Archive for December, 2011

DRG 492 – PPO VS Medicare VS Cost Plus

Thursday, December 29th, 2011

We received an interim claim this afternoon on an in-patient hospital admission (motorcycle accident) in the Rio Grande Valley (Texas). The patient was admitted about a week ago, and is still in the hospital, expected to be in the hospital for another two or three weeks. Due to stop loss issues, an interim bill was requested for prompt payment prior to expiration of the stop loss policy which is Jan 1, 2012.

This interim hospital bill so far is billed at $204,000 for charges through today. It was quickly repriced through the PPO contract in place, and the allowed amount comes to $142,000, for a whopping 29% discount off billed charges.

Medicare would have paid about $16,862.07 for DRG 492 ( ).

The hospital billed amount equals to about +1,200% of Medicare.

The PPO allowed amount equates to about +842% of Medicare.

Our Cost Plus program would have paid about $21,000 on this claim ( )

But, this claim is continuing as of this writing, and will be even more than what has been billed so far. So the numbers will look even worse for a PPO/Medicare/Cost Plus comparision.

Editor’s Note: This claim is not uncommon. We see claims like this every week. The problem is, consumers don’t see these claims and dont care. They have insurance!  Yet it is the hated, greedy insurance companies that take the blame for ever increasing health care costs. Isn’t that like blaming gas stations for the high price of gasoline?  You decide. Managed Care Under Siege – explains our take on our medical care delivery system. We welcome opposing views – write

From a Texas insurance consultant:

Bill, this is a good example of what an outlier in a PPO contract will do. I expect the outlier in this case is $100,000. Since the billed charge exceeded that threshold, it is no wonder the discount was so small. If this case had no PPO contract, and paid Medicare rates, balance billing could be handled as easy as dickering with a used car salesman. I bet a 20 minute phone call could have reduced this bill by 50%, much better than the 29% discount this claim received. This whole health care reimbursement system is Bull Shit.

From a Midwestern insurance consultant:


From a San Antonio business owner:

This isn’t ‘highway’ robbery; it’s a home invasion personal robbery!!



50,000,000 “Poor” Americans on Medicaid – 20% of Population – Program Running Out Of Money

Wednesday, December 28th, 2011
Medicaid is running out of money. Almost 20% of the U.S. population is covered by this entitlement program, due to increase substantially in 2014 when ObamaCare kicks in on steroids. But, where is the money to fund “free health care?” The system is already broke………………Then add in Medicare – losing money too. Add the number of Medicaid and Medicare recipients and it totals almost 50% of the U.S. population…………………and money is running out. Margaret Thatcher said it best: “The problem with socialism is you eventually run out of other people’s money.” (more…)

What Do You Mean I Owe You – ObamaCare Says It’s Free!

Wednesday, December 28th, 2011

With the passage of ObamaCare, the entitlement mentality continues to be fueled to even higher levels. Isn’t preventitive care supposed to be free……………………..


Lipitor And The Power of Advertising

Wednesday, December 28th, 2011

“Pfizer benefited from some lucky timing: Lipitor went on sale in 1997, the year the Food and Drug Administration first allowed drug ads targeting consumers……..So Pfizer spent tens of millions on ads……………..”


Captive Agent VS Independent Agent: Appropriate Titles

Wednesday, December 28th, 2011


“Fish said that a captive Allstate agent with a $1 million book of business will realize $90,000 in base revenues at 9 percent while an independent agent holding an Allstate contract earns $150,000. “How fair is that?” Fish asked.”


Health Insurance “Broker” Earns $670,000,000 In 2010 – Will ObamaCare Approve?

Tuesday, December 27th, 2011

AARP’s income from United HealthCare skyrocketed from 2007 to 2009, even as the recession was hitting, leaping from $284 million to $427 million during that time, a 50 percent jump. In 2010, those revenues soared even higher — to $670 million.

AARP makes the majority of its revenues from United’s supplemental insurance policies to seniors, including what is known as Medigap, which covers things for which Medicare does not pay. One of AARP’s many ads tells seniors that the insurance can help them protect themselves from some of what Medicare doesn’t pay.

