Author: admin
Former CEO Alleges Bid Rigging Conspiracy
Attorneys for Antonio Juarez, BISD’s former chief financial officer, on Friday filed a lawsuit alleging a conspiracy by former and current school board members to coerce his participation in the “manipulation of the bidding procedures” used to award a district basic life and stop-loss insurance contract.
The lawsuit alleges that when Juarez would not participate, current majority members of the Brownsville Independent School District Board of Trustees coerced Superintendent Hector Gonzales to obtain Juarez’s resignation. Gonzales then reassigned Juarez as BISD’s grants administrator.
At the same time, the lawsuit alleges that current and former BISD trustees sought to coerce Juarez into a conspiracy to oust Gonzales, for which Juarez was promised support for restoration to his status as chief financial officer.
The lawsuit says the board members attempted to force Juarez to file a grievance against Gonzales prior to a Jan. 6 board meeting concerning the superintendent’s contractual status. It says Juarez was threatened with retaliation if he did not.
The lawsuit was filed against Gonzales, in his capacity as the district’s chief executive officer, as well as any successor; Mike Saldaña, who serves as BISD’s counsel, and board members Rolando Aguilar, Joe Colunga, Ruben Cortez Jr. and Rick Zayas.
“ C o m p l a i n t a n t (Juarez) has chosen not to participate in the Board’s conspiracy, and fears that termination will result by not taking action,” the lawsuit states.
The lawsuit is a petition for declaratory judgment that seeks an injunction to prevent BISD from firing Juarez or taking action that would affect his contractual status.
It was filed by Brownsville attorneys Ben Neece and Star Jones in state District Judge Janet Leal’s 103rd District Court.
FBI – Brownsville, Texas (956) 546-6922
San Antonio Insurance Agent Becomes Speaker of the House
It appears the House will be getting a new Speaker, Rep. Joe Straus. Known as a moderate Republican, he has served only two terms in the House but has lined up significant support. A wealthy San Antonio businessman, Straus held minor posts in the Bush and Reagan Administrations. He is a principal in the insurance and executive benefits firm of Watson, Mazur, Bennett & Straus, L.L.C. He also is affiliated with National Financial Partners, a leading financial services company in the insurance, investments, and benefits industry.
Texas Bill Would Mandate Medical Loss Ratios
TEXAS: A bill was filed last week that would require insurers to report their medical loss ratios to the Department of Insurance on an annual basis and to maintain those ratios at 75 percent. The bill further gives authority to the Commissioner to order rebates, rate rollbacks or take other necessary steps to penalize any carrier in violation of the minimum ratio.
Text of Bill: texas-house-bill-medical-loss-ratio-hb00531i
UnitedHealth Group Reaches Agreement to Settle Class Action Lawsuits Related to Out-of-Network Reimbursement
Kidnapping & Ransom Insurance – Growing Market in Mexico
News reports show that kidnappings are up in Mexico. Over 4,500 in 2008 alone. Tourists are in danger, even in class resorts in places like Cancun.
Cuomo Announces Major Health Care Reform
http://www.oag.state.ny.us/media_center/2009/jan/jan13a_09.html
Editor’s Note: This is going to impact the group health care market in a big way.
Evercare of Texas Fined More than $1 Million
DALLAS — A health-care company hired to manage a program for elderly Texans as part of a broad privatization plan was fined more than $1 million by the state in the past year over mounting complaints that included delayed or denied medical care.
Evercare of Texas, a unit of Minnesota-based UnitedHealth Group, has drawn the ire of some powerful Austin lawmakers over its management of preventative and long-term care for the state’s most vulnerable, The Dallas Morning News reported Sunday in the first of a four-part investigative series.
Food Insurance PPO Network
Editor’s Note: HEB is a large chain of grocery stores in South Texas
Health Care Costs – By George Will
Washington Post Writers Group
Sunday, January 04, 2009
Washington —- Health care, says the man most concerned with that 17 percent of America’s economy, can be “a nation-ruining issue.” As Michael Leavitt ends four years as secretary of health and human services, he offers this attention-arresting arithmetic: Absent fundamental reforms, over the next two decades the average American household’s health care spending, including the portion of its taxes that pays for Medicare and Medicaid, will go from 23 percent to 41 percent of average household income.
It is, Leavitt says, “predictable” that today’s traumatizing economic turbulence, by heightening Americans’ insecurity, will complicate reforming entitlements. This, too, is predictable: By curtailing revenues, today’s recession will bring closer the projected exhaustion of the Medicare Part A trust fund, from early 2019 to perhaps 2016. That should get the president-elect’s attention.
When Medicare was created in 1965, America’s median age was 28.4; now it is 36.6. The elderly are more numerous and medicine is more broadly competent than was then anticipated. Leavitt says that Medicare’s “big three” hospital procedure expenses today are hip and knee replacements and cardiovascular operations with stents, which were not on medicine’s menu in 1965.
After being elected to three terms as Utah’s governor, but before coming to HHS, Leavitt headed the Environmental Protection Agency. He came to consider it a public health agency because the surge in Americans’ longevity in the last third of the 20th century correlated with cleaner air and fewer waterborne diseases. Longevity is, however, expensive, and demography is compounding the problem.
