Houston firm assists self-funded medical plans in directly contracting with medical care providers by moving away from traditional PPO networks. This article is an excellent read on some of the common myths regarding direct contracting:
http://www.ajlester.com/public_html/documents/HBJ%20Direct%20Contracting%20Myths.pdf
For more information go to www.directmanagedcare.com
The federal government has filed suit against BAE Systems alleging the company has violated disability laws by firing a morbidly obese employee at its Houston-area plant.
The Equal Employment Opportunity Commission’s lawsuit says the Virginia-based firm that makes military vehicles fired Ronald Kratz II in 2009 for being overweight.
The lawsuit filed in a Houston court says that when the company fired Kratz he was a materials handler who weighed more than 600 pounds. Kratz had worked at the plant in Sealy since 1994.
BAE told the Houston Chronicle it is reviewing the allegations and “will respond at the appropriate time and manner.”
The federal agency says Kratz, who received ‘very good’ employee reviews in 2008 and 2009, was replaced by a worker who was not obese.
“Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act, and the Voting Rights Act, and all of those challenges failed,” the Justice Department said.
SOUTHFIELD, Mich.—Blue Care Network said Wednesday that it will issue refunds of 2.5% of billed premiums to about 5,200 employers in Michigan.Officials at Southfield, Mich.-based Blue Care, the largest commercial health plan in Michigan, said it would issue the refunds because health care costs were lower than expected this year.”The Blues ask employers every day to embrace wellness in the workplace and give employees incentives to become healthier,” Blue Care President Kevin Klobucar said in a statement.
The total amount of the refund is $7.3 million. Blue Care Network did not provide a total count of employees, but these are 5,200 small businesses with 50 or fewer employees.
Blue Care also announced that its statewide average rate increase for the small-group market of 50 or fewer employees will be 6.7% in the first quarter of 2012, the lowest in the past four years. Blue Care increased rates 8.3% in 2009, 10.9% in 2010 and 9.9% in 2011.
“The Blues work every day to provide quality health care coverage while balancing costs,” Mr. Klobucar said. “We provide products that encourage healthy behaviors, programs that promote preventive care and wellness, and networks of high-quality doctors and hospitals. This approach is working and translates into lower costs for Michigan businesses.”
Blue Cross snared another group in South Texas recently. The Blues are aggressively competitive – their enrollment teams are working overtime these days. In just the past 30 days, the Blues have written Brownsville Independent School District, the largest employer south of San Antonio, Kleberg County and the City of Harlingen.
Steve Keevan, Blue Cross Blue Shield representative is leading the Blue Cross Blitzkrieg in South Texas with an unbroken chain of victories.
Nothing wrong with ObamaCare keeping medical records on every American, warehoused in some federal data base. But OnStar is chastised for basically the same thing?
http://news.yahoo.com/ny-sen-schumer-accuses-onstar-invading-privacy-215425123.html
The Baylor Health Care System has decided that if you use tobacco, in any form, you won’t get a job with them. Are Fat People next?
Under ObamaCare employers will face punishment if employee’s contribution for single coverage exceeds 9.5% of gross wages. If John earns $28,000, and pays $221.68 or more per month towards his single health insurance coverage, the employer is punished.
Employers may decide to charge each participating employee 9.5% of their gross wages to qualify for the group’s medical plan. That would protect the employer against government sponsored terror and give employees some skin in the game. Thus the rise of Defined Contribution Plans in this country will grow as fast as brush fire in Bastrop, Texas.
We are aleardy seeing a move in the market towards this end. Defined benefit plans will become dinasaurs according to Fred and Barney.
Austin Resolutions assists in claim management by negotiating / auditing health care provider bills. “Discounts from Billed Charges can be misleading…………..”
http://www.austinresolutionsonline.com/the_market.htm
Editor’s Note: What has been their success with Seton?
MyHealthGuide Source: H.H.C. Group, 9/20/2011, www.hhcgroup.com
Now there’s a better option than PPO discounts. H.H.C Group, a leading healthcare insurance consulting company, announced the launch of its Medicare/DRG Based Pricing Service, designed to help payors of all sizes reign in ever increasing provider related costs.
