Doctors May Face Legal Obligation To Disclose Care Costs

The days of physicians not mixing discussions about money with medicine are decidedly over.

Up to half of insured employees are expected to be enrolled in higher deductible health plans within the next 18 months, Reuters reported.

What’s more, the article goes as far as to say that failure to disclose health costs to patients during the informed-consent process could put doctors at legal risk.

According to Haavi Morreim, a lawyer and professor in the College of Medicine at the University of Tennessee, doctors may be liable for a breach of fiduciary duty if their care recommendations turn out to be too aligned with their own financial interest.

With healthcare price transparency slowly catching on, patients have access to a growing number of tools for comparing the costs of care in various settings. As patients have more financial “skin in the game,” they will likely use and rely more heavily on resources, such as, Reuters noted.
Although these trends have led the likes of Consumer Reports to begin dipping a toe in the healthcare waters, insurers looking to keep costs down are also increasingly providing cost-comparison tools to employers to help steer their employees toward cost-efficient care.

Some physicians are even leading this push toward greater health transparency. For example, Leslie Ramirez, a primary care and internal medicine doctor in Chicago, recently told MedCity News that it’s “crazy” for doctors to assume patients will “pay any price” for healthcare. In explaining her rationale for creating Leslie’s List, ( a price-transparency website she’s funded since 2009, Ramirez said, “It was so disheartening to hear that the plans that I had made for them [patients] weren’t being followed because they couldn’t afford the things that I was telling them to do.”

The site, which serves the Chicago and Dallas areas, lists procedures and medications from top to bottom according to how much they cost, with the least expensive coming up first. Ramirez said she hopes the site will not only share cost information with patients but also help drive prices down.

Emails Are Forever Imbedded In The Public Domain

By Molly Mulebriar
 November is Lawsuit Awareness Month in the insurance community. As a public service reminder, members of the insurance community are encouraged to read Chapter 21 of the Texas Insurance Code. Highlights include: – No one may make, publish, disseminate, or circulate in a publication, notice, or over a redio or television station, or place before the public in any manner, an advertisement which contains any information which is untrue, deceptive, or misleading about the business of insurance or any person engaged in it. – No one may publish, disseminate, or circulate, any oral or written statement which  is false, maliciously critical of, or derogatory to the financial condition of any insurer, and which is calculated to injure any person engaged in the insurance business. – No one may commit, or agree to commit in concert with others, any act of boycott, coercion, or intimidation resulting in or tending to result in a monopoly or an unreasonable restraint of trade in the business of insurance.
 Mulbriar’s Tip of The Day – be careful what you write in emails – never write an email that could hurt you, no matter who you send it to. Emails are forever and are the first thing a plaintiff’s attorney will ask for in discovery.

How ObamaCare Will Lead To A Single Payer Entitlement Program For All Americans

As ObamaCare finally kicks in over the next 14 months, the financial  impact on working Americans will become apparent (non-working Americans get free stuff so they don’t get impacted at all in a negative sort of way). The few health insurance carriers stupid enough to stay in the health insurance business will necessarily increase rates to new highs.

As this unfolds,  a hue and cry will arise from the masses, pointing to greedy health insurance companies as the main culprit to unaffordable health care. A demand for a single payer, “free” health care for all will become reality in short order.

It is already starting in Wisconsin:

Editor’s Note: As gasoline prices continue to soar, gas stations will become a target of consumer rage. Demands for government takeover of gas stations will reach a fever pitch. As more and more gas stations exit the market, 48% of Americans will demand free gas – after all, with a free cell phone to call for emergency health care, you need gas to get there. (What about a free car, Uncle Hermann? Free gas wont do any good without a car!)

Corpus Christi Independent School District Awards Contract To Blue Cross

The Corpus Christi Independent School District awarded the administration of their self-funded group medical plan to Blue Cross Blue Shield in a Special Called Meeting today. The top three finalists were Blue Cross, Group & Pension Administrators and Humana Insurance Company.

Editor’s Note: See clip of CCISD Insurance Committee meeting for insight into the decision making process:


Hospitals Compete For Business – School District Saves Money

Little Rabbit, Montana, with a population of approximately 240,000, is located in the central part of the state. The local school district is currently self-funded, but as is the case with most districts in the state, health care costs continue to rise at double digits.  With tight budgetary constraints and increasing medical costs, the Little Rabbit Independent School District (LRISD)decided to do something different to reign in their employee health care costs…………..they terminated their group medical plan.

Continue reading Hospitals Compete For Business – School District Saves Money

How Bundled Payments Just Might Save Health Care From Itself

In the 1960s, Texas Instruments developed the first handheld calculator. It could display up to 12 digits while performing addition, subtraction, multiplication and division. And it cost $2,200.

