Self-Insurer Apr 2011 by SIPC

April 2011

Sound BiteS from SIIAâ&#x20AC;&#x2122;s 25th Annual Legislative/Regulatory Conference

SiiA oFFiCeRS Chairwoman of the Board* Freda Bacon, Administrator Alabama Self-Insured WC Fund Birmingham, AL President* Alex Giordano, Vice President of Marketing Elite Underwriting Services Indianapolis, IN Vice President Operations* John T. Jones, Partner Moulton Bellingham PC Billings, Montana

April 2011 | Volume 30

FeAtuReS

Vice President Finance/CFO/ James E. Burkholder , President/CEO TPABenefits, Inc. San Antonio, TX

10 From the Bench

Executive Vice President Erica Massey Midland, NC Chief Operating Officer Mike Ferguson Simpsonville, SC

SiiA diReCtoRS Les Boughner, Executive VP and Managing Director Willis North American Captive and Consulting Practice Burlington, VT

Risk Management enhances Corporate Responsibility & Profitability By Mark B. Seiger and Charles F. Gfeller

Donald K. Drelich, Chairman & CEO D.W. Van Dyke & Co. Wilton, CT

Robert Repke, President Global Medical Conexions Inc. San Francisco, CA

SiiA CoMMittee CHAiRS

Mather’s Grapevine

The Game Changer for Behavioral Health Costs under Mental Health Parity

ART Gallery

PPACA, HIPAA and Federal Health Benefit Mandates: Practical Q&A

Ernie A. Clevenger, President CareHere, LLC Brentwood, TN

Steven J. Link, Executive Vice President Midwest Employers Casualty Company Chesterfield, MO

ARtiCleS

SiiA leAdeRSHip

Sound Bites from SiiA’s 25th Annual legislative/Regulatory Conference

2 President’s Message 36

Chairwoman’s Report

Chairman, Alternative Risk Transfer Committee Kevin Doherty, Partner Burr Forman Nashville, TN Chairman, Government Relations Committee Jay Ritchie, Senior Vice President HCC Life Insurance Company Kennesaw, GA Chairwoman, Health Care Committee Beata Madey, Senior Vice President, Underwriting HM Insurance Group Pittsburgh, PA Chairwoman, International Committee Liz Mariner, Executive Vice President Re-Solutions Intermediaries, LLC Minneapolis, MN Chairman, Workers’ Compensation Committee Skip Shewmaker, Vice President Safety National Casualty Corporation St. Louis, MO

April 2011 The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’

Publishing Corp. (SIPC), Postmaster: Send address changes to The Self-Insurer, P.O. Box 1237, Simpsonville, SC 29681 The Self-Insurer is the official publication of the Self-Insurance Institute of America, Inc. (SIIA). Annual dues are $1495. Annual subscription price is $195.50 per year (U.S. and Canada) and $225 per year (other country). Members of SIIA subscribe to The Self-Insurer through their dues. Copyright 2010 by Self-Insurers’ Publishing Corp. All rights reserved. Reproduction in whole or part is prohibited without permission. Statements of fact and opinion made are the responsibility of the authors alone and do not imply an opinion of the part of the officers, directors, or members of SIIA or SIPC. Publishing Director - James A. Kinder Managing Editor - Erica Massey Editor - Gretchen Grote Design/Graphics - Indexx Printing Contributing Editor - Tom Mather and Mike Ferguson Director of Advertising - Justin Miller Advertising Sales - Shane Byars Editorial and Advertising Office P.O. 1237, Simpsonville, SC 29681 • (864) 962-2201 Self-Insurers’ Publishing Corp. Officers (2010) James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary 2010 Editorial Advisory Committee John Hickman, Attorney, Alston & Bird David Wilson, Esq., Wilson & Berryhill P.C. Randy Hindman, Deloitte & Touche, LLP Jason Davis, Global Excel Management, Inc.

the Self-insurer P.O. Box 184, Midland, NC 28107 Tele: (704) 781-5328 • Fax: (704) 781-5329 e-mail: ggrote@sipconline.net. The Self-Insurance Institute of America, Inc. (SIIA) is the world’s largest trade association dedicated exclusively to the advancement of the self-insurance industry. Its goal is to improve the quality and efficiency of self-insurance plans through education and to create a general acceptance in the public and business communities of this viable alternative to conventional insurance. Founded in 1981, SIIA represent the interest of self-funded employers, independent administrators, utilization review companies, managed care companies, underwriting management companies, insurance companies, reinsurers, agents, brokers, CPAs, attorneys, financial institutions, manufacturers, trade associations, retail and service companies, municipalities, and others. SIIA designs and implements programs and services for the benefit of its members, the industry, and the general public to increase the general level of knowledge about self-insurance plans, achieve greater professionalism in the industry, and enhance the general well-being and mutual interests of its membership. SIIA achieves its goals and objectives through several means: • International/national conferences and industry forums which provide educational opportunities, with substantial discounts on the registration fees offered to SIIA members. • Distributed monthly, The Self-Insurer, features useful technical articles as well as updates on topical issues of importance to the self-insurance industry. • The Self-Insurance Educational Foundation (SIEF) conducts statistical research regarding the industry and grants educational scholarships to promising students whose studies focus on the self-insurance industry. SIIA enjoys federal representation in our nation’s capital through counsel and staff on key legislative and regulatory issues. SIIA is the only national voice encompassing the whole self-insurance industry. If your company is involved or interested in self-funding risk for workers’ compensation insurance programs, employee benefit plans, or property and casualty exposures, then it should be a member of the association serving the industry - the Self-Insurance Institute of America, Inc.

The Self-Insurer

April 2011

PRESIDENT’S MESSAGE every SiiA Member Can Make a difference

e marched on Washington last month – right up to Capitol Hill and the halls of Congress – and I was proud of our turnout and the energy, enthusiasm and commitment of our members as we convened for the 25th Annual Legislative & Regulatory Conference. I thought we had the best participation of any SIIA Washington conference I have attended. One good thing was that we didn’t have to coax members of Congress to think about health care – they’ve had enough health care to make them sick over the last couple of years. I don’t think it’s an overstatement to say we were fighting for our livelihoods in defending the employer-based self-insured health care system in America. And we found plenty of support for our position from both sides of the aisles of the Senate and the House. In my welcoming remarks I reflected on the fact of this being our 25th straight year to bring our political concerns as a group to the nation’s capital and I put that in perspective by pointing out that 25 years ago Ronald Reagan was in the White House and gas was under a buck and a quarter a gallon. That was a moment of high nostalgia judging from the smiles and nods in the room. I thought about one person who was not attending the conference. He is a SIIA member, in good standing, who deflected my invitation to attend, pleading the crush of business. “Hey, you may not have a business pretty soon if things go badly for us in Washington,” I told him. “But I’m just one guy,” he said. “I can’t make a difference in what the government will do.” And so I told the story in my opening remarks of an elderly woman who was out walking the beach one day when saw a strange sight. A young man was strolling the shoreline and every now and then he would bend over to pick up something and toss it out in the breakers. The woman, curiosity getting the best of her, caught up with him and inquired about his activity. “There is an extra low tide today and all these starfish have been stranded on the beach and will dry out and die,” he said. “I’m trying to prevent that.” “But young man,” the woman said, “think of all the beaches in the world where the tide is low. How can you make a difference in the fate of all the starfish?” The young man bent down and picked up a starfish and tossed it beyond the shore break. “Well ma’am,” he said. “It made a difference to that one.” It’s possible that big differences are made one person at a time – one person talking to another person and influencing that person’s opinion or actions. That’s why we go to Washington rather than just send paper petitions or group e-mails. It’s important to exert our personal influence to affect events that are vital to us. We can’t stop exerting our influence just because our Washington conference is past. Preserving self-insured employee benefit plans is not just a Washington issue, or a national issue. It is also a state issue in every state where health reform under PPACA will be implemented, and a local issue in every company that selfinsures. Our Government Relations office in Washington will guide members on how to get involved in their hometowns.

April 2011

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pAC promotion Successful Last month I encouraged every SIIA member to support the Self-Insurance Political Action Committee (PAC) with a donation that would bring a chance to win a fabulous week’s stay at the famed “Limin’ House” located in Tortola, British Virgin Islands owned and donated by Don Drelich, Chairman & CEO, D.W. Van Dyke & Co. and SIIA Board member. Our members came through and donated a total of $19,000 – and that wasn’t counting a separate fund-raising commitment of an additional $12,000. Additional donation promotions are planned for the PAC, but members may donate at any time – say a moderate monthly contribution that won’t break your budget but can make a lot of difference for our lobbyists in supporting those in Congress who can help us. PAC donations, of course, must be personal, and not company funds. Details are always on the SIIA website, www.siia.org. I look forward to seeing all of you in the desert at the SIIA TPA/MGU conference in April.

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April 2011

RiSk

EFFECTIVE ENTERPRISE

MAnAgeMent ENHANCES

CoRpoRAte

ReSponSiBility & pRoFitABility

By Mark B. Seiger and Charles F. Gfeller

April 2011

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ith every major product recall, we are reminded of the importance of effective risk management. For example, these days, the name “Toyota” does not lead to thoughts of shiny new cars; instead, for many people, it generates thoughts and concerns of product defects, product recalls, and Congressional testimony. Failure to properly and effectively manage risks on an enterprise basis can result in serious damage to a corporation’s reputation and profitability. We need look no further than the Toyota example to see the importance of staying ahead of risk and managing it properly. Beginning in early 2010, Toyota suffered through a major public relations and business crisis, when reports surfaced of widespread product defects in a variety of its models. Toyota was perceived to be slow to respond to these reports, and its brand suffered mightily as a result. In February, 2010, Toyota’s Chief Executive Officer testified in front of the United States Congress. The following appeared in the National Post following the testimony:

Toyota Motor Corp’s president apologized to U.S. lawmakers and ended the day in tears, marking a potential climax to his company’s safety crisis but leaving it with a long road to rebuild its reputation. Akio Toyoda, peppered with questions about its massive series of recalls, told lawmakers he was “deeply sorry” for accidents and injuries involving its cars and acknowledged it had lost its way in its pursuit of growth. Investors, who have knocked about $30 billion off its market value in the past month, appeared to view Toyoda’s hearing as a small step forward in what could be a difficult task of recovering the trust of consumers. The National Post, “Toyota Faces Tough Road to Redemption After Grilling,” Thursday, February 25, 2010, on-line edition.

