Archive for January, 2011

Rodger Vinson Declares ObamaCare Unconstitutional

Monday, January 31st, 2011

        Rodger Vinson, a Florida Federal Judge ruled today that ObamaCare is unconstitutional:

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.”

Editor’s Note: Does this mean we can now ignore ObamaCare mandates?

Is The BISD Health Plan Saving Money? Or Spending Less?

Sunday, January 30th, 2011
January 28, 2011 11:40 PM
By GARY LONG, The Brownsville Herald

The Brownsville Independent School District’s self-funded employee health plan cost the district less during 2009-2010 than it did during each of the previous two school years, BISD’s school board insurance committee learned Friday.

A summary provided to committee members by administration showed that net costs for the plan in 2009-2010 totaled $37.05 million compared to $43.45 million in 2008-2009 and $37.67 million in 2007-2008.

Per-employee, per-year costs also went down. In 2009-2010 the PEPY figure was $4,893 compared to $5,817 in 2008-2009 and $5,141 in 2007-2008. 

The latest survey shows that
three out of four people make
up 75% of the population

“That is almost unheard of in the healthcare industry,” Eric Wright of Mutual Assurance Administrators Inc. said after the meeting. Wright was at the meeting to present information and answer questions about the first quarter of MAA’s second plan year, which started Oct. 1, 2010.

MAA took over as third-party administrator for BISD’s health plan in October 2009. The previous TPA was HealthSmart Benefit Solutions Inc., which administered the plan the previous two years. Before that the TPA was Mutual of Omaha.

In self-funded health plans, the TPA administers the plan on the employer’s behalf, providing a network of medical providers, claims management and other services.

BISD is in the process of suing HealthSmart for $14.5 million in allegedly higher medical claims and improper charges during the two years HealthSmart administered the plan. The lawsuit, filed in August, was the result of an independent audit.

On Friday, Wright told insurance committee members that between Oct. 1 and Dec. 31, 2010, 91 percent of all plan expenses went directly to the benefit of BISD employees and their dependents.

In an executive summary provided to the committee, MAA said the plan had a per-employee, per-month cost of $448.53, which calculates to $5,382 per employee per year. The report said Mercer’s National Study of Employers for 2010 showed a national average PEPY cost of $9,562, meaning BISD’s costs so far in 2010-2011 are 56 percent of the national average.

The calculations exclude the cost of biometric screenings for BISD employees, which are part of MAA’s wellness and disease management efforts.

Kathy Corder, the chief marketing officer for Personalized Prevention, MAA’s wellness and disease management provider, said the biometric screenings are showing encouraging results.

The screenings, which are conducted where people work, are free to employees. Laboratory work is paid for by the plan. Corder said there were 4,988 such screenings in spring 2010 and 4,896 in fall 2010.

Of those, 713 screening participants were referred to care management, Corder said, and 70 were found to be diabetics whose blood sugar was out of control. Those 70 are now controlling their diabetes, resulting in savings of as much as $2 million over the life of the employee.

Editor’s Note: “How do we know we are doing much better this year than last year?” asked Don Pedro. “What was this year is last year plus or minus this year’s change,” replied the expert. “If change is the only constant why do we need to measure it? You dont know if something is better if you didnt know how to measure what it was before” countered Don Pedro. And out he went.

(Don Pedro is a well known local sage in Brownsville, Texas whose advice has guided several generations of loyal readers of the Brownsville Herald).

           If the BISD pepy (per employee per year) health care costs is $4,893, how does that compare to other local Valley school districts such as Rio Hondo, La Feria, San Benito, Mercedes, Weslaco, McAllen, PSJA, Sharyland, Point Isabel, Los Fresnos, and La Joya Isd?  Some of these districts have Blue Cross, others have HealthSmart and Texas True Choice.  A comparative analysis would be interesting.

Let’s Screw Our Mutual Clients & Be Their Best Friends Too

Saturday, January 29th, 2011

Hospitals and Preferred Provider Organizations (PPO) are team players. They are business partners who have forged lucrative business agreements with each other at the expense of the unsuspecting, ill-educated and clueless consumer.

The scam is so well refined that the poor unsuspecting consumer is led to believe they are the recipients of a really good deal when in fact they are getting screwed big time.  Yet, consumers continue to count PPO’s as the good guys. After all, arn’t PPO’s  looking out for them by negotiating great discounts (as opposed to great savings) from their business partners, the hospitals?

Molly Mulebriar, forensic private investigator, has given us a bonafide fictional tape recording of a recent meeting between a PPO representative and a hospital administrator.  We have permission to release the transcript, redacted, which illustrates the PPO/Hospital scheme to screw consumers:

Hospital Administrator – Good to see you again Jack.  I really, really enjoyed that golf game last week – it felt swell beating you again – bought my wife a new  car thanks to you. Ha Ha Ha, Anyway, as you indicated in your email asking for this meeting, you want to maximize our cash flow by maximizing yours. What is your proposal?

PPO Representative – It’s easy. First, the largest school district in the area just hired a so called insurance consultant. Ive met with her, and she doesnt know s–t from shinola. Now is a good time to screw the district again, maximizing both your revenue streams and mine, while making ourselves look like local heros. Plus, we will make the new insurance consultant a hero too, for a continued relationship that will maximize her revenue as well. It is a win win situation for all of us.

Hospital Administrator – Great! What is the plan?

PPO Representative – Ok, here is the deal. You raise your senseless Charge Master, which is already inflated, arbitrary and has no relationship to costs, by 18%.  Then, I will go to the insurance consultant and tell her that because of her great talent in negotiating with us, we will increase our PPO discount from 35% to 45%.

Hospital Administrator – By God, she will be able to tell the district the new PPO contract will save them millions of dollars in discounts as opposed to savings! This is brilliant. But exactly how would this work?

PPO Representative – Ok, you raise your Bull Shit Charge Master by +18%. Don’t worry, no one will know since you will not release the Charge Master to the public. Then you sign an updated agreement with me to increase our PPO discounts from 35% to 45%. Of course you will continue to pay our PPO a 4% “re-pricing fee” of the discount. The net to the hospital is an overall revenue increase of 12% while we get a 29% increase in our re-pricing fee. We both win by not losing.

Hospital Administrator – Wait a minute, Im getting a 12% increase in an already inflated arbitrary Bull Shit number, while you are getting revenue maximization of 29%! I want part of that 29%!

PPO Representative – I am sure we can work that out. How about if I increase your revenue stream by directing more elective surgical admissions to your hospital? Would that help you out? What I will do is identify which local physicians routinely admit patients to the other hospital in town, and renegotiate our contracts with them. I will tell them that the more admits to your hospital, the more we will compensate them. It’s illegal but hey, it’s done every day.

Hospital Administrator – Ok, here is a list of local physicians I want you to contact. Raise their rates from 175% RBRVS to 225% RBRVS. I will let it be known, unofficially, that it was I who helped them out. They will certainly return the favor I am sure.

PPO Representative – Ok, but of course the district will see that their costs are increasing despite the better “discount.” What we need to tell them is the culprit is inflation. That your cost of business is going up and you simply have to pass those costs on to the consumer. Also, you can tell them you are losing your royal ass off Medicare and Medicaid patients.

Hospital Administrator – Right on! But between you and me, we are making money off Medicare patients who represent +60% of our patient revenue. And the more Medicaid and indigent care patients we treat, the more Medicare pays us. I just love those Medicaid and indigent care patients! I wish we had more of them.

PPO Representative – Yeh, I know, I haven’t met a hospital administrator yet who lost money on Medicare patients. If they did, their Board of Directors would find a replacement real quick.

Hospital Administrator – Ok, let me see if I got this correct. You are going to tell the insurance consultant that you negotiated a better contract for the district because of her amazing negotiating skills, the district is going to “save” money as a result while spending more, and my hospital is going to get an overall +12% raise in revenue while you get a +29% pay raise.  And, about 60 local physicians will get paid more money by sending their elective surgical admits to me rather than to my competitor across town. It that right?

PPO Representative – Yes! Good doing business with you. No one will ever know what we agreed to today. Our contract is proprietary – no one but you and me knows what is in it. Not even the insurance consultant. I love this business! Let’s go play golf. Ive made a “bet” with a local insurance agent for $35,000 that Im going to lose on the 18th hole  – it’s that time of year he contributes to some sort of scholarship fund at the district.  Wanna make the same bet?

Editor’s Note: This is a true fictional narrative provided by Molly Mulebriar. Mulebriar cautions that this transcript is not attributable to any particular institution, person or locale.