Since then, the calculator has come a long way. Competition forced continuous innovations, and today’s models are more lightweight, have longer battery life, are capable of performing more complex computations –all at a dramatically reduced price point.

That’s the typical cycle in virtually every sector of the American economy. Innovations are introduced, competition forces design improvements and cost reductions and products are continually improved until the next big thing comes along to start the process over again.

Continue reading How Bundled Payments Just Might Save Health Care From Itself

Corpus Christi Independent School District To Select Health Plan

Monday, 29 November the Corpus Christi Independent School District is having a Special Called Meeting to select a health plan administrator for their self-funded employee welfare plan –

Finalist are Blue Cross, Humana, Group & Pension Administrators and Mutual Assurance Administrators. The current plan administrator is Meritain, an Aetna owned third party administrator. Meritain did not make the short list.

Editor’s Note: Molly Mulebriar, ace investigative reporter on assignment in Nueces County, says rumors are that one of the deciding factors in awarding the contract this year will be based on local provider contracts between Christus Spohn and HCA.  Smart money has Group & Pension Administrators getting the nod this year. However, Mulebriar hedges her bet and says Blue Cross may be the wild card.

San Antonio Employer Urges Employees To Vote In November

DATE:            October 19, 2012
TO:                 Distribution
FROM:           Bill Greehey and Curt Anastasio
RE:                 Benefits

Since Benefits enrollment started earlier this week, we have received a number of complaints regarding the reduction in the amount of money that employees are now allowed to put into their Flexible Spending Accounts. As you know, the NuStar plan has historically allowed employees to put as much as $7,500 per year into their Flexible Spending Accounts, which of course, was tax-free.

Unfortunately, the amount has now been capped at $2,500 by the Patient Protection and Affordable Care Act, which was signed into law by President Obama in 2010. We understand why many of you are disappointed by this reduction in your benefit options, but based on the new law we have no choice in this matter.

And while this change is one that directly impacts NuStar’s employees, it is only one of many problematic components of The Affordable Care Act, widely known asObama-Care. According to NuStar’s insurance broker, this program is projected to cost the company an additional $2.7 million once fully implemented and it will not provide any meaningful benefits beyond what we offer in our Healthcare package today.

The most costly component for NuStar is the “Cadillac Plan” excise tax, which imposes a non-deductible 40% tax for employer-provided healthcare coverage that exceeds the government-mandated maximum value for health care coverage.  Our insurance brokers estimate that this penalty — for NuStar to provide health care coverage that is above the government’s threshold — will cost almost $1.8 million by the close of 2019.

Unlike many companies, NuStar has no plans to reduce its benefits, but penalizing companies for providing superior healthcare coverage seems counter-intuitive and counter-productive for our country.  As you know,
the general election is less than three weeks away and we want to remind everyone just how important this election is to our future and we want to encourage all of you to vote for candidates that you believe will lead our nation, our employees and NuStar to a more prosperous future.

Paying Hospital Bills

Yesterday we met with a TPA from California who confirmed what we thought we already knew. His firm processes hospital claims at 130% of Medicare and gets very little push back from hospitals.

In Texas, we see the comfort margin with some hospitals between 135-150% of Medicare. Yet, we see managed care claims repriced to much higher Medicare reimbursment levels,  as high as 280% or more for in-patient services and 1000% or more for out-patient charges.

Managed care contracts are cost drivers, not cost savers, it seems. Managed Care Under Siege

On the other hand, we know of an East Texas hospital who, during a competitive RFP process, offered a direct contract with reimbursment levels generally below Medicare rates.

Pricing is all over the board and there seems to be no rhyme or reason other than geographic area and astute payers or lack thereof. But when push comes to shove, the magic number appears to be between 130-150% of Medicare.

Editor’s Note: Balance billing threats are easily combated. Acceptance of an Assignment of Benefits creates an implied contract.

California Bill Requires Insurers To Coddle Helpless and Ignorant Members

Here we go again! Another government mandate to coddle consumers who are too dumb and lazy to take care of themselves. It seems the general public is so helpless and lost in our health care delivery system that they cant pick up a telephone and call the doctor they want to see to determine if they are still in-network or not.

Maybe insurers need to consider getting rid of networks and just pay fair and reasonable rates. That is what more and more self-funded groups in Texas are doing.

Continue reading California Bill Requires Insurers To Coddle Helpless and Ignorant Members

HCC Announces New Stop Loss Product – Captive Turnkey Solution

HCC Life Insurance Company has built a foundation for success through our strong business practices. But we know thinking outside the norm and being innovative to address changing market demands is vital to our ability to meet our clients’ needs. This is why we are excited to announce our latest stop loss product: HCC Risk Solutions Company (HCC RSC), a licensed Nevada Captive. HCC RSC is a turnkey captive solution for the stop loss consumers seeking to take a “piece of the risk” in their stop loss policy without having the obligations to start their own captive. This self-contained program is clearly not for every policyholder, but is an exciting new venture into our ever-evolving industry.