Like many other manufacturers before it, Toyota could have avoided its problems if it had established an effective analytical framework in which to analyze risks on an enterprise basis and take appropriate action to avoid or minimize unnecessary catastrophic exposures. This analytical framework is known as “enterprise risk management.” “Enterprise risk management” is the name given to a process applied in a strategic setting across the entire enterprise. It is designed to identify potential events that may affect the company so that the company can manage the risks identified and keep them within the company’s acceptable risk appetite, thereby providing reasonable assurance that the company’s objectives can be achieved. Enterprise risk management must be embraced and adopted by the company’s board of directors to assure that its importance is both recognized and accepted by the entire enterprise. To be effective, enterprise risk management must be driven from the top down. All areas of the enterprise must appreciate that its activities can, and do, impact the

overall well-being of the enterprise. Identification and quantification of risk across the enterprise is critical. Once identified and quantified, appropriate risk management decisions can be made and applied. To a large extent, enterprise risk management is not a difficult concept. Common sense is a key element of all risk management programs. The ability to recognize and address risk in an appropriate manner is all that is required. The overall twin objectives of enterprise risk management should be corporate responsibility and enterprise profitability. While corporate responsibility should never be compromised, the company’s profitability should be somewhat flexible. Risk must be appropriately managed so as to maximize shareholder value. We need only look at the Toyota story to realize that failure to appropriately manage an enterprise’s risk will result in a calamity.

What is Risk? Risk is defined as the uncertainty that exists as to the occurrence of some future event. Businesses are generally concerned with an event that can result in an economic loss, or an involuntary diminution of value, such as the payment of money damages to an injured party who is successful in a civil lawsuit. It is clearly in the best interest of a business to avoid economic losstriggering events. While such losses can, and do, have an adverse impact on profitability, it is also axiomatic that businesses do not want to see people injured because of their business practices. While we will briefly look at the various alternatives available for handling risk, our main focus in this article will be on risk transfer (insurance) and use of loss-prevention activities (risk management). The principles set forth below are equally

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April 2011

applicable to manufacturers, retailers, and service-oriented businesses. Hopefully, this article will heighten awareness of the need to focus on “risk” in daily business decisions. By incorporating risk analysis into daily business decisions, a company will, in effect, be using the analytical framework of enterprise risk management. Hopefully, this framework will become second nature to the company.

Four Alternatives for Handling Risk The four recognized alternatives for handling risk can be grouped as follows: 1. Assuming risk 2. Risk avoidance 3. Risk transfer or shifting 4. Loss-prevention activities Assuming risk, or assumption of risk, also known as non-insurance, occurs when a business undertakes to assume a known risk. This is the most widely used of all methods for handling risk. In using this method, the business owner believes that the business either has sufficient funds available to cover any economic loss that might arise should an event occur, or that it is capable of raising such funds. Assuming the risk does not actually reduce the risk, since the possibility of economic loss continues to exist. In reality the business is merely betting that it has developed, or can develop, the ability to cover the loss. Risk avoidance occurs when a business decides that the risk associated with a particular business or activity is excessive and, therefore, chooses not to get involved with the business or activity. By not undertaking the activity, the business has effectively eliminated the risk entirely. Risk transfer, or risk shifting occurs when a business pays another (insurer) to assume a risk, which the business

April 2011

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desires to escape. The risk bearer charges a price (premium) for agreeing to assume the risk. While the risk of loss will typically be the same for the insurer as it was for the business that transferred the risk, the insurer typically has superior knowledge concerning the actual probability that the loss will occur. Risk of loss is the uncertainty that in any given time period, actual losses will equal probable losses. Because of its superior knowledge, the insurer should be in a better financial position to assume the risk. However, no matter who bears the risk, the risk still exists. Loss-prevention activities occur when a business looks at ways to reduce the risk of loss. As mentioned earlier, risk of loss is the uncertainty that in any given time period, actual losses will equal probable losses. Loss-prevention requires a business to recognize and analyze risk, and then look for ways to reduce and/or eliminate it. When it is economically reasonable to eliminate or reduce risk, profitability should be enhanced. Unfortunately, many businesses believe that loss-prevention activities are unnecessary once risk has been transferred. Deciding risk reduction is unnecessary once a risk is transferred,

of course, assumes that the ability to transfer risk at a fair price will remain without regard to the size of potential losses. The naïveté of that assumption should mandate that businesses recognize that loss-prevention activities are essential.

effective Risk Management To manage risk effectively, a business must recognize the importance of charging someone at a fairly high level within the organization with this responsibility. Ideally, this person should be capable of instilling into all key employees the absolute need to recognize and address risk in all decision-making. Effective risk management necessitates that a business have in place a discrete methodology to address risk of loss issues. In addressing these issues, one of five types of decisions should occur. A decision is made to (1) not get into the business or activity; (2) assume the risk of the business or activity; (3) transfer the risk of loss to an insurer; (4) implement loss-prevention activities that reduce and/or eliminate the risk of loss; or (5) implement a strategy that combines

elements of all four noted strategies. The two most powerful tools used in risk management are loss-prevention activities and insurance. The effective use of these two tools can properly protect a business’ bottom line. However, these tools will only work if the risk is recognized in the first instance. While this article looks at the risks involved with product manufacturing, the techniques discussed herein equally apply to all other areas of an enterprise. Risks exist in employment practices, workplace safety, credit activities, accounting practices, treasury issues (i.e., currency transactions/ hedging), securities, and board of director practices, just to name a few. While all enterprises accept some level of risk the key is to have the board of directors establish the enterprise’s appetite for risk and then to stay within the parameters set by the board.

loss-prevention Activities Proper loss-prevention activities should be business specific. A business that manufactures consumer products must be concerned with everything from the adequacy of the design to how the end user actually uses the product.This requires that the designer take into account how the product will be used, the ways in which the product can be misused, the types of injuries which the product may cause, possible alternative designs that could be considered, what testing should be done, what materials should be used in the manufacturing process, how the product should be manufactured, what warning should be incorporated onto or within the product, what the product literature should say about the product, and what should be included in the instruction manual. While it is important that consideration be given to all of these factors, it is critical that a business properly document how it has considered each factor. Preferably, documentation should be developed with the assistance of the company’s general counsel. Keep in mind that the product documentation may someday end up being reviewed by a jury in a civil lawsuit. Another important area of concern for a product manufacturer in risk assessment is product quality. It is important to note that the recognized quality assurance standard is ISO 9000. By implementing the standard, with its mandatory documentation requirements, into the manufacturing process, a manufacturer will have come a long way toward reducing manufacturing defects and, therefore, will have effectively reduced the risk of loss. In the wake of its well-publicized difficulties,Toyota recognized that it had a quality control problem and implemented more stringent quality control measures. While this was a good step in the right direction,Toyota would have been well-served to have enhanced quality control practices in place prior to its problems. In fact, this may have helped to prevent some of the malfunctions that were apparently present in certain Toyota vehicles.

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April 2011

insurance: Risk transfer Insurance is a time-tested and trusted method by which an individual or company may transfer all or part of a risk of loss. Insurance should be part of any enterprise risk management system. Insurance needs should be reviewed on an annual basis with a well-informed insurance broker to be sure that a company is properly protected. The lower the risk of loss, the lower the premium should be in a particular risk transfer. For cost reasons alone, loss-prevention activities are essential. If a business can demonstrate to an insurer that it has a low risk of loss, the insurance marketplace will assess a lower premium for accepting a transfer of that risk. One way to show that a risk is minimized is through loss prevention, as described above. For example, in the early days of the snowboarding industry, there was not enough of a loss history for the insurance market to determine an accurate experience rating. Therefore, to a large extent, insurers depended upon preconceived opinions factors_01_03.pdf 1 1/5/11 1:04 PM when settingEthicare_Ad premiums. Most insurance companies believed that snowboarding was dangerous and, therefore, would result in many lawsuits. This resulted in higher

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April 2011

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No right or wrong way exists to structure an effective risk management program. All enterprises are different in many respects. What is important is to find a system that works for the individual enterprise. Nevertheless, there are some elements common to effective risk management programs.The following elements must exist:

2. Corporate resolution regarding corporate responsibility

Structuring the program

1. Setting of the enterprise’s risk appetite

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insurance premiums. Statistically, however, this opinion was unfounded. Over time, those manufacturers that developed clear and documented lossprevention standards, usually with the assistance of a knowledgeable insurance broker, were able to obtain affordable product liability insurance. In essence, the experience of snowboarding manufacturers created a paradigm of how effective risk management techniques could assist in the survival and success of a “new” industry.

