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2011 Employer Healthcare CongressFour Leading Healthcare Conferences

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TABLE OF CONTENTS

Copyright © 2011 Self Funding Magazine. All rights reserved. Self Funding Magazine is published monthly by Global Health Insurance Publications. Material in this publication may not be reproduced in any way without express permission from Self Funding Magazine. Requests for permission may be directed to [email protected]. Self Funding Magazine is in no way responsible for the content of our advertisers or authors.

11 The Cards Are Dealt:How to Play the Hand for You and Your Employeesby Jenni Aldred

Paying Full-Price for Medications is a Thing of the Pastby Kevin Faherty

20EDITORIALEditor-in-ChiefAssist. Editor

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Jonathan EdelheitJohn Springer

01 LETTER FROM THE EDITORRhetoric of Politics in Our Industryby Jonathan Edelheit

02 Your Employees Can Help You Lower Healthcareby Alex Piper

07 OFFICE OF THE INSPECTOR GENERALBenefits for your Businessby Glenn Brown & Marsha Brown

14 Centers of Excellence Transplant Networksby John Van. Dyke

22 PEEK-A-BOO,I SEE YOU!by Kevin Connors

27 MARKET BASED PATIENT CARE!by Ralph Weber

34 PHYSICIAN SHORTAGE: FACT OR FICTION?by By Richard A. Longo

Facing Reality in 2011…It’s Your Jobby Kevin Faherty

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30 WHY CONSIDEROUTSOURCING COBRA?by Rich Glass, JD

TABLE OF CONTENTS



normally try to stay out of politics. In fact isn’t that what everyone always tells you. Don’t mix politics or religion with business. This month I simply cannot sit on the sidelines anymore. Unfortunately, politics has become like reality TV. It is more about the ratings and drama than “reality.” Scenes are staged, some shows are

scripted, and the producers edit films, switch up video and actually change the time sequence of events, solely for the purpose of making things look more dramatic and emotional. For those of you who don’t realize it, most things in Reality TV, are not really “reality.”

Politics has truly become reality TV. It’s no longer about what is good for the people or what is right or wrong, or what the moral high ground is. It is now about positioning, drama, emotion with an end focus on only one thing, getting reelected. In Wisconsin and other states some Democrats went into hiding, some left the state to hold up voting indefinitely on Unions, one part of the legislation was requiring the Union members to pay for their own health insurance. Have we really fallen so low that politicians now go into hiding to hold up voting? Are we five years old again and playing hide and seek? Why is it that we are allowing our politicians to behave like children and take action that would never be tolerated as an adult or in the business world? Everyone is getting caught up in the drama and not calling for an end to it. I find other editorials in benefits magazines, blogs from people in the health insurance industry, focus on blasting one political party, or blasting Obama or democrats on Healthcare Reform. What is happening is they are all keeping your eye off the real game. They are just part of the show, keeping you distracted and emotional.

Now that the Republicans have taken over the House of Representatives, do any of you really expect anything different? Do you see Republicans and Democrats working together and making change? Are you demanding change? Or are you trapped in the “reality” of it all.

IEDITOR’S LETTER: Rhetoric of Politics in Our Industry

Jonathan Edelheit

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Your Employees Can Help You Lower Healthcare

Over the last decade, the Employer Healthcare Industry has seen a couple of major developments. Major developments in

the Healthcare Industry are fueled by their ability to lower overall costs and are primarily driven by the gatekeepers of patients. Clinics, hospitals, drug manufacturers, equipment manufacturers, and professionals such as doctors and nurses benefit more when healthcare costs increase, provided, of course, that demand is not threatened. This article is not a supply-bashing article so I want to point out that the healthcare supply chain has provided the market with many beneficial services and products over the years. These products and services have improved the overall health of the patient public by finding new treatments, cures and drugs for the many ailments that affect the market. But, all things equal, major developments in healthcare are of the cost-reducing variety and are fueled by those who stand to gain the most from the cost reduction, namely the plan owners, patients and other payers of healthcare. The first such development that

comes to mind is Prevention. Synonymous with prevention is maintenance. The concept of prevention and maintenance was that if employees made doctor visits more often, potential serious conditions would be detected early and thus prevented from becoming full blown conditions. About fifteen years ago, the seeds of healthcare prevention and maintenance were planted. These seeds grew and bore full fruit in the late 1990’s and 2000’s with the emergence of HMO Plans. Whereas an explanation of HMO plans, their origin and proliferation is beyond the scope of this article, those of us familiar with the industry remember it as a time when basic healthcare benefits became more affordable. Doctor visits, prescription drugs, detection and diagnostic services went down in price. Of course, this price reduction occurred, because those

Writen by Alex Piper



services became more available. In other words, most healthcare plans made the services eligible, which in turn increased access, or volume. So, what the supply chain lost in per-visit revenue, they more than gained back in volume business. Therefore, as one would imagine, with both the healthcare supply and the healthcare demand being able to benefit from this prevention development, it persevered for a number of years.

The second such development that comes to mind is Consumerism. About ten years ago, the seeds of consumerism were planted. Those seeds grew and

bore full fruit in the 2000’s with the emergence of health and wellness plans. Whereas an explanation of Wellness plans, their origin and proliferation is beyond the scope of this article, those of us familiar with the industry remember it as a time when onsite services became more available. Similar to HMO plans, Wellness plans became more available because they resulted in a reduction of healthcare costs for the plan owner. Employees, who are the healthcare consumers, were asked to become more responsible for their own healthcare. Employers incented employees to take care of themselves. In some cases, employers penalized employees for

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employees to design actionable preventive and maintenance for the total employee body. Employees represent as homogenous a group as exists. When one thinks of homogenous groups, one thinks about the Army, Marines, Flight Attendants and any other group whose participants experience similar lifestyles and risk exposures. In a company, employees are as homogenous a group as can be found. Employers should tap into this resource in order to identify, duplicate, communicate and incent the healthy behaviors that exist within this group. The following action steps are recommended.

First, identify Employee Health Groups (EHG’s). Most companies have already identified employee groups when they enrolled in their current health plan. Employees are grouped by whether they

are full-time or part-time workers. They are also grouped by geographic location. Another way to group them is by work tasks. For example, employees who perform secretarial work can form one group. However, the incentive to group employees, in the past, has been so that the healthcare provider, whether it is the employer or an insurance company, can reliably set healthcare rates for that group. For the purposes that this article intends, the incentive should now also include the reason that the employee groups can learn from each other. For each EHG, the habits of the more healthy employees will become the standard to which the whole group will aspire. An example of an EHG could be employees who are parents. Another example of an EHG could be single parent employees. The list could go on and on. The key to creating EHG’s is to identify common risk exposures BOTH on and off the job. Once this step is accomplished the next step can begin.

The next step for employers to implement in order to tap into the healthcare resource that their employees represent is to identify the habits of

risky behavior. Employees could acquire financial compensation toward their share of healthcare costs if they engaged in certain behavior. For example, if they recorded their blood pressure a number of times each year. Another example is if they completed a healthcare assessment which was designed to target potential problems by identifying risks such as obesity or stress. There was an explosion of wellness organizations that were formed as a result of the demand the consumerism created. Employees everywhere were joining health clubs, watching their diets, getting their blood pressure checked and reading up on ways to avoid stress.