Rocky – Underwriter Whiz of PayLess Insurance Company
According to the American society of Actuaries, claim frequency and severity statistics show that 20% of any population base has annual medical expenses of more than $1,000. A $1,000 annual deductible will be met by 20% of the group. That means 80% of the group will not satisfy their deductible during the year.
Removing the $1,000 deductible entirely will benefit 100% of the group participants while 80% of the group will gain a benefit worth less than the benefit gained by 20% of the group.
According to the American Society of Actuaries 23% of any given population will not have any medical expenses during the year. That means 77% will. But 80% of those that do incur medical expenses will have claims below $1,000.
So what would it cost to eliminate the $1,000 deductible from a health plan? If everyone had medical expenses in excess of $1,000 during the year, the cost would be $83.33 pepm plus premium tax plus reserves. But that wont happen. An acturial chart used by many underwriters has a 9.1% load factor to eliminate a $1,000 deductible.
Eliminating the $1,000 deductible does not mean the exposure goes away or even increases. It’s a matter of allocating the risk, winner take all if fully-insured.
Recently a Texas employer changed their Pharmacy Benefit Manager (PBM) as recommended by their insurance consultant. The employer’s Risk Manager, one of the best there is in our opinion, tracked the claims prior to the change in PBM and after the change was made. In the first month under the new PBM, Rx claims increased more than 50%.
Something was amiss mused the Risk Manager. A meeting with a local mom and pop pharmacy to “compare notes” proved informative. In going line by line over the Rx claim report, and comparing off the pharmacy’s own computer generated Rx sales records, lining up dates, times, patient names, Rx dispensed, produced troubling news.
“Bill, spread pricing was apparant. One drug dispensed, for example, was charged to our Plan in the amount of about $138. The pharmacy was paid about $10. So the PBM kept a profit on that one drug of about $128!”
When the PBM was notified that their costs were out of line and that they needed to offer a reasonable explanation of why Rx costs increase by 53% in the first month of the program, they responded with an offer. “We will discount August’s bill by 12% and will credit next month’s bill by the same amount.”
The local pharmacist ask the Risk Manager “Why are you using a PBM? All a PBM does is screw you and me and drive costs up. I would be willing to work directly with your employer and save you money.
Editor’s Note: A Texas based TPA informed us that those clients of theirs that do not use a PBM have Rx costs much lower than those that do. Those groups cover Rx the old fashioned way; patients pay for their Rx at point of sale with cash, then file a claim with the TPA for reimbursement. Rx claims costs average 50% or more below than that of those groups that employ a PBM. Maybe the best PBM is no PBM at all?
……….Double billing, billing for services not provided, insurance company claim examiners dont check claims, PPO networks aid and abet fraud, hospitals and PPO networks engage in direct fraud by selling illusory discounts, PPO contracts preclude meaningful review of bills specifically prohibiting line item review of bills, PPO networks get paid a percentage of purported discounts…………………………….
California legal action – Executive Summary (05-08-2011) (2)
See previous posting – http://blog.riskmanagers.us/?p=5858
Exemptions
Certain plans will be exempt from the tax, including Medicare Advantage plans, Medicare prescription drug plans and plans covering federal employees.
In addition, the tax will not be assessed on services provided in Michigan to non-Michigan residents, according to the law.
The tax is intended to generate $400 million in annual revenues for the state. If the revenue collected exceeds that amount, insurers and TPAs would receive a credit against their assessments due the next year.
Other states that have similar taxes include Maine, which is phasing out its tax, Massachusetts and New York.
Editor’s Note: Medicaid “insurance” in Texas is the best insurance in the world. Better than what Federal Employees get. It’s free, and it’s good coverage – $5 co-pay to see a doctor, little or no out-of-pocket expenses. Hell of a deal for those than can afford a $5 co-pay. Why work, earn too much, and have to pay those exhorbitant health insurance premiums for lousy benefits? What do you mean I have to pay a deductible? That’s outrageous!
Recently, a Texas licensed insurance consultant, retained by a Texas independent school district, reported his analysis with recommendations to the district’s School Board of Trustees. Unfortunately for the consultant, one of the school trustees is an experienced purchasing manager well versed in the Texas Education Code in the area of puchasing requirements under a bid or proposal process.