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It is important for every employee and vendor to fully understand and appreciate that the enterprise is focused on risk management, and its goal is for it to be effective. While this is the stated goal, we must remember that we cannot completely eliminate risk. We need to recognize that in the event that something does go wrong, as a secondary goal, we have put in place systems that will permit the enterprise to better deal with the situation. For example, a product manufacturer needs to recognize that despite executing product development in an appropriate fashion, it may still be sued for a product

defect should someone be hurt. In utilizing loss-prevention techniques, the product manufacturer will have established appropriate product development files.Those files should tell the story of the tremendous effort that the product development team put into the development of the product. In reading the product development files, a jury should come away with an appreciation that the development team exerted care, conscientiousness and concern about the end user.The jury’s perception of attentiveness to risk during product development should prove helpful in achieving a successful outcome to any litigation. In effect, perception becomes reality.

becomes an inherent part of all

Toyota learned the hard way that being pro-active, rather than reactive, is the smart way to do business. As reported in The Washington Post, in February of 2010, Toyota’s CEO, in his Congressional testimony, noted that “the company will add a step to its recall process that will take account of customer safety and that it will form a ‘quality advisory group’ that he will lead, and he said he will establish a new position of ‘product safety executive.’ Moreover, he said that he will ensure that members of the management team ‘actually drive the cars.’ But more than anything, he seemed to say, there would be a change in attitude.” The Washington Post, “Toyota President Apologizes Under Fire of U.S. Officials,” February 25, 2010, online edition. Had Toyota embraced an effective risk management system years ago, it may have avoided the problems that it suffered through in 2010.

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business decisions, then the business will have planted the seeds for longterm profitability. In short, the “bottom line” of risk management will become an increased bottom line. n Mark B. Seiger and Charles F. Gfeller Gfeller Laurie LLP and are resident in the firm’s West Hartford, Connecticut office. Their practice focuses on litigation and counseling businesses in a variety of areas, including, but not limited to, product liability and risk management. A regular part of their practice involves working with corporations to develop innovative ways to assess and minimize litigation exposure. They may be reached at mseiger@sgllawgroup.com and

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Irrespective of the type of business, a consistent focus on risk management is essential to survival in a highly competitive world marketplace. If risk management

For more information, please visit the firm’s website at www.sgllawgroup.com.

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April 2011

Bench from the

By Michael Friedman, Esq. and John Eggertsen, Esq.

he following decision regarding ERISA’s disclosure obligations are significant in and of themselves, but are also noteworthy as reflecting a judicial trend towards taking seriously the ERISA requirements for adequate disclosure of benefit explanations. This trend is going to be of likely greater importance in light of the PPACA’s pending disclosure requirements, which are more extensive and detailed, with greater consequences for non-compliance.

i. disclosing plan documents – What is an Spd and What else Must Be disclosed? A. What is An Spd? A common claim in ERISA benefit cases is the plaintiff ’s claim for statutory penalties against the defendant for failure to timely provide the requested summary plan description (SPD) or “other instrument[ ] under which the plan is established or maintained.” ERISA § 104(b)(4). Two recent cases addressed each of these somewhat different document requests, and awarded the plaintiffs civil penalties for the employer’s failure to timely comply with the requested information. While the courts’ logic may be questioned, the results should be fair warning to plan administrators to take care in handling and responding to a participant’s document requests.

April 2011

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In Kasireddy v. Bank of America Corp. Corporate Benefits Committee, 2010 WL 4168512, 50 EBC 1753 (BNA) (N.D. Ill. 2010), Bank of America, in 2008, decided to revamp its medical benefit program and replaced a Blue Cross Blue Shield option with two options from Aetna – a Comprehensive Traditional Plan and a Comprehensive High Deductible Plan. Ms. Kasireddy, who was enrolled in the Blue Cross Blue Shield coverage, wrote to the Corporate Benefits Committee (CBC) on March 2, 2009 and requested copies of the Aetna “plan documents” so that she could “review coverages under [her] medical plan.” In response, on April 2, 2009, the CBC sent the following five documents: (1) Bank of America Associate Handbook 2005, (2) Bank of America 2006 Addendum to the Associate Handbook, (3) Bank of America

Summary of Material Modifications [no year specified], (4) Your Benefits, a Look Ahead to 2009 Brochure, and (5) Annual Enrollment Brochure – Your choices for 2009. The CBC also told her to visit the Aetna website.

available, and (b) the applicable appeals procedures for denied claims. While that is clearly not all that is required to be included in an ERISA-compliant SPD, those items are certainly among the more significant ones.

M. Kasireddy wrote again on April 22 and June 24 of that same year, repeating her requests. On July 9, 2009, the CBC sent the following three documents: (1) Annual Enrollment Guide: Get Ready for 2009, (2) Aetna Comprehensive Traditional Summary of Benefits, and 93) Your Medical Plan Options: a Closer Look. The CBC also stated that “[t]hese documents, as well as the documents sent to you n April 2, 2009, currently serve as the plan documents for the Aetna Comprehensive Traditional Plan.” Kasireddy filed this suit seeking the documents she requested and statutory penalties.

The Court found that the Associate Handbook materials provided in April of 2009 could not be the SPD because it contained no references to Aetna’s medical coverage at all. This should not be surprising as the versions of the Handbook provided pre-dated the commencement of the Aetna coverage. The Handbook did, however, have a description of ERISA’s appeal procedures.

Kasireddy contended that under ERISA § 104(b)(4), the CBC was obligated to send her the “official plan documents.” The CBC responded by saying there is no official plan document and that the Aetna Plan’s documentation consists of multiple documents, and that § 104(b)(4) only obligates it to provide the SPD. The Court agreed that only the SPD needed to be provided, but construed that to mean the CBC was required to provide “each and every document that . . . would constitute the Summary plan description” for the Aetna Plan. Ignoring for the moment the Court’s confusion as to the SPD for the “Aetna Plan” as opposed to the SPD for the Bank of America Plan, and its ignoring the language of § 104(b) (4) that requires the provision of a host of other documents, the Court honed in on whether the documents produced (a) provided Kasireddy with the information she needed as to the extent of the medical coverages

As for the documents provided in July, Kasireddy dismissed that as insufficient because they were mere summaries of the medical coverage provide by Aetna, but the Court found that this was what in fact Ms. Kasireddy had asked for and this was an essential part of the information that ERISA’s SPD requirements were supposed to contain. Kasireddy, arguing in pro per, only responded that the coverage information failed to contain specific information about fertility procedures and did not contain any information about the appeal procedures. Had she been able to point to a whole range of information that ERISA requires to be included in SPDs, she might have had more success in convincing the Court that the CBC had failed to produce any documents that could reasonably be deemed an ERISA-compliant SPD. As it was, the Court found that the Handbooks provided in April adequately explained the appeals procedures and the benefit summaries provided in July provided a sufficient explanation of the coverages offered to have met the CBC’s obligation. That the CBC did not fully respond to Kasireddy’s initial March requests until July, however, the Court

found inexcusable and imposed the maximum fine of $110 per day from April 3 through July 9, 2009 on Bank of America. this amounted to a civil penalty of $10,560 plus court costs. Attorney fees were not awarded only because Kasireddy represented herself and was not an attorney. Why the CBC thought that the first set of documents it produced, most of which pre-dated the benefit change that had triggered the document request would be satisfactory or why it thought that somehow its insurer’s documentation of its policy would be enough to constitute an SPD is never explained in this decision. Indeed, Bank of America was extremely fortunate that the Court found that at least pieces parts of the hodge-podge of documents the CBC finally did produce were sufficient to meet ERISA’s SPD requirements. Otherwise the $110/day clock could have run until the date of the decision on October 13, 2010.

B. What Constitutes “other instruments under Which the plan is established or Maintained” that Must Be produced? In Mondry v. American Family Mutual Ins. Co., 2010 WL 3730910, 50 EBC 1498 (BNA) W.D. Wisc. 2010), the documents at issue were not plan documents per se, but documents relied on by the claims administrator during the claims adjudication process. The Mondry saga dragged on for more than four years and was reflected in numerous decisions, and involved the efforts of Sharon Mondry, who worked for American Family Mutual Insurance Co. to get speech therapy benefits for her autistic son, Zev. CIGNA, the medical insurer for the American Family Mutual Insurance Co. Plan, denied her claim, saying that the costs of speech

The Self-Insurer

April 2011

therapy were not covered unless they wee “restorative in nature,” and according to two “clinical research tools” it used in this context, Zev’s treatment was not of this type. Both these clinical research tools were in CIGNA’s sole possession. The district court initially held that defendant – Mondry’s employer – was not obligated to produce the tools, but this decision was reversed by the Seventh Circuit. In response, CIGNA provided copies of the resource tools. The case was remanded for a determination of civil penalties for American Family’s failure and whether it had violated a fiduciary obligation by failing to produce these requested documents. On remand, the Court held that American Family had breached its fiduciary duty because, even thought these documents were not in its possession, it failed to help Mondry

obtain them from CIGNA. The American Family employees to whom Mondry addressed her requests did not view the tools as critical documents because (a) they believed that Zev had met the Plan’s criteria for coverage even under the more restrictive language of the resource tools and (b) they understood that the terms of the plan established the terms of coverage and overrode the terms of any resource tool. What bothered the Court, however, was that once it became clear that CIGNA had based its denials almost exclusively on these research tools, and that the basis of its denial was not evident from the plan documents and SPD, it did little to pressure CIGNA to disclose the documents to Mondry. though they did call CIGNA abut these documents, they accepted CIGNA’s explanations for not providing them at face value. The employer saw its interactions with CIGNA, merely as efforts to help Mondry get a fair hearing, not to lobby CIGNA on her behalf. Though, it made some efforts to get the documents from CIGNA, in the eyes of the Court the were not enough, and while CIGNA had the documents, it was not obligated under ERISA to provide them directly upon request. Plaintiff sought statutory penalties of $110 per day for each day American Family failed to respond to each of Mondry’s 12 requests, for a total of $1,053,690. As these civil penalties are imposed subject to the discretion of the Court, the Court here balanced (1) the length of delay in the production of the documents, (2) the prejudice to plaintiff, (3) the efforts American Family made to get the documents, (4) plaintiff ’s failure early on to clearly articulate the documents she was seeking and why they wee important to her appeal efforts, and (5) the state of the law at the time. Balancing out these factors, the court imposed a penalty of $30 per day

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for the 309-day delay in the production of the resource tools for a total of $9,270. Not a huge penalty perhaps, but significant for failure to produce documents you did not in fact have. What was not addressed in the case was why CIGNA was not obligated to produce the resource tools, not under § 104(b)(4), but under the regulations under § 503, which requires the claims administrator (CIGNA’s role here) to provide free upon request any “internal rule, guideline, protocol or other similar criteria relied on in making the adverse determination.” this likely would have provided a much more direct way of obtaining the resource tools. Nevertheless, this case stands as a cautionary tale to plan sponsors who might presume that because their insurer is making the clams decisions, they have no fiduciary responsibilities with respect to the claims adjudication process. ERISA fiduciary duties do not represent a cut and dried set of obligations, but rather are “functional,” and so may arise when plan sponsors are performing certain functions in certain contexts, though they may not realize at the time make them fiduciaries. With respect to participant inquiries about plan documents, especially with respect to claim decisions, caution is the rule of the day. If uncertain as to what your obligations are, consult with your benefits counsel (always good advice)!