Corporations, both big and small continue to search for ways to manage their healthcare costs. They negotiate rates with healthcare providers and with third party administrators. They aggregate their healthcare buying in order to leverage their position. All these efforts help to move the healthcare cost needle in the downward direction, but it’s time to move the needle down to the next level. The tool to achieve that downward trend is closer than most employees realize.

Employers should start using their own



the healthy individuals within each EHG. Again, in order to enroll in the current healthcare plan, employers would have gone through some exercise of identifying health measures that they wish their employees to aspire to. The more common health measures would be, for example, doctor visits twice each year, semi-annual blood pressure check-ups, or periodic body fat composition analyses. Within each of the health measures, the employer would have established employee goals. Examples of the goals would be that a certain percentage of employees complete the health measure activity, or that a certain percentage of employees’ results of each health measure be within a certain value range. So, if the health measure is semi-annual blood pressure check up, then the goal could be that ninety (90) percent of the employees achieve normal blood pressure measurements at each check up. Once employers have established these health measures and their corresponding goals, then they can actually start establishing actionable steps to achieve the desired results. The third step in this endeavor is for employers to implement aids to assist the employees to achieve the goals. Corporations focus so much on what’s right and being politically correct that most solutions are just band aids in fancy colors, not actual solutions. Employers have to rely on employees to design the healthcare programs. Let me give you an example.

Regarding the healthcare measure of employees incorporating exercise into their lifestyle, employers have gone to varying lengths. Some companies have negotiated discounts for their employees to become members at health clubs. Other employers have installed fitness gyms and even offered aerobics classes on site, for employees. I know of companies that have implemented longer work lunch periods or flexible work hours specifically in order to allow employees to engage in daily workouts. One employer addressed the needs of its black employees EHG. As most of us who are

knowledgeable about tangible healthcare statistics know, Black Americans suffer from increased levels of obesity and blood pressure when compared to their non-Black counterparts. In order to encourage the black employees at this particular employer’s organization, the employer encourage the black employees to conduct on-site “Hustle Aerobics” classes. These classes were basically black versions of aerobics classes. However, because they were led by black employees and because they targeted the black employees in the organization, they were very successful amongst that particular EHG. As a matter of fact, not only did that Hustle Aerobics attract the target market, but it also became popular amongst the broader employee base. This example represents a true success story and one that embodies the intent of this article.

Of course, employers need to address the complications that can arise with the advent of such a plan as this article suggests. Complications like privacy issues, sentiments of jealousy, sentiments of favoritism and what actual lengths the employer should go to in order to gain optimum benefits. However, the decision to implement such an action plan is a first step that is bound to result in overall success. Remember, the healthier your employees, the lower your healthcare costs and the higher their output.

BIO:With over 17 years experience in Insurance, Marketing and Employee Benefits Management, Alex Piper possesses extensive knowledge of the U.S. Voluntary Benefits Market and the influence that Insurance Carriers, U.S. Employers, TPA’s, and Government will have on the next generation of voluntary benefits. You can reach Alex at [email protected]

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OFFICE OF THE INSPECTOR GENERAL

The Office of the Inspector General Act of 1978 (and amended in 2008) established a new position

of accountability and oversight. The Office of the Inspector General is a dynamic, proactive and responsive position serving the American public. The major responsibilities include conducting audits, investigations, and other reviews and evaluations that are designed to detect and prevent fraud, waste and abuse in order to promote economy, transparency and effectiveness. The Office of the Inspector General Act requires the Office of the Inspector General to act independently and objectively. A Private Independent Office of the Inspector General (PIOIG) works

proactively with management and board members to improve operations and suggest innovative solutions that result in savings for your self-insured company or public entity.

There are many advantages to instituting a Private Independent Office of the Inspector General program to support your self-insured corporation or public entity. In addition to the functions stated above, the PIOIG is the central point for coordination of and responsibility for protocols that promote accountability, integrity and efficiency within your company. An efficient company is a profitable company! Before we get to the profits, let’s discuss the terms. How do you recognize and tell the difference between fraud, waste and abuse?

What constitutes waste? Waste is the intentional or unintentional, thoughtless or careless

Writen by Glenn Brown & Marsha Brown

Benefits for your Business

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expenditure, consumption, mismanagement, use or otherwise squandering of company resources. Waste also includes incurring unnecessary cost, because of inefficient or ineffective practices, systems or controls.

Example #1: “Company A”, when assisting an injured employee, will secure the first notice of claim, and then direct the injured worker to a medical provider. This medical provider may be of the company’s choosing, or it may have been selected by the employee. The medical provider often consists of a group of physicians with different specialties. Let’s say the employee injured his back on the job. Once he has been examined by the orthopedist, he is then referred to other specialists within the medical group. He may be examined by a neurologist, a rheumatologist and/or a cardiologist. Each of these doctors will submit an invoice to “Company A” for examination and consultation. “Company A” may routinely pay these invoices, even though there is no medical rationale for such varied and numerous examinations, given the nature of the employee’s injury. The extra cost constitutes waste – but “that’s the way we’ve always done it.” “Company A’s” policy as described is certainly wasteful, but does not necessarily represent fraud or abuse.

This unnecessary economic drain is exactly the type of situation a PIOIG can identify and rectify. A thorough investigation will uncover such wasteful procedures and issue a report to management and the board of directors recommending Best Practices.

Example #2: “Company B” attempts to save money by understaffing their claims department. As the staff becomes overwhelmed, the management of “Company B” becomes convinced that the only way to manage the situation is to relegate service vendors, such as investigators, to third party management. When this situation occurs, the “Company B’s” shareholders and/or owners may become vulnerable to substandard defenses, because of the poor quality

of work resulting from investigative service vendors who are forced to work at depressed fee schedules under the third party management allowable rates. As in all things, you get what you pay for. And often, what you’ll get is watered down investigation services resulting in a mediocre work product that will poorly support your compensability decisions. The same holds true for other service providers. This is waste, pure and simple.

When Best Practices on adequate staffing become the company’s policy, that allows claims examiners the time to professionally and efficiently handle their case load. The necessity to delegate work to a third party oversight company becomes gratuitous, money is saved and profits are increased.

When does waste become abuse? Abuse is the intentional manipulation, misapplication or misuse of company resources, such as receiving favors for awarding contracts to certain vendors, making procurement or vendor selections that are contrary to existing policies (Best Practices), or are unnecessarily extravagant or expensive. Once abusive practices are identified, a program of Best Practices should be introduced to management and staff. These Best Practices should focus on implementation of a change in staff conduct that will create savings and profits for the company. The implementation of Best Practices training must be monitored and measured – because what gets measured, gets done! A skilled and experienced PIOIG will evaluate your current practices and recommend improvements designed to eliminate abuse. After a period of time, the company staff’s conduct should be measured against the Best Practices that have been implemented to ensure compliance.

If staff conduct is still found to be deficient, continued training must be immediately reinforced, and the Best Practices process should be repeated. Incentives and positive acknowledgement may be offered in the form of time off or a financial bonus



percentage of the savings or profits realized as a result of the implementation of Best Practices. Our experience serving as Inspector General has revealed that positive reinforcement is a powerful motivation for staff to comply with the new protocols. If, on the other hand, the same wasteful and unproductive practices persist, an investigation must be conducted to identify where, how and why the economic drain continues to occur.