In the 43 years since America decided that health care for the elderly would be paid for by people still working, the ratio of workers to seniors has steadily declined. And the number of seniors living long enough to have five or more chronic conditions —- 23 percent of Medicare beneficiaries —- has increased. Many of those conditions could be prevented or managed by better decisions about eating, exercising and smoking. The 20 percent of Americans who still smoke are a much larger percentage of the 23 percent who consume 67 percent of Medicare spending. Furthermore, nearly 30 percent of Medicare spending pays for care in the final year of patients’ lives.
Suppose, says Leavitt, buying a car were like getting a knee operation. The dealer would say he does not know the final cumulative price, so just select a car and begin using it. Then a blizzard of bills would begin to arrive —- from the chassis manufacturer, the steering-wheel manufacturer, the seat and paint manufacturers. The dealership would charge for time spent there, and a separate charge would cover the salesperson’s time.
Leavitt says that until health care recipients of common procedures can get, upfront, prices they can understand and compare, there will be little accountability or discipline in the system: “In the auto industry, if the steering-wheel maker charges an exorbitant price, the car company finds a more competitive supplier. In health care, if the medical equipment supplier charges an exorbitant price, none of the other medical participants care.”
Medicare is a price-fixing system for upward of 12,000 procedures and drug codes —- and for hundreds of categories of equipment, the providers of which tenaciously oppose competition. Leavitt began implementing a tiny program of competitive bidding covering just 10 products in 10 cities. Based on the 15 days it lasted before Congress repealed it, savings were projected to be substantial. That is why equipment providers got it repealed.
Rather than ruining the new year by dwelling on Medicare’s unfunded liabilities of about $34 trillion (over a 75-year span), ruin it with this fact: In the next 50 years, Medicaid, the program for the poor —- broadly, sometimes very broadly defined —- could become a bigger threat than Medicare to the nation’s prosperity.
This is partly because of the cost of long-term care for the indigent elderly, some of whom shed assets to meet Medicaid’s eligibility standard —- sometimes as high as income under 200 percent of the federal poverty level. And many states, eager to expand the ranks of the dependent with the help of federal Medicaid money, use “income disregards” to make poverty an elastic concept. For example, they say: A person who gets a raise that eliminates his eligibility can disregard the portion of his income that pays for housing or transportation.
Governments with powerful political incentives to behave this way will play an increasingly large role in health care. As is said, if you think health care is expensive now, just wait until it is free.
Political Subdivisions Sometimes (or all the time) Make Political Business Decisions
A large South Texas school district recently went out for Request for Proposals (RFP) seeking competitive stop-loss insurance for their self-funded employee health insurance program. Several proposals were received. A consultant was retained to review the offers but was not asked to make a recommendation. The recommendation was to be made internally to the Board of Trustees. The district’s CFO made it known that he recommended the apparent “low bidder.” However, the Board of Trustees voted to select the highest bid through a local insurance agent. Subsequently the CFO was removed from his position and given the job of “grants administrator.”
An Open Records Request was received by the district in November 2008 seeking documentation of the stop-loss insurance RFP. The requestor subsequently received an anonymous phone call stating that “I have seen your Open Records request, and I can tell you that you will not get everything you have asked for, and documents are being destroyed.”
If this scenario is true, it is a sad commentary on how some political subdivisions make business decisions at the expense of the taxpayers. Vendors become aware of those political subdivisions that consistantly make “political business decisions” and usually decline to offer competitive proposals/bids in future RFP’s. This has become such a prevalent issue that some carriers have “red-lined” South Texas and seek to derive business elsewhere.
Retail Care off Fast Track
Modern Healthcare – December 22/29, 2008
A new study says the boom in convenient-care clinics appears to be slowing, and this could have a negative implications for the people most likely to use them; the uninsured and Hispanics. The study indicated that only 1.2% of U.S. families reported visiting a convenient-care clinic in the past 12 months, while only 2.3% reported ever visiting one. Uninsured families accounted for 27% of convenient-care clinic users. Also 1.9% of Hispanic families surveyed had used such a clinic in the past year, compared with 1% of non-Hispanic whites.
According to the Convenient Care Association trade group, there are now roughly 1,150 retail clinics operating in some 38 states.
The most common services obtained at convenient-care clinics were diagnosis of a new illness or symptom, 48%, prescription drug renewal, 47%, vaccination, 23%, and care for an ongoing condition, 18%.
Editor’s Note: While we don’t question the accuracy of this study, we find that convenient-care clinics are in a growth mode in Texas. Texas Med Clinics in Bexar County (San Antonio) is one example of the economic success potential of this business model. Just recently a group of deep pocketed investors in Amarillo started a company that will be building clinics throughout the Panhandle to gear towards walk-in traffic as well as employer based health plans. We expect the convenient-care clinic business model will grow significantly in Texas.
Congressional Budget Office Weighs Reform Proposals
Cover Story – Modern Healthcare – December 22/29, 2008
The Congressional Budget Office (CBO) laid out scores of ideas last week as a way to help federal lawmakers craft what could become the most sweeping legislation seen in a generation. Healthcare policy experts praised the CBO analysis as a handy reference tool for reform that they believe will serve as a prelude to the main event when lawmakers release an actual bill in 2009.
In one report the CBO addresses our healthcare system that spends with abandon more than $2 trillion a year and showing how it threatens the U.S. The CBO report stresses that a solution would require a variety of approaches, not just a “one size fits all” scheme, such as mandating universal coverage.
