Rodger Vinson, a Florida Federal Judge ruled today that ObamaCare is unconstitutional:

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.”

http://news.yahoo.com/s/ap/20110131/ap_on_bi_ge/us_health_overhaul

Editor’s Note: Does this mean we can now ignore ObamaCare mandates?

January 28, 2011 11:40 PM

The Brownsville Independent School District’s self-funded employee health plan cost the district less during 2009-2010 than it did during each of the previous two school years, BISD’s school board insurance committee learned Friday.

A summary provided to committee members by administration showed that net costs for the plan in 2009-2010 totaled $37.05 million compared to $43.45 million in 2008-2009 and $37.67 million in 2007-2008.

Per-employee, per-year costs also went down. In 2009-2010 the PEPY figure was $4,893 compared to $5,817 in 2008-2009 and $5,141 in 2007-2008. 

MAA took over as third-party administrator for BISD’s health plan in October 2009. The previous TPA was HealthSmart Benefit Solutions Inc., which administered the plan the previous two years. Before that the TPA was Mutual of Omaha.

In self-funded health plans, the TPA administers the plan on the employer’s behalf, providing a network of medical providers, claims management and other services.

BISD is in the process of suing HealthSmart for $14.5 million in allegedly higher medical claims and improper charges during the two years HealthSmart administered the plan. The lawsuit, filed in August, was the result of an independent audit.

On Friday, Wright told insurance committee members that between Oct. 1 and Dec. 31, 2010, 91 percent of all plan expenses went directly to the benefit of BISD employees and their dependents.

In an executive summary provided to the committee, MAA said the plan had a per-employee, per-month cost of $448.53, which calculates to $5,382 per employee per year. The report said Mercer’s National Study of Employers for 2010 showed a national average PEPY cost of $9,562, meaning BISD’s costs so far in 2010-2011 are 56 percent of the national average.

The calculations exclude the cost of biometric screenings for BISD employees, which are part of MAA’s wellness and disease management efforts.

Kathy Corder, the chief marketing officer for Personalized Prevention, MAA’s wellness and disease management provider, said the biometric screenings are showing encouraging results.

The screenings, which are conducted where people work, are free to employees. Laboratory work is paid for by the plan. Corder said there were 4,988 such screenings in spring 2010 and 4,896 in fall 2010.

Of those, 713 screening participants were referred to care management, Corder said, and 70 were found to be diabetics whose blood sugar was out of control. Those 70 are now controlling their diabetes, resulting in savings of as much as $2 million over the life of the employee.

http://www.bisd.us/Employee_Benefits_Risk_Mgmt/PDFs/Insurance_Committee/Health_Plan_Meeting.pdf

glong@brownsvilleherald.com

Editor’s Note: “How do we know we are doing much better this year than last year?” asked Don Pedro. “What was this year is last year plus or minus this year’s change,” replied the expert. “If change is the only constant why do we need to measure it? You dont know if something is better if you didnt know how to measure what it was before” countered Don Pedro. And out he went.

(Don Pedro is a well known local sage in Brownsville, Texas whose advice has guided several generations of loyal readers of the Brownsville Herald).

           If the BISD pepy (per employee per year) health care costs is $4,893, how does that compare to other local Valley school districts such as Rio Hondo, La Feria, San Benito, Mercedes, Weslaco, McAllen, PSJA, Sharyland, Point Isabel, Los Fresnos, and La Joya Isd?  Some of these districts have Blue Cross, others have HealthSmart and Texas True Choice.  A comparative analysis would be interesting.

Hospitals and Preferred Provider Organizations (PPO) are team players. They are business partners who have forged lucrative business agreements with each other at the expense of the unsuspecting, ill-educated and clueless consumer.

The scam is so well refined that the poor unsuspecting consumer is led to believe they are the recipients of a really good deal when in fact they are getting screwed big time.  Yet, consumers continue to count PPO’s as the good guys. After all, arn’t PPO’s  looking out for them by negotiating great discounts (as opposed to great savings) from their business partners, the hospitals?

