Self insurer oct 2016

October 2016

www.sipconline.net

The World’s Leading Alternative Risk Transfer Journal Since 1984

36th Annual National

20

Educat ional conference & expo Austin,TX

16

strength in

AN INTEGRATED APPROACH TO SELF-INSURED SOLUTIONS

balance Experts in coverage solutions for single entities, groups and public entities, our integrated approach gives self-insureds greater stability and control over their self-funded plan. Unparalleled underwriting expertise, innovative risk management and in-house claims management, work in sync and in perfect balance for best possible outcomes.

800.800.4007 | publicentity@midman.com | midlandsmgt.com WORKERS’ COMPENSATION | PUBLIC ENTITY | CATASTROPHIC CLAIMS MANAGEMENT | THIRD PARTY ADMINISTRATION | EXCESS WORKERS’ COMPENSATION | AUDITS | COMMUTATION | UTILIZATION & REVIEW

www.sipconline.net

The World’s Leading Alternative Risk Transfer Journal Since 1984

Self-Insurer’s Publishing Corp.

October

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

Editorial Staff PUBLISHING DIRECTOR Erica Massey SENIOR EDITOR Gretchen Grote CONTRIBUTING EDITOR Mike Ferguson

4 Think

2016

Volume 96

OUTSIDE

21

Adam V. Russo

28 Risk Retention Group Legislation

Marks 30th Anniversary

34 ACA, HIPAA and Federal

Health Benefit Mandates

The Affordable Care Act (ACA), the

Health Insurance Portability and

Accountability Act of 1996 (HIPAA)

and other federal health benefit mandates

of the Wrap

DIRECTOR OF OPERATIONS Justin Miller DIRECTOR OF ADVERTISING Shane Byars EDITORIAL ADVISORS Bruce Shutan Karrie Hyatt

Rx Adherence: Where Rubber Meets Road Integrated claims management strategy seen as way to rein in runaway drug costs

Editorial and Advertising Office P.O. 1237, Simpsonville, SC 29681 (888) 394-5688

2016 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary

SIIA Endeavors

40

On the Record with SIIA President & CEO Mike Ferguson 49

Controlling Health Benefit Costs with Fully-Insured Organ Transplant Solutions

55

News from SIIA Members

October 2016 | The Self-Insurer

3

Think

OUTSIDE of the Wrap

N

Written by Adam V. Russo 4

The Self-Insurer | www.sipconline.net

etworks are getting bashed every day in our industry.

Some of it is justified, but some of it‌not so much. I feel as if this is a recent phenomenon, but has it been going on for years?

I am sure that whoever invented health plan networks saw it as a brilliant idea at the time, and so did their customers. I mean it looks great on paper. Have a selection of doctors, surgeons, facilities and hospitals all available to a select group of people at a discounted rate from their normal fees. The problem is that when you continue to make that network larger, steerage to any particular provider suffers and it loses value to the provider.

Additionally, as prices being charged by providers fluctuate and you cannot audit or justify what the charges are in the first place, discounts lose their meaning and the “shine� of the network begins to lose its luster.

OUTSIDE THE WRAP | FEATURE

I am sure that the recent wave of interest in reference based pricing and alternative pricing options has had a lot to do with the negative viewpoint targeting provider networks as well. Administrators, brokers, and employers seek an alternative to the current health care mess we are in.

Brokers are being hammered by their clients, and are bogged down by double digit premium increases. The carriers and their networks are an easy (and big) target to blame.

The Three Stages of SelfFunding Before we further dissect the current attitudes towards networks, we need to look at how benefit plans are being structured in general. Networks and fully funded insurance carriers often go hand-in-hand, so any movement away from traditional fully-funded insurance will naturally impact network usage. Of the key discussion points missing from the analysis of networks, therefore, is the growth of selffunding. The fact is that employers, their brokers, and consultants are feeling more empowered to get creative with their plan structure.

reduce the overall cost of the plan. Most of these people don’t even know what a TPA is. For them, this is the first day of school.

For employees in these GED level selffunded plans, there is no difference between the fully insured plans and the self-funded ones. In fact, they probably aren’t even aware that their plan is selffunded. They still have the same insurance carrier logo on their identification card, only now it’s solely referencing the network.

They still have access to their same primary care doctor. The summary plan description (plan document or SPD) is pretty much the same as their old insurance policy, and any difference between them would never be noticed ... since the employee doesn’t look at the SPD unless their claims are

denied in the first place, and their financial responsibility is similar or the same. It’s business as usual for these plans and their employees!

A vast majority of self-insured plans fall under this scenario and they have no issues with provider networks, wrap networks, or specialty networks. If anything, it’s a big reason why they chose the GED level of self-funding in the first place. They liked the fully insured carriers’ network, (they just did not appreciate the premium increases), so (they were told by their brokers that) they can have the same access and coverage with the possibility of lower claims costs if they “self-fund.” They have no idea about RBP, direct contracting or incentivizing employees to lower costs... as they just

Self-funding is the focal point of this creative movement. As I like to say, in my opinion there are three levels of self-funding. The first stage is what I call the self-funding GED (the high school level equivalent).

These are employers and brokers that have never self-funded before.

They don’t know much about it other than that many employers and brokers are looking to selffund as the new and cool way to

October 2016 | The Self-Insurer

5

OUTSIDE THE WRAP | FEATURE

moved into this space. They do not know the true health care environment or the true savings opportunities available outside of the discount game.

The University of Self-Funding Employee Benefits Graduation time! Ok, now we are getting somewhere. These are the plans that fit most of the readers of this article. These plans have been self-funded for at least a year with some national carrier. While they like much of what the self-funded piece brings to the table, they are starting to get annoyed with some pieces of their new relationships; but the network truly isn’t one of them. What they are asking for is freedom in their plan design and the ability to start being a bit creative.

They are asking the basic questions as to why every plan for the national carrier is treated the same. Why does the SPD for my yoga studio plan look exactly the same as the SPD for the truckers’ union? The truth is there is no good answer to that question; all we’ve heard is “administrative ease of use.” Every self-funded employer is unique and has different needs. This is the beauty of the TPA industry and what makes TPAs so successful – the ability to customize for a client. The first thing that must be customized is the plan document. This is something that is just not seen in the ASO world and alone takes selffunding to a new college level. However, it does not take long for employers and their

brokers in this TPA universe to realize that so much more can be done, particularly as it relates to the primary and wrap networks that so many TPAs work with.

The Graduate Level SelfFunded Employers When the employer starts to realize that the discounts from billed charges truly don’t mean anything, this is when – I like to say – they have seen the light. They have put in the hours, they read the books, they took the courses, they studied all night, and now they are ready to take their bar exam, get their masters’ degree, and maybe even a PhD! Wow.

A Long Tradition of Insurance Solutions for Companies that Self-Fund Their Medical Plan Helping to better manage the risks associated with catastrophic claims

Manage the risks of self-funding.

AIG’s Group Benefits business has decades of experience in helping companies manage the risks of self-funding through stop loss, specified disease organ transplant, group captive, and Taft-Hartley solutions.

Learn about all the ways AIG’s Group Benefits business is here for you. Talk to one of our representatives or visit us online at aig.com/us/benefits.

The underwriting risks, financial and contractual obligations, and support functions associated with products issued by National Union Fire Insurance Company of Pittsburgh, Pa., are its responsibility. National Union Fire Insurance Company of Pittsburgh, Pa., maintains its principal place of business in New York, NY, and is authorized to conduct insurance business in all states and the District of Columbia.

NAIC No. 19445. Coverages may not be available in all states. © 2016. All rights reserved.

AIGB100939 R03/16

6

The Self-Insurer | www.sipconline.net

ABS-28000-16

OUTSIDE THE WRAP | FEATURE

At the end of the day, there is an overall flaw in the system relating to arbitrary and inflated billed charges that have no justification whatsoever. From the typical layperson’s perspective the discounts are impressive. However, after 20 years in the industry I have to wonder who the networks consider their actual clients to be – the facilities, the employers, or both?

If both, is that a conflict? Who are they fighting for? I understand their struggle as they need providers in the networks to be happy and they need brokers and employers as clients as well. However, their current processes and contracts leave a lot

to be desired, as ultimately there is no cap on what providers can charge – nullifying the value of the discounts.

From the plan’s perspective, I can see why they feel the need for a network.

Their employees like to see the logo on their ID card as it makes them feel safe and secure; generally speaking as well as specifically relating to balance billing. Heck; our own self-funded plan at The Phia Group has access to a national well-known network too, and the access, discounts, and “safety” are well worth it 99% of the time. For many, however, that 1% when

the network is more trouble than benefit, they decide it isn’t worth network usage at all. These employers go in the complete opposite direction – from full PPO user to no network at all. But unlike most employers we realize that there is a lot of space between the full RBP programs out there and the very strict network plans in existence. As I love to say, there is a lot of room in the middle to do plenty of innovative things. For the purposes of this article, the two I want to focus on are wrap network alternatives and incentivizing smart employee behavior.

October 2016 | The Self-Insurer

7

This isn’t our first

rodeo

WE’VE DONE THIS BEFORE.

Being in the medical self-insurance stop loss

market isn’t new to Houston International Insurance Group (HIIG). The experts and seasoned employees that founded the Company have decades of experience in this industry. In fact, HIIG was built using strategy, sound judgment, and business savvy from some of the same leaders who made this industry great from the very beginning.

Don’t get thrown for a loss. Make HIIG Accident & Health your partner in stop loss.

Learn more at hiigah.com or call us at 800.796.9165.

OUTSIDE THE WRAP | FEATURE Out of Network & Wrapped Claims This is an area at which every broker, employer, and administrator needs to take a second look. If you are afraid to make massive changes to your plan but want some easy and significant savings, this is your next area of focus. I understand the reasoning behind a primary network, and I’m telling you that more often than not, eliminating your wrap network (so that anything outside the primary network is now out of network) and changing what you do with those out of network claims has no negative effect on your employer and employee population – in fact it helps their bottom line greatly.

The biggest and simplest way to reduce your claims costs is by simply eliminating your wrap networks entirely, and strengthening your process for dealing with out of network claims. The process is easy; your members won’t feel a thing and your costs will go down.

So why isn’t everything doing it? Because they just don’t know that they can.

The current wrap network offerings suffer from the same issues as primary networks (discounts are applied to arbitrary, unfettered charges), but they feature even smaller discounts. Further, the plan has limited or no audit rights whatsoever, being forced to pay what they’re told with little to no ability to check for errors, or excess charges beyond the plan allowances. Why, then, do payers subject themselves to this weakest of the weak

network? Pay the network rate and there will be no balance billing of the members.

This is the reason why networks thrive in the first place. There is no noise – the membership is happy because they aren’t being balance billed or sent to collections.

The members feel insured!

Well, why couldn’t the plan have a lower cost alternative to wrap networks while also having any balance billing issues squashed before there is member noise?

Eliminating all networks will certainly mean there will be noise, as any and all claims could be balance billed. Eliminating only wrap networks means only out of network claims can be balance billed – a much rarer event. It all comes down to plan language,

Mind over risk: The secret weapon of employers and the people who insure them.

Turn challenges into opportunities.

At Tokio Marine HCC, we understand market trends. That’s why we can properly assess risk – allowing our clients to go about their business. Our medical stop loss clients have been benefiting from that expertise for over 35 years. To be prepared for what tomorrow brings, contact us at tmhcc.com for all your medical stop loss, group life and disability needs.

Tokio Marine HCC - Stop Loss Group A member of the Tokio Marine HCC group of companies tmhcc.com TMHCC1043 - 10/16

October 2016 | The Self-Insurer

9

10

The Self-Insurer | www.sipconline.net

September 2016 | The Self-Insurer

11

OUTSIDE THE WRAP | FEATURE

accessible Medicare and claim cost data, and skilled negotiators. It must be stressed that in order to reduce the plan’s spend on out of network claims; you need to significantly modify the plan language in the summary plan description. We will discuss the details on this later.

Wrap Network Contracts Essentially, wrap network agreements state that clean claims (meaning anything submitted to the administrator) must be paid within 30 days and that any other claim (the unclean ones) must be paid within 45 days. In most wrap contracts, covered services are health care benefits and services that a member is eligible to receive under the terms of the plan document. The contracts go on to state that the plan, when accessing such networks, compensate network providers in accordance with network provider agreements and using only contract rates.

