Archive for February 25th, 2011

Who Gets Jane’s Kidney?

Friday, February 25th, 2011

The United Network for Organ Sharing (UNOS) the nations organ-transplant network is considering a change in its policy by giving younger, healthier patients preference versus older, sicker people, The Washington Post reported.

Currently, UNOS gives kidneys, which is the most sought-after organ, to patients who have been on the waiting list the longest amount of time, but a new policy would match recipients and organs based on age and health.

Were trying to best utilize the gift of the donated organ, said Kenneth Andreoni, an associate professor of surgery at Ohio State University, who chairs the committee that is reviewing the system for UNOS, which is a non-profit based in Richmond, Va. Its an effort to get the most out of a scarce resource.

The possible changes are being welcomed by some bioethicists and transplant surgeons; however, others worry it would distort the pool of existing organs by modifying the model of people who make living donations. It could also discriminate against middle-aged or elderly patients.

The best kidneys are from young adults under age 35 years. Nobody over the age of 50 will ever see one of those,” said Lainie Friedman Ross, a University of Chicago bioethicist and physician. “There are a lot of people in their 50s and 60s who, with a properly functioning kidney, could have 20 or more years of life. We’re making it harder for them to get a kidney that will function for that length of time. It’s age discrimination.”

There are more than 110,000 Americans on the transplant waiting list. Of those, 87,000 need kidneys and each year, only 17,000 Americans get a kidney transplant. More than 4,600 people die because they did not receive a kidney in enough time.

The public can send in their comments to UNOS until April 1. A decision could be made by June 2012.

Editor’s Note: There should not be an organ scarcity – people die every day, every week, every month and at least once in their lifetime. Organs from the departed can be used to save and prolong lives. There is a value to that. A monetary value.

Gallagher CEO: Health Care Reform Will Lead to Broker Consolidation

Friday, February 25th, 2011


NEW YORK, Feb 18, 2011 (A. M. Best via COMTEX) —

The health care reform law will result in consolidation among smaller brokers, said J. Patrick Gallagher Jr., chairman, president and chief executive officer of insurance broker and risk management services firm Arthur J. Gallagher & Co.

“I think it’s [the new health care law] just horrible for America, but it’s great for Gallagher,” the executive told the audience at the Bank of America Merrill Lynch Insurance Conference in New York, according to a replay of the conference on the company’s website.

“Clients cannot figure this thing out,” Gallagher said, adding his company has built tools to assist clients in determining their costs as the health-reform changes are implemented in the years ahead.

“What this is going to do, in my opinion, is essentially push all the smaller brokers that are in the benefits space out of the space,” Gallagher said, noting that will help his company’s acquisition opportunities.

Gallagher said his company’s “pipeline for acquisitions has never been better,” and estimated there are some 18,000 retail and wholesale brokerages and agencies in the United States.

Recently, the company acquired the Gleason Agency Inc. and its affiliate, Gleason Financial Ltd., both headquartered in Johnstown, Pa. (BestWire, Jan. 11, 2011). Gallagher has long employed a strategy of growing through acquisitions, completing 71 deals, with annualized revenue of $409 million, from 2008 through 2010, according to the company’s presentation at the conference.

Gallagher highlighted the company’s acquisition of GAB Robins (BestWire, Oct. 5, 2010), which he said is going well. Gallagher is intent on international expansion and focusing on building new niches, he noted.

As of Dec. 31, Gallagher had $100 million in available cash.

“We only do three things with our cash: We buy brokers, we pay dividends, and, if there’s excess cash after that, we repurchase shares,” Gallagher said. “And, at this point in time, the share repurchase is not probably where we’re going because we have such great acquisition opportunities.”

Brokers are facing a moment of truth due to the new medical loss ratio rules, Peter Gruenberg, chief placement officer with the human capital practice of Willis North America, recently said. By 2012, large group health plans will be required to issue refunds to policyholders if they spend less than 85% of premium income on medical care and activities to improve the quality of care; for small group and individual plans, the threshold is 80% (BestWire, Jan. 5, 2011).

