Self-Insurer Aug 2013

August 2013

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The Impact of

SPECIALTY DRUGS on the Self-Insured Employer: The Current and Future Challenge & What You Can Do

ASSEnT Medical Cost Management

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AUGUST 2013 | Volume 58

August 2013 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

FEATURES

ARTICLES 10 ACA Gobbles Up Self-Insurance Marketplace One Bite at a Time

by Mike Ferguson

Editorial Staff

12 ART Gallery: Let’s All Play

PUBLISHING DIRECTOR James A. Kinder MANAGING EDITOR Erica Massey SENIOR EDITOR Gretchen Grote DESIGN/GRAPHICS Indexx Printing CONTRIBUTING EDITOR Mike Ferguson

4

The Impact of Specialty

Drugs on the Self-Insured Employer: The Current and Future Challenge & What You Can Do

by Kjel Johnson, PharmD, BCPS, FCCP, FAMCP

“Stump the Actuary”

14 PPACA, HIPAA and Federal Health Benefit Mandates: Private Exchanges and the Impact on Health Coverage

21 Legislative Update: The Future of TRIA Captives Dependent on Congressional Action

DIRECTOR OF OPERATIONS Justin Miller

26 RRGs Report Financially Stable Results

DIRECTOR OF ADVERTISING Shane Byars

at First Quarter 2013

by Douglas A Powell

Editorial and Advertising Office P.O. 1237, Simpsonville, SC 29681 (888) 394-5688 2013 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman

22

How TPAs Can Win

by Brian Klepper

Erica M. Massey, President

INDUSTRY LEADERSHIP 32 SIIA President’s Message

Lynne Bolduc, Esq. Secretary

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The Impact of

SPECIALTY DRUGS on the Self-Insured Employer: The Current and Future Challenge & What You Can Do

by Kjel Johnson, PharmD, BCPS, FCCP, FAMCP; Senior Vice President of Strategy and Business Development, Magellan Pharmacy Solutions

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S

pecialty drugs represent the fastest growing component of health care-related costs facing self-insured employers today.

In the wake of a decade of doubledigit growth, specialty pharmaceuticals have continued on this path and are currently trending at 20 percent.1 This perpetual growth in the segment has led to sizable spending on specialty drugs, which will likely reach 40 percent of all drug sales by the end of this year.1 Furthermore, forecasts clearly demonstrate that specialty pharmaceuticals will continue to trend towards an even greater share of drug expenditures: within the next five years, spending on these agents is expected to surpass that of conventional drugs and account for about 50 percent of pharmaceutical manufacturer sales.2 At the same time, the trend for traditional pharmaceuticals – typically oral agents offered via retail pharmacies or mail order – has become stagnant at 0 percent annual trend as so-called “blockbuster” drugs have and are continuing to lose patent protection (Figure 1).

In other words, the already significant impact of specialty drugs on employer health care budgets is increasing and poised to soon be the dominate drug spend. And while employers are generally cognizant of this fact, a disconnect is evident in that not many of them have a comprehensive understanding of specialty drugs or a grasp of what can be done to curb the specialty drug trend. A quarter of employers surveyed state that they have little

Per 50,000 Lives • • •

Annual Costs Annual Trend Potential Savings

Traditional Rx

to no understanding of specialty pharmaceuticals, and half state that they have only a moderate understanding.3

or Gaucher’s disease, with annual treatment costs of $100,000 and $600,000 respectively.

This unfamiliarity among employers is in part a result of the term “specialty drug” being so poorly defined. The characteristics of these agents are that they require special handling and administration and come at a high cost (approximately $2,500 per dose on average), a result of the fact that these large-molecule organic compounds require complex manufacturing processes and need to be injected, either by a provider- or self-administered by the employee. The development of oral chemotherapy has introduced exceptions to these “rules” but a key component of interest to employers – the price tag – remains a constant. Unlike traditional pharmaceuticals for high-volume conditions such as cardiovascular disease and diabetes, specialty drugs often target a smaller population of patients with relatively less common diseases. And yet because of these agents’ cost, the specialty drug spend can be onerous. Cancer, which is the foremost disease driver of the specialty trend and the leading condition in terms of medical and pharmacy costs among employees, accounts for only 1 percent of a typical employer’s health care claims but equates to >10 percent of health care costs.1,4,5 As such, a single employee receiving certain chemotherapies can decimate a selfinsured employer’s health care budget.

The same is true for increasingly rare conditions often treated with specialty medications, such as hemophilia

As mentioned previously, these already high costs – in combination with seemingly endless price increases in oncology, a wave of traditional pharmaceuticals losing patent protection, and a burgeoning specialty pipeline – are all contributing to the emerging dominance of the specialty drug market. In particular, the median monthly cost of cancer therapies has risen from $100 in 1965-1969 to >$5,000 in 2005-2009 (2007 US$).6 These exceedingly high costs are now the norm, as all 13 of the oncology agents receiving FDA approval in 2012 were priced in excess of about $6,000 per month.7 Self-insured employers will bear a significant portion of the estimated $104 billion in annual direct medical costs attributed to the cancer, while lower cost alternatives begin to abound in previously highcost disease states dominated by traditional pharmaceuticals.8 And with approximately 600 agents for 10 leading cancer types in research trials, it is readily apparent that cost concerns of cancer and other specialty drug care cannot be ignored.1

Specialty Rx

Medical Rx

•

~ $37M

•

~ $4M

•

~ $10M

•

0% Trend

•

20% Trend

•

16% Trend

•

~ $.2M (.7%)

•

~ $.3M (7%)

•

~ $1.5M (15)%

Figure 1. Current spend, trend, and potential savings across different drug segments.

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Actively Managing the Specialty Drug Spend Traditional pharmacy benefits managers (PBMs) often use specialty pharmacy distribution as a costcontainment tool; a specialty pharmacy is a closed-door pharmacy that is generally focused on the distribution of specialty products directly to an employee. Slightly more than half of employers require the use of a specialty pharmacy and a quarter have implemented benefit incentives to direct employees to use their preferred specialty pharmacies.9 Still, the reality is that this approach is not effective in

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curbing the specialty trend or spend. For example, when considering self-injected specialty agents covered under the pharmacy benefit, retail distribution frequently offers a more aggressive rate to the employer (i.e., more favorable AWP pricing) than specialty pharmacy distribution.

Rather, savvy employers are creating provider incentives, promoting appropriate utilization, and eliminating fraud, waste, and abuse to manage specialty across all benefits and all sites of service. That said, Table1 reviews what really works in terms of managing an employer’s specialty drug spend by addressing the closely interrelated cost-drivers at play: reimbursement, benefit design, channel management, formulary management, medical management, and health plan operations.

