If You Like Your Scam, You Can Keep It: the Attack on Out-of-Network Doctors.

“It doesn’t make sense until you understand that the giant hospital bills gave the PPOs an opportunity to profit from their repricing scam, charging for the extent to which they are successful in “discounting” these inflated bills.”

Editor’s Note: Working the spread between Hospital Charge Master Rates and allowed amounts is how third party intermediaries earn billions of dollars in the United States –  http://blog.riskmanagers.us/?p=11527    The higher the “sticker price” and the greater the “discount” = increased fee revenue off the spread.

Continue reading If You Like Your Scam, You Can Keep It: the Attack on Out-of-Network Doctors.

Would We Be Better Off If Employers Stopped Paying for Health Insurance?


Employers may have an incentive to reduce benefits costs yet they are passive purchasers. With a few exceptions, nearly every American corporation outsources its healthcare benefits to insurers and ASO providers and then looks the other was as the medical bills pile up. Sure, they complain about the high cost of medical care, but they don’t take direct action by aggressively shopping for lower provider prices.”

Continue reading Would We Be Better Off If Employers Stopped Paying for Health Insurance?

Ternian – Innovative Self-Funded Coverage Options That Are ACA-Compliant


Are you looking for an effective starting point for ACA Compliance that includes preventive coverage only and will be paired with a limited-benefit health plan? 

Learn more about our Minimum Essential Coverage plans

Limited-benefit health plans being offered side-by-side with ACA-compliant coverage according to the Wall Street Journal

You and your clients are likely looking for ways to comply with the Affordable Care Act (ACA) while also minimizing increases in healthcare costs. One emerging strategy involves offering limited-benefit health plans alongside ACA-compliant coverage for eligible employees. In fact, this topic was covered in a recent Wall Street Journal article.

Why are many large employers considering this approach? Even with employer contributions, many employees still cannot afford major medical coverage. Also, the high deductibles required by these plans mean that younger, healthier employees may find them unappealing.

What about the individual penalty? The Congressional Budget Office projects that less than 2% of Americans are expected to face this penalty. For example, this penalty will not apply if ACA-Compliant coverage requires an individual contribution that exceeds 8% of income.

What about the employer mandate? As long as companies offer at least one plan that complies with the ACA, they are free to keep offering ones that don’t.

If you have additional questions about this approach, we encourage you to read our FAQ on the subject. Or contact Ternian directly at 602-216-0006 to learn more.

Ternian Insurance Group
(602) 216-0006


RFP Process Under Fire – Insurance Consultant or Insurance Agent, or Both? Who Is KBA?


According to this article, paid claims for the prior year were $35 million and low bidder came in at $27 million. Consultant/insurance agent recommended low bid for a “savings” of $8 million.  Does a rental PPO network out perform the Blue Cross network? Is district’s insurance consultant acting as an insurance agent, fee based consultant, or both? http://esbstaff.lpssonline.com/attachments/3da8b4cd-d8ce-4dbb-aadd-4bda2b6c081c.pdf

Sometimes a second opinion can be important [ City of Lewisville – http://blog.riskmanagers.us/?p=12968, Edgewood ISD – http://blog.riskmanagers.us/?p=14796]

Continue reading RFP Process Under Fire – Insurance Consultant or Insurance Agent, or Both? Who Is KBA?

Selecting A Third Party Administrator


By William Rusteberg

Selection of a third party administrator (TPA) is crucial to the success of a self-funded plan. Criteria usually revolve around several factors including compatibility. Corporate philosophies of the employer and TPA should harmonize.

The role of a third party administrator is to adjudicate and process benefits, provide billing and recordkeeping services and provide support and auxiliary services where possible and appropriate.  Selecting a TPA based on cost is not a good idea since such action will only result in confusion with plan administration. In addition, fees paid to a TPA represent a very small percentage of overall plan spend.

Unbundling of plan components can be of vital importance to the overall management of a self-funded employee welfare plan subject to ERISA. The Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries. Competitive procurement of plan administration, stop loss insurance, audit services and additional plan components, separately, enables a plan sponsor to fulfill their fiduciary duties in the broadest possible terms. Plan sponsors can achieve more plan efficiency, lower costs and more control.

