South San Antonio Independent School District is seeking a qualifited health insurance consultant. The district employs approximately 1,500. Current carrier is Blue Cross and the plan is fully-insured. The district contributes $285.80 pepm.

Contact Mr. Andy Rocha, Director of Purchasing @ South San Antonio ISD. Proposals are due Jan. 6, 2011.

Editor’s Note: Unless the district wants to consider a self-funded health plan, the district is tied to four main health insurance companies active in the San Antonio market: Aetna, Blue Cross, Humana, United HealthCare. But which one has the best and lowest health care provider costs? All say they do, but can’t or won’t prove it. PPO contracts, they all chime, are proprietary.

December 27, 2010

PacifiCare Life & Health Insurance Co. put a proposed $120 million dividend payment to its parent company on hold under pressure from California insurance regulators seeking potential billions in fines.

After California Insurance Commissioner Steve Poizner ordered PacifiCare to halt the payment, the division of UnitedHealth Group (NYSE: UNH) notified Indiana regulators that it will not go through with a $120 million payment to two United subsidiaries. Poizner is seeking up to nearly $10 billion in fines from UnitedHealth for millions of alleged violations dating back to its acquisition of Indiana-based PacifiCare in December 2005 (BestWire, Sept. 9, 2010).

“While the investigation into PacifiCare is ongoing, the blocking of this payment is a critical victory because it keeps the money where it would be available to satisfy any order that is issued and pay accordingly the fines that go along with such an order,” Poizner said in a statement.

UnitedHealth — which previously said the size of the fine sought “has no basis in reality” — intends to successfully resolve the legal matter, which remains pending before a California administrative law judge. “We are puzzled by the commissioner’s statement because, as he is well aware, we are actively contesting his decision on the PacifiCare dividend through the process established by his own department. We continue to disagree with the commissioner’s attempt to use the dividend process to try to gain leverage in a separate case about administrative issues that have long since been addressed,” spokeswoman Cheryl Randolph said.

Texas Business reports:  Temple-based Scott & White Healthcare plans to build a new hospital in College Station.

The health care entity has acquired approximately 98 acres of undeveloped land that will be the home for a new 143-bed acute care hospital project.

The property was purchased from Weingarten Realty Investors and College Station ISD.

The five-story, 320,000-square-foot Scott & White Hospital-College Station will be located at the intersection of Texas Hwy 6 and Rock Prairie Road.

Construction is scheduled to begin early next year.

An adjacent 75,000 square-foot clinic is also proposed and will be built by a third party developer in conjunction with the hospital.

The hospital and ambulatory facility will be built within 90 days of each other, with a projected completion date of the summer of 2013 for both projects.

Scott & White Hospital-College Station will open initially with 119 beds and can be expanded to accommodate another 24 beds when the need arises.

“This new hospital brings Scott & White’s model of a seamless, continuum of health care—outpatient to inpatient to outpatient—to the Brazos Valley,” said Scott & White chief executive Alfred B. Knight in a prepared statement.  “Our focus on the highest quality, coordinated, cost-efficient health care is unrelenting.”

Scott & White Hospital-College Station will house an emergency department,  cardiac services including cath labs, neonatal intensive care unit, comprehensive cancer services, operating rooms, maternity services suites, endoscopic procedure suites, interoperative robotics and other specialty services, all supported by a pharmacy, comprehensive state-of-the-art imaging technology and other diagnostic capabilities.

“Patient demand for the excellent ambulatory care Scott & White has provided in the Brazos Valley sparked the building of our new clinic on Arrington Road,” said Scott & White College Station region executive William Rayburn in a prepared statement.  “Scott & White Hospital-College Station will be an open staff model hospital and will complement and support both clinics, while enhancing our ability to better serve patients through seamless handoffs between the clinic and the hospital.”

Jason Jennings has been named chief executive officer for Scott & White Hospital-College Station. Jennings previously served as chief operating officer for Hillcrest Baptist Medical Center, one of the 12 hospitals and hospital partners in the Scott & White Healthcare System.   He is a graduate of Texas A&M University, where he earned a bachelor’s degree in biomedical sciences.  He also holds master’s degrees in physical therapy from the University of Texas Medical Branch and in business administration from the University of Texas at Tyler.

 Scott & White Healthcare is a non-profit collaborative health care system established in 1897 in Temple.  The system, one of the nation’s largest multi-specialty group practices, provides personalized, comprehensive, high-quality health care enhanced by medical education and research.  The system’s Temple campus serves as the principal clinical four-year teaching facility for the Texas A&M Health Science Center College of Medicine.  Scott & White Healthcare staff of 12,000 includes more than 800 physicians and scientists and nearly 400 specialized health care providers. The system’s 12 hospitals or hospital partners include Scott & White Hospital-Brenham, and more than 60 clinic locations throughout Central Texas, including Scott & White College Station Clinic on University Drive and Scott & White College Station Clinic-Arrington Road.

Boy was I ever ripped off for a dental degree!

I spent 4 years in college and 4 years in dental school, and according to a CNBC article with no byline titled “ Alaska ‘s efforts on rural dental care paying off,” I could qualify for this job after only 2 years of study right out of high school. What’s more, instead of it costing me tens of thousands of dollars in tuition, the state of Alaska insists that corporations will pay for dental therapists’ education as part of the deal… with strings attached of course.

http://www.cnbc.com/id/40734187

“Organizations that employ certified dental therapists are Yukon Kuskokwim Corp, Southeast Alaska Regional Health Corp., Maniilaaq Assoc. (Kotzebue), Norton Sound Health Corp. and Bristol Bay Health Corp.”

In return, dental therapists must serve those corporations for four years to pay them back for their investment in the state certification, as well as produce income to cover the corporations’ liability and adequately compensate CEOs for their cleverness in business. Since DDSs aren’t trained to make shrewd business deals like the Alaska plan, I bet the CEOs are MBAs.

Aren’t there laws against this kind of business arrangement in the 49 states south of Alaska ?

Other than the indentured servitude problem, did not one of the RTI researchers hired by W.K. Kellogg Foundation to turn out swell research, have anything at all to say about risks of having inadequately trained high school grads performing surgery in the middle of nowhere? Did not one of the 14 therapists experience an unexpected treatment complication that required the skill and training of a real dentist – and quickly? Since the therapists work under “general supervision” of fully-licensed dentists in Alaska, rather than ”direct supervision,” how far away by plane will the DDS be when unanticipated problems predictably arise? Mysteriously, issues involving tedious parts of the Hippocratic Oath were not covered in the CNBC article.