Discount Dentistry – A Dentist’s Perspective

Friday, January 28th, 2011

  Holding DentalPlans accountable to dental patients

Today, I got into a discussion with an anonymous DentalPlans sales rep who goes by “Dental Hygenie.” We are discussing the morality of deceptive advertising in the discount dentistry market and gullible, vulnerable dental patients. I’m hoping she’ll return to fasten down some loose ends. I’m pretty sure Hygenie is a woman.

“We don’t have our own dentists. We simply provide consumers with a list of dentists that accept dental plans. We are always researching and getting feedback. Thanks for all your questions Darrell, its been fun chatting with you today!”

My reply: I’m sorry you had to rush off, Dental Hygenie. I’ve sincerely enjoyed our conversation today and learned a lot about DentalPlans from you. I hope that the information we shared will help others understand their choice in dentists – including discount dentists promoted by DentalPlans who work for as little as 15% of their normal salary (A 30% discount based on an industry average of 65% overhead means a 5% net, versus a dentist’s full pay of 35% net). To clarify one of your statements, I should point out that you also wrote that DentalPlans dentists offer discounts as high as 60%. I think that quote must have been a typo. Anyone can see that if a dental practice has a 65% overhead, and sells dentistry at a 60% discount, the dentist would make more money by staying home. For example, if one nets a negative 25% on each widget one sells, making more widgets will only dig one deeper in debt. You really didn’t mean to advertise that DentalPlans offers 60% discounts, did you, Dental Hygenie? That would be misleading and probably illegal outside the Internet. Such deception certainly wouldn’t be ethical.

Even a 30% discount simply sounds incredible. As a dentist, I cannot imagine working 7 times faster to make the same amount of money I earn now, and still maintain the quality my patients expect of me. Dentistry is intricate, one-of-a-kind handwork performed to tight tolerances in juicy, wriggly mouths attached to occasionally nervous patients who sometimes show up late, or not at all. Please help me and others understand how dentists can discount their work by 85% and not go bankrupt.

I find another of your statements confusing. It may be a typo as well. You said, “You pay a one time fee starting at $79 for the year and start to receive your discounts almost immediately.” Did you mean to say there is a one time fee or a yearly fee starting at $79?

I’m hoping you will find time to return soon. I have other questions your potential customers would ask if they had a clue where to start. I’d like to discuss more about DentalPlans’ quality control with you. I’m glad to read that DentalPlans’ business partners like Aetna and BCBS scrutinize the dentists they send trusting and vulnerable patients to see. After all, to offer dentistry by the lowest bidders with no quality control would be morally bankrupt.

Whatever your name is, you just have to agree that since most people are clueless about dentistry, they are terribly vulnerable to being ripped off by anonymous salespeople. Let’s you and I make sure it doesn’t happen on Dental Facebook.

D. Kellus Pruitt DDS –

Shooting Yourself In The Head – PPO Fees as Percentage of Discounts

Wednesday, January 26th, 2011

     I recently gave a keynote speech to a group of insurance brokers affiliated with the Institute for Work Comp Professionals; the talk focused on cost drivers in WC, with special emphasis on medical costs.

The part of the talk that generated the most discussion was the section on networks, and specifically how most WC networks have completely failed to reduce medical expenses.

My net is insurers are shooting themselves in the head, with a pistol provided by their managed care departments.

PPOs contract with providers to deliver services at a discount. Most PPOs get paid a percentage of the savings that is delivered by that discount, typically 15 to 22 percent of the savings. So, the more the PPO ‘saves’ the more it makes. On the surface, this sounds good: the system rewards the PPO for saving money and does not pay it when it delivers no savings.

However, a closer look reveals that when the PPO vendors win, the payer loses. The ugly head of the Law of Unintended Consequences emerges again.

At the most basic level, health care costs are driven by a relatively simple equation:

Price per Unit x Number of Units = Total Costs

Under a percentage-of-savings arrangement, reducing total cost is ignored in favor of saving money on unit costs. The PPO gets paid for savings on individual bills. Therefore, the more services that are delivered and the more bills generated, the greater the ‘savings’ and the more money the PPO makes.

The system encourages over utilization because it is in the PPO’s best interest financially to have numerous providers generate lots of bills for lots of services. Also, the providers, squeezed by a per-unit fee schedule that is lower than fee schedule/Usual and Customary Rates (UCR), have a perverse incentive to make up for that discount by performing more services.

The industry has been hit, and hit hard, by the Law of Unintended Consequences. Two of the top managed care “fixes” – fee schedules and PPOs with pricing based on percentage of savings, encourage over-utilization, a major cost driver for workers’ compensation.

It’s no wonder that most PPOs like this model, but why would any of their customers?

The simple answer is that managed care departments at many carriers and third party administrators (TPAs) are evaluated on the basis of their network penetration (the percentage of dollars that flow through a network provider) and network savings (on a per-bill basis).Their internal and external customers have bought into the per-unit discount model, and measure the success of their managed care programs on the dollars and/or bills that flow thru the network, and the savings below fee schedule or UCR delivered by the network.

The fact is few carriers, TPAs, or employers have realized that per-bill ‘savings’ is the wrong way to assess a managed care program. And unless senior management changes their evaluation methodology, their managed care departments will have no incentive to change their program to one that actually does reduce total costs.

After my conversation with a hall full of brokers, my bet is more carriers are going to be getting more questions about this.

Editor’s Note: This was written by Joe Paduda

Another Carrier Exits Medical Insurance Market

Wednesday, January 26th, 2011

   Guardian announced yesterday they are exiting the medical insurance market. They have sold their medical insurance block to United HealthCare.

Fewer carriers in the medical insurance market means less competition. Those carriers that remain, we believe, will focus on administering self-funded employee welfare plans – some will exit the fully-insured market due to stiff restrictions mandated by ObamaCare.

Crime Pays in South Texas

Tuesday, January 25th, 2011

 Admitted Felon Olivarez Goes Free – Beats Justice System – Maintains Texas Insurance License

Half Guilty, Half Pregnant Arnulfo Olivarez was sentenced yesterday for his crimes. This admitted felon paid bribes to public officials in exchange for lucrative insurance contracts worth millions of taxpayer dollars.  

Arnulfo “Arnie” Cuahtemoc Olivarez
Insurance Agent
4 years probation
$25,000 dollar fine

Editor’s Note: The following is an excerpt published in the McAllen Monitor –

Arnie Olivarez: “I want to apologize to my family, especially my daughters and to everyone I’ve done business with.”

Arnie Olivarez: “It’s a common practice but it’s wrong.”

Judge Ricardo Hinojosa: “By doing that, you’re insulting every elected official and every business person who does it the right way, which I believe is the majority. They get hurt every time someone like you does what you did.”

Judge Ricardo Hinojosa: “This is not a victimless crime.”

Arnie Olivarez: “I hurt my family, lost my business, had to let go of of good friends. I’m trying to keep my insurance license. I had a major heart attack and I’ll have to take medication the rest of my life. I’ve been under house arrest the last three and a half years.”

Arnie Olivarez: “I want to apologize to the court and to everyone for all the things I did wrong.”

Judge Ricardo Hinojosa: “I wouldn’t be surprised if he deducted it on the federal income tax for his business making us all sponsors for this trip.”

Judge Ricardo Hinojosa: “I dont’ know how much profit your client made, I gathered it was a lot more than $10,000 dollars.”

Olivarez claimed his contract was worth $180,000 dollars per year for three years.

He said he got half, or about $90,000 dollars per year for three years, but had to use part of it to pay his own staff.

Olivarez claimed he told Cameron County Sheriff Omar Lucio and the former Hidalgo County Sheriff about bribery allegations. He said that went nowhere.

Olivarez said before he starting making “contributions” and “sponsorships” that the PSJA school illegally cancelled one of his previous contracts.

Judge Hinojosa said he should have gone to authorities and not “played along.”

Defense Attorney Heriberto “Eddie” Medrano: “He has been traumatized. This has been a three and a half year ordeal. He’s been waiting for this day.”

Amfels Goes Cost-Plus – Will Brownsville Independent School District Be Next?

Sunday, January 23rd, 2011

Amfels, the second largest employer in Brownsville, Texas, has decided to change their current PPO group health plan to a Cost Plus plan. Estimated savings are expected to be significant.

An analysis of an in-patient hospital claim from a local Brownsville hospital illustrates the potential savings to Amfels. Total billed charges were $118,143.43. This claim was repriced by a PPO network down to $76,793.23, for a “savings” of $41,350.20 or 35% off billed charges. We believe this is the same rental PPO network currently utilized by the Brownsville Independent School District.

Using a Cost Plus 12% or Medicare +20%, whichever is more, this claim was audited and repriced down to Medicare +20%, or $24,336.76, which represents +79% off billed charges.  Had a Cost Plus Plan been in effect at Amfels just 60 days ago, their self-funded group medical plan would have saved over $40,000 on just one claim.