A Best Practice that has been proven very successful is to empower the claims examiner with a manageable case load of 125 to 175 cases per desk, along with the responsibility of direct management of that case load. We have found that when the case load delegated to the claims handlers is consistently excessive (more than 175 cases), a competing agenda often exists that is inimical to the company’s savings and profit agenda. Employees can be so overwhelmed that efficiency becomes vulnerable to “too much work and too little time.” In this circumstance, the company’s financial resources are not being used to properly staff the claims department with an adequate number of claims examiners. Senior management should be probed to determine the cause.

Understaffing can result in penalties and missed deadlines, which can be very costly. Often, work is delegated to outside attorneys, who in turn, assign their in-house clerical staff to process the tasks at their standard attorney hourly rate. This can severely drain a company’s reserves to the point where business operations may ultimately be impacted to the point of failure. When understaffing or ineffective in-house systems persist, even after being trained on Best Practices – it moves from being waste, to being abuse.

And finally, what part does fraud play? Fraud can be defined as, “an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him, or to surrender a legal right; a false representation of a matter of fact, whether by words or by conduct, by false

or misleading allegations, or by concealment of that which should have been disclosed… with the intention to deceive another.” (Black’s Law Dictionary – Revised Fourth Edition)

Example #3: In a redacted sample from an actual PIOIG investigation, “Company C” has more than 500 employees. A large portion of this work force has health insurance provided by the company. The universal reality is that health care costs have continued to increase dramatically, and this was definitely a cost driver to “Company C” that pays for a percentage of these benefits. In probing the systemic cause of this drain on the company’s savings and profitability, a Private Independent Inspector General disclosed that financial and healthcare data, as well as Social Security numbers, were being processed and handled by convicted criminals – because it was less expensive. These inmates were found to possess private citizens’ social security numbers inside their prison cells. Unfortunately, this is not an isolated example. This co-mingling of personal information, including social security numbers, with inmate access is a common practice and often results in theft and illegal

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sales of these critical assets. Proactively addressing this issue, United States Senator from California, Dianne Feinstein, sponsored Senate Bill S141, the Social Security Number Protection Act of 2010, which passed into law in December 2010. Public Law 111-318 is designed to prevent prisoners from handling Social Security data.

The situation described above is a pervasive fraud being perpetrated not only on “Company C”, but on many unsuspecting companies – perhaps yours. Unless the health care provider disclosed their use of inmates up front, and “Company C” agreed, this would constitute a deliberate and intentional perversion of truth – the truth that convicted inmates would handle sensitive medical and personal information (probably at pennies on the dollar of the quoted fee) in order to obtain an economic advantage over “Company C’s” profits – at high risk to “Company C’s” viability.

Example #4: Continuing the story of “Company B”, the third party oversight company often represents to the client company that the work product they are overseeing is the result of their own efforts, and thus, charges a higher fee schedule than the outside vendor service company who is performing the actual work. They may even put the work product on their own letterhead, without identifying the service vendor who actually performed the work. The service vendors are paid at a much lower rate than the third party oversight company charges you – their client. The ultimate result of this fraudulent practice is that this unvetted service vendor provides a substandard work product in order to make ends meet. A PIOIG would probe the difference between the fee charged by the third party oversight company and the actual cost of services rendered. What value does the third party oversight company actually provide that the outside vendor service company does not – and often at a much lower cost to your company? Where and to whom does the inflated fee go? Worse yet, when you reach the legal arena, you may find that

the opposition’s legal team is coming with its “A List” service providers. Your company’s bottom line may be exposed to unnecessary losses, because of substandard information.

It’s fraud when a third party oversight company represents the work of the actual performing vendor as their own, or when the fee charged to the client company is marked up higher than what was paid to the performing vendor - without disclosure to the client company. Fraud is also defined as “the means resorted to by one individual to get advantage over another by false suggestions or by suppression of the truth, and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated.” (Black’s Law Dictionary – Revised Fourth Edition)

Fraud, waste and abuse place a drain upon a company’s operational efficiency and profitability. It is to your advantage to have a Private Independent Office of the Inspector General (PIOIG) on your team, making sure that you are protected from the detrimental impact of fraud, waste and abuse.

About the Author

GLENN S. BROWN, J.D. is Chief Executive Officer of Fu-Gen, Inc. Research and Investigation. He has well over 34 years of experience in all facets of the investigation industry. He is directly involved in the following investigation areas: Inspector General services, workers’ compensation (AOE/COE), fraud, background checks, surveillance, sexual harassment, corporate theft, and liability.

MARSHA L. BROWN, M.A. is president of Fu-Gen, Inc. Research and Investigation, a nationally recognized investigation corporation specializing in Inspector General Services, the elimination of fraud, waste and abuse, transportation-related accident investigations, as well as workers’ compensation investigations for self-insured corporations.



The Cards Are Dealt:How to Play the Hand for You and Your Employees

To paraphrase Woody Allen, “managing benefits is like playing bridge. If you don’t have a good partner, you’d better have a good plan.”

Health Care Reform along with other legislation implemented last year required—and continues to require—a significant effort for employers. The wide range of plan design and administrative requirements that need to be implemented and communicated comes with substantial cost—both in terms of the internal and external resources needed, and the attendant hike in premiums to accommodate such changes as the elimination of lifetime maximums, dollar amounts on preventive care, and the mandatory coverage of adult dependents. Some employers have even

gone so far as to eliminate or substantially reduce benefits in an effort to escape the requirements of such recent legislation (most recently, the Screen Actors’ Guild eliminated mental health coverage to avoid the requirements and cost of mental health parity). But the new legislation also offers a “bright” side: the chance to offer your employees meaningful benefit choices that create a true partnership.

As we move ahead into 2011, most companies have already taken advantage of the golden opportunity to begin more open communications with their employees about their benefits – and, with good cause. A recent poll suggests that changes due to health care reform encouraged over two-thirds of employees, in recent annual enrollments, to review their

Writen by Jenni Aldred

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benefit options more closely. And an equal number of employees are looking for ongoing communications concerning how legislative changes will continue to impact their benefits and associated costs. While some of the messages communicated—such as premium increases—may have left a bad taste in employees’ mouths, the focus now is how to show employees how actions can determine the impact new legislation will have on their benefits down the line.

So what can employers do?

Leverage What Exists

• 100% Preventive Care Benefits and Wellness. The legislative requirement to provide preventive care benefits at 100% is a perfect launch pad for creating a partnership with your employees. Because “prevention” is closely linked to “wellness,” use this focus on prevention to encourage employees to become accountable for their health and well-being. Social media venues– such as blogs, Twitter, and Facebook – enable you to keep your employees constantly updated on trends in prevention, newly covered preventive tests and diagnostics, and focused topics related to your population’s “pain points” with disease and illness (such as diabetes, high blood pressure, and heart disease).

• “We’re Ahead of the Curve.” If you’ve never imposed a lifetime maximum on benefits or were already covering preventive care at 100%, let your employees know that the company has been ahead of the curve. This positions you as a company with its employees’ best interests in mind.

• Don’t ignore non-medical benefits. Although recent legislation has scarcely touched these benefits, communicating these “employee focused” benefits is now more important than ever. According to a recent PPACA poll conducted by MetLife , “71% of employees who say they have a good understanding of health care reform also say that their non-medical benefits are very important in driving their feelings of employer loyalty.” Make sure your employees understand the full package of benefits available to them—especially those that are provided at low or no cost.

• Your 401(k) Program. In December 2010, President Obama extended the Bush-era tax cuts, including a one-year reduction in workers’ Social Security taxes by nearly a third, from 6.2 percent in 2010 to 4.2 percent. Your employees will have more in their paycheck, giving you the opportunity to boost your 401(k) participation by encouraging them to redirect those funds to another form of retirement security—one they have control over.