Molly Mulebriar, forensic private investigator, has given us a bonafide fictional tape recording of a recent meeting between a PPO representative and a hospital administrator.  We have permission to release the transcript, redacted, which illustrates the PPO/Hospital scheme to screw consumers:

Hospital Administrator – Good to see you again Jack.  I really, really enjoyed that golf game last week – it felt swell beating you again – bought my wife a new  car thanks to you. Ha Ha Ha, Anyway, as you indicated in your email asking for this meeting, you want to maximize our cash flow by maximizing yours. What is your proposal?

PPO Representative – It’s easy. First, the largest school district in the area just hired a so called insurance consultant. Ive met with her, and she doesnt know s–t from shinola. Now is a good time to screw the district again, maximizing both your revenue streams and mine, while making ourselves look like local heros. Plus, we will make the new insurance consultant a hero too, for a continued relationship that will maximize her revenue as well. It is a win win situation for all of us.

Hospital Administrator – Great! What is the plan?

PPO Representative – Ok, here is the deal. You raise your senseless Charge Master, which is already inflated, arbitrary and has no relationship to costs, by 18%.  Then, I will go to the insurance consultant and tell her that because of her great talent in negotiating with us, we will increase our PPO discount from 35% to 45%.

Hospital Administrator – By God, she will be able to tell the district the new PPO contract will save them millions of dollars in discounts as opposed to savings! This is brilliant. But exactly how would this work?

PPO Representative – Ok, you raise your Bull Shit Charge Master by +18%. Don’t worry, no one will know since you will not release the Charge Master to the public. Then you sign an updated agreement with me to increase our PPO discounts from 35% to 45%. Of course you will continue to pay our PPO a 4% “re-pricing fee” of the discount. The net to the hospital is an overall revenue increase of 12% while we get a 29% increase in our re-pricing fee. We both win by not losing.

Hospital Administrator – Wait a minute, Im getting a 12% increase in an already inflated arbitrary Bull Shit number, while you are getting revenue maximization of 29%! I want part of that 29%!

PPO Representative – I am sure we can work that out. How about if I increase your revenue stream by directing more elective surgical admissions to your hospital? Would that help you out? What I will do is identify which local physicians routinely admit patients to the other hospital in town, and renegotiate our contracts with them. I will tell them that the more admits to your hospital, the more we will compensate them. It’s illegal but hey, it’s done every day.

Hospital Administrator – Ok, here is a list of local physicians I want you to contact. Raise their rates from 175% RBRVS to 225% RBRVS. I will let it be known, unofficially, that it was I who helped them out. They will certainly return the favor I am sure.

PPO Representative – Ok, but of course the district will see that their costs are increasing despite the better “discount.” What we need to tell them is the culprit is inflation. That your cost of business is going up and you simply have to pass those costs on to the consumer. Also, you can tell them you are losing your royal ass off Medicare and Medicaid patients.

Hospital Administrator – Right on! But between you and me, we are making money off Medicare patients who represent +60% of our patient revenue. And the more Medicaid and indigent care patients we treat, the more Medicare pays us. I just love those Medicaid and indigent care patients! I wish we had more of them.

PPO Representative – Yeh, I know, I haven’t met a hospital administrator yet who lost money on Medicare patients. If they did, their Board of Directors would find a replacement real quick.

Hospital Administrator – Ok, let me see if I got this correct. You are going to tell the insurance consultant that you negotiated a better contract for the district because of her amazing negotiating skills, the district is going to “save” money as a result while spending more, and my hospital is going to get an overall +12% raise in revenue while you get a +29% pay raise.  And, about 60 local physicians will get paid more money by sending their elective surgical admits to me rather than to my competitor across town. It that right?

PPO Representative – Yes! Good doing business with you. No one will ever know what we agreed to today. Our contract is proprietary – no one but you and me knows what is in it. Not even the insurance consultant. I love this business! Let’s go play golf. Ive made a “bet” with a local insurance agent for $35,000 that Im going to lose on the 18th hole  – it’s that time of year he contributes to some sort of scholarship fund at the district.  Wanna make the same bet?