The interesting piece to note here is that the plan document governs the covered

services and yet the plans never get to see the network provider agreements.

Therefore, there is no difference between what the wrap agreements state versus the primary networks except that wraps have worse discounts and employees have no loyalty to the wraps since they are out of network. A key difference.

To make matters even worse, many wrap network contracts want exclusivity and place language in the agreements stating the employer plan must eliminate all current wrap and/or out of network area relationships and utilize the wrap network exclusively. So if you already have an out of network deal in place through medical tourism or direct contracting, you would need to terminate the relationship in order to work with the wrap. To top it all off, they will only charge you a fee of 2535% of “savings� from the inflated charges.

Basically, these wrap partners are hoping that hospital charges just keep getting bigger and bigger.

Whatever happened to bottom up pricing?

Instead of discounts off a charge, why not pay a premium above the cost of the care?

This is what your plan document should say regarding how it pays out of network claims. You will be pleasantly surprised how many well-known facilities and top quality physicians will accept your reasonable, reliable and correctly priced payment structure.

The reality is that most wrap networks charge exorbitant fees and offer discounts as low as 2% off of billed charges. For the privilege of getting 2% off your bill, you have to agree to exclusivity? What type of discount would you get without exclusivity?

Reference Based Pricing RBP can yield amazing savings for plans, yet in the marketplace the RBP model has had much more bark than bite. Everyone is talking about it but not as many are taking it all the way. Most of the ones that have replaced their primary networks have

October 2016 | The Self-Insurer

11

OUTSIDE THE WRAP | FEATURE

been successful but it’s the horror stories that scare most brokers and employers away.

Therefore, replacing a primary network often isn’t viable even though the savings could be great. I would argue that roughly 10% of the current self-funded employers out there are ready to go full RBP, while the rest run away as fast as possible. Yet, unless these plans find a way to reduce costs, they will one day have no choice but to do RBP as many union plans are beginning to see.

One way of balancing the two is by creating a narrow primary network with an RBP based “wrap-network-replacement that – in essence – increases the number of out of network claims, firms up how out of network claims are treated, and makes provider membership in the remaining network more valuable. If done properly, these out of network claims can be paid and resolved fully by the plan, eliminating balance billing. Currently, while out of network claims are rarer than this proposed approach, they almost always result in balance billing. I envision there being more out of network claims, but less instances of balance billing – so long as out of network claims are paid properly, and not with some ambiguous “usual and customary” approach.

12

The Self-Insurer | www.sipconline.net

This process will reduce the cost to the plan (and therefore to the member), will virtually eliminate medical trend increases, provides reasonable reimbursement to providers for services rendered to members, and utilizes accepted and understood rates as benchmarks. This way you can keep a primary network but ditch the wrap. You can have the model built on the same chassis as a successful RBP program without having to eliminate access to the network that your employees have been accustomed to using. What makes me shake my head in disbelief is that so

OUTSIDE THE WRAP | FEATURE

many employers and administrators still use wrap networks when they have no reason to do so.

The Wins We Have Seen Instead of just telling you how this can hypothetically work, I think a better approach is to actually share some wins that I have seen across the country with self-funded employers that decided to ditch their wrap networks and fundamentally change the playing field regarding the treatment of out of network claims. I have omitted actual names to protect the innocent!

There was a cochlear implant claim in Flint, Michigan with billed charges of $184,000.

If the plan and its administrator had used the national wrap network, it would have received a discount of 15%, leaving the payable amount of $156,400. The plan has a stop loss deductible at $70,000 meaning they would have had to file a stop loss claim as well. That’s not a great thing for renewal purposes.

Instead, the plan had improved; specific language tied to how it would pay out of network claims, managed to carve out these claims and treat them as out of network, and ended up paying $63,735 with sign off from the facility. Not only did the plan save an additional $92,000 above the wrap discount, but it did not have to get the stop loss carrier involved at all.

The second example is a knee replacement surgery in Manhattan, Kansas. The total billed charges were $106,800 and the wrap network offered a great discount of 40%, leaving the plan to only pay $64,080.

Now, most brokers in this country would look at that claim as an example of why

wrap networks make sense. I mean 40% off is great until you realize that you are talking about 40% off some arbitrary and unsubstantiated bill.

Now, instead of accessing the wrap, this employer used specific language in the SPD (basing its payments of out of network claims off the cost of the care itself) and received sign off from the provider for payment of the claim at a total of $23,920.

The plan had zero percent in discounts and still paid over $40,000 less than the wrap discounted amount. Now that is what I call savings. What brokers and employers need to do is stop being addicted to discounts and instead start getting addicted to net payments.

For every large discount percentage we see in the wrap network world, there are the amazing 5% discounts we all seem to apply to air ambulance charges. We saw a billed charge of $55,895 in San Antonio that had a $53,100 payable amount after the discount.

The plan had luckily removed air ambulance from their wrap, and inserted cost plus type language in its documents ... and paid $15,002 with sign off from the provider (following some intense negotiations), saving the plan an additional $38,000 above and beyond the wrap.

The non-use of a wrap network is not just for large dollar claims. Smaller claims can have the same level of success using an alternative. We recently saw an emergency physician claim in Fresno, California with a

For more than 16 years we have been a trusted source for your Stop Loss needs; Helping business maintain profitability with customized Stop Loss products and cost containment services.

October 2016 | The Self-Insurer

13

Catastrophic medical claims aren’t just a probability — they’re a reality.

As a Captive Director, Risk Manager, VP of HR or CFO, QBE’s Medical Stop Loss Reinsurance and Insurance can help you manage those benefit costs. With our pioneering approach to risk and underwriting, we make self-insuring and alternative risk structures possible.

Individual Self-Insurers, Single-Parent and Group Captives For more information, contact: Phillip C. Giles, CEBS 910.420.8104 phillip.giles@us.qbe.com

QBE and the links logo are registered service marks of QBE Insurance Group Limited. Coverages underwritten by member companies of QBE. © 2016 QBE Holdings, Inc.

September 2016 | The Self-Insurer

15

OUTSIDE THE WRAP | FEATURE

billed charge of $7,500 that had a wrap discount of 12% available, meaning the employer plan was to pay $6,600. Well, by just picking up the phone, sharing the cost data with the provider, and having sustainable language in the plan document, the plan was able to negotiate a payment of $582. We are talking about a savings of over $6,000 above the wrap network discount.

Last but not least is the emergency room admission at an Orlando, Florida hospital. For those of you that have heard me speak at a conference, you know the facility that I am talking about. This one is by far my favorite. The claim we saw had billed charges of $220,000 with a wrap network discount of 20%, meaning a payable amount of $176,000 for a group that is self-funded with a stop loss deductible of $250,000, meaning the entire payment is at the risk of the employer plan. I can tell you most experienced brokers would think this is a great deal, especially since it’s an out of network claim. Think about how many people travel to Orlando with their families every year that end up in the ER! That’s a lot of money going to this facility. Well, to make a long story short, this plan decided to negotiate the claim and got sign off at the amount of $88,000.

The net result for these five claim examples using different types of claims from across the country is all follows. There are total billed charges of $574,195 with a wrap network payable rate of $456,180. The amount that these plans actually paid with a signed agreement from the facilities was $127,504. For those of you that still believe in discounts I will tell you that this equates to a 77.8% savings off billed charges and 72.1% in savings above the wrap rate. Not bad for a few paragraph changes in the plan document, repricing the claims using cost and Medicare data, and negotiating with the facilities.

We can’t stop the unexpected.

We can stop loss.

• More than 35 years of stop loss experience • Ranked number 3 among third party stop loss carriers1 in the nation • Consultative approach and flexible contracts that match your unique needs Contact your local Voya Employee Benefits sales representative or call 866-566-2316 1

Ranking of top stop loss providers in the United States based on yearly premium as of 4/25/2016 by MyHealthGuide Newsletter: News for the Self-Funded Community, and does not include managed health care providers.

Stop Loss Insurance is underwritten by ReliaStar Life Insurance Company (Home and Administration Office: Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Home Office: Woodbury, NY; Administration Office: Minneapolis, MN). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state. ©2016 Voya Services Company. All rights reserved. CN0707-25797-0717 175487 08/01/2016

October 2016 | The Self-Insurer

15

OUTSIDE THE WRAP | FEATURE

Take the “Usual and Customary Charge” language (please), and remove any connection to what a provider may charge in any given area. That just breeds claim inflation. Instead, give your plan the flexibility to pay for covered expenses using a variety of factors. This may refer to payments typically accepted for medical services, care, or supplies, made by other medical professionals with similar credentials or of similar standing, which are located in the same geographic locale.

As long as there are dialysis facilities that are receiving over $700,000 a year in payments per patient after the network discounts are applied, there will be opportunities to lower the cost of claims. These facilities are receiving $100,000 for the same patient care if that patient was on Medicare. Paying them 200% of the Medicare rate would still save the plan $500,000.

As long as a rural Oklahoma hospital can receive $90,000 after the wrap network discount when Medicare would be reimbursing $14,000 there will be plenty of articles like this one.

We as an industry complain about overcharges, yet we are slaves to wrap discounts that we have no reason to be chained to. Regardless of your feeling on PPOs, if you are using outdated methods for calculating out of network payments, allowing subsequent balance billing to occur, and take advantage of costly wrap arrangements, you are likely outdated.

When Medicare pays an air ambulance $11,500 and your client is paying $47,500 for the same flight, there should be outrage and change; not just outrage.

The Plan Language Innovations So you are ready to take some action... right? Great. The first thing you need to do is review how your summary plan description pays out of primary network charges. Speaking of plan language, as an attorney who couldn’t write you a will but can draft a plan document in his sleep, I say that a vast majority of self-funded employee benefit plans have horrendous out of network language that pays claims based on normal area charges. When I talk to employers, brokers, and administrators everyone tells me that their language doesn’t state that providers can name their own price, yet somehow most of the plans I see do have those exact terms.

Don’t be embarrassed about your language; just change it to ensure that your plan has the right weaponry in its arsenal.

16

The Self-Insurer | www.sipconline.net

The plan sponsor has a fiduciary duty to be prudent with plan assets. Therefore, the plan’s payment level should be determined based upon the cost to the provider for providing the services or Medicare reimbursement rates. At the plan administrator’s discretion, the amount paid by the plan can be determined and established using Medicare cost to charge ratios, average wholesale price, or manufacturer’s retail pricing.

Typically, plans will calculate the payment amount as a multiple of the Medicare allowable amount, such as 120% to 170% of Medicare for the services or supplies. Since there are claims that do not have corresponding Medicare pricing – think pediatric claims – the plan should have language that utilizes Medicare approximations or equivalency tools, including cost data and other metrics at its disposal, in determining the payment amounts.

This language alone will save your selffunded employee benefit plan millions of dollars in claims payments. Every stop loss carrier and MGU should be offering significant discounts to employers with similar language since it reduces their claims risks significantly.

OUTSIDE THE WRAP | FEATURE

Instead of telling their employer clients to pay more in premium, deductibles, out of pockets and co-pays, brokers should be telling their clients and the employees the real reason behind the high cost of health insurance – the unjustified facility charges.

Facilities are taking advantage of the fact that most employees only care about their out of pocket, co-pays and deductibles – not the entire bill. This in essence is the best thing about networks and the worst thing about networks. There is no patient noise because they don’t care. If they only have to pay $20 or $250, the fact that it costs the employer

$20,000 or $200,000 doesn’t matter. So how do we get the employees to care? Easy – give them cash – incentivize them.

Incentivizing Your Employees It all starts with your plan document. On page two of ours, where most of you have your table of contents, we have a section titled “cost containment incentives.” It truly is a page in the document that tells employees how they can make money and put cash in their pocket by looking at the whole bill and not just their co-pay. The first time an employee gets money in their pocket by having skin in the game, it spreads like wildfire throughout the organization.

People talk about it at the water cooler and whether it’s $100 in savings or $30,000, every bit counts and adds up.

Our plan document features numerous provisions enabling participants to enjoy substantial savings and benefits when they take proactive measures to contain overall plan expenditures.