This is an actual claim, incurred at a local Brownsville, Texas hospital, less than 60 days ago.  See audit here – Cost Plus Elap Audited claim.

Amfels is not the first Valley employer to change from a PPO plan to Cost Plus. Another large Brownsville based employer with over 500 employees embraced the concept over a year ago. They have realized significant savings.

Several Valley independent school districts have also made the decision to do away with their PPO plan and implement a Cost Plus plan later this year. An analysis of past claims for these groups shows estimated savings in the millions of dollars. With the state budgetary crisis looming, these districts are taking a proactive approach to cutting their health care expenses while maintaining and even improving benefits.

Cost Plus is not a new method of paying hospital claims. Medicare is utilizing a cost plus approach with select hospitals across the country –

Editor’s Note: This blog has written about PPO network versus Cost Plus for several years. Many of our clients who have  elected to implement a cost plus plan have achieved significant plan savings as a result – See Bill Miller Forbes. The first political subdivision in Texas to adopt the concept was San Patricio County  – Health Care Strategies for Texas Political Subdivisions. The Brownsville Independent School District, currently in turmoil over truth and fiction regarding plan “savings” and which PPO has the best “discounts” should consider a Cost Plus approach. This Brownsville taxpayer whose local taxes have increased over 100% in the past ten years, would welcome any effort by the Brownsville Independent School District to cut unnecessary expenditures. A Cost Plus approach may be a very good step in that direction.

$4,000 Marachi Band May Lead To Prison Time For Half Guilty, Half Pregnant Insurance Agent

Thursday, January 20th, 2011

    Half Guilty, Half Pregnant Arnulfo C. Olivarez, licensed Harlingen insurance agent, will again face sentencing for his crimes before the Hon. Ricardo Hinojosa in McAllen, Texas next week.

Admitted felon Olivarez has plead guilty to bribing pubic officials  in exchange for lucrative insurance contracts.

A $4,000 Marachi band expense for a public official may lead Olivarez to hard time in federal prison. A $500 set of tires for a Valley school superintendent several years ago netted a three and a half year federal prison sentence. If a $500 bribe equals 3.5 years, what does a $4,000 bribe equal?

Editor’s Note: Type in “Arnulfo Olivarez” in the search box on this site to review earlier postings on Half Guilty, Half Pregnant Olivarez, admitted felon and still licensed Texas insurance agent.

Brownsville Independent School District Seeks Insurance Consultant

Thursday, January 20th, 2011

The Brownsville Independent School District is seeking a qualified insurance consultant to assist the district in their $50 million self-funded health care plan.  Deadline for RFQ response is January 28.

To review the RFQ you may go to the Brownsville Independent School District website for a copy of the specifications (under purchasing department).

It will be interesting to see which insurance consulting firms respond. Cameron County and PUB both employ the same consultant from Dallas – he has the track record, experience, and credentials most consultants would envy. A McAllen consulting firm, with several local school districts as clients, may apply – this firm specializes in assisting Texas political subdivisions. Several other reputable consulting firms in San Antonio may apply as well, having experienced work in the Valley in the past, dealing with upper Valley school districts including Mission and Edinburg ISD. Then there are the large brokerage firms in Houston and Dallas – will they throw their hat in the ring?

Double Mint is Double Good

Monday, January 17th, 2011

Why would a group health plan employ both a fee based insurance consultant in addition to an agent working on a commission? And why would the group plan pay the consultant who does all the work  year round less than the the agent who does no work other than delivering a proposal once a year? 

Seems upside down.

Can Texas Local Governments Employ Broker or Agent of Record?

Saturday, January 15th, 2011

Commissioners Bulletin # B-0041-07


RE: Use of insurance agents as “agents or brokers of record” by local governments

The Department has received inquiries concerning the employment of insurance agents, as “agents or brokers of record” by local governments.  This bulletin is intended to provide guidance that local governments and licensees may find useful when local governments are considering engaging Department licensees for assistance in the purchase of insurance products.  The bulletin will also relate prior Attorney General opinions related to “brokers of record” and the differences between an insurance agent license, a Life and Health Insurance Counselor license, and a Risk Manager license.


  • Texas Attorney General Opinion JC-205 advises that the purchase of insurance is the purchase of personal property, and opines that a school district may not contract with a licensed insurance agent to serve as an agent or broker of record unless the use of a designated agent or broker of record to purchase insurance is a purchasing method that has been expressly authorized by the legislature.
  • Local governments and insurance agents are advised that the Texas Legislature has created two licenses, the Life and Health Counselor license and the Risk Manager license, which authorize persons to act solely on behalf of a client in an advisory or counseling capacity when considering the purchase of insurance products.
  • The Department cautions insurance agents that Insurance Code §§4005.054 and 4052.055 and 28 Texas Administrative Code §19.1318 contain prohibitions against licensed persons accepting dual compensation for acting as both an insurance agent and life and health counselor or a risk manager for the same service provided to the same client.


Generally the purchase of insurance by a local government is the purchase of personal property and subject to competitive purchasing requirements.  (Texas Attorney General Opinion No. JC-205 (2000))  Often a local government, in compliance with applicable statutory competitive purchasing procedures, will issue a request for proposal seeking a “broker” to independently evaluate insurance products for the local government and for which the “broker” will be paid solely by the local government.  Although use of the term broker accurately represents a situation where a person represents the customer, local governments are advised that the Texas Department of Insurance does not issue broker licenses.  Additionally, Texas insurance agents are not authorized to act independently of the carriers they represent as described by Insurance Code §§4001.051(b), 4001.052, 4001.101, and 4001.201. 

This limitation on an insurance agent’s ability to procure insurance from any carrier was recognized in Texas Attorney General Opinion No. JC-205 (2000).  

“We understand that an insurance agent will be affiliated with a limited number of insurance companies. For this reason, a designated broker of record will not be able to solicit rates on the [junior college] district’s behalf from all possible insurance companies for a particular policy. Because the use of a designated broker of record will necessarily limit the number of companies from which the district may purchase insurance, it may foreclose the district’s access to the most advantageous rates and terms.  (JC-205, Page 2)

With respect to the use of insurance agents in the competitive bidding process, the Attorney General went on in JC-205 to hold:

“Even if a [junior college] district were to instruct a designated broker of record to solicit terms and rates using one of these methods, the district would not have used the method in its truest, most complete form. For this reason, we believe that the legislature must expressly authorize use of designated brokers of record, as it has done in the context of certain municipal insurance purchases.”  (JC-205, Page 6, referring to Attorney General Opinion DM -070), see also Attorney General Opinion JC-492).

The Department is aware of only two legislatively authorized exceptions with respect to local governments: Local Government Code §262.236, which is limited to counties with populations of greater than 800,000; and Local Government Code §252.024, which authorizes municipalities to engage brokers of record with respect to excess and surplus lines insurance. 

Local governments and insurance agents are advised that the Texas Legislature has created two licenses, the Life and Health Counselor license and the Risk Manager license, which authorize persons to act solely on behalf of the client in an advisory or counseling capacity when considering insurance products.  Both licenses are available from the Department. 

With respect to joint licensure and compensation, local governments and insurance agents are advised that the Texas Insurance Code does not prohibit insurance agents from holding an agent license as well as a life and health counselor and/or a risk manager license.  The Department, does, however, caution insurance agents that Insurance Code §4005.054 and §4052.055 and 28 Texas Administrative Code §19.1318 have prohibitions against licensed persons accepting dual compensation for acting as both an insurance agent and a life and health counselor or a risk manager for the same service provided to the same client.  Further, if an insurance agent or an insurance agent’s affiliate receives compensation from an insured, the insurance agent must make all applicable disclosures required under Insurance Code §4005.004.

Finally, persons holding an insurance agent license, a life and health counselor license, and/or a risk manager license are subject to disciplinary action under Insurance Code §4005.101 and Chapters 82, 83 and 84 for violations of the Insurance Code or Department rules, including engaging in deceptive trade practices under Insurance Chapter 541; acting without, or in excess of, their licensed authority; or engaging in fraudulent or dishonest acts. 

Additional information on this Bulletin and the license types described herein may be obtained from Matt Ray, Deputy Commissioner, Licensing Division, 512-463-8917.

Dragging Claims

Friday, January 14th, 2011

Dragging claims can be an effective way to obtain competitive stop loss quotes prior to renewal. It is also an effective strategy to make year end results appear to be more favorable.

Most reputable TPA’s don’t employ this scheme, which ensures their continued good standing in the insurance community. Those TPA’s that make a habit of dragging claims are eventually blacklisted within the stop loss world.

How does a self funded employer detect the phenomenon of claim dragging? Continued review of monthly claim activity including pended claim reports as well as monthly lag reports are helpful.