Save up to thousands of dollars in potential out-of-pocket expenses with an AARP Medicare Supplement Insurance Plan,” the ad says.

But AARPs support for the Obama administrations new health care law, which calls for $500 billion in cuts to Medicare, critics say, makes it all the more likely people would need supplemental insurance, something AARP stands ready to provide. That move alone, as seniors began to go to Medigap insurance, increases AARP’s revenue over a 10-year period by $1 billion.

Editor’s Note: With ObamaCare and the minimum loss ratio requirement (MLR) how are association sponsored health plans affected like the Texas Association of Counties, Texas Municipal League and others who sponsor and market group health plans in Texas? After all, aren’t these entities acting as a broker? Will their compensation be included in the MLR calculation? Or is there a loophole to be seized?



Texas House Members Object To Medical Loss Ratio Waiver Request

Sunday, December 25th, 2011

A group of lawmakers in Texas are urging the state’s insurance commissioner to withdraw a request for a waiver to the medical loss ratio (MLR) provision in the federal health insurance reform law. They say the request would cost Texas policy holders an estimated $260 million.

State Rep. Lon Burnam and 30 other state representatives want Texas Department of Insurance (TDI) Commissioner Eleanor Kitzman to withdraw the waiver application to application to the U.S. Department of Health and Human Services (USHHS).

The MLR rule is a provision of the Affordable Healthcare Act that would require insurance companies to spend at least 80 percent of policy premium dollars on actual medical expenses, rather than in-house overhead, marketing, advertising, or bonuses. Under the MLR, if insurers fail to comply with these standards, they must provide rebates to policyholders. In Texas, rebates would amount to approximately $350 for each policy holder.

“I can see no reason why the state of Texas would want to delay a measure that would save Texans money,” said Rep. Burnam in an announcement released by the Texas House of Representatives. “After a session in which budget writers slashed funding for essential public health services, Texans need all the help they can get to cover their medical expenses.”

Burnam added that several health insurers in Texas are meeting the new MLR requirement. That fact “demonstrates that the standard is clearly achievable,” he said.

“I would urge all North Texans to contact TDI Commissioner Kitzman at (512) 463-6464 and encourage her to withdraw her request to delay full implementation of the MLR rule,” Burnam said.

To date, USHHS has denied MLR delay applications from Indiana and Louisiana.

The National Association of Insurance Commissioners sent a resolution to USHHS asking that the MLR be modified. Agent groups and many commissioners believe that the MLR restriction will reduce agent commissions. That in turn will hurt consumers by cutting agents out of the process of securing health insurance, especially on the individual level, they say.

Editor’s Note: Burnam is a socialist (Democrat)


RBRVS PPO Network Announces 2012 Sales Projections – Private Sector Targeted

Wednesday, December 21st, 2011

RBRVS, the nation’s largest PPO network, announced today in a televised press conference that sales projections for 2012 will surpass 2011 sales by 100%. 

“We expect rapid growth in the first quarter of 2012, followed by significant increase in market share in the private sector in the second and third quarters” announced Molly Mulebriar, CEO of Blithering Strategies (BS) of Dime Box, Texas.

RBRVS is a national network of hospitals and doctors and other health care providers. To date, the largest payer of the RBRVS network is the Federal Government through their Medicare program. Recent polling data indicates that other payers are forecast  to endorse the network in large numbers in 2012.

Molly (Bull Dog)  Mulebriar, well known  insurance industry critic and rabid health care advocate,  expanded her comments after the press conference.   “We at BS are excited about the RBRVS PPO network. Payers will save money. Practically every doctor and hospital in the country is on the system. And more importantly, it is unlike any other PPO network in the country – It is transparent. It is proven. It offers  a win win situation for consumers.”

“We believe in transparency. We publish our fee schedule. Anyone can access our fee schedule at – no other PPO in the country shares this information with the public. They keep their fees secret. That is wrong, and the root problem with health care costs in this country!” noted Mulebriar in an emotional exchange with ABC news reporterette and former Blue Cross representative,  Sandy Ostrich.