Look Ahead

• Incentives, incentives, incentives. Although the Health Insurance Portability and Accountability Act (HIPAA) brought more attention to wellness programs and having incentives in place for employees who participated in these programs, the Patient Protection and Affordable Care Act (PPACA) will place greater focus on having this type of program in place by 2014. The law will permit rewards or penalties, such as premium discounts, of up to 30 percent of the cost of coverage – an increase of 10% of the total premium set by HIPAA. And, as premium rates continue to rise, being able to communicate



to your employees that they have a chance to negate the increased cost with participation in a wellness incentive plan provides you a chance to shift priorities in health care from diagnosis and treatment to focus on prevention and wellness and move responsibility to your employees.

Solidifying Your Partnership: If you already have a wellness program in place, investigate how to bring your incentives up to the current 20 percent of cost of coverage limit between now and 2014 – this will put you in a position to leverage the 10% increase in 2014 and offer your employees more ways to save. Be sure to communicate to employees the impact of participating and not participating in the program in terms of percentages added or subtracted from their current premium rate.

• W-2 Reporting. As of January 2012, employers must report the aggregate cost of health coverage on employees’ W-2. This is an outstanding opportunity to show employees the “real” dollar value of their benefits. The true cost- sharing partnership will be evident, and employees will see the impact your contribution has to their pocketbook.

Solidifying Your Partnership: Think about incorporating a more effective disclosure of health-care cost information—such as a total rewards statement—into your current communications to employees. Incorporating total rewards statements as an integral part of their employee communications, companies are achieving higher returns on their investment in their employees by helping them understand the overall value of their employment and the link between collective efforts and personal success. • Expanded Review Process. While the

expansion of the internal and external review process adds another step to the Claims and Appeals process, it also provides an opportunity to provide an opportunity for you to communicate “one extra step” in place to protect your. . It also allows you to eliminate some of the “grey” area around adverse benefit determination.

Solidifying Your Partnership: Treat this as an opportunity to communicate to employees the non-biased approach to your Claims and Appeals Process. Many employees think their employers are the “bad guy” in these circumstances. Recent legislation allows employers to provide employees with a more detailed, specific understanding of their options – once again, adding value by placing emphasis on employee-driven outcomes.

The administrative challenges associated with recent legislation are daunting. But, the security employees expect from their benefit programs—not to mention the loyalty they hope for in an employer—seem to put perspective on the task at hand. To paraphrase Woody Allen, planning is a good idea, but having a good partner is the first at hand. Make your choices with that partnership in mind.

About the Author

Jenni Aldred is a Senior Project Manager/Writer for HighRoads, Inc. She joined HighRoads with 12 years of communication consulting experience with Buck Consultants and Watson Wyatt Worldwide. Using her extensive understanding of new Health Care Reform legislation, Jenni currently provides our clients with the information needed to navigate the changes occurring now and in upcoming years.

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Centers of Excellence Transplant NetworksHealth Insurance Reform Consequences:Bigger Carrots, But Even Bigger Sticks

As a professional working in the transplant network industry for the last 16 years, I can see that healthcare reform has made the Carrots and Sticks consequences of transplant care more dramatic. For many health plans,

getting a great transplant outcome was desired, but lifetime maximum insurance benefits protected the plan from those that did not. Every year health plans have transplant companies close cases because the member has exhausted their benefits, even though the member is still receiving intensive care. In today’s health reform world, the benefit of the good outcome (carrot) remains, but the lifelong benefit consumption of a bad outcome transplant (stick) is a new looming reality for health plans. Climbing the sales side of the industry, I was taught to sell the benefits of achieving the good outcome transplant. I can see myself closing a sales presentation: “There are so many benefits to the plan when a liver transplant recipient jumps-up out of bed after 7 days and returns home complication free. Billed charges are low for the transplant admission and low thereafter - this is the Carrot you seek. The COE carrot results from increased transplant competency through volume, tightened patient selection criteria and outcomes that improve yearly” says John Van Dyke, the young sales person. It gives me great joy to revisit the COE mantra. In this article, however, I want to explore the ever growing Stick side of transplant COE. Although the COE

Writen by John Van. Dyke



concept for transplant care has been around for nearly 25 years, and the benefits well documented, some insurance plan fundaments have created complacency within the industry. The two health plan conditions are: 1) reinsurance coverage; and 2) lifetime maximums. The payment of a complicated transplant is most often shared between the plan and their reinsurer. With a specific deducible at $500,000 (plan maximum exposure) and a lifetime maximum benefit of $1,000,000 (reinsurance maximum benefit) both parties enjoyed a limited risk of sorts.

Transplant recipients with complications have been using plan lifetime benefits and much more for decades, but they ultimately become wards of the state, transition to Medicare and Medicaid plans or become charity care and part of the cost shift. Many recipients expire early from complications, but many are forced to live with medical intensive life-long complications. There is simply no data available to determine the incurred long term costs of a poorly done transplant. With disappearing lifetime benefit caps, recipients living with those complications will now become running liabilities of the plan. With transplant outcomes so readily available, and networks so well established, channeling for a good outcome/keeping transplants from occurring at poor outcome centers has never been more important.

When mulling over just how disruptive putting in a COE requirement might be, you should take into consideration transplant frequency. Industry working numbers are 16.1 transplants per 100,000 covered members, so if you have 5,000 members in your plan, you should anticipate roughly 1.2 potential transplant candidates resulting in .8 transplants in any given year.

Enough Stick side talk, so let’s wrap this up

on a positive note. With transplant volumes and surgical proficiency increasing at major transplant centers, the disruption is low and the outcomes good for the member and the plan. With many plans working to retain their “grandfather status” new benefit plan language is emerging which provides Centers of Excellence access as more of an Exclusive Provider Organization.

Installing an EPO benefit for transplantation during this time of health insurance reform is appropriate. As a network, we receive a couple emergent heart transplants each year, and maybe an emergent lung transplant or two, but nearly all other referrals have ample time for thoughtful facility evaluation and selection. The most common method of program selection is by physician referral to the closest center to the member, which is often the pathway to low volume, poor outcome centers. For example, data gathered from 1999 through 2006 demonstrate that centers performing fewer than 10 heart transplants per year have about an 80% higher mortality rate in the first 30 days than the national average. People receiving a new heart at centers transplanting more than 40 a year have half the 30-day mortality rate of those doing 10 or fewer.

Considering the lifelong financial exposure of a poorly done transplant, and that the networks for controlling those risks are so readily available, the time to implement a transplant COE EPO has never been better.

About the Author

For more information about topics covered in this article, please contact John Van Dyke at [email protected].

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PEEK-A-BOO,I SEE YOU!Writen by Kevin Connors



The year is almost 2011, and “homo sapiens” has attained evolutionary heights consistent with mere 24 hour interconnectivity, such that burbs in the western provinces of

China register on social networking seismographs in Nova Scotia.

The point being, it is no longer your smart phone, your laptop, the cloud that you are considering emigrating to, as it is that all of us now live in glass houses, filled with self portraits and convex mirrors.

Yes, you are on Facebook, we know, originally only to connect with high school and college friends that you have not thought of in years, and you think it okay to stray from the claim or file in front of you, to run a quick social networking search on whomever or whatever.

And, yes, we are all out there, all searching for whatever we think we need to search for, although the search engines are now busy searching for us.