Another indication of a TPA dragging claims is an uptick in provider and employee  complaints. If claims are delayed, employees with claims begin to get hounded by those providers who expect to be paid quickly. PPO contracts usually stipulate that claims must be paid within a certain amount of time or the PPO discounts are lost and the full billed charge is then demanded by the provider. The state of Texas has passed a law requiring insurers to pay claims within a specified time or be sanctioned.

Clearly, when claims are dragged, they eventually must be paid. A decision to release these claims rapidly causes a spike in claim activity which a descerning risk manager would question. The alternative method is a well managed slow but consistant release of claims over a 90 day period.

Towards the end of a contract that may be in jeopardy (political subdivision which is planning to bid out the service), the TPA may drag claims so that if the case is lost, they can then adjudicate the claims “post contract” at exhorbitant fees. Held hostage to a degree, the self funded employer is stuck with a bill that otherwise would not have occured.

Can Texas Hospitals Legally Waive Deductibles / Coinsurance To Attract Patients?

Tuesday, January 11th, 2011

We are aware of one Texas hospital which has offered to waive deductibles and coinsurance for a large self-funded employer group plan. Can a Texas hospital legally do this? Are self-funded ERISA plans exempt?

Waive Deductible Co-Pay

Consulting Firm Proves Medical Providers Will Compete For Your Business

Tuesday, January 11th, 2011

While health care costs are literally burning up dollars, many employers see only two answers: reduce benefits or increase premiums. The professionals at GM&A offer a real alternative. By creating a custom network for you, we will substantially reduce employer and employee’s medical costs and not change benefits!

GM&A is a team of genuine medical insiders. We have over a century of combined experience in the areas of hospital administration, medicine, nursing and medical insurance.

We’ve been helping employers and their employees for ten years. We put our expertise to work for you. We can develop custom networks that are uniquely suited to any geographical region and/or employee needs, as well as offer consulting service, auditing, or fully insured products. Through a combination of substantive negotiations with providers and vigilant plan monitoring, we are able to produce immediate and long-term reductions in you medical costs. Again, this is without changing current employee benefits.

– 5301 Knickerbocker Road, Suite 100, San Angelo, TX 76904 | (325) 224-3245 –

Editor’s Note: For more information go to

Update: Medical Community Gifts Another $2.2 Million to the Brownsville Independent School District

Sunday, January 9th, 2011

According to recent media reports the Brownsville Independent School District has “saved” another $2.2 million by changing from the HealthSmart PPO network last year to the Texas True Choice PPO network. (Up from $6.8 million reported in October – see previous posting below) If true, the Brownsville medical community should be applauded. 

But has the BISD really “saved” money this year due to the change in PPO networks? Are office visit charges cheaper? Have the two local hospitals reduced their Charge Master pricing? Are prescription drugs cheaper too?

If the Texas True Choice network has significantly better pricing than HealthSmart, what kind of pricing does  Blue Cross have?

Some represent that Blue Cross  must have much better pricing since they command 28% of the Texas market.  They  provide coverage for federal and state employees too. They currently insure San Benito ISD, Los Fresnos ISD, McAllen ISD, PSJA ISD, Weslaco ISD, Mercedes ISD. Supporters point out that Blue Cross gained the business  through a competitive bid process aided by recommendations of independent insurance consultants.

If the move from HealthSmart to Texas True Choice “saved” $9 million,  and if Blue Cross does indeed have superior pricing with the medical community, imagine how much the BISD would save by moving to Blue Cross? $10 million? $15 million? $20 million?

Whoever has the best prices, whether it’s Texas True Choice, HealthSmart, Blue Cross, Humana, Cigna, United HealthCare should have all the business. It is that simple.

The truth is elusive. PPO contracts are as well guarded as all the gold at Ft. Knox. The truth is there to find – time to find it.

Original post below:

Medical Community Gifts $6.8 Million To Brownsville Independent School District

Good news for Brownsville taxpayers! It appears that the local medical community has “gifted” $6.8 million to the Brownsville Independent School District through lower medical fees. Or did they?

In the October 17 issue of the Brownsville Herald, it was reported that MAA officials told the district’s insurance committee to expect a “savings of $6.8 million” this year over last year.  MAA acquired the BISD account last year. The prior third party administrator was HealthSmart.

Does this sound too good to be true? Why would medical care providers lower their fees and give up $6.8 million in a year’s time? Are area physicians driving volkswagons these days? Are hospital administrators moving to low rent apartments? Most people have come to understand that medical prices are constantly increasing, not decreasing.

Or, could it be that the conclusion is based on inaccuracies or flawed methodologies upon which the projection was performed? Or, is BISD simply have a good year? Or a combination of these possibilities?

One of the biggest flaws in a PPO network evaluation process is that many use an evaluation model that are based on historical data (usually 12-36 months). They use a retrospective review of network pricing, factoring in those savings levels onto future cost projections. A network evaluation based on retrospective information, with no adjustments made for significant contract or rate changes, becomes irrelevant and is not a valid indicator of what a group like the BISD will actually save by moving to another network. For example, when consumers prepare to buy a new television, do they make their buying decision by looking at the price for each television from 2 years ago? Of course not.

PPO contracts contain “escalator” clauses that give medical providers a “raise” every twelve months. So every month, some 1/12th of all providers get a pay raise, a never ending cycle.

Neither HealthSmart PPO or Texas True Choice have a predominant market share over the other in the lower Rio Grande Valley. Both of these “rental” networks have pretty much the same providers on their PPO listing. The overall aggregate pricing differential, in our opinion, is just about 1%.  We have developed credible data that we believe proves this.

In our opinion there is no compelling argument that would conclude that medical providers in our community would agree to significantly better pricing with one rental network over another.

Only the medical community knows the truth, and they are keeping quiet (for now).

We look forward to learning the truth. The Brownsville Independent School District VS HealthSmart lawsuit will shine a strong light on the mysterious world of PPO “discounts.”

Editor’s Note: “How do we know we are doing much better this year than last year?” asked Don Pedro. “What was this year is last year plus or minus this year’s change,” replied the expert. “If change is the only constant why do we need to measure it? You dont know if something is better if you didnt know how to measure what it was before” countered Don Pedro. And out he went.

Brownsville Independent School District Terminates Insurance Consultant’s Contract

Saturday, January 8th, 2011
January 07, 2011 2:17 PM
By GARY LONG, The Brownsville Herald

The Brownsville Independent School District Board of Trustees voted 4-3 Thursday night to terminate the consultant for the district’s $40 million self-funded employee health plan in a vote the losing side characterized as illegal.

The board voted to immediately terminate Gary Looney of Alamo Insurance Group as the district’s insurance consultant and put out requests for qualifications for a new consultant.

“This is an illegal act as well as a waste of taxpayer money,” said Joe Colunga, who was chairman of the board’s insurance committee at the time Looney was hired. “No case has been made of any wrongdoing. This makes no business sense.”

Looney was hired in August 2009, and his consultant contract was renewed last summer for an annual fee of $55,000. He was responsible for providing analysis of proposals from firms wanting to be the third-party administrator for the district’s health insurance plan.

Under Looney’s guidance the board awarded the contract for third-party administration of the health plan to Oklahoma-based Mutual Assurance Administrators. Supporters say the move saved BISD an estimated $9 million in lower claim costs over the previous third-party administrator, AAG HealthSmart Inc.

Board president Catalina Presas-Garcia put on the agenda the item calling for discussion, consideration and possible action regarding Looney’s contract. At the meeting, however, she said trustee Luci Longoria first made the request to her.

Colunga said the item was illegal because it was placed on the agenda by a board member rather than BISD administration.

Longoria moved to terminate Looney’s contract and Presas-Garcia seconded. Those two voted for the motion along with trustees Enrique Escobedo and Christina Saavedra. Colunga and trustees Minerva Peña and Rolando Aguilar voted against.

Responding to Colunga’s contention that no case for wrongdoing had been made against Looney, Longoria said she moved to terminate him because she didn’t like the job he was doing.

“Even (previous board attorney Mike) Saldaña said we can terminate someone for good cause,” Longoria said. “Our good cause is lack of trust and confidence.”

Peña said firing Looney is a waste of taxpayers’ money.

“He’s already been paid,” she said. “He loses nothing. I have a real big problem with this. He has eight months to go on his contract.”

Aguilar said terminating Looney was uncalled for after he saved the district $9 million through lower claims costs.

Meanwhile, BISD is suing HealthSmart to recover $14.5 million in higher medical claims and thousands more in allegedly improper charges during the two years it administered the employee health plan.

At the beginning of the meeting, Presas-Garcia asked to have two items removed from consideration that would have discussed district finances as they relate to an impending state budget crisis.