HCC Life is a leading provider of medical stop loss insurance and has consistently held an A+ (Superior) rating for financial strength by A.M. Best Company as well as AA (Very Strong) ratings by Standard & Poor’s and Fitch Ratings. Our longevity in the industry and strong financial history give us the ability to offer new products and services that you can use.

For more information on HCC RSC and our captive product, contact Jay Ritchie, Senior Vice President, at (800) 447-0460. Visit us online at for more information about our company, our products, and our people.

Editor’s Note: Captives are sexy these days.

Out-Of-Network BUCA Reimbursement Revealed

One of our clients recently went out to bid for their fully-insured group medical plan. Most of the BUCA’s bid on this case, clearly indicating there is competition for this account which generates a seven figure revenue stream.

Two of the BUCA’s, independent of each other, disclosed their out-of-network reimbursment strategy:

BUCA #1 pays 110% RBRVS for facility and professional services while BUCA #2 pays 105% RBRVS for professional services and a whopping 140% RBRVS for facility charges.

So the question arises – do these two BUCAS pay providers more  or less out-of-network compared to in-network? If the answer is “more” than in-network providers are really stupid. If the answer is “less” than those “steep” in-network provider discounts are nothing to write home about.

Blue Cross Offers Cost Plus Health Care Financing

“Cost-Plus is a rating arrangement (not an alternative funding arrangement) that shifts the burden of financial risk (payment obligations) from the carrier to the group itself. The group is responsible for payment of claims plus retention fee. Under a Cost-Plus arrangement, a financial settlement is normally calculated after each contract period, at which time any surplus is returned to the group and any deficit is due and payable to the carrier. The billing under a Cost-Plus arrangement can be based either on a predetermined rate (rate basis) or on the actual claims of the group (claims reimbursement basis). An IBC group under a Cost-Plus arrangement may or may not have state-mandated benefits and/or hold its own claim reserves.” (see pg’s 7-8)

Editor’s Note: What is the percentage equivalent of claims that your TPA currently charges you? If the TPA’s annual administration fee is $300,000, and paid claims are $3.5 million, you are paying about 8.5% in addition to cost (actual example). What incentive does the TPA have in reducing your claims under a cost plus arrangement?  Can the TPA be limited to charging their fee based on a claim benchmark basis such as Medicare or Medicaid and not tied to billed charges? (On a side note, we found a Texas municipality paying such a high claim administration fee on a dental plan that it actually cost the city more in claim fees to pay a $74 cleaning – $84 to pay a $74 claims for a total of $158). Seems to us that a TPA claim fee of 5% using a benchmark claim reimbursment method is a fair and reasonable fee basis. No claims, no fees. No work, no charge. So if Sally Jones has no claims during the year, she costs her employer zero (statistics show that 23% will have no claims during the year).

Reinsurance Health Reform Provision Should Be Repealed

A provision in the health care reform law that should be repealed is one that will sock employers that self-fund their health care plans with billions of dollars in assessments for which they will receive no direct benefit.Starting in 2014, that Patient Protection and Affordable Care Act provision creates what the law calls the Transitional Reinsurance Program. Self-insured employers will be assessed a per-participant fee — likely in the $60 to $90 range — to help fund the $25 billion program. For a big self-funded employer, with say 100,000 people enrolled in its health care plans, its first-year tab for the three-year program could be about $10 million.And where will all that money go? The beneficiaries will be commercial insurers who will receive the money as partial reimbursement for writing coverage for those in the personal lines market with the highest health care costs.It is hard to find the logic or fairness here. These are employers who voluntarily agree to provide coverage for their employees and dependents and they get hit with a whopping fee to offset coverage costs to individuals for whom they have no connection.If lawmakers wanted to give employers a disincentive to offer coverage, they certainly achieved that in authorizing these fees.Equity and fairness aside, there are plenty of practical problems with the program. For example, the fee assessment is based on the number of plan participants. Does that include COBRA beneficiaries or those in retiree health care plans? No one knows because the law just isn’t clear on those points as well as numerous others.A broader question is how this provision got inserted while the legislation was working its way through Congress and why there never was any discussion of it. Our best guess is that this is yet another example of how attention to detail is overlooked by lawmakers and their staffs on both sides of the aisle, with disastrous results.That, unfortunately, is history. So, for now, we strongly believe the best course of action for lawmakers is to repeal of the Transitional Reinsurance Program as soon as the next congressional session begins.