Are those reaping the profits from this experiment in iatrogenics properly informing Alaskan parents who live in unnamed communities that the dental care their children receive is inferior to that provided by a fully trained dentist? Or perhaps RTI researches have proven that the additional, traditional education makes no actual difference in dental care.

Since there is no bad news to report, politicians could conclude from the CNBC article that the level of care provided by dental therapists with 2 years training is equivalent, or even superior to dentists’ who have four years of post-graduate training. It looks to me like Alaska is proudly racing New Zealand’s to the bottom to save money on dental care in the short term while incidentally boosting corporate profits the American way. So why not push the envelope of humane treatment, and include a capitation plan run by and for Dental Health Maintenance Organizations?

As I write this, the Texas HHS is proposing capitation to state lawmakers as a way to save money on Medicaid dentistry for children in Texas who have no choice or voice. Rather than paying per filling, DHMO corporations reward neglect on a per-head basis. I suppose worse things could happen for dental therapists’ patients.

 Since CNBC’s obviously biased article has no byline, it’s a sure bet it was not written by a CNBC reporter. So who purchased this press release? Follow the tuition.

 D. Kellus Pruitt DDS

Why deal with the hassles and uncertainty of the yearly HHS mini-med waiver process for annual limits and loss ratio? It is likely that the exceptions provided under the waiver process will change next year. Ternian can offer you and your clients stability in this marketplace. Our fixed indemnity limited-benefit medical plans are not subject to the health insurance reform provisions of PPACA.

On-Site Health Centers: Value, Evidence, Toolkit, Wish We Had Known, More

MyHealthGuide Source: National Business Group on Health, 12/2010, NBGH Resource Page and Complete Toolkit available for download

To assist employers considering establishing an On-Site Health Center or those that would like to improve or expand their offerings, this toolkit offers general guidance for determining the key strategic and operational answers that need to be addressed in order for your center to be a success.

Employers are continually searching for ways to improve the health of their employees, control health care costs while still providing quality health care and provide benefits that their employees will truly value.

One potential solution is the development and use of on-site health centers (OHCs). OHCs are not a new concept; they have been used to address occupational health needs for decades. However, in recent years innovative employers have looked to redesign OHCs, transforming them from occupational health clinics to health centers that treat both the acute and chronic medical needs of their employees.

To assist employers that are considering establishing an OHC or those that already have such centers but would like to improve or expand their offerings, the National Business Group on Health has developed this toolkit, The Value of On-Site Health Centers. Because opening an OHC is a major undertaking, with design and implementation unique to each company, the toolkit offers general guidance for determining the key strategic and operational answers that need to be addressed in order for your center to be a success.

Complete Toolkit available for download.

Toolkit Components 

•  Making the Business Case: What is the Evidence on Cost Savings? Provides a summary of the evidence of the value of these centers and cost savings associated with them.
• Strategic Decision Guide: Questions to Consider before Opening an On-Site Health Center: Outlines the key decisions that an employer needs to make in order to guide the development of an OHC.
• Operational Decision Guide: Reviews the important decisions that need to be made when opening a health center, such as the amount of space needed, hours of operation and cost-sharing arrangements.
• Evaluation Measures: Discusses the right metrics to use to track and quantify the cost and benefits of OHCs.
• Vendor Assessment Tool: Provides a summary of important questions you may want to ask OHC providers to help you determine if they are the right partner (or partners) for you.
• Using Communications to Drive Utilization: Presents tactics and timelines you should consider when developing your communications strategy.
• Wish We Had Known: Key Lessons From Employers: Employers that have “been there” provide insight into what they wish they knew before they started down the path of opening an OHC.

About the National Business Group on Health

The National Business Group on Health is the nation’s only non-profit organization devoted exclusively to representing large employers’ perspective on national health policy issues and providing practical solutions to its members’ most important health care problems. The Business Group helps drive today’s health agenda while promoting ideas for controlling health care costs, improving patient safety and quality of care and sharing best practices in health benefits management with senior benefits, HR professionals, and medical directors from leading corporations. Business Group members, which include 64 Fortune 100 companies, provide health coverage for more than 50 million U.S. workers, retirees and their families. Visit www.businessgrouphealth.org.

Controlling costs will require health plans to build small, tight, highly-managed networks of excellent providers. The current PPO (better known as APO’s – All Provider Organization) system simply does’nt work.

Employers could offer two plans: One that provides inexpensive comprehensive cover and makes economic sense and one that provides expensive comprehensive cover that makes no economic sense.

The benefits under both plans would be identical.

The “entitlement crowd” can buy up (in other words, pay for) the outrageously expensive comprehensive cover that makes absolutely no economic sense while the remaining participants enroll in the employer paid inexpensive comprehensive cover that makes economic sense.

This is how to control group medical costs.

December 24th, 2010

The cost of health insurance for the average working American more than doubled over the last decade, leaving many Americans feeling like they’re at the mercy of insurance companies, with no control over when the next exorbitant rate hike was coming.

That’s not okay. And now it’s starting to change.

Just yesterday, we announced a proposed new policy to help hold insurance companies accountable. These new proposed rules would allow the Department of Health and Human Services, in coordination with states, to require many insurers to publicly disclose and justify unreasonable rate increases.

For too long, it’s been all too common to open your mailbox this time of year and find a letter from your insurance company saying your premiums are going up 20, 30, or 40 percent – often with little or no explanation. 

Whether it’s insurance for yourself, your family, or your small business, this is the kind of news that not only spoils your holidays, but can also endanger your health care coverage – and your health.

These new rules bring unprecedented transparency and oversight to insurance premiums to help states reign in excessive and unreasonable rate increases that have made insurance unaffordable for so many families.

Rather than explain all the details in an email, here is a video where I explain the new proposed rules and why they are important for your health:

Click Here to Watch My White House White Board Video

We believe that shining a light on insurance premiums will convince more insurers to think twice before submitting large rate hikes, the impact of which will be felt by millions of Americans.

This is our latest step to put health care where it belongs – in the hands of consumers instead of insurance companies. 

Please help to spread the word and share this video with your friends and family this holiday season. And for more on our efforts to hold insurers accountable, read this blog.

Happy Holidays,

Kathleen Sebelius
Secretary of Health and Human Services

Editor’s Note: Below are a few uncensored comments received from readers of this blog:

Peter Suderman | December 21, 2010

21 Dec 2010

Today the Obama Administration said it would require health insurers to disclose and justify any increases of 10 percent or more in the premiums they charge next year.

The administration, said in proposing regulations to enforce the requirement, that state or federal officials will review the increases to determine if they are unreasonable.

Kathleen Sebelius, the secretary of Health and Human Services, said the review of premiums would “help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families.”

