May Day symbolism from The City Council of Houston. Ah, the power of incrementalism. How long before health care becomes a basic human right in America--I bet its number 11 on this list by May 1, 2008. I think Howard Dean sees a voting bloc here.