Numbers Can Lie – An Audit Can Mislead – Fuzzy Math Reigns

Friday, January 7th, 2011

Numbers don’t lie! Or do they?

Two things to remember about numbers: first, the semantic premise imposed upon the calculation determines, in the eye of the unsuspecting, the “truth” which “supports” one’s contentions, i.e. “see I told you so, the audit proves we are getting screwed.” Second, numbers based on one methodology can be made to appear to change under a different methodology. And, multiple numerical entries can appear to skew a single numerical entry when totaled and compared as a percentage.

Consider three school district employees traveling to San Antonio on district business. They get off to a late start and arrive in the evening. They look frantically for a hotel, but all are booked. A national convention is in town, and there are no vacancies available.

But, finally, they get lucky. Tired, disheveled, they spot a “Room Available” neon blinking sign in front of the Blue Bonnet Motor Inn in South San Antonio. They ring for the attendant who finally appears and says “I have only one room left and the price is $30 cash.”

Relieved to find a temporary home for the evening, and resigned to the fact that all three would have to share the same room (what will the husband think of this Molly?” )  each plunked down $10 to pay the $30 daily rate – $10 X 3 = $30.

Shortly after encamping in their room, the hotel clerk realized he over-charged the three. The room was only $25 for the night, not $30. He called the Bell Hop and handed him five one dollar bills and said “Go to room 23 and give them a refund, I over-charged them.”

On the way to room 23, the Bell Hop, being a Democrat, decided requisition $2 and give each a $1 refund.

Here is the math – Each occupant paid $10-$1 = $9………………..$9 X 3 = $27    The Bell Hop Stole $2

Where is the missing $1?

Auditing PPO discounts   and payments can be conducive to a Fuzzy-Math-Out-of-Body-Experience. Careful attention must be made to (1) premise/s represented, (2) terminology employed and (3) Bell Hops.

And, fuzzy math can take a 25% cost increase down to a 10% increase very easily. It is done quite frequently in the insurance business. Anyone want to know how?

Editor’s Note: A good lawyer can make a bankrupt business look like MicroSoft, or vice versa. It’s done every day.

Humor = Reality

Friday, January 7th, 2011

Change is Good

TRS ActiveCare Rates to Be Increased?

Friday, January 7th, 2011

The TRS ActiveCare health insurance program for Texas public school districts has enjoyed stable rates and comprehensive coverage since 2003. Approximately 87% of Texas public school districts have joined the program. Most recently the El Paso Independent School District (+8,000 employees) joined effective January 1, 2011 (

A brief review of the TRS ActiveCare financials (TRS 2009 CAFR ActiveCare) indicates an erosion of plan assets. Most recent paid claim experience shows a loss ratio of 98.7%. Last year the trustees of the program raised premium but offset some of the increase by dipping into plan reserves. It does not appear they will have that luxury this year.

A 98.7% loss ratio deserves a rate increase. With ObamaCare mandates in play, and +$20 billion state budget deficit to be addressed in the current legislative session, what will the trustees do this year to ensure the continued solvency of the TRS ActiveCare plan? And where is the money to come from?

Rates for plan year 2011-2012 should be announced in March.

Nevada Hospital System Adopts Cost-Plus Reimbursement

Thursday, January 6th, 2011

We received a call this morning from an actuary firm in Nevada informing us that one of their clients, a hospital system, has agreed to accept cost plus 12%  reimbursemet from all local political subdivisions whose insureds seek treatment at the hospital.

Details to follow.

Editor’s Note: In Texas we know of five (5) hospitals who have adopted the Cost Plus approach for their own self-funded employee benefit plans. We also know of several hospitals who have agreed to accept Cost Plus insureds and are happy to earn a 12% profit margin. And, recently, we have learned of one major hospital system who has agreed to accept Medicare +35%. This is encouraging to traumatized consumers who have been pounded with ever increasing health care costs, year after year, despite representations from PPO networks who tout “superior discounts” for their clients. – look up hospital’s cost to charge ratio here. 

   We have learned that the reason the hospital system agreed to Cost Plus 12% is because the same system has contracted with a few local  payers on a flat per diem of $1,800 for both medical and surgical admissions, with no outlier. They will earn more under a Cost Plus 12% contract.

Blue Shield of California Raises Rates – Points to Rising Health Care Costs – Policyholders Stunned – Huge Increases as High As +59%

Thursday, January 6th, 2011

Another one of California’s largest health insurers has stunned individual policyholders with news of huge rate increases — this time it’s Blue Shield of California seeking hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield’s plan comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from the new healthcare laws passed last year. “We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members,” the company told its customers last month.

In all, the insurer said that 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October that have been rolled into one for about 7,000 members.

Nearly one-quarter of the affected customers — 44,000 — will see cumulative increases of more than 50% over five months.

Blue Shield notified some policyholders of the rate increases in late December. That’s when Michael Fraser, a longtime Blue Shield policyholder from San Diego, learned that his monthly bill would climb 59%, to $431 from $271.

“When I tell people, their jaws drop and their eyes bug out,” said Fraser, 53, a freelance advertising writer. “The amount is stunning.”

The increases prompted complaints to new Insurance Commissioner Dave Jones, criticism on the Internet and letters to The Times. They are providing an early test for Jones, a former Democratic state assemblyman who targeted Anthem last year after it sought its big increases. . . .

Jones said the Blue Shield premiums underscore the need for the Legislature to give the insurance commissioner legal authority to regulate insurance rates the same way he does automobile coverage.

At present, the commissioner can block increases only if insurers spend less than 70% of premium income on claims. Jones’ office said that Blue Shield’s March 1 increase is still under review.

“Blue Shield’s increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well,” Jones said in an interview. “My hope would be that Blue Shield would reexamine these rate hikes, particularly in the face of the impact they are having on individual policyholders.”

Blue Shield said the cost of health coverage is being driven up by large hospital expenses, doctors’ changes and prescription drug prices. Blue Shield spokesman Tom Epstein said other factors also contributed to three increases in five months.

On Oct. 1, he said, Blue Shield imposed increases averaging 18%, and reaching as high as 29%. Those hikes had been delayed for three months while state regulators examined Blue Shield’s filing, costing the company tens of millions of dollars.

Epstein said Blue Shield raised rates again Jan. 1 to pay for reforms under the national healthcare overhaul and a new state law that bars insurers from charging women more than men. (Some policyholders will pay less under the state gender law, while others will pay more.)

A third round of hikes scheduled for March 1 comes in response to rising healthcare costs, he said. Those increases will average 6.5% and be as high as 18%.

Some policyholders have seen their bills rise gradually over the last five months, while others will see the charges lumped together March 1.

“It’s unfortunate that they all came in a five-month period,” Epstein said. “Rates are going to continue to rise unless the cost of medical care is brought under control. We need to reduce what we pay to hospitals, medical groups and pharmaceutical companies.”

Despite the large increases, Epstein said Blue Shield would again lose “tens of millions of dollars” on its individual business in 2011.

Not included in the rate increases are 78,000 Blue Shield individual policyholders whose insurance is regulated by a second state agency, the Department of Managed Health Care. Those customers have seen two rate increases since October that together average 37%, Epstein said

Blue Cross Talks with NorthWest Fail; Cost Rise

Thursday, January 6th, 2011

January 6, 2011


Blue Cross Blue Shield of Texas consumers can expect to pay more out of their own pockets for some treatment after negotiations between Northwest Texas Hospital and the region’s largest insurer failed.

As of Saturday, at the start of the new year, Blue Cross patients are now being charged out-of-network prices at Northwest, which means people needing specialized treatment – like trauma and wound care and some pediatric services that only Northwest provides – could potentially see costs increase by tens of thousands of dollars depending on the treatment.

Northwest houses the region’s largest designated trauma center.

John Greeley, a spokesman for the Texas Department of Insurance, said in most cases when someone goes out of network, it means that the amount of coverage from the insurer drops and the percentage of the bill the patient is responsible for rises.

According to the Texas Department of Insurance’s 2010 annual report, in 2009 Blue Cross was by far the state’s largest accident and health insurer. In 2009, Blue Cross Texans held about 27.3 percent of the market share for written premiums, according to the state.

Blue Cross spokeswoman Margaret Jarvis said Blue Cross will still pay in-network treatment costs, but the patient will cover the co-pay and whatever the difference is between what the insurer covers and the final hospital bill.

Jarvis said she wouldn’t speculate on the cost impact for consumers, but Northwest officials have previously said the patients’ out-of-pocket expenses could top tens of thousands of dollars on a trauma bill.