October 2016 | The Self-Insurer

17

OUTSIDE THE WRAP | FEATURE

patient and the large bill that doesn’t exist for the plan. We took it a step further by stating that the co-pay normally applicable to diagnostic services if performed at a hospital is waived if the service is sought at any self-standing non-hospital facility.

What this provision has done is change the behavior of our employees. When they need testing done, they ask if it can be done at a non-hospital facility. In addition, in order to encourage the use of generic medication whenever possible, we waived any co-pay.

We address the various instances where responsible, cost-containment behavior is incentivized.

We created a claim audit review program designed to reward employees for identifying erroneous charges on bills recoverable by the plan. Simply put, if the patient identifies something in their bill and the plan doesn’t have to pay it or is able to recoup the payment, the patient gets 25% of the savings in their pocket, regardless of the amount. Trust me; we only pay for services that actually occurred! One employee received a check for over $10,000 for identifying $40,000 in claims we didn’t have to pay. This is promoted across our entire organization.

This next one has saved us hundreds of thousands in potential claim costs. Participants who preemptively consult with our human resources department regarding proposed, non-emergency, to-be-scheduled medical procedures, to discuss options available to the participant, can receive a financial reward. We had a recent situation where one of our employees needed a surgery. The employee’s surgeon could have performed the operation at two different facilities. The employee met with our HR team and after reviewing the claims data available to us we realized that the higher quality facility would have a total cost of $7,000 to perform the operation, while the other facility, using the same surgeon, would cost $40,000. We saved $33,000 and our employee received 25% of this amount in a check payable to them! That’s called having skin in the game.

At any other self-funded plan, employees would just go to the place that may be closer to their home, or maybe they know a friend who works at the hospital, or they pick one over the other for any other reason ... perhaps they choose a location with better parking because at the end of the day, they have the same co-pay and deductible regardless of where they go.

They have no idea that one facility will cost the plan tens of thousands of additional dollars for the same exact procedure. However, at our company they do know and they do care ... and that’s a real difference maker.

We have a provision stating that there is no co-pay for the use of urgent care facilities in lieu of a hospital’s emergency room. Think about how much time and money this saves the

18

The Self-Insurer | www.sipconline.net

The cultural change affects every aspect of our health plan and the reduction of overall plan spending. Under our current network, you can purchase a nebulizer after the discount for a total plan cost of $200. If you go to Amazon.com, you can purchase that same nebulizer for $118 with free two day shipping on Amazon Prime. It’s a savings of $82 and the employee receives a check for 25% of that amount. While it’s a small amount for the overall plan expense, it’s a huge change in our employees’ behavior.

They look for ways to reduce the cost, whether it’s big or small, because that $20.50 is added to their paycheck.

In Conclusion At the day of the day, what really matters to employers? Do they care what the network is, what the logo looks like, what the overall discount is, how many free tickets to the ballgame they receive or how fancy the website looks? I would argue no. As an employer myself, I feel that I have the right to answer this question with some level of authority. I want my employees to be happy.

I want my employees to feel secure and that security includes a respectable pay check for a hard week’s work and health insurance

OUTSIDE THE WRAP | FEATURE

coverage that will be there for them and their loved ones when they need it most.

The only way to ensure they the reliable health coverage will be available to my employees in the future based on their needs is to innovate. The simplest ways to innovate right now and get the most bang for our buck is to remove the wrap networks, treat out of network claims differently, and incentivize employees to care about the overall cost of care.

Adam V. Russo, Esq. is the Co-Founder and Chief Executive Officer of The Phia Group LLC; an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets.

He is a frequent speaker and author on health care and employee benefits topics at webinars, conferences and seminars across the country. Attorney Russo’s industry leading blog, www.passionforsubro.com is regularly updated with news and information relevant to the entire healthcare industry.

Attorney Russo obtained a Juris Doctorate degree from Suffolk University Law School and a Masters Degree in Finance from the Frank Sawyer School of Management at Suffolk University in Boston, Massachusetts. He also acquired an undergraduate degree from Suffolk University, where he double majored in Political Science and Public Relations. He was recognized by Suffolk University with the 2005 Outstanding Alumni Achievement Award.

Approachable. Knowledgeable. Dependable.

EXCESS OF LOSS IN SELF-INSURANCE · MANAGED CARE · PERSONAL ACCIDENT PRODUCTS

We are well-versed in customized offerings and rooted in strategic thinking. With over 15 years of experience, our dedicated team provides a consultative approach to achieve the best risk solution for you. Visit starlinegroup.com today to learn more.

October 2016 | The Self-Insurer

19

No matter your industry, Delaware’s award-winning Captive Insurance Bureau can help your business gain the upper hand...

Call us today to begin a conversation about your goals and our solutions.

BUREAU OF CAPTIVE & FINANCIAL INSURANCE PRODUCTS The Nemours Building | 1007 Orange Street, Suite 1010 | Wilmington, DE 19801

Phone: 302.577.5280 | Fax: 302.577.3057 Web: http://captive.delawareinsurance.gov

Insurance Commissioner Karen Weldin Stewart 16

The Self-Insurer | www.sipconline.net

Rx Adherence: Where Rubber Meets Road

Integrated claims management strategy seen as way to rein in runaway drug costs

W

hile pharmaceuticals have long represented the fastest-growing portion of employer-provided health care costs, they also can significantly curtail enormous expenses related to surgery or hospitalization. But the potential for cost savings is moot unless drugs are taken as prescribed. “When used appropriately, medications are the best point throughout the care continuum to change the trajectory of overall health care costs,� suggests Kempton Presley, VP of business information solutions and client performance at PharmMD, which connects patients, providers and pharmacists.

Written by Bruce Shutan

As part of that approach, the thinking is to spend more on medication to remove barriers that fuel non-adherence, which will reduce utilization and overall medical costs. Another part of that argument is to ensure that a primary care physician (PCP) knows not only which medications are working or not working to treat each patient, but also what’s being prescribed by other clinicians.

October 2016 | The Self-Insurer

21

medication adherence each year are avoidable, suggests research published by the New England Journal of Medicine and IMS Health.

The biggest factor associated with nonadherence of a prescription drug regimen involves missed doses at 39%, data from pharmacy benefit manager (PBM) Express Scripts reveals. Rounding out the list of other reasons is the cost of drugs, clinical questions, late refills and late renewals.

Studies published in scholarly journals such the Annals of Neurology have shown that the annual cost of medication nonadherence, which kills about 125,000 Americans and causes 30% to 50% of treatment failures each year, is as much as $300 billion. Non-adherence has been shown to result in $100 billion each year in excess hospitalizations alone, notes a study in the New England Journal of Medicine. In addition, the American Society of Consultant Pharmacists blames 20% of annual hospital admissions on nonadherence.

PCPs also can benefit from knowing diagnoses from other physicians, as well as having access to a myriad of best practices from the Pharmacy Quality Alliance, National Committee for Quality Assurance or even the Food and Drug Administration, he adds.

“We know that the doctor-patient relationship isn’t always in complete lockstep,” Presley admits.

22

The Self-Insurer | www.sipconline.net

Brow-raising cost driver

The best strategy is to focus on patients who are adherent and keep them that way, suggests a new study from the CVS Health Research Institute. It noted that an adherent patient who became nonadherent spent an additional $2,663 on medical care.

About half of the roughly 187 million Americans with prescriptions do not take their medications as prescribed, according to the Kaiser Family Foundation (KFF).

It can be even higher for mental health patients, which KFF said ranges anywhere from 24% to 90%. It’s also worth noting that as many as 2 billion cases of poor

The need for better strategies to ensure adherence to a prescription drug regimen will deepen considering a troubling demographic trend. By 2020, the World Health Organization estimates that the number of Americans with at least one chronic illness who will require drug therapy will swell to 157 million.

HELP YOUR CLIENTS

TO A TRUE PARTNER IN STOP-LOSS. The benefits of smart coverage, when it matters most.

Sun Life is #1 in stop-loss for a reason:* our unparalleled expertise and innovative benefits and services help protect self-funded employers. Our new benchmarking tools arm you with customized data in an appealing, client-ready format. Coupled with our cost-containment products, you can tailor the perfect solution for each client. Put our expertise to work—call your Sun Life rep today.

Life’s brighter under the sun

sunlife.com/wakeup *#1 independent direct writer stop-loss carrier based on the 2013 year-end Sun Life Stop-Loss premium of $915.2M and our analysis of marketshare data from various third parties. Group stop-loss insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states, except New York, under Policy Form Series 07-SL. In New York, group stop-loss insurance policies are underwritten

by Sun Life and Health Insurance Company (U.S.) (Windsor, CT) under Policy Form Series 07-NYSL REV 7-12. Product offerings may not be available in all states and may vary depending on state laws and regulations. © 2015 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada.

PRODUCER USE ONLY. BRAD-5073

SLPC 26354 01/15 (exp. 01/17)

Cures, side effects and prevention Whereas pharmaceuticals have historically focused on treating the symptoms of certain diseases, “we’re now living in an era where there are medications that will actually most of the time cure a disease like a hepatitis C,” explains Jason Ellison, area VP of health and welfare consulting at Gallagher Benefit Services, Inc. “From an overall cost Stacey Grant management perspective, we see pharmacy as a low hanging fruit and a real opportunity to manage cost and efficacy.”

Adherence becomes critically important, he says, because of the high stakes involving some incredibly expensive scripts. “The last think you want is to take $60,000 worth of medication and then have it not work,” he argues.

Any medication, even if it’s cheaper, will turn out to be a complete waste of money if it’s not being taken as prescribed, according to Stacey Grant, a pharmacist at PharmMD. While noting that “it’s incredibly hard to balance the cost of medication with the side effects profile,” she says non-adherence of drugs that involve a co-pay of just $2 or $50 will simply lead to higher costs and long-term issues. Her solution: an upfront investment of preventative medicine that will pay long-term dividends.

The side effects associated with medication to treat diabetes tend to drive quite a lot of non-adherence anecdotally speaking, Grant observes. Another cause of non-adherence occurs when multiple medications are prescribed to treat a single illness or several chronic conditions at once – a practice known as polypharmacy. She says taking one pill twice a day for each of, say, three different illnesses can lead frustrated patients who struggle to keep track of all their scripts to stop filling their medications, altogether.

Metabolic and cardiovascular conditions for which patients may or may not display any symptoms also tend to drive non-adherence “because

they don’t have a sort of cause-and-effect reason to be taking their meds,” Presley explains.

This is where pharmacists can help. They’re able to assess other medications in that same drug-therapy class or other classes of drugs to cut back or eradicate any side effects, according to Grant. Among some of the routine questions they can ask patients: Do you feel better? Are you experiencing any negative side effects? What’s your energy level?

How’s your eating? Unless any new useful information comes to light, she says nothing will change.

Since pharmacists “have a lot of touches” with patients in the community every month, Grant says they’re poised for enough meaningful follow-up care to ensure the right medication and doses are taken. “Physicians are in a tough spot,” she acknowledges.

24

The Self-Insurer | www.sipconline.net

“They’ve got a lot to do and very little time to do it.” ‘ She adds that physicians and nurse practitioners are typically “very receptive” to the assistance pharmacists offer in helping with adherence.

It’s not unusual for someone who has been diagnosed with a condition to never take their prescribed medication or be off the drugs for a long time, which is why Presley says it’s imperative to look beyond pharmacy claims in isolation of the bigger picture.

For example, he says medical claims and diagnoses also must be factored into the equation and aligned with various recommendations. This is particularly helpful in cases involving high cholesterol, hypertension or diabetes. He says significant deviations from evidence-based, best-practice protocols can be found when examining actual behaviors.

In many cases, Presley realizes it’s possible that certain medications may make people feel worse than their conditions. But when left unmediated and unmanaged, he cautions that “those conditions manifest themselves into much more significant problems.”

Take diabetes, which he says costs employers about $10,000 to $12,000 a year on Kempton Presley average if managed well, whereas the tab could swell 10 times that amount under worst-case scenarios. They include anything from end-stage renal disease or cardiac issues

to acute myocardial infarction, blindness or amputation.

He says a value-based benefit design is a good place to start along the road to adherence. And while PBMs help selfinsured employers with transactional tasks such as securing drug rebates, he cautions that many of them aren’t privy to medical claims, and as such, don’t see the entire picture and could benefit from the addition of a specialty vendor.