Drivers

Sample Initiatives

Timing

% Redn

Pharmacy

• Improve specialty pharmacy rates

18 mo

1%

Medical

• Implement a variable fee schedule

3 mo

5%

Pharmacy

• Appropriately design Pharmacy benefit

>18 mo

Variable

Medical

• Appropriately design Medical benefit

>18 mo

Variable

Channel Management

Pharmacy

• Use distribution to optimize formulary

1 mo

Variable

Medical

• Prevent costly site of service changes

3 mo

Variable

Formulary Management

Pharmacy

• Formulary optimization

1 mo

7%

Medical

• Incent lowest net cost products

3-6 mo

Reimb

Medical Management

Pharmacy

• Establish prior auth when appropriate

Variable

5%

Medical

• Implement stepped-care programs

Variable

8%

Health Plan Operations

Pharmacy

• No opportunity

n/a

n/a

Medical

• Recover errors, fraud, irrational Rxs

1 mo

4%

Reimbursement Benefit Design

Table 1: Drivers of the specialty drug trend/spend: Related management interventions with accompanying considerations on timing and potential cost savings.

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The effect of managing drug reimbursement rates is based upon what benefit a particular specialty agent is paid under. For drugs under the pharmacy benefit, little to no savings can be found by switching from one specialty distributor to the next since today’s specialty pharmacy reimbursement rates are virtually at rock bottom. An employer’s choice of specialty pharmacy should instead be based upon the quality of utilization/formulary management programs available through a particular vendor; therein lays the real specialty pharmacy savings opportunity. For drugs paid under the medical benefit, reimbursement for provider-administered drugs can be configured to promote the selection of lower cost alternatives via a variable fee schedule. In general, fair and favorable reimbursement should be in such a manner that keeps provideradministered injectables in the most economical and employee favorable site of care: the physician’s office. Today, two-thirds of provider-administered injectables paid by managed care plans are delivered in the physician’s office.1 This concept is commonly referred to as distribution “channel management”, which essentially seeks to deliver specialty pharmaceuticals in the most financially sound. Hospitals and other facilities typically carry much higher costs, more than twice that of a doctor’s office.1 The administration of specialty drugs in the physician’s office also ensures that a patient’s care is not fragmented, thereby maintaining continuity and quality of care as their physician oversees the process in its entirety. Another scenario in which channel management comes into play is the allowance of self-administered injectables to be paid under the medical benefit. This practice, which is still common among some employers,

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is not financially sound and these selfadministered agents should be moved under the pharmacy benefit.

Benefit design is actually a useful vehicle for channel management in that it is a key driver of the particular settings in which certain agents will be paid for. For example, some employers have offered benefits that keep provider-administered injectables in the physician’s office by offering these agents with no employee costsharing in this setting. Alternatively, their benefit design requires a 50 percent coinsurance if an employee receives his or her provider-administered injectable in the hospital- or facility-based sites of care. This form of benefit design initiative is also provides an effective solution to the Patient Protection and Affordable Care Act (PPACA)-driven trend of facilities buying up large physician’s practices, and then assessing the more costly facility charge.

Also in terms of cost-sharing,

recent data indicate that managed care organizations are increasingly using coinsurances instead of copays for provider-administered specialty drugs (those paid under the medical benefit).

This trend represents the payers’ desire to increase cost contribution from the member (and thus more impactfully direct behavior), with average coinsurance recently rising from 20 percent to 26 percent. However, selfinsured employers appear to be lagging in implementing such benefit changes.

Approximately half of employers used the same copays for specialty drugs as they did for traditional pharmaceuticals and only 1 in 4 employers cite having a specific specialty drug benefit.9 A separate specialty drug benefit allows for the provision of employee contribution rates and management interventions that are specifically tailored to the unique characteristics of these agents. Regardless of the particular benefit used for the coverage of specialty drugs, the general

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attitude among both payers and employers indicates a willingness to shift more financial responsibility to the member/employee. Employers should be mindful, however, of the impact of cost-sharing on therapeutic adherence.

Studies demonstrate that annual outof-pocket outlays exceeding $2,500 can have a distinctly adverse effect on this adherence.

Formulary management can be used to drive the utilization of lower-cost alternatives to specific therapies in cases where another viable therapeutic option exists. This can be accomplished through benefit design and reimbursement strategies that encourage the selection of low-cost, high-quality alternatives. Likewise, formulary management links to medical management in that certain medical management interventions can be built into the formulary so that predetermined disease- or prior treatment-specific criteria must be met before a higher-cost agent will

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be covered. In these cases, medical management comes into play, including prior authorization and step-therapy (based on prior treatments). To do this, employers must carefully select drugs for utilization management initiatives based on scenarios in which they are frequently used inappropriately or where an opportunity for a lower-cost alternative exists. By and large, the vast majority of drugs paid under a particular benefit will not have utilization management requirements. For example, approximately 900 drugs exist under the medical benefit, but only approximately 12 of them should have a prior authorization opportunity. Instead, employers should focus on areas of frequent misuse, such as human growth hormone (HgH), where denial rates currently reside in the 10 percent to 20 percent range.

Additionally, employers should work with claim managers to reducing billing errors, waste, and fraud. Billing errors alone account for 3 percent to 5 percent of the cost of provider-administered specialty products.1 Regardless of how this is accomplished, as either pre-service reviews or post service edits, such initiatives are advisable for selfinsured employers to curtail billing errors, fraud, waste, and off-standard-of-care use.

insured employers can implement such initiatives extremely quickly.

The specialty trend and spend is already significant and the pipeline robust; this will lead to an employer’s specialty spend eclipsing that of traditional agents in the next five years.

Although daunting, the most prudent approach is to immediately size the specialty spend and trend, and then actively evaluate the cost-containment solutions described herein. n References ICORE Healthcare. Medical Pharmacy & Oncology Trend Report™. Available at www.icorehealthcare.com/ media/329731/2012_trend_report.pdf.

1

Artemetrx. Specialty Drug Trend Across the Pharmacy and Medical Benefit. 2013.

2

Installing a Comprehensive Specialty Drug Management Strategy A comprehensive strategy is necessary to effectively manage an employer’s specialty drug spending. Past experience indicates that the conventional management strategies used for traditional oral pharmaceuticals are inadequate for controlling costs while maintaining quality of care in the specialty sector. And while developing such a management strategy can be a complicated endeavor, the good news is that the necessary tools and proven interventions are readily available for self-insured employers who actively seek solutions. Fortunately, self-

McGrory-Dixon A. “Employer understanding of specialty pharmacy benefits falls short.” BenefitsPro. September 29, 2011.