It is a Brave New World.

The problem is, that the glass house is an invitation to look inside, as evidenced by the recent trial court opinion issued in McMillen v. Hummingbird Speedway, Inc., wherein Judge Foradora of the Jefferson Court of Common Pleas, was asked to rule on objections that a personal injury Plaintiff raised in response to the discovery requests of a defending party seeking Plaintiff’s social network information, such as the Plaintiff’s social networking IP addresses, with the Plaintiff claiming, as though it might mean something in the context of social networks that are anything but private,

that the defending party’s discovery request intruded on the personal injury Plaintiff’s privacy rights, resulting in the defending party filing a Motion to Compel Plaintiff’s disclosure of the Plaintiff’s social networking profiles and addresses, so that the defending party could, within the context of the Pennsylvania’s Rules of Civil Procedure, investigate whether the Plaintiff had posted descriptions or photographs of activities that might be inconsistent with the injury claims being made by the Plaintiff in the personal injury lawsuit.

“You talking to me, you talking to me?” Of course, that was Robert DeNiro’s character, in the infamous Martin Scorsese Taxi Driver movie, talking to himself in a mirror, as the Facebookians among us sometimes are wont to do about personal things that in pre-social networking days would not even rise to the level of being fodder for polite reflections in overcrowded elevators.

In today’s digitally-driven social networking world, it is never how important the thing or event is, it is very simply that you have designated it important enough to make it public through the megaphone of Facebook, Twitter, or MySpace, which, at this point, probably has as many subscribers as this e-mail.

Sifting through the Pennsylvania Rules of Civil Procedure dealing with issues of both discovery and privilege, the trial court blithely rejected every argument made by the Plaintiff, thereby overruling the Plaintiff’s objections to the defending party’s social networking

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discovery requests, and compelling the Plaintiff to produce this information, although the information ordered to be produced would still be subject, in any trial phase, to any and all evidentiary rules that might be applicable to authenticating the information for admission into trial. Although there are no appellate decisions of precedential significance in Pennsylvania on this issue, it is only a matter of time before there are, as there are other jurisdictions faced with similar discovery and evidentiary issues, with the general rule seeming to be, that fair is fair, and that if a litigant, represented or not, has chosen to go “public” through a social networking service, that information once “published” is no longer “private”, such that the information should and must be discoverable as being “public” for all of the world to view,

whether limited to a defense counsel preparing for a personal injury Plaintiff’s deposition, or, perhaps, a jury hearing a personal injury case being presented with social networking evidence at odds with testimony offered by an injured party.

Although McMillen is a decision that will resonate through the personal injury litigation universe, great caution must be exercised, whether in a pre-litigation claims investigation phase, or in a post-complaint discovery phase, that the party seeking the social networking information, must play by all applicable rules, and one rule that seems absolute, is that the parties seeking the social networking information cannot “friend”, directly or indirectly, the person from whom the information is being sought; to do so, not



only violates the rules imposed by the social networking sites, which uniformly prohibit such activity, but such a search would also potentially render the sought-after information as invalid, and inadmissible.

There are simply no excuses for breaching this very simple rule.

Practical Suggestions

By all means, “seek and find” remain the operating principles upon which claims must be investigated, and lawsuits must be defended.

With time still left on the game clock, you will have many opportunities to seek out and discover whatever information might be “public”.

To do so, however, the following guidelines are suggested:

• Strict adherence to all Rules of Civil Procedure, irrespective of jurisdiction, applicable to both discovery and evidence;

• Strict adherence to all jurisdictional decisional authorities, dealing with social networks;

• Strict adherence to privacy guidelines, established by individual social network sites;

• Strict avoidance of any inappropriate contact, using both common sense and the generic rule of “how would I like it if they did that to me?”; and,

• Develop claims and litigation-specific

protocols for seeking social networking information, to include formal social networking profile preservation requests.

The general rule that will likely evolve throughout all jurisdictions on this issue, will be “ask nicely” and you “shall receive”. Be formal, thorough, and direct in asking for this information, and, under no circumstances, should you allow an objection or refusal to produce to terminate your search for the truth”.

Assume further that you will receive no cooperation from the social network service/sites, as they are too busy making money to understand, let alone respond, to the importance of how relevant these disclosures and posted information on social network sites might be, to litigants debating the propriety of privacy versus publication.

Keep in mind that the trial court’s overruling of the objections raised by the Plaintiff and McMillen should apply across the board in any litigation, where inconsistent statements might be both relevant and admissible.

About the Author

Since 1988, I have been representing employers and businesses in defense of workers’ compensation claims in Pennsylvania, and I have, over the last 23 years, tried every conceivable type of workers’ compensation claim. Over the years, I have published extensively on workers’ compensation practices and procedures, and in 2010, I was awarded an AV-rating by Martindale-Hubbell, the highest possible rating for professionalism and legal ability.

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Paying Full-Price for Medications is a Thing of the Past

There has never been a better time to help people afford their medications than in the current landscape of high unemployment and lost benefits. With over fifteen million unemployed and a total of

nearly fifty million underinsured or uninsured in the United States, the crisis is quite evident. States are broke or headed that way. Obamacare may be taking its last gasp and government programs are cutting more and more benefits to people in need by the day. Small businesses don’t know where to turn for an alternative to the high cost prescription drug coverage they can’t afford for their employees. Programs exist that address this problem.

The advent of the discount card has come of age. The number of people with insurance is declining and the need for alternative solutions is increasing. Perhaps for that reason, some of the major insurance companies began to embrace the concept of the discount card and began to explore

the possibility of allowing their networks to be used for that purpose. These discount cards provide discount health, dental, vision and prescription products to the general public, regardless of age or income.

Prescription discount cards are out there that provide discounts on average of 15% on brand name drugs, and 55% on generics. Over 80% of pharmacies accept the cards, including most major chains in the US and Puerto Rico. Dental discount programs often provide more savings than dental insurance and offer discounts not available with dental insurance, such as on cosmetic procedures.

These discount cards are not affiliated with any one particular pharmacy. They offer an alternative to rising drug costs. Since the introduction of the Rx discount card, consumers have saved over $100 million in drug costs. The cards are free with no age or income requirements to meet. No FDA drugs are excluded and include diabetic supplies and smoking

Writen by Kevin Faherty



cessation products with a prescription. Many of the available cards never expire and can be used over and over again with no enrollment procedure or information gathered on the bearer of the card.

When a doctor prescribes a drug it is for treatment. In order for a drug treatment to work, the patient should take the medication as prescribed. If the patient can’t afford the medication, they will buy and take what they can afford this month. Maybe next month they will buy and take the drug they skipped the previous month. Sadly, we all know that is not how their medication is to be taken, but the patient is only trying to make the best of it, struggling month to month.

This is why hospitals, clinics, urgent cares, churches, counties, municipalities and State Departments are all now using these cards because the need to help people is overwhelming. The cards are offered free to the consumer.

Discount cards and programs can be researched on the internet. Some card companies offer the consumer the convenience of just printing out a card, and using that paper copy at the local pharmacy. Pharmacists are happy to provide the discounts as it brings more people into their stores, and offers a way to assist those that would have had to pay full price for their medications.

About the Author

Kevin Faherty, author, is President and CEO of National Benefit Builders, Inc. of Florham Park, NJ – Kevin is also the past president of the Group Insurance Association of New York and past president of the Mutually Preferred PPO network in New Jersey, a subsidiary of Mutual of Omaha. Kevin has spent 39 years in the group health insurance business.

