Archive for May 13th, 2010

HealthSmart Seeks Court Case Dismissal

Thursday, May 13th, 2010

Lawyers for Ted Parker company’s ask a judge to dismiss the City of Lubbock’s lawsuit to audit past health plan records.

The city filed the complaint more than two years ago. It involves Covenant Health Systems and the Ted Parker Group PPO Healthsmart Preferred Care.

In its 2003 contract with the city Healthsmart promised better discounts than the city’s previous provider.

Healthsmart and Covenant then entered into an agreement that set up a process for the city to verify the promised discounts.

Shortly after the city parted ways with the Parker Group. Covenant refused to hand over documents for an audit citing concerns about the potential for violating federal patient privacy laws.

Healthsmart adding its concerns about disclosure of competitive business information.

In January of 2008 the city filed a complaint asking Amarillo federal Judge Mary Lou Robinson to rule on the dispute.

But four months later the litigation was suspended after FBI agents carried away dozens of boxes of records in a search warrant for city documents concerning its health insurance benefits contracts.

Filings in related litigation pending in other courts indicate the FBI investigation is continuing.

On Wednesday Healthsmart’s lawyers filed a motion to dismiss the city’s civil suit that’s still pending in Amarillo federal court.

In it they argue that the court lacks jurisdiction over the subject matter of this case and that the city’s complaint quote: “Is nothing more than an end-run around the discovery procedures that are available to it in related litigation.”

Healthsmart’s lawyers suggest that this document disclosure dispute should instead be addressed in arbitration already underway with the city over related contractual disputes.

Thursday, May 13th, 2010

Obama Administration Defends Healthcare Law in First Court Test

May 13, 2010

Copyright Reuters

The Obama administration has urged a court to reject an attempt to block a controversial new law overhauling the U.S. healthcare system, saying it is constitutional and any challenge is premature.

The reforms, a top priority of President Barack Obama, were approved by Congress in March after a fierce national debate. The Justice Department defended their legality late Tuesday in the first response to a number of court challenges.

A conservative public interest group, the Thomas More Law Center, had filed a lawsuit in Michigan on March 23, the day Obama signed the law, and asked the court for an injunction to block it from taking effect.

The group said a provision requiring most Americans to buy health insurance under threat of financial penalty was beyond the scope of Congress’ power and was an unconstitutional tax.

The group also said it violated their constitutional rights because federal tax dollars would be used to fund abortions.

Defending the law, the Justice Department said Congress acted to address a national problem, the minimum coverage provisions were constitutional and the lawsuit was premature because no one had been harmed by the law.

“They bring this suit four years before the provision they challenge takes effect, demonstrate no current injury, and merely speculate whether the law will harm them once it is in force,” the Justice Department told the court.

“Enjoining it would thwart this reform and reignite the crisis that the elected branches of government acted to forestall,” the administration said in a 46-page brief made available in Washington.

Several states have also filed lawsuits in Florida and Virginia challenging the law.

A lawyer for the Thomas More Law Center said he was not concerned by the issues raised by the administration. “There were no surprises and we’re prepared to respond to every argument they raise,” said Robert Muise, senior trial counsel.

The Justice Department said that Congress did not exceed its authority. It said those who did not want to buy insurance may qualify for an exemption from any penalty and that U.S. law prohibits lawsuits aimed at blocking the collection of taxes.

(Reporting by Jeremy Pelofsky, editing by David Storey)

Thursday, May 13th, 2010

Plan to seek retiree care subsidy? Don’t delay



WASHINGTON—A $5 billion federal program to partially reimburse private and public employers for retirees’ health care costs is about to begin, but employers who don’t act on the offer quickly may come away empty-handed.

The Early Retiree Reinsurance Program, which is part of the federal health care reform law, will reimburse employers for a portion of health care claims incurred by retirees who are at least age 55 but not eligible for Medicare as well as retirees’ covered dependents, regardless of age.

The reimbursement, following a plan sponsor’s application and filing of claims information, will kick in after a participant in an early retiree plan incurs $15,000 in health care claims in a plan year. After that, the government will reimburse plan sponsors for 80% of a participant’s claims up to $90,000 during a plan year.