3

Loeppke R, Taitel M, Richling D, et al. Health and productivity as a business strategy. J Occup Environ Med. 2007;49:712-721.

4

Peyenson B. Cost of Cancer to Employers. Milliman, American Cancer Society, C-Change. 2007.

5

Bach PB. Limits on Medicare’s ability to control rising spending on cancer drugs. N Engl J Med. 2009;360:626-633.

6

Emmanuel EZ. “A plan to fix cancer care.” New York Times. March 23, 2013.

7

American Cancer Society. Cancer Facts & Figures 2012. www.cancer.org/acs/groups/content/@ epidemiologysurveilance/documents/document/ acspc-031941.pdf.

8

Boress L, MBGH, Midwest Business Group on Health.

July 31, 2012. Specialty Pharmacy Benefit Tools for Employers & Managed Care.

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But some changes will be big. Very big. PartnerRe’s $23 billion in assets gives Presidio stability that is unsurpassed by others in the Accident & Health market.

Our truly global reach allows us to provide financial peace of mind worldwide.

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Contact us to discuss your health risk needs at 1 415 354 1551 or PresidioRe.com.

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Editor’s Note: The following story was recently published on the SelfInsurance World Blog, where SIIA Chief Operating Officer Mike Ferguson offers original reporting and commentary on legislative/regulatory issues affecting companies involved in the self-insurance/ alternative risk transfer marketplace. The blog can be accessed on-line at www.self-insuranceworld.blogspot.com

ACA Gobbles Up Self-Insurance Marketplace One Bite at a Time by Mike Ferguson

T

he recent announcement that the ACA’s employer-mandate provision has been postponed has understandably gotten a lot of attention. It’s a big deal for sure, but while federal regulators punted on this high profile provision, they demonstrated no such caution with the recent release of two sets of final rules that will have the likely effect of eroding the self-insurance marketplace.

So while everyone is talking about the employer-mandate development, it’s important to interject some exclusive reporting and commentary regarding separate finalized ACA rules related to contraceptive coverage and student health plans to demonstrate how self-insurance options are being quietly restricted in certain market segments.

The rule-making process for contraceptive coverage has certainly attracted much attention over the past two years, but this blog is agnostic regarding the ongoing religious liberty debate that dominates the headlines. We have, however, been very interested in how the final rules will affect self-insured religious organizations, of which there are many.

As some may recall, when the controversy originally erupted over the prospect of religious organizations being forced to provide coverage for contraceptive coverage, Obama’s political operatives quickly hatched a plan:

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insurance companies would be required to include this coverage at no cost to the religious organizations.

Notwithstanding the fact that this accommodation failed to satisfy religious liberty objections, the White House overlooked the fact that a large percentage of religious organizations operate self-insured group health plans, so the suggested insurance company fix would not apply to these plans.

Faced with this realization, regulators have floated various proposals during the rule-making process on how self-insured religious organizations can comply with the law. Most of these proposals have been variations on the theme of forcing third party administrators to take responsibility for coordinating such coverage.

For good measure, regulators offered a closing comment in the proposed rules essentially saying that such organizations can always convert to fully-insured arrangements if self-insurance is no longer viable.You have to appreciate such bureaucratic thoughtfulness.

enter into or remain in a contractual relationship with the eligible organization to provide administrative services for the plan.”

Already acutely sensitive to potential fiduciary designations outside of the ACA context, it’s a reasonable conclusion that at least some TPAs will consider the new rules to be a tipping point, forcing them to part ways with their religious organization clients, which in turn will make it more difficult for such organizations to maintain their self-insured plans.

In separate news, CMS published the final rule clarifying exemptions to the individual mandate requirement in as provided for in the ACA. As part of this, the rule also contained the final language on which “non-insurance” programs will be considered minimum essential coverage (MEC) for purposes of satisfying the mandate.

The earlier, proposed version of the rule had included self-funded student health plans in the list of allowable MECs. Under the final version of the rule, however, self-funded student plans will only be considered MEC for plan years beginning before December 31, 2014. After that date, such plans will have to apply to CMS to maintain the exemption.

Given the explicit goal of the Administration to steer as many young and healthy individuals into the exchanges as possible, this blog is highly skeptical that such exemptions will be forthcoming. And of course, the real effect of this rule won’t be felt until after the 2014 elections.

We’ll concede the fact that student health plans and religious organizations do not represent major segments of the overall self-insurance marketplace, but they are viable segments that are being quietly gobbled up by the bureaucracy. So while everyone understandably is now talking about the employer-mandate delay, much of the real action continues to be in the details of the highly technical ACA implementation rules that cannot be easily distilled by the media nor understood by most health care reform observers. n

Based on the final rules released, it appears that the viability of selfinsured plans will be significantly compromised. At issue is that regulators are forcing TPAs to serve as plan fiduciaries solely for the purpose of arranging separate contraceptive coverage for plan participants.

Industry stakeholders have raised numerous concerns that such an approach is legally questionable and would expose TPAs to a variety of legal liability scenarios. But the regulators flatly rejected these comments, asserting that “the Department of Labor’s view that is has the legal authority to require the third party administrator to become the plan administrator under ERISA section 3(16) for the sole purpose of providing payments for contraceptive services if the third party administrator agrees to

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ART GALLERY

by Dick Goff

Let’s All Play “Stump the Actuary”

L

ast month’s ART Gallery exhibit of enterprise risk management concepts sparked some interest falling into the “how to” realm.

A few responses indicated that readers understood the need to cover unique or nontraditional risks, but still weren’t clear on how to establish coverages or their associated premiums.

We summarized the subject in that column with the comment that an actuarially sound captive insurance program would be a good way to approach unusual risks that could devastate an enterprise.

But we didn’t say anything about how the actuarial process would work.

It’s not obvious. Enterprise risks are typically those potential hazards that are both very infrequent and very severe.

Traditional insurance typically covers risks that occur more often with likely less severe damages (with the obvious exceptions, life insurance being the best example).

So, what’s the actuarial approach for enterprise risk?

Is it the often brain-numbing recourse to massive data, or something closer to the approach known as WAG (wild-ass guessing)?

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“You’d be surprised at how often we can find data that correlates with seemingly unique events,” said Brian Johnson, principal with Bartlett Actuarial Group, Ltd. of Charleston, SC, when I caught up with him for a short course in actuarial work for enterprise risk management. “Of course, that needs to be balanced with the art of applying experience to individual cases. We would call that wisdom rather than WAG.” Our conversation took the form of a game show that could be called “Stump the Actuary” as I tossed out examples of enterprise risks and Brian responded with implications to consider or approaches to follow.

