Archive for September, 2010

Texas Hospital System Threatens 52 Texas Employer Groups

Monday, September 27th, 2010

A Texas hospital system has threatened 52 employers by demanding cash upfront on all non-emergency hospital admissions.

Affected employers who sponsor group health insurance for their employees are angry. They plan a concerted effort against the hospital system to include legal action, legislative intervention and publicity.

Regarding the later, public opinion will be an important element in their overall strategy to expose core issues to what is wrong with our current healthcare delivery system.

For the first time the general public will understand why health care costs are out of control.  That is a good thing.

Details will be posted on this website later this week as this story unfolds. We expect the national press will run with this.

Editor’s Note: ERISA mandates that Plan Sponsors  have a fiduciary responsibility to pay only fair and reasonable fees. Are hospital fees fair and reasonable? Should a hospital charge $12,000 for an MRI when their cost is less than $300? What is fair and reasonable, and who decides?

Carriers Under Assault From Politicians – Big Government Dictates Status Quo

Monday, September 27th, 2010
Lawmakers Warn Insurers About Blaming Reform Bill For Costs

Sens. Max Baucus (D-Mont.) and John D. Rockefeller IV (D-W.Va.) on Monday sent a letter to the
largest health insurers warning them about raising premiums and blaming it on the health reform
 WellPoint, UnitedHealthcare, Aetna, Health Care Services Corporation, and CIGNA received the
letter. Despite the requirement to add additional benefits under the law, the senators said the
costs should only increase premiums by 1 to 2 percent.
The lawmakers’ letter mimicks one sent to the industry September 9th by HHS Secretary Kathleen Sebelius that said the agency will have “zero tolerance” for insurers that blame premium increases on the reform law.


Sunday, September 26th, 2010

September 26, 2010

Memo to all employees

editor’s note

The following memorandum was leaked to us by someone who wishes  anonymity for himself and the firm in question.  
Dear employees:
Great news — you will receive a 15% raise in 2011!!!  If you are one of those “hope and change” types, you will be pleased to learn that your raise will be applied to our health insurance premiums to pay for the medical care of a brain dead illegal immigrant in a permanent vegetative state due to injuries sustained in a shoot-out with police.  If this seems unfair to you, or if you frankly are just sick of working, you may want to consider quitting this job and taking advantage of the federally mandated 99 weeks of unemployment payments.  Don’t worry about the cost — we paid for that too.  If you would like to keep your job and your 15% raise, please express that desire on November 2.
ps.  the new employee in the back office was hired to complete the 50 to 100 1099’s we will have to fill out starting in 2012 to send to every vendor with whom we spend more than $600.  We anticipate hiring more such employees in the future as additional nuggets buried in the health care bill come to light.

70% of South Texans Are Obese

Sunday, September 26th, 2010

Most costly medical condition? Obesity, doctors say

September 25, 2010 9:45 PM
By JARED JANES, The Monitor

Local physicians say the most costly chronic condition isn’t hypertension or diabetes.

It’s obesity.

Seventy percent of the people who live in the 19-county South Texas region are overweight or obese, a rate four percentage points higher than the state as a whole, according to the Texas Department of State Health Services. If current trends continue, 75 percent of Texas adults would be overweight or obese by 2040, costing as much as $39 billion in unnecessary health care costs.

But despite Dr. Benjamin Bujanda’s best efforts to counsel his patients on health complications from being overweight, many are unwilling or unable to change.

“Ultimately, the patient needs to be responsible,” he said, showing a handout he gives to patients that lists 30 complications from obesity, including diabetes, high blood pressure, heart disease and cancer. “We can provide the education that they need to stay healthy but it all depends on them.”

That’s the crux of preventive care: Physicians can try to educate patients on how to live a healthy lifestyle, but success is determined solely by what the patient does at home.

Still, some suggest that investing in proven programs can pay dividends. A 2008 report by Trust for America’s Health, a nonprofit group that focuses on disease prevention, found Texas could save $1 billion annually within five years if it invested $10 per person in community-based programs to increase physical activity, improve nutrition and prevent smoking and tobacco use.

Melissa Nitti, a spokeswoman for the U.S. Department of Health and Human Services, said obesity is widely recognized as a major driver of health care expenditures.

If providers can prevent and reduce obesity in child patients, they may cut the incidence of adult health conditions that are expensive to treat, such as diabetes, hypertension and adult obesity, she said. A recent study estimated that a 1 percentage point drop in obesity among 12-year-olds would save $260 million in total medical expenditures.

Bujanda, a family practice physician in McAllen, holds free seminars each month where he counsels people on how to prevent and avoid acute and chronic illnesses.

He estimates that 30 to 40 percent of his hospitalized patients could have stayed out of the hospital if they followed advice from his free seminars.

“It would save lives and complications,” Bujanda said. “We’re just treating the ill people.

Trucking Firm Begs Federal Government to Keep Existing Health Plan

Tuesday, September 21st, 2010
We just delivered our first post 23 Sept. renewal on a long-haul trucking firm. They have a mini-med plan for their employees.
The owner will ask (beg) the federal government to allow him to keep his plan as is. We should get the government’s answer in the next 30 days.
If his request is rejected, we are going to put out a full page advertisement in the Corpus Christi Caller Times thanking Solomon Ortiz (our Lily Livered Socialist Congressman) for voting for ObamaCare and thus causing this trucking firm to cancell all insurance for their employees.
We gave the owner of the trucking firm various insurance quotes that comply with ObamaCare. His costs would go up by 500% and more. This is not an option he can afford.
The trucking industry is struggling to keep afloat, with over 900 independent trucking firms in the nation going out of business in just the first quarter of 2010.
Editor’s Note: Fire Congress on November 2!

Monday, September 20th, 2010


latest news    select news    web meetings of interest     feedback
September 2010
Latest News
Welcome to The Big Picture

CIGNA® welcomes all brokers and consultants to our new The Big Picture newsletter. The Big Picture covers topics for CIGNA business enterprise-wide, so you may find that details in the “Latest News” updates may not always be relevant to your business. For Select Segment specific updates please see the CIGNA Select Segment News section of this newsletter. 