Editor’s Note: This is a true fictional narrative provided by Molly Mulebriar. Mulebriar cautions that this transcript is not attributable to any particular institution, person or locale.

  Holding DentalPlans accountable to dental patients

Today, I got into a discussion with an anonymous DentalPlans sales rep who goes by “Dental Hygenie.” We are discussing the morality of deceptive advertising in the discount dentistry market and gullible, vulnerable dental patients. I’m hoping she’ll return to fasten down some loose ends. I’m pretty sure Hygenie is a woman.

“We don’t have our own dentists. We simply provide consumers with a list of dentists that accept dental plans. We are always researching and getting feedback. Thanks for all your questions Darrell, its been fun chatting with you today!”

My reply: I’m sorry you had to rush off, Dental Hygenie. I’ve sincerely enjoyed our conversation today and learned a lot about DentalPlans from you. I hope that the information we shared will help others understand their choice in dentists – including discount dentists promoted by DentalPlans who work for as little as 15% of their normal salary (A 30% discount based on an industry average of 65% overhead means a 5% net, versus a dentist’s full pay of 35% net). To clarify one of your statements, I should point out that you also wrote that DentalPlans dentists offer discounts as high as 60%. I think that quote must have been a typo. Anyone can see that if a dental practice has a 65% overhead, and sells dentistry at a 60% discount, the dentist would make more money by staying home. For example, if one nets a negative 25% on each widget one sells, making more widgets will only dig one deeper in debt. You really didn’t mean to advertise that DentalPlans offers 60% discounts, did you, Dental Hygenie? That would be misleading and probably illegal outside the Internet. Such deception certainly wouldn’t be ethical.

Even a 30% discount simply sounds incredible. As a dentist, I cannot imagine working 7 times faster to make the same amount of money I earn now, and still maintain the quality my patients expect of me. Dentistry is intricate, one-of-a-kind handwork performed to tight tolerances in juicy, wriggly mouths attached to occasionally nervous patients who sometimes show up late, or not at all. Please help me and others understand how dentists can discount their work by 85% and not go bankrupt.

I find another of your statements confusing. It may be a typo as well. You said, “You pay a one time fee starting at $79 for the year and start to receive your discounts almost immediately.” Did you mean to say there is a one time fee or a yearly fee starting at $79?

I’m hoping you will find time to return soon. I have other questions your potential customers would ask if they had a clue where to start. I’d like to discuss more about DentalPlans’ quality control with you. I’m glad to read that DentalPlans’ business partners like Aetna and BCBS scrutinize the dentists they send trusting and vulnerable patients to see. After all, to offer dentistry by the lowest bidders with no quality control would be morally bankrupt.

Whatever your name is, you just have to agree that since most people are clueless about dentistry, they are terribly vulnerable to being ripped off by anonymous salespeople. Let’s you and I make sure it doesn’t happen on Dental Facebook.

D. Kellus Pruitt DDS – pruittdarrell@sbcglobal.net

     I recently gave a keynote speech to a group of insurance brokers affiliated with the Institute for Work Comp Professionals; the talk focused on cost drivers in WC, with special emphasis on medical costs.

The part of the talk that generated the most discussion was the section on networks, and specifically how most WC networks have completely failed to reduce medical expenses.

My net is insurers are shooting themselves in the head, with a pistol provided by their managed care departments.

PPOs contract with providers to deliver services at a discount. Most PPOs get paid a percentage of the savings that is delivered by that discount, typically 15 to 22 percent of the savings. So, the more the PPO ‘saves’ the more it makes. On the surface, this sounds good: the system rewards the PPO for saving money and does not pay it when it delivers no savings.

However, a closer look reveals that when the PPO vendors win, the payer loses. The ugly head of the Law of Unintended Consequences emerges again.