Reimbursement will apply for claims incurred starting on June 1. The $5 billion fund is intended to reimburse employers for claims through the end of 2013, when the program expires. But experts say the money is likely to run out long before the Dec. 31, 2013, expiration date.

“How long will the funds last? That’s a great question. No one has a firm answer,” said Michael Morfe, a senior vp with Aon Consulting in Somerset, N.J.

While no one can predict how long the federal funds will last, some benefit experts say they could be exhausted in as little as 18 months.

And under rules published last week by the Department of Health and Human Services, the agency that will administer the program, the program could close even before some employers get their applications in.

Under the HHS rules, employers will be required to project reimbursement amounts during a two-year period. HHS will use those projections to determine “if and when we should stop accepting funding applications,” the agency said in the rules.

“It is very much first come, first serve,” said Dave Osterndorf, chief health actuary at Towers Watson & Co. in Milwaukee.

“There is a great incentive to file quickly,” said John Grosso, a consultant in the Norwalk, Conn., office of Hewitt Associates Inc.

But just filing quickly is no guarantee an employer will receive reimbursement of retiree health care claims. The applications, which have not yet been published, also have to be filled out correctly. If not, the new application would be pushed behind already accepted applications.

“You have to be fast and correct,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

“Get in early and be correct, or you will get bounced to the back of the line,” said Andy Anderson, a partner with Morgan, Lewis & Bockius L.L.P. in Chicago.

Ultimately, the bulk of the reimbursements may go to a small number of sponsors with very large plans, Mr. Stover said.

The design of some early retiree health care plans—and the rules attached to the federal program—may result in some employers not even trying to get reimbursed.

Under the HHS rules, employers must maintain “the level of effort in contributing to support” the plans. The rules don’t specify how long this maintenance of effort must be applied. In addition, employers must apply the reimbursement to reduce their own costs, the costs of plan participants or a combination of the two. An employer could not simply pocket the reimbursement, said Fran Bruno, a consultant with Mercer L.L.C. in Washington.

Many employers have plan designs in which they cap how much they will spend annually on coverage for early retiree health care plan participants, with cost increases absorbed by participants. In that type of design, any reimbursement would have to go exclusively to reduce plan participants’ costs.

That could result in some employers deciding against seeking reimbursement, as they won’t derive any economic benefit, some experts say.

Still, the economic benefits for some employers and their early retirees could be considerable. Buck Consultants, for example, estimates that between 10% and 20% of early retiree health care plan participants would pierce the $15,000 claims threshold, setting the stage for 80% reimbursement of claims above that amount.

Family of Four Healthcare Costs $18,074

Thursday, May 13th, 2010

SEATTLE, May 11, 2010 (UPI via COMTEX) — The cost of healthcare for a U.S. family of four is $18,074, an increase of $1,303 from last year — the highest ever, a consulting firm says.

The Milliman Medical Index, created by Milliman Inc., an independent actuarial and consulting firm based in Seattle, tracks the changes in average annual healthcare costs for a U.S. family of four among 14 metropolitan areas covered by an employer-paid preferred provider organization.

“The cost of group insurance continues to increase at a historically-consistent pace, even with reform now the law of the land,” study co-author Lorraine Mayne, Milliman principal and consulting actuary, says in a statement.

“The cost of group insurance continues to increase at a historically-consistent pace, even with reform now the law of the land. While there will be short-term cost implications, especially for particular employees and certain employers, this year reflects a continuation of the prevailing cost trends.”

The healthcare cost for the family of four is calculated by the number, type and cost of healthcare services and how much the employee’s health plan pays the medical providers for the services.

The medical costs range from more than $20,000 in New York, Miami and Chicago to $16,071 in Phoenix, the study said.

The complete Milliman Medical Index is at

Editor’s Note: Our health care financial system is broken. Why have consumers allowed that to happen? Can government intervention lower health care costs for all of us? What is it that the government can do to keep health care costs affordable that private industry cant do? Why are health care costs in other advanced countries at least half the price of health care costs in our country?