While PBMs also excel at formulary management, as well as flagging drug interactions, fraud, waste and abuse, Ellison agrees that combining medical and pharmacy data is imperative and will enable clinicians to have a more holistic interaction with their patients.

“As I talk to my self-funded employer clients, some of whom are really big, they’re recognizing a lot of folks in their population that have a chronic condition,” he reports. “And they’re also recognizing that for every one they know about, there

are probably several others out there that are undiagnosed. And so, identifying those people early, and then doing everything they can to ensure adherence is the most effective means for mitigating future large costs associated with those conditions.”

‘Medical reconciliation’ Evolving technology is expected to play a role in shaping the adherence landscape.

Some literature suggests that electronic health records, as helpful as they are from an operational efficiency standpoint, aren’t able to necessarily capture every type of drug interaction. By strictly looking at the pharmacy claims, Presley says it’s not always possible to red flag, for instance, a patient with

asthma who’s on a beta-blocker, which can be dangerous. A related concern is when self-funded health plans aren’t able to track hospital medications, which is why he says “medical reconciliation, both prior to admission and after discharge, is critical to be able to have that holistic picture of inpatient versus outpatient utilization.”

Given the enormity of employees and their dependents in any given employer

October 2016 | The Self-Insurer

25

population who are taking medications, he quips that it can take a village to achieve adherence. In lieu of an individual or team of clinicians who can review every health plan member’s information to ensure that every protocol is followed, he recommends the use of big data and algorithm tools for a holistic view of adherence.

“I think technology allows practices and plans to have tentacles throughout communities to be able to disseminate messaging and use behavioral science to nudge people in the right direction,” he opines. Even with the aging population, he notes that baby boomers and others are using technology just as much as millennials, “and if people are glued to their phones, why not take that captured attention and ensure that the right information is being disseminated?”Indeed, Presley believes mobile technology can serve as a tremendous tool for helping health care consumers adhere to their prescription drug regimen.

Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for 28 years.

26

The Self-Insurer | www.sipconline.net

Would you go on a hike without a map?

As a Stop Loss expert, Berkley Accident and Health can put you on the right path.

Our innovative approach to risk management can lead to greater stability, transparency, and control with your self-funded plan. When it comes to risk, let Berkley be your guide.

Stop Loss | Group Captives | Managed Care | Specialty Accident Insurance coverages are underwritten by Berkley Life and Health Insurance Company and/or StarNet Insurance Company, both member companies of W. R. Berkley Corporation and both rated A+ (Superior) by A. M. Best. Coverage and availability may vary by state. Š2015 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved.

BAH AD-2014-0139

22

The Self-Insurer | www.sipconline.net

www.BerkleyAH.com

Risk Retention Group Legislation Marks 30th Anniversary Written by Karrie Hyatt

R

isk retention groups (RRGs) were enabled by Congress thirty years ago this October through the signing of the federal Liability Risk Retention Act (LRRA). RRGs have been both reviled and influential in the alternative risk transfer sector and have carved out a unique niche for themselves in the insurance marketplace.

RRGs are self-insurance mechanism that allow for member-owned liability insurance companies to organize in one U.S. state domicile and to conduct business throughout the United States. This allows member-owned RRGs to more effectively provide liability coverage to their member-insureds while being able to stabilize premiums and, in many cases, keep costs down. They offer a range of liability coverage, primarily in the healthcare arena, but also for higher educational facilities, accountants, lawyers, land trusts, and more.

28

The Self-Insurer | www.sipconline.net

History and Background Leading up to the legislation that would create RRGs, Congress initially created the Product Liability Risk Retention Act passed 1981. After years of an especially hard insurance market, when the availability and affordability of commercial liability insurance had become extremely limited, Congress amended the original act to broaden the scope of the law to include all forms of third-party liability coverage. Essentially, what the LRRA did was to preempt state regulation to allow RRGs providing liability coverages to their member-owners to do business in states other than their state of domicile without the inconvenience of using fronting companies. While this is a key aspect in the operation of RRGs, it has also been a major source of criticism.

In the early years, RRGs were quickly established, and some quickly went out of business, but many RRGs have proved remarkable staying power. One of the very first RRGs was Ophthalmic Mutual Insurance Company (OMIC), which was formed a few months after the LRRA was signed into law by President Reagan. The RRG was formed to serve members of the American Academy of Ophthalmology (AAO) and has been doing so since 1987.

According to Timothy Padovese, president and CEO of (OMIC), “The formation of OMIC not only injected competition into the current market; it also created a new niche for specialty-specific insurance products and services. OMIC became an expert in ophthalmic specific risk management and our members now rely on us to provide critical information and resources that protect them such as patient education and consent forms.

OMIC has a very specialized expertise gained over nearly thirty years in business and we publish suggested protocols and procedures that are widely used among ophthalmologists to reduce risk to claims and lawsuits.�

October 2016 | The Self-Insurer

29

Purposely tailored risk management and a close knowledge of specialized industries is what can distinguish RRG operations from the traditional insurance market. While the expertise of RRGs operating in the last ten years is generally recognized, it was not so in the beginning.

“Thirty years ago, risk retention groups had a limited history in the medical malpractice market and had not been tested sufficiently by navigating difficult market conditions,” said Padovese.

“Some were not adequately funded and failed. The uneven performance of early RRGs allowed for some traditional companies to define our structure as unstable and risky. Over the past three decades, RRGs have grown in size and our track record has been very good, in many cases outperforming the traditional markets.

States regulating RRGs with strict oversight and high standards have improved the way RRGs are viewed by competitors in the insurance industry as well as by hospitals and other third party entities. We have become a strong and viable alternative to the traditional insurance market and our members truly see us as value added.”

Owner Benefits and Perks Risk retention groups have proven to be a successful alternative to obtaining liability insurance from the traditional market. In addition to being able to cover members over multiple states, the LRRA was intended to help members keep liability coverage costs low. Member-owners of RRGs can avoid the ups and downs of the insurance market and keep their premium rates stable. They also have more control

30

over their own coverage. This can be especially important for physicians and hospitals, as well as for taxi and truck drivers where rates can be particularly volatile.

“OMIC’s sponsoring organization … wanted to create its own insurance company that would serve its members nationwide,” said Padovese. “Before OMIC was created in 1987, the rates charged ophthalmologists were disproportionally high in relation to the risk involved and when compared with other specialties. This was not only unfair, but also a threat to ophthalmic practice.”

Benefits that were not specifically intended, but are still an important aspect of RRGs’ success is their ability to implement effective loss control and risk management practices, and even to issue dividends to members for good loss experience. For many members, the additional benefits are more important than the potential savings and rate stability.

The National Catholic RRG (TNCRRG) was established in 1987 and began operations in 1988 to provide liability insurance to Catholic archdioceses, dioceses, religious institutes, and related Catholic entities. The RRG has been a leader in providing member benefits outside premium savings. According to Michael Bemi, director, president and CEO, “TNCRRG provides coverage that is—within our niche—widely regarded to be the broadest, most comprehensive available. We provide this coverage with very competitively priced premiums—though we have neither desire nor intention to be ‘the cheapest’ in the market. When compared to the traditional commercial market, our premiums have remained very stable over the ‘long haul.’ … We provide a number of very valuable risk and claims management services for our members [including] our safe environment program and our free claim audits of members’ TPAs, among others.”

Yet the reason that owners still turn to RRGs is their ability to operate across state lines. “The onerous process previously required to open for business and operate in each individual state had dissuaded the [AAO] from moving forward, but when the Risk Retention Act was passed it opened the door for the [AAO] to begin putting together the foundation for the company that would eventually become OMIC. As a risk retention group, OMIC could operate across state lines efficiently and at a lower cost. OMIC has provided members stable and competitive rates and consistent dividend returns since 1987.”

Facing Obstacles According to Bemi, “RRGs

are primarily confronted with three challenges: the persistent very soft market—awash in excess capital—which leads to occasional predatory (and often naive) competition and resultant loss of business; the inability to underwrite any property or Worker’s Compensation coverage, which precludes RRGs from obtaining the benefit of portfolio/diversity effect and also lessens RRG attractiveness to a potential buyer; and the remaining (though greatly diminished over the years) hostility of certain regulators.”

The Self-Insurer | www.sipconline.net

Risk retention groups have faced sharp criticism throughout the last thirty years, similar to the criticism faced by the captive sector as a whole. As a new type of insurance, they were an unknown quantity and many state regulators took an immediate aversion to them. This viewpoint has not entirely gone away, but on the whole, after thirty years, RRGs are better understood and more respected. In the 1980’s, there were only a handful of states that had captive law and were active in forming captives. RRGs fit right into the burgeoning captive industry and found a foothold in domiciles such as Vermont and Hawaii.

As the captive marketplace has matured, so has industry attitudes towards captives and RRGs. “Initially, some states were wary of the single state regulation model,”

said Padovese. “But seeing the success of companies like OMIC, all states now support RRGs. Challenges occasionally arise with regard to discriminatory RRG reporting and operating requirements by some states, hospitals, or facilities. It is important that we work in conjunction with PIAA, National Risk Retention Association, Vermont Captive Insurance Association, and other organizations to respond when unfair or burdensome regulations are introduced in order to protect the original intent and integrity of the Risk Retention Act.” Since the beginning, another major obstacle facing RRGs is the LRRA’s limitation to only providing liability coverages. For many well-established groups this has been an incredibly restrictive factor. For many RRGs whose members want to purchase non-

liability coverage, they have to use fronting carriers or go to another carrier. Nearly all of the attempts to expand the LRRA with new legislation has included adding property coverage. Workers’ Compensation would also be a welcome addition, but comes in a distant second from RRGs’ need to be able to write property.

As risk retention groups were established to offer relief to a very difficult insurance market, when the market improves, it becomes hard for RRGs to offer the savings benefits to their members. During most of the 1990s, the RRG marketplace contracted as capital became readily available and insurance prices plummeted.

The hard market of the early 2000’s saw a meteoric rise in the number of operating RRGs, the number more than doubling.

After the financial market collapse nearly a

artexinfo@artexrisk.com artexrisk.com

®

October 2016 | The Self-Insurer

31

decade ago, RRGs have been struggling, with many RRGs closing their doors.

Yet even through the continued soft market that the industry is currently experiencing, RRGs continue to form and succeed, especially those that were well-established before 2007.

RRGs Have Changed the Insurance Marketplace Since 1987, RRGs have had a strong influence on the liability insurance market. According to Padovese, “Almost immediately, malpractice insurance rates fell, and for everyone in our specialty market. Even ophthalmologists insured by multispecialty carriers started paying less. Competition forced multispecialty carriers to pay close attention to the rates, coverages, and services offered to ophthalmologists or risk losing business. Professional liability coverage for ophthalmologists improved and rates have remained stable for thirty years.”

Bemi also believes that risk retention groups have made the liability insurance marketplace more competitive. “While I can’t prove this proposition, I believe that in certain market niches—such as educational, religious and healthcare institutions—RRGs have forced the traditional market participants to ‘up their game’ or lose the business. This provides a benefit to all market participants and their insureds.”

32

The Self-Insurer | www.sipconline.net

“As for the captive market,” continued Bemi, “while RRGs are a specialized segment of that market, distinguished in a number of ways, I think that RRGs—largely via the National Risk Retention Association—have frequently ‘led the way’ for the broader captive marketplace, specifically in the arenas of advocacy and education.”

Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years. More information about her work can be found at: www.karriehyatt.com.

Guardian® in sync

Stop Loss

When evaluating stop loss carriers, just look at the numbers.

Looking for assurance that Guardian Stop Loss Insurance will protect you against catastrophic claims and higher than expected medical plan usage? Our numbers speak for themselves: Only 2–3 days to turn around claims, whether $10K or $10M1

155 years of financial stability, so you know we’ll be there when you need us

98 (out of 100) score from Comdex, making us one of the most highly rated insurers2

Visit www.guardiananytime.com/stoploss

LIFE

DENTAL

VISION

DISABILITY

ABSENCE

SUPPLEMENTAL HEALTH

STOP LOSS

ASO

GuardianAnytime.com The Guardian Life Insurance Company of America®, 7 Hanover Square, New York, NY 10004. GUARDIAN® and the GUARDIAN G® logo are registered service marks of The Guardian Life Insurance Company of America and are used with express permission.