Starting in 2005, the hospital charged Blue Cross in-network prices – or essentially a discounted rate – for specialized services. But in September, hospital officials announced they canceled the contract with the insurer because Northwest was not a full network provider. Hospital officials said it didn’t make sense for them to offer Blue Cross a discount for specialized services when the insurer was directing patients with all other medical needs to Baptist St. Anthony’s Health System for treatment.

Both sides initially said they hoped talks could resolve the dispute before it affected patients’ pocketbooks, but negotiations ultimately failed.

Martin said the hospital “hates this (outcome) as much as everybody,” but still has to do business.

“We were the ones that canceled our contract,” said Northwest spokeswoman Caytie Martin. “They have refused to accept our calls to have any further conversations. Blue Cross is not willing to allow us to (be) a fully in-network facility.”

Jarvis said she doesn’t expect a big effect for consumers because they can get all their emergency care needs – minus trauma care – at BSA.

She said it’s up to Northwest how much extra the patient will have to pay.

“It’s up to them if they choose to balance-bill a patient and charge them over and above the rate that their insurance pays,” she said.

Martin said no contract means no discount for Blue Cross patients.

“We hope those that may be impacted by that decision have the ability to speak with their employers about their concerns that they don’t have trauma coverage,” she said.

Ultimately, Greeley said the state has little oversight on the relationship between insurers and hospitals other than to make sure insurers provide enough in-network specialists.

“We can’t change the fact that a particular facility and a particular insurer have parted ways,” Greeley said. “We can’t make that better.”

Greeley said the state offers a consumer hot line to help people understand their insurance bills and responsibilities.

“At some point they’re going to get a bill and they’re going to have questions about it,” he said. “(We can help) make sure it is according to the contract they have and answer any other questions.”

Do Stop Loss Insurance Policies Pay Retail ?

Wednesday, January 5th, 2011

     Most medical stop loss insurance policies pay retail instead of lower, negotiated discounted fees. Most don’t know this and don’t care, “since it is the insurance company paying the bill.”  The fact of the matter is that we are all paying for the higher reimbursement rates in loaded premium charges, as much as 46% more.

Hospital PPO contracts contain outlier provisions. Once the outlier, or threshold is reached, a typical PPO contract then reverts back to a small percent off “billed” charges, all the way back to the first dollar. Many of these PPO contracts stipulate that the outlier discount is 5% off billed charges.

Billed charges are like new car sticker prices; there is no correlation between the sticker price and actual costs. It is an arbitrary made up number, and the number is put up there really high. That makes the PPO discount look really good. But it is all a game foisted upon the unknowing consumer.

So, if the PPO outlier is placed at $50,000, and a typical PPO average “discount” is 35%, then a $45,999 hospital bill is repriced through the PPO contract by 35%, or $32,499. But, if the claim comes in at $50,001, the discount is reduced to 5% and the PPO repriced bill then becomes $47,501. This represents a +46% increase in plan reimbursement to the hospital.

As you can see, it is in the best interest of the hospital to inflate the bill to exceed the outlier. They get paid more money. And is it no wonder that almost all PPO contracts prohibit the payer from auditing the hospital’s bill?

Do you get the picture now?

Could this pricing phenomenon be linked to increasing stop loss premium? Why would you pay a vendor for the privilage of paying exhorbitant fees to pay for exhorbitant hospital charges?

More and more employers who self fund their group medical plans are eyeing captives.

Editor’s Note: Compare your current stop loss premium with this report:

Also see HM Insurance article –,0,w (excellent piece)

Texas Medicaid Rx Scam Exposed

Wednesday, January 5th, 2011

     Texas Business reports: The Texas attorney general’s office recently resolved a state enforcement action against Mylan Laboratories Inc., which was charged with inaccurately reporting drug prices to the Texas Medicaid program.

Under an agreement, Mylan must pay $65 million to the state and the federal government.

 Texas’s share of the recovery is $23 million.

The state’s enforcement action against Mylan stems from the defendant’s failure to properly report the price of its drugs to the Texas Medicaid program.

Court documents filed by the state allege that the price Mylan provided to retail pharmacies caused the taxpayer-funded Texas Medicaid program to significantly overpay the pharmacies for certain generic drugs.

In 2007, Texas initiated legal action against Mylan and two other drug manufacturers. The first of those three cases settled last summer when Teva Pharmaceutical Industries, Ltd. paid $169 million to resolve claims brought by Texas, several other states and the federal government.

The three defendants named in the enforcement action were:

•           Teva Pharmaceuticals Inc. of Pennsylvania (with subsidiaries Lemmon Pharmaceuticals Inc., Copley Pharmaceuticals Inc. Ivax Pharmaceuticals Inc., Sicor Pharmaceuticals Inc., Teva Novopharm Inc. and Teva Pharmaceutical Industries, Ltd.),

•           Mylan Laboratories Inc. of Pennsylvania (with national subsidiaries Mylan Pharmaceuticals Inc. and UDL Laboratories Inc.), and

•           Sandoz Inc. of New Jersey (with subsidiaries Geneva Pharmaceuticals Inc., Novartis Pharmaceuticals Inc., Eon Labs and Apothecon Inc.).

In order for pharmaceutical products to be eligible for reimbursement from Medicaid, Texas law requires that manufacturers accurately report market prices to the taxpayer-funded program. The Medicaid program bases its reimbursement to pharmacies on the pricing information reported to it by drug manufacturers.

The State’s three-year investigation revealed that the defendants sold hundreds of Medicaid-covered drugs at steeply discounted prices to large pharmacies such as Wal-Mart, CVS, Walgreens, and others – but concealed this same pricing information from the Texas Medicaid program.

As a result, state officials were misled about current market prices for the drugs. When pharmacies sought Medicaid reimbursement for these drugs, the false price reports led the Texas Medicaid program to unnecessarily spend millions of taxpayer dollars on the defendants’ products. Thus, Medicaid reimbursed at significantly higher rates than the discounted rates already established between the defendants and these retailers.

The scheme was brought to the state’s attention by Ven-a-Care of the Florida Keys Inc., an industry whistleblower. Since 2003, settlements in the Ven-a-Care drug-pricing cases have recovered more than $300 million for the Texas Medicaid program.

Texas Minimum Liability Limits Mandated to Increase – State Cites Increasing Medical Costs

Tuesday, January 4th, 2011

Dear valued MileMeter customer,

We hope that you have enjoyed your Holiday Season and we wish you a healthy and happy new year!

In an effort to keep you informed, we are notifying you that the state has mandated an increase in the Texas minimum liability limits, in attempt to keep up with the steady increase of medical costs.  On January 1, 2011, the present minimum limits of 25/50/25 were replaced by the new minimum limits of 30/60/25.  We will continue to offer the higher limits of liability, which are 50/100/50 and 100/300/50.

Additionally, as part of our rate filing with the Texas Department of Insurance, we have implemented an overall increase in our rates, as medical expenses and the cost of automobile and property repairs continue to rise. The liability coverage increases will be around 7.4% on average.  If you also buy Physical Damage coverage, the overall increase could be between 8.65% and 11.15%.

These increases will go into effect only on policies that are renewed on or after January 1, 2011.  To see how much your policy cost will be affected, you may obtain a quote a new quote at any time.

Texas DPS and TexasSure will be verifying insurance coverage aggressively in the coming year.  We urge you to consider buying an additional 1000 miles of coverage at your renewal.  If you don’t use it all in this upcoming policy period, you will be eligible for a renewal credit.

Be safe, be smart, be economical, and stay insured with MileMeter.

Editor’s Note: Auto insurance purchased by the mile? That is innovative! We are satisfied MileMeter customers – we insure several of our vehicles with them at a pretty good savings. You can get a quote direct from MileMeter by going to their website.

San Antonio: TexSan Hospital Under New Ownership

Tuesday, January 4th, 2011

Methodist Healthcare System has officially closed on its purchase of TexSan Heart Hospital from MedCath Corp. and its physician owners.

Under the terms of the deal, Methodist bought the hospital for $78.5 million. MedCath anticipates that it will receive $58 million in cash for the facility after paying liabilities, closing costs, taxes and acquisition costs related to the buyout of the minority interest owned by heart doctors.

The effective date of the transaction was Dec. 31, 2010.

TexSan Heart Hospital opened in San Antonio in 2004 as a specialty hospital. In 2009, TexSan earned an Excellence Award from HealthGrades, the independent health care ratings organization.

Charlotte, N.C.-based MedCath (NASDAQ: MDTH) currently owns an interest in and operates six hospitals in six states and has a total of 533 licensed beds.

Methodist Healthcare is San Antonio’s largest health system.

Monday, January 3rd, 2011


A Texas based physician sent this to us today:

Insurers Bid for State Medicaid Plans – This is interesting –  We just got a contract sent to us from United last week about this, wanting us to become providers in their ‘network’.  They’re probably preparing a bid to get some or all of this business in Texas.

