Archive for May, 2013

Faced With Extinction, Insurance Insiders Find Nirvana

Thursday, May 30th, 2013


A Scheme To Avoid or Reduce Accountable Care Act Taxes

By William Rusteberg

“Skinny” group medical plans have been making the news lately. Gleeful insurance agents, consultants, TPA’s and insurance companies are ecstatic , believing that they have found a new marketing bonanza with rich rewards. Whereas ObamaCare ensured eventual extinction, profitable economic survival as a health care intermediary now seems viable once again.

Certain provisions of the PPACA appear to create a big loophole for employers in search of ways to avoid, or minimize ObamaCare taxes.

Mark Holloway, a compliance specialist at Lockton Companies, wrote about the loophole in February 2013, after studying recently released U.S. Department of Health and Human Services implementation guidelines.

Here is a summary of how the scheme is employed – A Scheme To Avoid or Reduce Accountable Care Act Taxes

Numerous insurance intermediaries are jumping on the loophole bandwagon. Fees and commissions to be earned can be enormous. Marketing strategies are geared to entice Plan Sponsors with promises of legal tax avoidance benefits while blinding eager prospects to high fees. Administration fees, commissions and other fees can account for as much as 50% or more of claim costs. There is no MLR provision to worry about.

Some employers are willing to pay anything to avoid punishing PPACA taxes. It’s the bottom line that counts.

Will the loophole survive political scrutiny? Seems unlikely.

Note: SIIA believes that the Federal agencies may conclude that this type of practice violates the new nondiscrimination rules that apply to fully-insured group health plans.  To date, the Federal government has not issued regulations detailing these rules.  In the case of self-insured plans, this practice may already violate the nondiscrimination rules applicable to self-insured arrangements under section 105(h) of the Internal Revenue Code (“Code”).  If not, contemporaneous with the issuance of the new nondiscrimination rules for fully-insured plans, Treasury may add to the current regulations under Code section 105(h), providing that offering low-cost, skinny plans could be discriminatory in certain instances.

Related Posts:


Nurse Practicioners Applaud Bill To Widen Primary Care Services In Texas

Thursday, May 30th, 2013

nurseSenate Bill 406, authored by State Sen. Jane Nelson, R-Flower Mound, will have far-reaching effects that will facilitate more patients receiving the health care they need, according to the Texas Nurse Practitioners, which represents 9,000 nurse practitioners statewide. The bill has also drawn support from the Texas Association of Business.


ObamaCare Opponents Target Exchange Funding

Thursday, May 30th, 2013

defundobamacareEven though the health reform law was upheld by the U.S. Supreme Court and is moving steadily along in terms of implementation, some staunch opponents are still working on repealing the health overhaul legislation.

But instead of lobbying Congress or suing through the court system to reach a full repeal of the law, opponents are taking steps to block the health insurance exchanges, which are key provisions to the whole law, from success, reported Bloomberg.

“If you’re committed to making sure Obamacare doesn’t go into effect, you have to focus on the expansion and on the exchanges,” said Dan Holler, a spokesman for the Heritage Action for America, a conservative lobbying group. “Once you have people under a program, it’s really hard to change that system no matter how badly it needs change.”

In particular, Heritage Action and similar groups like FreedomWorks are working to persuade Congress to end exchange funding when the lawmakers debate whether to raise the debt ceiling later this year. Exchanges lacking adequate financial support will result in limited enrollments and higher costs, which could drive lawmakers to roll back all or part of the law in the future.

“If enough people don’t get in to these exchanges, it’s essentially going to be to be unfundable,” Josh Withrow, legislative affairs manager for FreedomWorks, told Bloomberg.

Some of their efforts appear to be working. Congress rejected a request from the U.S. Department of Health & Human Services for $1.5 billion to implement the exchanges, FierceHealthPayer previously reported.

