Archive for October 23rd, 2010

HealthSmart VS City of Lubbock

Saturday, October 23rd, 2010

Special City Council session on Saturday, possible Parker settlement

Posted: Oct 21, 2010 1:56 AM CDT

Updated: Oct 22, 2010 4:27 PM CDT

Click image to enlarge

By James Clark email

LUBBOCK, TX (KCBD) – In a rare Saturday special session, Lubbock City Council is scheduled to vote on a proposed settlement with businessman Ted Parker.  In order to meet Saturday, the City Council had to have posted public notice of the meeting no later than 1:30 PM on Wednesday.  KCBD NewsChannel 11 discovered the special meeting notice after hours. 

How Did This Start?

Parker was in charge of ICON/AAG which was the city’s health insurance administrator from 2004 through 2006.  In 2007 the city sued Parker’s company, and accused him of not allowing an audit, which he was contractually obligated to do. 

At the time, former Mayor David Miller said that AAG might owe Lubbock $200,000.  As time went on the claim got bigger until Miller said publicly that Parker owes the citizens of Lubbock $12 million, which Parker denies.  Parker also claims that the city wanted trade secrets as part of its audit, which he was not willing to disclose.

The Fight Moved To Dallas County

Parker filed a separate lawsuit in Dallas County against four city officials, including Miller, saying their statements were false.  Miller, City Manager Lee Ann Dumbauld, Assistant City Manager Scott Snider, and Risk Management Director Leisa Hutcheson counter-sued Parker in Dallas County at City of Lubbock expense.  

The city also sued Covenant Health System seeking records pertaining to Parker’s Company. Meanwhile, the city’s liability insurance company sued Lubbock in an effort to not pay any claims from the other Parker lawsuits.  The Covenant lawsuit is still pending and the city is in the process of settling out of court with the liability insurance company.

The FBI Raid & Other Strange Facts

Only adding intrigue to the all-out war-of-words and series of legal dramas, the FBI raided Lubbock City Hall in May of 2008, confiscating health insurance records.  To date, no charges have ever been filed. 

Parker dropped his Dallas County lawsuit in May.  But Miller, Dumbauld, Snider, and Hutcheson continued their counter-suit at City Of Lubbock expense even though, if successful, they would be legally entitled to any award instead of the city.  Only one Councilman, Paul R. Beane, voted no to this arrangement.

Some of the legal expenses paid by the city for Miller, Dumbauld, Snider and Hutcheson include items such as beer & oysters, steak dinners, and filet mignon.  Just on the Dallas County lawsuit alone, the city has spent $1.8 million in legal expenses.   

Details Not Yet Available

As for the settlement to be considered on Saturday, public records do not yet reflect details.  Look for a follow up Thursday on and KCBD NewsChannel 11 at 5 & 6.

End Of An Era? Will Health Insurance Companies Stay In The Business?

Saturday, October 23rd, 2010

October 22, 2010

Copyright Reuters

U.S. state insurance commissioners unanimously backed tough rules requiring health insurance companies to direct more of the premiums they collect to medical care, rather than corporate salaries and profits.

Although the percentages are mandated in the new healthcare law, insurers including Aetna Inc. and WellPoint Inc. sought looser definitions of some spending, arguing changes were needed for them to stay competitive.

In a final vote on the recommendations, called for under the new law, the National Association of Insurance Commissioners (NAIC) on Thursday rejected most of the insurance industry’s requests.

NAIC’s proposal moves early next week to the Department of Health and Human Services, which will decide whether to adopt the proposals as regulation or first make changes.

By law, the changes must take effect by Jan. 1.

Consumer advocates and Democratic lawmakers had argued for strict limits on the industry, which has come under fire for rising rates and denial of coverage.

Under the law passed in March, large group health plans must allocate at least 85 cents per premium dollar to medical care, not administrative costs or profit. Plans for individuals or small groups must spend 80 cents per dollar.

Such spending ratios, known as a medical-loss ratio, or MLR, have been closely watched by Wall Street as a sign of potential profitability. Under the law, customers could see rebates if insurers spend less than required on care.

“This is placing on them some pretty stringent requirements,” Kansas Insurance Commissioner Sandy Praeger, head of a NAIC working committee, said of insurers.

The goal is to ensure that when individuals or employers buy coverage “that a good portion of that premium dollar goes to medical activities and is not just being used to enhance profits or enhance large salaries,” she told reporters.

Insurers argue that the restrictions will handicap smaller companies with limited resources or hit others with plans for small groups or individuals that can be expensive to operate.

“The current MLR proposal will reduce competition, disrupt coverage, and threaten patients’ access to health plans’ quality improvement services,” America’s Health Insurance Plans President and Chief Executive Karen Ignagni said.

NAIC did allow insurers to deduct most taxes in calculating spending, an industry win that Democrats had fought.

But it rejected insurers’ pleas to measure spending ratios on a nationwide basis, sticking with state-by-state calculations.

U.S. Health Secretary Kathleen Sebelius has said the agency would like to move on the regulations this month, although some analysts do not expect action until November.

(Reporting by Susan Heavey; Editing by Maureen Bavdek and Tim Dobbyn)

Editor’s Note: Health insurance brokers will soon (very soon) join the ranks of unemployed, lamenting with door-to-door encyclopedia salesmen. Gone will be the day of making $250,000 per year on a 400 life group, or $35,000 per year on a small 65 life case. Company group sales reps. will morph into service reps with reduced pay.