A second report lays out more than 115 different options for reform, encompassing a wide swath of issues related to how healthcare is delivered and paid for. Among the options are some that would reduce spending and others that would increase it.
Some of the options that would reduce spending include trimming billions of dollars in Medicare and Medicaid payments from the provider community. The CBO proposal looks at a proposal to bundle payments for hospital care, a move it found would save $18.6 billion over 10 years. Separately, an option to reduce Medicare payments to hospital with high readmission rates would shed another $9.7 billion.
Editor’s Note: 2009 may bring significant changes to the U.S. healthcare delivery system. Powerful lobbying entities will spend millions to sway 435 people to vote on proposals that benefit special interests.
Tax Victory Buoys Captives
December 29, 2008 – Business Insurance
It isn’t often that the captive insurance industry scores a victory of the Internal Revenue Service, but in 2008 it did just that.
That victory came in February, when the IRS withdrew a proposed 2007 rule affecting sponsors that use captives to fund risks of various corporate entities and that file a consolidated tax return covering the affiliates and the captive.
The rule would have barred captives from taking an immediate tax deduction at the time reserves were established. Instead, tax deductions would have been allowed only at the time claims are paid – a change that wold have made captive programs much less attractive financially, especially for captives used to write long-tail business.
Editor’s Note: Employers are beginning to realize that funding a health benefit program through a captive makes sense for some. Those employers utilizing existing captives for other lines may be wise to consider the scheme. Auto dealers have used captives successfully for years on their credit life business, for example. Large retail chains such as furniture outlets have done so as well. A large national TPA is marketing a product utilizing a Rent-A-Captive scheme for employer groups of 50-250 employee lives.
Top RiskManagers.us Story for 2008
The top achievement of RiskMangers.us in 2008 was to peel away the onion layers of the PPO world to expose the truth behind PPO discounts. It has been an interesting mission indeed. We met with hospital administrators, PPO network officials, PHO groups, all of the BUCA’s to learn as much as we could about the mysterious world of hospital and physcian pricing. One of the BUCA’s told us that we would never, ever get our hands on one of their hospital contracts. They were wrong. And what a story their hospital contract told us!
One interesting assignment in 2008 was a newly acquired client in North Texas, a political subdivision, who for the past ten years were sending their employees to one of the two hospitals in the area. Hospital “A” was the “better” hospital because it was in-network, while Hospital “B” was out-of-network. What we found was that the charges at Hospital “A” through the PPO was three to four times higher than the charges at the non-network hospital ten minutes away. So, in essence, employees and their families were steered to a higher cost facility and thereby increasing the Plan’s cost by over $1 million a year for this small group of about 350 employee lives.
There are numerous other stories regarding our quest for truth about PPO’s that are fascinating but for the purposes of this post, would be quite lengthy.
As a result of our quest for truth, in 2008 we moved several of our more progressive clients from the PPO world into the darkness of the unknown – back to the 1970’s when PPO’s were not yet invented. We had the audacity of recommending that our clients may save more by getting away from the PPO world and dealing direct with the provider community – results so far have been good.
What is interesting is all the players watching our intentions play out jumped on the “Your gonna be balance billed and boy are the employees going to be upset” bandwagon. Through a strategic partnership, we solved the problem of balance billing once and for all.
We have also learned that you can partner with a PPO on a client specific basis to achieve similar results. We found this to be particularly true in working the El Paso market.
We are looking forward to 2009 with the many changes sure to come.
Self-Funded Mini-Med Plan a Success
Two years ago we assisted a 3,500 life restuarant chain in designing a self-funded mini-med program for their hourly employees. The plan offers a $20 physician co-pay, a prescription drug card (not a discount card), 80% coverage up to an annual calendar year maximum of $2,500 per insured. Plan benefit payments use 2007 RBRVS as a benchmark. Plan participatants pay $50 per month while the employer contributes an additional $50 per month per participant. Paid claim loss ratio has been consistantly below 40%.
We have two other accounts on a similar program. One is a long haul trucking firm and the other is a political subdivision located in Texas. The trucking firm has an annual plan limit of $25,000, while the political subdivision has no annual plan limit. Both plans have funding levels of approximately $100 pepm which has proven to be adequate to cover the expense of the plan.
This should give the reader some idea of what a mini-med plan should cost in view of the benefits offered. There are numerous fully-insured mini-med plans in the market for those employers not comfortable with assuming any risk. The best fully-insured mini-med plan we have seen has no deductibles, no co-pays and simply pays 100% of Medicare allowable up to $25,000 per calendar year – all for about $128 per employee per month. And, if you realize that less than 4% of any insured group have claims in excess of $25,000, this may be a very good option for the majority of the participants in the plan. A premium of $128 versus $500 we have seen for a conventional plan, could be affordable for many employers now struggling with the high cost of group health insurance.
PPO Hospital Contract Renews March 1, 2009 with 18% Increase
A South Texas public school district moved from a rental PPO network to a BUCA network October 1, 2008 primarily due to their consultant’s recommendation that such a move in networks will achieve a $1.5 million in claim savings. An attorney for the rental network hired two independent insurance consultants to review the district’s consultant work product, and both found that, in their opinion, the purported $1.5 million in “savings” did not exist. In fact, both concluded, a move would increase the district’s cost by over $500,000 in fixed costs alone.