Reform Swings into Action

Health care reform sets in motion this fall as the initial provisions take effect. From 100 percent coverage for preventive care to the expansion of dependent coverage to age 26, to big decisions about grandfathering, the Affordable Care Act is changing U.S. health care. Clients, customers and consultants have questions about the provisions listed above plus the dozen or so others that are already impacting business. CIGNA’s reform website,, continues to be a trusted, highly used resource. Check back often for breaking news and updates.

Election Update: Impact of Health Care Reform

In less than 60 days, the public will go to the polls to elect all 435 Members of the U.S. Congress, 36 members of the U.S. Senate, 37 Governors, and many state and local officials. For the national elections, many key issues of the first two years of President Obama’s Administration will play a large role in determining election outcomes – especially the volatile health care issue.

Read more information here.

Empowering Customers with Tools and Resources to be Better Informed

Customers today are being asked to take more accountability and control of their health – and their health spending. Not surprisingly, they expect to have the information and tools* to make smart decisions. CIGNA’s award-winning suite of decision support tools does just that. We’ve collected cost and quality information, simplified the language, redesigned the tools, and added new features that make it easier than ever for individuals to choose and use health care wisely.

Take a look at the experience our customers can expect.

*® and resources discussed in the linked information do not apply to all health plans. Please contact your CIGNA representative if you have questions.

Health and Wellness at Work

Bringing health and wellness programs directly to the workplace is the work of CIGNA Onsite Health®, which has built an extensive suite of onsite capabilities as an integral part of the health management programs CIGNA provides to employers and their workers. CIGNA now offers onsite health centers, pharmacy services, one-on-one health coaching, health promotion, health improvement programs, educational seminars, biometric screenings and flu shots.

Read more information here.

Health Care Reform Impacts on HRA, HSA, FSA Plans

Health care reform has specific impacts on health plan spending accounts that clients and customers will want to know. The impacts may change the way customers plan for and use their HRAs, HSAs or FSAs. Specifically, there are a number of changes related to over-the-counter eligibility for reimbursement, penalties on HSA distributions and reimbursement for expenses of dependents.

Get the details.

CIGNA Pharmacy Management® / Merck Outcome-Based Contract a Proven Success

In April 2009, CIGNA Pharmacy Management and Merck & Co., Inc. entered into the country’s first national outcome-based contract between a pharmaceutical company and a pharmacy benefit management company. 

Check out the results of this agreement.

CIGNA Select Segment News
(51-250 Employees)
Welcome to the Big Picture
We’re excited to welcome you to The Big Picture, your new source for CIGNA Select quarterly news. The Big Picture covers CIGNA markets enterprise-wide, so if your business takes you beyond the 51 to 250 employees segment, you’ll now find all your updates in one place. Big Picture’s general news items may contain details at times that are not relevant to the Select segment. Be sure to also scroll to this section each issue for Select-specific business updates.

Please contact your CIGNA representative if you have questions.

Importance of GWH-CIGNA Network Designation

Because CIGNA has multiple networks, it’s important for your Select segment self-funded clients to know their plan is paired with the GWH-CIGNA network. We’re now also including a message on the back of each GWH-CIGNA ID card in bold red font. Please review the ID card with clients to help them avoid any confusion with health care professionals and pharmacy guidelines.

CIGNA Establishes New Legal Entity

CIGNA is creating a legal entity with a name that more clearly describes what we do for your clients – CIGNA Health and Life Insurance Company (CHLIC).

Read about impacts to your Select clients.

Bend the Cost Curve with CIGNA’s CDHP

As of January 2010, approximately ten million people were covered by HSA/HDHP products, an increase of 25 percent since last year.* In fact, more and more clients are turning to CIGNA’s simple-to-administer consumer-driven health plans to achieve consistent cost reductions compared to traditional health plans.

* Center for Policy and Research, America’s Health Insurance Plans, January 2010 Census Shows 10 Million People Covered by HSA/High-Deductible Health Plans, May 2010,

The numbers prove it. Read more. 

Why Onsite Wellness?
Helping people stay healthy makes good business sense.

Offering onsite health and wellness programs is one of the most convenient, effective ways clients can help employees understand their health risks and support them in making healthier lifestyle choices.

Read about an opportunity for new Select cases.

New Web Address for Client Reporting

Changes planned for the client reporting website will take effect on Sept. 20, 2010. Beginning on that date, the website (formerly the customer reporting portal) will feature a new web address:

Get the full details.

More Funding Options than Any Other Carrier

If you’re frustrated with the limited funding choices offered by other health insurance companies, you’ll be interested to know that CIGNA provides more funding options for your clients than any other carrier.

Read about two unique funding alternatives.        

Free CE and More at

If you haven’t dropped by lately, may yield a few surprises to make a visit worth your while: Free CE, a video or two to view, a new tool and more.

Learn more.

CIGNA Pharmacy Management Receives Prestigious Industry Accreditation for Meeting Strict Quality Standards

CIGNA Pharmacy Management was granted full Pharmacy Benefit Management accreditation from URAC, a Washington, DC-based health care accrediting organization that establishes quality standards for the health care industry. The accreditation for the commercial market promotes industry best practices, encourages quality improvement, and protects and empowers consumers.

Read more information.

CIGNA Tel-Drug Becomes CIGNA Home Delivery Pharmacy

CIGNA Tel-Drug® will now be known as CIGNA Home Delivery PharmacySM. CIGNA Home Delivery Pharmacy’s dedication to providing accuracy, service and reliability will remain the same.

Read more information.

What’s In a Name? CIGNA Establishes a Legal Entity with Clarity in Mind

CIGNA is committed as a global health service company to being helpful, easy to understand, clear and concise. In support of this commitment, we’re introducing a legal entity with a name that more clearly describes what we do for your clients – CIGNA Health and Life Insurance Company (CHLIC). Best of all, the change will be seamless for your clients and their employees.

Read more.

CIGNA’s Smarter Phone Process Yields Strong Results

Employees who need to take a disability or other leave want a simple and supportive experience. Employers want claim performance that’s effective, provides great service, and helps employees quickly get back to work. CIGNA’s phone claim reporting process delivers all this and more.