The new health care law, signed in March by President Obama, calls for the annual review of “unreasonable increases in premiums for health insurance coverage.” The law did not define unreasonable.

Under the proposed rules, insurers seeking rate increases of 10 percent or more in the individual or small group market next year must publicly disclose the proposed increases and the justification for them.

“Such increases are not presumed unreasonable, but will be analyzed to determine whether they are unreasonable,” the administration said.

Starting in 2012, the federal government will set a separate threshold for each state, reflecting its cost trends, and insurers will have to disclose rate increases above that level.

Under the proposed regulation, the federal government will evaluate each state’s procedures for analyzing insurance rates.

If the federal government finds that a state has an “effective rate review system,” the state would conduct the annual reviews of premium increases.

But, the administration said, “if a state lacks the resources or authority to do thorough actuarial reviews, the Department of Health and Human Services would conduct them.”

The federal government will post information about the outcome of all rate reviews on the department’s Web site, and insurers must post the information prominently on their Web sites.

Under the new law, insurers that show “a pattern or practice of excessive or unjustified premium increases” can be excluded from the centralized insurance market, or exchange, that is to be set up in each state by 2014.

In February, just one month before Congress completed work on the health care bill, President Obama proposed giving federal officials the power to block excessive rate increases by health insurance companies. Congress did not accept the proposal, choosing instead to leave rate review primarily in the hands of state officials.

An official at the Department of Health and Human Services said Tuesday: “The statute does not give us authority to disapprove rates. We do not have that authority. The regulation leaves state laws intact. It does not interfere with state law. In some states, rates cannot be put into effect unless the state affirmatively approves the rate increase.” In other states, insurers must file rates with a state agency before using them, but the state does not approve or disapprove rates.

The federal government has awarded $46 million to states to enhance their review of premium increases — the first installment of $250 million that will be distributed for that purpose from 2010 to 2014.

Under the new regulation, a federal health official said, “we are not setting an absolute numerical standard for whether a rate is unreasonable.”

Instead, the proposed rule lays out factors to be considered. It says that a rate increase will be considered unreasonable if it is excessive, unjustified or “unfairly discriminatory.”

A rate increase is defined as excessive if it “causes the premium charged for the health insurance coverage to be unreasonably high in relation to the benefits provided.”

In addition, under the rules, the assumptions used in calculating a rate increase must be based on “substantial evidence.”

Ms. Sebelius said that since 1999, the cost of health insurance for the average working American had risen 128 percent

  Capitation dentistry, midlevel providers and sinfully huge tax savings

 On December 7, I posted an opinion piece on The American Way of Dentistry titled “Is the nation really ready for two-tiered dentistry?” (On the 8^th, it was picked up by the Medical Executive-Post as “Dental Therapists [Emerging New Providers?].”)

http://medicalexecutivepost.com/2010/12/08/dental-therapists-emerging-new-providers/

 Yesterday, a reader named Tom opened the door for me to further expound on my opinion of midlevel providers and a future of multi-tiered dentistry. I’ll be sharing this conversation with my state and national lawmakers as well. Do you think I’ll get any responses?

 Tom says: “It already exists. There are insurance based practices and fee for service practices and if you don’t think there’s a difference in quality…..”

 I agree with you, Tom. But I should warn that as dentists, you and I are now skirting the fringes of unwritten rules of “professionalism” should we openly mention that managed care dentistry is dentistry by the lowest bidders with no quality control.

 It’s also politically incorrect to reveal that one can go to the dentist rating site, DR.Oogle (doctoroogle.com), and quickly research preferred providers’ popularity with patients compared to other practices. Invariably, the managed care practices average in the lower half of the ratings by the only critics who matter.

 Indeed, dental patients across the nation confirm that there have been two tiers of dentistry for decades: First is fee-for-service controlled by freedom of choice and marketplace competition, and then there is a second, preferred-provider tier controlled by discount dentistry brokers like Delta Dental, United Concordia and BCBSTX according to cost. Now a third tier is in the race for the bottom – capitation dentistry, and it’s coming to a state near you.

 Decades ago, the concept of paying dentists on a per-head basis rather than per-filling was soundly rejected by Americans for good reason: It proved to be unethical to encourage even a professional to profit from neglecting patients’ health. It’s much, much better to make someone work for their pay. Nevertheless, capitation is returning to the dentistry marketplace. In Europe, the UK ’s National Health Service (NHS) which provides free dentistry as an entitlement will soon begin a pilot program to carefully investigate the promise that capitation will indeed solve the nation’s access problem before making the benefit plan law.

 On the other hand, the Texas Dept. of Health and Human Services has guts. Naïve leaders in the state organization intend to persuade lawmakers to turn Medicaid dentistry into capitation immediately without bothering to even ask dentists about it. How is that not bureaucratic bonehead?

 The 1980s sales pitch went something like this: “We pay dentists for quality outcomes instead of unnecessary crowns, and pass on the savings to you!”

 The difference of 25 years? This time, capitation decay will be ignored, then delayed and finally treated by non-dentists instead of dentists. The pitch: “It will cost taxpayers even less to provide dental care to the poor (including avoidable, painful complications – which are contractually up to the dentist to resolve). And who will be the unfortunate dental patients? Children in Texas from poor homes who have no choice where to go for dental care and whose complaints matter little if at all.

 There is no latent fairness in “tiered” dentistry. Only different levels of pain.

 D. Kellus Pruitt DDS

Health insurance companies and their role in employee benefits and health insurance in general in a couple of years will definitely be VERY different.  PPACA has poison pills for insurers sprinkled throughout the law, designed to punish and/or squeeze them out of any profitable role.

Let me give just four examples:  >MLR squeezes their operations top to bottom and distribution network (commissions).  >Also,  I suspect that insurers will find participation in state exchanges will be money-losing.  >It looks like insurers are going to increasingly be squeezed into one-size-fits-all policy design, with little room for innovation.  >The power of bureaucrats to dictate what they feel is “unreasonable” premium for an insurer to charge is like a fatal cancer, since government officials are notorious for having no idea of the actual claims cost impact of things governments cavalierly mandate.  Any one of these would be enough to drive most companies out of the business.  If insurers become money-losers, then stockholders & management will rebel….and, ironically, the same state officials imposing many of the losing requirements will tell insurance companies that they are not adequately funded to remain in business.