– Business Insurance 10-21-2012

No Soup For You! If An Employee Doesn’t Turn in Medical Certification, FMLA Leave is Not Protected

“…….where the employee fails to return certification, the regulations clearly state “No Soup for You!”  Well, something close, at least: if the employee never returns the certification, according to the regs, “the leave is not FMLA leave.”  29 C.F.R. 825.313(b). ”

Verizon To Transfer $7.5 Billion In Pension Benefits Through Annuity Purchase

In another corporate move to reduce pension liability risk, Verizon Communications Inc. said Wednesday that it is buying a group annuity to provide benefits to about 41,000 Verizon management retirees.Under the arrangement, Verizon will transfer about $7.5 billion in pension plan obligations to Prudential Insurance Co. of America by purchasing the annuity. The agreement covers plan participants who retired and began receiving pension benefits before Jan. 1, 2010. Verizon will contribute about $2.5 billion to the plan in connection to the transaction.“The transaction is expected to further Verizon’s objective of derisking the pension plan while improving the company’s longer-term financial profile,” New York-based Verizon said in a statement.Verizon’s move follows that of  General Motors Co., which earlier this year said that it would purchase a group annuity — also from Prudential — to cover benefits of tens of thousands of participants in its pension plan for salaried employees.“The size of the pension settlement actions announced in 2012 is redefining the market,” Ari Jacobs, senior partner and global retirement solutions leader at Aon Hewitt in Norwalk, Conn., said in a statement.“In the U.S., the entire volume of pension liabilities annuitized in recent years has been about $1 billion per year and no single transaction has exceeded $1 billion since the 1980s,” Mr. Jacobs said. “The transactions by Verizon and GM are orders of magnitude larger than this and likely to be important in the continuing trend in pension derisking and settlement strategy.”Aon Hewitt served as Verizon’s lead strategy partner in the transaction.%%BREAK%%Earlier, experts said more employers will take such actions. Through purchasing an annuity and transferring the benefit obligations to an insurer, employers will save on costs such as premium payments to the Pension Benefit Guaranty Corp., as well as fees and costs associated with offering and administering their pension plans.In addition, employers taking such actions no longer will be exposed to fluctuating interest rates and investment results that can cause major changes in their pension plans costs and contributions.

Editor’s Note: Can a GASB 45 liability be transferred to an annuity? Or a group annuity with various political subdivisions participating through an Interlocal Agreement?

Mercer Report – Annuity Based Funding

Employers Opt For Medical Tourism – By John Goodman

In Priceless, I hazarded a guess that employers could cut the cost of hospital care in half by engaging in medical tourism. It’s a variation on what is sometimes called “value-based purchasing” or “reference pricing.” In its pure form, the employer picks a low-cost, high quality facility and covers all costs there. If the employee chooses another hospital, the employee must pay the full extra cost of the more expensive choice. In Priceless, I argued that to take full advantage of the opportunities available, the patients must be willing to travel.

Several large companies are already trying the idea out. As Jim Landers explains:

Wal-Mart Stores Inc., the nation’s largest employer, will jump into medical tourism next year by offering insured employees no-cost heart and spine surgeries at Scott & White Memorial [in Temple, Texas] and seven other hospitals across the country…By using a hospital in the new narrow network, patients could save as much as $5,000 or more…

The hospitals in Wal-Mart’s network — including the Cleveland Clinic and Geisinger Medical Center in Danville, Pa. — have gained national reputations for both quality and value. Physicians and surgeons work under financial incentives rewarding improved patient outcomes.

 Here is the complete network:

  1. Temple’s Scott & White Memorial — Texas (cardiac surgeries, spine surgeries)
  2. Mayo Clinic’s three hospitals (organ transplants)
  3. Cleveland Clinic (cardiac surgeries)
  4. Geisinger Medical Center (PA) (cardiac surgeries)
  5. Mercy Hospital Springfield — Springfield, Mo. (spine surgeries)
  6. Virginia Mason Medical Center — Seattle (cardiac surgeries, spine surgeries)

This is actually an expansion of a program already under way. And Wal-Mart is not alone:

  • Wal-Mart developed a relationship with Mayo Clinic in 2007 for transplant and lung volume reduction surgeries.
  • Lowes began an initiative in 2010 when it began offering workers the option to travel to Cleveland Clinic for cardiac procedures.
  • PepsiCo announced in December of 2011 that it planned to offer its employees the option to travel to Johns Hopkins Medicine in Baltimore for cardiac and complex joint replacement surgeries.