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Facing Reality in 2011…It’s Your JobA New Health Benefit Management Program

A new breed of health care management is making enormous strides in controlling healthcare costs. Healthcare activists across the United States are reporting savings

of as much as 56% in healthcare expenses. Separate programs around county are starting to show success. Though independent from each other, each of these programs has several things in common.

Each program gets its impetus from forensic analysis of medical claims and the use of intervention with the most costly employees (patients). The core of each of these programs is an ongoing physician-employee (patient) relationship, which is centric to all health initiatives (including wellness) education,

provision of care, medical care coordination, coaching, informed decision making, and application through the entire continuum of an individual’s health.

Self-Funded Corporation, TPA’s and Brokers Are Well Positioned to Reach “Tipping Point”

Although these programs are in their infancy, their potential to drive a true consumer driven healthcare system is inevitable. However, if the concept of such programs is going to reach a “tipping point” and become the practical answer to rising healthcare costs, corporate America and the self-funded healthcare industry need to take action. It is the author’s belief that corporate America, independent TPAs and the self-funded industry are ideally positioned

Writen by Park Miller



today to lead the charge of this new breed of healthcare management. But, corporate America and the self-funded industry need to wake up and face reality before there will be any serious movement toward gaining control of healthcare costs.

Jack Welch, former CEO of GE, spoke of “facing reality.” It was his opinion that facing reality is the hardest thing an executive staff will ever do. He also understood that leaders who avoided reality will have little chance of improving their business’ performance. His motto, “Change, before it’s too late” should be corporate America’s and the self-funded benefit industry’s wake-up call. American companies must face the reality that the current system and the enacted federal legislation will not yield the cost savings they desire.

How much higher must our healthcare costs climb before serious action is taken on a large scale? How serious does the economic impact need to be before corporate America realizes how ineffective and self-serving the promoted solutions from the healthcare industry and the federal government are before taking action.

Creating a Powerful and Comprehensive Health Benefit Management Model Although each of these new healthcare management programs represents only one or two management features, combined they create a powerful and comprehensive means for “health benefit management” (HBM) similar to the “prescription benefit management” (PBM) industry.

Cutting Healthcare Cost by 56%

One innovative program showing success was developed in Camden, New Jersey. A healthcare activist group called the Camden Coalition of Healthcare Providers. The Coalition used forensic medical claim analytics to detect the most costly patients and created intervention programs that cut hospital admission by 56%. Savings reached $700,000 per month, while emergency room visits went from an average of 62 admissions per month to

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37, a 40% decrease. These savings were driven by an ongoing physician intervention program, consistently tackling chronic issues proactively, thus avoiding expensive crisis management in an emergency room.

Safeway, another healthcare activist, implemented a number of health initiatives that kept their overall healthcare expenses at zero growth for a period of four years. A Wall Street Journal article about Safeway’s stunning results stated, “Market based solution can reduce the national Health-care bill 40%.”

The Avivia Healthcare website reports that when patients are fully informed about their health care options, approximately 30% of them choose a less-invasive treatment and are subsequently more satisfied with their overall healthcare experience. Avivia relies on the power of data analytics and the use of medical management and health initiatives throughout the continuum of care cycle for an individual. It’s encouraging to see providers such as those in Camden facing their reality. They know that if they don’t embrace change someone is going to do it for them. And the same will hold true for corporate America and the self-funded industry. Remember Jack Welch motto “Change before it’s too late.” It’s better to manage change toward your own goals than to have unknown change forced upon you.

Core Concepts of an HBM Model—Focusing on Most Costly Employee

An advanced Health Benefit Management (HBM) program should begin with a comprehensive employee profile developed by primary care physicians (panel) using a company’s medical claims database,

employee risk assessment and personal history, advanced biometric screening and prescription drug database analysis. Once profiles are completed each employee is placed into one of four categories; most costly, chronic, early stage disease development, and low risk.

The comprehensive profiles and employee groupings provide the foundation for a company’s overall health initiative program, coordination of medical care activities, education, primary care panel development, intervention programs, coaching and advocacy efforts. Program implementation begins by focusing on the employees who make up 70% of a health plan’s costs. Compare this comprehensive approach to other health initiative and traditional wellness programs that implement less intense activities across the entire employer workforce resulting in slow adoption rates and poor ROI.

An initial focus on those employees that make up the large majority of healthcare plan costs does not imply that a Health Benefit Program ignores the remaining employer population. It merely underlines the importance of addressing the most costly employee first using intense health initiatives, medical care coordination efforts, education and physician coaching. Secondary objectives and the remaining employees are incorporated into the overall plan during the remaining implementation phase which can last up to six months.

The Power of Primary Care

A well structured HBM program will include a highly trained panel of primary care physicians to manage general care, create



health initiatives, provide education, wellness, coaching and coordinate all medical care. These activities are all geared toward empowering the employee-patient team to make better informed decisions about healthcare choices. The primary care panel will be heavily supported by the results of medical claims data analysis, follow-up biometric screenings, health initiatives and care coordination associates. There may be a need for outsource vendors to provide specific assistance. However, the total process must be managed directly by the primary care panel and employee. A well organized HBM program features financial incentives to use the primary care panel to overcome participation hurdles, a challenge faced by other health initiatives. The physician can then instill in the participating employee the importance of using their services as both coach and team leader for more serious interventions. Each primary care physician should be highly trained to provide the appropriate mentoring, research, and coaching as well as becoming a trusted advocate. NMD’s are a new breed of primary care physicians that are well versed in these concepts as well as providing a more holistic approach to the health process.

As Health Benefit Management programs develop and mature, most companies will begin to make it mandatory for employees to visit primary care physicians for all health initiatives and coordination of medical care. Significant financial incentives and penalties will play a vital role in directing employees to the use of the primary care panel. Today there are companies that make it mandatory to complete biometric screening to maintain employment status.

Traditional Health Initiatives and Care Coordination Will Become a Thing of the Past

In the foreseeable future, advanced HBM programs will make all other health care initiatives, disease management programs and wellness initiatives a thing of the past. HBM programs reduce vendor program costs because their services are embedded in the medical care coordination routine, health initiatives and MD coaching activities. There still will be a need for some vendor services that are directly in support of primary care physicians.

The HBM process should significantly lower per employee per month costs associated with these healthcare programs. There will be a shift in spending from unnecessary administrative and vendor costs to fees for provider services. In addition, this process will eliminate a disparate and highly disconnected system of care. These activities reduce administrative layering and filtering of information and lead to decreased stress levels for the employee-patient team and a better overall healthcare experience. HBM Programs Should be Flexible in Pricing-Implementation and Management

Several health activist started HBM type programs using different components, yet each component yielded success on its own merit. This indicates that the HBM model has tremendous flexibility and will become an attractive feature for the healthcare industry as a whole to implement. TPA’s will be able to implement an HBM program for employers as a standalone program or as a complement

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to other health initiatives provided by an ASO carrier. HBM programs do not represent a one size fits all approach, but rather a collection of highly specialized components based upon each employer’s needs. Some employers and TPAs may choose to take on enhanced roles by internally managing certain components and outsourcing others, while others may wish to outsource all of the activities associated with a Health Benefit Management program.

Because HBM programs can have standalone components, pricing structures are quite flexible and implementation follows step-by-step approach. Fees are phased in based upon the component being added. Virtually all traditional health initiatives are paid on a PEPM basis across all employees, but some HBM components can be paid for by only those employees using the service.