At the most basic level, health care costs are driven by a relatively simple equation:

Price per Unit x Number of Units = Total Costs

Under a percentage-of-savings arrangement, reducing total cost is ignored in favor of saving money on unit costs. The PPO gets paid for savings on individual bills. Therefore, the more services that are delivered and the more bills generated, the greater the ‘savings’ and the more money the PPO makes.

The system encourages over utilization because it is in the PPO’s best interest financially to have numerous providers generate lots of bills for lots of services. Also, the providers, squeezed by a per-unit fee schedule that is lower than fee schedule/Usual and Customary Rates (UCR), have a perverse incentive to make up for that discount by performing more services.

The industry has been hit, and hit hard, by the Law of Unintended Consequences. Two of the top managed care “fixes” – fee schedules and PPOs with pricing based on percentage of savings, encourage over-utilization, a major cost driver for workers’ compensation.

It’s no wonder that most PPOs like this model, but why would any of their customers?

The simple answer is that managed care departments at many carriers and third party administrators (TPAs) are evaluated on the basis of their network penetration (the percentage of dollars that flow through a network provider) and network savings (on a per-bill basis).Their internal and external customers have bought into the per-unit discount model, and measure the success of their managed care programs on the dollars and/or bills that flow thru the network, and the savings below fee schedule or UCR delivered by the network.

The fact is few carriers, TPAs, or employers have realized that per-bill ‘savings’ is the wrong way to assess a managed care program. And unless senior management changes their evaluation methodology, their managed care departments will have no incentive to change their program to one that actually does reduce total costs.

After my conversation with a hall full of brokers, my bet is more carriers are going to be getting more questions about this.

Editor’s Note: This was written by Joe Paduda

   Guardian announced yesterday they are exiting the medical insurance market. They have sold their medical insurance block to United HealthCare.

Fewer carriers in the medical insurance market means less competition. Those carriers that remain, we believe, will focus on administering self-funded employee welfare plans – some will exit the fully-insured market due to stiff restrictions mandated by ObamaCare.

 Admitted Felon Olivarez Goes Free – Beats Justice System – Maintains Texas Insurance License

Half Guilty, Half Pregnant Arnulfo Olivarez was sentenced yesterday for his crimes. This admitted felon paid bribes to public officials in exchange for lucrative insurance contracts worth millions of taxpayer dollars.  

Arnulfo “Arnie” Cuahtemoc Olivarez
Insurance Agent
4 years probation
$25,000 dollar fine

Editor’s Note: The following is an excerpt published in the McAllen Monitor -

Arnie Olivarez: “I want to apologize to my family, especially my daughters and to everyone I’ve done business with.”

Arnie Olivarez: “It’s a common practice but it’s wrong.”

Judge Ricardo Hinojosa: “By doing that, you’re insulting every elected official and every business person who does it the right way, which I believe is the majority. They get hurt every time someone like you does what you did.”

Judge Ricardo Hinojosa: “This is not a victimless crime.”

Arnie Olivarez: “I hurt my family, lost my business, had to let go of of good friends. I’m trying to keep my insurance license. I had a major heart attack and I’ll have to take medication the rest of my life. I’ve been under house arrest the last three and a half years.”

Arnie Olivarez: “I want to apologize to the court and to everyone for all the things I did wrong.”

Judge Ricardo Hinojosa: “I wouldn’t be surprised if he deducted it on the federal income tax for his business making us all sponsors for this trip.”

Judge Ricardo Hinojosa: “I dont’ know how much profit your client made, I gathered it was a lot more than $10,000 dollars.”

Olivarez claimed his contract was worth $180,000 dollars per year for three years.

He said he got half, or about $90,000 dollars per year for three years, but had to use part of it to pay his own staff.

Olivarez claimed he told Cameron County Sheriff Omar Lucio and the former Hidalgo County Sheriff about bribery allegations. He said that went nowhere.

Olivarez said before he starting making “contributions” and “sponsorships” that the PSJA school illegally cancelled one of his previous contracts.

Judge Hinojosa said he should have gone to authorities and not “played along.”