Writing at Tom Emerick’s blog, Brian Klepper sums up the trend this way:

Health care organizations should not underestimate the significance of Wal-Mart’s (Center of Excellence) program. It is one of many signs suggesting that, after 40 years of being impervious to market forces, the health care bubble could burst. All it would take to change health care as we have come to know it is for more employers to collaborate and follow Wal-Mart’s, Lowes’ and PepsiCo’s leads. They would stop doing business with health care organizations that are unaccountable and don’t provide measurable value, and transfer that business to those that do.

San Benito Independent School District Seeks Insurance Consultant

RFP Consultant

Editor’s Note: For background information, type in “San Benito ISD” in search box on this site. Also see presentation by current (or former?) San Benito ISD insurance consultant Glen Hillyer here –


Editor’s Note: San Benito ISD could save time simply by utilizing the work already performed by Edinburg ISD –

Stratose Announces Medicare Pricing Solution

We are hearing more about non-managed care approaches to reigning in health care costs. This is a hot topic these days among insurance brokers and consultants. Now we learn that Stratose, formerly known as Coalition America, is pushing Medicare based benchmarking for payment of medical claims. ( )

They recently announced they have entered into an agreement with First Health.

The movement is spreading fast. In the past year we have identified numerous entities entering the non-managed care arena, either on the auditing, repricing and legal indemnification side, or in combination of two or all three elements.

As we see it, Group & Pension Administrators (GPA)  started this payer revolt against PPO networks with the introduction of their Cost Plus program over 4 years ago. (Bill Miller Forbes) GPA’s competitors have taken note, and employers are paying attention.

Is Cigna Dental Pulling A Fast One On Dentists? Dr. Pruitt Opines

Is Cigna Dental pulling a fast one on dentists?

I received an intriguing call from a Cigna Dental rep today. She offered to direct Cigna’s fee-for-service customers to my practice “even if you are out of network,” with free advertising targeting Cigna’s customers. What’s more, she promised no fee restrictions – allowing me to charge what the market will bear.

Since the offer seemed too good to be true, I patiently awaited the hook. Finally, she mentioned that all that is required of me is to share the profits with my current Cigna PPO patients by giving them “just a little better discount.” Judging from her surprise when I told her that I don’t participate in Cigna or any other PPO plan, I suppose I am one of the very few these days.

Obviously, sales reps prefer relevant leads than to waste time cold calling, making the call this morning seem odd. So I suspect Cigna is conducting a clever ruse intended to enroll more dentists into Cigna PPO plans. If I am correct, could this be a sign that discount dentistry brokers like Cigna are finally having to compete with Delta Dental and other managed care plans for willing dentists?

If there are any Cigna PPO dentists in the audience, I am especially curious to know if you received the same advertising offer. Regardless, what are your thoughts concerning this puzzler?

Dentists who might be considering Cigna’s free advertisement offer I described earlier today should be reminded that nothing is free.

The clever executives responsible for this unfolding scam are awarded bonuses for lowering dentists’ payments – not for treating dentists fairly. Dentists are personally accountable to the welfare of their patients. Cigna employees are not. Cigna’s only obligation is to investors and as long as there is no transparency such as offered in this post, they have nothing to lose.

If I were running Cigna’s scam, and had no ethics, I would have already quietly increased my boss’s market share by signing up more preferred providers at an even lower pay scale than Cigna’s current PPO contracts. Then, shortly before the insurance renewal anniversary for a dentist’s new and existing fee-for-service Cigna clients, I would pull the rug out from under the vulnerable dentist by encouraging his or her patients to switch to a PPO plan their dentist already accepts – at even greater discount than other available Cigna PPO plans.

Like most good scams, this one is beautiful in its simplicity (as long as stoic dentists don’t discuss it with each other).

Dr. Pruitt is a practicing Texas dentist. His email address is

ERS Chooses United HealthCare Over Blue Cross – Does UHC Have Better Provider Pricing?

More than 400,000 state employees, retirees, and their dependents will get a new health insurance company. The Employees Retirement System (ERS) is negotiating a new contract with UnitedHealthcare Services, replacing Blue Cross and Blue Shield of Texas as the party administrator for the self-funded HealthSelect of Texas health plan.

ERS officials say the new contract will save $41 million and that they chose United because of its “winning combination of programs, services, and low administrative fee.”

They added they expect minimal network disruption and project that about 2 percent of HealthSelect members might switch their primary care physician.

TMA’s Payment Advocacy Department advises physicians that because a new carrier will administer the ERS business, they may want to reevaluate their payer mix. Be aware that United has secondary networks and consider those agreements when evaluating the practice’s payer mix.

Blue Cross filed a protest with ERS in March 5 and asked for a review of the competitive bidding process ERS used. Blue Cross contends switching to United will cost the state an additional $450 million because Blue Cross offers better discounts to members of the state plan than does United, and it has a larger network of physicians, hospitals, and other health care professionals.

