Wal-Mart kicking in to reduce care costs

$670,000 to aid state, insurers

Friday, January 11, 2013

Correction: Wal-Mart Stores Inc. employees hired before February 2012 who work at least 24 hours per week are eligible for company benefits, including health-insurance coverage. Part-time workers hired after that date must work at least 30 hours per week to be eligible for benefits. This story incorrectly described Wal-Mart’s benefit eligibility policies.

Wal-Mart Stores Inc. announced Thursday that it will flex its corporate muscle with a $670,000 grant to help the state and private insurers harness rising health-care costs.

The money is designed to aid efforts to rework how Medicaid and private insurers pay for medical care, including care given to the company’s 58,000 Arkansas employees.

The announcement comes as the Bentonville-based company grapples with the federal Patient Protection and Affordable Care Act, which takes effect beginning next year.

The 2010 law has potentially far-reaching effects on the nation’s largest private employer. Some experts say that the company will effectively transfer many of its low-income workers to expanded state Medicaid rolls or federally subsidized health-insurance exchanges.

On Thursday, Wal-Mart officials gathered in the Governor’s Conference Room at the Capitol to praise the state’s effort to curb medical costs.

“Our focus is on saving people money so that they can live better, and that’s exactly what this is doing,” Sally Welborn, Wal-Mart’s senior vice president of global benefits, said of the state’s nearly 2-year-old partnership between Medicaid and two of the state’s largest insurers to reduce health-care costs.

“If we apply that mindset ... to the health-care report then we will all come out ahead.”

Much of the Wal-Mart money will go toward creating a tracking system that will seek to identify glitches or untapped savings as the state pursues a first-in-the-nation attempt to switch from a health-care system based on paying for individual tests and procedures to one that rewards or punishes providers based on their average billing costs over a year.

The new system debuted in July, and state officials estimate it will pare $80 million from Medicaid costs over the next two years.

The savings are designed to aid a beleaguered $5 billion Medicaid program, which serves about 780,000 poor Arkansans, including the elderly, the disabled and low-income children. State Medicaid officials have estimated the program faces a $138 million deficit by this July.

Arkansas Blue Cross, Blue Shield and QualChoice of Arkansas, which together control more than 80 percent of the state’s private insurance market, also have joined the payment overhaul.

Gov. Mike Beebe said Wal-Mart’s decision to support the state’s payment fix is an example of “collaboration” between the public and private sectors on health-care costs.

The company’s participation is important “to try to get a handle on one segment of our economy that has continued just to escalate and explode — that’s hurt our businesses, that’s hurt our families,” Beebe said at the Capitol news conference touting the Wal-Mart commitment.

Providers welcomed Wal-Mart’s entrance into the payment overhaul.

“As long as it doesn’t give [Wal-Mart] access to personal health information, proprietary information, there is no reason for us to be concerned about it,” said David Wroten, executive vice president at the Arkansas Medical Society.

Wal-Mart won’t have access to personal medical records, said Dr. Joe Thompson, the state’s surgeon general. The tracking system will be developed by the Arkansas Center for Health Improvement, which Thompson directs.

“This comes with no strings attached and gives Wal-Mart no leverage with the state that I can see,” Thompson said.

The advantage to Wal-Mart is lower-cost, quality health care, he said.

Thompson said he hoped Wal-Mart’s huge corporate clout would persuade other self-insured companies to join the change. In 2011, 43 percent of Arkansas companies selfinsured at least some of their employees, according to federal data.

A key advantage for the state would be greater breadth of information generated by the tracking report: Integrating data from Medicaid, Blue Cross, Blue Shield and Qual-Choice in one place will allow policymakers to see how the payment fix is working across both the public and private sectors, Thompson said.

The tracking reports won’t replace the current methods of determining financial rewards or penalties for doctors, hospitals and other providers in the new “episodes of care” model.

State Medicaid officials have already begun three episodes of care, in which providers will be held financially accountable for costs associated with upper-respiratory infections, attention deficit hyperactivity disorder and maternity care; 12 more episodes will be in place by October, according to the Department of Human Services.

Wal-Mart’s grant also will pay for educational materials about the payment overhaul. The company also will participate in an employer advisory council and lobby other large companies to participate in the cost restructuring.

Wal-Mart, like other large companies, is self-insured. Its medical claims are administered by Arkansas Blue Cross, Blue Shield. The company didn’t have to participate in the payment fix. But it chose to do so in an effort to reduce costs, Welborn said.

Last year, employee premiums in the company’s largest plan rose by $2 per pay period, she said.

OUR Walmart, a group funded by the United Food and Commercial Workers union, recently criticized the company for raising some of its health-care premiums by as much as 36 percent, which applied to policies covering workers with children. Full family coverage premiums rose 32 percent.

Statewide, the average increase in rates was 6.6 percent, according to the Arkansas Department of Insurance. Premiums are derived from rates.

Some experts anticipate that Wal-Mart may shift many of its low-income workers from company policies to expanded Medicaid coverage that covers individuals earning up to 138 percent of the poverty line.

Arkansas lawmakers haven’t agreed to expand Medicaid and the issue is widely expected to dominate the legislative session that begins Monday. Three-fourths of lawmakers would have to agree to accept federal funding to add up to 250,000 people to the state’s rolls. Every dollar would be paid by Washington, D.C., until 2017. By 2020, the state’s share would be 10 percent.

If expansion does occur, some Wal-Mart workers would qualify for Medicaid, experts say.

“It was designed in that way,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California at Santa Barbara.

But Wal-Mart officials say they aren’t attempting to push employees toward Medicaid coverage.

“That’s not our intent,” said Randy Hargrove, a company spokesman.

Another possibility is that some Wal-Mart workers might migrate to the state’s healthinsurance exchange, beginning in 2014. The health-care law penalizes businesses with more than 50 employees if workers buy insurance on the exchange. The fine is $3,000 per employee who receives the benefit.

But part-time employees, those defined by the healthcare law as working fewer than 30 hours per week, won’t expose the company to federal fines if they seek coverage under expanded Medicaid or on the insurance exchange.

Wal-Mart workers hired before February 2012 who work at least 24 hours per week remain eligible for company benefits. But workers hired since then won’t be covered.

Wal-Mart’s goal is to get as many part-time employees as possible working at least 30 hours a week, Hargrove said.

“We want to work with our associates to give them those hours,” he said. The company has about 1.4 million U.S. employees.

Wal-Mart’s least expensive plan costs $17 every two weeks and more employees signed up for it this year, Hargrove said.

“We believe that’s because our health-care plans are affordable,” he said.

The low-cost plan, however, has a $2,750 deductible, partially offset by $250 in upfront coverage paid before the employee pays any out-ofpocket dollars.

It’s still not clear how big companies such as Wal-Mart will respond to the Affordable Care Act, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, but she said it stands to reason that employers will try to understand how they can make the law work best for them.

Wal-Mart pays about 60 percent of the total cost of health care for its employees, which exceeds the retail average, Hargrove said.

“We believe we have a shared responsibility for coverage,” he said. “Our focus has remained on offering our associates comprehensive coverage.”

Front Section, Pages 1 on 01/11/2013