When asked what she message she would  to send to employers who sponsor group health insurance plans, Mulebriar responded “if you want transparency,  and willing to take your head out of the sand, Sandy, the RBRVS network should be the network of choice without question.”

For more information on the RBRVS PPO network, write

From a Mid West Insurance Consultant:

ooh baby…I’m all in on this one. where do I buy stock? Obama HQ?

Beginning of The End of Employer Sponsored Health Care

Wednesday, December 21st, 2011

This Explains It All – The Devil Made Me Do It

Monday, December 19th, 2011


Editor’s Note: A good laugh now and then is good for the soul

How Doctors Die

Sunday, December 18th, 2011

 By Ken Murray, M.D.

 “It’s not a frequent topic of discussion, but doctors die, too. And they don’t die like the rest of us………………”


SIIA Files Legal Brief In Defense of TPA’s and Self-Funding

Friday, December 16th, 2011

December 15, 2011 – The Self-Insurance Institute of America, Inc. (SIIA) today filed an “initial” amicus brief with the Texas State Supreme Court in the case of GPA Holdings, Inc. v. Baylor Health Care Systems. This initial brief supports GPA’s request that the Supreme Court consider arguments to reverse an adverse judgment issued by the Fifth District Court of Appeals. Should the Court agree to hear arguments, SIIA will file a secondary, more comprehensive brief.

At issue is whether third party administrators (TPAs) can be held financially liable for health care services incurred by self-insured group health plans. The Appeals Court declared that such financial liability is lawful.

SIIA’s brief, drafted by attorneys Adam Russo and Ron Peck of the Phia Group, LLC., argues such legal interpretation dictates that TPAs would necessarily be deemed as plan fiduciaries, which clearly conflicts with the Employee Retirement Income Security Act (ERISA). More broadly, SIIA contends that the Appeals Court decision threatens the existence of TPAs in Texas and elsewhere, and in turn, would greatly compromise the viability of self-insured group health plans for most employers.

“This case has significant implications for the self-insurance marketplace so SIIA’s legal action in support of one of its long-time members is clearly warranted,” said association Chief Operating Officer Mike Ferguson. “Unfortunately the number of legal threats to our industry is increasing so SIIA will be announcing a new legal defense initiative after the first of the year.”

The full text of the brief can be accessed by members through the SIIA web site at

This is a developing story so please watch for additional updates from SIIA.

Who Started Cost Plus Health Insurance? GPA or Blue Cross?

Wednesday, December 14th, 2011

Editor’s Note: This country’s current system of every provider being in a Preferred Provider Network (PPO) while rate increases keep going up by 20-40% per year is not sustainable.  The “New Reality” is here.  New  solutions based on old ideas will need to be implemented or the system that will likely occur is one few will enjoy. Have you negotiated for care? Or do you continue to rely on others to do so?



“……………………..the primary reason that the medical community created the Blues was to avoid the consequences of a competitive market—including vigorous price competition and careful oversight of provider behavior by third-party payers. ………..hospitals were reimbursed on a cost-plus basis……………”


FBI Investigates Prime Healthcare – Reports

Tuesday, December 13th, 2011


The Federal Bureau of Investigation (FBI) is looking into the billing practices of California-based hospital operator, Prime Healthcare Services, following reports that it allegedly overbilled Medicare for rare and serious conditions at high rates, California Watch reports on the San Francisco Chronicle.

Although the FBI did not confirm or deny an investigation, California Watch reports that a special agent approached two former Prime coders, Anneke Doty and Danika Fedeli, about the hospital chain’s billing practices. The coders who worked at Alvarado Hospital Medical Center explained that billing practices changed after Prime acquired the San Diego hospital and that Prime owner Dr. Prem Reddy in December 2010 encouraged doctors to document rare medical conditions so the hospitals could reap more payments, the illegal billing practice known as “upcoding.”

Soon after, Alvarado coding manager Joseph Ingrande resigned, stating he could not in good conscience be part of activities that placed him in potential legal jeopardy with Medicare, according to another California Watch article.

