Category: Uncategorized

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

 

 

 

 

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.

“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

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.

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-captive               

http://news.yahoo.com/s/ap/20081119/ap_on_go_co/health_insurers

http://www.xprize.org/future-x-prizes/healthcare-x-prize

http://www.pharmalot.com/2008/11/did-merck-and-cvs-violate-patient-privacy/

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 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/

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.

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

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

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.

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.

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?

http://www.txhealthpool.com/Financial%20Resources%20Table%20CURRENT.pdf

Effective October 1, 2008 Medicare will stop reimbursing healthcare providers for 11 “never events” – considered reasonably preventable errors in healthcare delivery. 

Editor’s Note: Does your health plan pay for Never Events? If so, how much did that cost your plan last year?