The District Court, while rejecting Kitterman’s faulty SPD theory, did find that a reasonable plan participant would take the term “out-of-pocket maximum” at face value and expect to pay no more than that. It further held that the language purporting to hold the participant responsible for charges above that amount for non-participating providers was ambiguous and therefore might have been misunderstood by the average participant. It ordered Coventry to pay all expenses above $8,000. The Eighth Circuit would have none of it and vacated the district court’s decision. It also did not address plaintiff ’s faulty SPD theory, but held

ii. providing Spds to participants Who don’t Read them The issue in Kitterman v. Coventry Health Care of Iowa, Inc., 2011 WL 520840, 50 EBC 1897 (BNA) (8th Cir. 2011), was not a failure to produce the SPD, but a failure to understand what it said. Diane Kitterman was diagnosed with ovarian cancer in 2008, and sought treatment at the Mayo Clinic. Before scheduling her procedure, she contacted a representative at Coventry who told her that the Mayo clinic was an out-of-network, non-participating provider and that her coverage there would be limited to out-of-network benefits. The representative also told her that she could get the same services at the university of Iowa Hospital System on an in-network basis. Kitterman looked at the three page Schedule of Benefits and on page two was a chart that listed the annual “out-of-pocket” maximum at $8,000 for nonparticipating providers. Thinking that her liability limit was $8,000, she went ahead and got her procedure done at the Mayo Clinic at a total cost of $44,459. Unfortunately, Kitterman did not read page 3 of the Schedule of Benefits section which stated expressly that “Co-payments and charges that exceed our Out-ofNetwork Rate for Non-Participating providers do not apply to your Out-of-Pocket maximum.” The definition of the “Out-of-Network rate,” also on that third page, expressly stated that: “The Out-of Network Rate is the maximum amount covered by Us for approved out-of-network services. This rate will be derived from either a Medicare based fee schedule or a percent of billed charges as determined by Us. You are responsible for Charges that exceed our Out-of-Network Rate for nonParticipating Providers. This could result in your having to pay a significant portion of your claim. Balances above the Out-of-Network Rate do NOT apply to your Out-of-Pocket maximum (emphasis in original).” Coventry paid $20,671 of the Mayo Clinic bill leaving Kitterman to pay $23,788. Kitterman sued, claiming that the Schedule of Benefits was a faulty SPD.

April 2011

The Self-Insurer

instead that, consistent with traditional contract law, the document had to be read as a whole and that the provision clearly stating that charges in excess of the “Out-of-Network Rate” would be the responsibility of the claimant, and the sentence that “You are responsible for charges that exceed our Out-ofNetwork Rate for Non-Participating Providers. this could result in you having to pay a significant portion of your claim” were not ambiguous. A reasonable participant reading the entire document would have known that these charges would be applicable, even if in excess of the annual Outof-Pocket maximum. Kitterman failed to read these, but the Court cannot rewrite the Plan to fit what she chose to read. in short he Plan said what it meant and meant what it said, and Kitterman was stuck with the bill. We realize that both the facts and holding of this case are simple and straightforward, and present no complex question of law or ERISA intricacies. We present it as break for both ourselves and our readers. n

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The Self-Insurer

April 2011

Sound BiteS

from SIIA’s 25th Annual Legislative/Regulatory Conference 16

April 2011

The Self-Insurer

IIA identified powerful allies in the effort to preserve and protect the employer-based self-insured health system during the 25th Annual Legislative & Regulatory Conference in Washington, DC, last month. Following are notable sound bites from government figures who spoke:

Rep. John kline (R-Mn): Rep Kline is chairman of the Education and Workforce Committee with jurisdiction over ERISA, the law that enables self-insured employer health plans with federal preemption. Speaking for House Republicans he said: “We thought the health reform law should be repealed.The law is terribly flawed, built on a sham that uses numbers in different ways and penalizes doctors. We believe the law should be repealed and we should start over again… I think we’ll have an employer-based health system for a long time but we have to modify or repeal Obamacare…It’s good to see

that SIIA focuses on regulation as well as legislation.There will be a blizzard of regulations coming out of the federal agencies. Bring up your concerns to members of Congress and perhaps a problem can be fixed by statute if members are willing to weigh in.”

Sery kim, House Committee on oversight and government Reform: Ms. Kim is health oversight counsel to Chairman Darrell Issa (R-CA). She quoted the Congressional Budget Office conclusion that PPACA will not diminish the long-term costs of health care. She said Chairman Issa is looking at two issues raised by PPACA: first, the capacity of the federal government to administer the law when the IRS now fails to collect $300 billion of taxes each year and will be tasked to collect $390 billion in new taxes under the law and hire 16,000 additional IRS agents; and second, the uncertainty of the bill’s regulatory burden on employers as the Department of Health and Human Services issues regulations without allowing for public notice or comment. She said Chairman Issa’s strategy is that, “We’ve got to fix this bill.”

Senator Jon tester (d-Mt): Sen.Tester said that he will introduce legislation to modernize the Liability Risk Retention Act (LRRA) to allow risk retention groups to cover commercial property risks. SIIA has led industry groups in drafting bills for the Senate and the House and in identifying sponsors. Sen.Tester said he will sponsor the bill to fill a void in the traditional insurance market: “I think the risk retention model has worked pretty well. It has injected additional flexibility, affordability and competition into the marketplace.” He said the modernized law “would increase access and reduce costs in areas of the country… Self-insurance is an important risk management tool, particularly important in enabling businesses to pool their coverage in risk retention groups.” He said the bill would also address other

The Self-Insurer

April 2011

needs of risk retention groups such as development of a process for resolution of disputes between the groups and nondomiciliary state insurance regulators. He said the bipartisan bill would enable Congress to “Put aside partisan politics to work together to help the economy and create jobs.”

Rep. phil gingrey (R-gA): Rep. Gingrey is chairman of the Republican Doctors Caucus of the House. He said he opposed the

Democratic health care reform bill last year: “First, it was a distraction when we were in the depths of a recession will millions out of work… Second, I don’t want the government running health care. I didn’t go into medicine to have a government bureaucracy in DC running it…This bill was going down in the Senate but the trick of the reconciliation process, which should only be used for financial bills, allowed the senate to pass PPACA…Since passage, further study of the law hasn’t made it more acceptable.

Rep. Mike Ross (d-AR):

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April 2011

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William decker and nathan Crawford of the Centers for Medicare & Medicaid Services: The two members of the agency’s Office of Financial Management spoke on the mandatory Medicare secondary reporting requirements for insurers to report the availability of health coverage for employees or dependents on Medicare. “We will work with you to help you report correctly rather than making fines,” Decker said.Two websites were provided for information: www. cms.hhs.govmandatoryinsrep and for Medicare secondary payer recovery issues: www.msprc.info.

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The dog food hasn’t gotten any better and the dogs aren’t eating it.” Regarding the current legal battle to declare PPACA unconstitutional, he said: “I do not believe you can stretch the commerce clause to force us to do anything. What’s next: a government mandate that we all have to eat broccoli?”

Rep. Ross is chairman of the House Blue Dog Coalition of fiscally conservative Democrats. “We’re sick and tired of all the bickering,” he said, pledging that Blue Dog Democrats “look for common sense ideas serving the people who sent us here. We’re politically in the middle where the majority of the American people are.” Resisting his party’s pressure to support PPACA, he said he voted against it “Because the bill is too big, too costly and really didn’t address the number one issue of stopping health care costs from growing at twice the rate of inflation. It should be tossed out and let us start over…Until we can get health care costs under control it will only get worse.” He said that in order to reform health care, “The American people have to buy into what we do – there wasn’t enough education about the bill.” He spoke to SIIA interests when he said, “We need an employer-based system. And I think we do need a way your insurance can follow you. Too many people are stuck continuing to work just for health care.” n