“Because of our experience with ERS and its participants, providers, and others over the last three decades, we are deeply concerned with the impact ERS’ decision will have on the state of Texas and ERS participants,” a Blue Cross statement said.

Editor’s Note: Does UHC have better pricing than does BCBS? One would think so with a group this large electing to go with the best bid. BCBS representatives are trained to tout “our discounts are better than theirs”, which may be true. But a 50% discount off $100 is not as good as a 45% discount off $80.

Presidential Election Will Predict Health Reform Future

 Gary Johnson, Candidate for  President of The United States

The presidential election next month will dramatically affect the future of the health insurance industry, with either the continuation of the health reform law or a likely disruption to some or all of its provisions, according to a side-by-side analysis of the healthcare platforms of President Barack Obama and Gov. Mitt Romney.

“It wasn’t hard to find major distinctions,” said Shana Alex Lavarreda, co-author of the UCLA Center for Health Policy Research policy paper. “All this information was out there, but it wasn’t together in one place.”

If Obama is re-elected, the reform law will move forward as planned, with insurers seeing an influx of individual consumers buying plans through health insurance exchanges and an expansion of Medicaid, reported California Healthline.

But a Romney win could mean private insurers begin to provide more Medicare plans but don’t sell policies through exchanges, which the candidate has promised to eliminate, The New York Times reported. Instead, he wants to establish “public-private partnerships, exchanges and subsidies,” but hasn’t fully fleshed out the details of that proposal.

Romney also would drop the medical-loss ratio provision and eliminate the requirements that insurers provide coverage for individuals with pre-existing conditions and free preventive healthcare. And he’s pledged to repeal the individual mandate, Healthline noted.

Meanwhile, Romney wants to effectively shrink Medicaid by providing a fixed amount of money to states to cover Medicaid members and granting states with more authority to determine their own eligibility and benefits standards, according to the Times.


Health Insurance Mergers & Acquisitions – Is the Future Medicaid Contracts?

Just two weeks into the final quarter of the year, mergers and acquisitions activity among U.S. health insurers in 2012 could best high-water marks set nearly a decade ago, according to Charlottesville, Va.-based SNL Financial L.C.M&A deals in the managed care sector so far this year already have reached an aggregate value of $13.4 billion, the highest mark recorded since 2007, according to an SNL report released on Friday. By year’s end, the report predicts, M&A deals could top valuations recorded in 2003, a year that included the $16 billion merger between Anthem Health Networks and WellPoint Inc.Among the largest deals announced so far this year were Aetna Inc.’s agreement to buy Coventry Health Care Inc. for $7.3 billion and WellPoint Inc.’s proposed purchase of the Amerigroup Corp. for an estimated $4.9 billion, the report said.Analysts said the increased consolidation witnessed in 2012 has been driven largely by insurers hoping to expand their Medicaid enrollments, particularly in light of the U.S. Supreme Court’s June 28 ruling on the Patient Protection and Affordable Care Act. Upon completion of the Amerigroup purchase, WellPoint stands to grow its affiliated Medicaid enrollments to more than 4.5 million beneficiaries, while Aetna’s purchase of Coventry will see its Medicaid enrollments grow by an estimated 4 million members.SNL cited a report by Irving Levin Associates as a contributing source for its analysis.

Editor’s Note: Health insurers are hedging their bets. Some are expanding overseas. Others are vying for lucrative government health insurance contracts. What both strategies have in common is the understanding that the role of health insurance companies in the United States is undergoing a fundament change. Others are getting out of the life & health business altogether and focusing on property-casualty lines.

United HealthCare Expands To Brazil

UnitedHealth Group is set to become the controlling owner of the largest healthcare company in Brazil, a country whose health market is rapidly growing, in one of the most high-priced overseas deals by a U.S. private insurance company.

The largest American insurer is spending $4.9 billion to acquire 90 percent of Brazil’s Amil Participacoes, which has about 5 million members, a provider network of 3,300 hospitals and 44,000 doctors, and also owns 22 hospitals and about 50 clinics, reported the Associated Press.

By entering the Brazilian healthcare market, UnitedHealth can better access the country’s 200 million population, only 25 percent of which has private insurance, at a time when Brazilian leaders increasingly are turning to private companies to insure its citizens, Reuters reported.

“Brazil has emerged as a consistently growing and evolving market for private sector health benefits and services. Its growing economy, emerging middle class and progressive policies toward managed care make it a high potential growth market,” UnitedHealth CEO Stephen Hemsley said Monday in a statement.

“Combining Amil, the clear market leader serving an under-penetrated market of nearly 200 million people, with UnitedHealth Group’s experiences and capabilities developed over the last three decades is the most compelling growth and value creation opportunity we have seen in years,” he said.