So, it is hard to envision how or why insurers would want to stay in the US health insurance market.  They have an overseas option.  As I have mentioned before, because many entities check with SPBA as a resource on trends in the health & benefits arena, I had learned about two years ago that insurers were exploring other markets in case the US market was closed to them (such as a government single-payer plan).  They identified what look to be profitable markets in parts of Asia & Europe…and with the bonus of usually no government micromanagement.  So, you notice the trickle of announcements of insurers opening or expanding their overseas markets.  So, that will provide new income to replace withdrawing from the US market. Editor: Cigna in China, Humana in GB, etc.

HOW MIGHT INSURERS REMAIN IN THE MARKET?  Some may become the financial part of an ACO.  Some may find niches that work in state exchanges or other programs, especially if states are successful in getting waivers for MLR & state exchanges (but waiver simply means states will impose their own rules). 

Many insurers already have as much as 2/3 of their business in self-funding as ASO under their own name or via investment in independent-name TPAs.  Since anything with the name (or even erroneously perceived by government as in any way) an “insurance company” will tend to face the harassments in PPACA, even if they are not performing “insurance” functions.  So, I think the corporate decision will be to centralize all their self-funding into the independent-named TPA .  So, I think that the biggest chunk of continuing  insurance company corporate income will be via the independently-named (and…important…independent-acting) TPA.

Editor’s Note: This is an excerpt from Fred Hunt’s email blast of Dec. 20, 2010

November 16th, 2010 by David E. Williams of the Health business blog

Alternative Pharmacy Network Whitepaper December 16, 2010

Health care reform requires employers to calculate and report the aggregate cost of applicable employer-sponsored health insurance coverage on employees’ Form W-2s. Although the new rule applies for employees’ tax years beginning after Dec. 31, 2010, payroll systems need to be updated for this change by January 2011. This deadline is imposed because employees are entitled to request their Form W-2s early if they terminate employment during the year.

[Update:  The IRS announced that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011. See Draft Form Issued for Reporting Health Care Costs on W-2s; Requirement Made Optional for 2011.]  I attached this article below.

Plans for which coverage costs must be reported under the new requirement include:

• Medical plans.

• Prescription drug plans.

• Executive physicals.

• On-site clinics if they provide more than de minimus care.

• Medicare supplemental policies.

• Employee assistance programs.

Coverage under dental and vision plans is included unless they are “stand-alone” plans. However, the cost of coverage under health flexible spending accounts, health savings accounts and specific disease or hospital/fixed indemnity plans is excluded from the reporting requirement.

How to Value Plans

The aggregate cost of coverage under the plans (including the employee and employer portions of cost) is determined under rules similar to COBRA—minus the 2 percent administrative charge permitted under COBRA. Government regulations regarding how to value plans for COBRA purposes were, as of this writing, expected shortly. Presumably, any regulations issued would apply to COBRA and to the new Form W-2 reporting requirements. One challenge for employers might be that some of the plans covered by the new reporting requirement, such as on-site medical clinics, are not plans that they have previously valued for COBRA purposes. Now, employers will need to come up with reportable values for coverage provided under these programs.

Monthly Coverage

The new reporting requirement appears to require a monthly calculation of coverage. However, some employees might have less than a month’s coverage if their coverage starts or stops during the month. Future regulations might clarify how to report coverage of less than a full month.

Reporting is required for employees but also seems to apply to former employees who are provided with health coverage, including early retirees, retirees, terminated employees on COBRA and surviving spouses. Many of these individuals would not typically receive a Form W-2 from the employer, at least not for taxable years following their termination of employment. Accordingly, if this interpretation is correct, an employer’s overall W-2 reporting requirements may increase dramatically. Employers should begin working with their payroll departments immediately to ensure compliance with these new requirements.

Maureen M. Maly is a partner with Faegre & Benson in the law firm’s Minneapolis office. Her practice focuses on employee benefits with a particular expertise in welfare benefits issues.

11:36 PM CST on Friday, December 17, 2010

By JASON ROBERSON / The Dallas Morning News
jroberson@dallasnews.com

Just two weeks before more than 1.3 million North Texans would have been forced to scramble for new doctors, the region’s largest insurer and largest hospital system agreed late Friday on new contracts.

The multiyear agreement will allow Texas Health Resources’ 24 hospitals, 18 outpatient facilities and physicians to remain in the network of Blue Cross Blue Shield of Texas.

For several weeks the Arlington-based hospital system and Richardson-based insurer took public stabs at each other as they neared a Dec. 31 deadline to sign a new contract covering reimbursement rates.  (See http://blog.riskmanagers.us/?p=4550) After that date, Texas Health could have been considered out-of-network for Blue Cross members.

“We’ve worked hard over the past several months, and it has resulted in the right agreement for our patients,” said Douglas Hawthorne, chief executive of Texas Health.

“The new agreement focuses both parties on improving the long-term affordability of health-care services,” said Blue Cross president Darren Rodgers.

In recent interviews, the two have disagreed on who bears more blame for expensive health care. However, both have said it’s time to base health-care payments on the value of care, not the volume of care.

Dispute details

The companies gave no clues about what’s in the new contract. Blue Cross had said Texas Health was demanding an additional $120 million over three years to cover cost increases. Texas Health had complained that Blue Cross wanted to give it a lump sum payment rather than reimburse for health services after care was delivered.

In many ways, the contract dispute is a study in health care’s corporate power shift. Twenty years ago, it may have been unlikely for a hospital to go toe to toe with the likes of Blue Cross. Hospitals were more fragmented, negotiating on a solo basis.

In the 1990s, hospitals began consolidating. Texas Health was formed in 1997 by combining the Fort Worth-based Harris Methodist Health System with Dallas-based Presbyterian Healthcare Resources.

The dispute also underscores the widespread frustration over rising health care expenses. Insurers are under pressure from employers to contain costs. Hospitals are under pressure to deliver quality care for an increasing number of uninsured patients, which drives up costs.

In Dallas, total health benefits cost an average $9,174 per employee this year. Local employers are expecting a 5.4 percent increase in health care costs, according to a survey from Mercer, a consulting, outsourcing and investment firm.

Editor’s Note: A reader of this blog sent the following note:

     As we all knew Blue capitulated to the almighty Texas Health Resources before 1/1.  It even says 20 years ago “it may have been unlikely for a hospital to go toe to toe with the likes of Blue Cross.  Hospitals were more fragmented, negotiating on a solo basis”.  “In the 1990s, hospitals began consolidating. Texas Health was formed in 1997 by combining the Fort Worth-based Harris Methodist Health System with Dallas-based Presbyterian Healthcare Resources”.   The article basically says even the almighty Blue cannot negotiate with these powerful hospital systems and this is why costs are rising at an exponential rate. 

