Archive for March, 2009

Florida Hospital Administrator Speaks About Illegal Immigrant Care

Tuesday, March 31st, 2009

Admitted Felon, “Half Guilty” Olivarez Faces Sentencing

Monday, March 30th, 2009

Admitted felon and still licensed insurance agent “Half Guilty” A.C. Olivarez, after having his sentencing postponed two or three times since August 2008, is now scheduled to be sentenced in McAllen, Texas on May 15 at 9:30 am.  See related stories on this blog.

Editor’s Note: Bribery of public officials to gain insurance contracts is a crime. To continue to act as a licensed insurance agent after pleading guilty to a felony seems improbable. The Wheels of Justice turn ever so slowly.

U.S. Health Insurance Mandate Gains Support

Sunday, March 29th, 2009

WASHINGTON (Reuters) – Support grew on Friday for insurance industry demands that all Americans be required to obtain coverage as part of a planned healthcare system overhaul, with a senior Senate Democrat and a coalition of business and consumer groups promoting the idea.

 Senate Finance Committee Chairman Max Baucus, a Democrat who is helping write healthcare legislation, said an insurance requirement, or mandate, would help the market function better and reduce premium costs for everyone.

 Baucus argued that the cost of medical care for people with no insurance is being shifted to those with insurance, forcing costs higher.

Editor’s Note:  Insuring everyone will not lower health care costs.

Why is Health Care Cheaper in India?

Saturday, March 28th, 2009

A $175,000 heart surgery in the United States goes for about $10,000 in India. What is up with that? Indian doctors practicing in the United States charge more than if they were in India?  Seems logical that one should consider going to India for surgery to save money. In fact, an employer would do well to encourage it. If employee Jones needs heart surgery, why not offer him the option of traveling to India with his wife, free of charge, pay 100% of all expenses, including medical expenses, and hand employee Jones a check for $20,000.

Senate Takes on Out-Of-Network Issues

Saturday, March 28th, 2009

Next Tuesday a Senate hearing will be held to highlight medical out-of-network issues. The issues include the contention that insurance companies are low-balling out-of-network reimbursement and leaving the consumer to pay more than they should.

Editor’s Note: It is frustrating to watch Congress delve into areas they have no business delving into. They should let free market forces reign. This is another example of why PPO networks drive costs up, not down and have become nothing more than a smokescreen to allow providers to inflate their fees. The only thing that a PPO guarantees is the promise of no balance-billing. But, we have found a solution to the balance billing issue which defuses the fear mongering tactics used by medical providers, insurance companies and PPO network salesmen.

Tattoo Removal Program Included in 2009 Spending Bill

Friday, March 27th, 2009

Rep. Howard Berman (D-Calif) added funding to allow Providence Health & Services to purchase a $200,000  tattoo-removing laser to expand their ten year-old program that removes gang-sign tattoos. The program, run out of North Hollywood, has removed tattoos from 12,000 former gang members, helping them get jobs with employers who otherwise would not hire them. Berman spokesman says the program actually makes the streets safer for all Southern California residents. “When former gang members with these tattoos go walking around, they become targets of drive-bys and other shootings” he said.

Editor’s Note: This article appeared in the March 9, 2009 issue of Modern Healthcare magazine. Appropriately, the beneficiaries of the plan are residents of California.

2009 Managed Care Survey

Friday, March 27th, 2009

New survey discloses the best and the worst insurance companies – 2009payorsurveyfactsheet1

Proposed HB 1578 Will Affect Stop Loss Market in Texas

Thursday, March 26th, 2009

A stop loss carrier sent this to us this morning which bears worth watching:

HB 1578 has been introduced in the Texas Legislature.  The Bill would affect stop loss and reinsurance policies.  Under the Bill reinsurance would be prohibited and stop loss insurance required to cover a self-funded plan.  All stop loss policies must be approved by the Commissioner.  An individual stop loss policy must have a deductible between $5000 and $100,000 or it will not be approved. 


Editor’s Note: This is another example of government interferance in private enterprise. It appears that the State of Texas wants to become an insurer and will prohibit the private sector from reinsuring medical stop loss policies. Specific stop loss limit of $100,000 will significantly increase costs for larger self-funded groups that currently have their specific level at $250,000 or higher.  And, for those groups, it would not be actuarial sound to limit their exposure to $100,000.

Congress Begins Task of Health Care Reform

Thursday, March 26th, 2009

Health care reform has taken center stage this week and we expect headline news on this in the coming days. Yet, no one really knows what changes are to be proposed or what specific directions a national health care plan will take.

Our predictions include a two payer system; a government run system that will compete with private health care companies such as Aetna and Cigna. This arrangement will be problematic since a government run plan can mandate costs while a private health care company can only negotiate costs.  Our second prediction is all health care costs will be taxable income to plan beneficiaries. Our third prediction is that the government will mandate expense ceilings for private health care plans as well as mandated target loss ratios. This will diminish the role, and the need for, independent insurance agents and brokers as well as damper financial interests of private payers such as United HealthCare, Aetna and their respective share holders. In time, the private sector health care payers will fade away and a one payer natiional health plan will become reality.