Amil’s founder Edson Bueno and his partner Dulce Pugliese will retain their 10 percent ownership of Amil for at least five years. Amil also will invest about $470 million in UnitedHealth Group shares, which it also will hold for five years, according to the Minneapolis Star-Tribune.

Patient Centered Medical Home Yelds $40 Million Savings In 18 Months

CareFirst Blue Cross Blue ­Shield has established one of the largest patient-centered medical homes (PCMH), which already yielded $40 million in cost savings in the program’s short 18-month lifespan. To better understand how CareFirst became so successful so quickly, FierceHealthPayer spoke with Chet Burrell (pictured), the insurer’s chief executive officer.

FierceHealthPayer: How does CareFirst’s PCMH differ from other payers’ similar programs? It has achieved fast results and quick growth–what are the keys to that success?

Chet Burrell: There are a few reasons for our success. The first is the way we set up accountability for primary care physicians. It’s way beyond just primary care; it’s for all care in all settings for their patients. They are accountable for the aggregate outcome, including cost and quality, for their patients.

The second difference is that the incentives in our program are very powerful and are tied to their accountability. Their accountability is for global costs and their incentives are based on global cost savings. So if you can prevent hospitalizations at least to some degree by stabilizing these patients then you share in the savings of the aggregate medical dollar, not just the primary care piece of of that.

That means there are very powerful rewards so you can get what amounts to anywhere between 0 percent or 1 percent increase in fees to 70 percent of fees. So it’s not some little tiny marginal thing. It’s not paying them $20 per member per month. If you save on the aggregate medical dollar even 5 percent or 6 percent, you get really big rewards.

Medical Malpractice Rates To Increase Due To Provider Consolidation?

“…………..due to the rising number of physicians closing their private practices for positions with hospitals, whose tendency to fold newly hired and acquired providers into their self-funded medical professional liability insurance programs has reduced loss experiences for commercial malpractice insurers……………”

Continue reading Medical Malpractice Rates To Increase Due To Provider Consolidation?

Health Care Changes Ahead

“Large numbers of employers are also considering new plan strategies for 2015. More than one-quarter (27%) are considering adding reference-based pricing- – (e.g., offering a defined level of reimbursement for a procedure), and 40% are considering adding valuebased benefit designs (e.g., providing a different level of coverage based on cost or quality) by 2015.”

Restaurant Chain Cuts Hours To Avoid ObamaCare Costs

A major restaurant group is experimenting with cutting its employees hours in the hopes of cutting the costs of healthcare.
Darden Restaurants, which owns the Red Lobster, Olive Garden, LongHorn Steakhouse, and Yard House chains has stopped offering full-time schedules to hourly workers, the Orlando Sentinel reports. The company plans to offer a maximum of 28 hours per week per employee.

Continue reading Restaurant Chain Cuts Hours To Avoid ObamaCare Costs

ACO’s Produce Little Health Care Savings

It’s disappointing news for the architects and participants of accountable care, hoping that the alternative payment model would curb healthcare spending. A new Health Affairs study found that Medicare accountable care organizations (ACO) that improved diabetes outcomes by as much as 10 percent had little to no effect on costs savings, MedPage Today reported.
Medicare ACOs only showed limited savings under federal Shared Savings Program, in which ACOs must hit 2 percent in savings.

The Centers for Medicare & Medicaid Services anticipated that ACOs will receive an estimated median Shared Savings of $800 million for all participating organizations, at about an annual $2.5 million in Shared Savings payments per organization, according to the study. However, researchers found that the savings needed for that kind of dough would likely come from other quality improvement activities.

However, the results shouldn’t be extrapolated to other conditions, David Eddy, founder and chief medical officer emeritus at the health-modeling company Archimedes, told MedPage Today. “Each condition has to be analyzed on its own.”
In a separate study by the Agency for Healthcare Research and Quality (AHRQ), bundled payments did curb healthcare spending. The RAND research, which looked at single institutional providers, such as hospitals and skilled nursing facilities, concluded “there is weak but consistent evidence that bundled payment programs have been effective in cost containment without major effects on quality.” The study found that moving from fee for service to a bundled payment model led to a 10 percent reduction in spending and utilization.

Nevertheless, researchers concluded that bundled payments could be a “promising strategy” for curbing healthcare costs.