Upon receipt of information from the payer. 2 As of 2/2/2016 and subject to change. Source: Vital Signs. Comdex is a composite of all ratings that a company has received from the major rating agencies (A.M. Best, Standard & Poor’s, Moody’s, and Fitch).

1

Guardian’s Stop Loss Insurance is underwritten and issued by The Guardian Life Insurance Company of America, New York, NY. Policy limitations and exclusions apply. Optional riders and/or features may incur additional costs. Financial information concerning The Guardian Life Insurance Company of America as of December 31, 2015 on a statutory basis: Admitted Assets = $48.1 Billion; Liabilities = $42.0 Billion (including $37.0 Billion of Reserves); and Surplus = $6.1 Billion. Policy Form #GP-1-SL-13.

File # 2016-21397 Exp. 8/17

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

Q& A T

he Affordable Care Act (ACA), 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 ACA, HIPAA and other federal benefit mandates.

Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Dan Taylor 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 Dan Taylor 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.

34

The Self-Insurer | www.sipconline.net

HIPAA Phase 2 Audits: What has OCR requested from auditees to date?1 In our May article, we discussed the U.S. Department of Health and Human Services’ (HHS) Office of Civil Rights (OCR) “Phase 2” audit program. Then, we could only make educated guesses about what documents OCR would likely request from auditees.

However, on July 11, 20162, OCR contacted the covered entities it selected. Although, the tight 10 day turn-around caused some angst for those audited, the scope of OCR’ s requests (drawn directly from the OCR audit protocol document) were less onerous than many predicted (especially given the length of the protocol document).That said, while HIPAA covered entities that were not selected can take a deep sigh of relief (for now), the audit activity is far from over. As part of its Phase 2 audit program, OCR will next audit business associates based on the information the covered entities provide. Additionally, OCR will conduct on-site audits of covered entities and business associates. It is unclear whether this may include covered entities and business associates that OCR did not select for original desk audits, as OCR said, “[s]ome desk auditees may be subject to a subsequent onsite audit3.”

Documents Requested: List of Business Associates via E-mail Unsurprisingly, OCR requested a list of business associates. OCR provided the following sample template (available at http://www.hhs.gov/hipaa/for-professionals/complianceenforcement/audit/batemplate/index.html) to help auditees respond:

Notably, OCR only requested documents from HIPAA covered entities during this first stage of the Phase 2 audits. During the next stage, OCR will select business associates for audit from the lists covered entities provided.

Documents Requested: Privacy Rule & Breach Notification Rule documents or Security Rule documents via secure website upload Although OCR required auditees to submit their list of business associates by e-mail, it provided a secure website for auditees to upload the other documents they requested. In a webinar4, OCR it indicated that “entities will either be audited on [Security Rule] controls or [Privacy Rule & Breach Notification Rule] compliance.”The documents5 that OCR typically requested of covered entities selected for Privacy Rule and Breach Notification Rule audits included:

1

All HIPAA notices of privacy practices posted on the entity’ s website, within its facility, or distributed to individuals, that were in place at the end of 2015.In its desk audit guidance6, OCR clarified that this includes translations.

2

The URL for the website where the notice of privacy practices was posted, if any. In addition, if electronic notice was provided, OCR requested its policies and procedures regarding electronic distribution, as well as a sample of an individual’ s consent to receive the notice via e-mail or electronically.

3

Policies and procedures for individuals to request access to PHI, as well as the documentation for the first access requests granted, and evidence fulfillment, in 2015. OCR also requested documentation for the last five access requests that the entity extended its time for response, as well as any standard template or letter that the entity uses or requires to grant access requests. When a third-party administrator decides access requests for a health plan, HHS stated in a Q&A7 that the covered entity should provide a description of how the business associate handles access requests in the comment section. Thankfully, the desk audit guidance clarified that access requests do not include third-party disclosure requests that are merely authorized by an individual.

October 2016 | The Self-Insurer

35

30

The Self-Insurer | www.sipconline.net

4

Documentation for five breach incidents in 2015 involving less than 500 individuals, including the date individuals were notified, the date the covered entity discovered the breach, and the reasons for any delayed notification.

5

Documentation for five breach

incidents involving 500 or more individuals in 2015, including one written notice sent to an affected individual for each breach, and any standard templates or form letters.

OCR desk audits for the Security Rule can include:

1

HIPAA risk analysis policies and procedures for the six (6) years before the audit request date. OCR also required entities to provide documents from 2015 showing that these documents were available to the individuals responsible for implementing the policies and procedures, and that they were reviewed periodically and updated as needed.

2

The most recent HIPAA risk analysis, the risk analysis immediately before it, and the results. In the Q&A, HHS stated that it did not want covered entities to create a new risk analysis if the risk analysis is not up to date. Also, although some entities raised concerns that disclosure of this information could become public knowledge under FOIA, OCR stated in its desk audit guidance that it believes the information is exempt from FOIA as “trade secrets or commercial

or financial information that is confidential or privileged.”However, OCR noted that it might be required to release audit notification and other information about these audits under FOIA in the webinar.

3

HIPAA risk management policies and procedures regarding risk management for the six (6) years before the audit date. OCR also required entities to provide documents from 2015 showing that these documents were available to the individuals responsible for implementing the policies and procedures, and that they were reviewed periodically and updated as needed. OCR’ s desk audit guidance says evidence that the policies and procedures were available to responsible individuals would include screen shots that show document properties and mapped drive permissions.

4

The documents showing efforts used to manage risks in 2015, as well as the measures implemented to reduce risks based on the current risk analysis.

Uploading Documents: be careful before you press submit!

OCR hosted an informational webinar8 shortly after it notified selected covered entities.The webinar included screenshots of what auditees can expect to see when the upload their documents, such as:

Of great significance to those responsible for uploading the document, OCR noted in the Q&A during the webinar that, “once an entity selects the ‘ review and submit’ button, you cannot return to the system to delete and replace files previously uploaded.”

If I’m a covered entity that’s also a business associate, can I also expect to be audited as a business associate?

During its Q& A, OCR stated that “[i]t is possible, but not likely” that OCR will select them for another audit if they are the business associate of another covered entity, which might provide some comfort to covered entities that OCR selected for desk audits.

October 2016 | The Self-Insurer

37

Conclusion

References

No one is off the hook, yet. Although OCR made its Phase 2 desk audit requests for covered entities, business associates are next. Moreover, covered entities and business associates may remain subject to on-site audits regardless of whether or not they were selected for a desk audit. We can also expect that this year’ s foray into the audit world will prove to be a mere prelude to more detailed investigations in years to come. Thus, it would be wise to ensure that you can provide the documents HHS has requested to date during its Phase 2 desk audits, as well as any other documents required to comply with HIPAA (including the ones mentioned in our May article in case you are selected for a desk audit).

1

Steven Mindy, an associate in Alston & Bird’ s Washington

DC office co-authored this article.

2

http://www.hhs.gov/hipaa/for-professionals/compliance-

enforcement/audit/index.html#responsible 3

http://www.hhs.gov/hipaa/for-professionals/compliance-

enforcement/audit/ 4

Webinar available at http://www.hhs.gov/sites/default/files/

OCRDeskAuditOpeningMeetingWebinar.pdf 5

http://www.hhs.gov/hipaa/for-professionals/compliance-

enforcement/audit/index.html#responsible 6

http://www.hhs.gov/sites/default/

files/2016HIPAADeskAuditAuditeeGuidance.pdf 7

Q&A available at http://www.hhs.gov/sites/default/files/

Phase2AuditOpeningMeetingWebinarQ%26A.pdf 8

Webinar available at http://www.hhs.gov/sites/default/files/

OCRDeskAuditOpeningMeetingWebinar.pdf

38

The Self-Insurer | www.sipconline.net

Does the self-funded route look a little muddy?

HM Stop Loss gives you the confidence

to gain your footing.

The expert risk assessment and exceptional service delivery of HM Stop Loss give self-funded groups the financial protection they need to overcome challenges like the rise in the frequency and severity of claims. Our performance, policy and protection set us apart as we deliver smart solutions to our clients.

Find tips, tools and insights for self-funded groups at hmig.com/claimtrends.

STOP LOSS MTG-3015 (R8/16)

MANAGED CARE REINSURANCE

SIIA

Endeavors

On The Record With SIIA President & CEO Mike Ferguson

David Kirby: So let’s jump right in. Why do you think it so important for companies involved in the self-insurance

Self-Insurer Contributing Author David Kirby sat down with SIIA President & CEO Mike Ferguson for a wide-ranging interview to talk about how the association continues to evolve and play an increasingly important role in helping its members be successful in the self-insurance marketplace.

marketplace to be SIIA members?

Mike Ferguson: I think SIIA is doing some very important work to promote the expansion of this marketplace, while fending off regulatory threats affecting our members in various ways. Of course, our ability to effectively execute this mission depends on a growing and active membership base.

SIIA members are always the first to learn about important industry developments and we consistently deliver important informational and educational resources through a variety formats from a monthly magazine, multiple educational conferences and various social media platforms.

I should also point out the networking value of SIIA membership. Our industry is really relationship-driven and most of the major players are highly active in our association. It’s really hard to count the number of members who have told me they have been able to build highly SIIA President & CEO, Mike Ferguson

40

The Self-Insurer | www.sipconline.net

MIKE FERGUSON INTERVIEW | FEATURE

successful businesses thanks in large part due to the connections they have made through their SIIA involvement. Obviously I love hearing these stories and they are great to share with potential members.

DK: How has SIIA responded what has seem to be a

multi-state self-insured employers, so SIIA has taken a leadership position once again in order to protect the self-insurance marketplace. Our case is now on appeal with the U.S. Supreme Court, so we will likely know by early next year on how it may ultimately be resolved.

In addition to this current ERISA preemption challenge where SIIA is the lead plaintiff, the association as also filed an Amicus brief in a separate federal case concerning captive insurance arrangements. Our brief provided the court a more specific understanding of how and why captives are used, which has become increasingly important given heightened IRS scrutiny of these alternative risk transfer strategies. A ruling in this case is also pending.

growing number of legislative/ regulatory threats at the state level?

MF: We concluded a few years ago we

that legislative/regulatory threats coming from the state level would likely multiply and we were under-resourced to effectively respond. Our response has included the hiring of an in-house state government relations director and then retaining contract lobbyists in specific states where needed.

We currently have four lobbyists on retainer in various states and it is quite possible that we may add additional lobbyists in 2017.

And when all else fails, we are not shy about pursuing legal challenges in response to state laws affecting our industry.

DK: Let’s pick up on your comment regarding legal challenges, as I believe SIIA is currently engaged in some high stakes litigation. Can you provide some details?

MF: The association had been fighting the state of Michigan in federal court over that state’s Health Insurance Claims Assessment Act, which we believe should be preempted by the Employee Retirement Income Security Act (ERISA). Our view is this case has broad ramifications, particularly for

October 2016 | The Self-Insurer

41

IHC

Risk Solutions

Our

world-class capabilities

A powerful combination

Sometimes more really is more. Swiss Re Corporate Solutions has joined forces with IHC Risk Solutions.

By integrating IHC’s business we are complementing this highly-regarded firm’s wealth of expertise with our own financial strength and global capacity. It’s a powerful combination of expertise and capabilities, and we believe it offers enhanced value to any employer seeking to self-fund their healthcare benefit plan.

But there’s another belief that we share with IHC, and that’s in the paramount importance of understanding and supporting the needs of our customers and building strong, enduring partnerships. We wouldn’t have it any other way. We’re smarter together. swissre.com/esl Insurance products underwritten by Westport Insurance Corporation and North American Specialty Insurance Company.

14

The Self-Insurer | www.sipconline.net

MIKE FERGUSON INTERVIEW | FEATURE

DK: You have commented publicly on several occasions about how important it is for SIIA to become more a major player in terms of political contributions. Can you elaborate a bit on why this should be such a priority and any progress that has been made to move in this direction?