Dick: I just heard of a case of a pro ballplayer who wants insurance against the loss of his contract. Is that possible for ballplayers or maybe even extending to performers or media people?

Brian: First, I don’t think you can insure against the obvious exceptions embedded in most contracts, such as the results of illegal or immoral acts. But people can lose their contracts for a variety of reasons. We have the recent example of food celebrity Paula Deen, or going back to people such as Lance Armstrong or Tiger Woods. A sponsor may want to sever ties with a celebrity over a reputation issue that may or may not be based on the narrow definition of illegality.

Contracts of this type state the remuneration so that makes it easy to project possible damages, but you would have to project the possible reasons that could occur for the contract to be cancelled, and how often that might happen.

Dick: Aren’t many contracts lost because of events that aren’t the fault of the contractor?

Brian: In the case of the ballplayer, a strike or lockout by the owners would be such an example. Or federal contractors can lose their contracts at the whim of the government. Coverage of that risk is called “continuing resolution.”

Some contracts could be cancelled as the result of a physical disaster, a union action or political events such as an “eminent domain” action. You could write captive policies that would cover those eventualities. Again, you have to rely on data that exist for a given industry and then research each specific case before you decide to insure. Often writing a policy or establishing a premium comes down to the “sniff test.”

Dick: What if a company wanted to insure the exclusions in its existing policy?

Brian: Oh, yes, those pesky exclusions that traditional insurance companies don’t want to touch. Generally, you can cover against any risks that are not

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connected to the policyholder’s illegal acts. The common exclusions such as acts of war, certain kinds of air travel or sports activities can be actuarially analyzed. Some athletes’ contracts, for example, don’t provide coverage for mishaps that occur playing basketball or skiing. You can cover the gaps in property owners’ policies through exclusions for damage from floods or earthquakes. You’ve just got to figure out for each specific case how likely those risks may occur.

and, if you have a subject to cover in depth, send a query describing your article to managing editor Gretchen Grote at ggrote@sipconline.net.

Dick Goff is managing member of The Taft Companies LLC, a captive insurance management firm and Bermuda broker at dick@taftcos.com. Brian Johnson may be reached at BrianJ@bartlettactuarialgroup.com.

There’s also the matter of relativity.

If you’re going to cover exclusions that may amount to ten or twenty percent of your risks, you probably don’t want to have to pay a premium greater than that of the base policy.

Dick: What I’m hearing from you is that actuarial analysis of enterprise risks is a logical, step-by-step progression that can be replicated over many kinds of cases.

Brian: I’m glad that came through.

Dick Thanks for playing “Stump the Actuary.” n And for the readers: you can play, too, by sending me your questions or comments

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PPACA, HIPAA and Federal Health Benefit Mandates:

Practical

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.

Q&A

Private Exchanges and the Impact on Health Coverage

B

eginning in 2014, individuals will be able to select from a variety of coverage options made available through the State (or federal) based exchanges required under the Affordable Care Act (ACA).1 Employers are also considering a variety of ways to make multiple coverage options

available to employees, in some cases utilizing the State exchanges, and in other cases making coverage available through so-called “private exchanges”. This article recaps our discussion form last fall on HRA-based individual insurance policy exchanges and expands the discussion to include issues that may arise where a defined contribution approach (with or without a health reimbursement arrangement or HRA) is used to make group coverage available through a private exchange arrangement.

What is a Health Coverage Exchange Simply stated, a health coverage exchange is a marketplace established to provide a selection of health coverage options. The “public exchange” generally refers to the individual coverage made available to individuals through the American Health Benefit Exchange or the group coverage made available to employers through the Small Business Health Options Program (SHOP).2 A

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private “exchange”, however, has no set definition, and is generically used to refer to arrangements under which employers make a variety of coverage options available to employees through a pre-selected menu.

In some cases, an employer may offer multiple insured or self-funded benefit options (e.g., high deductible, HMO, PPO, etc.) to employees and assign different subsidy levels toward the cost of coverage. Historically, this type of “private exchange” arrangement has been common among larger employers. What is new post ACA, however, is the down-streaming of multiple benefit option arrangements enabling smaller employers to make different coverage options (perhaps with different carriers) available to employees.

Use of Defined Contribution Approach to Fix Financial Exposure A defined contribution approach generally enables employers to fix their financial contribution obligation yet enables employees to use the fixed contribution to select from a variety of benefit options. The defined contribution element provides funding for the purchase of coverage through the exchange “marketplace.”

Employees can use allotted funds to select more or less comprehensive coverage to suit their individual preferences, and pay any additional amount through payroll deduction.

Not Every Defined Contribution Arrangement is an HRA The hallmark of a health reimbursement arrangement (HRA) is that it is a medical reimbursement arrangement that allows unused

amounts to carry forward into future coverage periods. Although many health plan service providers refer to their defined contribution “exchange” approach as an HRA, this is somewhat of a misnomer. Not every defined contribution approach incorporates a carryover feature for unused employer contributions. In many cases, the employer subsidy is made available solely to offset coverage in the current year with no carryover.

Private Exchanges and Health Care Reform Considerations For Individual Policies Many employers have considered making available a defined contribution approach that offers employees a choice of health (and possibly other) coverage options through individual insurance policies. Prior to 2014, great uncertainty exists because such “defined contribution” arrangements raise a number of compliance concerns under HIPAA’s nondiscrimination rules and practical coverage availability issues due to the impact of insurer individual policy underwriting practices on employees with health concerns.

Beginning in 2014, the ACA requires that individual health coverage in the private market (both in and out of the public exchange) must be made available without regard to preexisting conditions or health status.

Some employers may see this as an opportunity to consider a defined contribution model under which employer subsidies may be made available strictly for individual health coverage options offered through a public or private exchange. This approach raises several compliance issues under the ACA that do not arise where employers utilize group health

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coverage (even through a defined contribution approach). Issues that may arise due to the utilization of individual policy coverage include: i. The agencies’ strong distaste for approaches where tax free employer contributions are used for individual medical coverage.