 Where are all the providers going to come from to care for all these people if they’re only willing to pay Medicaid rates?  While I don’t know that to be the case,  maybe there’s some flexibility in what they’re willing to pay. 

 Wait until 2014 when all this takes effect.  If they can’t find providers for the Medicaid rates, and the state ends up having to pay higher rates to entice enough providers to see all these people, it will bust the state budgets.  Texas is short an estimated $20 B in the upcoming biennium.  It will be even shorter in 2013-2014.  There will be no choice except to raise taxes.  Texas will either have to create a personal income tax, raise the sales tax, or increase the business margins tax.   And every other state will be singing the same tune.  How’d you like to be living in California?

 Get ready.  The tsunami is coming.  Congress has done a masterful job of shoving the real costs of ObamaCare down to the states so the state legislatures can end up being the real bad guys by raising everyone’s taxes to cover the federal mandate.

 What a crock!!

Editor’s Note: See

Doctor-Patient Relationship Compromised by Facebook?

Monday, January 3rd, 2011

I posted this on my Facebook today. Now I’m going to go play pool.

I invite questions about dentistry

An article titled “Doctor-patient relationship compromised by Facebook,” written by Kate Taylor for was posted recently.

“Doctors on Facebook risk compromising the doctor-patient relationship because many don’t use tight enough privacy settings. Researchers surveyed the Facebook activities of 405 postgraduate trainee doctors at Rouen University Hospital in France and found that almost three out of four had a Facebook profile. One in four logged on to the site several times a day, and half logged on several times a week.

Almost half believed that the doctor-patient relationship would be changed if patients discovered their doctor held a Facebook account, but three out of four said this would only happen if the patient was able to access their profile.”

For those with questions they are afraid to ask, I want to make this clear to my friends: That is so not me.

Recently, a few of my Facebook friends have privately asked me dental questions, and seemed to almost apologize for “bothering me.” It pleases me greatly to be able to help anyone. I’m from West Texas, not France .

 Darrell K. Pruitt DDS

Accountable Care Organizations – ACO’s To Replace PPO’s?

Monday, January 3rd, 2011

 Show Promise in Reducing Health Costs for Self-Funded Employers

MyHealthGuide Source:  Marla Durben Hirsch, Todd Leeuwenburgh, Editor, Employer Health Benefits, Thompson Publishing Group, 12/21/2010,

As the U.S. consumers of health care try to control costs while improving health quality, some experts are turning to the Accountable Care Organization (ACO) as the delivery model with the potential to meet both objectives.

ACOs are designed to provide financial incentives for providers to improve quality, eliminate waste and control the cost of health care. Under the ACO model, spending targets are set to reflect the expected costs of caring for the patients, and quality-of-care targets are set. When the ACO meets or exceeds the targets, stakeholders share in the savings.

After passage of the Patient Protection and Affordable Care Act (PPACA) which endorsed the ACO model for the Medicare program (called the Medicare Shared Savings Program), the number of providers and payers developing ACOs has risen substantially.

Louisville, Ky.-based Norton Healthcare and insurance giant Humana launched the Louisville region’s first commercial ACO in November 2010, according to Kenneth Wilson, Norton’s vice president for clinical effectiveness and quality.

Employers Can Reap Gains From ACOs

Many different forms of ACO have been created, often depending on the local provider market. As a result, whether employers can get in on the shared savings depends on:

  1. whether they’re self funded or fully insured;
  2. what kind of models are being offered in their area; and
  3. what kind of business the employer is in.

Some of the different opportunities for employers include:

  • Creation of an ACO for one’s own employees. Some employers have created ACOs for their own employees, much in the way that they’ve created health plans or on-site clinics. Methodist Health, a hospital system in Memphis, is one such employer, according to Christie Travis, CEO of the Memphis Business Group on Health.
  • Direct contracting with an ACO. Some employers may have the opportunity to directly contract with the provider system that is forming an ACO. Under this model, the employer will not need to use a health plan as a middle man to offer the provider network, says Travis. The ACO will directly provide the continuum of care through its own provider network.
  • Creation/sponsorship of the employer’s own ACO. A self-funded employer could sponsor and organize its own ACO. Some employers may even help a new ACO get off the ground by investing funds to assist it, perhaps for a piece of the projected shared savings, says Blau. “Employers can play an important role in the formation of ACOs. They bring expertise to the table [as to what is effective] and have been incentivizing their employees to take care of themselves,” says Wilson.
  • Creation/sponsorship of an ACO using independent payers and providers. Some employers may be interested in creating and supporting an ACO for their own employee/retiree population. For example, the California Public Employees’ Retirement System (CalPERS) launched an ACO in January 2010 for its 40,000 CalPERS members in the Sacramento, Calif., area. The ACO is comprised of Blue Shield of California, Catholic Healthcare West, and Hill Physicians Medical Group, who all agreed to accept financial risk for the success of the program. The ACO has guaranteed CalPERS 5% in savings, about $15.5 million, and it appears that the ACO will meet its targets for 2010, says Ken Perez, senior vice president of marketing for MedeAnalytics, a health information technology company based in Emeryville, Calif.
  • Employer accesses ACO(s) in its payer’s provider network, and is entitled to some of the shared savings. This is the model contemplated by Norton and Humana. The pilot ACO program will initially cover only employees of Norton and Humana, but will eventually cover all employers in town, says Wilson. It is anticipated that the participating employers, as well as Norton and Humana, will receive some of the shared savings.
  • Obtaining health benefits from a commercial health insurance payer that includes one or more ACOs in its provider network, but no shared savings. In this model, the employer doesn’t directly share in the savings of the ACO. However, if employees are using the ACO, their services should be less expensive and they should be healthier because the ACO is working to meet quality and cost targets, notes Jordan Bazinsky, vice president for science and technology at Verisk Health, a health data analytics company based in Waltham, Mass.

When considering working with an ACO, employers should consider whether they should create or sponsor an ACO, directly contract with one, or access one via a health insurer. Determine their options.

ACO Downsides

Of course, there are some drawbacks to using an ACO. The National Committee for Quality Assurance, the private non-profit accrediting organization for health care organizations, hasn’t even finalized the criteria it intends to use to accredit ACOs. Several legal issues still need to be resolved, such as how an ACO can incentivize its providers to keep costs down and share savings without running afoul of federal anti-kickback, antitrust and other laws. Some ACO models may turn out to be less effective. “An ACO that’s just glorified capitation and under incentivized to provide good quality care won’t be good,” warns Bazinsky.

Some ACOs may also not succeed for financial reasons. There’s a tremendous amount of expense in forming an ACO, including creation of the infrastructure to collect data, coordinate care, and measure performance, the provision of clinical integration to reduce waste and inefficiencies, and installation of health information technology, which may doom many nascent ACOs, notes attorney Daniel Mulholland with Horty Springer in Pittsburgh.

There’s also a concern about the long-term viability of ACOs, which in the first few years may successfully reduce costs by increasing efficiencies and reducing expensive care but after a while may have hit the limit and can’t cut more to keep up the profits.

But the risks are minimal for most employers, since they won’t be financially on the hook, notes Wilson.

  1. Look at ACO design. Determine which ACO best meets the company’s operational needs. For instance, some companies may allow patients to go out of network for care; others may not. Some may assign employees to a particular ACO, while others will let employees choose which ACO to be affiliated with, says Travis. A good ACO will have sufficient numbers of primary care providers engaged in leadership and management, and the major physician and hospital partners should have a track record of working together effectively says Wilson.
  2. Make sure the ACO meets applicable criteria. For example, it needs to have a network of providers that is adequate for employee populations, and articulated quality goals. Ask what providers are in the ACO, and if your workforce has established relationships with them, says Wilson. “If 70% of your employees go to hospital A, you may want to use the ACO that hospital A is part of,” he suggests.
  3. Ask if employers will be involved and/or will see any shared savings. If the employer is not creating its own ACO, it can still receive some of the shared savings, and should ask how savings will be shared if the ACO is successful. If you don’t ask who benefits from the generated savings, the insurer will benefit. At the very least, employers should ask payers how premiums might be affected if the employees use the payers’ ACO.
  4. Make sure there’s a robust measurement system to see if the ACO is really improving quality and reducing costs. Clearly this is important if the employer is a stakeholder in the ACO. However, it’s also important even if the employer’s workforce uses an ACO simply because the ACO is part of a payer’s provider network. “You need to know which ACOs are better, so you can drive employees to providers that provide better care,” explains Bazinsky.

Last Physician Owned Hospital in the United States?

Monday, January 3rd, 2011


Editor’s Note: Freedom to conduct commerce continues to being taken away by the government.