To learn more: – read the Bloomberg article


Cigna Enjoys Success In Marketing Health Insurance In Communist China

Thursday, May 30th, 2013


With roughly 1.3 billion people and a growing middle class, China is on the brink of a burgeoning healthcare market. And Cigna is making inroads to secure a large share of the business.

The insurer teamed up with China Merchants Bank, a prominent retail lender known for its ability to adeptly handle consumers, when it entered the Chinese market in 2003. And last year, Cigna reported $331 million in revenues, an increase of 32 percent from 2011. What’s more, its Chinese business broke even after operating in the country for only three years, according to Fortune.

Such strong financial performance comes amid healthcare spending in China that’s expected to more than triple by 2015 to $648 billion, with the health insurance market in particular reaching about $15 billion, of which Cigna’s portion could total almost $1 billion, says Ana Gupte, an analyst at Bernstein Research.

Among its ventures in India, Turkey and the Middle East, as previously reported by FierceHealthPayer, “China is the fastest growing asset in our international portfolio,” Cigna CEO David Cordani said.

Key to Cigna’s rise in the foreign Chinese healthcare market is its joint venture with CMB, which uses innovative marketing tactics, including the latest data-mining techniques.  And because China’s registration process is lengthy and cumbersome, Cigna isn’t likely to face a lot of competition.

“It’s a great opportunity for them,” Wedbush Securities analyst Sarah James told Fortune. “I don’t see anyone else entering the market there.”

Up next for Cigna is offering employer-based insurance plans to Chinese companies. It has signed deals with 12 more banks, credit companies, airlines and retailers to acquire their customer lists while also establishing a concierge service to help middle-class Chinese consumers deal with the evolving healthcare market.

To learn more: – read the Fortune article



One Strategy For Health-Law Costs: Self Insure

Tuesday, May 28th, 2013

Atlanta Hospitals Forming Own Insurance Company – A New Trend?

Tuesday, May 28th, 2013

“Consolidation, both in the provider space and also in the insurer space . . . has been on the rise since the passage of the Affordable Care Act,” said Graham Thompson, an Atlanta-based insurance industry lobbyist. “I believe all involved are trying to reach economies of scale and increase market share. And that helps them be competitive.”


Obama Skinny Plan Irony

Monday, May 27th, 2013


Prior to ObamaCare a few million people had these not-quite-insurance insurance mini med policies. The administration and pro-reform crowd decided people who purchased these plans needed protection from themselves and set out to wipe them away.


Memorial Day

Thursday, May 23rd, 2013

Lt. Col. Rusteberg, May 1944, London

West Point 1934

Two Silver Stars, One Bronze Star, Presidential Unit Citation (Battle of Hatten), Purple Heart. American hero.

The President of the United States of America, authorized by Act of Congress July 9, 1918, takes pleasure in presenting the Silver Star to Lieutenant Colonel (Infantry) Edwin Rusteberg (ASN: 0-19542), United States Army, for gallantry in action while serving with Headquarters, 1st Battalion, 242d Infantry Regiment, 42d Infantry Division, in action on 9 January 1945 at Hatten, France. As Commanding Officer of the First Battalion, 242d Infantry Regiment, during the action at Hatten, France, Colonel Rusteberg planned and executed the defense of that area with outstanding success. In spite of point blank fire from enemy tanks supported by Infantry that raked his positions with fire, Colonel Rusteberg by personal example held his troops in position and withstood the enemy attack. Fighting side by side with his men in the face of overwhelming odds without mechanized or artillery support, Colonel Rusteberg by his courageous leadership, tenacity and devotion to duty played a major role in the successful defense of the town of Hatten.

General Orders: Headquarters, 42d Infantry Division, General Orders No. 131 (1945)

Action Date: 9-Jan-45 Service: Army Rank: Lieutenant Colonel Company: Headquarters Battalion: 1st Battalion Regiment: 242d Infantry Regiment Division: 42d Infantry Division


Dentists: Beware of HIPAA Fines

Wednesday, May 22nd, 2013


If your office computer is stolen in a burglary, or if your patients’ records are hacked by a dishonest employee of your cloud service provider, can you afford a $400,000 fine?