MATHER’S GRAPEVINE

ebster’s defines a miracle as “an extraordinary event manifesting divine intervention in human affaires.”Those of us who have spent most of our business lives in a close association with the medical delivery system know that “medical miracles” certainly are associated with that definition but go a step further.They include “human intervention” in human affaires. On a daily basis all across the globe, doctors and hospitals, aided by the host of scientific tools of our time, perform miracles in the treatment of the most serious of human medical problems. As we move along through life, many of us unfortunately tend to take them for granted. Nearly a dozen years ago I wrote a piece for The Self-Insurer about a little nine year old girl who was dying and was saved by brilliant medical intervention and the parents of a six year old organ donor who was killed in an auto accident and who’s heart saved her life. She has lived a wonderful life since, filled with good schooling, partaking in athletic events, social activities and eventually a good job allowing her self-sufficient living circumstances. I have followed this amazing story and know it to be true because you see, she is my Granddaughter Katy. In recent months things began to go bad.The original estimate on how long that heart would support her, about ten years, had been surpassed. During the Christmas holidays it began to fail. Back she

went to the C. S. Mott Hospital at the University of Michigan in Ann Arbor, the scene of the original surgery. She took up residence in the ICU unit for the better part of six weeks awaiting another medical miracle. The brilliant professionals there kept her alive under extremely difficult circumstances. And then another miracle occurred. Katy received a perfect match of a new heart from yet another donor. She underwent recovery at that facility, being watched over by those great physicians and nurses, her parents, sister, and in the hearts and minds of our whole family and friends. Now she is at home and anxiously awaiting her return to work. How many miracles do you get in a lifetime? In Katy’s case – two! I can assure my readers that none of us are inclined to take that for granted. At this time in history, as the war over who is going to run our medical delivery system in the future rages on, perhaps the politicians and bureaucrats should step back and think for a moment about the successes in our medical delivery system and the thousands of lives that are saved each year. It might occur to at least a few of them that governmental intervention into matters such as this, with final decisions being made by government employees, czars and politicians, would be an insane mistake. Was this treatment expensive? Certainly it was. Do the costs get spread far and wide throughout the medical delivery system, the insurance industry and the people involved? Of course it does. Would you or I or the families of politicians or government employees have it any other way if faced with the same or similar situation? Is there reason to continue to fight for a delivery system that deals with the medical wonders that modern science has given us or should we instead shift to control over our lives by an unknown face behind a computer in an unknown Washington office? We have to get back to the watch with amazement over Katy. You have to get back to your political representatives in an effort to correct the direction into which we are headed. In the meantime, bless those wonderful professionals who make things like this happen. n

The Self-Insurer

April 2011

The

gAMe

CHAngeR

for Behavioral Health Costs under

Mental Health Parity

hen Congress passed the Mental Health Parity and Addiction Equity Act of 2008 (parity), most “experts” looked at past utilization and costs for mental health (M/H) claims, which are relatively low, and projected a minimal cost impact from expanded parity benefits. In their assessment and projections of parity, most failed to recognize three important issues relating to the quality and scope of mental health treatment as health plans move forward under parity. First – the majority of patients seeking mental health care today are doing so in the general medical setting. Second – M/H and substance abuse treatment facilities have been relatively silent regarding any direct consumer marketing for almost 20 years. Third – most utilization management

April 2011

The Self-Insurer

By Fred Newman

for M/H treatment is designed to manage care only when a higher level of treatment is indicated. The above three issues together will create the “game changer” that increases utilization and costs for M/H claims under parity benefits. Employers must evaluate their future exposure and implement programs to manage the resulting risks. There are two choices available – realize the future impact now and adopt a proactive and comprehensive approach to minimize the risks, or wait for their costs to actually increase before reacting. As stated above, most “experts” (TPAs, brokers, actuaries, etc.) failed to recognize that the majority of health plan members seeking mental health care are doing so in the general medical setting with no mental health diagnosis. These plan members were not calculated to impact M/H claims under parity. At first, this may not seem to be a problem. But, if one realizes, as many studies have reported, most general medical providers have neither the time nor training to properly treat mental health issues, then the problem is defined. For most individuals seeking M/H care in the general medical setting, the following clinically accepted guidelines are not being followed: • Quality assessments of mental health problems • Ongoing screenings to evaluate the effectiveness of treatments • Medication management to determine the most effective drug and/or dosage • Medication monitoring to ensure drug compliance • Patient education regarding treatment and compliance

• Psychotherapy for those dealing with mental health stressors

marketing. It worked in the eighties for treatment facilities, continues to work today

• Feedback to patients regarding change in their condition

parity benefits. This will put in play the “game changer” for mental health claims

As far as the number of health plan members impacted, most employers are experiencing between 10 and 25 percent of their members as having filled a script in a recent 12-month period for a subgroup of psychotropic drugs that are primarily prescribed in the general medical setting. This subgroup includes antidepressants, anxiolytics, and sleep-aids. Again, these members are not showing up as mental health claims under the health plan. In fact, most health plans are currently spending more on this subgroup of psychotropic drugs (prescribed by general medical doctors) than they are on treatment from mental health providers. As we move past plan renewals with parity benefits adopted by most employers, a number of treatment facilities will begin direct consumer

going forward. To minimize this problem, health plans need to implement proactive programs to identify members dealing with M/H conditions and coordinate effective care early-on. It is a clinical fact that if not appropriately treated, depression will likely worsen and become more treatment resistant. Studies report that when depression is diagnosed and properly treated within the first six months, the chance of achieving remission is greater than 50 percent. If depression is not properly treated for one year, the chance of remission drops to less than 20 percent. Bottom line, not treating mental health issues timely will create more plan members VHN_SelfInsurer_4.5x6.75_bw:Layout 1 6/24/09 11:40 AM that Pagemeet 1 medical necessity for higher levels of care later.

So how are general medical doctors treating M/H conditions? They are prescribing an antidepressant or other psychotropic drug during a general office visit without applying most or any of the above listed clinical guidelines. Per IMS Health, antidepressants alone have been in the top four classes of prescription drugs in the U.S. over the past five years. Around 80 percent of antidepressants and certain other psychotropic drugs are written by general medical providers. Numerous studies and reviews have presented evidence documenting significant quality of care issues around mental health treatment in the general medical setting. In fact, the Interim Final Rules (for the parity act) presented a study that found only 12.7 percent of individuals seeking mental health treatment in the general medical setting received minimally adequate care.

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April 2011

This brings us back to the impact that direct consumer marketing will have.There will be an increase in the number of “at-risk” plan members susceptible to the marketing of treatment facilities if not appropriately treated early-on. To identify those plan members seeking mental health care in the general medical setting, one must filter the prescription drug data targeting certain psychotropic drugs. Then, a process needs to be implemented that coordinates the following: • A two-way secure data feed to the pharmacy benefit manager (PBM) to exchange drug and compliance information • Effective outreach to potential candidates based on filtering of drug data • Financial incentives involving drug co-pays to encourage participation • Telephonic screenings to determine candidates for participation • Daily electronic reporting of compliance/noncompliance to the PBM • Outreach and partnering with prescribing physicians to improve standards of care and treatment outcomes • Ongoing standardized screenings completed with all participants to score and measure change in the severity of their symptoms (frequency based on severity) • Monitoring of drug compliance through ongoing reviews of drug data • Results of standardized screenings provided to participants and physicians • Educational materials provided to participants so they better understand the conditions for which they are being treated, including the need for medication compliance during treatment • Recommendations to treating physicians and participants around medmanagement and other treatment modifications based on screening outcomes, drug compliance, and treatment history • Coordination with the EAP for free short-term psychotherapy when appropriate • Outcome reporting on quality improvement The need for the above process is amplified by a lack of psychiatrists to treat all individuals impacted with mental health conditions, which has been documented in numerous studies. So, one must figure out how to work within the general medical setting to improve standards of care for M/H treatment whereby outcomes for the majority of patients are dramatically improved.

April 2011

The Self-Insurer

Conversely, those individuals dealing with more severe M/H issues need to be under true care management. Utilization Management (UM) for M/H must be focused on managing and coordinating all aspects of care utilizing a step-down approach to ensure that each patient has in place the resources to minimize relapse. Medical based UM for M/H can no longer be focused on just moving the patient below a certain level of treatment with the mind set that “our job is then done” once that lower level of care is achieved. Specialized UM by mental health vendors must be utilized to achieve true care management. Otherwise, health plans will be incurring multiple episodes of treatment from facilities as patients relapse and meet medical necessity for readmission (with no benefit limitations in place to prevent it). Analysis of these issues makes it clear that the basis for a “perfect storm” is in place regarding increased M/H claims costs for health plans under parity benefits. If you doubt it, then review the number of health plan members that have filled a prescription for a psychotropic drug in a recent 12-month period and compare that to mental health claims filed for the same time period. Do employers take a proactive position to mitigate costs and improve employee health or just sit back and wait for their claims costs to increase while productivity decreases? n Fred Newman is the founder and CEO of Interface EAP and Coordinated Health Solutions. In the mid-eighties he was the CFO of a public company that owned and managed psychiatric hospitals. It was in this position that he saw the need for a behavioral healthcare company with a proactive approach for addressing the impact mental health has on medical costs, productivity, and other labor costs. Fred founded Interface EAP in 1989, which began providing services on a national scale in 1990. In 2004, Interface began development of its unique Pharmacy Intervention Protocol (PIP) patent

Phone 301.963.0762 • Fax 301.963.9431 pending to address the quality of care and costs issues resulting from the high use of antidepressants and other target psychotropic medications within the general medical setting. In 2009, Coordinated Heath Solutions was established to coordinate PIP with other EAPs. Fred has previously served for four plus years on the board of the Texas Association of Benefit Administrators (TABA) and the Benefits Committee for the Self Insurance Institute of America (SIIA). He currently serves on the board for Mental Health America of Texas. He has presented programs on behavioral healthcare management to numerous groups including Benefit Management Forum & Expo, SPBA, TABA, WorldatWork, SIIA, URAC, Pharmacy Benefit Management Institute (PBMI), Health Action Council of Ohio, Midwest Business Group on Health, and Health Care Administrators Association (HCAA). In addition, he has authored several articles for industry publications including The SelfInsurer, The Journal of Employee Assistance, and TABA’s The Benefit.