This was recently demonstrated by agency FAQ guidance that concluded that an employer HRA arrangement could not be “integrated” with individual policy coverage to satisfy the ACA’s prohibition on annual or lifetime benefit caps – even though an HRA could be integrated with group coverage under certain circumstances.3 ii. If the employer is an applicable large employer (i.e., 50 or more FTE employees), will the employer’s subsidy for individual coverage count as minimum essential coverage and be considered to satisfy the employer’s (newly delayed until 2015) availability and affordability requirements under the “play or pay” requirement?4 Based on recent regulations under IRC 5000A, it seems that the agencies have concluded that individual coverage would not be considered eligible employer sponsored coverage that counts for pay or play purposes. iii. Can employees pay for any excess cost of individual coverage with pre-tax salary reduction through a cafeteria plan? If the coverage is individual coverage offered through the government exchange, the answer would be no.5 Outside of public exchanges the answer is at best unclear.

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iv. Will coverage under an HRA be considered to be group health plan

HIPAA underwriting prohibition to individual insurance coverage as well. There are some unresolved issues, however.

For example, the ACA allows limited underwriting with regard to an individual based on age or smoker status under PHSA 2701. It is unclear whether such provisions would be considered impermissible health based underwriting in a group plan setting. More guidance on this issue would be helpful.

coverage that will cause the employee to be considered ineligible for federal subsidies through the federal exchange?6 If the arrangement is an HRA that qualifies as an employer sponsored group health plan, the answer would most likely be yes. v. Will the employer’s defined contribution arrangement be considered a separate group health plan for purposes of all of the ACA mandates, including preventive care requirements, the comparative effectiveness research (CER) fee, and the reinsurance fee? vi. A majority of states have adopted the NAIC Small Employer and Individual Health Insurance Availability Model Act. That Act provides that the state “small group rules,” which generally impose premium rating and minimum coverage requirements will apply when individual policies are sold to the employees of a small employer through a tax-advantaged funding arrangement (e.g., an HRA, cafeteria plan or employer paid arrangement). Unless/until such laws are changed, carriers (and agents) should be wary of marketing coverage through tax-advantaged arrangements for employers subject to the small group rules (generally 50 or, at times 100 or more employees). vii. HIPAA generally proscribes health based underwriting and premium differentials based on health status with respect to any group health plan.

Prior to 2014, there is a likelihood, based on existing agency guidance, that an employer funded individual policy arrangement (including pre-tax salary reduction funding) would be considered to be a group health plan for HIPAA compliance purposes. Beginning in 2014, the ACA extends the

Private Exchanges and Health Care Reform Considerations For Group Policies Several entities offer exchangebased arrangements whereby coverage is offered through group health arrangements. Employer seeking to implement their “exchange” arrangement through such private

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group exchanges should evaluate several issues that may affect the viability of such arrangements including: i. Cost Differentials Associated With Group Coverage: Depending on an employer’s current census information, the cost of insured group health coverage may be more or less than the cost of coverage made available through an insured group exchange arrangement.

In making cost comparisons, however, self-funded employers should keep in mind several potential cost factors that may not apply in the current fully insured environment. These include the additional costs associated with mandated benefits (including essential health benefit mandates), state-based insurance premium taxes, and the new federal “insurance sector”

tax imposed under the ACA.

employer plan sponsor.

ii. Potential Limitations and Geographic Differences In Plan Design: Employers will, for the most part, be subject to the insured plan designs presented to them by their exchange vendors, This may result in coverage differences between states or regions based on disparate state mandates. iii. Potential Impact of State Law on Eligibility: State mandates that require that dependent coverage be extended to certain individuals may cause disparate plan administration.

In some cases (e.g., dependent child coverage beyond age 26, extension of coverage to domestic or civil union partner) these requirements may result in imputed income and other plan administration headaches for the

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iv. State Licensing and Administration Requirements: Third party administrators and exchange service providers should evaluate the myriad of regulatory requirements that may apply to them. In many cases, state TPA statutes may impose certain registration and disclosure requirements on entities that handle insurance premium funds and/or otherwise provide exchange conduit services.

Approach Exchanges (Group or Individual) with Caution As 2014 looms nearer, the marketplace for employer subsidized health coverage will undergo dramatic changes. In some cases (e.g., retiree only plans) a private exchange utilizing

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individual coverage through a defined contribution approach will raise few compliance issues. In other cases, the use of individual policy coverage for active employee may raise a host of compliance concerns. As noted above, self-funded employers considering group health exchange arrangements will need to assess potential compliance and cost concerns associated with fully insured coverage and the loss of ERISA preemption. Rather than blindly jumping into any private exchange arrangements, employer must work carefully with counsel to evaluate the potential risks associated with any post ACA arrangement. n Attorneys John R. Hickman, Ashley Gillihan, Johann Lee, and Carolyn Smith 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 email to Mr. Hickman at john.hickman@alston.com.

Would you climb a mountain without a guide?

Healthcare is complicated. As a risk management expert, Berkley Accident and Health, LLC can guide you in the right direction.

Our creative, nimble approach to risk, backed by the strength of a Fortune 500 company, gives us a unique perspective. Count on Berkley to show you the way.

References Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1311(b)(1) (2010) (PPACA). If a State fails to make an exchange available a federally run exchange may be implemented. PPACA § 1321.

1

2 Affordable Insurance Exchanges: Choices, Competition and Clout for States, Mar. 2012, available at www.healthcare. gov/news/factsheets/2011/07/exchanges07112011a.html .

See Agency FAQs About Affordable Care Act Implementation Part XI, Q/as 2-4 at www.dol.gov/ebsa/ faqs/faq-aca11.html 3

Code Section 4980H

4

Stop Loss | Group Captives | Managed Care | Specialty Accident Berkley Accident and Health, LLC is the U.S.-based accident and health operating entity of the W.R. Berkley Corporation Member Companies. Coverages are underwritten by StarNet Insurance Company and/or Berkley Life and Health Insurance Company, both member companies of W.R. Berkley Corporation, and both A+ rated by A.M. Best. © 2012 Berkley Accident and Health, LLC BAH AD-20120100

www.BerkleyAH.com

Code Section 125(f)(3)

5

Code Section 36B and Treas. Reg. § 1.36B-2(c)(3)(iii)(A).

6

© Self-Insurers’ Publishing Corp. All rights reserved.

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Legislative UPDATE The Future of TRIA Captives Dependent on Congressional Action

W

ith a deadline for action now on the horizon, the Self-Insurance Institute of America, Inc. (SIIA) has ramped up its lobbying efforts to push for passage of federal legislation to reauthorize the Terrorism Risk Insurance Act (TRIA). H.R. 508 would extend the federal/private sector partnership by five years to ensure the continued accessibility of affordable terrorism coverage. The bill is currently pending in the House Financial Services Committee.