Subsidy Calculator

Wednesday, May 22nd, 2013

This tool illustrates health insurance premiums and subsidies for people purchasing insurance on their own in new health insurance exchanges (or “Marketplaces”) created by the Affordable Care Act (ACA). Beginning in October 2013, middle-income people under age 65, who are not eligible for coverage through their employer, Medicaid, or Medicare, can apply for tax credit subsidies available through state-based exchanges.

UnitedHealthCare Announces Pricing Comparison Tool

Wednesday, May 22nd, 2013

 “The online and mobile service is more precise than cost estimation tools that may rely only on historical claims data or provide estimates based on geographic average. myHealthcare Cost Estimator draws on the company’s actual contracted rates with physicians, hospitals, clinics and other health care providers, giving consumers more accurate pricing information.”

Editor’s Note: We bet that providers who sign provider agreements with UHC are not going to like their contracted fees exposed to the public.


The “Strong” Penalty VS The “Weak” Penalty

Wednesday, May 22nd, 2013

“Last week, I discussed how Obamacare’s individual and employer mandates dramatically expand the power of the Internal Revenue Service. In that piece, I highlighted the fact that the employer mandate gives employers “an incentive to offer coverage that is either ‘unaffordable’ according to Obamacare or that fails to meet the law’s ‘minimum essential requirements.’” Let’s delve into that further, as this aspect of Obamacare is likely to have far-reaching consequences for the way that employers offer health coverage in the future.”


Employer Mandate Requires Employee Notification By October 1

Wednesday, May 22nd, 2013

On May 8, 2013, the Employee Benefits Security Administration of the U.S. Department of Labor (“DOL”) issued Technical Release No. 2013-02 (“Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“Affordable Care Act”), with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace (“Marketplace”), previously referred to as the “Exchange.”


The ObamaCare Tax Dodge – Risk Transfer To Taxpayers?

Monday, May 20th, 2013


“Rather than offer an affordable, minimum value plan at an average cost of $5,500 pepm (industry average), the employer funds only $3,000 in sanctions for  only those in need of catastrophic, comprehensive coverage through the state exchange. Risk transfer to taxpayers.  This is upside down, but it is what it is.  Waving a red flag in front of a bull (Sebelius) may be dangerous. Will the bull win?” – Molly Mulbriar


Medicaid Life Settlements

Saturday, May 18th, 2013

If one of your elderly clients was about to enter a nursing home, probably the last piece of advice you’d give them would be to surrender their life insurance.


Delta Dental & Greed

Friday, May 17th, 2013

pruitt     By Darrell Pruitt, DDS –

Delta Dental and other discount dentistry brokers in Iowa attempted to limit preferred providers’ fees even for work even after Delta patients exceed their annual maximum. Of course, it’s Delta which sets the annual maximum. The free market won. Delta tyranny was defeated… this time.

“Court sides with Iowa dentists in key billing case” By RYAN J. FOLEY, Associated Press

The “Burden” Of High Deductibles

Friday, May 17th, 2013

The “burden” of high deductibles is really not a burden at all compared to what you pay for a lower deductible, month after month, year after year.

Bronze Plan Premium Gold Plan Premium Difference Maximum Bronze Deductible
Individual 2,700 4,680 1,980 1,750
Family 9,526 16,716 7,190 3,500

So families with “high deductibles” of $3,500 or less are “burdened” even though they would have to pay $7,190 in higher premiums to avoid the deductible. Keep in mind that the premium is lost money.


Ordinance Requires $1Million “Dangerous Dog” Policy

Thursday, May 16th, 2013


More government insurance mandates? Times have never been so good for insurance brokers.