Facing Reality in 2011…It’s Your Job

Are you ready to rally around what a health benefit plan can become or are you content with complacency and 20 to 30 percent annual

rate increases? As I travel around the country, I am astounded by the mindset of corporate managers, health industry vendors, insurance brokers and healthcare providers. Most remind me when years ago General Motors and Ford executives told Americans with confidence that they knew what was best for consumers. That was just before the Japanese car invasion brought new product ideas to the American consumer. It took a complete collapse of the industry two decades later to affect a meaningful transformation.

Is your corporate health benefit plan, health care vendor, broker or provider organization any less married to an outdated business model than the American automobile industry was decades ago? Has your organization hit a brick wall with nowhere to turn to improve its health benefit plan, no more answers for your client’s as a healthcare vendor? Does your organization have another twenty years to wait before taking action? One only needs to watch the debates in Washington about healthcare to realize the time to face our reality has come. This debate has been going on long enough.

It’s now up to the self-funded corporations, TPAs and the industry to face reality in 2011…It’s your job…Before it’s too late.

About Park Miller

Miller is the founder and CEO of NuView Health Partners, Inc. Before founding NuView, Miller served in management roles in managed care organizations, Medicaid, PBM industry, TPA and hospital administration. He holds an MHSA degree in Healthcare Administration.



Market Based Patient Care!

Health plans are expensive because medical care is expensive. Will shopping across state lines for insurance fix that? It’s a

nice sound bite, and will allow the insured to drop some of their own state mandates, but the biggest input to the cost of a health plan, is the underlying cost of the medical care financed by this plan. If you buy a plan in Shreveport, and use it in San Francisco, it will trend up in costs.

During the year-long healthcare debate, I did not hear ONE person ask why medical care is so expensive. They barely even asked why health insurance was expensive, but if 85% of the premium for health insurance must be paid out in medical costs with the new medical loss requirement, and we have not addressed the cost of medical care, then insurance premiums

will CONTINUE to rise at an unsustainable rate. Enacting health insurance reform without addressing the cost of medical care, is like putting a new roof on a building which was in an earthquake.

Here’s how the Feds put the fix on health care pricing.

It all starts with a Federal agency called the Center for Medicare Services (CMS). They set the reimbursement rates for some 14,193 medical procedures. How they come up with these figures is based on a “secret formula” calculated like most government methods of accounting. Then CMS pays the AMA (American Medical Association) to produce and manage “secret codes” called Current Procedural Terminology codes (CPT codes). The AMA then sells these codes to all doctors and hospitals, and insurance billing clerks. Altogether, they receive annual income reported to be $69.9 million, to manage

Writen by Ralph Weber

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these codes. Insurance companies then use the reimbursement rates as a starting point in determining how much should be covered as an insurable benefit under the term, you no doubt recognize: “co-insurance”.

In any business model where prices are fixed and paid by a third party, the patient (consumer) and doctor (provider) both have an incentive to consume more services than may be needed in order to gain maximum benefit. This is why these programs have become entitlements, rather than indemnity programs. If patients travel to Kansas for a bunionectomy or to New Jersey for a knee replacement, or Oklahoma for a Coronary Artery Bypass Graft, and you allow doctors and hospitals to compete across state lines, with their own rates, THEN you will achieve fair market rates, and sustainable costs.

Each doctor and hospital has different costs for different procedures, and each medical provider includes different services with any given procedure. When a third party arbitrarily decides to pay Dr. X in Los Angeles the same as they pay Dr. Y in Miami, some doctors will be overpaid for certain procedures, and underpaid for others. Patients will receive “cost effective” procedures, which may not be what they really need. How many times have you turned on the TV and heard a vendor offer, “If you have Medicare, we’ll get it paid for, or you get your scooter free.”? Would you get one if you had to pay $25,000 of your own money? Take your car to a body shop and get an estimate to fix a dent. Then say: “oh, I forgot to mention, I have insurance”. The price will suddenly go up. This is because both the consumer and the provider are spending other people’s money.



So how can we address the costs of medical care? By allowing doctors and hospitals to compete across state lines, not just insurance companies, and by having the patient see the true cost of the care, and direct their own care. A key element completely missed in healthcare reform.

In recent years, an industry known as “Medical Tourism” has emerged, and is projected to grow at an estimated 35% per year. Medical tourism brokers send people overseas with “promised” savings which compare “billed

rates” in the US to “paid rates” overseas. There often exists an added incentive for these brokers to send you overseas in the 20% to 80% or more that they get in kickbacks from the facility they send you to. These kinds of kickbacks are illegal in the US, so these brokers usually won’t refer you to a US facility. Deloitte estimates that by the year 2017 as much as $599.5 billion per year of medical care revenues could be lost from the US, in favor of overseas facilities. There is a very important place for overseas medical facilities in caring for US patients, but they are often not competitive on price. When US doctors and hospitals are permitted to set their own rates, they can usually compete very favorably with overseas facilities. A service such as MediBid.com allows patients to shop domestically as well as internationally, and define their own criteria for medical care.

The status quo, and the reformed healthcare model lack transparency, as well as financial incentives for both provider, and consumer to reduce costs. In order to reduce costs while encouraging technological improvements, we need to introduce competition among doctors and hospitals.

About the Author

Ralph F. Weber, President of MediBid, started an international health insurance brokerage in Canada, then moved to the U.S. and expanded his brokerage. Ralph has contributed healthcare reform policy to Rudy Giuliani and Mike Villines. Driven by a passion for greater access and transparency, Ralph and private investors started MediBid, a truly free-market solution to healthcare.

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Why Consider Outsourcing COBRA?

“CAUTION! Handle With Care!” This warning is typically seen with fragile packages, but it also applies to an important area of benefits law:

COBRA administration. While COBRA is not nuclear physics, its complexity has grown since 2008, and mistakes are not cheaply forgiven.

The ARRA subsidy, the Health Coverage Tax Credit expansion and more rules, model notices, forms and court decisions have rendered the COBRA headache a serious health condition for many HR, insurance and benefits professionals. As a result, more employers are

evaluating whether to outsource this important task. What should they look for in a COBRA administrator?

Consider four factors in making this critical decision to seek the assistance of a COBRA third-party administrator (TPA):

1. The TPA’s ability to provide a comprehensive, IRS and DOL compliant program, especially with self-funded health plans

2. The commitment to customer service

3. The level of technology to facilitate interactions between TPA and employer

4. The extent of indemnification protection should something go wrong

Writen by Rich Glass, JD



1. A Comprehensive, Compliant Program

The IRS uses the COBRA Examination User’s Guidance assistance for plan audits and examining compliance. Four criteria found in a Senate Report on COBRA often guide these IRS audits. This Report was for a law called the Technical and Miscellaneous Revenue Act of 1988 (TAMRA). The “TAMRA criteria” can indicate if the IRS will waive an excise tax of $100 per day for COBRA mistakes:

• Training. The best practice is to designate the person(s) responsible for COBRA and ensure they are fully and properly trained. Once trained, the employer should retain evidence of this fact. They should have proper back-up. This “one sheriff-several deputies” rule applies well here.

• Written Instructions. An employer must have written procedures that are followed. The TPA should be able to provide these instructions if and when needed.

• Design and Updates. The COBRA program must be designed based on competent professional advice. The advice should include legal and actuarial resources.