Prime Healthcare said it was unaware of an FBI investigation, according to the article.

“Prime Healthcare Services is an award-winning management company, and federal accreditation agencies frequently audit its hospitals and laud their practices,” spokesman Edward Barrera said. “No federal agency has contacted us, nor are we aware of any federal review. Any scrutiny will show that our hospitals are committed to following all state and federal laws and regulations.”

Prime Healthcare has been under the microscope, accused of falsely billing Medicare for various conditions at higher-than-normal rates. Services Employees International Union (SEIU) alleged that Prime billed Medicare for treating a large number of patients with kwashiorkor, a severe form of malnutrition, as well as bloodstream infections. The state public health department launched a probe into Prime’s septicemia cases, but regulators found insufficient evidence to cite Prime Healthcare, according to California Watch. The independent investigative reporting center also said Prime documented for autonomic nerve disorder, accelerated hypertension, and malignant hypertension.

California Watch reported on its year-long investigation into millions of patient admission records. Prime Healthcare repeatedly called the accusations false and based on SEIU information.

Aetna Announces Innovative Hospital Network – A SBPPO?

Tuesday, December 13th, 2011

In an earlier posting we described the phenonomen of PPO Networks within a PPO Network, which some refer to as a  SBPPO. Could this be an Aetna SBPPO? You decide.


Owe Medical Bills? Don’t Pay Promply, Pay Late & Join The 50% Club

Friday, December 9th, 2011

If you owe a medical bill to a hospital, for example deductibles and co-insurance amounts, is it better to pay your share promply or delay payment?


A PPO Network Within A PPO Network?

Friday, December 9th, 2011

“The “preferred provider” strategy, used in tiered and narrow networks, is not a new concept. For decades, the term “preferred provider” has been defined by the managed care industry as a physician, hospital or other health care provider that provides health care services to patients usually at a discounted fee. Today, in an attempt to curtail health care costs, some health insurers and other payers are deploying products that stratify physicians and other health care providers into tiered or narrow networks that are based primarily on cost of care.”

Translation: We have an extensive PPO network of contracted medical care providers. Some of these providers have signed contracts with us that are more cost effective to you. For example, Dr. Smith, as greedy as he is, demands, and we agreed to those demands, to be paid 195% RBRVS. But, down the street Dr. Smith, the stupid bastard that he is,  agreed to 110% RBRVS. We have some more stupid bastards on our network, so we decided to group those into a tier within the full network and we call that a PPO within a PPO, or SBPPO. For those employers who really want to save money, we will sell them access to the Stupid Bastards PPO  (SBPPO) network.

See AMA’s report, “Tiered and Narrow Physician Networks” – PPO Network Within A PPO Network

Editor’s Note: Does this mean that when insurance consultants evaluate PPO networks and use the old  tried and flawed method of random sample claim repricing, an astute sales representative would reprice the claims using his SBPPO network to make his numbers look better?

Brownsville Independent School District To Dismiss HealthSmart Lawsuit

Thursday, December 8th, 2011


“Any fool with a $150 filing fee can sue a Ham Sandwich these days………..”

Brownsville Independent School District trustees have voted to dismiss a lawsuit claiming that HealthSmart Benefit Solutions Inc. cost BISD $14.5 million in higher medical claims during the two years it administered the district’s self-funded employee health plan.

“It was a difficult call for the board, but I think there were real issues with regard both to proving liability and then proving damages,” district counsel Arturo Michel said Wednesday. “I think the board felt that in these tough financial times there was a question whether the time and money to prove the case would be worth the effort.”

Michel said his law firm had interviewed school officials in a position to know about “whether the evidence you would need in order to prove a claim was actually there” and had concluded “that there were real issues” with regard to prevailing in the case.

“There was real concern whether at the end of the day there would be any real recovery,” he said. “You can prove your case and still not prove damages.”

The vote Tuesday night to dismiss was 4-3, with Trustees Catalina Presas-Garcia, Enrique Escobedo, Luci Longoria and Christina Saavedra voting in favor and Rolando Aguilar, Joe Colunga and Minerva Peña against.