This morning we were informed that effective March 1, 2009, the BUCA PPO contract with a certain hospital will be renewed with an overall increase of 18%. Although we learned this from a very reliable source, we have no way of proving this to be true.
Over 90% of hospital utilization of the school district is through this particular hospital. But if true, the school district will not be notified by the BUCA PPO network of this increase, and the hospital will certainly not inform the district either. In fact, no one will inform the school district that their costs at this one hospital may increase 18%.
The methodology used by most insurance “consultants” in analyzing and comparing PPO networks is flawed for many reasons. There is only one way to compare PPO discounts.
Texas Workers Compensation Discount Rate Set at 3.95%
The Texas Department of Insurance Division of Workers’ Compensation reported that the workers’ compensation interest/discount rate for Jan. 1, 2009, through March 31, 2009, will be 3.95 percent.
The interest/discount rate for the quarter ending Dec. 31, 2008, is 5.22 percent
Massachusetts Nears Universal Health Insurance Coverage
More than two years after Massachusetts passed groundbreaking legislation to move the state closer to universal health insurance coverage, the Bay State has achieved that milestone, according to a survey released last week. Some 97.4% of Massachusetts residents now have health insurance coverage.
Several provisions in the Massachusett’s 2006 reform law have been key in increasing coverage, expets say, including state premium subsidies for the low-income uninsured, imposing financial penalties of more than $900 a year on those who are not covered under a health plan and a $295 per employee assessment on employers who do not offer coverage.
New Medicare Mandate Raises Liability Worries for Employers
Effective July 1, 2009, a new Medicare mandate will require employers to file claim data to CMS in an attempt to ensure that the government saves money in cases where Medicare is supposed to be a secondary payer for its beneficiaries. Self insured employers should assure that their third party administrator is positioned to provide Medicare with the required information. Employers should be concerned because the penality for failure to report is $1,000 per day per claim. This new reporting mandate is contained in the Medicare, Medicaid and SCHIP Extension Act of 2007 that President Bush signed a year ago.
TDI Approves 13 Companies to Self-Fund Workers Compensation Claims
AUSTIN, TX – The Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC) approved 13 companies to self-insure for workers’ compensation claims for a one-year period under the TDI-DWC Self-Insurance Regulation program. These 13 companies collectively employ approximately 26,500 employees in Texas.
Under Texas law, certain large, private companies can self-insure for workers’ compensation claims, while retaining the protection of the Texas Workers’ Compensation Act for the company and for its employees. To qualify, a company must have a minimum workers’ compensation insurance unmodified manual premium of $500,000 and meet other requirements subject to annual review.
The following thirteen companies received renewals of existing self-insurance certificates:
- AAA Cooper Transportation, Dothan, AL
- American Electric Power Company, Inc., Heath, OH
- Associated Wholesale Grocers, Inc., Kansas City, KS
- E. I. du Pont de Nemours and Company, Wilmington, DE
- Emerson Electric Co., St. Louis, MO
- FedEx Freight East, Inc., Harrison, AR
- Guardian Industries Corp., Auburn Hills, MI
- Hyatt Corporation, Chicago, IL
- International Paper Company, Memphis, TN
- The Sherwin-Williams Company, Cleveland, OH
- Unique Staff Leasing I, Ltd., Corpus Christi, TX
- Valero Energy Corporation, San Antonio, TX
- VF Corporation, Greensboro, NC
Life Settlement Investments Bonded by Provident Capital Indemnity Ltd.
The Texas Department of Insurance cautions consumers that the public is being offered investments in life settlements bonded wholly or in part by Provident Capital Indemnity, Ltd. of Costa Rica ( http://www.providentinsurances.com/). The bonds are included with the investor agreement to purportedly provide a guarantee to the investor in the event the insured lives longer than the projected life expectancy.
Provident Capital Indemnity has never held a certificate of authority to act as an insurer or surety in Texas nor has Provident Capital Indemnity ever been qualified as an eligible surplus lines insurer in Texas.
http://www.tdi.state.tx.us/news/2008/news2008188.html tdi-bulliten-provident-capital-indemnity
Austin Indemnity Lloyds Enters Receivership
At the request of the Texas Commissioner of Insurance, a petition was filed on December 3, 2008, to liquidate Indemnity Lloyds Insurance Company (“Austin Indemnity”). On December 29, 2008, a Liquidation Order will be submitted to the Travis County District Court. As a consequence of the entry of the Liquidation Order on December 29, 2008, all policies issued by Austin Indemnity that are still in effect on January 28, 2009 will terminate effective January 28, 2009.
If TRS ActiveCare will Save Us Millions, Why Have We Not Enrolled?
In Texas, public school districts are eligible to purchase their group health insurance coverage through the Teacher Retirement System. Most Texas school districts have elected to do so. Rates, for all practical purposes, have remained static over the past 4 years, with the Economies of Scale providing a safe harbor for many.
Yet, we find that there are still some Texas school districts that have elected not to join the TRS ActiveCare program. It seems that these disticts are paying more by not joining the TRS plan. We are wondering why. Could it be that there are no commissions to be paid to brokers, who in turn are unable to secure school board votes with “campaign contributions.?” It seems to us that if you can get the same or better coverage through the TRS ActiveCare plan and save a substantial amount of taxpayer money, it would be a prudent business practice to join the TRS plan.