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The Self-Insurer

April 2011

ARt GALLERY By Dick Goff

epending on who’s talking, either the insurance industry or the capital markets caused the financial meltdown that left us with today’s challenges and opportunities. One of the emerging opportunities, it turns out, appears to be a new source of liquidity – specifically provided by the private equity branch of the capital markets – to self-insured entities such as workers’ compensation groups, risk retention groups and others. It’s ironic that the financial ruins left in part by insurance companies overexposing themselves to the risks of investment products can now be sifted for a new flow of credit in the opposite direction. The lesson is that smart money will find opportunities, no matter how hard it has to work at it. Some self-insured entities have been damaged or severely limited in their ability to prosper because of restrictive regulations that require high capital reserves – they’re literally sitting on mountains of cash that they can’t use. Now there is hope for self-insurers and the ART industry.That glow on the horizon is new liquidity that is beginning to flow toward self-insured entities to help them overcome their regulatory burdens and inject new energy into their operations. One of the harbingers of that trend is Alexander Burns, a principal and chief strategist of Southport Lane, a New York City-based private equity firm that manages an investment portfolio on behalf of institutional investors. “We saw an opportunity to help

April 2011

The Self-Insurer

replace liquidity that may have been lost in the meltdown or sidelined by the regulatory environment,” Burns told me. The firm’s transactions with selfinsured entities are basically reinsurance contracts funded through segregated accounts of a Bermuda captive, which acts as a reinsurer. During recent years, “liquidity evaporated in ways no one had seen before,” Burns said. “We intend to pick up the ball in areas that have been dropped by other insurers or that have suffered lost liquidity themselves.” I thought that could be a huge service to, for example, the SIGs whose capital, for lack of a more genteel description, has become constipated. A firm such as Southport Lane can enter the picture on behalf of actuarially sound insurers with a new boost of liquidity. “Yes, we can provide a bridge point to another pool of capital, providing additional liquidity,” Burns said. I thought of another possibility. Say a SIG wanted to collapse into a fronted reinsurer in a captive. Additional liquidity would be needed to capitalize the front market. “Right,” Burns said. “You could just think of us as another source of credit.” Another way to look at this scenario is to compare it to the hedge funds’ earlier operation of sidecars for CAT bonds. Private equity firms will be operating for self-insurers in the same way. I saw this new kind of transaction as a brand new door for any self-funded structure to leverage itself into a better position to do new creative funding or improve its A.M. Best rating. One real life example is a captive that had $8 million in reserves to

support conservatively projected losses at a 45% ratio. Actual losses have been running 14%. Through a private equity reinsurance contract they were able to discount their reserves and declare a nice dividend. A second case involved an RRG that was working out of troubled times. A private equity-financed reinsurance contract covering losses for immediate years resulted in an infusion of $1.2 million in new cash and a reduction of $2 million in liabilities. “Simply put, this boils down to effective use of third-party capital,” Burns said. “This method is less restrictive than a traditional reinsurance contract. We can be substantially more flexible and employ more tools than are generally available from the reinsurance market.” Southport Lane is a corporation, and as such is set up for long-term transactions in comparison to most private equity funds, which are organized as limited partnerships that have five- to sevenyear terms. I thought that this kind of approach could be immediately valuable to selfinsured organizations for a variety of purposes including cleaning up their balance sheets, having additional capital to support new business, and dispatching legacy issues that have been haunting them such as the regulated misdirection of capital. n Dick Goff is managing member of The Taft Companies LLC, a captive insurance management firm and Bermuda broker at dick@taftcos.com.

A Rising Maximum Lifts All Plan Risks.

35 th

y ers–ar v i n An– Est. 

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for a detailed review of your medical stop loss insurance policy. The solvency of a self-funded employer health plan floats on the premise that the stop loss insurance carrier will reimburse the policyholder at claim time. Employers spend countless hours and resources getting their health plan strategy in order and setting their budget. Then they set sail with a medical stop loss insurance policy full of gaps and conflicts with plan language. Risk less by knowing more about your stop loss insurance carrier.

The product portfolio offered by the companies of OneAmerica®

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Contact R.E. Moulton, Inc. at 781-631-1325 or visit us at remoultoninc.com. Life Insurance | Retirement | Employee Benefits www.OneAmerica.com —--

The companies of OneAmerica®: American United Life Insurance Company®, The State Life Insurance Company, OneAmerica Securities, Inc., McCready and Keene, Inc., R.E. Moulton, Inc., Pioneer Mutual Life Insurance Company and AUL Reinsurance Management Services, LLC. © 2011 OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica® and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc.

The Self-Insurer

April 2011

PPACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

Q&A

By John Hickman, Esq.

The Patent Protection and Affordable Care Act (PPACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on PPACA, HIPAA and other federal benefit mandates. Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Johann Lee provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte and Washington, D.C. law firm. Ashley Gillihan, Carolyn Smith and Johann Lee are members of the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com.

April 2011

The Self-Insurer

ppACA implementation Reference Chart By now, most employer/plan sponsors should have implemented the first round (i.e., first plan year on/after September 23, 2010) of mandates under the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA).This article will refer to the two bills collectively as “PPACA” or just “health care reform.” Health care reform includes a number of provisions that have a significant impact on employer sponsored group health plans. Some of these provisions are effective immediately, while others become effective later (in some cases, as late as 2014 for the “pay or play” tax or 2018 for the “Cadillac tax”).The key to complying with the health care reform requirements is understanding what applies to your plan and when. To help you review and understand your obligations, we have provided a suggested “Implementation Reference Chart” which includes a discussion of the health coverage “mandates” as they relate to covered group health plans, and suggested required and recommended implementation steps. This chart does not purport to be an exhaustive list, and there are other aspects of health care reform not addressed herein – e.g. “Cadillac tax and “pay or play” mandates. n

insurance Reform (pHSA §)

Rule

notes and Actions

FPY on/after September 23, 2010 (i.e., January 1, 2011 for CY plan) Prohibition on lifetime/annual limits Prohibits group health plans and health Required action: insurance issuers offering group or § 2711(a) • Eliminate all lifetime dollar individual health insurance coverage maximums that apply generally to from establishing lifetime limits and all benefits. ALL PLANS annual limits on the dollar value of • Ensure that generally applicable benefits. Caps on annual benefits for annual dollar maximums are within essential health benefits are allowed the phase-out allowance. until 2014 as follows: • Eliminate combinations of dollar/ • $750,000 for plan years beginning treatment maximums (e.g., “up to on or after 09/23/2010, but before 10 visits per year capped at $50 per 09/23/2011 visit” is akin to a $500 annual limit • $1.25 million for plan years _______________________________ beginning on or after 09/23/2011, Recommended action: but before 09/23/2012 • Consider removing lifetime and • $2 million for plan years beginning annual limits for any individual on or after 09/23/2012, but before benefit until further guidance on 09/23/2013 “essential” benefits is released; and/or • Convert dollar limits on specific benefits to treatment visit limits. Prohibition on preexisting condition Group health plans and health insurance Required action: Remove all exclusion of enrollees under age 19 issuers offering group or individual pre-existing condition exclusions coverage may not impose a preexisting § 2704 for enrollees (employees and their condition exclusion or discriminate dependents) under age 19. based on health status ALL PLANS notes Prohibition on rescissions • Group health plans and health insurance issuers may not rescind • Prospective cancellation of § 2712 health coverage (i.e., retroactively coverage is not a rescission. cancel) after coverage begins • In the event of failure to elect or ALL PLANS except in the case of fraud or pay for COBRA coverage position intentional misrepresentation. can be taken that coverage is • Thirty (30) day advanced notice terminated for non-payment of required for all rescissions to all premium; thus rescission rules individuals whose coverage is would not apply. affected by the rescission. _______________________________ • Rescission is now an “adverse Required action: benefit determination” subject to claims procedures. • Absent fraud or intentional • Coverage for concurrent care misrepresentation as prohibited must continue during any appeals by the plan, remove all rescissions, process. including those for: • Prospective cancellation of • • Mistaken enrollment (e.g., coverage or retroactive cancellation enrolled employee’s regularly for failure to promptly pay scheduled work hours fall below premiums are not rescissions (i.e., plan eligibility level). no notice required and not subject to claims procedures)

The Self-Insurer

April 2011

insurance Reform (pHSA §)

Rule

notes and Actions

Prohibition on rescissions

• Any eligibility failure based on retroactive eligibility determinations (e.g., union employees covered if they worked at least one hour during the month, but eligibility determination is not made until the close of the month). • Any other rescission not involving fraud or intentional misrepresentation. If rescission due to fraud or intentional misrepresentation is enforced, provide 30 days advanced notice to affected individuals. Adhere to claims procedures, as rescission is an adverse benefit determination (including the requirement to continue with concurrent care). _______________________________

§ 2712 ALL PLANS continued...

Coverage of adult children § 2714

• Dependent coverage of adult children must continue until age 26. • “Child” who has not attained age 26 cannot be defined other than in terms of a relationship between a child and the participant (e.g., no limitations based on marital, employment, student, residency or tax dependent status).

ALL PLANS

• Rule applies to a 152(f) child (i.e., son, daughter stepchild, adopted child, or eligible foster child) (Q/A 14 at http://www.dol.gov/ebsa/faqs/ faq-aca.html)

April 2011

The Self-Insurer

Recommended action: Establish a mechanism whereby the plan can show fraud or intentional misrepresentation for coverage of an ineligible spouse/dependent. For example, require re-designation of all spouses and dependents at open enrollment each year and prior to dependent audits. Allow “amnesty” period prior to dependent audit to allow violators to voluntarily come forward in exchange for prospective termination of coverage. notes: • Based on agency FAQ guidance, this requirement now incorporates 152(f) children. Consequently, coverage of ANY non-152(f) child (e.g., grandchild, any child living with you for whom you support) can apparently continue most limitations like student or marital status, etc. • The rule does not apply to excepted benefits like health FSA, dental, and vision (i.e., covered under a separate policy of insurance or not an integral part of the medical plan).

insurance Reform (pHSA §)

Rule

Required action: • Raise limiting age for 152(f) children to 26. • Check plan definition for “dependent”. • Remove all eligibility limitations for any Section 152(f) child under age 26 except to define the relationship between the child and participant, including references to such child as a “tax dependent”, or to such child’s marital, student, employment, or residency status. • Check all plan/SPD provisions that may be affected (e.g., dependent eligibility is often repeated in sections regarding termination of coverage and COBRA). _______________________________

Coverage of adult children § 2714 ALL PLANS continued...