Find out more.

Life Insurance Awareness Month:Resources for You and Your Clients

Life Insurance Awareness Month is the perfect opportunity to contact your CIGNA representative or visit for more details about our life insurance plans. Don’t forget to take advantage of our Academy by CIGNA continuing education program, which offers a life insurance course for CE credit at times and locations convenient to you.

Read more information.

Web Meetings of Interest
Trust is a Must

Helpful. Easy. Personal. Not the adjectives most people would use to describe their health plan. Learn why health plans must change and why trust is a must with customers to drive behavior change, improve health and lower costs. See what’s possible when the customer experience is redefined to create more active individuals and how that translates into a healthier workforce – and a healthier bottom line.

Register now.

We welcome your feedback. Let us know what types of articles you would like to see in this newsletter. Just send an email to

Thank you.

839049 09/10 © 2010 CIGNA


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Rural Hospital Seeks Cost-Plus Reimbursement

Monday, September 20th, 2010

By Dave Ranney
KHI News Service
Sept. 9, 2010

ULYSSES — The hospital here wants to take part in a Medicare initiative designed to test the merits of letting rural hospitals switch to a system of cost-based reimbursement.

The Centers for Medicare and Medicaid Services last week announced its intent to add up to 20 hospitals to its Rural Community Hospital Demonstration program. Ten hospitals already are in the program.

Most rural hospitals are critical access facilities, a federal designation that allows them to bill Medicare for 101 percent of their outpatient, inpatient, laboratory, physical therapy, and post-acute care costs.

Grant County Hospital is not a critical access facility.

“A mistake was made based on incorrect information or an incorrect understanding,” Frable said. “The (hospital) board did not go for critical access designation when it had the opportunity to do so – prior to January 2009.”

If the hospital is one of the 20 added to the demonstration program, Medicare reimbursements for its inpatient services would be figured using a cost-plus formula.

Currently, Medicare pays the hospital a predetermined rate that may or may not cover the hospital’s actual costs.

If Grant County Hospital had been part of the demonstration project last year, Frable said, it would have collected an additional $869,000 from Medicare.

Approximately 60 percent of the hospital’s patients, he said, are on Medicare.

“The biggest problem for the rural hospitals is that for (the current) payment system to work, you have to have a certain number of patients to come out ahead,” Frable said. “We don’t have the volume we need to make it work.”

The Ulysses hospital was the first in Kansas to express interest when queried about the program by the Kansas Hospital Association.

Editor’s Note: Cost Plus makes sense. In the Ulysses Hospital example, had Cost Plus been in place last year, their revenue would have increased by almost $1 million.

Several Seton Hospitals Accept Cost Plus

Saturday, September 18th, 2010

According to information obtained from , Seton Highland Lakes and Seton Edgar B. Davis Hospitals, members of the Seton family of hospitals, are designated critical access hospitals. As such, each hospital has agreed to cost-plus 1% reimbursement from Medicare. According to this website, this cost-plus 1% reimbursement from Medicare is “intended to improve financial performance.”

There are over 1,300 hospitals across the United States that participate as critical access hospitals. While we like the cost-plus approach, we wonder how a hospital can expect to “improve financial performance” with only a 1% margin. We think a 12% margin is more fair and reasonable.

Protected: Cost Plus Versus Billion Dollar Hospital System and Their “Partners” – PPO Networks – WWIII Has Begun

Friday, September 17th, 2010

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Is Blue Cross of Texas Being Held Hostage?

Friday, September 17th, 2010

Is Blue Cross of Texas under threat by government officials? Why have they suspended all sales activities and renewals? The answer remains elusive. We have been informed that BCBS employees are not even permitted to send out emails on the subject. A strict silence, it seems, has been imposed on their entire work force.

Molly Mulebriar is investigating.

Search For Cheap Drugs Near You

Friday, September 17th, 2010

Thursday, September 16th, 2010

From: Blue Cross and Blue Shield of Texas <>
September 16, 2010 2:01:53 PM CDT
SPECIAL EDITION: Important Message from HCSC President of Plan Operations
Reply-To:” <>


Sept. 16, 2010Dear Producer,

While provisions of the Affordable Care Act will be implemented over several years, a number of changes to group health plans and health insurance coverage are scheduled to take effect for plan/policy years beginning on or after Sept. 23, 2010.

As you know, regulations and guidance have been issued since the enactment of the Affordable Care Act on March 23, 2010. To ensure that our customers have the most up-to-date and accurate information, we are updating our materials to clarify information about plan or customer-initiated benefit changes and those changes specified by state or federal legislation.

We are working to complete this update by no later than Oct. 1. Until that time, we will not be releasing any marketing communications that include information about the Affordable Care Act to accounts or members. This includes all renewals. Please do not release any marketing communications or renewals, pending the update of our materials.

We will provide you with additional updates as they become available, including updated materials once they have been completed.

We appreciate your assistance in this important matter.


Marty Foster
Executive Vice President and President of Plan Operations
Health Care Service Corporation

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News from the Blues for Producers is an e-newsletter containing updates on product and Web site enhancements, as well as sales information, legislative updates and BCBSTX/HCSC corporate news.


Editor’s Note: Translation – “We are having some difficulty with HHS and until we resolve this problem we will not be quoting new business nor offering renewals until further notice. “

Here Comes The ObamaCare Rate Increases!

Thursday, September 16th, 2010

Anthem Blue Cross and Blue Shield in Connecticut, by far the largest insurer of Connecticut residents, said in a letter that it expects the federal health reform law to increase rates by as much as 22.9 percent for just a single provision — removing annual spending caps. The mandate to provide benefits to children regardless of pre-existing conditions will raise premiums by 4.8 percent, Anthem said in the letter. Mandated preventive care with no deductibles would raise rates by as much as 8.5 percent, Anthem said,0,5611833.story

Editor’s Note: Not to worry……………if the rate increase is too high, and the loss ratio is less than 85%, Blue Cross will have to rebate the difference back to the insureds – Minimum Loss Ratio Requirement to kick in January 1, 2011.