Marketing Scheme Costs Employers Millions

Monday, January 3rd, 2011

January 1, 2011


EXECUTIVES of a small insurance company in Albany were mystified when, almost overnight, its payments for a certain class of antibiotics nearly doubled, threatening to add about a half-million dollars annually in costs.

The reason, it turned out, was that patients were using a card distributed by the maker of an expensive antibiotic used to treat acne, sharply reducing their insurance co-payments. With their out-of-pocket costs much lower, consumers had switched from generic alternatives to the more expensive drug.

With drug prices rising and many people out of work, pharmaceutical companies are increasingly helping patients with their co-payments. The use of such co-payment cards and coupons and other types of discounts has more than tripled since mid-2006, according to IMS Health, an information company that tracks the pharmaceutical industry.

Last month, for instance, Pfizer introduced a new card that can reduce the co-pay on its blockbuster drug Lipitor to $4 a month, a savings of up to $50. That brings the out-of-pocket cost in line with what consumers might pay at Wal-Mart for a generic version of a competing cholesterol-lowering drug.

Drug companies say the plans help some patients afford medicines that they otherwise could not.

But health insurers and some consumer groups say that in many cases, the coupons are just marketing gimmicks that are leading to an overall increase in health care costs. That is because they circumvent the system of higher co-pays on costlier drugs that insurers use to encourage consumers to use less expensive products.

“The member is somewhat insulated from the cost of the prescription,” said Kevin Slavik, senior director of pharmacy at the Health Care Service Corporation, which runs Blue Cross and Blue Shield plans in Illinois and three other states. “In essence, it drives up the total cost of providing the prescription benefit.”

The Food and Drug Administration, meanwhile, is studying the effect of the discounts on consumer perceptions, concerned that the coupons will make consumers believe that a drug is safer or better than it really is.

The acne drug that produced higher costs in 2008 for the Albany insurance company was Solodyn, a once-a-day formulation of an antibiotic called minocycline. A month’s supply of Solodyn sells for more than $700 on, compared with about $40 a month for capsules of generic minocycline, which are generally taken twice a day.

Executives at Medicis, the company that sells Solodyn, have told investors that the co-payment card is used by an “overwhelming majority” of patients, and is largely responsible for doubling use of the drug, to 26,000 prescriptions a week.

Co-payment coupons and cards are distributed by drug company sales representatives to doctors, and are also often available directly to patients over the Internet. Patients present them at the drugstore when paying for their prescriptions.

Any shift to brand-name drugs can have a big impact on health care costs.

At District Council 37, a union representing public employees in New York City, 59 percent of claims for statins in the year ended in June 2009 were for brand-name products that cost the plan $17.3 million. The other 41 percent of claims were for generic statins, which cost only $179,000. A year ago, the health plan eliminated the co-pay on generic statins to encourage more use of them.

For very expensive drugs, co-pay assistance is almost de rigueur, because in some cases co-payments can be up to 20 percent of the price of the drug. Novartis’s new pill for multiple sclerosis, Gilenya, costs $48,000 a year, compared with $30,000 to $40,000 for rival drugs, which are injected. Novartis is offering to cover the entire co-pay, up to $800 a month, which is 20 percent of the drug’s monthly cost.

“It seems the best strategy for a pharmaceutical company is to price their drug as high as they possibly can and offer that co-pay assistance broadly” to insulate consumers, said Joshua Schimmer, biotechnology analyst at Leerink Swann, an investment bank.

Jazz Pharmaceuticals has quadrupled the price of its narcolepsy drug Xyrem, to about $30,000 a year, over the last five years, according to a recent report from the securities firm Jefferies & Company. To cushion patients, the company recently increased its co-pay assistance to as much as $1,200 a month.

“We do want to avoid big jumps in price, abrupt changes in price, which can have a negative impact on payers, physicians and, most importantly, patients,” Robert M. Myers, Jazz’s president, told analysts in November, as the company increased Xyrem’s price by 22 percent. He added: “The coupon program, I will point out, does help patients get low monthly out-of-pocket costs, and this is a program that we are definitely committed to.”

Drug companies defend the coupons, saying they are helpful to consumers and allow patients and doctors to make decisions based on medical reasons, not costs. In many cases, such as with Lipitor and Solodyn, the rival drugs are not exact generics.

Jonah Shacknai, the chief executive of Medicis, said Solodyn’s once-a-day formulation reduces side effects and makes it easier for people to take their medicine. He also said many insurers paid far less for the drug than the price on

“No one is forcing anyone to prescribe Solodyn,” he said. “We think the public wins because we have facilitated access to a product that dermatologists are eager to prescribe.”

Amgen is offering to defray co-payments in excess of $25 per month for its new drug Xgeva, which helps prevent fractures caused by cancer that has spread to bones. In some clinical trials sponsored by Amgen, Xgeva proved more effective than its competitor, Zometa from Novartis, but at $1,650 a month, Xgeva’s wholesale price is twice as much.

The co-pay assistance is aimed at ensuring that differences in co-payments between the two drugs “aren’t driving medical decisions,” said Joshua J. Ofman, vice president for reimbursement and payment policy at Amgen.

Companies also say that lower co-payments help patients stay on their medicines. Studies have shown that patients are more likely to quit taking their drugs when the co-pay is high.

Drug companies cannot offer co-payment assistance for patients in federal programs like Medicare because such offers are considered an inducement to use a drug and in violation of anti-kickback laws. Some companies have responded by contributing to, or even helping to set up, charitable foundations that can provide co-payment assistance legally.

Massachusetts also bars drug company coupons, and on similar grounds. It is the only state to do so.

That became an issue for Tamara Starr, 25, a graduate student in journalism, when she moved from New York to Boston in 2008. In New York, she paid only $25 for a three-month supply of Betaseron, the Bayer drug that she uses to treat multiple sclerosis.

But in Boston, her co-pay is $75 a month. She said she was taking the drug as little as once a month, instead of every other day as she was supposed to. She has been hospitalized three times in the last year with symptoms from her disease, like vision loss. “I don’t want to make the choice of paying that $75 a month or putting that $75 toward my groceries,” Ms. Starr said.

Last spring, the Massachusetts House of Representatives voted 156 to 0 to repeal the ban on coupons. The state Senate eventually passed a more narrowly worded repeal, but it came too late in the session for the two bills to be reconciled.

Editor’s Note:  EXECUTIVES at insurers and pharmacy benefit management companies say they would like to counter the cards and coupons but are not sure exactly how to do so. One problem is that the information they receive from pharmacies does not specify whether the co-pay was made by the patient or by the drug company.

“The payer doesn’t know, and the P.B.M. doesn’t know,” said F. Everett Neville, chief trade relations officer at Express Scripts, a pharmacy benefits manager. “We have no ability to stop it and no ability to prohibit it.”

THIS WAS RECEIVED BY A PBM REPRESENTITIVE: It’s ironic that I had scanned in an example of this earlier today (see attachment). Concerning XXXX coverage, we specifically excluded drugs like the one mentioned in the article below after a series of emails on 10/27/2010.  That took care of those old antibiotics that were “reformulated” and then aggressively marketed to dermatologists.  It seems dermatologists are targeted for many of these campaigns.  The difficulty is that (PBM) never knows when one of these “copay cards” are used because it acts as secondary coverage.  The pharmacy processes the prescription on the (PBM) card as primary and then runs the copay card as secondary, so as far as we can tell, the patient paid the full copay.

El Paso ISD Joins Government Health Plan Today

Saturday, January 1st, 2011

The El Paso Independent School District , effective today,  is now enrolled in a government health insurance plan for district employees and their families.  The district ditched their self-funded health plan based on recommendations from their insurance consultant. See earlier posting on this blog –

El Paso ISD Benefits Committee Review –

El Paso ISD Benefits 2011 –

The TRS ActiveCare program, currently insuring a  majority of Texas public school districts,  has enjoyed stable rates and comprehensive benefits since inception in 2002. Could this be evidence that supports the theory that government health insurance plans work better than private health insurance schemes?  

Participating TRS ActiveCare Districts –

Details of the TRS ActiveCare Plan –

This story is an appropriate way to enter the New Year, 2011, as we believe it portends of events to follow regarding the health care delivery system in this country. With ObamaCare now firmly in place, with a few phase-in mandates effective today,  and with more to follow, many believe that by January 1, 2014  ObamaCare will gain a strangle-hold on employer sponsored health plans, what’s left of them.  

Group health plans, like the El Paso Independent School District, will be firmly under government control.

Editor’s Note: If an employer can save millions of dollars on health insurance through a government health plan, does it make sense to take advantage of the savings? See – Will the Brownsville Independent School District consider joining TRS ActiveCare in 2011?