The relevance of this legislation to the self-insurance/ alternative risk transfer marketplace is that many corporations with significant real property holdings utilize captive insurance companies for terrorism-related risks. If the law is not extended by Congress, these “TRIA captives” will no longer be viable alternative risk transfer vehicles.

First passed in 2002 and extended in 2005 and 2007, TRIA was enacted to address the disruption in the terrorism insurance market, caused by the attacks of September 11. Immediately following the attacks, everything from construction projects to real estate transactions were put off throughout the year and into 2002, caused by the

unavailability of affordable terrorism coverage. The current program, set to expire at the end of 2014, contains several provisions including: • A federal backstop for aggregate industry losses exceeding $100 million per year due to acts of terrorism; • 85% of insured losses would be paid by the government after an insurer meets a deductible of 20% of annual premiums; • For losses up to $27.5 billion, the Department of the Treasury will collect 133% of payouts through surcharges on property/casualty policies. In excess of $27.5 billion, the Secretary shall have discretion.

Over the past few weeks, SIIA lobbyists have met with about a dozen key members of Congress on the House Financial Services Committee to discuss the legislation and educate them about TRIA captives. This has been particularly important in order to dispel the perception that this legislation only benefits the commercial insurance industry.

While many lawmakers are unwilling to consider the impact of TRIA’s expiration, a significant number of members from both parties have told SIIA that they are willing to extend the program to ensure terrorism coverage does not become too costly or unavailable. Insiders confirmed that industry stakeholders will need to pressure committee and party leadership to understand the costs of the program expiring.

This will likely be a developing story for the next year, so watch for additional exclusive reporting from SIIA. For more information about TRIA, including a copy of the bill, or to learn how you can become involved in this lobbying effort, contact SIIA Government Relations Coordinator Kevin McKenney at 202-463-8161 or via email at kmckenney@siia.org. n

As a result of these meetings, SIIA has learned that many in congress are reluctant to support the reauthorization, primarily due to increased skepticism of the federal government and its role in the private insurance marketplace. This reluctance has been exacerbated by recent revelations about the government’s ability to efficiently manage various types of programs.

© Self-Insurers’ Publishing Corp. All rights reserved.

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How Can

TPAs

Win

by Brian Klepper

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© Self-Insurers’ Publishing Corp. All rights reserved.

O

ne of health care’s deeper mysteries is why third party administration firms remain minor health plan players and, to a large degree, have been all but uncompetitive with the major health plans. Yes, the big plans have paid brokers more handsomely and have offered broader services, simplifying purchasing. But they have also offered mediocre-to-poor products at increasingly exorbitant cost. Why have TPAs as a group not distinguished themselves with better performance?

This is the root of the health care cost crisis that is sucking business’ and individuals’ economic vitality from our nation. US businesses competing in international markets must overcome a 9+ percent health care cost disadvantage just to be on a level playing field. A 2010 RAND analysis found that four-fifths of the last decade’s growth in household income has been absorbed by health care, crowding out other essential expenditures for education, energy, transportation and retail.

We’re all aware of the mechanisms involved. Health systems develop outreach centers, with instructions to clinicians to refer in early and often for key procedures – e.g., advanced imaging, ambulatory surgeries - with outrageous unit pricing. Health plans buy stakes in PBMs, then jack up the generic drug pricing by 200 percent and use the margin as a revenue stream, all the while telling clients that they’re managing their cost. In the name of “choice,” we offer yellow pages networks, never acknowledging that the right to go to a lousy doctor or hospital

Most TPAs emerged as employer advocates, promising to protect their clients from the financially conflicted practices embraced by the major plans. But over time, many have become, as the term implies, administrators rather than managers, processing transactions without much focus on changing the ways that care and cost are delivered. Certainly in recent years, the majority have not attacked the egregious excesses that have made American health care so costly. Or to say it more simply, even though it has been in their clients’ interests, most have not done the hard work required to make health care cost less with better health outcomes, and so gain a quality and price advantage over their competitors.

After all, there’s a good living to be had just putting together the coverage machinery processing claims.

American health care’s overarching truth is its institutionalized excess and exploitation. Virtually all its players have become comfortable extracting significant funds from patients and purchasers that they are not legitimately entitled to. So we pay double (or more) what every other industrialized nation does for health care.

© Self-Insurers’ Publishing Corp. All rights reserved.

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does no one any favors. We pay primary care poorly, which reduces office visit times and increases specialty referrals, diagnostics and procedures.

The good news is that, as health care reaches a breaking point, conditions become more favorable for a health care marketplace. There is an opportunity to exploit market vacuums, to play the players off against one another, to steer to the high performers and away from the poor ones, and to deliver measurably better quality care at lower cost. Doing these things well can result in far better performance and market share.

The game is afoot. Some TPAs now are aggressive managers, and many more niche health care organizations are showing up that have developed innovative solutions for analytics, empowered primary care, advanced imaging, dialysis, ambulatory surgeries, specialty drugs, management of high cost cases, data-driven narrow high performance networks, and on and on. An increasingly capable medical management sub-sector is emerging, focused on taking advantage of health care’s excesses.

The Affordable Care Act’s onerous provisions for employers will drive significant new self-funding business opportunities for TPAs, not only as market agents for employer purchasers but also as advocates for policies that can be a counterweight

TPAs can win by re-embracing the promise to safeguard their clients from excessive care and cost, by driving appropriateness. If they follow their natural incentives, they will strongly outperform the major health plans, and the market will change.

The question is whether TPAs will squander this moment or demonstrate a cost and quality difference that can translate to market share and an strengthened voice in the national health care discussion. The opportunity is certainly here. n Brian Klepper PhD is Principal and Chief Development Officer of WeCare TLC, a worksite clinic and medical management firm based in Orlando.

to the health care industry’s influence. It is as favorable a position as any industry sector could want.

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RRGs Report Financially Stable Results at First Quarter 2013

by Douglas A Powell, Senior Financial Analyst, Demotech. Inc.

This article originally appeared in “Analysis of Risk Retention Groups – First Quarter 2013”

I

n reviewing the reported financial results of risk retention groups (RRGs), one gets the impression that this is a group of insurers with a great deal of financial stability. Based on first quarter 2013 reported financial information, RRGs continue to effectively provide specialized coverage to their insureds. Over the past five years, RRGs have remained committed to maintaining adequate capital to handle losses. It is important to note that ownership of an RRG is restricted to the policyholders of the RRG. This unique ownership structure required of RRGs may be a driving force in the strengthened capital position exhibited by RRGs. Since RRGs are restricted to liability coverage, they tend to insure medical providers, product manufacturers, law enforcement officials and contractors, as well as other professional industries. While RRGs have reported direct premium written in nine lines of business so far in 2013, more than 60 percent of this premium was in the medical professional liability lines.