Chantix Commercial Seizes ObamaCare Opportunity

Thursday, September 16th, 2010

Bill, I saw two Chantix commercials on Bill Oreiley Show last night.  My guess is that since non-grandfathered plans must cover smoke cessation therapy at 100 percent with no copays or deductibles, Chantix will be “free” for insureds who try to quit.

Manufacturer of Chantix must have figured this out.

Molly Mulebriar

Editor’s Note: Chantix does have potential side effects: suicidal tendencies, depression. The good news is that the Mental Parity Act covers these. We expect enterprising entrepenurs everywhere to open up Smoking Cessation Clinics all over America. Under ObamaCare, non-grandfathered health plans must cover smoking cessation 100% without deductibles or copays. Employers who are affected will be paying for these clinics – costs will be enormous. Could this be a good business opportunity for soon to be unemployed health insurance agents?

Market Intelligence – One Vendor’s Analysis of BISD Business Opportunity

Tuesday, September 14th, 2010

Market intelligence is important to a successful business. This is taught at West Point as a fundamental necessity to engage the enemy and win. Sun Tzu’s writings of several thousand years ago alludes to the supreme importance of knowing the terrain and desposition of opposing troops.

Prior to HealthSmart successfully acquiring the Brownsville Independent School District several years ago, every effort was made to gather information and size up opportunities. A well laid plan is worth a dozen regiments and a well executed plan inspires victory.

How was the BISD account to be landed? Low rates would be a good start. Usually, the insurance company with the lowest rates gets the nod. What drives health insurance rates? Claims of course. Bidding on specified benefits would preclude a successful bidder from coming in with inferior benefits and thus lower costs. So the strategy would be to negotiate the best possible medical care provider rates in town. That makes sense.

But, a wise and seasoned vendor would ask, what is the competition doing in regards to contracting with the two Brownsville hospitals and the hundreds of physicians in town? What must one do to “beat” those negotiated rates and thus have the lowest bid?

In her continuing quest to explore the fascinating sequence of events surrounding the BISD health insurance saga and resultant lawsuit filed recently by the BISD against their former third party administrator, Molly Mulebriar came across this interesting email  which will give the reader an interesting peek at behind the scenes strategies employed by a vendor to gather business intelligence – HealthSmart Overview of BISD Opportunity

Protected: Texas TPA Sues Seton Hospital – Cost Plus Reimbursement At Issue

Monday, September 13th, 2010

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Man Fined For Not Having Health Insurance

Monday, September 13th, 2010

“Navigator” – New Title For Soon To Be Extinct Health Insurance Agents

Monday, September 13th, 2010
“Considerable debate is occurring with regard to the role producers will play in the exchanges. The Patient Protection and Affordable Care Act creates a new entity called “navigators” that will assist consumers in the exchanges with public education, distribution of enrollment information and referrals. Beyond that, the law does not provide much detail on the role of navigators, so roles will need to be clarified further through the regulatory process. Producers are particularly concerned about how the navigator role is defined. To that end, at the National Association of Insurance Commissioners (NAIC) conference last month, the insurance commissioners approved a resolution that provides some insight on the role of producers and the role of navigators. The National Association of Health Underwriters (NAHU), which represents insurance producers, was pleased with the NAIC resolution.” 

HealthSmart – Baylor PPO Agreement

Monday, September 13th, 2010

HealthSmart Preferred Care II, LP (“HealthSmart”) has renegotiated its contract with Baylor Health System in North Texas , effective October 1, 2010.  As part of this new agreement, all HealthSmart Groups wishing to continue access to the Baylor Health System facilities and ancillary providers in the Dallas-Fort Worth area on or after October 1, 2010 must review and execute a Payor Acknowledgement form.  While each Payor must read the contract in its entirety to ensure a clear understanding of its obligations under the contract, Article II and Article IV are very important sections to review and understand.  For uninterrupted network access to services through Baylor, the Payor Acknowledgement form and accompanying documents must be signed no later than Friday, September 24th, 2010.

 Please understand that any client that chooses not to sign the attached Payor Acknowledgement form will not be granted in-network access or discounts for the Baylor Health System facilities or ancillary services after 10/1/2010.  For any Payor Acknowledgements received after September 24th, access may be granted, however, processing will require a minimum of 30 days for Baylor to activate such reinstatement.

Editor’s Note: For a complete copy of the HealthSmart/Baylor PPO Agreement, write

Gov. Christi Addresses Teacher’s Concerns

Friday, September 10th, 2010

Gov. Christi addresses teacher health care costs, among other things, during this question and answer session held recently –

Editor’s Note: School teachers, god bless them, are unique individuals who have never left the classroom.

Health Care Blue Book Brings Pricing Transparency

Friday, September 10th, 2010

Health Care Blue Book provides consumers with transparent health care pricing. The cost differential among providers, whether they are PPO network providers or not, can be significant. Health Care Blue Book has the data to prove it.                         Healthcare Blue Book

30% Of Population Taking Prescription/s for Controlled Substance

Friday, September 10th, 2010
BY LYNN BONNER – staff writer

Sheriffs in North Carolina want access to state computer records identifying anyone with prescriptions for powerful painkillers and other controlled substances.

The state sheriff’s association pushed the idea Tuesday, saying the move would help them make drug arrests and curb a growing problem of prescription drug abuse. But patient advocates say opening up people’s medicine cabinets to law enforcement would deal a devastating blow to privacy rights.

Allowing sheriffs’ offices and other law enforcement officials to use the state’s computerized list would vastly widen the circle of people with access to information on prescriptions written for millions of people. As it stands now, doctors and pharmacists are the main users.

Nearly 30 percent of state residents received at least one prescription for a controlled substance, anything from Ambien to OxyContin, in the first six months of this year, according to the state Department of Health and Human Services. Nearly 2.5 million people filled prescriptions in that time for more than 375 million doses. The database has about 53.5 million prescriptions in it.