Editor’s Note: The TRS Active Care program is self funded, as opposed to a partially self-funded plan (TRS plan has no stop loss insurance cover).
2008 Audit Report shows $1.1 billion in revenue, $953 million in paid claims. Ratio of total operating expense to revenue is 96.3%. Booked reserves are $476 million. Based on this, we expect little or no increase needed to fund expenses and liabilities through 2009. Plan expenses are low due to lack of stop loss, agent commissions, marketing fees, etc.
For more information on TRS ActiveCare, click here – http://www.trs.state.tx.us/
Political Subdivision Drops PPO – Balance Billing Issue Solved
A South Texas political subdivision decided this month to eliminate their PPO plan and instead pay claims using 2008 RBRVS as a benchmark for physician claims. Facility charges will be paid on a cost plus basis. A special feature of the plan prevents any balance billing to the plan participant. To our knowledge, this is the first Texas political subdivision to take this approach to controling run away health care costs.
Blue Cross Revises Fee Schedules For Federal Employee Program
In response to criticism from federal workers and members of Congress, the Blue Cross and Blue Shield Association has announced that it will revise its 2009 fee structure for out-of-network, non-emergency surgeries under its standard plan for federal employees. BCBS — the largest provider of federal employee health insurance plans previously had said members of the plan in 2009 would be responsible for 100% of the cost of an out-of-network surgery, up to a maximum of $7,500 per surgeon, per surgical day. According to the Post, the change “outraged” federal workers and “troubled” many members of Congress.
Under the revised fee structure for 2009, BCBS will cover 70% of the cost and members will pay the remaining 30%, as well as any difference between the allowed amount and the actual bill.
P&C Industry Profits fall 92%
Investments and catastrophic losses affected property/casualty insurance industry earnings for the first nine months this year as net income dropped 92%. Net income for the industry after taxes was $4.1 billion for the first nine months of 2008, compared with $50 billion during the first nine months in 2007.
FBI Investigating Bankrupt Brooke Corporation
December 19, 2008 – Agents from the Federal Bureau of Investigation have seized files from Brooke Corp. and are combing through the bankrupt insurance agency franchiser’s financial records, the special master appointed to oversee the bankruptcy confirmed.
Editor’s Note: What will be the immediate future of the Brooke Insurance Agencies in Texas?
Aetna Underwriting Medical Policies for Cats and Dogs
Aetna is offering traditional medical policies for pets as it branches out for the first time from humans to cats and dogs.
The Hartford-based health insurer began underwriting the policies last week in six states, mostly in the West, and in the District of Columbia. Aetna eventually expects to sell in all 50 states.
Two Approaches to Insurance Consulting
Not all consultants use the same approach to serve a client’s needs. Consultants will typically take one of two basic approaches when they work with clients:
Consultants as Experts – Many think of consultants as experts. A medical doctor is an “expert” – you explain your symptoms to a doctor, who in turn asks you a few important questions and then tells you what you need to do to get better. This situation is not too different in a business context. The obvious advantage of hiring an expert is that they have knowledge that is not available within the client organization. One potential problem with hiring an expert is that the expert may not fully appreciate the nature of the client’s business and may recommend actions that cannot or do not address the problem the consultant was hired to solve. Alternately, a client may end up with some wonderful recommendations but be unable to implement any of them because of the unique politics or culture of the company.
Consultants as Facilitators – under this approach the consulant simply assists the client in going through the steps necessary to solve a problem. The consultant “oversees” the project while staff of the client does most of the work. The consultant does not implement changes, take actions, and does not tell the client what solution is best under the circumstances. Instead, the consultant assists the client in defining the problem, analyzing the situation, evaluating possible solutions, and deciding on the best solution and the best way to implement the option choosen. One problem using this approach is that the client group may not be capable of making tough decisions. Many times, the aim is to accomodate all the participant’s view-points and to keep peace in the company. As a consequence, although a consensus may be achieved, it may be at the cost of making the best decision.
Sometimes we get a call into our office, a referral, seeking our services as a consultant. Almost immediately the question is posed: “How much do you charge”? The biggest mistake we have made is to give out a pricing range, without first interviewing the potential client to determine expectations, needs and outcomes. Every consulting job is different and unique.
Medical Tourism – Interesting Facts to Consider
An excerpt from www.freehealth.com :
“We are in a sad state. There are Americans who need life saving surgical procedures each day who simply cannot afford it, do not qualify for state or federal aid, do not know of any other options and die each day because of lack of access to healthcare. No one talks about this “tragedy” that happens on a daily basis in America, as doctors, hospitals, and the government turn their back on millions of Americans. Even more Americans don’t take necessary prescription drugs simply because they are unaffordable. ” Our American health care system is broken leaving many Americans with no access to health care.”
That is why it is so shocking to Americans that they can jump onto an airplane fly several hours outside of American Airspace, and wherever they land the price of surgery and prescription drugs are as much as 50% to 90% less than in America. Does that make sense? That a prescription drug costing $150 costs $15 outside of the US, or a injectible prescription drug that costs $1,800 costs $900 outside the United States. The exact same drug by the same drug manufacturer? Is the drug subsidized by the foreign government? No!