MF: I have actually been saying this for the past several years and this objective has

continued to move up the list of association priorities. There are two primary reasons for this prioritization, with the one reason being fairly obvious for most members, with second reason less obvious for those who are not creatures of the DC lobbying world.

The obvious reason, of course, is that is much easier to make and keep friends on Capitol Hill if you provide financial support for their campaigns. This does not mean that if you

contribute to a specific member of Congress that they are certain vote a specific way, but it’s certainly easier to get a meeting with the member and/or their senior staff to explain your issues.

Not so obvious to those outside the beltway is that when an organization establishes itself as a political financial player, it raises your “street cred,” so to speak of with other important organizations in town that may be needed to partner with on various lobbying efforts.

October 2016 | The Self-Insurer

43

MIKE FERGUSON INTERVIEW | FEATURE

In this regard, I am pleased to report that SIIA is now well positioned with some of the powerful associations in DC, including the U.S. Chamber of Commerce, National Association of Manufacturers, and at least one major union organization.

progress that is sure to greatly assist our advocacy efforts.

DK: We’ve been seeing updates about how successful SIIA has been in securing

Our progress has been somewhat slow but steady since we established the Self-Insurance Political Action Committee (SIPAC) about five years ago as a vehicle for SIIA members to channel political contributions to key members of Congress. Things have accelerated this year thanks to this more dedicated focused combined with increased staffing resources and you are now starting to see SIIA really establishing itself as a money player in DC. Obviously we are not the biggest player by any means but its solid

media placements highlighting

story. Since that time we have been working with this firm to craft specific messages that can be pitched to the media. These have included general informational pieces about self-insured health plans, as well as Op-Eds focused on specific legislative and regulatory developments at both the federal and state level that affect our marketplace.

the positive aspects of selfinsurance and/or captive insurance, how has the association been able to move the needle on this?

MF: I can tell you this has been a very de-

liberate process, which started last year with SIIA retaining a top-notch publications firm, specializing in media campaigns and issue advocacy to help us tell the self-insurance

More recently, we have proactively engaged our members to assist us with this media outreach effort by identifying employers who have had positive experience with self-insurance and/or captive insurance to serve as interview sources for potential stories and to identify interesting industry trends.

LISTEN - UNDERSTAND - LEVERAGE - SOLVE

A CONTRACT IS A LEGAL DOCUMENT.

A TRUEIS SO PARTNERSHIP MUCH MORE. Our experience, innovation and track record are only meaningful if we are able to help our clients. We will listen carefully to your goals and challenges and leverage our deep and varied resources to deliver a customized solution that meets your needs.

Find out what you can expect from a true partner at partnerre.com/health Underwritten by PartnerRe America Insurance Company Executive Office: 199 Fremont St., San Francisco, CA 94105 Form HAD1214 03/2016

44

The Self-Insurer | www.sipconline.net

MIKE FERGUSON INTERVIEW | FEATURE

This collective work has resulted in media placements in several leading publications including The Wall Street Journal, The New York Post, The Pittsburgh Post-Gazette and The New Jersey Star Ledger. SIIA and self-insurance was also featured in multiple radio interviews over the past year. The collective readership reach to date is estimated at 65 million, so our story-telling efforts are having real results.

Going forward, we hope to advance the discussion in the media to highlight how most of the innovation in health care cost containment is coming from the self-insurance word. Separate pitches are also being developed to highlight how captive insurance is solving many critical risk management needs of mid-market companies.

DK: So the association has its big National Conference & Expo coming up soon in Austin, TX. Are there any particular highlights you would like to preview?

MF: We think it’s going to be a really great event. The program will feature two keynote speakers, nearly 40 breakout educational session and the industry’s largest exhibit hall. In addition, this is a new exciting location for this conference and we are bringing back our party event to help everyone with a last round of networking in a fun environment.

DK: What does the SIIA conference schedule look like for 2017?

MF: It has shaped up nicely with

something for all of our members, both in terms of content and location. Our 2017 conference season will start with the Self-Insured Health Plan Executive Forum, scheduled for March 28-30 at the JW Marriott Star Pass Resort in Tucson, AZ. This is a new property for us and we really think our attendees will enjoy being there at that time of the year.

Keeping with a Latin America focus, the International Conference will move to Puerto Rico April 18-19, giving attendee an offshore experience without actually having to leave the United States. The Condado Vanderbilt will serve as the host hotel.

JW Marriott Tucson Star Pass Resort and Spa

October 2016 | The Self-Insurer

45

MIKE FERGUSON INTERVIEW | FEATURE

The Legislative/Regulatory Conference will be back with an updated format. In additional to a freshened up program, it will be scheduled later in the year – May 2-4 in Washington, DC. We think this timing works well given that this will give the new Congress the opportunity to get to work and to start formulating various legislative agendas.

DK: We’ve seen numerous announcements over the last couple of years of companies upgrading to Diamond or Gold member status, can you talk a

The big news for the Workers’ Compensation Executive Forum is that we have chosen a great new hotel/location for 2017. The event will be held May 16-18 at the beautiful Grove Park Inn in Ashville, NC.

little SIIA’s approach relative to these membership categories and the factors that have contributed to the apparent growth?

Then to finish up the years, we’ll be returning to the J.W. Desert Ridge Resort & Spa in Phoenix on October 8-10 for our National Educational Conference & Expo. This is arguably our members’ favorite conference hotel so it should be a great turnout.

DK: I noticed you that Taft-Hartley Executive Forum is not back on the schedule for next year, does that mean that SIIA is backing off its outreach to the Labor world?

MF: Not at all. While it has been determined that the forum should be taken off

calendar for next year, we fully intend to continue our outreach to key labor groups to better coordinate on lobbying and litigation matters of interest to both private self-insured employers as well as self-insured Taft-Hartley health plans.

DK: SIIA has a distinct membership constituency comprised of companies involved with self-insured workers’ compensation programs. Can you give us an idea of some association initiatives that appeal specifically to these members?

MF: Yes, we have a very active segment of members involved with self-insured worker’s

compensation programs, including group self-insured funds. In addition to SIIA’s Workers’ Compensation Executive Forum, some key initiatives is the development of on-line educational content for group fund trustees, addressing expected regulatory staffing turnover in many states, and identifying issues where SIIA’s lobbying and media relations team can provide value.

46

The Self-Insurer | www.sipconline.net

MF: Unlike many other trade organizations that are relatively homogeneous in terms of size and business focus, SIIA is much more heterogeneous. We have smaller members with varying degrees of industry focus to companies with billion dollar balance sheets that focus exclusively on the self-insurance marketplace. Because of this disparity, it does not make sense to have a single membership category so we have created multiple membership categories with different dues rates and benefit packages. This has enabled companies to plug into SIIA at various entry points.

With regard to increase in higher level membership, I think the bigger companies in our industry like what SIIA has been doing and would like to see us to continue to “scale,” to put in growth company terms so that we can further promote and protect their business interests.

MIKE FERGUSON INTERVIEW | FEATURE

DK: SIIA has held some high profile International conferences in recent years, most

uptick in interest in self-insurance and/or captive insurance from multiple countries within this region.

recently in Costa Rica and Panama. What’s the strategy behind this?

MF: We recognize that the insurance

industry, like make other industries, has become increasingly global in nature and an increasing number of our members have told us they are looking for new business opportunities outside the United States.

In this regard, SIIA believes it can play an important role of helping members identify these opportunities and facilitate the necessary business connections to take advantage of these opportunities. We have decided to focus on Latin America due to the geographic proximity and there is an

As I mentioned previously, we’ll be holding our next International Conference in Puerto Rico, so this will be the next big opportunity to connect and educate, but we’ll likely be updating our informational resources in the meantime, so members should watch for this.

MF: My view is that SIIA is playing a

very unique and useful role in the captive insurance space in that the organization is actively integrating industry stakeholders into the much broader self-insurance world.

This is important because mid-market employers are becoming increasingly sophisticated in how they manage risk and understand that they can integrate multiple self-insurance strategies, which may include the formation of a captive insurance company. SIIA brings this all together, giving captive insurance professional more educational and networking resources.

DK: How do you view SIIA’s role in the captive insurance space and why this membership constituency appears to be growing?

Planned healthcare procedures don’t seem very….planned.

Until now.

solutions@fairchex.com | 844-640-0754 | fairchex.com

October 2016 | The Self-Insurer

47

MIKE FERGUSON INTERVIEW | FEATURE

Complimenting this integration strategy, SIIA also provides more specialized services for this growing membership constituency. Most notably, our team of lobbyists has been active in responding to ongoing federal regulatory threats related to enterprise risk captives. For these reasons and others, I think SIIA will further enhance its reputation as key organization for those involved in the captive insurance space.

DK: There certainly sounds like a lot of exciting things going on at SIIA. What advice would give industry executives who want to become more active in the organization?

MF: Well of course, become a member if you are not already. Showing up at association events is a big deal because SIIA is a very interactive and social organization and there is no substitute for being there. We also recruit members to serve on our various volunteer committees and participate in periodic grassroots lobbying campaigns, which are great involvement opportunities. I like to say we are happy to put our members to work, so be on the lookout for announcements.

Cut surgical costs, not corners.

Now the impossible is possible. BridgeHealth is a value-added benefit that significantly reduces costs on planned surgeries while improving outcomes.

here’s how it works: •• Employees gain access to hospital

providers who are ranked in the top 25% nationally for quality

•• BridgeHealth pre-negotiates bundled

case rates for planned surgeries, eliminating complex billing

For more information, call: (855)459-9064 Or visit: bridgehealth.com

48

The Self-Insurer | www.sipconline.net

•• We provide surgery decision

support, scheduling and help with travel arrangements, if necessary

•• Save 20-40% on average

from discounted PPO rates

Controlling Health Benefit Costs with

FULLY-INSURED Organ Transplant Solutions

I

By Russ Jehs

n 2015, for the first time in any calendar year, more than 30,000 organ transplants were performed in the U.S., according to the United Network for Organ Sharing (UNOS),the private, nonprofit organization that manages the nation’ s organ transplant system. As a recent UNOS press release shared, “For the year, 30,973 transplants were reported, representing an increase of nearly 4.9% over 2014 and continuing a three-year trend of annual record numbers.”1

October 2016 | The Self-Insurer

49

As the number of organ transplants has risen, the costs have risen, as well. For employers striving to control runaway health benefit expenses, the details are sobering.

For example, Milliman data reported triennially shows that in the U.S., estimated billed charges for a single-lung transplant rose from $561,200 in 2011 to $785,000 in 2014, while estimated billed charges for a heart transplant rose from $997,700 to $1,242,200 during the same time.2

The Impact The impact of costlier organ transplants on health benefit plans can be severe, even catastrophic, especially among groups, businesses or corporations that self-fund the health care plans they offer their participants. Since most organ transplants require candidates to be on waiting lists for a year or more, transplants introduce known risks to self-funded plans that must be disclosed at renewal.

Disclosure often triggers “lasers” (higher deductibles for, or exclusions of, specific employees) and therefore, a greater assumption of risk by health benefit plans for these potentially high-claim individuals.

Unfortunately, transplant networks typically expose the employer to most of the severity and all of the frequency costs of transplants.

A Potential Solution Fully-insured organ transplant insurance is designed to mitigate devastating, unpredictable medical expenses for selffunded employers and employees. The need is crucial, as according to UNOS, a new person is added to the national transplant waiting list for a transplant every ten minutes.3 Consider how an organ transplant has the potential to help control benefit costs in 50

the event of renal disease. One in three American adults is at risk for developing kidney disease, according to The National Kidney Foundation.4 Furthermore, of the 119,932 people waiting for organ transplants in the U.S. as of August 5, 2016, nearly 100,000 were awaiting kidney transplants, according to the Department of Health & Human Services.5 Milliman data shows that estimated average billed charges for a kidney transplant are $334,3006– nearly 76.9% lower than the average cost of kidney dialysis per patient in the U.S. ($1.45 million, according to a recent American Journal of Transplantation article7). But $334,300 is still a hefty price tag.

A fully-insured organ transplant product can remove large claims for organ transplants from a stop-loss program. Some fully-insured organ transplant solutions can be leveraged in conjunction with the issuing carrier’ s stop-loss insurance or with any other carrier’ s stop-loss insurance. Stop-loss carriers typically offer a discount on stop-loss coverage if the transplant risk is transferred to a third party.