Read more:

Protected: Breaking News – Bombshell Temporary Restraining Order (TRO) to Be Filed Next Week

Thursday, September 9th, 2010

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BISD Audit – Molly Mulbriar Weighs In

Thursday, September 9th, 2010

Molly Mulebriar, private investagator, weighs in on the BISD audit story:

I have both the MedReview LLC audit done in 2007 and the CTI audit done this year. I dont agree with either one to the extent that I dont believe their methodology is bullet proof. Both based their findings off “discounts” and neither one had the ability to review provider specific contracts for compative purposes, nor did either firm have the ability to compare each hospital’s charge master. In my opinion, to compare PPO savings one has to have both the chargemasters and the actual contracts.
Then there are variables such as changing charge masters. Every 60 days hospitals review their chargemasters and make changes as they deem necessary. So those numbers are a moving target. Also, hospitals use formulas applied to their charge masters that are payer specific. Hospitals will deny this, but they are lying. I purchsed a book that was written just for hospital administrators and there is a section within the book that describes how a hospital can actually use different billed charges off the same charge master, for different payers. So, when hospitals say that it would be illegal for them to charge one payer more than another, that may be true. But what they are doing is using the same exact charge master, i.e. same prices for all payers, but applying a formula to each payer which effectively changes the billed charges by payer. I can document all of this and would be prepared to do so at a School Board Meeting, deposition, etc.
So, when one audit says the average overall aggregate PPO savings for Texas True Choice is 41% (as the MedReview audit shows) and another audit says the average overall aggregate PPO savings for HealthSmart is about the same (as the CTI audit shows), one has to ask (1). Was the chargemaster pricing taken into account over both time frames (2). Were 100% of claims repriced for the audit (3). Were contract outliers taken into account (4). Were each provider contract specific to each taken into account (5). Were provider re-pricing fees taken into account (6). Did the audit take into account escalater clauses inherent in all PPO contracts (7). Was a Favored Nations clause in any of the PPO contracts with any of the hospitals.
This is just a short answer to my basic thesis: You cant adequately compare PPO savings using the methodology employed by either auding firm, in my opinion.
So the question is “How does TTC and HS compare in savings to the BISD?” If you didnt know better, and only relied on both the MedReview and CTI audits, you would conclude that the TTC and HS “discounts” are just about the same. In the aggregate, both are within 1% of each other.
Then, of course, I point to the claim repricing exercise I had X do on the XXXXXXXXX claims at XXXXXXXXX. last year. We sent them a year’s worth of claims to reprice under their contract. The difference between TTC and HS was about 1%.
So the case could be made that both networks are about the same. And, I suspect that if a proper audit could be done using the methodolgy I prefer, the outcome would be about the same too, but better documented. I say this because providers these days dont have to give one payer a much better deal than another. Dr. Sorenson, a well known expert in this field, came to the same conclusion in his studies (I have his report in my files).
Politically speaking, TTC beats HS all day long. The public perception now is against HS and for many perception is reality. Such is the power of a lawsuit, irregardless of it’s merits.
Hope this makes sense.  BTW – ran into Don Pedro yesterday and he agrees with me on this.

Can Blue Cross Save Brownsville Independent School District Money?

Wednesday, September 8th, 2010

Blue Cross Blue Shield of Texas (BCBSTX) has larger market share than any other managed care company. They insure most Texas school districts through the TRS ActiveCare plan, many federal employees, and all State of Texas employees. They even insure HEB, a 70,000 life grocery store chain that out-competed Albertson’s in the Valley several years ago.

You would think, and BCBS representatives will verify, that BCBSTX has the market clout to negotiate superior PPO discounts with medical care providers, especially hospitals.

This may be particularly true with hospitals. A review of a BCBS hospital contract will reveil a unique arrangement that no other managed care provider offers, as far as we can tell: an annuity feature. Participating hospitals are guaranteed a weekly cash flow, whether they see a BCBSTX member patient or not. That is important to a hospital’s bottom line. And that is worth something in contract negotiations.

So, why isn’t the Brownsville ISD engaged with BCBSTX? 

BCBSTX may become a contestant worth considering next time the BISD goes to bid. The variables will include many factors such as broker control of bids/proposals, bias of consultant, Board politics, local health care providers intent to perserve profits, expertise of the BISD insurance committe, and the position of the Moon.

BISD MedReview, LLC Audit 2007 Compared to CTI Audit

Wednesday, September 8th, 2010

The BISD hired MedReview, LLC  in 2007 to audit the district’s self-funded medical claims as re-priced through the Texas True Choice PPO network.

MedReview wrote, in part, “During the audit period, the Texas True Choice netowrk delivered an average discount of 34.2% on professional claims, 45.5% on facility claims, and 41.0% on all claims. Please note that these calculations are based on all claims and all providers. It is not uncommon for provider networks to inflate their average discounts by excluding some types of providers that historically, give very small discounts, i.e,. childrens hospitals.”

For a complete copy of the MedReview audit, email  

The recent CTI audit report shows HealthSmart PPO discounts  for the period 10/01/07 – 9/30/08 of 38.8% on profiessional claims, 43.3% on facility claims.

                                                                              Texas True Choice                HealthSmart

Professional                                                         34.2%                                                  38.8%

Facility                                                                  45.5%                                                  43.3%

Onc should be careful in evaluating an auditing firm’s evaluation. This is proof of that.

In the aggregate, based on two different audits by two outside “professional” auditing firms, the discount differential appears to be 1% or less.

Editor’s Note: As we have indicated in a prior post, the CTI audit raises more questions than it answers. The recent lawsuit filed by BISD against HealthSmart should put to rest any questions we have. It will also lead to an opening of Pandora’s Box with unintended consequences, in our opinion.

Brownsville ISD Takes HealthSmart to Court (Cont.)

Wednesday, September 8th, 2010

The BISD’s group medical plan costs appear to have spiked when the district transitioned from Texas True Choice PPO to HealthSmart PPO. Why one wonders? Did Texas True Choice have better discounts with area providers?

In researching this we  went back to our reference files in our office. In our continued quest to learn the truth about PPO contracts, we have accumulated a wealth of information.  Our records reveal interesting information we obtained from the Valley Baptist website several years ago.  Posted on one of their web pages was a listing of their managed care (PPO) contracts along with reimbursement rates paid by each PPO network. Texas True Choice and HealthSmart were listed.