The lawsuit had been under scrutiny ever since BISD’s current Board of Trustees took office after the November 2010 election. It was filed in August 2010.

BISD maintains a self-funded employee health benefits plan and contracts with a third-party administrator or TPA to administer the plan on its behalf. HealthSmart lost its TPA contract to Oklahoma City-based Mutual Assurance Administrators, Inc. shortly before the lawsuit was filed.

“We’ve been deliberating this for awhile,” Escobedo, who was elected board president Tuesday night, said. “It was not a spur of the moment decision. Finally, last night we came to the conclusion that this was probably the right move to make.”

In a statement, BISD said the board chose not to pursue the case because the money could be better spent elsewhere.

“The board believes that with the reduction of school funding facing all Texas school districts, it should not expend further funds in pursuing this case under these circumstances when Brownsville ISD monies can be used for direct educational needs,” the statement said.

Editor’s Note: It is our opinion this lawsuit was politcal and filed without due consideration of the facts. As an experienced insurance expert, after reading the original pleadings we concluded early on that the BISD would have a very difficult time proving a financial loss. How do you prove a loss when there’s not one? The purported $14,000,000 that was “lost “was never there to be lost in the first place. Neither was the $9,000,000 “savings” the first year the district moved away from Healthsmart and went with another vendor. This is a classic case of PPO smoke and mirrors at it’s best.


Aetna Files Antitrust Suit Against Blue Cross Blue Shield of Michigan

Wednesday, December 7th, 2011

The Wall Street Journal (12/7, Mathews, Subscription Publication) reports that Aetna has sued Blue Cross Blue Shield of Michigan for allegedly paying hospitals to charge other insurers up to 39% more than they charged Blue Cross, making it difficult for others insurers to compete.

        Bloomberg News (12/7, Pettersson) reports, “Blue Cross Blue Shield of Michigan in August lost a bid to dismiss a joint US-state lawsuit accusing it of driving up competitors’ costs through preferential pricing contracts with hospitals. In some cases, hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the US Justice Department has said.” The current “case is Aetna v. Blue Cross Blue Shield of Michigan, 11-15346, US District Court, Eastern District of Michigan (Detroit.).”

        The Detroit News (12/7, Burden) reports, “Aetna…filed an antitrust lawsuit Tuesday in Detroit federal court against Blue Cross Blue Shield of Michigan, alleging the state’s largest insurer has prevented Aetna from expanding in Michigan.” Aetna’s “lawsuit is a piggyback on the fall 2010 suit by the US Justice Department and former Michigan Attorney General Mike Cox that accuses the Blues of using special hospital contracts, or most-favored nation clauses, that stifle competition and drive up rates for consumers.” Michigan Association of Health Plans deputy director Paul Duguay remarked that the lawsuit will “at a minimum” shed “greater light on those practices and, if successful, stands to foster greater competition in Michigan” for health plans other than Blue Cross.

        The Detroit Free Press (12/7, Anstett) notes that “The Aetna case is significant because other insurers and Michigan hospitals have stayed out of the fight with Michigan’s largest insurer, which covers about 60% of Michigan’s residents with health insurance. Only the city of Pontiac, an outstate business and a lone consumer have filed so-called piggyback lawsuits against the Blues alleging improper pricing practices.” In 2005, Aetna paid “nearly $390 million…to acquire a Michigan-based health care network, HMS Healthcare, in hopes to building a statewide plan of services for employers and individuals buying Aetna insurance. HMS operates in Michigan under the name PPOM.”

Managed Care Under Siege & The Future of Health Care Reimbursement

Tuesday, December 6th, 2011


Failure of Managed Care

With the advent of PPO’s and HMO’s in the late seventies, a new term was coined – Managed Care. Hailed as a panacea for ever rising health care costs, the concept initially performed as expected .

Over time that changed. Ownership of the concept as well as delivery of services became the intellectual and real property controlled by medical providers and third party intermediaries.

A fortress was built protecting the interests of the provider community with the active assistance and collusion of third party intermediaries. The consumer was relegated to obscurity, leaderless and subject to the mercy of the elements. Without realizing it, they lost advantage yet continued to enrich the King’s treasury.