Fully-insured organ transplant products may offer full coverage for single- and multipleorgan procedures (heart, heart and lung, lung, liver, kidney, kidney and pancreas, pancreas, and small intestine), as well as for bone marrow and stem cell transplants. As solutions vary, it’ s important to read policies carefully to understand the various features, benefits, exclusions, terms and conditions.

The Risks May Rise Ongoing research, innovation and collaboration may bring about more organ transplants and thus, the risk of more costs for employers. As The Washington Post shared in June, the White House and a coalition of universities, companies and nonprofits have announced new steps to

The Self-Insurer | www.sipconline.net

reduce the wait time for organ transplants – an initiative that may help increase the number of transplants in the U.S. by nearly 2,000 each year8 and impact self-insured employers.

Furthermore, as Kaiser Health News reported in late July, the popular online dating app Tinder has partnered with a nonprofit group called Organize, which aims to help end the organ donation shortage.

As a result of the alliance, Tinder users soon may be able to “swipe right” on their mobile phones to register to be organ donors, a move that also could drive up the number of transplants in America.9 The Kaiser article explained that “A similar campaign between Tinder and the National Health Service was carried out in Britain last year. Organize is also partnering with the comedy video website Funny or Die, Facebook, various universities and hospitals to launch apps and social media campaigns to boost registrations for organ donations.”10 Additionally, as Fox News relayed recently, a voucher program that allows relatives to preemptively donate their kidneys to a potential loved one in need is scheduled to launch in at least ten U.S. hospitals.

According to Dr. Jeffrey Vealer, a transplant surgeon who helped start the program at the Ronald Reagan UCLA Medical Center and was quoted in the Fox article, “This is groundbreaking and could completely change the field of transplantation.

The demand for a kidney transplant is tremendous, but with this program, I would argue that, for the first time in history, we can actually start reducing the number of people who are on the waiting list.”11 Furthermore, The New York Times shared recently that another breakthrough “could slash the wait times for thousands of people” who need new kidneys. The article, about a study published in the New England

Journal of Medicine, relayed that with a method known as desensitization, physicians have “successfully altered patients’ immune systems to allow them to accept kidneys from incompatible donors.”12

Four Key Questions When an organization is considering whether to purchase a fully-insured organ transplant product, the following key questions may be helpful to consider:

1

Have risk exposures such as organ transplants made the organization less inclined to self-fund its plan?

2 3

Has the organization been assessed with a laser due to a potential transplant exposure?

Is the organization currently insured with a stop-loss plan without a transplant carve-out solution?

4

Myths and Truths The answers to the foregoing questions may reveal some misconceptions about organ transplant costs and coverage. When equipped with the facts, decision-makers at self-funded organizations may be more easily able to determine their needs and the appropriate solution.

Comment: Our organization has self-funded our health care for years with no organ transplant claims. We do not need fullyinsured organ transplant insurance.

Response: Industry data suggests that organ transplants are increasing in both cost and frequency.

Is the organization aware of the cost and increasing number of organ transplants in the U.S.?

Booth 819 at the National Workers’ Comp & Disabilty (NWCD) Conference in New Orleans Nov. 29-Dec. 2

We know the bottom line is important to you.

Go direct with Prime PPO and realize immediate cost savings.

We’re your primary PPO solution, providing nationwide coverage customized to your needs.

Let us help you to maximize your penetration and work comp savings while offering you highly competitive primary PPO network access rates.

www.PrimeHealthServices.com info@primehealthservices.com 866-348-3887 work comp | auto | commercial group health | medicare

October 2016 | The Self-Insurer

51

Comment: Stop-loss insurance has provisions for organ transplants. Our organization does not need to purchase separate coverage.

Response: Using stop-loss plans to absorb the cost of an organ transplant may negate the cost savings that employers initially realize from these plans, as the transplants usher in lasers that have the potential to result in dramatically higher stop-loss rates at renewal time.

Comment: Our self-funded organization has a large, specific deductible or no stop-loss coverage and therefore, would not be a good fit for fully-insured transplant coverage.

Response: Organ transplant coverage provides budget predictability for organ transplant costs, capping the exposure for the covered organization. For an affordable per-employee, per-month rate, the organization may be able to mitigate the budget impact of transplants in terms of frequency/severity. For example, whether five employees or ten undergo transplants, fully-insured benefits typically are provided for 100% of transplant-related costs.

Comment: Our organization has access to an organ transplant network via our stop-loss coverage. We do not need an organ transplant plan.

Response: A transplant network provides discounted rates on organ transplants. These network discounts minimize the stop-loss carrier’ s financial exposure to organ transplants, but leave the employer with the balance of the costs. With fully-insured organ transplant coverage designed specifically for the employer, it is possible for the employer to receive 100% of the benefit amount for transplant-related costs.

Features to Review Fully-insured organ transplant solutions typically impose no deductibles, co-payments or out-of-pocket costs for the employer or employee when the transplant occurs in network.

(However, employees who have a high-deductible health plan option should consult their legal and tax advisors for any impact the transplant coverage may have on their Healthcare

52

The Self-Insurer | www.sipconline.net

Savings Account.)

As “first-dollar” insurance, these fully-insured plans offer 100% payment for all covered, transplant-related physician and hospital charges, as well as related drugs, when in network. Many provide claim payments directly to the providers to eliminate reimbursement issues and help preserve a company’ s cash flow. What, then, are some potential product differentiators to review?

Consider the following when evaluating fullyinsured organ transplant solutions: • whether they include access to a national network of highly regarded, successful transplant hospitals, • whether they offer one-on-one care management and advocacy from experienced transplant nurse supervisors throughout the entire episode of care, starting from evaluation through a full year after the date of the transplant, • whether they offer an indemnity payment of several thousand dollars made directly to covered patients who receive a transplant, and

• whether they feature a limitation on pre-existing conditions to help make coverage feasible for the group (through more liberal underwriting), even if one or more employees will be subject to a waiting period before coverage under the policy becomes effective.

Note that while some organ transplant solutions may appear to be fully-insured, they may offer an option to choose a deductible of $5,000 to $25,000 to lessen the cost of the policy. The contract, therefore, is not a fully-insured transplant policy; instead, it more closely resembles a stop-loss transplant policy. For self-insured companies and groups, having a transplant policy with a deductible, in additional to the organization’ s deductible for stop-loss coverage, may not be financially prudent.

The Bottom Line In a time of increased organ transplant frequency and costs, a strategy of insuring transplants separately from an organization’ s medical policy is designed to transfer risk, stabilize the group’ s stop-loss rates, and help facilitate high-quality, comprehensive care management that benefits the organization as well as its employees. Companies can learn more about managing needs and costs associated with catastrophic transplant claims by looking to a leader in fully-insured organ and tissue transplant insurance.

Russ Jehs is Senior Product Director, Organ Transplant, of Group Benefits, AIG Consumer Insurance. He can be reached at Russ.Jehs@aig.com.

References “More than 30,000 transplants performed annually for first time in the United States;” United Network for Organ Sharing (UNOS) press release; Jan. 13, 2016; http://www.businesswire.com/news/ home/20160113005358/en/30000-transplants-performed-annually-time-United-States

1

2011 U.S. Organ and Tissue Transplant Cost Estimates and Discussion; Milliman, Inc.; April 2011;2014 U.S. Organ and Tissue Transplant Cost Estimates and Discussion; Milliman, Inc.; Dec. 2014.

2

3

“Fast Facts;” National Kidney Foundation; April 2016; https://www.kidney.org/news/newsroom/factsheets/ FastFacts

4

Organ Procurement and Transplantation Network National Data;” U.S. Department of Health & Human Services; Aug. 5, 2016; https://optn.transplant.hrsa.gov/ data/view-data-reports/national-data

5

2014 U.S. Organ and Tissue Transplant Cost Estimates and Discussion; Milliman, Inc.; Dec. 2014

6

7 P.J. Held, F. McCormick, A. Ojo and J.P. Roberts; “A Cost-Benefit Analysis of Government Compensation ofKidney Donors;” American Journal of Transplantation; Oct. 16, 2015; http://onlinelibrary. wiley.com/doi/10.1111/ajt.13490/epdf 8 Lenny Bernstein; “White House, private sector act to reduce organ transplant waiting list;” The Washington Post; June 13, 2016; https:// www.washingtonpost.com/news/to-your-health/ wp/2016/06/13/white-house-private-sector-act-toreduce-organ-transplant-waiting-list 9 Zhai Yun Tan; “Surgeon Says Apps May Turn Organ Donation Support Into ‘ Concrete Action;’” Kaiser Health News; July 25, 2016; http://khn.org/ news/surgeon-says-apps-may-turn-organ-donationsupport-into-concrete-action 10

Ibid.

11 “Voucher program may reduce organ transplant waitlist, save lives;” Fox News; July 14, 2016; http:// www.foxnews.com/health/2016/07/14/voucherprogram-may-reduce-organ-transplant-waitlist-savelives.html 12 Gina Kolata, “New Procedure Allows Kidney Transplants From Any Donor,” New York Times, March 10, 2016, http://www.nytimes.com/2016/03/10/ health/kidney-transplant-desensitization-immunesystem.html?_r=0

“Data;” United Network for Organ Sharing (UNOS); 2016; https://www.unos.org./data

Visit windsorstrategy.solutions for online demonstrations and learn more today.

October 2016 | The Self-Insurer

53

“The Craft Brewer of Benefits” In the words of the Brewers Association:

Small

Annual production of 6 million barrels of beer or less...”

BIC stays small to provide the utmost attention to the most discerning tastes.

Independent

Less than 25% of the craft brewery...controlled by an...industry member...

BIC stays independent...beholden only to our customers

Traditional

A brewer that...derives from traditional or innovative brewing ingredients...

Flavored malt beverages are not considered beers.

BIC brews benefits with innovation and tradition always true to our mission to deliver value.

303 West Allegheny Avenue • Towson, MD 21204 Phone: 443-275-7400 • Fax: 443-378-8567 info@benefitindemnity.co • www.benefitindemnity.co 60

The Self-Insurer | www.sipconline.net

NEWS

from SIIA

Members

2016 OCTOBER MEMBER NEWS

SIIA Diamond, Gold & Silver Member News SIIA Diamond, Gold, and Silver member companies are leaders in the selfinsurance/captive insurance marketplace.

Provided below are news highlights from these upgraded members. News items should be submitted to Wrenne Bartlett at wbartlett@siia.org. All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at www.siia.org. For immediate assistance, please contact Jennifer Ivy at jivy@siia.org. If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy and jivy@siia.org.

DIAMOND MEMBERS Companion Life Insurance Company Companion Life Named to a National Top 50 List The business consulting firm Ward Group named Companion Life Insurance Company one of its top 50 performing life and health insurance companies for the sixth consecutive year.

Cincinnati-based Ward Group, a provider of benchmarking and best-practices services to the insurance industry, annually analyzes the financial performance of hundreds of life and health insurance companies in the United States to identify the top performers.

It recognized Companion Life for achieving outstanding results in the areas of safety, consistency and performance.

October 2016 | The Self-Insurer

55

“Companion Life strives for best practices in all our product areas. It’s an honor to be recognized by an independent, external organization that knows our industry,” said Scott Hinton, Companion Life president.

“In selecting the Ward’s 50, we identify companies that pass financial stability requirements and measure their ability to grow while maintaining strong capital positions and underwriting results,” said Jeff Rieder, president of Ward Group.

Artex Artex Named Captive Manager of the Year at 2016 US Captive Service Awards Artex has been recognized as Captive Manager of the Year at the 2016 US Captive Services Awards. This is the fifth year that Captive Review, a niche publication and website dedicated to the

interests of risk management and captive insurance, has hosted these awards. A selection of judges with deep captive expertise from a variety of industries reviewed nominations and selected the winners, who were recognized last night at a special dinner ceremony in South Burlington, VT as part of the Vermont Captive Insurance Association’s annual conference.

Captive Review commented, “The judges were impressed by the diverse and growing nature of the Artex practice, demonstrating a clear commitment to be one of the leading players in the industry. Already a leader in the enterprise risk and group captive space, it showed strong growth and success in its rent-a-captive solutions during the judging period and significantly improved its large captive capabilities with the acquisition of Kane in early 2016.”