Here is what the website page showed:

Texas True Choice: “The fee schedule is based on 140% of the Current Year RBRVS schedule for E&M (90000), Radiology (70000), and Path/Lab (80000) Codes. Surgical (1000-69999) Codes are reimbursed at 165% of the Current Year RBRVS. Anesthesia Codes are reimbursed at 85% of Billed Charges. Immunizations, HCPCS and Codes without an allowable assigned are reimbursed at 75% of billed charges. Note; Covers Mutual of Omaha plans with BISD.”

HealthSmart Preferred Care: “The lesser of: 70% of billed charges or 135% of 2004 St. Anthony’s RBRVS on an aggregate basis. Covered procedures not listed or given a RBRVS value will be reimbursed at 70% of billed charges.”

See copy of Valley Baptist Webpage here –  Valley Baptist Managed Care Contract

Who has the better contract?

Editor’s Note: We would welcome a debate with anyone regarding PPO contracts.

Medical Stop Loss Insurance

Wednesday, September 8th, 2010

Medical stop loss insurance is a commodity and not a value added product.  Stop loss contracts are by characteristic, inherently at odds with PPO contracts and some argue are equally at odds with ERISA. How can that be? And do insurance agents, brokers and consultants care about potential conflicts and costly lawsuits? Does E&O cover this exposure?

A good attorney could build his practice around these issues.

We will explore this in a subsequent posting soon.

Brownsville ISD Takes HealthSmart to Court Over Health Insurance Costs

Monday, September 6th, 2010;jsessionid=0BE3097B005AD7B482870F17E64D49D8?contentguid=8EbyQbk3&full=true#display

Editor’s Note: This lawsuit is going to run an interesting course. Will McAllen ISD follow suit?

El Paso Indictments Handed Down – Feds Claim Public Corruption

Friday, September 3rd, 2010

Six year investigatiion leads to indictments. Local El Paso third party administrator target of probe –

Forbes: Austin’s Seton Medical Center one of most profitable hospitals in U.S.

Friday, September 3rd, 2010

September 2nd, 2010 1:24 pm CT

Austin’s Seton Medical Center is one of the most profitable hospitals in the country, according to a new list from Forbes magazine.

Seton Medical Center ranks fifth on the list, based on an operating margin of 34 percent. Net patient revenue for the 405-bed hospital is $432 million, according to Forbes.

Seton Medical Center, Austin’s largest hospital, is part of the Austin-based Seton Family of Hospitals, whose nonprofit parent is St. Louis-based Ascension Health Inc.

The Forbes list, done by the American Hospital Directory, is based on operating income figures that hospitals must report to the federal Medicare program each year. It found that 24 hospitals in the country with more than 200 beds each make an operating margin at least 25 percent.

The most profitable hospital in the country, Flowers Medical Center in Dothan, Ala., recorded an operating margin of 53 percent, according to Forbes.

Five other Texas hospitals appeared on the Forbes list of the 25 most profitable hospitals: Del Sol Medical Center in El Paso, No. 2 (45 percent operating margin); Conroe Regional Medical Center, No. 16 (28 percent), Medical Center of Plano, No. 17 (28 percent); Medical City Hospital in Dallas, No. 19 (26 percent); and Las Palmas Medical Center in El Paso, No. 23 (25 percent).

“Some say profitable hospitals may be using local monopoly to overcharge insurers and patients,” the magazine reported. “Others see the high profits simply as [a] sign of efficiency and good quality.”

San Antonio Employer Elects Cost-Plus To Save Money

Friday, September 3rd, 2010

Conference of Methodist Churches of the Southwest decided yesterday to move their group health plan from a traditional PPO model to a cost-plus program.

This is another San Antonio employer who has joined the Cost-Plus Revolution. Bill Miller Bar B Q of San Antonio was the first employer in Texas to transition their self-funded group medical plan to a cost-plus platform – Bill Miller Forbes.

The list of prominent San Antonio employers who have  followed the Bill Miller BBQ example is impressive, and growing.

Another large San Antonio employer will be joining the Cost-Plus Revelution on January 1, 2011.

Hospital profit report ranks some North Texas centers high, some low; findings draw challenges

Friday, September 3rd, 2010
12:00 AM CDT on Thursday, September 2, 2010
By JASON ROBERSON / The Dallas Morning News

North Texas is home to hospitals with the nation’s best and worst operating margins.

Medical Center Plano and Medical City Dallas Hospital, both owned by Nashville-based Hospital Corporation of America, have profit margins between 26 and 28 percent. They rank among the top 25 in the nation, according to an American Hospital Directory report that Forbes magazine published this week.

However, John Peter Smith Hospital in Fort Worth has the nation’s third-worst profit margin at minus 204 percent. Parkland Memorial Hospital in Dallas ranks 14th-worst with minus 74 percent. Both are county hospitals.

“A lot of this comes down to how they do the analysis,” said John Dragovits, executive vice president at Parkland.

After crunching the data from Forbes’ list, Dragovits realized that the hospital’s tax revenue – more than $400 million annually – had been omitted from the calculations.

A hospital’s operating margin is its income divided by revenue, expressed as a percentage. It’s an important measuring stick for ranking efficiency among competitors.

A higher operating margin tends to indicate a lower cost of running a hospital. It says the hospital can deliver health care to patients more cheaply than competitors can and make money.

But in an era of rising health care costs and assigning blame, being recognized for high operating profit margin is not necessarily a compliment.

Some top-ranking hospitals took issue with the report.

“We’re not clear how the numbers were derived, but our margin is significantly lower than what is stated in Forbes,” said Mark Whitley, a senior vice president of the North Texas division for Hospital Corporation of America.

“We are proud that the Medical Center of Plano and Med City Dallas Hospital, as well as our other HCA North Texas hospitals, have strong clinical and administrative teams who run great hospitals.”

Flowers Hospital in Dothan, Ala., No. 1 on the list with an operating margin of 53 percent, is disputing its ranking, according to the Dothan Eagle. The hospital says that its revenue was misreported and that the actual operating margin is 12 percent.

Hospitals with stronger operating margins do not necessarily provide better care.