Defense Attorney Heriberto “Eddie” Medrano: “He has been traumatized. This has been a three and a half year ordeal. He’s been waiting for this day.”

http://www.themonitor.com/articles/today-46495-case-mcallen.html

Amfels, the second largest employer in Brownsville, Texas, has decided to change their current PPO group health plan to a Cost Plus plan. Estimated savings are expected to be significant.

An analysis of an in-patient hospital claim from a local Brownsville hospital illustrates the potential savings to Amfels. Total billed charges were $118,143.43. This claim was repriced by a PPO network down to $76,793.23, for a “savings” of $41,350.20 or 35% off billed charges. We believe this is the same rental PPO network currently utilized by the Brownsville Independent School District.

Using a Cost Plus 12% or Medicare +20%, whichever is more, this claim was audited and repriced down to Medicare +20%, or $24,336.76, which represents +79% off billed charges.  Had a Cost Plus Plan been in effect at Amfels just 60 days ago, their self-funded group medical plan would have saved over $40,000 on just one claim.

This is an actual claim, incurred at a local Brownsville, Texas hospital, less than 60 days ago.  See audit here – Cost Plus Elap Audited claim.

Amfels is not the first Valley employer to change from a PPO plan to Cost Plus. Another large Brownsville based employer with over 500 employees embraced the concept over a year ago. They have realized significant savings.

Several Valley independent school districts have also made the decision to do away with their PPO plan and implement a Cost Plus plan later this year. An analysis of past claims for these groups shows estimated savings in the millions of dollars. With the state budgetary crisis looming, these districts are taking a proactive approach to cutting their health care expenses while maintaining and even improving benefits.

Cost Plus is not a new method of paying hospital claims. Medicare is utilizing a cost plus approach with select hospitals across the country – http://blog.riskmanagers.us/?p=3895

Editor’s Note: This blog has written about PPO network versus Cost Plus for several years. Many of our clients who have  elected to implement a cost plus plan have achieved significant plan savings as a result – See Bill Miller Forbes. The first political subdivision in Texas to adopt the concept was San Patricio County  – Health Care Strategies for Texas Political Subdivisions. The Brownsville Independent School District, currently in turmoil over truth and fiction regarding plan “savings” and which PPO has the best “discounts” should consider a Cost Plus approach. This Brownsville taxpayer whose local taxes have increased over 100% in the past ten years, would welcome any effort by the Brownsville Independent School District to cut unnecessary expenditures. A Cost Plus approach may be a very good step in that direction.

    Half Guilty, Half Pregnant Arnulfo C. Olivarez, licensed Harlingen insurance agent, will again face sentencing for his crimes before the Hon. Ricardo Hinojosa in McAllen, Texas next week.

Admitted felon Olivarez has plead guilty to bribing pubic officials  in exchange for lucrative insurance contracts.

A $4,000 Marachi band expense for a public official may lead Olivarez to hard time in federal prison. A $500 set of tires for a Valley school superintendent several years ago netted a three and a half year federal prison sentence. If a $500 bribe equals 3.5 years, what does a $4,000 bribe equal?

Editor’s Note: Type in “Arnulfo Olivarez” in the search box on this site to review earlier postings on Half Guilty, Half Pregnant Olivarez, admitted felon and still licensed Texas insurance agent.

The Brownsville Independent School District is seeking a qualified insurance consultant to assist the district in their $50 million self-funded health care plan.  Deadline for RFQ response is January 28.

To review the RFQ you may go to the Brownsville Independent School District website for a copy of the specifications (under purchasing department).

It will be interesting to see which insurance consulting firms respond. Cameron County and PUB both employ the same consultant from Dallas – he has the track record, experience, and credentials most consultants would envy. A McAllen consulting firm, with several local school districts as clients, may apply – this firm specializes in assisting Texas political subdivisions. Several other reputable consulting firms in San Antonio may apply as well, having experienced work in the Valley in the past, dealing with upper Valley school districts including Mission and Edinburg ISD. Then there are the large brokerage firms in Houston and Dallas – will they throw their hat in the ring?