Balance Billing, Chargemaster Pricing & Remedies

Wednesday, May 15th, 2013


Balance Billing

“We guarantee zero balance billing to our clients as part of our comprehensive medical claim administration services, guaranteeing that patients will never be hassled by a provider for additional funds.”


Hospitals Dismiss Significance Of Chargemaster Prices?

Tuesday, May 14th, 2013

lustig Victor Lustig

By William Rusteberg

Hospitals dismiss the significance of chargemaster prices? (See link to article below). That is totally misleading. Chargemaster prices are extremely significant and gives rise to a billion dollar business for intermediaries such as insurance companies, audit firms, law firms, claim re-pricers, and third party administrators.

The scheme is tied up in “savings” to be realized through the difference between arbitrary and unreasonable chargemaster prices and what is actually paid. The quantative differential  can be enormous.

Percentage of savings fees is the greatest fraud foisted upon consumers since Vicor Lustig sold the Eiffel Tower in 1925.

It is clear to all that chargemaster rates are “totally around the bends.” No one will disagree with that. Yet many ancillary industries, given rise by our current health care delivery system including managed care companies, audit firms and third party administrators depend on chargemaster pricing without which they could not survive.

If the average differential between chargemaster pricing and the actual price paid is 50-80%, there is a lot of “money” contained in the “spread” to be earned. Many PPO networks, for example, will charge 30% of savings for out-of-network claims. 30% of 80% is 24%. To earn 24% of an inflated, arbitrary number that no one ever pays is better than robbing a bank.

A well oiled conspiracy requires sharing.  Commonly formed side-agreements are forged between willing partners. Health care intermediaries are in a competitive business.

Thus, hospital chargemasters have fueled the fortunes of many health care intermediaries and the scheme continues…………………………

Editor’s Note: See previous posting:

Insurers Predict 100-400% Obamacare Rate Explosion

Monday, May 13th, 2013

atomic bomb

HealthSmart Continues Acquisition Strategy – 8 TPA’s in 2 Years

Monday, May 13th, 2013
“During the past two years, HealthSmart has acquired seven other third party administrators,” said Daniel D. Crowley, Chairman of HealthSmart.

Medicare Releases Rx Records

Sunday, May 12th, 2013

Medicare’s popular prescription-drug program now serves more than 35 million people, but the names of prescribers and the drugs they choose have never previously been public. Use this tool to find and compare doctors and other top prescribers in 2010.

Cost Plus Dental

Saturday, May 11th, 2013

The Cost Plus Dental model is very simple.  Like Costco or Sam’s Club, patients pay an annual membership fee.  Cost Plus Dental uses these membership fees to help offset the cost of care which allows members to have high quality care for extremely low cost.  In addition, care can be provided without the limits and restrictions associated with traditional dental benefits plans.

The Basics Of Setting Health Insurance Premium

Saturday, May 11th, 2013


health insurance premiumsWhen setting health premiums, insurers balance covering their financial risk and administrative overhead with offering competitive rates.  Insurance companies consider factors like age, medical history and cost of care to set premiums for the coming year.


International Federation Of Health Plans

Saturday, May 11th, 2013

Interesting summary of health care costs across the world – especially prescription drugs:

% Of Savings Fee – Scam Of The Century?

Friday, May 10th, 2013


In the article,  Transparency And The Fallacy of Charge Masters  the author exposes the fallacy of “charged based negotiations” with hospitals.

“The charge masters are totally irrational…….over time, hospitals raised charges in anticipation of negotiating discounts with private health insurance companies while maintaining their revenue streams……….Over the years, the charge masters have become more and more disconnected from reality.”

Yet third party intermediaries love charge masters. The higher charge master rates are, the higher their fees.

Negotiating hospital bills and charging fees based on a percentage of savings is a billion dollar business in the United States. It continues because payers won’t stand up and say “enough already, your fees are too high……let’s negotiate your fees to a more reasonable level, based on a flat fee per claim or a percentage applied to a universal benchmark such as Medicare!”

