As its revenue plunged two years ago, Gannett adopted a more aggressive approach to tamping down soaring employee medical costs. The company hired a Kentucky firm to comb through its workforce, looking for children and other dependents getting Gannett-provided medical coverage, even though they were ineligible. Many employees reacted with anger, fearing a loss of privacy as they were forced to turn over copies of marriage certificates, adoption records and other personal documents to prove they were complying with Gannett's rules.GCI never said publicly what it was paying the firm, Chapman Kelly of Louisville, for the company-wide audit. Here's the answer: $200,884 for 2008 alone, according to documents recently made public by the U.S. Department of Labor.
The information appears in an annual report Gannett filed with the Labor Department for its medical care and group life insurance programs. Together, they cover tens of thousands of current and former employees. This week, I got a copy of the report, the most recent available, after filing a request under the federal Freedom of Information Act.
The report is a window on the extraordinary medical costs paid by large U.S. employers, as the nation struggles to curtail increases while also extending coverage to millions who lack insurance. Only two weeks ago, President Obama signed a landmark health care bill to reform costs and availability.
The Gannett report includes a raft of other financial information, including the multimillion-dollar fees Gannett paid to consultants and other businesses such as Chapman Kelly.For example, Hewitt Associates -- which helps manage the company's 401(k) and medical benefits -- got paid $16.1 million in 2008 for "consulting," according to the report. Many employees have criticized Hewitt's performance, complaining about slow responses to questions about continuing health coverage for those laid off in recent years.
The second biggest fee went to insurance giant Aetna, which Gannett paid $2.2 million as "contract administrator,'' the report says.
But the report also shows the enormous stakes in curtailing costs. Gannett is self-insured, which means it pays for all medical claims beyond the monthly premiums paid by current and former employees. In 2008, when it employed about 42,000 workers, the company paid out $172.2 million in benefits, up from $166.5 million in 2007, the report says. However, it only collected $70 million in employee premiums vs. $64.8 million in 2007.
Is Gannett still doing medical coverage audits like Chapman Kelly's? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.
Jim, that indicates that employees are paying 41% of the costs. I don't know what the industry standard is, but I would think it's on the high end. My post-Gannett employer requires its employees to pay just 10%.
ReplyDeleteThe portion that Gannett requires employees to pay is one of two reasons why health premiums keep spiking so high: Gannett keeps chipping in proportionally less. The other bigger reason is the increase in the actual costs.
In 2007, according to your figures, employees paid 39% of the costs, so that's an increase of (almost) 2% in just a single year. It would be interesting to know what it was 10 years ago.
Kicking off ineligible family members is distasteful and heavy handed for a company that gives so little and asks so much. It can't be argued that it's not their right to do it, however. I wonder how many beneficiaries Gannett found who shouldn't have been receiving benefits. That would have caused a few employees significant problems, and likely saves all employees, but mostly the company, a little.
I would just guess that those ineligible family members didn't cost the company as much as the big shots who get coverage for life----for doing nothing post-retirement.
ReplyDeleteUnfortunately, this is how things are going to be at newspapers and I imagine many other workplaces. The news doesn't matter anymore. It's all about the bottom line. McClatchy has been making employees sign papers as to whether spouses have other insurance for years. I'm surprised they haven't made people go to a notary. They found out a while back that it wasn't employees or even their kids costing the company so much, it was spouses. So Gannett paid this company a little over $200,000 for a year; how much did they save the company?
ReplyDeleteThanks for the fair and balanced report here Jim. I had no idea the company paid so much out in health care costs.
ReplyDeleteI would expect that paying a company $200,000 for such an audit likely saved Gannett millions. Employees trying to cheat the company should be fired.
ReplyDeleteIf HR had been doing its job, this audit would not have been necessary. Gannett HR should have been weeding out the cheaters on a regular basis I think.
ReplyDeleteIt's worth pointing out that some of these employees had enrolled ineligible individuals by mistake, or didn't understand that they had lost their eligibility. They weren't all deliberate "cheaters."
ReplyDeleteMore importantly, this underscores the insanity of tying medical care to employment. Companies shouldn't be in the business of providing health care. And we should all have universal coverage that doesn't depend on our employment status.
I agree with you, Jim. But the reality is Gannett offers healthcare to employees. Gannett also hires and pays HR people. One would think these "professionals" could help employees with the health insurance enrollment process, and monitor eligibility to protect the company.
ReplyDeletePersonally, I think Hewitt is a joke. They are slow and incompetent. If the company wants to save money, maybe it can reduce what it pays outside consultants like Hewitt. I'm sure we could get better service - at a lower cost.
ReplyDeleteLast fall, my 2 kids (both under the age of 10) got thick envelopes in the mail from Gannett telling them that they had been found ineligible to be covered by the health plan. I had returned the survey about my dependents and provided birth certificates, so I immediately called Hewitt to say WTF!!! They told me that Chapman Kelly determined that my children were not eligible for the health plan. No explanation, no nothing. I called the insurer and sure enough, my kids had been dropped.
ReplyDeleteI called Chapman Kelly, they had no answer for me. To make a long and awful story short. Someone either at Chapman Kelly or Hewitt FUCKED UP and randomly sent out letters to like the ones my kids got to God knows how many employees.
A couple of weeks later I got an unsigned apology letter telling me that my children had been dropped due to a "data error" and had been since reinstated.
Great feeling knowing that a subcontractor paid lots of $$$$ by Gannett can randomly threaten innocent children for no apparent reason. I spent hours on the phone trying to fix this mess that Chapman Kelly created for no apparent reason. Great way to save money.
Absolutely horrifying.
ReplyDeleteCheaters of the system always win. How come cheaters were not procecuted to the full extent of the law? Or at least made to pay back all the money they stole from the company. Money that, had it not been paid to the cheaters, would have lowered my premiums?
ReplyDeleteJim:
ReplyDeleteDoes the report list employees by name that have high medical claims and if so could that be tied to layoffs of these specific employees to reduce medical costs?
It would seem to me that this would be more than likely if they were targeting ineligibles as well.