The role of the TPA can be one of general manager upon which the plan sponsor delegates authority to sub-contract with vendors such as managed care networks, pharmacy benefit management, subrogation and other services important to the operation of the plan. Or, the plan sponsor can reserve the role of general manager to ensure the ability to “plug and play” the various components that are important to the operation of the plan. Plan sponsors who take this approach generally rely on an independent experienced advisor.

Our Philosophy

The shared vision of RiskManagers.us and clients who retain our services is to establish and maintain a comprehensive employee health and welfare plan, identify cost areas that may be improved without cost shifting to any significant degree, and ensure a superior and sustained partnership with a claim administrator responsive to members needs on a level consistent with prudent business practices.

Plan costs, in all areas including fixed expenses and claims are open for review on a continuing basis. Cost effective plan administration and equitable benefit payments to providers are paramount to fulfilling our mutual fiduciary duties. As we proactively monitor and manage an entire benefit program we are open to any suggestions members may make or the dynamic health benefit market may warrant in order to achieve these goals.

Duty of loyalty to our clients, transparency and accountability are essential to the foundation of our services. To that end, we expect our clients to realize a substantial savings based upon the services that we will deliver.


ObamaCare’s Risk Corridor “Bailout” Just Got Bigger, Much Bigger

By Filed under New Health Care Law on March 20, 2014 with 12 comments

Last Friday, the Administration quietly released 280 pages of rules that, among other things, increased ObamaCare’s risk corridors:

We propose to implement an adjustment to the risk corridors formula…Such an adjustment could increase a QHP issuer’s risk corridors ratio if administrative expenses are unexpectedly high or claims costs are unexpectedly low, thereby increasing risk corridors payments or decreasing risk corridors charges. We propose to raise the administrative cost ceiling by 2 percentage points, from 20 percent to 22 percent. We also propose to increase the profit margin floor in the risk corridors formula (currently set at 3 percent, plus the adjustment percentage, of after-tax premiums). Such an adjustment could increase a QHP issuer’s risk corridors ratio if claims costs are unexpectedly high, thereby increasing risk corridors payments or decreasing risk corridors charges. We propose to raise the profit margin floor by 2 percentage points, from 3 percent to 5 percent. (p. 56)

The table below shows an insurance plan with $10 million cost target versus $11 million of allowable costs. Actual medical claims are $8.8 million. Using the formula for calculating its payout from the risk corridor, allowing 20 percent of administrative costs, the plan gets a $410,000 “bailout” (panel A). If it can add administrative costs up to 22 percent of allowable costs, the payout increases to $635,641 — an increase of 55 percent (panel B).


– See more at: http://healthblog.ncpa.org/obamacares-risk-corridor-bailout-just-got-bigger-much-bigger/#sthash.JoQk9bab.dpuf

Texas Lands First Captive


20 March 2014

The Texas Captive Insurance Association (TxCIA) has licensed its first captive insurance company. CART Assurance Company, has successfully re-domiciled from Arizona to Texas and, as a result, is the first company to receive a Certificate of Authority to operate as a captive insurance company in Texas.

CART president, Irving Pozmantier, commented: “We have a high degree of confidence in the ability of the Texas captive regulators to provide an appropriate balance of regulation with assistance in establishing captive insurance companies with solid business purposes and sensible business plans. From our first meeting with the department’s captive team, they have extended full cooperation, thoughtful suggestions and flexible regulation.”

Texas state law was amended in 2013 in order to give it the ability to license captives to insure the risks of parent companies and affiliates, as well as controlled unaffiliated businesses. This also includes the redomestication of captives from other states. A number of companies have taken this option since the law was amended, with several more applications currently nearing approval at the TxCIA.

Edgewood ISD

mulebriarThe Edgewood Independent School District’s recent decision to drop their fully-insured Blue Cross health plan may become a major issue with local teacher unions in coming days as employees adjust to the new health program known in the insurance industry as Cost Plus, True Cost or Reference Based Pricing. Unfamiliar with new benefit protocols, confused employees are questioning the merits of the plan and continued access to local medical caregivers.