Editor’s Note: To pay a percentage-of-savings fee off an existing contract is insanity.

The Rest Of The Story About Hospital Pricing

Friday, May 10th, 2013
The recent Medicare report on variation in hospital “prices” is not exactly news. In fact, I wonder why anyone (including the NY Times and NPR) covered it, let alone make it a lead story.


Will COBRA Become Obsolete?

Thursday, May 9th, 2013

“People who purchase coverage through the Marketplace instead of COBRA could cut their premiums by as much as half.  They may also qualify for a new kind of tax credit that lowers monthly premiums right away.  From now on, people leaving their jobs will learn that they may be eligible for affordable insurance through the Marketplace.” – K. Sebelius


Transparency And The Fallacy of Charge Masters

Thursday, May 9th, 2013


“The charge masters are totally irrational,” Robert Laszewski, a former health insurance company executive who consults for health care companies as president of Alexandria, Va.-based Health Policy and Strategy Associates, wrote in an email to The Huffington Post.

Hospitals used to base prices on health care costs and on the need for profit that would, among other things, enable them to make investments in their facilities, Laszewski explained. “They became the baseline from which the hospitals started,” he wrote.

But over time, hospitals raised charges in anticipation of negotiating discounts with private health insurance companies while maintaining their revenue streams, he said.

Prices have continued growing over decades to the point where there is no plausible justification for them, according to Laszewski: “Over the years, the charge masters have become more and more disconnected from reality.”


U.S. Hospitals Quietly Deport Hundreds Of Illegal Aliens

Wednesday, May 8th, 2013


“Medical repatriation” allows hospitals to put patients on chartered international flights, often while they are still unconscious. Hospitals typically pay for the flights.


Most Favored Nation Clause Under Attack, Again

Wednesday, May 8th, 2013

mooresevilleThe lawsuit, filed by businesses and residents of  Mooresville, was the first of more than 20 class actions making similar  allegations against Blue Cross plans nationwide.  Those cases have recently  been consolidated before a federal judge in Alabama, which means that the  litigation’s outcome likely would affect companies and policyholders  nationwide.


One Hospital Charges $8,000 – Another $38,000

Wednesday, May 8th, 2013


For the first time, the federal government will release the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors.


Xerox, Eastman Kodak And Cost Plus Insurance

Friday, May 3rd, 2013


Remember Xerox? How about Eastman Kodak? Both companies were pioneers in their industries. They were visionaries providing solutions by fulfilling previously unmet needs, creating new markets that did not exist before.


Case No. 13-623 Halbig et al v. Sebelius et al

Friday, May 3rd, 2013

(Reuters) – A group of individuals and businesses filed a lawsuit against the Obama administration’s healthcare overhaul on Thursday, hoping to stop the law in states that have not set up new insurance exchanges.


San Benito Independent School District Seeks Bids

Thursday, May 2nd, 2013


Editor’s Note: Excellent opportunity for those seeking practice putting proposals together.

Invasion Of The Health-Insurance Brokers

Wednesday, May 1st, 2013

invasion body       If Matt Stover is right, it won’t be long before your workplace is crawling with health insurers and brokers trying to recoup revenues they lost because of the Affordable Care Act.


Aetna Cuts Predictions For ObamaCare Enrollment

Wednesday, May 1st, 2013

By Jay Hancock

April 30th, 2013, 3:50 PM

In a new sign that implementing the health law could take longer than expected, insurer Aetna said Tuesday it lowered the number of medical policies it expects to sell through online marketplaces that open for business in October.

“This is going to be a slow uptake,” Aetna CEO Mark Bertolini told investment analysts on a call to discuss financial results. “The process required to sign up, to get the subsidies, is going to take some time. And I think this is a two-year ramp to get the individual exchanges up to a level where customers are going to feel appropriate signing up. And so our estimates of what we believe … enrollment [will be] are dropping for the first year.”