When is the American public going to “wake up and smell the coffee” about the abuse we are taking by paying such high costs to these monopolies.   I predict the government will have to step in if we don’t try using the free-market system of competition under cost plus and direct contracting.    The article says both parties will not reveal what is in the contract.  Imagine the secret negotiations.  Employers are tired of this backroom dealing along with rising costs.  We know Blue as a carrier will be passing on this huge increase to employers and will somehow still make more money themselves.  Thus both parties won and the losers are employers/employees.   We heard that THR was also demanding a “no audit” clause to be signed but graciously gave a bigger “discount” for this term.   THR has been demanding this in the last year with all PPO’s.  The power has shifted in the last 10 years to the hospitals and we definitely need change.

A Brownsville hospital is reported to have soaked an insured patient thousands of dollars for an emergency room visit recently. A brief visit to the emergency room produced billed charges in excess of $4,000. Thankfully the insured had the “Caring Card”, BCBS of Texas insurance. Billed chargesof more than $4,000 were discounted down to about $2,300.

Maybe the problem is regional – http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

A brief 45 minute emergency room visit at a local Brownsville hospital for only $2,300. Sounds reasonable?

Molly Mulebriar and her team will submit their full detailed and documented report in a few days.

Could this be an example of egregious hospital cost gouging? Do PPO’s really negotiate good deals for us or do they owe a duty of loyalty with the providers they sign up? And, if what BCBS salesmen tell us, that they have the best pricing of any competitior in the market, how much would this emergency room bill had been under HealthSmart, Texas True Choice, Aetna, PHCS, United HealthCare, or any number of other PPO networks?

Could this be the reason the Brownsville Independent School District’s group health plan is costing the taxpayers over $40,000,000 per year? Does the BISD administration really know what kind of pricing Texas True Choice has negotiated with area providers upon the taxpayers behalf? Did the Brownsville medical community cut their costs to BISD through the Texas True Choice network as compared to the costs negotiated by HealthSmart the year before? (See http://blog.riskmanagers.us/?p=4143).

Editor’s Note: PPO’s negotiate provider pricing behind the curtain and will refuse to disclose the terms of their contracts with consumers. Medical providers will not disclose the contents of the contracts either. So no one other than the PPO networks and the providers know the true cost of health care – yet they expect consumers to pay without question. Almost all PPO contracts prohibit the consumer from auditing their medical bills. PPO contracts are Contracts of Adhesion. Brownsville ISD is spending over $40,000,000 per year on medical bills for their employees. This could be cut in half without reducing benefits. It has been done before and can be done in Brownsville. What is stopping the BISD from taking control over their raging healthc are costs?

The Cost Plus health care revolution in Texas continues to grow. Employers, searching for cost effective plans under the protections afforded through ERISA,  are experiencing plan savings of 40% and more without reducing benefits.

Five (5) Texas hospitals have elected the Cost Plus approach for their own group medical plans – a profound and unintended endorsement of the scheme. And, several large physician groups have initiated Cost Plus Plans for their employees as well.

Carrier representatives are worried. “Cost Plus will fail” is their message to their brokers. “Hospitals will shut Cost Plus Plans down!” they insist. Or, “We cant compete against it” some sob in abject mental anguish. Yet we find that more employee benefit brokers are embracing the concept, either as a defensive mechanism or as “true believers.”

We predict continued growth of the Cost Plus approach, along with significant changes to be endorsed by willing providers.

Cost Plus plans are managed by Group & Pension Administrators Inc. (www.gpatpa.com) in partnership with ELAP (www.elapinc.com).

Editor’s Note: Cost Plus is all about transparency. Will other TPA’s follow suit? Will other audit firms join the fray?

Just listed on the New York Stock Exchange. Experts recommend as a Buy. Large gains expected.

The company – one that looks set to reward you with a rapid 5,589% gain – is called First China Pharmaceutical Group (FCPG)… 

First China Pharma distributes and sells prescription drugs in the world’s most populated country… China… home to 1.3 billion people.

More specifically, First China Pharma is the leading regional pharmaceutical distributor providing approximately 5,000 products to more than 4,700 pharmacies, hospitals and clinics in China’s Yunnan Province.

RediClinic LLC is expanding the company’s partnership with H.E. Butt Grocery Co. (H-E-B) with plans to open three in-store clinics in San Antonio by the end of January.

Houston-based RediClinic already operates 21 clinics in Houston and Austin. In all, the company is planning to open 20 more clinics at H-E-B stores statewide.

The three local clinics will be operated in partnership with Methodist Healthcare System of San Antonio.

RediClinics are staffed by nurse practitioners and physician assistants who work with local physicians to diagnose, treat and prescribe medications for common illnesses.

For more information, visit this link.

www.rediclinic.com

Read more: RediClinic opening at select San Antonio H-E-B stores | San Antonio Business Journal

Editor’s Note: We suppose referrals will be where the money is made – Will Methodist Hospital be the beneficiary?

 Subject: SPBA Email Alert: Health Reform: Today’s (December 13th)
Insights

SPBA Email Alert – December 13, 2010

Health Reform Insights
Personal candid insights from SPBA President Fred Hunt

Special Report: DISAPEARING  DOCTORS & HOSPITALS:
WHAT’S THE IMPACT ON EMPLOYERS & BENEFIT PLANS?

We are so busy focusing on the future of the payment side of health care,
that we forget to examine the necessary flip side…those who provide
medical care.  It’s scary, so let me devote most of this e-mail to that.

What if everyone has health coverage, but they can’t get a doctor in an
adequate or timely manner??  That’s the situation in many countries where
the government brags that it provides “coverage” to everyone.  (Lesson:
“Coverage” and “health care” are not synonyms.)  The signs are now clear
that PPACA has shifted us into high gear towards a mega doctor shortage (and
thus shortage of actual access to care).  Here’s the situation:

(1).  For years we have known that we would face a shortage of doctors as
the baby-boomer generation of doctors retired, and both old and young
doctors found it easier to be in non-clinical medical work, where new
profitable fields have opened, such as media expert-doctors, consultants,
authors, and entrepreneur & business activities that are not quite “medical”
and thus do not trigger the costs & hassles of being a practicing doctor..

(2).  An assortment of incentives have steered more doctors into specialty
practice…even though it has been known for decades that the greatest need
(and already a shortage) is in general practice family physicians.

(3).  Government continues to dodge handling nagging problems such as tort
reform and other things that add to the costs & hassles of being a
practicing doctor.

(4).  The effects of Congress’ 1997 health reform law create an SGR that
will impose draconian cuts (now approaching 25%) cuts on the payments (which
doctors already felt were too low) the government will make to doctors for
Medicare patients.  This comes at the same time as Medicare faces a glut of
new baby-boomers and PPACA will make almost half-a-Trillion dollar cut in
what government spends on Medicare.