Could the Edgewood ISD follow the foot-steps of Mason Independent School District?    “After several teachers in the Mason City Schools had trouble getting medical care, the district waffled Tuesday on whether it would abandon the controversial TrueCost  (Cost Plus) health care plan.”  http://news.cincinnati.com/article/20130219/NEWS0102/302190076/

“We applaud Edgewood for exploring cost effective alternatives to traditional health insurance plans and hope  they persevere in holding the line against escalating health care costs” said Oscar “Perro Grande” Meyer, a local South San  politiquera. “Perhaps a careful scrutiny of plan contracts to determine liability issues would be important at this early stage before the program matures much further. It’s always in one’s best interest to get a second opinion. Edgewood should engage an independent insurance expert to review the plan, as the City of Lewisville did last year.”     http://blog.riskmanagers.us/?p=12968

Editor’s Note: Cost Plus, or Reference Based Pricing can be a viable alternative to traditional managed care plans if properly structured, priced, implemented and conveyed to plan participants. If not, it could end in poor employee moral and unexpected uninsured financial risk. Risk Managers has several Texas school clients utilizing Cost Plus with good results, as well as a number of San Antonio employer groups. www.costplusinsurance.com


From A TPA – Looks like Cost Plus / Reference Based Pricing may take a hit in the San Antonio area if Edgewood terminates the plan and goes back to a PPO. That would be unfortunate.

From Anonymous – Edgewood is screwed if they terminate early. But I like the second opinion comment by Big Dog Meyer

From San Antonio risk manager – Very interesting. Keep us posted.

From a San Antonio physician group – The Edgewood move away from managed care is being watched very carefully here in San Antonio.

From a Lawyer –  Our firm represents hospitals. Texas courts have expressly held that ONLY A LICENSED ATTORNEY may lawfully represent third parties in negotiation of their legal rights. Crain v. The Unauthorized Practice of Law Committee of the Supreme Court of Texas, 11 S.W.3d 328 (Tex.App.–Houston [1st Dist.] 2000reh., . den.) Anyone else acting on behalf of a third party is ENGAGING IN THE UNAUTHORIZED PRACTICE OF LAW.

A BUSINESS COMPANY may not circumvent this requirement by having an in-house attorney handle the matter because that is the COMPANY practicing law–which only a PROFESSIONAL CORPORATION is permitted to do. Bar Ass’n of Dallas et al. v. Hexter Title & Abstract Co., 175 S.W.2d 108 (Tex.Civ.App.–Fort Worth, 1943, reh. den.) Nor may the business company hire an outside lawyer and have the lawyer handle the matter, because the law firm’s CLIENT is the COMPANY, *not* the third party. And the company cannot get around this with some sort of “power of attorney” or other “written authorization to represent” ruse either.

Only ATTORNEYS may form a professional corporation and a professional corporation may ONLY practice law.

We have found that some marketers regularly misrepresents to ISD’s (school districts) and various other government units that their plans and activities are protected by ERISA. The fact is that ERISA has a “governmental plan” exception–NO governmental entity comes under ERISA.



Insurance Companies As We Know Them Are About to Die And Here’s What’s Going To Replace Them


“More health systems are seeking to contract directly with employers with deals to bundle the price for certain services or serve as exclusive contractor for all healthcare services for a company’s employees….”

Editor’s Note: We believe this article provides an accurate prediction of the evolution or our health care delivery system. We are already seeing the movement begin here in Texas.

“Reimbursements Based on a Medicare Allowable Not Legally Appropriate”


Another short-term, cheap and faddish solution is making benefit reimbursement determinations based on a Medicare allowable.”

Editor’s Note: This article will be in every salesman’s briefcase tomorrow morning. You can hear the Xerox machines warming up right now. Pro-Cost Plus Health Care Revolutionaries who sell fear  (http://blog.riskmanagers.us/?p=14092)   will use this article to justify higher fees for legal indemnification, while BUCA sales representatives will use it to sell against Cost Plus Insurance…………..


From a TPA:

At the root of this article is the fact that DCC is a Dialysis Cost Containment company whose lifeblood is “negotiated” reductions from providers of that service.  The successful use of reference based pricing combined with use of the laws related to dialysis service facilities not being able to balance bill Medicare eligible plan members would eliminate DCC from the market.  The article is built from a self-serving perspective.