So, the next question the uninsured asks is what does the hospital look like and what experience do the doctors have. We have to ask that question because how would it be possibly to provide equal to or better care in a hospital for 90% less than in America. If a heart procedure that costs $100,000 could only cost $9,000 overseas than the hospital must be sub-standard compared to American hospitals, and the doctors less experienced than American doctors. Over 500,000 Americans who went overseas for surgical procedures in 2006 discovered that the hospitals were equal to or in some cases nicer than American hospitals. Some American hospitals describe the hospitals as “7 Star” hospitals , nicer than a Ritz Carlton, and they come back and “rave” about the tremendous experience of the doctors and how some were trained in the US or UK.”
“Did you know that 25% of doctors practicing in the U.S. were trained overseas?”
Do you know that the U.S. was rated 37th on the World Health Organization’s Health Report and that the U.S. was beat out by Costa Rica and Columbia?
Editor’s Note: Free health? There is no such thing as free health anywhere. Someone pays for it. But, it is a catchy phrase and will peak one’s curiosity. So, we went to visit www.freehealth.com and reviewed the power point – free20health20powerpoint20presentation – sure enough, the program does cost something, seems to be about $8 per month.
“Half Guilty” Admitted Felon Faces Sentencing
Broker Strategy Exposed – Are Employers Stupid?
Below is a redacted email received yesterday from a TPA that exposes the methods utilized by some brokers to justify moving from a TPA to a national carrier because of “superior PPO discounts.”:
Here is a group that left a TPA and went to XXXX XXXXX on “promised discounts”. The current broker was actually trying to show on this year’s renewal, that XX was a good choice. Let’s really look at the big picture. The Fixed costs were about the same at $38.00 PEPM. What made the fixed costs look better was the supposed rebates on the Rx that got the fixed costs to “look” lower. If you look at the claims cost for Rx it actually went up 4% but 2008 was an immature year. By maturing this number up 20% the Rx cost actually went up 24% which is double trend. What we also found out was this group has a lot of employees outside of Texas so the % of savings XXXX XXXXXX charged is so far at $156,000 this year. That is an increase of 25% to the fixed costs. I guess somebody forgot to tell the client about this fee.
Now the current broker showed a 4% decrease to the claims cost. But wait 2008 is an immature year, therefore add 20% to this figure and you get a 16% increase in the claims cost. The group was sold on an increase in PPO discounts which they probably got but the Medical claims went up along with the Rx claims and an increase in the fixed costs. The renewal for 2009 on the aggregate is about an 80% increase!
I have seen a couple of supposed studies from brokers who showed moving to a national carrier saved the group money. Most of the time it is on a Powerpoint and the details are left out. We need everyone to start looking at claims data because PPO discounts can be manipulated to be whatever you want. We will be starting a website to post the PPO discount games along with studies like this and other data. We need to share all of our findings because the national carriers have to back up their promises and it is not panning out. We has taken over $40 million in claims from the national carriers and we have brought down the claims cost on average of 7% matured. Data does not lie!
Editors Note: We are in the process of gathering claim data from various groups that went from rental PPO networks to national carrier networks to determine actual claim costs under both scenarios. So far we find that the purported deep discounts to be realized through national carrier’s PPO networks as compared to rental networks are not significanly different. Once we complete this documention, we will share it with those who may be interested in learning the truth about PPO discounts.
Coca Cola Uncaps Captive Plan
“Coca Cola Co., in a potentially groundbreaking move, plans to seek approval to fund retiree health care benefits though it’s South Carolina – domiciled captive insurance company.”
“Coca Cola’s retiree health care funding proposal comes at a time of increased employer interest in using captives to fund employee benefit risks.”
“Observers cite several reasons for the growing corporate interest in captive benefit funding. “You can save money and improve cash flow. There are pluses all the way around,” said Karin Landy, a managing partner with Spring Consulting Group in Boston.”
Employers Eye Innovations to Cheaper, Better Healthcare
Risk & Insurance, December 2008
“Two innovations offer solutions outside of cost-shifting and dropping coverage for self-funding companies that still would like to provide cheaper but top-notch benefits to their employees.”
“One option is to get healthcare providers to charge what medical services actually cost.”
“Self-insured companies could also apply leverage to healthcare providers by sending workers someplace else for care. That’s a large part of the premise behind another innovation – a medical travel program.”
Editor’s Note: This is an excellent article. We have initiated these suggestions in some of our more progressive groups over a year ago. This is out-of-the-box kind of solutions that work. See entire article here – cheaper-insurance
Protected: Hospital in Trouble – Press Will Not Report – CEO May Be In Hiding
Let’s Make a Deal!
This must be the month for making deals:
EL PASO – Former El Paso Independent School District trustee Salvador “Sal” Mena, who was indicted earlier this year on bribery and fraud charges, is negotiating with the federal government in an effort to preempt a trial, according to courtroom testimony.But exactly what those negotiations entail was not revealed Wednesday morning during a status hearing before U.S. District Court Judge Frank Montalvo.
Both Assistant U.S. Attorney Debra Kanof, who is the lead prosecutor in the FBI’s public corruption case, and Mena’s defense lawyer, Miguel Torres, had to appear before Montalvo on Wednesday to update the judge on the status of the case, and possibly to set it for trial.