WASHINGTON (Reuters) – The U.S. hospital and drug industries lashed out at provisions of President Barack Obama’s deficit reduction plan that would saddle them with more than $200 billion in federal healthcare spending cuts.
Blue Cross parent’s profits drop in second quarter
By: Thomas A. Corfman and Kristen Schorsch September 19, 2011
(Crain’s) — After surging earlier in the year, profits of the parent of Blue Cross & Blue Shield of Illinois dropped sharply during the second quarter, to a still hefty $270 million, as benefits rose and membership shrank.
Health Care Service Corporation (HCSC), which operates Blue Cross and Blue Shield of Illinois (BCBSIL), announced today an agreement that will establish a nationwide private exchange for employers to use in managing their health benefit offerings.
My analysis shows that the strategic delay of treatment and the associated adverse selection may be an important factor in explaining why so few people have dental insurance coverage in the US and why typical dental “insurance” contracts provide so little insurance.
http://www.stanford.edu/~mcabral/Ex_Post_Adverse_Selection.pdf
Some employers measure risk through premiums charged. Others measure risk through more independent means.
– Molly Mulebriar –
Washington State Department of Labor & Statistics publishes Ambulatory Surgical Center Fee Schedule in July 2011 – http://www.lni.wa.gov/ClaimsIns/Files/ProviderPay/FeeSchedules/2011FS/fsAsc.pdf.
As a self-funded employer, how does this compare to what your Plan is now paying? You may be surprised at the cost differentials.
We recently reviewed an ASC claim on a hand surgery in Greater San Antonio Texas – ASC charge was about $98,000, surgeon was about $38,000, and the ancillary lab and x-ray brought the overall total to right at $150,000. We did not pay this amount of course, rather we sent them a check for much less. In fact, the check we sent was not enough to even buy a 2011 Four Wheel Drive, Delux Chevy Truck with leather seats.
Unfortunately this example is not uncommon. How about an ASC charge for a deviated septum on a 12 year old patient coming in at about $60,000? Yep, it really did happen. We paid the ASC $2,500 instead.
Seems that if you have insurance, you pay more. Employer Sponsored Cash Plans reign supreme.
It’s been over three years since we first implemented Cost Plus with many of our clients. The results have been good, with health care costs finally under control for these self-funded clients of ours. But, in the beginning, not knowing how the plans really worked, and the theory behind them, it was a tough learning process for some employees used to the old True & Tried PPO system of health care financing.
Below is a redacted letter we wrote to one client in regards to an employee who could not understand why she was having to navigate through the American health care system without the guidance of a PPO network handbook. For the first time, she began to question health care costs:
Ive read the letter from Mrs. XXXX and have reviewed the bills you sent us. This is a perfect illustration of what is wrong with our health care delivery system and with consumer perceptions / expectations.
For the first time, it appears that the consumer is questioning her medical care bills. This is a good thing. Before, consumers were used to simply paying their co-pay/deductible/co-insurance and the insurance company would take care of the rest. And therein lies the problem. What the consumer did not know, or even care about, was what the provider was charging for services. Employers and employees were content to assume that the PPO networks had successfully negotiated significant “discounts” on their behalf. But, what we have found through two years of study and investigation, PPO networks have become nothing but a smokescreen that allow providers to inflate their fees. PPO networks directly contribute to continued escalating medical costs.
One example of price gouging by a provider can be found on one of the claims you sent to us. A tissue exam by a pathologist was billed at $2,827.31. Yet, Medicare would have paid this provider only $97.69. That is a +3000% markup from what the Federal Government would have paid under the Medicare program.
In looking at the other bills, I find markups of anywhere from 250% to over 800% of Medicare. Yet, locally in Bexar County, we have negotiated rates on your behalf of 115%-125% of Medicare with hundreds of physicians. They are quite happy with the arrangement with some even going as far as applauding what your company is trying to accomplish.
In our quest to learn about PPO metholologies, we found that every PPO network we investigated negotiated dissimilar contracts with providers. For example, Dr. Smith may have negotiated a better contract than Dr. Jones down the street in the same specialty. Consumers did not care or even know about this – all they knew is that both physicians were “in-network” and all they had to pay to visit the more expensive Dr. Smith was $20 where they could have gone to see Dr. Jones who was less expensive, for the same $20 copayment. None of this makes any economic sense, yet we have continued to perpetrate this inefficient and costly system we call health insurance.