(5).  Medicaid was already bleeding state & federal budgets, and often pays
doctors less than even Medicare.  PPACA will add about a 30% increase in
this money-losing category of medical practice.

(6).  All sorts of pressures point to cuts & pressure on doctor pricing in
the coming years for the other (not Medicare or Medicaid) patients, such as
pressures that will come from states to minimize the payments from their
state exchanges.  The whole medical community has relied on extensive
cost-shifting of losses from government programs made up by increases in
charges to private payers, who are getting tired of feeling ripped-off by
this practice.  So, cost-shifting opportunities will be severely shrunk.

(7).  There is a quadruple-whammy disconnect between the reality of the
structure of medical practices versus the  new government pressures.  The
majority of doctors today are in private practice, especially in small &
medium size practices.  However, everything seems to be trying to
marginalize that form of medical practice.  How?  >>Hospitals have pushed to
have more doctors as employees (and many young doctors prefer the
predictable hours & paycheck, and someone else taking care of the logistics
& insurance).  >>There has been a perception that bigger is better in
medicine so there is pressure for more groupings such as the Medical Home
and other combined concepts that make doctors feel like just a cog in a
machine.  >>Now, PPACA creates a strong push to have large Accountable Care
Organizations (ACOs, sort of a rebirth of the original HMO concept) as the
main provider of medical services.

NOTE:  Many of these same problems & pressures are also impacting the
changing future of hospitals, especially small & medium, and specialty
facilities.  So, that is why most of my forecasts later also apply to
hospitals & facilities.

The Physician Foundation has done a survey to gage the mood & plans of
doctors.  (Go to
www.PhysiciansFoundation.org<http://www.physicianfoundation.org/>).

>>60% of docs say that PPACA will lead them to close or significantly
restrict their practices to certain categories of patients (Read that to
mean only patients who generate profitable payments….not the ever-larger
Medicare & Medicaid population.)

>>Of the 60%, 93% said they would have to close or significantly cut back on
Medicaid patients, and 87% said they’d close or significantly restrict
Medicare patients.  This is presumably on top of the shortage of doctors who
will accept new Medicare & Medicaid patients today.

>>Besides natural retirements, 40% of doctors say they will drop out of
patient care in the next 1-3 years (note that their target time of year
three is 2014, when PPACA really kicks in).

>>59% say that PPACA will force them to spend less time with patients.
(Time with patient has always been an effective measure of “quality” of
care, so this is actually a decrease in quality.)

>>Over half of doctors said that PPACA will cause patient volumes to
increase, and 69% said they no longer have the time or resources to see
additional patients in their practices while still maintaining quality of
care.

>>In Washington DC (among politicians, AARP, and policy wonks…myself
include), it was assumed that SRG “doc fix” and impending fast-rising cuts
in payments for Medicare services was a desperate situation for doctors.  It
was, after all, the issue that got and kept the AMA as a “supporter” of
health reform.  However the Physicians Foundation survey reports that
doctors are about evenly divided about the impact importance of SRG (36%)
and health reform (34%) to their practices, and which will have the greatest
impact on their taxes.

FORECAST: My personal forecast is that doctors and all of us have been
feeling the pre-tremors, and by 2014 (assuming no dramatic change…meaning
more than just repealing PPACA), there will be a major earthquake of
doctors’ (and hospitals’) world, and much of what they and we patients have
known will no longer exist.  It will be a brave new world, and as I quoted
someone in my last e-mail, it will be a time when patients will need to
become accustomed to less-is-more when it comes to costly care & technology.
Mega is also presumed to be the mode of doctor & hospital combined medical
delivery.  Though the coordinated concept makes theoretical sense, I’m
betting that patients will equate mega with bureaucracy and lack of
continuity of personalized attention (which surveys have shown is how many
view many large doctor practices now).

Personal interaction may well shrink.  A person’s smart-phone will be their
doctor…to tell them the latest health news & reminders, have databases for
feedback & answers, and maybe even for transmitting check-up & diagnosis
data.

FUNNY DEJA VU:  This is a back-to-the-future scenario for me.  Because of
my involvement in health policy during the writing & passage of ERISA, in
1974, I was selected by a leading hospital to be a guinea pig for a (then)
cutting-edge full physical check-up without any humans.  Even the finger
prick for a blood sample was non-human.  Today’s technology would be able to
do much more, but the basic problem I had in 1974 will remain.  Many health
questions are not flat yes or no or multiple choice.  Machines don’t
understand nuances and can’t hear your tone or look into your eyes to
determine what you are truly trying to say about an ache or concern, or
notice that my hearing test headphones were too small, so let in outside
noise that drowned out the test noise, so I was rated as deaf in one ear.  I
did my best, the results were reviewed by top specialists at the hospital
(sounds like Medical Home or ACO concept), and the report arrived. The
report was far more detailed than normal physicals, but that precision and
the many bright red “abnormal” findings they triggered left me sure I would
soon be dead.  Fortunately, a neighbor had her med school books, and saw the
despondent panic in my eyes.  It turns out that many things cutting-edge
machines can measure (or misconstrue) vary wildly from testing to testing or
have no “normal”.  So, 36 years later (no thanks to the mechanical check-up)
I am alive and well.  So, medical care in a few years may be déjà vu for me.

IMPACT ON EMPLOYERS & BENEFIT PLANS:
The changes & shrinking in the medical provider arena will make employee
health benefits far more important than ever before.  They will not be
“fringe” benefits.  In the fast-approaching new world, an employee health
plan is a vital part of survival of the employer entities’ functions &
bottom-line.

Every employer knows that having a key computer or system out of service for
almost any time can be crippling.  That is why most employers have contracts
for very prompt diagnosis & repair of the problem to get the computer system
functioning again.  As all employers have trimmed staff levels in recent
years  and have thus less back-up, if a key person at any level is
out….especially out for a long undetermined time…it is just like having
the software system down for a long unknown amount of time.  In today’s
health system, a worker can get in to see a doctor and see whatever series
of specialists might be recommended  pretty quickly, and thus there is a
diagnosis…which gives both the employee and the employer some timeframe
for recovery, and recovery proceeds quickly  As the statistics & reasons
above show, this current situation of having enough doctors will be ending
in 1-3 years.

In countries where there are doctor and/or facility shortages (usually
because of government policy and/or the economics described above), that
initial appointment & diagnosis process can take months, and getting the
actual treatment can take more months.  (It took 18 months off the job for a
friend of mine in Canada.  That left the employer without the needed person
that long, and the worker’s reduced income during that period devastated
both family income and morale in the company.)