Instead of setting a court date, Kanof and Torres told the judge they were negotiating. Therefore, no trial was set and a status hearing was set for Dec. 22.
Neither Torres nor officials with the U.S. Attorney’s office would comment on what happened in court or about the ongoing negotiations.
A Common Sense Understanding of Our Health Care System
Texas Department of Insurance Renews Convicted Felon’s Insurance License
Corrupt insurance agent, Arnulfo C. Olivarez, who pleaded “HALF GUILTY” to a felony in August (see August archives) has gained the approval of the Texas Department of Insurance in renewing his insurance licenses for two more years. One wonders whats up with that? It has been our understanding that in Texas felons are not eligible for licensure by the Texas Department of Insurance. I guess we are wrong about that. Could it be possible that some sort of “deal” has been cut with the Feds?
http://www.solutionsfortexas.info/id133.html
Process for revocation of license due to felony conviction:
If the attorney determines that the license should be denied due to the criminal conviction, the attorney, with the assistance of an investigator, secures certified copies of the relevant criminal convictions and any other information deemed necessary. A letter of proposed license denial is then mailed to the applicant. The letter clearly identifies the convictions that form the basis of the proposed denial, cites the statutory authority for the proposed denial, and advises the applicant that a hearing may be requested to challenge the proposed denial.
If an applicant requests a hearing on the proposed license denial, the request is immediately forwarded to the prosecuting attorney. The attorney schedules a hearing on the nearest available date, and issues a Notice of Hearing to the applicant. After a hearing is conducted, the Administrative Law Judge issues a Proposal for Decision for consideration by the Commission of Licensing and Regulation. After considering the Proposal for Decision, the Commission may grant or deny the license.
For individuals who are already licensed when the agency discovers a criminal conviction, the process is essentially the same as that described above. A conviction discovered by Licensing staff, an Enforcement investigator, or any other agency employee is referred to the Enforcement Division. If the Enforcement attorney finds, after investigation, that the conviction warrants license suspension or revocation, a letter of proposed license suspension or revocation is issued to the license holder. If the license holder requests a hearing, a hearing is conducted, a Proposal for Decision is issued for consideration by the Commission, and the Commission ultimately decides whether the license should be suspended or revoked.
Can Risk Management be Quantified?
Employer: How do we know we are doing much better this year than last year?
Risk Manager: What is this year is last year plus or minus this year’s change.
CFO: But change is the only constant, so why do we need to measure it?
To quantify risk management performance, the cost of risk must be measured. The components of Cost of Risk (COR) include 1. insurance premiums, 2. retained losses, 3. risk management department budgets, 4. risk management contract services. Results are compiled to show an average COR cost per $1,000 of revenues.
Insurance Agent’s Sentencing Delayed
Admitted felon, Arnulfo “Half Guilty” Olivarez, was to have been sentenced for his crimes on December 3, 2008. However, the sentencing has been delayed and several sealed documents have been delivered to the court. Could it be that under a Plea Agreement the convicted insurance agent is cooperating with authorities to reduce his prison sentence?
For more information, refer to the August Archives on this weblog.
What is An Actuary?
“An actuary is a person who passes as an expert on the basis of a prolific ability to produce an infinite variety of encomprehensible figures calculated with micrometric precision from the vaguest of assumptions based on debatable evidence drawn from inclnclusive data derived by persons of questionalble reliability for the sole purose of confusing an already hopelessly befuddled group of persons who never read the statistics anyway.”
Daren Daley, Perr & Knight
Protected: Using Captive Insurance Companies for Savings
Protected: Agency Captive – Risk Sharing with Insured
Bull Moose Party Endorsed National Healthcare
Most people don’t know that when Theodore Roosevelt ran for President on the Bull Moose ticket, he proposed universal healthcare and a national insurance program. Since then, presidents have attempted to secure universal or near-universal healthcare coverage for Americans with limited success or none at all.
Community Hospitals See Record Profits in 2007
U.S. community hospitals enjoyed record profits in 2007, posting $43 billion more in revenue than expenses and creating the largest single-year jump in profit margins in at least 15 years, according to figures released by the American Hospital Association in its AHA Hospital Statistics 2009 Edition.
Stop Loss Through a Captive
Protected: Stop Loss Insurance Cooperative – Multiple Employers Banding Together for Economies of Scale
Health Insurers In Favor of National Health Plan
Protected: Turn Your Workers Comp. Premium Into Profit
Want $10 Million? Easy! Just Fix Health Care
Who Do PBM’s Work For?
Protected: State of Texas May Reinsure Health Claims in 2009
Hospital Waives $500,000 in Payor Screw Up
Some call this a mix-up, we call it a screw-up.
http://www.reporternews.com/news/2008/may/15/hendrick-waives-fees-after-mix-up/
Texas Medical Association – Trends in PPO Contracting
Slides 8,9,10 are very interesting. Illustrates the kinds of deals that are being made that employers who foot their employees health care bills are unaware of. Also further proof that medical care cost contracted on an APO basis lead to higher health care costs in the community.