The payers representing them became the paid undercover agents for the medical community. Despite representations otherwise, they were not champions for the end user. Through proprietary and secret agreements, payers and other third party intermediaries enriched themselves through an ever increasing revenue stream funded by ignorant consumers. Kickbacks, inflated pricing, Evergreen clauses, provider re-pricing fees, and other schemes to milk the health care honey pot became business as usual, hidden behind a smoke screen called medical inflation, or trend.

Consumers were clueless.  They were unarmed. They were told by insurance companies that insurance costs were going up due to an aging population, new technology , costly new prescription drugs, all of which were represented to be the main cost drivers of medical inflation. This deception continues today.

Despite Managed Care, health care costs continued to rise at double digits. Managed Care has failed.

 A Common Sense Approach

There is only one reason medical costs continue to soar: Providers are charging more and we continue to agree to blindly pay up.  

The more they charge, the more they can “discount” their fees. PPO representatives tout significant discounts, and they are not untruthful. They point to continued steep discounts, with new contracts continually being negotiated for even steeper discounts. This well planned and coordinated deception has had the intended effect of passifying  the masses into submission.

Yet costs keep going up.

The answer to lower health care costs is simple. Pay providers less.  But that is easier said than done. How can you pay a provider less when you really don’t know what they charge? They don’t publish their prices do they?  No, but Medicare does.

Medicare is an indemnity plan funded by taxpayers and accepted universally by the medical community. Over 12,000 listed medical services are assigned a price to be paid to providers. Using Medicare pricing as a benchmark to pay claims seems a fair, transparent and equitable means to pay for health care in the private sector. No argument with that is there?

The problem  is Medicare + 10% , or 15%, or 20% is much less than what some in the medical industry are used to getting from the private sector.  It is not uncommon to see a hospital bill that is priced at +1,000% of Medicare, and re-priced down to +500% of Medicare through a PPO contract. To pay a provider Medicare +20% when he normally gets Medicare +500% threatens lifestyle choices. Balance billing becomes an issue.

Balance billing can be combated in any number of ways, all to the advantage of the patient. Controlling the money puts one in the driver’s seat – entering into a negotiation from a position of power, for the first time, is to the advantage of the consumer.

Paying claims using Medicare as a benchmark is not a new concept. There are a few third party administrators  in Texas like RH Administrators Inc. ( ) that are doing so for their clients, with good results.  However, one would have to look far and wide for those TPA’s in the market willing to leave the fortress. Most TPA’s dont want to jeopardize their relationships with PPO networks and medical providers as well as lose revenue sharing arrangements with them.

Cost Plus medical reimbursement is not a new concept either. It has been around for years, first starting with Blue Cross in their hospital contracts. Years ago Blue Cross negotiated cost plus 5% with member hospitals. But, with the passage of Medicare in 1966, that began to change.

Cost plus is a simple concept. Pay a provider’s cost then add a margin (profit). This method is becoming popular in Texas.

Group & Pension Administrators Inc., ( ) in partnership with ELAP Inc., ( ) has put together a turn-key approach to reigning in health care costs on a Cost Plus basis. To date, no other TPA, to our knowledge, has taken this approach in Texas. We suspect there are a number of reasons for this, including fear of reprisal from hospitals leading to lawsuits and the fear of leaving the safety of the fortress.

Outsourcing shared fiduciary responsibility, employing legal expertise, strategic placement of liability cover and using public database available ( ) to all Americans, Cost Plus addresses claim costs, balance billing issues, lawsuits, and improved benefits for plan participants.

The Future

The failure of Managed Care is evident. No one can argue that. The good news is that free market opportunities are still available for those willing to take risks, think out-of-the-box and approach the complex health care financing system with common sense.

More payers, predominately independent TPA’s will move away from PPO contracts and pay claims using Medicare reimbursement as a benchmark. In reality this is going back to the old indemnity plans of the 1960″s – 70″s.  History repeats itself……………

Usage of a limited number of providers will be common place – the current telephone book thick list of preferred providers will become a historical footnote much to the amusement of future epidemiologists.