School District Refuses To Save +$16,000,000

Monday, March 23rd, 2009

A Texas public school district could join the TRS ActiveCare Plan, essentially maintain the same level of benefits, and save the taxpayers over $16,000,000.  Current annual cost of the district’s self-funded health insurance exceeds $42,000,000. When you add in claim run-off liability, that figure jumps to over $50,000,000. Yet by joining the TRS ActiveCare Plan this district’s cost would below $30,000,000 annually.

Aegis Stop Loss 2008 Survey

Sunday, March 22nd, 2009


There Can Be Freedom in Captivity

Saturday, March 21st, 2009

More employers are considering captives as a method to fund their employee benefit programs. We have been reporting on this for the past six months – see previous articles on this weblog. There is an excellent article in the March 2009 Employee Benefit News on captives. The theme of the article is that “captive owners can have increased control through tailor-made benefit designs and claims cost management.”

We are currently working with a captive manager with a proven track record of establishing and managing captives for employers who self fund their group medical plans. A unique scheme to band small employer groups into a captive without becoming a MEWA may be a viable option for employer groups that are currently fully-insured with 50 – 500 employees. These employers can band together for the purpose of establishing a captive to fund their health care plans, yet remain independent of each other.

Brownsville Independent School District Seeks Insurance Consultant

Friday, March 20th, 2009

Brownsville Independent School District is actively seeking a fee-based insurance consultant to provide expert insurance advice for the district’s insurance needs. The current consultant from Dallas is charging the district an annual fee of $24,500. The consultant before him , from San Antonio, charged an annual fee of approximately $35,000. In our opinion, neither fee supports the work to be provided.

This group is the largest employer south of San Antonio, with over 7,000 employees. It will be interesting to see who bids on this and how much their fees will be. Once the insurance consultant contract is awarded, we will post the bids on this weblog.  

El Paso ISD Awards Insurance Consulting Contract

Thursday, March 19th, 2009


Editor’s Note:  We have monitored insurance consulting fees charged to policitical subdivisions in Texas for several years and find no rhyme or reason for fee structures. We have seen fees as low as $5,000 for the same work as performed for an awarded fee of $100,000. We do not understand how some consultants make money with the low fees they sometimes charge. A 7,000 life political subdivision, for example, awarded a twelve month insurance consulting contract to a large national consulting firm for $24,500. The consultant agreed to review, assist, monitor all lines of cover. In estimating expenses, we concluded that this firm will not make a profit on a $24,500 fee and will in fact lose money. One would wonder if there other revenue streams in play? Of course, dual compensation in Texas is prohibited. 


Himmler Fordert Mitarbeiterliste von AIG

Tuesday, March 17th, 2009

New Yorker Oberste Justizbeamte Cuomo Himmler befahl gestern AIG, eine Mitarbeiterauflistung von denjenigen zur Verfügung zu stellen, die Bonus vom Versicherungsriesen erhalten sollen. Zur gleichen Zeit gab bayerischer Unteroffizier Schummer bekannt, dass die Bonus-Schuldigen streng bestraft werden, wenn sie nicht bereit sind, die Bonus zurückzugeben. Ein Senator von Iowa fügte hinzu, dass schuldige Beamte von AIG Selbstmord begehen sollten.

Editor’s Note: Is 2009 beginning to look like 1937?

Senator Calls for Killing of AIG Executives

Tuesday, March 17th, 2009
In this May 22, 2008 file photo, Sen. Charles Grassley, R-Iowa is seen on AP – In this May 22, 2008 file photo, Sen. Charles Grassley, R-Iowa is seen on Capitol Hill in Washington. …

IOWA CITY, Iowa – Iowa Sen. Charles Grassley suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

Editors Note:  This is so amazing and counter to our upbringing that we cannot find the words to express our outrage and contempt for this idiot.


Admitted Felon’s Sentencing Delayed Again

Saturday, March 14th, 2009

March 10, 2009 scheduled sentencing of admitted felon and still active insurance agent , “Half Guilty” Arnulfo Cuahtemoc Olivarez was cancelled until “further notice.”  This is the second or third time that sentencing has been delayed. 

Part of a Plea Agreement finalized last year included dropping a separate indictment (edcouch-indictment). See August 2008 archives for more information.

Aetna To Buy Humana?

Friday, March 13th, 2009

Will Aetna buy Humana next week? If so, how will the two corporate philosophies morph into one? Aetna is viewed by many as a Round Peg fits only a round hole and a square peg fits only a square hole  type of company. Humana, on the other, has a different corporate philosophy and allows Regional Managers to manage their own territories with little or no home office interference. At Humana innovation is rewarded. At Aetna, direction flows from the top down.