Protected: Barton V. Whataburger, Inc., 2008
Protected: Community Rated Group Health Insurance Plan
Sell Your Life Insurance Policy for Cash
Recently we brokered the sale of an existing $500,000 term life policy for a client. The owner of the company was in the process of selling his business to a concern in Mexico, and no longer had a need for the coverage. There was no cash value (it was a term life policy). We solicited bids for the policy. An institutional investor (a New York Bank) submitted the highest cash offer. The transaction was completed and our client received a check for $50,000.
Viatical and Life Settlement Brokerage is regulated by the Texas Department of Insurance.
Corpus Christi ISD Switches from Blue Cross to Humana
Corpus Christi Independent School District selected Humana after a competitive Request for Proposal process. Chief reason cited was lower costs with Humana. Does that mean that Humana has steeper PPO discounts than Blue Cross? – http://www.caller.com/news/2008/nov/03/ccisd-health-plans-cheaper/
Protected: Chief Appraiser Pleads Guilty
Protected: Risk Manager Indicted
Corrupt Insurance Agent’s Plea Agreement Released
Lower Rio Grande Valley insurance agent pleads guilty, faces sentencing in Dec. – Plea Agreement released – arnulfo-cuahtemoc-olivarez-plea-agreement1
A check with the Texas Department of Insurance shows Olivarez, despite pleading guilty of a felony, is still an active and approved insurance agent.
http://www.texasonline.state.tx.us/NASApp/tdi/TdiARManager.
Editor’s Note: See August archives for more information on Olivarez, admitted felon
Protected: TPA Loses Business But Makes More Money Than If They Had Kept it.
Protected: Medicare Fee Schedules
How Many Insurance Agents Do You Have Mr. Employer?
At www.freeerisa.com you can find a wealth of information through filed 5500 forms. For example, we checked on a San Antonio group of 450 employees and found that during a one year period they paid 28 agents a commission on voluntary products through one insurance company. This is an example of how some insurance companies distribute their product through various marketing levels. For example, there may be a State Manager, Regional Manager, District Manager, Area Manager, Sr. Sales Leader, Agent and Broker all paid in accordance to a commission hierarchy system. The money flows from the top down. In this case, this well known voluntary benefits carrier paid 28 agents a total of $47,883. The higest paid agent received $26,280 and the lowest paid agent received $2.
Hospital Billed Charges Versus Cost
We have several clients who have decided to take control of their health care spending by reimbursing hospitals on a cost-plus basis rather than rely on PPO discounts off billed charges.
Here are a few recent examples:
Billed Charges Plan Payment
1. $59,248.72 $11,034.84
2. $ 7,682.20 $ 865.02
3. $25,245.63 $ 6,864.73
4. $443,076.26 $116,086.39
Under ERISA a Plan Fiduciary must pay only what is fair and reasonable. Fiduciary liability is transfered to a third party who handles claim appeals and provides defense in Federal Court. An insurance policy indemifies the employer.
Hospital Net Income – Are You Sorry for the Non-profits?
Employee Benefit Trust
Political subdivisons may benefit from an Employee Benefit Trust – Click here and go to page 8 – http://www.kerrville.org/DocumentView.asp?DID=3377 See Chapter 222.002 Texas Insurance Code here – http://law.onecle.com/texas/insurance/222.002.00.html
Protected: Blue Cross Blue Shield Agent Compensation Schedule
Protected: Stop Loss Carrier Discloses Fees/Commissions/Bonus Arrangement
Is Your Physician on Retainer?
A small but growing niche in health care delivery is becoming popular with both physicians and their patients. Physicians charge patients an annual fee of $1,500 and reduce their patient load down to about 600, which is significantly less than normal. No insurance company to mess with, no claims to file, less overhead. So, for about $900,000 per year, the physician can pay his staff, spend more time with his patients and make a good profit. These physicians provide same day appointments, house calls, extensive physicals and diagnostic testing and more consultation about topics such as diet and exercise.
Hospital Price Gouging Revealed
In our continuing struggle to bring transparency to medical care pricing, we have yet another hospital claim that was incurred in August that reveals the level of price gouging we find in almost all hospital claims. Total billed charges were approximately $109,000. The hospital graciously offered to discount this by 7%, and would settle for $101,000 if we agreed to pay quickly. We repriced this claim under Medicare 2008 RVRBS and found that Medicare would have paid about $18,000 on this claim. The billed charges are 575% of Medicare.
We hope our client is not going to “play ball” with this hospital, as the bill is not fair and reasonable in our opinion.
As reported to CMS, this hospital’s cost for this admission was $27,862. Therefore, the hospital will make a profit of about $73,000 for this 2 week hospital admission.
Since the employer is a political subdivision, and ultimately the taxpayers will foot this bill, we believe that if the hospital does not come to a reasonable and fair price, the taxpayers should be informed.
Protected: Kickbacks, Undisclosed Broker Fees Exposed
Texas Department of Insurance – BCBSTX Fined $250,000
Blue Cross and Blue Shield of Texas, A Division of Health Care Service Corporation of Chicago, IL
Order Number: 080514
Date of Order: 6/13/2008
Order Final In: June
Action Taken: $250,000 fine with additional fine of $3,900,000 subject to possible dollar-for-dollar reduction to zero by restitution paid
Violation: Failed to make non-preferred benefits reasonably available to its insureds; Failed to maintain an accurate listing of its preferred providers
Editor’s Note: PPO networks change almost daily. So how does one maintain an accurate listing of its preferred providers?