In a U.S. Department of Health and Human Services measurement of hospital death rates among heart-failure patients, hospitals with lower operating margins, such as Parkland and JPS, were in line with the national average, as were Medical City Dallas and Medical Center Plano, with higher margins.

Most of the hospitals with the worst operating margins are county hospitals in states with high percentages of uninsured residents. Texas, which leads the nation with a 25 percent uninsured rate, has six hospitals on the list.

BCBS Texas Announces New Out-of-Network Reimbursement

Thursday, September 2nd, 2010


September 1, 2010Allowable Amount Definition for Non-Contracting Providers to Change

Blue Cross and Blue Shield of Texas (BCBSTX) is migrating to a new out-of-network reimbursement approach. As groups renew with BCBSTX, the majority of out-of-network claims will be reimbursed based on a pre-determined percentage of Medicare rates.

Medicare provides a national standard recognized by all providers that is used to reimburse a significant portion of all medical claims in the United States. As a result, we expect the new methodology to increase transparency for providers and members through availability of information about Medicare standards. In a number of isolated instances, such as when a service is not priced by Medicare, a default pricing method will be used. This will be stated in the certificate of coverage. Our methodology has been submitted to and approved by state regulators in Texas.

We will begin meeting with our group customers to explain the new Medicare-based methodology. We anticipate that the overall impact of the new methodology will not be significant due to Health Care Service Corporation’s broad provider network, which results in more than 97 percent of all claims we process to be in-network.

To help avoid confusion for members during the transition to the new methodology, communication tools will be provided to the Full Service Units to address any concerns. Members also will be encouraged to continue to get estimates from out-of-network providers for the cost of services and to call us to help determine estimated allowable amount.

The migration will be upon group renewal beginning on Sept. 1, 2010, dependent upon successful testing.

 Editor’s Note: We like this approach and are encouraged that Blue Cross likes it too. Next step is to convert their PPO contracts in a similar fashion. With upcoming requirement under Obamacare, full PPO contract terms must be publicly disclosed, thus ending the PPO world as we know it today. This is a good thing (some change is good).


BISD Audit Results In

Thursday, September 2nd, 2010

The Brownsville Independent School District’s external audit of their self-funded health plan is now part of the public record. The audit was a “review and verification of BISD Insurance Consultant Recommendation of the medical plan proposals for 2009-2010 and HealthSmart’s rebuttal of said recommendations.”

A “he said, she said” it appears, is now a a “he said, she mislead”.

In reveiwing PPO savings, many focus on “discounts” as the basis of determinining “savings.” Department Store “A” sells the exact same freezer as Department Store “B”. Department Store “A” advertises a 50% off sale, while Store “B” advertises 40% off on the same freezer. But % off what? Store “A” retails the freezer at $500 while Store “B” retails the same freezer at $400.

Surely the sale at Store “A” is better than at Store “B”!

Such are the flaws utilized by some in evaluating PPO discounts.

We found this audit report to be a fascinating reading.  A few exerpts include:

“In the course of our claim administration audit, CTI learned that the claim negotiation expense charged by HealthSmart to BISD also included fees for addtional discounts it negotiated with its own network providers………………………CTI has never in its experience seen where a TPA will negotiate additional discounts on in-network provider claims…………………it is not typical for the TPA to attempt to negotiate an additional discount since it would violate that provider’s discount agreement with the PPO………………….” Page 8 of CTI Report

“Again, CTI has not previously in its audit experience seen a situation where a TPA negotiates additional discounts with in-network providers on a regular basis and pays itself an additional fee for doing so……………” Page 9 of CTI Report

“In CTI’s opinion the unusual nature and material amount of additional fees associated with HealthSmart Benefit Solution’s negotiations with providers contracted with by its own affiliate PPO, HealthSmart Preferred Care, is worth of further analysis.”

You may review the Executive Summar of the CTI report here:  BISD Audit – Executive Summary

We are not posting the full report here. The full report may be obtained from the BISD under the Open Record Act.

Editor’s Note: This audit raises more questions than answers.  Comparing PPO plan savings is impossible without reviewing specific hospital contracts and charge masters, something the CTI report is missing it seems.

We have the BISD audit report performed prior to the HealthSmart contract. A comparison to the CTI report should prove interesting.

Protected: Cost Plus Revolution Drives Hospital Executive To State of Insanity

Thursday, September 2nd, 2010

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BCBS Illinois Implements Non-PPO Reimbursement Methodology

Thursday, September 2nd, 2010
News from the Blues for Producers - Blue Cross and Blue Shield of Illinois


September 1, 2010

BCBSIL’s Migration to a New Non-contracted Reimbursement Approach [All Markets]

Blue Cross and Blue Shield of Illinois (BCBSIL) is migrating to a new non-contracted reimbursement approach. As groups renew with BCBSIL, the majority of non-contracted provider claims will be reimbursed based on a pre-determined percentage, as set forth in the certificate of coverage provided to members, of Medicare reimbursement rates. Medicare provides a national standard recognized by all providers that is used to reimburse a significant portion of all medical claims in the United States. As a result, we expect the new methodology to increase transparency for providers and members through availability of information about Medicare standards. In a number of isolated instances, such as when a service is not priced by Medicare, a default pricing method will be used. This will be stated in the certificate of coverage. Our methodology has been submitted and approved by state regulators in Illinois. Please note that Medicare-based reimbursement rates for non-contracted providers will not have any impact on our Medicare Secondary Payer process.        

We will begin meeting with our ASO group customers to explain the new Medicare-based methodology and to walk through options available for particular plans. We anticipate that the overall impact of the new methodology will not be significant due to Health Care Service Corporation’s broad independently contracted provider network, which results in over 97 percent of all claims we process to be in network.

To help avoid confusion for members during the transition to the new methodology, communication tools will be provided to the FSUs to address any concerns. Members will also be encouraged to continue to get estimates from non-contracted providers for the cost of services and to call us to help determine estimated allowable amount.

A Division of Health Care Service Corporation, a Mutual Legal Reserve Company,
an Independent Licensee of the Blue Cross and Blue Shield Association.