Despite growing government interference, private enterprise and the free market is still a force to be reckoned with.

Managed Care Under Siege





Firms Seek Medical Second Opinions

Monday, December 5th, 2011
“According to recent data collected by three major second-opinion medical service providers, misdiagnoses are discovered in up to 20% of medical cases and treatment changes are recommended in more than half of them.”

Government Control of Food Tightens

Monday, December 5th, 2011

With the advent of recent Congressional legislation and the passage of the 2014 Food For Every American Act (FEAA), the newly established Department of Food  & Nutrition (DF&N)  has released December 5  interim rules and regulations.

Barney Frank, Commissioner of the DF&N announced that the American food industry must be held accountable for ever increasing food costs in the United States. “It is outrageous what food suppliers are making! They are making millions off the backs of working Americans and must be held accountable!” lisped Mr. Frank in a rare press conference in the Rose Garden.

Newly re-elected President Barak Hussein Obama agreed. “Every American has a right to food and we must make sure that every American has food on their table. Today, we see the beginning of fair and equitable distribution of food stuffs in the United States. Greedy  and rich grocery store owners and their stockholders will be held accountable for the first time.  My administration intends to bring the full force of the law to bear on those who oppose  and ignore the Act.”

Under new rules promulgated today, beginning January 1 all grocery store chains must submit a monthly accounting to the Secretary of DF&N showing profit / loss statements. Grocers must maintain a profit margin of no more than 1%, down from the current industry average of 3%.  Any overage must be paid back to their customers within 90 days of each accounting period.

Minority owned Mom and Pop as well as union dominated grocery stores chains may apply for waivers.

To date, the legislation has not addressed food suppliers such as farmers, ranchers and processing plants.

Bill Ayers, leader of the Americans For Free Food  Labor Union (AFF) attended the Rose Garden press conference. “We support the FEAA although our members feel it does not go far enough. Why should rich people be able to purchase prime cut New York Strips while the average Amercan can only afford beans and rice? It is not only unfair, it is un-American. Government must step in and stop this atrocity!”

Under the FEAA, the food stamp program will be expanded to include all households making less than $150,000 per year. Payroll taxes of 12.4% on all working Americans, in addition to a surtax charge of 78% on all rich people (as defined by Government Code 1234) is projected to cover the cost of the program.

When asked about the Constitutionality of the FEAA, President Obama stated “With the recent Supreme Court decision upholding my ObamaCare Program, I see no distinction here that would lead me to conclude that the FEAA will not pass the same scrutiny with the court. With my recent appointment to the court, I now can tell you that I have total control of that branch of the federal government. The basic premise, of course, is that every American has a right to food and we must make sure that every American gets food. Even those that dont want food will be required to buy it.”


Government Control Of Health Care Tightens

Monday, December 5th, 2011

Even if insurers meet the medical-loss ratio (MLR) threshold, they will still have to explain to consumers how their premium dollars are spent under the released Dec. 2 by the Department of Health & Human Services (HHS).

The final rule requires insurers to send their customers a notice about the MLR–regardless of whether they meet the 80 to 85 percent threshold. The notice must disclose the MLR amount and how it improved because of health reform, according to HHS.

When insurers don’t meet the MLR requirements and must issue rebates, the final rule requires they explain to customers how much money they’re getting back and how the MLR compared to the Congressional standard.

HHS also is phasing out special allowances for “mini-med” plans that offer limited benefits to individuals or small groups by slowly tightening standards for those plans. By 2014, mini-meds will have to meet almost the same requirements as comprehensive policies, reports Kaiser Health News.

Another change in the final MLR rule is that fees paid to brokers and agents won’t count as medical care.

Death of A Salesman

Sunday, December 4th, 2011

Health insurance agents are becoming extinct. With fewer carriers in the market, and rising health insurance costs, many employers, and insurance companies, are questioning the value of health insurance agents/brokers.

United HealthCare announced earlier this year that they will stop paying broker commissions on groups of 100+ employees – .

