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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.

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

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.  

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. 

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

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

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.

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/

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.

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 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.

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.

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.

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 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.”

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?