A good example of this can be found on two claims for the same proceudre code (36415). One vendor billed $12 and your plan paid $3. The other vendor billed $21 and your plan paid $3. This shows that vendors bill different amounts for the same exact procedure. Under a PPO plan, the consumer does not know this. And, they dont care because “insurance will take care of this for me.” Providers can markup their charges to any level they choose.
Your employees have a choice of which providers they can see. Employees will need to become more engaged in their health care costs and make prudent business decisions that are best for them. My suggestion to Mrs. XXXX is to engage here physician in a dialog relating to costs. This is a cash plan, not an insurance plan – we are not employing an insurance company – we are marshalling money from your company and from the employees to fund a medical care plan that will pay providers a fair and reasonable fee for services.
In the past the only time a consumer complained about their insurance was when the rates went up every year. And they mostly blamed insurance companies for this. They were right but do not know why they were right.
On Monday I am going to set aside time to call the providers to see if we can get them to agree to reduce their fees on these particular claims. Of course, they do not have to agree to anything and can charge any amount they choose to charge. This is a free market.
From A Carrier Rep:
Bill. Great article. Curious, does cost-plus generate monthly reports that show billed charges/allowed charges to final claims paid? Also do they show billed to negotiated charges on their EOBs. I applaud their approach for greater transparency. Releasing this information would only demonstrate this transparency. Your thoughts?
From a Health Care Auditing Firm:
Bill, you nailed it again!
From A Ft. Worth Dentist:
Nice job, Bill.
Editor’s Note: I started in the insurance industy in 1973, selling health insurance. At that time there was no such thing as PPO’s, or even HMO’s. We sold indemnity plans. $20 per day hospital room, surgical schedule, no out-patient Rx, no major medical either. Then in 1975 the company I worked for came out with something new; Major Medical. The cost to add Major Medical of $250,000 to the indemnity plan was only $2-$3 more to the monthly premium. Still no PPO’s or HMO’s. That came later. Balance billing issues were few and far between. In fact, extremely rare. Consumers understood that they were ultimately responsible for their health care, not someone else.
But the two generations since then know nothing else but PPO’s – even hospital people believe that only “True Insurance” must be a contractual relationship, anything else is “not insurance.” The Entitlement Mentality was not pervasive in 1973 but it is now.
What happened?
Location: San Antonio (Northwest San Antonio, TX)
Established Allstate Insurance Agency providing services to the Northwest San Antonio area. Policies offered by this agency are Home, Auto, Life and Health, and Commercial Insurance with over 1,800 policies in place, the business generated over approximately $230k in commissions last year with an 82% retention rate. There is $225k in equity in the book of business, which can assist in lending. Currently there are 3 binding agents not including the owner and one part time telemarketer.
Editor’s Note: No outlier? Why would anyone sign a contract that contains one? An outlier creates a conflict of interest in our opinion and gives the hospital an incentive to inflate billed charges.
Federal authorities say 20 South Texas residents have been convicted for their roles in a scheme to defraud the American Family Life Insurance Co.
Between 2006 and 2010, the timespan reflected in the charges, Fontenot, as a hired consultant, advised the parish committee on myriad health, accident, life and dental insurance policies. During that time, he made recommendations involving Cigna, Coventry Health Care of Louisiana, Humana, Peoples Health and United Healthcare, five companies with which he allegedly had separate business agreements, according to the charges.
Jefferson Parish paid Fontenot & Associates $93,600 between 2006 and 2010, records show.
The charges also state that Fontenot accepted payments from Coventry, Humana, Peoples Health and Sun Life Financial, a company with a parish contract in 2006 and 2007, according to parish records. The Ethics Board charges do not say how much Fontenot made from the companies.
I know, I know, I know! Mrs. Brown! I know the answer! Please Mrs. Brown, let me answer that one, pleaaaaassse let me answer that question!!!!!!!!!!!!! Please, please, please, pleeeeeeeeeeeeeeeeeeeeease Mrs. Brown.
