Government representatives recently came to the UC San Diego campus as part of an outreach program to inform more than 100 business attendees about federal contracting opportunities; including helping the businesses connect with the Department of Health and Human Services. The participants were also briefed on the availability of tax credits and other changes under health care reform.
As one of three “Getting Back to Business” events, the forum was directed at small businesses with fewer than 25 employees. The meeting was held in the new Medical Education & Telemedicine building. UCSD Health System CEO Paul Viviano said in remarks that the most important mark of achievement is when we can meet our greater needs in this ever-changing economic climate and adapt and maintain educational excellence with fewer resources and less reimbursement.
“We hope you leave here better equipped to capitalize on every opportunity available to you and your employees,” Viviano said.
Herb Schultz, regional director of the Department of Health and Human Services who was appointed by the president two years ago to conduct outreach to key constituents and stakeholders, discussed small-business tax credits that have been available since 2010 under the Affordable Care Act. Businesses that provided health insurance in 2010 and 2011 but didn’t claim this credit can still be reimbursed at a rate of 25 percent for tax-exempt organizations and 35 percent for for-profit organizations, Schultz said. In 2014, those credits will increase to 35 percent and 50 percent, respectively, he said.
Schultz also explained that rebates will become available under the “80/20 rule,” also known as the Medical Loss Ratio standard. The rule, applied because of health care reform, states that 80 cents on every dollar now has to be spent by insurance companies on medical and health care-related expenses and limits administrative costs such as salaries, sales and advertising to 20 cents on every dollar.
“This provision is designed to save dollars and ensure that not all the money is spent on administration but is used for the health care of employees,” Schultz said.
Beginning this year, insurers must notify customers how much of their premiums have been spent on medical care and quality improvement. Insurance companies that do not meet the 80/20 standard are required to provide their customers a rebate for the difference no later than Aug. 1 of this year. Schultz said rebates are estimated to total $1.1 billion, and will commonly be reflected as a reduction in future premiums. Rebates can also be realized by a check in the mail; as a lump-sum reimbursement to the same account that is used to pay the premium if by credit or debit card; or through reimbursement by an employer.
“The insurers are responsible for providing the rebates,” he said. “The insurers have an obligation to do that.”
Schultz said health care reform also ensures transparency when insurers want to raise rates over 20 percent. The guidelines require a public process for outlining the reasons for the increase and identifying who it would affect.
“We have seen less rate increases, smaller than what insurers originally proposed and we’ve seen one insurer in particular take back the increase,” he said. “It’s designed to help businesses, anyone, individuals and families, get the value from their health care.”
While providing tips on how to market to the HHS department and other federal agencies, Teresa Lewis, director of the Office of Small and Disadvantaged Business Utilization in HHS, said HHS spends $18.5 billion annually on contracts and is considered the largest civilian agency for government contracting opportunities.
“Approximately 20 percent is awarded directly to small businesses at the prime contract level,” said Lewis. “We’ll untangle the questions and confusion on how to do business with the federal marketplace, especially HHS.”
Ruben Garcia, district director of the Small Business Administration in San Diego, encouraged the business representatives in attendance to get the information they need by relating a personal story of how his father was prevented from expanding his gas station business due to a lack of information.
Back in 1952, Garcia said his father came to California to pursue a job pumping gas for 50 cents an hour as opposed to picking cotton for 50 cents a day. With a 10 percent down payment on a $20,000 bank loan his father was able to advance from being an attendant to owning his own gas station. People, including John Wayne, came in asking for a car wash and planted the seed for expanding the station with a car wash and hot dog stand. Garcia’s dad went back to the bank for a $5,000 expansion loan but without sufficient collateral he was denied.
“My dad asked the critical question, ‘Do you know anyone else who can help me?’ ” Garcia said. “I don’t know if it was because (the banker) was ignorant, didn’t know or didn’t care, but he didn’t tell my father the truth. The banker said, ‘There’s nobody in this town who can help.’ ”
But Garcia said six miles away was a Small Business Administration district office that would have provided a $10,000 loan based on half the worth of his gas station.
“Because he didn’t get the right information my dad gave away his dream,” said Garcia, adding that the person who expanded the gas station with a car wash and convenience store built seven more like that and became a millionaire in two years. “Networking, matchmaking, anything you can do to get with the right people to me is the most important thing you can do … You will gain so much by meeting just five people today. The chances of you being successful will increase exponentially. Don’t give away your dream and don’t ever stop thinking there’s not somebody there to help you.”
The event concluded with a matchmaking session in which business representatives were able to meet one-on-one with HHS and prime contractors such as Gilbane Construction, staffing agency Kelly Services, and Northrop Grumman.