Balance Sheet Analysis Comparing the last five years of results, cash and invested assets, total net admitted assets and policyholders’ surplus have all continued to increase at a faster rate than total liabilities (figure 1). The level of policyholders’ surplus becomes

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increasingly important in times of difficult economic conditions, as properly capitalized insurers can remain solvent while facing uncertain economic conditions.

Since first quarter 2009, cash and invested assets increased 44.4 percent and total net admitted assets increased 33.4 percent. More importantly, over a five year period from first quarter 2009 through first quarter 2013, RRGs collectively increased policyholders’ surplus 81.7 percent. This increase represents the addition of more than $1.5 billion to policyholders’ surplus. During this same time period, liabilities increased only 14 percent, approximately $597 million. These reported results indicate that RRGs collectively are adequately capitalized

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Figure 1 – RRG Balance Sheet Metrics at First Quarter 2013 (In Billions)

and able to remain solvent if faced with adverse economic conditions or increased losses.

Liquidity, as measured by liabilities to cash and invested assets, for first quarter 2013 was approximately 72.4 percent. A value less than 100 percent is considered favorable as it indicates that there was more than $1 of net liquid assets for each $1 of total liabilities. This also indicates an improvement for RRGs collectively as liquidity was reported at 75.9 percent at first quarter 2012. Moreover, this ratio has improved steadily each of the last five years.

Loss and loss adjustment expense (LAE) reserves represent the total reserves for unpaid losses and unpaid LAE. This includes reserves for any incurred but not reported losses as well as supplemental reserves established by the company. The cash and invested assets to loss and LAE reserves ratio measures liquidity in terms of the carried reserves. The cash and invested assets to loss and LAE reserves ratio for first quarter 2013 was 237.7 percent and indicates an improvement over first quarter 2012, as this ratio was 220.5 percent. These results indicate that RRGs remain conservative in terms of liquidity.

In evaluating individual RRGs, Demotech, Inc. prefers companies

to report leverage of less than 300 percent. Leverage for all RRGs, as measured by total liabilities to policyholders’ surplus, for first quarter 2013 was 136.4 percent. This indicates an improvement for RRGs collectively as leverage was reported at 148.7 percent at first quarter 2012.

The loss and LAE reserves to policyholders’ surplus ratio for first quarter 2013 was 79.3 percent and indicates an improvement over first quarter 2012, as this ratio was 88.8 percent. The higher the ratio of loss reserves to surplus, the more an insurer’s stability is dependent on having and maintaining reserve adequacy.

In regards to RRGs collectively, the ratios pertaining to the balance sheet appear to be appropriate.

Premium Written Analysis RRGs collectively reported $1.3 of billion direct premium written (DPW) through first quarter 2013, an increase of 4.9 percent over first quarter 2012.

RRGs reported $541 million of net premium written (NPW) through first quarter 2013, an increase of 16.6 percent over first quarter 2012. These results are reasonable.

The DPW to policyholders’ surplus ratio for RRGs collectively through first quarter 2013 was 150.5 percent and

© Self-Insurers’ Publishing Corp. All rights reserved.

indicates an improvement over first quarter 2012, as this ratio was 156.4 percent. The NPW to policyholders’ surplus ratio for RRGs through first quarter 2013 was 60.6 percent and indicates a diminishment over 2011, as this ratio was 56.7 percent. Please note that both of these amounts have been adjusted to reflect projected annual DPW and NPW based on first quarter 2013 results.

An insurer’s DPW to surplus ratio is indicative of its policyholders’ surplus leverage on a direct basis, without consideration for the effect of reinsurance. An insurer’s NPW to surplus ratio is indicative of its policyholders’ surplus leverage on a net basis. An insurer relying heavily on reinsurance will have a large disparity in these two ratios.

A DPW to surplus ratio in excess of 600 percent would subject an individual RRG to greater scrutiny during the financial review process.

Likewise, a NPW to surplus ratio greater than 300 percent would subject an individual RRG to greater scrutiny.

In certain cases, premium to surplus ratios in excess of those listed would be deemed appropriate if the RRG had demonstrated that a contributing factor to the higher ratio was relative improvement in rate adequacy.

In regards to RRGs collectively, the ratios pertaining to premium written appear to be conservative.

Income Statement Analysis The profitability of RRG operations remains positive (figure 2). RRGs reported an aggregate underwriting gain through first quarter 2013 of $3.6 million, an increase of $14.2 million over first quarter 2012, and a net investment gain of nearly $57.1 million, a decrease of $4.3 million over first quarter 2012. RRGs collectively reported net income of over $56.4 million, an increase of $8.3 million over first quarter 2012.

The loss ratio for RRGs collectively, as

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Figure 2 – RRG Income Through First Quarter (In Millions)

measured by losses and loss adjustment expenses incurred to net premiums earned, through first quarter 2013 was approximately 68.8 percent and is the same result as first quarter 2012.This ratio is a measure of an insurer’s underlying profitability on its book of business.

The expense ratio, as measured by other underwriting expenses incurred to net premiums written, through first quarter 2013 was 18.6 percent and indicates a slight improvement over first quarter 2012, as the expense ratio was reported at 19.7 percent.This ratio measurers an insurer’s operational efficiency in underwriting its book of business.

The combined ratio, loss ratio plus expense ratio, through first quarter 2013 was 87.4 percent and is comparable to first quarter 2012, as the combined ratio was reported at 88.5 percent. This ratio measures an insurer’s overall underwriting profitability. A combined ratio of less than 100 percent indicates an underwriting profit.

Regarding RRGs collectively, the ratios pertaining to income statement analysis appear to be appropriate.

Moreover, these ratios have remained fairly stable each of the last five years and well within a profitable range (figure 3).

Figure 3 – RRG Ratios Through First Quarter

Analysis by Primary Lines of Business The financial ratios calculated based on first quarter results of the various primary lines of business appear to be reasonable (figure 4). Also, the RRGs have continued

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to report changes in DPW within a reasonable threshold (figure 5). It is typical for insurers’ financial ratios to fluctuate year over year. Moreover, none of the reported results are indicative of a continuing negative trend.

Figure 4 – Key Ratios and Metrics – 3/31/13

Jurisdictional Analysis

Figure 5 – Direct Premium Written by Lines of Business (000’s omitted)

Much like insurers, it is typical for jurisdictions to compete for new business. Some of the factors that may impact an insurer’s decision to do business in a certain jurisdiction include minimum policyholders’ surplus requirements and the premium tax rate.