So, the new reality (especially since about 10 years from now, a labor
SHORTAGE is expected as most baby-boomers retire or die) is that employers
will be desperate to have a process (like their computer systems repair) to
get employees seen, diagnosed, and treated as soon as possible, and
self-funding will be the only way to custom-design the coverage for that
particular workforce.  It is pure survival economics.

So, smart employers (I’m including union-management multi-employer plans) of
all kinds will want to keep and maximize their employee health plan.
Wellness programs and even on-site of shared clinics will spread.

You may ask if employers can afford to maintain their employee health plan.
Besides the inestimable survival factors noted above, it will be very
expensive to not have an employee health plan.  There is a penalty fee if
you don’t sponsor a plan.  It’s not bad now, but will rise and rise.
However, the biggest cost factor is that you don’t just send employees off
to buy their own coverage.  You will be expected to make the big boost to
their paychecks to pay for not only the cost of the coverage elsewhere…but
they (and you) will also have the payroll taxes for that big boost in income
which will also raise their IRS & state/local income taxes and any other
items tied to pay level.  Employees are going to expect you to make them
whole for ALL their extra costs because you do not have a health plan.
Again, it is simply human psychology & economics.  I think it will cost more
than working with a TPA to design & administer a customized prompt employee
health plan.

So, let me end with one of the first thoughts.  In the system that is taking
shape (and can not be stopped), having health “coverage” or “insurance” is a
very different thing than getting health “care” & services.

Fred

RICHMOND, Va. – A federal judge declared a key provision of the Obama administration’s health care law unconstitutional Monday, siding with Virginia’s attorney general in a dispute that both sides agree will ultimately be decided by the U.S. Supreme Court.

U.S. District Judge Henry E. Hudson is the first federal judge to strike down the law, which has been upheld by two other federal judges in Virginia and Michigan. Several other lawsuits have been dismissed and others are pending, including one filed by 20 other states in Florida.

Hudson rejected the government’s argument that it has the power under the Constitution to require individuals to buy health insurance, a provision that was set to take effect in 2014.

“Of course, the same reasoning could apply to transportation, housing or nutritional decisions,” Hudson wrote. “This broad definition of the economic activity subject to congressional regulation lacks logical limitation” and is unsupported by previous legal cases around the Commerce Clause of the Constitution.

There was no immediate comment from the White House.

The lawsuit was filed by Virginia Republican Attorney General Kenneth Cuccinelli in defense of a new state law that prohibits the government from forcing state residents to buy health insurance. The key issue was his claim that the federal law’s requirement that citizens buy health insurance or pay a penalty is unconstitutional.

“This won’t be the final round, as this will ultimately be decided by the Supreme Court, but today is a critical milestone in the protection of the Constitution,” Cuccinelli said in a statement after the ruling.

Hudson, a Republican appointed by President George W. Bush, sounded sympathetic to the state’s case when he heard oral arguments in October, and the White House expected to lose this round.

Administration officials told reporters last week that a negative ruling would have virtually no impact on the law’s implementation, noting that its two major provisions — the coverage mandate and the creation of new insurance markets — don’t take effect until 2014.

The central issue in Virginia’s lawsuit was whether the federal government has the power under the constitution to impose the insurance requirement. The Justice Department said the mandate is a proper exercise of the government’s authority under the Commerce Clause.

Cuccinelli argued that while the government can regulate economic activity that substantially affects interstate commerce, the decision not to buy insurance amounts to economic inactivity that is beyond the government’s reach.

By JASON ROBERSON / The Dallas Morning News
jroberson@dallasnews.com

Hospitals are still making money, especially in North Texas.

The recession may have threatened to put the nation’s hospitals on life support, but they managed to post a 5 percent profit margin in 2009.

That ties their 25-year average profit margin, according to an analysis from Modern Healthcare magazine.

Last year, the nation’s hospitals earned $34.4 billion in profit on $691 billion in net revenue.

The report, based on data from the American Hospital Association, said hospitals’ efforts to control expenses more than made up for their sluggish patient revenue. Hospitals slowed the expense growth to 5 percent, compared with the 25-year average of 7 percent.

Few regions exemplify hospital financial health like North Texas. Some of the nation’s most profitable hospitals are based here.

Baylor Medical Center at Frisco has the highest operating margin among full-service hospitals in North Texas, with 29 percent, according to the American Hospital Directory.

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

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

However, high operating margins also are used when deciding where to place blame for health care cost increases.

Read more: Prime Health expanding to San Antonio | San Antonio Business Journal

(MILWAUKEE, WI) Published findings from a new report released today by the independent pharmacy benefit manager, Restat, found that employers could experience significant annual cost savings by adopting a “preferred” pharmacy benefit strategy. The report, “The Value of Alternative Pharmacy Networks and Pass-Through Pricing,” was researched and written by the internationally recognized consulting firm of Milliman, Inc. and outlines for the first time actuarial estimates of prescription drugs’ retail cost components.  The report can be found on http://align.restat.com/white-paper/.

“These findings show that significant savings could be available to employers willing to adopt a strategy that cuts the fat from the traditional pharmacy benefit model,” said David Kwasny, Restat president.  “This new approach also helps eliminate the confusion and misunderstanding some employers may have over a pharmacy benefit system that has become much more complicated in recent years.”

 Milliman’s comprehensive analysis broke apart the traditional pharmacy benefit model studying the key cost and distribution components among drug manufacturers, wholesalers, drug stores and pharmacy benefit managers (PBMs). The study, commissioned by Restat, sought to determine if there were potential cost-saving benefits to employers adopting a preferred pharmacy model that reduces drug costs and eliminates price spreads.

According to Kwasny, Milliman’s findings demonstrate the science behind Restat’s Align model – a strategic approach to pharmacy benefit design that tears a page out of the Preferred Provider Organization (PPO) model where network hospitals or physicians accept a reduced fee to be included as a favored healthcare provider.  Pharmacies in a preferred network offer lower drug prices and reduced dispensing fees to attract customers from competing drug stores and increase foot traffic from members enrolled in the employer’s pharmacy benefit plan.        

Milliman’s findings show that, depending on the benefit design, an employer’s overall costs could be reduced by up to 13 percent by utilizing a limited, preferred pharmacy benefit design and pass-through pricing model rather than a traditional model that includes most retail pharmacies.  For example, the study showed that by adopting a closed network, where coverage is only through network pharmacies, an employer with approximately 10,000 members could save up to $845,000 annually. Additional savings could also be earned with plan changes that encourage member use of generic drugs over branded drugs.