Coverage of preventive care (without cost sharing) § 2713 Grandfathered Plans exempt (GF)

notes and Actions

Recommended action: • Check cafeteria plan and health FSA definition for dependent and amend to correspond with new 105(b) rules (i.e., 152(f) children until the end of the year in which they attain age 26). Health FSAs technically are not subject to PPACA, but health plan participants will expect their covered dependents to be eligible for health FSA coverage. • Group health plans and health Required action: insurance issuers offering group or • Ensure that all preventive care individual health insurance coverage requirements listed in the regulation must cover certain preventive are covered 100% for the January 1, services, immunizations, and 2011 plan year. screenings, without any cost sharing _______________________________ • If required preventive care is Recommended action: covered 100% in-network, cost • Confirm that all preventive sharing is permitted for preventive care requirements posted on care sought out-of-network. HHS website are covered. Note • Recommendations and guidelines that aspirin, folic acid, and iron for preventive care services that supplements are likely covered as preventive care, so review these must be covered are described in requirements with your prescription the regulations (and in the July 27 drug plan to determine whether A&B Advisory on Preventive Care) these drugs and supplements will and will be updated at http:// www. be covered under the prescription HealthCare.gov/center/ regulations/ drug plan or medical plan. prevention.html.

The Self-Insurer

April 2011

insurance Reform (pHSA §) Coverage of preventive care (without cost sharing) § 2713 Grandfathered Plans exempt (GF) continued...

Rule

notes and Actions

• Plans and issuers need not make changes to coverage and costsharing requirements based on a future recommendation or guideline until the first plan year (in the individual market, policy year) beginning on or after the date that is one year after the new recommendation or guideline went into effect. Plans or issuers need to visit the site just once annually to have access to all the information necessary to determine any changes to the preventive care coverage requirements.

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April 2011

The Self-Insurer

contact: Lee Walters Chief Marketing Officer office: 203-446-8053

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insurance Reform (pHSA §) Claims appeal procedures § 2719 GF

Rule

notes and Actions

Required Action: For covered plans, apply PPACA regulatory changes to existing DOL claims procedures: • Include rescissions in definition of “adverse benefit determination”. • Review of urgent care must be changed from 72 hours to 24 hours. Fully-insured plans can have only • Remove second level appeals for one level of appeals review; selffully-insured options/plans. insured plans can still have two levels. • Allow claimant to provide “testimony” and provide claimant, Claims and appeals must be free of charge, with any new or adjudicated in a manner designed additional evidence considered, to ensure the independence and relied upon, or generated by the impartiality of the persons involved plan or issuer (or at the direction in making the decision. (E.g., no of the plan or issuer) in connection compensation or promotion with the claim. decisions based upon the likelihood • Provide claimant with rationale for that the individual will support a the decision. denial of benefits.) • Update communications based on Plans/issuers must “strictly adhere” new model notices for adverse to new claims procedures; failure to benefit determinations and appeals do so triggers deemed exhaustion decisions available at http://www. of procedures, allowing claimant hhs.gov/ociio/. to pursue external review and/or • Do not provide any incentives to judicial review.* adjudicators to deny claims. Interim External Review Safe • For self-insured plans and insurers Harbor for self-insured plans: without access to an existing Establish external review state review process, arrange for procedures that comply with external review in accordance with Technical Release 2010-01 or, requirements. if access is permitted by the _______________________________ state, comply with state external Recommended Action: review. Agencies acknowledge Consider whether to conform internal some flexibility for good faith review processes for non-covered implementation. http://www.dol. plans (vision, dental, FSA. etc) for gov/ebsa/faqs/faq-aca.html administrative consistency. Watch Technical Release 2010-02 provides for further guidance related to SPDs an interim non-enforcement rule and until further guidance is available, until July 1, 2011 for the following reference the availability of external internal claim review requirements: procedures in SPDs. Include notice 1) Urgent care claim notices that external review may be pursued (whether adverse or not) must be concurrently with internal review of provided within 24 hours (instead urgent claims and concurrent care of 72 hours). claims in the SPD.

• GHPs (and insurers offering group or individual health coverage) must comply with existing DOL claims procedures, as modified by PPACA regulations, and comply with any applicable State external review process meeting minimum federal standards. •

•

The Self-Insurer

April 2011

insurance Reform (pHSA §) Claims appeal procedures § 2719 GF continued...

Rule

notes and Actions

• 2) Notices must be provided in a culturally and linguistically appropriate manner according to the regulations. 3) Additional content (such as CPT codes, denial codes, etc) must be included in adverse benefit determination notices.4) An internal review is deemed exhausted unless the claims reviewer “strictly” complies with the requirements (as opposed to substantially compliance • Interim External Review Safe Harbor for insured plans: HHS will not take any enforcement action against an issuer that complies with the interim compliance method that will be detailed by HHS at http://www.hhs.gov/ociio/. This method will either involve use of a State external appeals process or a temporary process established by HHS. • Disclosure/SPD requirements expected in future guidance.

Patient protections: choice of primary care provider §2719A GF

Required action: • Group health plans and insurers offering group or individual health • If designation of a PCP is required coverage that require or provide or provided, then incorporate the for designation by a participant, model language into the SPD. beneficiary, or enrollee of a • Remove contrary provisions in the participating primary care provider, plan (e.g., any referral requirements must permit the designation of any for OB/GYN) participating primary care provider (or pediatrician in the case of a child) who is available to accept the participant, beneficiary, or enrollee. • Must provide direct access to obstetrical or gynecological care without a referral. • Model language is set forth in the regulation for such notices (and in the June 29 A&B Advisory on Core Interim Requirements).

April 2011

The Self-Insurer

insurance Reform (pHSA §) Patient protections: emergency services without prior authorization and out-ofnetwork charges §2719A GF

Rule Emergency services (defined by regulation) must be provided: • without the need for any prior authorization determination, even for out-of-network emergency care (although “notice” is permitted). • without regard to whether the emergency care provider in- or out-of-network. • without imposing any administrative requirement or limitation on outof-network coverage that is more restrictive than those applied to in-network emergency coverage. “Notice” can be required, even at the time of or prior to receipt of emergency services, in exchange for a lower coinsurance rate or waiving a copay.

notes and Actions Required Action: • Eliminate all disparate financial requirements/cost-sharing between in-network and out-of-network emergency services. • Eliminate all precertification-type requirements from emergency services, including for mental health/ substance abuse. • Ensure that any administrative requirement for out-of-network emergency services is the same as those for in-network (e.g., post-emergency services “notice” requirement for out-of-network should not be 24 hours if innetwork emergency services notice requirement is 48 hours). • For actual payment of emergency services, plan must pay the “reasonable” amount. _______________________________

Cost sharing for emergency services provided out-of-network cannot Recommended action: exceed those charged for in-network • Define emergency services in the emergency services, although participant plan to correspond to regulatory can be balance-billed if the emergency definition. Ambulance services for services exceed a reasonable amount. non-emergency purposes would Plans/insurers must pay “reasonable” not be required to be included. amount for out-of-network emergency care, which means the greatest of • Eliminate terminology such as (excluding any in-network cost sharing): “precertification” or “prior authorization” from emergency • The negotiated rate for in-network; service benefit requirements (even • The amount for emergency if functionally these are post-service services using the same method notice requirements) and replace the plan uses for determining other with post-emergency services out-of-network amounts (e.g., usual “notice” requirement. and customary; reasonable amount); or • The amount Medicare would pay.

• Explain in SPD what “reasonable amount” is based on for purposes of “balance billing”.

The Self-Insurer

April 2011

insurance Reform (pHSA §)

Rule

notes and Actions

First Plan year on/after January 1, 2014 Prohibition on preexisting condition exclusion on ALL enrollees § 2704 ALL PLANS Limitation on waiting periods §2708 ALL PLANS Guaranteed renewability of coverage (applicable to health insurance issuers) §2703 GF Applicable only to fully insured plans Fair health insurance premiums (limits factors that can be used to determine premiums) §2701 GF

Group health plans and health insurance Awaiting future guidance, but clearly all issuers offering group or individual pre-ex requirements must be eliminated. coverage may not impose a preexisting condition exclusion or discriminate based on health status. Prohibits any waiting periods that exceed 90 days for group health plans and group health insurance coverage

Awaiting future guidance.

Requires guaranteed renewability of coverage regardless of health status, utilization of health services, or any other related factor. Coverage can only be cancelled under specific, enumerated circumstances.

Awaiting future guidance.

Health insurance issuers may not charge Awaiting future guidance. discriminatory premium rates. The rate may vary only by whether such plan or coverage covers an individual or family, rating area, actuarial value, age, and tobacco use.