From left to right: Sophie Thompson - Captive Review; Kevin Heffernan, Executive Vice PresidentOperations, Artex; and Paul D’Angelo, a comedian who was the host for the evening.

56

The Self-Insurer | www.sipconline.net

David McManus, Artex’s President & Chief Executive Officer states, “Artex is delighted to have been recognized as the Captive Manager of the Year and particularly gratified that the judges identified the diversity of our practice and our industry leading growth as differentiators. It’s an endorsement of the deeper client understanding and independent thought Artex’s 400 professionals bring to work every day and its each and every one of them that so richly deserve this important peer recognition.”

GOLD MEMBERS Change Healthcare Holdings, Inc Change Healthcare Reports Second Quarter 2016 Results Change Healthcare Holdings, Inc., a leading provider of software and analytics, network solutions and technology-enabled services designed to enable smarter healthcare, today announced financial results for the three and six months ended. In sum, on June 28, 2016, Change Healthcare jointly announced the creation of a new healthcare information technology company with McKesson Corporation. The new entity will combine Change Healthcare and the majority of McKesson Technology Solutions (MTS) into a separate company positioned to address the healthcare industry’s emerging and most pressing challenges. The transaction is subject to closing conditions, including antitrust clearance and the completion of audited financial statements of the MTS businesses being contributed to the new company, and is expected to close in the first half of calendar year 2017.

Second quarter solutions revenue increased 22.5% to $323.3 million from $263.8 million for the comparable period in 2015.

drive advancements that address the three critical areas of healthcare: cost, quality and outcomes.”

“We are pleased with the continued growth in our business during the second quarter and excited about the many opportunities ahead,” commented Neil de Crescenzo, president and chief executive officer for Change Healthcare. “The pending combination of Change Healthcare and MTS comes at a transformational time in U.S. healthcare as providers and payers transition to value-based healthcare.

Together we will create significant value by combining complementary capabilities from both organizations to deliver innovative new solutions for customers, create opportunities for team members at a leading healthcare technology company and

Group

Oxford Risk Management

Oxford Receives Prestigious US Captive 2016 Services Award Oxford Risk Management Group received the US Captive 2016 Services Award for Captive Management of Enterprise Risk Captives. The award was based on Oxford’s level of commitment to serving the middle market and, in particular, its strong focus on document reporting to ensure transparency and smooth transitions when a change in service provider is undertaken.

The firm has consistently grown in client numbers, premium volume and staff head count. It also played an active part in advocating on behalf of the enterprise risk captive industry as Congress considered, and passed, changes to the 831(b) tax election in December 2015.

“We are proud of our team and independent services providers who help us provide the most conservative structure for 831(b) captive implementation available in the market,” said Michael A. DiMayo, Principal Oxford Companies.

“While continuing to grow this market, we anticipate continued high quality service and competitive product offerings.”

WHEN THE DUST SETTLES

IS YOUR NEW WORLD BRAVE ENOUGH? HCAA’s Executive Forum 2017 Look for more information: www.hcaa.org

February 8 th -10 th | Bellagio, Las Vegas

BOOK YOUR ROOM TODAY!

October 2016 | The Self-Insurer

57

SILVER MEMBERS

HHC Group

EthiCare Advisors, Inc.

HHC Group Certified by Pennsylvania as

EthiCare Advisors, Inc. Launches HIPAA Compliance Solutions on the 20th Anniversary of HIPAA Becoming Law EthiCare Advisors, Inc. announced a valuable new service for our clients, HIPAA Compliance Solutions. This new service is being launched on the 20th anniversary of HIPAA being signed into law by President Bill Clinton on August 21, 1996.

HIPAA Compliance Solutions was created to help EthiCare Advisors’ clients abide by the strict guidelines set out in the law regarding the privacy and security of protected health information. Having the proper measurers in place to meet the requirements of HIPAA will help its clients protect their businesses and to be prepared if they ever face a federal compliance audit.

Mark S. Hartmann, Jr., MS, EthiCare’s Managing Partner & CEO said, “Our clients were instrumental in the creation of this service, many stressed the need for assistance with HIPAA compliance. We think we have the solutions to help.”

The major components to good HIPAA compliance include the performance of regular Security Risk Assessments, updated and customized Policies & Procedures and systematic Employee Training. EthiCare will offer these and other compliance related services such as IT Security, Software Compliance and Breach Investigation.

YOUR VERY OWN BULLDOG FOR CLAIMS SAVINGS

Utilization Review Entity The Pennsylvania Department of Health has certified HHC Group as a Utilization Review Entity for Pennsylvania Managed Care Plans. The State has also certified HHC Group to conduct External Grievance Appeal Reviews received from consumers and providers of health service decisions by Managed Care Plans. The State has begun assigning HHC Group cases for review.

Utilization Review Entities or Independent Review Organizations (IRO) provide peer review services when insurers deny health insurance claims. The purpose of these reviews is to determine if a service is medically necessary, medically appropriate, experimental or investigational. The Affordable Care Act requires insurance

W

hen it comes to claims savings, you want a bulldog – someone

who’s guaranteed to protect your best interests. That’s why third-party administrators and self-insured groups rely on HHC Group to save the maximum amount of money possible on their medical claims. Armed with advanced technology and driven by a dogged work ethic, our resourceful team never gives up on your medical claims.

LEARN MORE. CALL

301.963.0762

OR EMAIL

www.HHCGroup.com Claims Negotiation & Repricing | Claims Editing | Medical Bill Review (Audit) | Reference-Based Pricing DRG Validation | Utilization Reviews and Independent Reviews | Independent Medical Examinations

58

The Self-Insurer | www.sipconline.net

sales@HHCGroup.com

ACCREDITED

INDEPENDENT REVIEW ORGANIZATION (EXTERNAL)

companies to contract with at least three IROs that are nationally accredited.

HHC Group is a URAC accredited IRO. URAC (formerly the Utilization Review Accreditation Commission) is a nonprofit organization promoting healthcare quality by accrediting healthcare organizations.

URAC’s IRO standards “assure that organizations that perform this service are free from conflicts of interest, establish qualifications for physician reviewers, address medical necessity and experimental treatment issues, {and} have reasonable time periods for standard and expedited reviews, and appeals processes.”

HHC Group provides Internal and External Independent Peer Reviews for insurance companies, health maintenance organizations, self-insured companies and ERISA plans. The team overseeing the review process utilizes its combined 125 years of healthcare experience to ensure that every review fully answers all questions being asked, cites the appropriate medical guidelines, and is clearly written and grammatically correct.

Integro Integro Hires Reinsurance Expert Raj Gulati as Senior Vice President International broker and risk management firm Integro Insurance Brokers announced that Raj Gulati joins reinsurance subsidiary Integro Re as senior vice president, based in New York.

At Integro Re, Gulati will work with clients to attain optimal program structure, conditions and pricing.

“We are delighted that Raj is onboard to contribute his considerable market experience and significant technical skills to the benefit of our rapidly growing specialty reinsurance portfolio. His transactional depth perfectly complements our overall commitment of a true consultative and analytic based approach to the development of customized solutions to client challenges in this arena,” said Managing Principal Peter Robinson.

Gulati brings more than 16 years of insurance and reinsurance industry experience to Integro Re. Most recently he served as vice president in JLT Re’s Life, Accident and Health group, responsible for managing all aspects of client engagements.

Gulati is a graduate of Pennsylvania State University with a Bachelor of Science degree in management. He also earned the FLMI (Fellowship, Life Management Institute) and ARA (Associate, Reinsurance Administration) designations granted by LOMA (Life Office Management Association).

October 2016 | The Self-Insurer

59

SIIA New Members Regular Corporate Members Matthew Herrera Director of Sales Careington International Corporation Frisco, TX C. David Hayth Senior Manager DAVID CORP Wakefield, MA William Taylor Managing Consultant Fairly Group Amarillo, TX Dan Contilli Senior Director of Inside Sales HealthEdge Plainfield IL Addam Arrington National Account Executive Johnston & Associates Franklin, TN Matthew Feltman General Manager Kroger Prescription Plans, Inc. Cincinnati, OH Nicole Chapman Sales Director McKesson Health Solutions Alpharetta, GA William Low President Medical Review Institute of America Salt Lake City, UT Terry Young President MRM, LLC Birmingham, AL

60

Virginie Fournier Marketing Coordinator MSH International Calgary, AB Michelle Rice SVP, Public Policy & Stakeholder Relations National Hemophilia Foundation New York, NY Robert Dial Vice President Compliance Preferred Risk Administrators Bedford Park, IL Erison Rodriguez Regional Sales & Marketing Director ProAct Rx East Syracuse, NY Bryan Noar General Manager SelfHelpWorks, Inc. San Diego, CA Aalap Majmudar President Signal Health New York, NY Thomas Wagner VP Health & Welfare SK&P Insurance Services, Inc. Austin, TX Teresa Heinitz Account Executive The Karis Group Austin, TX Daniel Thies Executive Vice President Three Rivers Provider Network Chula Vista, CA Amy Martinson Marketing Manager TrendShift Marina del Rey, CA

The Self-Insurer | www.sipconline.net

Silver Member Suzanne Webb CEO Exclusive Surgeries Network, LLC Peoria, AZ

Employer Member Joseph Taussig Chairman Enterprise Risk Re San Juan, PR

SIIA would like to Recognize our Leadership and Welcome New Members 2016 Board of Directors CHAIRMAN* Steven J. Link Executive Vice President, Midwest Employers Casualty Co. Chesterfield, MO PRESIDENT Mike Ferguson SIIA, Simpsonville, SC TREASURER & CORPORATE SECRETARY* Duke Niedringhaus Senior Vice President, J.W. Terrill, Inc. Chesterfield, MO CHAIRMAN-ELECT Jay Ritchie Senior Vice President, HCC Life Insurance Company Kennesaw, GA

Directors

Joseph Antonell Chief Executive Officer/Principal A&M International Health Plans Miami, FL Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA Andrew Cavenagh President Pareto Captive Services, LLC Philadelphia, PA Mark L. Stadler Chief Marketing Officer HealthSmart Irving, TX Robert A. Clemente Chief Executive Officer Specialty Care Management LLC Lahaska, PA David Wilson President Windsor Strategy Partners, LLC Junction, NJ

Committee Chairs

ART COMMITTEE Jeffrey K. Simpson Attorney Gordon, Fournaris & Mammarella, PA Wilmington, DE GOVERNMENT RELATIONS COMMITTEE Jerry Castelloe Principal Castelloe Partners, LLC Charlotte, NC HEALTH CARE COMMITTEE Leo Garneau Chief Marketing Officer, SVP Premier Healthcare Exchange, Inc. Bedminster, NJ INTERNATIONAL COMMITTEE Robert Repke President Global Medical Conexions, Inc. Novato, CA WORKERS’ COMP COMMITTEE Stu Thompson CEO The Builders Group Eagan, MN

Do you aspire to be a published author? Do you have any stories or opinions on the self-insurance and alternati ve risk transfer industry that you would like to share with your peers?

We would like to in vite you to share your insight and submit an article to The Self-Insurer ! distributed in a digital and print format to reach over 10,000 readers around the world. The Self-Insurer has been delivering information to the self-insurance /alternative risk transfer community since 1984 to self-funded employ ers, TPAs, MGUs, reinsurers, stoploss carriers, PBM s and other service providers.

Articles or guideline to Editor Gretchen Grote at ggrote@sipconline.net also has advertising opportunities available. Please contact Shane

Byars at sbyars@sipconline.net for advertising information.

October 2016 | The Self-Insurer

61

2

The Self-Insurer | www.sipconline.net

2

The Self-Insurer | www.sipconline.net

Better Service.

Better Performance.

Experience Zelis Healthcare.

Network Solutions

Claims Integrity

Payments

Local expertise and national resources

Highest level of savings on every claim

Streamlined payments significantly improving cost control

Zelis Healthcare is a healthcare information technology company that provides solutions which address pre-payment to payment needs across the claims life cycle.

Find out what Fully Integrated Healthcare Cost Management can do for you!

Visit us at Zelis.com Copyright 2016 Zelis Healthcare. All rights reserved.