Instead, United HealthCare will offer to bill an employer on behalf of the agent for “servicing fees” should the employer wish to continue to employ an insurance agent to service their account. One may wonder why the agent can’t bill the client himself. Irregardless, service fees to be paid, if any,  are to be negotiated between the agent and the employer.

The problem with United HealthCare’s recommendation for agents stems from disclosure. For the first time, agents will have to disclose their heretofore undisclosed commissions to maintain their lifestyle.  Can you imagine this dialog?: “Mr. Employer, whereas before UHC stopped paying me commissions on your account, I was making $150,000 per year.  To maintain that, I need a check from you for $150,000 please.”

The question of licensure in Texas arises.  If an employer enters into a direct agreement  of some sort with an insurance agent/broker which stipulates the services to be provided and the compensation to be paid, certain licensing requirements may apply.

If services include analysis and recommendations related to insurance, a Life & Health Counselors License  is mandated in this state.   A Risk Manager License may be required as well since some Life & Health insurance products are casualty in nature.

The trend among employers is to go direct to the insurance company leaving their broker in the unemployment line. Employers who have taken this draconion step have miraculously survived.

One example is the TRS Active Care program. Texas school districts  insured through the  program have effectively eliminated their insurance agent.

Some employers continue to maintain a broker and see a value in doing so. But unfortunately for the broker, the trend is against them. Some understand where the market is heading and are adapting. Others are hanging on hoping to scratch a few dollars from a dying business.

Editor’s Note: The number of Life & Health Counselor Licenses issued in Texas is increasing. In 1997  when we applied there were less than 100 statewide, now there are several hundred.

Outpatient CBC Test – Billed Charges +1,800% of RBRVS 2010

Saturday, December 3rd, 2011

A blood draw, performed by a nurse, with results in ten minutes. All in-house. Of course insurance covered the bill. A month later the patient gets an Explanation of Benefits  (EOB) from his insurance company which provides an accounting.

But, there were two EOB’s each with two ledger items. Total billed charges on EOB #1 was $153.00. Total billed charges on EOB #2 was 52.00 for a total billed charge of $205.00 for a blood draw.

The insurance company allowed $55.14, a significant discount of 73% off billed charges.

Medicare 2010 would have paid $11.14.

Insurance company paid about +500% of Medicare.

The insurance company is a major health insurance company, one of among only a few left in the business of providing health insurance for Americans.

Editor’s Note: Does Medicare pay too little or does insurance pay too much? The answer depends upon who you ask. With third party intermediaries paying claims consumers don’t really care. “Hey Doc, before you run that test, tell me how much it costs please – I don’t want my insurance premiums to increase too much.”


Bill, the clinic has agreed to pricing with the insurance company. In this case they agreed to accept $55.14. Why do they bill $205 when they know they agreed to accept $55.14? Is it because they are trying to inflate their U&C profile or to show a “loss?” Or maybe someone is getting a percentage of the “discount” as a fee? Any number of possibilities it seems. This makes no sense but I am sure there is a logical explanation. Maybe it was a clerical error? Please enlighten me!

Insurance Investors At Risk Of Euro Hit – Global Impact On Stop Loss Cover?

Friday, December 2nd, 2011

“You’re talking about a very nasty scenario,” he said. “It’s not something you want to think too hard about if you’re having difficulty sleeping.”


Captives Gain Popularity – Kansas Based Health Care System Partners With Minnesota Life

Friday, December 2nd, 2011

“…..Via Christi’s application comes in the wake of a spurt of activity in the captive employee benefits funding arena.”


Heath Care Service Corporation On Pace For Another $1 Billion In Profits in 2011

Friday, December 2nd, 2011

             (Crain’s) — The parent of Blue Cross & Blue Shield of Illinois is poised to post $1 billion in profits for 2011, thesecond consecutive year the insurer would cross that benchmark, which is likely to raise questions anew about spiraling medical costs.


Knapp Hospital Sold

Thursday, December 1st, 2011

WESLACO—Knapp Medical Center will become part of South Texas Health System, representatives of both entities confirmed at a news conference Wednesday.