RRGs have continued to report changes in DPW, on a jurisdictional basis, within a reasonable threshold (figure 6).

Figure 6 – Direct Premium Written by State (000’s omitted)

Conclusions Based on First Quarter 2013 Results Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialized coverage to their insureds.

The financial ratios calculated based on the first quarter results of RRGs appear to be reasonable, keeping in mind that it is typical for insurers’ financial ratios to fluctuate over time.

The first quarter results of RRGs indicate that these specialty insurers continue to exhibit financial stability. It is important to note again that while RRGs have reported net underwriting gains and net profits, they have also continued to maintain adequate loss reserves while increasing premium written year over year. RRGs continue to exhibit a great deal of financial stability. n Mr. Powell has nearly ten years of progressively responsible experience involving financial analysis and business consulting. email your questions or comments to Mr. Powell at dpowell@ demotech.com. For more information about Demotech, Inc. visit

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Mind over risk.

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HCC Life has stood on a strong foundation of solid business practices and a firm commitment to our medical stop loss clients for 35 years. We’ve used that groundwork to drive us as a leader in the industry to understand trends that shape the market and properly assess risk to intelligently manage data. This gives our

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msl2188 - 06/13

Š Self-Insurers’ Publishing Corp. All rights reserved.

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SIIA PRESIDENT’S MESSAGE Les Boughner

The most significant event of the year for the self-funded marketplace

S

IIA’s National Conference & Expo, is fast approaching.

This year’s conference is scheduled for October 2123 at the Sheraton Hotel & Towers in Chicago, IL. This is your best opportunity to attend an event featuring cutting edge educational sessions, networking events with all the key people in our industry, and an exhibit hall with more than 150 companies showcasing a wide variety of innovative products and services designed specifically for self-insured entities.

It is the world’s largest event that is exclusively focused on the selfinsurance/alternative risk transfer marketplace, typically attracting more than 1,700 attendees from throughout the United States and from an increasing number of countries around the world.

The educational program features multiple tracks including sessions designed to help selfinsured employers and their business partners get better prepared for full health care reform implementation in 2014, stop-loss captive programs (also known as employee benefit group captives), 831(b) captives, a Workers’ Comp educational track with a collection of sessions geared for both individual employers and group self-insured workers’ compensation funds (SIGs), and an international track, with sessions focused on key self-insured issues, including ACA

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compliance requirements, for companies with global operations and/or workforces.

SIIA’s National Conference is the premier event for industry experts and even though there are many advanced-level educational sessions, SIIA warmly welcomes those who are new to self-insurance/alternative risk transfer and want to learn the basics. This year’s program will kick-off with “beginner” sessions immediately before Monday night’s welcome reception. Additionally, for employers (non-industry service providers) that are considering self-insurance, I encourage you take advantage of a highly discounted registration fee.

SIIA will once again close the conference with their infamous conference party an incredible social event at the famous House of Blues with a live performance

by Better Than Ezra. Admission to this event is included with your conference registration, so be sure that you make your travel arrangement accordingly!

If you’re looking to increase your company and product awareness, develop sales leads and new customers, and make immediate sales, there are many exposure opportunities available to you, including sponsorship packages designed to fit any budget and exhibiting opportunities. Sponsorship is a cost-effective and targeted tool that can help your company accomplish its marketing and sales goals and position you as an industry leader to attendees. Information on exhibiting and/ or sponsorship opportunities can be accessed online at www.siia.org or by calling (800) 851-7789.

I encourage you to take advantage of the many invaluable opportunities for your business, and register for SIIA’s National Conference and Expo today. More information, including online registration, can be found at www.siia.org. n I look forward to seeing you in Chicago!

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© Self-Insurers’ Publishing Corp. All rights reserved.

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SIIA would like to recognize our leadership and welcome new members Full SIIA Committee listings can be found at www.siia.org

2013 Board of Directors

Committee Chairs

CHAIRMAN OF THE BOARD* John T. Jones, Partner Moulton Bellingham PC Billings, MT

CHAIRMAN, ALTERNATIVE RISK TRANSFER COMMITTEE Andrew Cavenagh President Pareto Captive Services, LLC Conshohocken, PA

PRESIDENT* Les Boughner Executive VP & Managing Director Willis North American Captive + Consulting Practice Burlington, VT VICE PRESIDENT OPERATIONS* Donald K. Drelich, Chairman & CEO D.W. Van Dyke & Co. Wilton, CT VICE PRESIDENT FINANCE/CHIEF FINANCIAL OFFICER/CORPORATE SECRETARY* Steven J. Link Executive Vice President Midwest Employers Casualty Company Chesterfield, MO

Directors Ernie A. Clevenger, President CareHere, LLC Brentwood, TN Ronald K. Dewsnup President & General Manager Allegiance Benefit Plan Management, Inc. Missoula, MT Elizabeth D. Mariner Executive Vice President Re-Solutions, LLC Wellington, FL Jay Ritchie Senior Vice President HCC Life Insurance Company Kennesaw, GA

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August 2013 | The | Self-Insurer The Self-Insurer

CHAIRMAN, GOVERNMENT RELATIONS COMMITTEE Horace Garfield Vice President Transamerica Employee Benefits Louisville, KY CHAIRWOMAN, HEALTH CARE COMMITTEE Elizabeth Midtlien Senior Vice President, Sales StarLine USA, LLC Minneapolis, MN CHAIRMAN, INTERNATIONAL COMMITTEE Greg Arms New York, NY CHAIRMAN, WORKERS’ COMPENSATION COMMITTEE Duke Niedringhaus Vice President J.W. Terrill, Inc. St Louis, MO

SIIA New Members Regular Members Company Name/ Voting Representative Mark Doepke, President, Actuarial Advisors, Inc., Minneapolis, MN Russell Burks, Managing Director, Ansley Capital Group, Naperville, IL Bill Mulcahy, CEO, E4 Health Inc., Irving, TX Gregory Everett, President, Payer Compass, LLC, Plano, TX William Myers, CEO, Prospective Risk Management Corp., Jacksonville, FL Joel Duhl, President, Resolve Health Plan Administrators, Ormond Beach, FL Aaron Pohlmann, Attorney, Smith Moore Leatherwood LLP, Atlanta, GA

Contributing Members John Iusi, Upstate Operations Leader, EmblemHealth, New York, NY

Employer Members Larry Keeports, Director-Alliance Benefits, The Christian and Missionary Alliance, Colorado Springs, CO

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