Founded in 1927, Arthur J. Gallagher & Co. was the fifth-largest global insurance broker, based on 2009 revenue of $1.7 billion, according to Best’s Review magazine’s annual ranking.

During the afternoon of Feb. 18, Gallagher’s stock (NYSE: AJG | PowerRating) was trading at $31.62 a share, up 0.67% from the previous close.

(By Diana Rosenberg, senior associate editor, BestWeek)

Editor’s Note: Big is not always better. The big brokerage houses employ people. Some people are better equiped than other people. But a small independent can have the brain power and aggressive energy to run circles around the big boys. And they are more nimble.

TPA’s Can (and sometimes do) Control Retention Through Stop Loss Threats

Friday, February 25th, 2011

Self funded employer groups sometimes find themselves held hostage by their TPA via stop loss insurance policies. The intended result is that the employer is unable to find competitive alternatives.  Fear of lost coverage drives the buying decision to the advantage of the incumbent TPA. We have seen this more than once, more so with certain TPA’s operating in Texas.

For example, we assisted a Texas county in evaluating their  self-funded health plan recently. The county had been with the current TPA for many years and had not competitively bid out their cover for some time. Data provided by the TPA was less than good, and pulling data from the TPA was tantamount to asking the Pope for a condom.

The TPA provided the stop loss carrier’s renewal on the TPA’s letterhead, with no supporting documentation. When asked to provide the underwriter’s notes, the TPA refused, stating that they (the TPA) were the underwriters and only they could bind coverage. “This is how we do business” was their response.

We knew this was not true.

Their stop loss “renewal” offer was firm, with no conditions or contingencies despite the TPA’s representations that the case was running “hot” and there were nine (9) potential large claimants. The TPA warned the county that going to bid would jeopardize the stop loss carrier’s renewal with the possible  loss of a firm renewal and potential lasers to be placed on the identified potential large claimants.

“The county is really getting a good deal, just don’t jeopardize it” warned the TPA’s broker.

The TPA gravely warned that any other competing TPA/Stop Loss carrier would most certainly laser some individuals to the detrement of the county. The TPA and the local agent representing them met with each county commissioner individually to warn and caution them. They even provide each a formal letter attesting to their representations.

The TPA provided a claim report indicating the identification of potential large claimants as proof. Certainly this “evidence” was not doctored, or was it? 

Why would the stop loss carrier offer a firm renewal, with no lasers, with very low and fair rates if the case was running “hot?” You would think, and common sense would dictate, that the carrier would rather lose the account than to keep it. After all, aren’t insurance companies in the business to make a profit? Does the Pope abhor condom usage? Is the Moon round?

We were suspicious. When told we could not contract the carrier’s underwriter to discuss the renewal, and to verify it, we picked up the phone and called the stop loss insurance company directly. This company is a well known household name carrier with a fine reputation. We knew some of their underwriters. There was no indication other than our innate suspicions that our call to them would produce information contrary to the representations of the TPA.  Trust but verify should be everyone’s business model. 

Our conversation with the chief underwriter was eye opening. No, there were no indicated large claimants. No one was in large case management. No one in the group attained 50% of the specific level. The renewal called for a modest trend increase and no lasers. Run-in claims had no limit. A great renewal for a good risk it seemed. And, they were willing to negotiate an even better renewal too. (Hmmmmm, lower premium = less commissions?)

Here is a case where an employer was advised by the incumbent vendor  not to bid out their cover as it would jeopardize their covered risk. Documentation was provided to convince the employer that it would be in the best interests for all to maintain the status quo. However, it became apparent that the intent was to hold the county hostage and retain the account for another contract year.

Using documentation provided directly by the stop loss carrier, the county successfully bid out their self funded plan. A change in stop loss carriers provided savings to the plan. The TPA was fired and a new one retained.

Editor’s Note: Unfortunately, this story is not too uncommon. The severity of this one is. Has your group ever been held hostage?