Roundstone, Nationwide Announce New Group Captive Underwriting Facility

Roundstone Management Ltd. and Nationwide Life Insurance Co. have announced a new managing general underwriter agreement focusing on group captive insurers, Roundstone announced in a statement Monday.With services directed toward middle-market medical companies, the two organizations plan to offer medical stop-loss for self-funded plans through a single stop, turnkey group captive underwriting facility. “We look forward to working with Nationwide as we strive to improve upon our stop loss captive offerings,” said Michael Schroeder, President of Roundstone, in a statement. “Our customers will benefit through our ability to deliver a complete underwriting solution in the most time and expense efficient manner in the market. Stop-loss group captive growth and successful outcomes are greatly enhanced with Nationwide on our side.”

Editor’s Note: Captives are sexy these days

Texas County Faces Health Insurance Nightmare

A Texas county is facing a financial decision – continue their self-funded group medical program and go broke or discontinue it. Claims and expenses exceed funding by over $1 million per year. The county refuses to fund more into their plan and instead has bid out the contract hoping to get lower rates/costs. That won’t happen.

This problem is real simple: if funding cannot be increased to cover expenses and claims, then the county needs to spend less on expenses and claims. It is that simple.

If claims are averaging 250% of Medicare or more through their PPO network,  then why not pay just 100% of Medicare? After all, the local hospital relies on Medicare patients. Hospitals do not have to accept Medicare, but most do since they make money doing so (despite protestations otherwise from distraught hospital administrators seeking competitive advantage when negotiating PPO contracts).

So the solution is simple: pay providers less and let the county employees fight  balance billing that is sure to occur. At least that is better than having no insurance at all. Squeezing blood out of a turnip is a hard thing to do.

The county would be wise to offer two plans – one tagged at 100% of Medicare and the other using a traditional PPO network. Employees could buy up to the vaunted PPO – no balance billing plan but would pay a premium price for the privilege. A Cost Plus reimbursement approach would also solve their  financial woes but that would require a strong political backbone.


Maxor Announces Formation of New TPA – Maxor Administrative Services, LLC

Maxor National Pharmacy Services Corp. is pleased to announce the formation of a new company, Maxor Administrative Services, LLC (MAS), which will provide third party administration (TPA) services for self funded health benefit plans.  MaxorPlus currently provides Pharmacy Benefit Management services to many self funded groups throughout the United States, and we believe that it is a natural progression for us to expand our administrative services to all aspects of the health benefit plan.

MAS will offer the transparency and flexibility that is needed for self funded health plans to effectively manage their employee benefits.  As the landscape of healthcare continues to change at a rapid pace, employers continue to search for ways to provide a quality, cost effective healthcare benefits package for their employees.  The lack of transparency in the healthcare market today limits accurate information and encourages hidden revenue which can impede an employer’s ability to make informed decisions.  MAS will provide accurate financial information about each component of their employee benefit plan and allow the employer to act on that information by selecting the service providers that best meet the needs of the Plan and its members. MAS will also be actively pursuing innovative cost containment solutions that break the mold of traditional healthcare delivery.

About Maxor National Pharmacy Services Corporation (Maxor) Maxor is a multi-faceted pharmacy services company. Since 1926, we have grown into a nationwide provider of pharmacy and healthcare services, including MaxorPlus, Ltd., pharmacy benefit management services; Maxor Pharmacies, retail and mail order pharmacies; Maxor Specialty Pharmacy and IV Solutions, specialty pharmacy services and home infusion therapy; Maxor Pharmacy Consulting & Management Services, providing inpatient and outpatient pharmacy consulting and management services; Maxor Correctional Pharmacy Services, providing correctional pharmacy services; and PickPoint, providing intelligent pharmacy solutions for remote dispensing systems, “will call” systems, and electronic medication administration records; and our new company, Maxor Administrative Services, administration of employee healthcare benefits.  For more information about Maxor, visit

For additional information, contact:

Lori Brown, Vice President, Maxor Administrative Services


Dodd Nolan, Vice President, Business Development

(806) 322-5920 – Toll Free: (855) MAXOR-TPA

GPA Email Touts Cost Plus – Cites Baylor Medical Center’s Billing Practices

We received the following email from Group & Pension Administrators (GPA) this morning. GPA started Cost Plus Health Insurance four years ago in Texas, and has since expanded their client base nationally utilizing this concept:


Attached is a link to an article by The Center for Public Integrity, a non-profit, non partisan news organization. The article describes the billing practice of one of the Dallas – Fort Worth metroplex hospitals in billing Medicare at the most expensive level of emergency care. The article states “In 2008, the hospital billed Medicare for the two most expensive levels of care for eight of every 10 patients it treated and released from its emergency room – almost twice the national average,” The hospital president says they didn’t return any of the overcharges and a hospital spokesperson stated their charges were accurate in the context of the billing guidelines at that time, the hospital has since reigned in their charges since 2009. This raises the logical question of whether the overcharging was also done to patients under insured and self funded plans. This is another example why Cost Plus is the solution to these practices.”