Continue reading “Reimbursements Based on a Medicare Allowable Not Legally Appropriate”

Watch For Defamation Of Doctors – “Doctors Show Emotional Irrationality”


By D. Pruitt

It wasn’t long ago that I warned that frustration would next lead to defamation of providers by the Obama administration. Evidently, such things have happened before. “Clinton-era White House memo from Rose Law Firm adviser: Doctors show ’emotional irrationality’ in resisting health reforms, have no ‘right’ to be over-compensated’ for treating patients.”


Stunning memos shed light on back-room cynicism behind ‘Hillarycare’ plan in the 1990s. One adviser wrote that doctors only want to ‘make money which supports them in the lifestyle which they have anticipated’ Another said two days of planned public hearings about health care reform would be just for show, to generate ‘political inoculation’

Clinton Presidential Library is releasing thousands of pages of documents from the 1990s White House just when Hillary needs transparency the least

Editor’s Note: Dr. Pruitt is a Ft. Worth dentist

HCAA Executive Forum 2014 Addresses Cost Plus – Reference Based Pricing

hcaaThe annual Health Care Administrators Association annual Executive Forum held in Las Vegas in February 2014,  addressed one of the hottest topics in today’s challenging health care delivery system – Reference Based Pricing, also known as Cost Plus Insurance.

Reference Based Pricing provides an alternative to today’s ever-rising cost of health care. Using multiple data points, including Medicare rates, cost-to-charge ratios, and historical data as its baseline, Reference Based pricing ensures transparency and fair reimbursement for members, plans, and providers.  During this session, the panelists will outline what works, what hasn’t, and what the future may look like.”

Continue reading HCAA Executive Forum 2014 Addresses Cost Plus – Reference Based Pricing

When It Comes To Price Or Broad Choice Of Providers, Price Wins Everytime

priceisright “Looking for SB’s in the audience!”
 What are narrow networks? It’s real simple: narrow networks are made up of docs and hospitals that charge less for the same services than other docs and hospitals…..This proves that not all docs and hospitals within a broad PPO network  have identical  managed care contracts. It’s the SB’s that make up a SBPPO………..(type in “SBPPO” in the search box on this blog to learn what an SBPPO really is).

Employer Barriers To Adoption Of The Private Exchange Model

The Affordable Care Act has begun to redefine our healthcare system, yet most companies are still evaluating how they want to provide healthcare benefits to employees in the coming years. Many employers are considering a private exchange, similar to the public Health Insurance Marketplace introduced to individuals and families last October. In fact, Accenture projects that private exchange participation will surpass public exchange enrollment by 2018. What must happen before private exchanges become the “new norm” in healthcare benefits administration?

Continue reading Employer Barriers To Adoption Of The Private Exchange Model

Working A School Board – Part 1

compadre1By Molly Mulebriar

School Trustees are elected officials who retain enormous control and discretion over millions of taxpayer dollars. In South Texas where I am from, taxpayer funded “honey pots” magnetize fortune seekers, from roofing companies to insurance brokers to building contractors. Changes in school board majorities each election cycle bodes well for those with the foresight to fund political coffers. Hedging bets by contributing equally between contested seats is a well honed skill, utilizing various partners privy to the scheme.

Typically, individual vendors find it difficult to succeed in gaining lucrative contracts with South Texas school districts without help from influence peddlers. It is a time honored tradition. However, on occasion these conspirators turn fractious once contracts are awarded. Disagreements on monetary splits cause angst, without recourse to the legal system or publicity. To do so would expose the conspiracy and bring scrutiny from regulatory agencies.

These squabbles are never public. They remain private, most of the time.

Take the case of a South Texas school district’s recent change in group health insurance. The district was facing an enormous rate increase. An enterprising insurance agent, keen on a relatively new health insurance medical reimbursement strategy, felt the district could save money, sensing an opportunity to save the district hundreds of thousands of dollars while earning lucrative fees in return.

But he knew he couldn’t count on enough votes to swing the contract. He needed an influence broker………………….