• Monitoring. Independent auditors must monitor the program. They must be well versed in COBRA law. Employers handling COBRA in-house often miss this step.

The importance of compliance is increased when an employer is responsible for one or more self-funded plans. Examples include

a Health Flexible Spending Arrangement (FSA), a Health Reimbursement Arrangement (HRA) and self-funded medical and/or dental plans (common in the government sector). The premium calculation rules are founded on the simple COBRA concept of determining the premium based on the “total cost of coverage.” However, the methodology is difficult to understand, requiring calculations based either on reasonable actuarial estimates or past costs, adjusted by the Implicit Price Deflator as published by the Bureau of Economic Analysis. A competent TPA should be able to guide an employer through maze that is §4980B(f) of the Internal Revenue Code.

The tricky issues don’t stop with calculating the premium for self-funded health plans. Health FSAs may qualify for a limited offering of COBRA (or in some cases, no COBRA at all) if they satisfy a three-part test that incorporates a HIPAA excepted benefits test. Finally, how much coverage do you offer when multiple Qualified Beneficiaries elect Health FSA COBRA? A good TPA should have a ready (and correct) answer for all of these questions.

2. Commitment to Customer Service

COBRA situations typically involve former employees who are upset about a variety of coverage and premium payment issues. A TPA should have a well-trained call center that answers the phone promptly and resolves issues quickly and accurately. The call center should be open extended hours to allow Qualified Beneficiaries to call outside of normal business hours and to accommodate those in other time

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zones. Secure web access to vital information is also helpful. HIPAA standards suggest that the optimal level of security for electronic data is encryption.

A TPA that promptly addresses issues with a sense of urgency can lower an employer’s risk of complaints to the DOL or of threatened legal action.

3. Availability of Technology

An employer will usually retain some role in the COBRA process. After all, the employer must report when a Qualifying Event occurs and what the plan’s premiums are. A TPA should provide a variety of means for providing this information (e.g., electronic data transmission, website, fax or paper). As mentioned above, the electronic means should be fully secure and encrypted. In addition, a TPA should be able to provide a variety of activity reports, available through a secure website at any time.

The technology should have a robust reporting mechanism so that employers can use the needed information for other purposes. This might include insurance carrier communications, payroll administration and eligibility management.

4. Indemnification Protection

Accidents happen. When a TPA accidentally makes a mess, you should count on the TPA to clean it up. Examine the indemnification verbiage in the service agreement to ensure that the TPA will take

responsibility for its mistakes and will take appropriate corrective actions. Many TPAs insert a clause that limits liability to a low dollar amount or multiple of the monthly fees.

A 2006 COBRA case showed how messy indemnification disputes between an employer and TPA can be. In Linden v. Harding Tube Corp. and ADP, a COBRA coverage failure resulted in the TPA and employer each pointing the finger at the other. The only thing certain was the $62,000 judgment that one or both of the parties would have to pay.

In making the ultimate decision about whether to outsource and to whom to outsource, fees and costs are a consideration. However, if the above four factors are not fully in place, the decision to opt for the cheapest alternative may be a regrettable one.

About the Author

Rich Glass is Chief Compliance Officer and in-house legal counsel for Infinisource, Inc., a third party administrator based in Michigan. Infinisource provides a variety of administrative services – including COBRA, Payroll, HIPAA, Flexible Benefits, HSAs, and Online Enrollment/Eligibility – for more than 15,000 employers nationwide.

More information on Infinisource is available at http://infinisource.net



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Physician Shortage: Fact or Fiction?A Look Into the Rumors of a Shortage

Writen by Richard A. Longo

So, you need to see a primary care doctor. You’ve had a nagging lump in your neck that is causing concern and you figure it’s time

to get it checked. After dialing your family physician, you’re told that you can schedule an appointment, but you’ll have to wait for almost 2 months before the doctor has time to see you.

This is a scary scenario, but unfortunately this is what some patients in Massachusetts are facing today. In 2006, the state legislature passed a healthcare reform that bears similarities to the Obama administration’s recent bill. This

healthcare reform, combined with an already stressed healthcare system, is making it a little bit tougher for Massachusetts residents to access healthcare.

Growing Shortage Concerns

For years, the healthcare industry has been plagued with growing concerns over a potential physician shortage. Studies by different organizations have reached forecast assumptions about what the shortage could look like in terms of patient to doctor ratios. The lowest projection from the Department of Health and Human Services shows a shortage of over 65,000 by 2020, while other projections have the shortage upwards toward the 200,000 mark.



Impact of Healthcare Reform

President Obama’s signature sealed the Patient Protection and Affordable Care Act (hereafter referred to as the healthcare reform act). With that flick of the pen, the President introduced an additional 30 million patients into the healthcare system. This increase of just 4% has the potential to stress an already ailing system to the max. The question remains if our hospitals and primary care doctors’ offices are ready for the influx of patients.

Other Contributing Factors

Aside from the healthcare reform act, there are other major factors contributing to the impending physician shortage. The “baby boomer” generation is quickly reaching retirement age, and with it, many physicians will be hanging up their stethoscopes in exchange for post-retirement vacations and other leisurely activities. According to the Association of American Medical Colleges, one-third of the active physician population is over the age of 55. The Pennsylvania Medical Society reported that in 2006, fewer than 8 percent of physicians in the state were under the age of 35.

According to the U.S. Census Bureau, the trend from 1990 to 2000 in population growth showed an increase of 13.2 percent, representing 32.7 million people. Data from the 2010 census has yet to be released; however, there does seem to be a continued rise in the nation’s population growth rate.

What You Can Do It is nearly impossible to tell if the predictions of the physician shortage will come into full

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bloom, and if they do, whether it will be as harsh as expected. Now, the question becomes, if a shortage rears its ugly head in the next few years, what, if anything, can you do to make sure that your employees are getting the care they need?

The answer is that, yes, you can be instrumental in ensuring that you and your employees stay covered.

Review Your PPO Network: Take another look at your PPO network to make sure that there is strong coverage for primary care physicians and urgent care facilities, such as hospitals. Make sure that this includes facilities not only close to your office locations, but also within close proximity to your employees’ home locations. If there is significant holes in your network, contact your PPO networks to find out if they can negotiate contracts with facilities within the range that you want them.

Find a Primary Care Physician: Encourage your employees to find a primary care physician as soon as possible if they do not currently have one. New employees, in particular, may not have a family doctor if they relocated for their job or if their former doctor is no longer in-network. Many physicians will stop accepting new patients if their patient load becomes too great.

Educate Employees on Retail Health Clinics: The consumer world of healthcare has arrived, and it can be a viable option when urgent care is needed quickly. Even though retail clinics have been around for 10 years, many people are still relatively uneducated about their existence. Instead of visiting a physician office or the emergency room, your employees can pull up to a Walgreens, MinuteClinic, or other retail clinic to be seen by a medical professional, who is typically a nurse practitioner or physician assistant.

While not much can be done by the general populations in terms of the broader medical care issues, every precaution and strategy should be taken to ensure that your employees are able to receive care in an effective and efficient manner.

About the Author

Richard A. Longo, RN, FACHE, FACMPE, possesses extensive and varied experience in healthcare management and strategy development gained through over 25 years in the healthcare industry. He is currently the Senior Vice President of Network Management for Devon Health Services, Inc., one of the largest regional PPOs in the Northeast. Richard can be reached at [email protected].

59w w w. S e l f Fu n d i n g Ma g a z i n e . c o m

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