While the Milliman report did not specifically study Restat or Align, Kwasny said “Milliman’s findings reinforce our own client experience,” said Kwasny.

“By creating plans that use preferred pharmacy networks and favor generic drugs, Restat has found that a company with 5,000-6,500 employees can save up to $2 million annually,” Kwasny added.

In addition to lower drug pricing, Kwasny said reduced program costs are achieved with transparent PBM pricing. The PBM charges an explicit administrative fee for drug administration services.  It collects no revenue from rebates or “spread” – the difference between the price the pharmacy collects from the PBM and the price the PBM charges employers, which is a common feature of traditional PBM contracts.

The study was authored by a team of actuaries led by Bruce Pyenson, FSA, MAAA, from Milliman’s New York office.  The report analyzed each component of pharmaceutical drug spending – starting from the manufacturer all the way to the employer and use by consumers.  Milliman’s findings help explain why some pharmacies and PBMs could offer lower prices on prescription drugs and how an employer could obtain significantly lower costs by using preferred pharmacies with pricing that goes directly to the network member. 

 According to Kwasny, the preferred pharmacy benefit network model is “clearly a better approach to managing prescription benefits, and one that offers greater transparency in services offered by PBMs by delivering savings directly from the pharmacy to the employer.” 

“Our goal is to simplify the purchase and use of healthcare by providing unbiased benefits advice free of any conflict of interest,” Kwasny said. 

ABOUT RESTAT:  A member of the Dohmen family of companies, Restat simplifies the purchase and use of healthcare services through independent health benefits management. As the largest independent PBM, Restat has no ownership ties to drug manufacturers or distribution channels, making it uniquely positioned to provide customers with unbiased benefit management solutions. Today, more than 4,200 companies, ranging in size from the Fortune 50 to small managed care organizations rely on Restat to manage the prescription benefit for more than12.2 million people nationwide. To learn more, visit www.restat.com or call 800.926.5858.

 ABOUT MILLIMAN: Milliman is among the world’s largest independent actuarial and consulting firms. Founded in 1947 as Milliman & Robertson, the company currently has 54 offices in key locations worldwide. Milliman employs over 2,400 people. The firm has consulting practices in healthcare, employee benefits, property & casualty insurance, life insurance and financial services. Milliman serves the full spectrum of business, financial, government, union, education and nonprofit originations. For further information, visit www.milliman.com.

Editor’s Note:  Here you go. Makes sense. HEB and others are pushing this concept; “make us your only Rx source and we will give you a heck of a deal.” This is exactly the same thing we are doing with cost-plus – steering patients to the most cost effective providers. Rx pricing differentials between pharmacies can be significant. And with Rx costs going through the roof this year (why?) some groups are paying as much as 25% of their total spend on drugs. Time to do something about it.

You have been invited to bid on the following opportunity by the buyer.
In order to respond to this bid opportunity, you will first need to register with SISD eBid System.
Once your registration has been approved, you will be able to login and respond to the bid opportunity.

To begin the registration process, please click the following link or paste the link into your web browser:

    https://ebid.sisd.net/VendorRegistration.aspx?vcid=27&iid=43B42A5E-16D9-4ABB-A84C-0656A49C731E

Bid Opportunity Information:
    Bid Number: 199-1217-E1149
    Bid Title: Employee Benefit Consulting Services
    Bid Notes: To provide Socorro Independent School DIstrict with Employee Benefit Consulting Services on an as needed basis.
    Issue Date: 12/6/2010 11:42:34 AM Mountain
    Close Date: 12/17/2010 9:00:00 AM Mountain

If you do not wish to respond to this bid, you may choose not to register.

If you have questions about this bid opportunity or the system, please contact Purchasing.
    Phone: (915) 937-0164
    Fax: (915) 851-7577
    E-mail: ebid@sisd.net

 Molly Mulebriar reports she has obtained a copy of a BCBS hospital contract. She wants $1 million for it, and will accept cash only. She is willing to consider other offers, and suggests that a consortium of interested actuaries pool their resources to make an offer to purchase.

As a sign of good faith, Mulebriar has brokered an agreement with the Pope to act as facilitator of the sales transaction. The BCBS Hospital Contract, herein referred to as The Holy Graile, is under guard at the Vatican. Independent experts have verified authenticity.

In lieu of selling The Holy Graile, Mulebriar has challenged us to publish the document on this blog. However, she insists, to be fair, we publish Aetna, Humana, Texas True Choice,  and HealthSmart PPO contracts as well.

We are meeting with Mulebriar next week in Moose Breath Montana to discuss terms.

Trend is a fancy word for medical inflation. We all know that health care costs go up every year. We expect our health insurance rates to increase to cover the higher health care costs. Makes sense.

But, who calculates trend? Carriers do, and make sure you know it. Trend, they pontificate, is the evil ingrediant in ever rising health care costs. More than advanced technology, aging population, new government mandates, trend is why your health care costs go up every year they reason.

Recently we looked at a Humana and a Cigna renewal on two different groups. Both used a trend factor of about 14%. What that means is that both carriers project that health care costs are going to go up next year by 14% and they offered renewal rates accordingly.

Other carriers are using just about the same number.

But, a recent report released in November by New York based Mercer L.L.C. shows that trend is 6.9%, up from 5.5% last year (Business Insurance, November 22, 2010).

If Mercer is right, then how do carriers come up with a figure double that?

Or do the carriers know something we dont know? Do their PPO contracts contain escalator clauses which guarantees their providers a pay raise year after year? Do PPO escalator clauses drive up health care costs?

Editor’s Note: We know that a few actuaries visit our site on occassion. We welcome their response to this post. Leave your comment/s at Riskmanager@sbcglobal.net

The blog posting below this one confirms what Jeff Seiler has been saying for years. Confirmation by a major hospital system adds to Seiler’s reputation as one of the leading health care consultants in the United States. 

A visit to his website, www.ssbenefits.net is a must for anyone interested in learning The Truth that no one else (except us) wants you to know.

Read his masterpiece article, “The Truth (As We See It) About Blue Cross PPO Discounts” here: http://www.ssbenefits.net/THE%20TRUTH%20ABOUT%20THE%20BLUES.htm

NEW as of 3/2010- this is the Blues new disclosure, which basically proves everything in “The Truth (as we see it) about the Blues PPO Discounts” article above.  Blue Cross 5500 Disclosure Proves The Truth   We’ll bet your Blues broker never read it or told you. We’ve highlighted a few areas for you to review.

 Texas Health Resources BCBS 

Editor’s Note: Molly Mulebriar reports more information availble soon.