Employee Benefits-Self-Insured Multiemployer Health Plans Could Be Exempt From ACA Reinsurance Fee In 2015 And 2016

union1“………..for 2015 and 2016, the final rule exempts from the fee any multiemployer plan which is both self-funded and self-administered.”  Guess what a multiemployer plan is? Does Taft Hartley come to mind? Union groups will be exempted from the ACA Reinsurance Fee while non-union plans will not be exempted.

Continue reading Employee Benefits-Self-Insured Multiemployer Health Plans Could Be Exempt From ACA Reinsurance Fee In 2015 And 2016

Employees Seek Cost Savings From Private Health Exchanges

1403_AonHewitt_PlanSelection1 private exchanges

“We had postulated that private exchanges would accelerate the movement toward consumerism in employer-provided health care, where people have more to say about the cost of care they receive, and these results validate that to some degree,” says Michael Thompson, a principal in the health-care practice at PricewaterhouseCoopers. “Overall, these are encouraging results. We’re seeing a lot of people right-sizing their coverage when they fully understand the trade-off between the cost of coverage and what they’re getting.”

Continue reading Employees Seek Cost Savings From Private Health Exchanges

Disruption Of The Healthcare Syndicate

keithsmithBy Dr. Keith Smith

“This coercive, anticompetitive system has survived to this day, under government protection, resulting in the runaway costs and obscene corporate profits you would expect. This syndicate generates gigantic hospital bills, and the extent to which these bills remain uncollected provides the basis for the taxpayer subsidization known as the uncompensated care system, or disproportionate share hospital (DSH) payments.”

Continue reading Disruption Of The Healthcare Syndicate

Aon Hewit: Private Health Exchange Mitigates Costs, Engages Consumers

aonLINCOLNSHIRE, Ill., March 6, 2014 /PRNewswire/ — As employers search for new and innovative ways to provide competitive benefits to employees, positive second year enrollment results from Aon Hewitt, the global talent, retirement and health business of Aon plc (NYSE: AON), demonstrate that the Aon Active Health Exchange is delivering on its promise to engage consumers, offer broad choice and control cost.

Continue reading Aon Hewit: Private Health Exchange Mitigates Costs, Engages Consumers

“Take It To The Limit” – Accurately Identifying and Taking Advantage of Network Contractual Boundaries

PHIAWhile it is true that some network contracts restrict a benefit plan’s ability to audit claims – or as is more often the case, simply prohibits the benefit plan from doing anything with the information so identified; some contracts apply unrealistic deadlines and still others contractually compel payment of claims otherwise excluded by the plan document… There are key provisions plan administrators can use to limit or eliminate the negative impact of such provisions.

Join The Phia Group’s CEO – Adam V. Russo; Sr. Vice President – Ron E. Peck; and select members of their legal team as they address some of the most common conflicts experienced by plan administrators utilizing a preferred provider organization network, action you can take now to avoid conflicts, and strategies you can apply to maximize the benefit of network usage.

Thursday – March 27th      1:00 – 2:00 PM EST                          To Register Now, Click Here  

takeit   https://www.youtube.com/watch?v=FbxdGW82xx4


Goal Of Underwriting Stop Loss – Drain Value, Avoid Claims

Stop Loss Start Over

“The stop loss insurance business is an underwriter’s game.  Their game plan is to avoid paying claims.  They screen each prospect with claim review and disclosure requirements, and reject or rate-up anyone who may actually present a claim.  The higher the deductible, the more effective this process, hence the bias to drive deductibles higher and higher.  The carriers who have done best in this business have been the ones with average higher deductibles for this reason.”

Continue reading Goal Of Underwriting Stop Loss – Drain Value, Avoid Claims

Brownsville ISD Insurance Meeting – Will MAA Be Sued Next?


Suing a ham sandwich has never been easier!

“…………..its been several years without payments (to medical providers) …………….we think they will be happy……………………..” ( Homer G. Farnsworth, M.D. says “Oh really? Is it not possible these medical caregivers have a legal right to full billed charges since payment is overdue past required time limits under Texas statue?”)

The first 6 minutes of this video is pretty interesting – http://bisd-kbsd-itv.pegcentral.com/player.php?video=8079ed9dab491a7cfb1ce697296b2a00

The remaining 25 or so minutes are also interesting for those in the insurance business. For example, a pre-paid legal plan with rates guaranteed for 6 years?