Protected: Comparison of Federal Income Tax Rates 2008, 2009

Wednesday, March 11th, 2009

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Employer Saves $800,000 in Six Months

Friday, March 6th, 2009

In 2008 an employer group decided to move away from the PPO world into a program that utilizes Federal Law (ERISA) to pay providers a fair and reasonable fee for services.  Here is a summary of results after six months:

Allowed Amounts:    Under PPO Contract    Fair & Reasonable

– Facilities                    43% off Billed                  85% off Billed

– Physicians                  41% off Billed                   57% off Billed

Plan paid facilities on a cost-plus basis. All other providers were paid using a uniform formula applied to 2008 RBRVS as the basis of payment. Since ERISA mandates that a plan fiduciary must only pay a fair and reasonable rate, balance billing issues are subject to an appeal process handled by an out-sourced plan fiduciary. Plan participants are protected against balance billing through a propriety arrangement.

Total hard dollar savings for this South Texas employer during the six month period exceeded $800,000.

Editors Note: Tyler Independent School District and Blue Bell Creameries, among others, have achieved similar results utilizing out-of-the-box risk management techniques. Employers who are willing to consider these proven techniques can cut their health insurance costs by as much as 50% or more.

If you are not part of the solution, there is good money to be made in prolonging the problem.”

Texas Addresses Balance Billing Issue

Friday, March 6th, 2009
This is an excerpt of Aetna‘s weekly Legislative Update:
TEXAS: All industry stakeholders were invited to attend a meeting last week with Senate leadership and the Commissioner of Insurance to discuss a proposed solution to the balance billing issue. The Commissioner laid out a multi-pronged approach that included the following proposed requirements: Carriers must negotiate in good faith toward the development of a statutorily defined “adequate network”; carriers must provide enrollees with notice before terminating contracts with hospital-based providers; carrier contracts with hospitals must prohibit exclusive contracts with hospital-based providers or prohibit balance billing where exclusive contracts are in place; noncontracted providers must coordinate with hospitals to provide good faith estimates to insureds prior to services being rendered; hospitals must assign contracted providers to patients covered by their carrier when possible; hospitals must give carriers 60 days notice prior to termination of hospital based provider contracts; if a carrier has five days notice of a procedure likely to involve balance billing, it must attempt to reach an agreement with the provider and provide insureds with information regarding its offer, the provider’s counter and anticipated balance bill to the insured prior to the procedure; if a carrier receives an estimate from an out-of-network provider prior to services rendered, the carrier must pay billed charges, and the provider’s rates will be published in a rate survey provided to consumers; where no estimate was provided to the insured, carriers may pay up to 125 percent of Medicare, accompanied by an offer to pay for binding mediation. All stakeholders were invited to provide feedback to the Commissioner regarding his proposal, which ultimately will require legislation.

 Our Comments:  PPO’s have successfully insulated the consumer from the reality of health care costs. The fear of balance billing is a good sales tactic utilized by those in the industry that are profiting from the system. The only thing PPO’s guarantee is the promise of no balance billing.

 I am convinced, through two years of study and review of our health care delivery system, that we can cut medical costs by up to 50% or more by getting away from PPO networks and working directly with medical care providers. Rather than allowing others to set prices for medical care, we should set prices that are fair and reasonable, and transparent.
Competition needs to be introduced into the health care delivery system. A very good example of this is the case of a specialist we approached seven months ago. We invited the physician group to enter into a direct agreement with a client of ours at 115% of Medicare. They refused, stating that they were getting on average 185% – 225% of Medicare from the carriers. Then, just last week, they called wanting to sign an Agreement. Seems two employees of the employer, needing services, had told the provider that they would seek treatment elsewhere. 

 We have an incredible story regarding a group that eliminated their PPO plan last year – the plan savings were astounding. As a result, the plan is now considering removing their calendar year deductible completely and other benefit improvements.

Stimulus Law Makes Sweeping Changes to HIPPA

Tuesday, March 3rd, 2009

The economic stimulus legislation signed into law in February could be onerous for employers and their health care partners. The law now requires “covered entities”, which in the past typically included employers and insurers who sponsor health plans, to notify individuals in writing if their personal health information is compromised. Notification of a breach in privacy must be made within 60 days of the breach.

For the first time, the law extends direct HIPPA enforcement to “business associates” which include consultants, pharmacy benefit managers, third party administrators and other vendors. The legislation gives state attorney generals the authority to bring lawsuits seeking statutory damages and attorney fees for HIPPA violations.

This law will have a direct impact on employer’s relationships with their vendors, including consultants. If, for example, a consultant breaches HIPPA, he/she must notify the insured within 60 days of the breach. The state attorney general can then bring suit against the consultant for damages.

E&O coverage needs to be amended, in some cases, to cover this liability.