Applicable only to fully insured plans

PROVIDING SERVICE TO THE SELF INSURANCE INDUSTRY FOR OVER 33 YEARS IN OVER 30 STATES Audits Tax Preparation, Compliance and Minimization NAIC Annual Statements, assistance and preparation Management Consultation Expert Witness Regulatory Matters

Contact: William L. Shores, CPA 17 S. Magnolia Ave. Orlando, Florida 32801 (407) 872-0744 Ext. 214 Lshores@shorescpa.com

April 2011

The Self-Insurer

insurance Reform (pHSA §)

Rule

Guaranteed availability of coverage (applicable to health insurance issuers)

Health insurance issuers in both the individual and group markets must accept every employer and individual in the §2702 State that applies for coverage, but are permitted to limit enrollment to annual GF open and special enrollment periods for Applicable only to fully insured plans those with qualifying lifetime events. Nondiscrimination based on health status Retains the HIPAA nondiscrimination provisions for group health plans §2705 and group health insurance issuers. Specifically, plans and group health GF insurance issuers may not set eligibility rules based on factors such as health status and evidence of insurability – including acts of domestic violence or disability. Provides limits on the ability of plans and issuers to vary premiums and contributions based on health status. The Affordable Care Act adds new provisions regarding wellness programs. Prohibits discrimination by group health Prohibition on discrimination against plans and health insurance issuers providers against health care providers acting §2706 within the scope of their professional GF license and applicable State laws. Requires health insurance issuers in the Comprehensive health insurance small group and individual markets (and coverage (requirement to provide large group markets in State exchanges) essential benefits and OOP and to include coverage which incorporates deductible cost sharing provisions) defined essential benefits, provides a §2707 specified actuarial value, and requires all group health plans to comply with GF limitations on allowable cost sharing.

Participation in clinical trials §2709* GF

notes and Actions Awaiting future guidance,.

Awaiting future guidance.

note: Self-insured plans and large insured plans will not have to provide essential benefits, even if they lose grandfather plan status. Awaiting future guidance. Prohibits health insurance issuers from dropping coverage because an individual (who requires treatment for cancer or another life-threatening condition) chooses to participate in a clinical trial. Issuers also may not deny coverage for routine care that they would otherwise provide because an individual is enrolled in a clinical trial.

* Due to drafting errors, there are two sections 2709 of the PHSA after PPACA. The section referred to in the table is a new section. The other section 2709 (relating to disclosure of information) is renumbered from prior law PHSA section 2713. Grandfathered plans remain subject to the pre-PPACA requirements that are still in effect.

The Self-Insurer

April 2011

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April 2011

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inSideR INFORMATION myMatrixx Announces Michael geis as director of it infrastructure Tampa, FL—myMatrixx®, a leading provider of pharmacy management solutions in the workers’ compensation arena, announced that Michael Geis has joined the company as Director of IT Infrastructure. With more than 15 years of technology leadership in a number of different industries, Mr. Geis brings extensive experience in IT services, security, compliance and infrastructure design to the company. “A solid IT infrastructure is essential in supporting our continued growth in the marketplace,” said Stuart Kime, Chief Technology Officer of myMatrixx. “Michael can contribute a broad range of experience in IT

security and compliance that will keep us on solid footing.” “Working with a team of professionals that utilizes some of the most advanced technology in the industry is very exciting,” said Michael Geis. “It provides a solid foundation in ensuring the security and availability of critical customer data. I know my experiences will contribute in maintaining a lead visionary position in the industry.”

pHX Announces Addition of William g. Schneider - Vice president, partner development and leo J. garneau iii- Vice president of Marketing Bedminster, New Jersey -PHX,

the leading provider of healthcare cost management solutions, is pleased to announce William G. Schneider has joined the company as Vice President, Partner Development. In his role, Bill will be responsible for the development and management of strategic alliances with industry partners that share the PHX commitment to excellence, innovation and value. These partnerships will further enable PHX to provide cutting edge solutions and a full suite of service offerings to the healthcare community. Leo J. Garneau III has joined the company as Vice President of Marketing. In this newly created position, Leo will be responsible for building the communication strategy and the competencies necessary to

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800.578.9714 or www.ARMSRx.com The Self-Insurer

April 2011

expand the awareness of the PHX suite of solutions and for the support of the PHX growth platform. His work with virtually every segment of the healthcare chain has provided him with a unique understanding of the intricate needs that each healthcare stakeholder possesses, the connective tissue that binds them together, and the ability to build communication bridges that drive awareness and generate demand. Visit www.phx-online.com for more information, or contact Clara Pachomski at (888) 311-3505 or cpachomski@phx-online.com

Midwest employers Casualty Company Creates Healthcare Risk Management practice St. Louis, MO – Midwest Employers Casualty Company

(MECC) announced the launch of a Healthcare Risk Management Practice. MECC created the Healthcare Risk Management Practice in recognition of the potentially devastating consequences that injuries on the job can pose within healthcare organizations. It is estimated that an organization loses operating revenue at a rate of four to 10 times the direct costs of a work-related injury. And it costs about one and one-half times an employee’s annual salary to replace that employee. The purpose of MECC’s practice is to assist clients in reducing costs associated with workrelated accidents. Several customers piloted the program so that MECC could identify their unique needs and develop a successful program. MECC’s Healthcare Risk Management Practice designs and implements a wide variety of

best practice programs, including developing transitional duty return to work procedures, addressing sharps/ needle stick incidents or combative patients, reducing slips, trips and falls, a safe patient handling program and more. MECC’s Healthcare Risk Management Practice is available to create best practices programs for the company’s healthcare clients. “MECC is the only workers’ compensation excess insurance company that offers a client services division, and our division has over 20 people in it,” said Steve Link, executive vice president at Midwest Employers Casualty Company. “Having a Healthcare Risk Management Practice within client services is our way of showing healthcare clients that we really care about helping healthcare companies build and improve their programs, and we are invested in fostering happier employees and

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April 2011

The Self-Insurer

a safer work environment for our clients.” For more information on MECC’s Healthcare Risk Management Practice, contact Renée Lunceford at 1.877.WRK.COMP or rlunceford@ mwecc.com.

oneAmerica promotes CFo Scott davison to executive Vice president Indianapolis, IN – OneAmerica Financial Partners, Inc. announced that Chief Financial Officer Scott Davison has been promoted to the position of executive vice president. Davison joined the organization in 2000 and has served as chief financial officer since 2004. Since becoming CFO, he has taken on additional responsibilities, including oversight of R.E. Moulton’s medical stop loss business and the enterprise risk management function, as well as serving as president of OneAmerica Funds, Inc. In his new role, Davison will assess and provide strategic counsel and direction on key enterprisewide initiatives that enable OneAmerica’s continued growth. “I’m humbled by this appointment and grateful for the opportunity,” said Davison, “I look forward to continuing to work with our team as we pursue delivering long-term value to our customers.” Davison is a 25-year veteran of the insurance industry and was named “2008 CFO of the Year” by the Indianapolis Business Journal in the private companies with revenues of $250 million and above category. For more information contact Paul T. Branks, Assistant Vice President, Corporate Communications (317) 285-1437 or paul.branks@oneamerica.com

SIIA New Members REGULAR MEMBERS Voting Representative/Company name Vish Rathnasabapathy, VP, Strategy & Implementation, ACS Recovery Services, A Xerox Company, Schaumburg, IL

Mark Haegele, Director of Sales, HealthLink, St. Louis, MO

Scott Eastland, President, Aran Insurance Underwriters, Phoenix, AZ

Matt Schreiber, Vice President of Marketing, myMatrixx, Tampa, FL

Jennifer Kingsley Wilson, CEO, ARMSRx Pharmacy Benefit Consulting, Windermere, FL

Jennifer Ryon, Director of Account Management, Prime Health Services, Inc., Brentwood, TN

Sheryl J. Dobson-Wainwright, Owner, Dobson and Associates, LLC, Salt Lake City, UT

Peter C. Robinson, Principal, ReSource Intermediaries, Inc., San Francisco, CA

Stace Bondar, Managing Member, Exlman Re, LLC, Reisterstown, MD Polli B. Yount, Senior Vice President & COO, Golden Triangle Specialty Network, LLC, Brentwood, TN

Jeffrey D. Powell, Executive Vice President & COO, Sterling Self Insurance Administration, Inc., Los Angeles , CA

EXECUTICE CORPORATE MEMBERS Voting Representative/Company name Matthew Parker, Senior Account Executive, First Source Employee Management, North Olmsted , OH

The Self-Insurer

April 2011

CHAIRWOMAN’S REPORT

Freda Bacon

eorge Bernard Shaw wrote, “The single biggest problem in communication is the illusion that it has taken place.”

Almost 200 people attended the Legislative and Regulatory Conference in Washington DC, and there was an excitement in the air as we all gathered to hear congressional leaders give us their insight on a variety of topics. One question I often ask myself when signing up to attend a conference is, “Why am I going here, and what do I think I will get out of this meeting?” (Okay, I also look to see if there is a golf course at a great location) We have dozens of tools today that we can use to communicate. Networking sites, voice and video phone, instant messenger, forums, blogging and webinars. So why do we spend our time and money to attend meetings that often times crowd our already busy schedules? There is so much more that can be accomplished at a conference you simply cannot do online. Personal interaction with attendees and speakers is foremost, but also the ability to make small talk and the personal connection between you and someone else that forms the basis of all successful business relationships. There is also added energy at a conference, and I personally believe a change of scenery does your mind good. Even though we sometimes leave a conference tired, there is also an energized feeling. If I leave any conference at any time with one new idea, concept or contact, then the trip was well worth it. There is a definite connection when you are with a group of your peers and in many cases competitors that can only happen with the personal touch gained through face to face contact. As we are all becoming more and more “connected” via technology, let’s not forget the smile on the face of a friend or a business associate, or the voice on the other end of the phone. Maybe I’m a bit old fashioned, although I am trying to utilize all the technology that my brain can absorb. When it to comes to business relationships, only the warm handshake or hug when you arrive at a conference, and the same when you leave make all the hard work worthwhile. ‘Til next time (or the next conference),

Freda Bacon, Chairwoman

April 2011

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