 Editor’s Note: We applaud BCBS Illinois for this move towards greater transparency. We only hope that more payers will do the same and even take it a step further; eliminate lucrative PPO contracts entirely and pay fair and reasonable reimbursement rates.

Hospitals Look At “Paid to Billed” Ratios

Wednesday, September 1st, 2010

Justifying your managed-care discount levels with PPOs

February 10th, 2010

by Maria K. Todd, MHA, PhD

As an interim contract negotiator for several hospitals throughout the country (none of which compete with one another in the same market), I often receive assertions from PPOs, TPAs and others that the hospital’s discount is not competitive with so-and-so up the street, in the nearby community or (fill in the blank).

Speaking from first-hand experience, I strongly suggest: the next time someone claims that your discount isn’t competitive, first determine if what they say is true, and then determine what you want. Don’t just react. Respond with a critical evaluation of the deal. It’s time for reform; one contract at a time, if necessary.

Case in point: Consider one of my own recent experiences.

Earlier this week, a PPO network representative called claiming that all the other hospitals had increased their discount off charges. I knew for a fact that his claim was not true, nor was it any of my business, as that is supposed to be confidential. I also knew that we didn’t really care if the competitor hospital had increased the discount to this network. I also knew that based on the previous payer performance associated with this PPO network that there was no defense to change anything, except perhaps raise the price and lower the discount.The caller first started with accusations that we were not competitive and that he was offended that we had put him off to discuss the matter until after the first of the year. His contract was not compelling given that we had other more pressing issues with payers and networks of much larger bottom-line influence. Still, he had to bring his sarcasm and condescending attitude to the team. Wrong move.

When asked for new data that might support an argument that we should reconsider our position, he stated that he provided employers and member counts the previous August, (before open enrollment might have lessened the counts from non renewals) and that he had no intention of going to the trouble to get them again. At that point, I responded that my attempt to defend his case to the CFO would be rather short. (Those who know me know that any other response would have been out of character for me.)

Then I asked what the top 10 payers and employers he represented had spent at the hospital per year for the past three years. He said he had no way to know. I followed this question with how much he anticipated the change in spend to be this year. He said he had no way to know. Now I ask you this: If he didn’t know what they spent the past three years, and he had no projection of the impact to the hospital for the upcoming year, why does he need a bigger discount? Where is the defense that there should be any change warranted at all?

One of the TPAs that processes claims for a group he represents within his network caused a lot of grief and expense to the hospital by not following the contract. Heck, they didn’t even follow the law. The hospital submitted a proper bill for a service. The first thing the TPA did was to suggest that the hospital change the DRG submitted to a complex version of that DRG, for which the claim did not exactly meet criteria. The TPA stated that if we changed the DRG and wrote off the remaining balance, the plan would issue another $10,000. The remaining balance was in excess of $40,000 (after the discount was applied). Had the hospital done that, it would have been guilty of a federal offense and possibly charged with fraud, false claims, and a myriad of other wrongdoings. The hospital instead verified its charges with a colleague of mine who has an RHIT credential. She said it was coded correctly and to stand firm on the courage of our convictions.

The next defense was that the TPA claimed the charges were correct but in excess of usual and customary charges and that the plan had a limitation of payment on this service. Highly unlikely, but okay…whatever.

To address this, in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), the hospital then prevailed upon the patient who might be subject to the balance of the charges not covered by their plan to execute an Authorized Representative designation so that the hospital could obtain the document in question to see if such a limitation really existed. The patient signed the form and the form was submitted to the employer’s representative at the TPA to request a copy of the Summary Plan Description. The TPA representative then advised the Plan Administrator at the Employer Human Resources department not to comply. I am certain that had we been able to obtain the document, that no such specific limitation existed on the date of service. In fact, under ERISA if they refuse to comply or delay, the Plan Administrator can be held liable for $110 per day for every day after the thirtieth day from the date of the request owed to the Authorized Representative (the hospital). The cost to do this for just this one case in time, staff and lost opportunity from not having the case was several thousand dollars.

The PPO network representative claimed he had no knowledge that the above had occurred. I maintain that he brought them to the table to enjoy the discount from the hospital, therefore it was his responsibility to see that they followed the contract as it was negotiated. I also told him that I did not want any more business like this. “Thanks, but no thanks…we’ve had our fill of those wonderful opportunities.”

Finally, I pulled our data for a payer report card on this contract. In this, we measure not only the ease of dealing with the contract and its recognized payers, but also problems like the above and the timeliness, accuracy and paid-to-billed ratios from the top 10 payers and employers on this contract. We not only measure how the payer pays, but also qualitatively how the plan members pay their coinsurance and deductibles. Do those amounts go to bad debt? Is the hospital’s cost to collect low or high? Do they go to an outside collection agency that then receives 28 percent of the amount they are able to collect?

So here’s the bottom line:

1. What did they spend last few years? Is there an anticipated change? Fewer episodes of care? Fewer benefits? Lower percentage of plan responsibility (higher deductibles and co-insurance)?

2. Of what they spent, how were they as a trading partner? Did the hospital have to commit time and staff resources to enforce the contract? Those costs should be translated to dollars and added to the negotiated discount to see the true “discount” effect.

3. How did the plan members honor their cost share responsibility? Any write offs, collection service fees, or additional discounts should be applied to the net contract performance.

Maria K. Todd, MHA PhD, is ( is a consultant, speaker, author and health care industry thought leader who specializes in managed care contracting. She’s the author of The Managed Care Contracting Handbook, 2nd edition and the Physician Employment Contract Handbook (1999).

Editor’s Note: This gives a good behind the scene look at PPO negotiating skills. A good negotiator takes a position of strength, not weakness. We think the above scenario is common and par for the course. Who do you think is negotiating from a position of strength?  We think that the one holding the check book should be the one with more clout, but unfortunately in our current healthcare system that does not seem to be the case.

Hidalgo County Seeks TPA/Stop Loss Proposals

Wednesday, September 1st, 2010

  Third Party Administration, Individual Stop Loss & Aggregate Stop Loss For Self-Funded Medical Plan,
9/22/2010 9:30 AM