Is it because Medical providers continue to charge more and we continue to pay it?
Exactly! And Ignacio, how can we lower health care costs?
Easy Mrs. Brown, hire RiskManagers.us!
Editor’s Note: Mrs. Brown is a 3rd grade teacher from Los Prietas, Texas. Her class studied health care costs this summer and assisted the Teacher’s Insurance Committee in negotiating a new group medical plan for the district employees. Ignacio hopes to attend the London School of Economics on scholarship next summer, majoring in health care financing. His mother, currently employed by Christus Health Systems, is related to Mother Teresa.
Fort Worth Housing Authority will be seeking competitive proposals for fully-insured and self-funded health insurance on Monday, September 19. Interested vendors may contact RiskManager@sbcglobal.net.
Bexar appraisal District, located in San Antonio, Texas, will be seeking competitive proposals for group medical insurance and voluntary vision care program. Request for Proposals will be released on Monday, September 12. Interested vendors may contact RiskManager@sbcglobal.net .
“…………….the audit also was to have included BISD’s self-funded employee health plan, which generates about $40 million a year in claims. After negotiations with the firm, it was determined that insurance expenditures would not be included in the audit’s scope.”
REFUGIO – Efforts to wrangle in a new health insurance company to cover Refugio County employees were unsuccessful.
The county’s solution is to increase employee salaries at least $600 to cover the individual cost of purchasing insurance.
Verity National, the insurance company that covered the county for the past 15 years, could not meet the county’s high claims. Other major insurers, such as Humana, UnitedHealthcare and Blue Cross/Blue Shield, also did not want to cover the county because of the high claims, said Ann Lopez, county commissioner Precinct 1.
“It’s not a situation that any of us wanted,” Lopez said. “But it’s also one that we could not find a solution to.”
The high claims were beginning to deplete the county’s reserves, she said.
Hopes are for county employees to use the extra income to purchase health insurance, though it’s not required, she said.
“People started aging and getting sick and that began to impact the whole plan significantly,” Lopez said.
County employees received letters with information about other health insurance companies and the county is doing what it can to help ease the burden, Lopez said.
The county is expected to approve its budget and the exact increase in salaries for the county employees on Sept. 13.
“It’s a very difficult decision,” she said.
Editor’s Note: The county could have continued a group health insurance program simply by indemnifying the benefits. We have a Texas county insured on that basis for the past four years.
Central Texas is on fire, literally. Suffering one of the worse drought in years, dry grasslands provide fuel for fires spurred by high winds this weekend. The Bastrop area is especially hard hit. On Highway 21, the Lost Pines section is gone. The Valero store “exploded” and is no longer there.
But, not to worry. Since the Democats in Congress pushed through a health care bill last year that covers pre-existing conditions, it is only a matter of time before they do the same for homeowners insurance.
Just think, no more nasty insurance premiums to contend with, until the need arises. When fire threatens one’s ranch, livestock and homestead, all one would have to do is head straight down to the local Texas Farm Bureau office and apply for instant coverage, just like applying for health insurance for that heart transplant you just learned you need.
ObamaCare for ranchers! A novel idea whose time has come. Vote Democrat for the “Free Stuff”.
Editor’s Note: Health care financing is no more of a right than any other financial loss one suffers. It is all about personal responsibility.
From April 2007 employers who provide healthcare benefits via a ‘cost-plus’ or trust scheme will be able to benefit from PruHealth’s award winning product and vitality programme.
Starting Thursday, state and federal regulators will review double-digit rate increase proposals from health insurers to determine whether the premium hike is reasonable.
The SEC publishes 10K Filings which provides useful information regarding company finances and strategies. Ever wonder who owns the MGU, and who owns the owner of the MGU, and who owns the owners of the owners of the MGU or insurance carrier, or which marketing firm (brokerage) is owned by any one of the above owners? A 10K filing provides the answers. Below is a portion of a recent filing:
Under ObamaCare, carriers that participate in Exchanges “must contract with essential service providers.” Will that incentivize providers to charge more? “You want me in your lousy network? Then I want 500% of RBRVS and not a penny less!” Why should providers negotiate lower fees when insurance companies are required to use their services? Just the opposite may happen
