Self Insurer August 2019

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A S I P C P U B L I C AT I O N

Occ Docs Within Reach

MORE SELF-INSURED EMPLOYERS OFFERING ONSITE OR NEAR-SITE OCCUPATIONAL HEALTH CLINICS THAT MAY SUPPLEMENT PRIMARY CARE SERVICES

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TABLE OF CONTENTS

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W W W. S I P C O N L I N E . N E T

FEATURES 4

OCC DOCS WITHIN REACH MORE SELF-INSURED EMPLOYERS OFFERING ONSITE OR NEAR-SITE OCCUPATIONAL HEALTH CLINICS THAT MAY SUPPLEMENT PRIMARY CARE SERVICES

By Bruce Shutan

12

TAX COURT DEALS BLOW TO ENTERPRISE

RISK CAPTIVES

ARTICLES 18

INSIDE THE BELTWAY

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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

38

HOW SELF-INSURED HEALTH PLANS ARE HELPING EMPLOYERS COMPETE IN A CHALLENGING TALENT MARKETPLACE

44

SIIA ENDEAVORS

46

NEWS FROM SIIA MEMBERS

30 BROKER/ADVISOR PERSPECTIVES INSIGHTS FOR AND ABOUT

BROKERS/ADVISORS ACTIVE IN

THE SELF-INSURANCE MARKETPLACE

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC).

Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681,(888) 394-5688

Self-Insurer’s Publishing Corp.

PUBLISHING DIRECTOR Erica Massey, SENIOR EDITOR Gretchen Grote, CONTRIBUTING EDITOR Mike Ferguson, DIRECTOR OF OPERATIONS Justin Miller, DIRECTOR OF ADVERTISING Shane Byars, EDITORIAL ADVISORS Bruce Shutan and Karrie Hyatt, 2018 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman, Erica M. Massey, President, Lynne Bolduc, Esq. Secretary

AUGUST 2019

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FEATURE

Occ Docs Within Reach

MORE SELF-INSURED EMPLOYERS OFFERING ONSITE OR NEAR-SITE OCCUPATIONAL HEALTH CLINICS THAT MAY SUPPLEMENT PRIMARY CARE SERVICES

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s America’s convenience culture gains traction both at home and work, self-insured employers increasingly see value in offering onsite or near-site medical clinics. Benefits include reducing absenteeism, improving productivity and getting a better handle on soaring health care costs.

The same can be said about occupational health services at or near the worksite, whose larger purpose is to expedite return to work. But there are nuances to consider along the way to deciding whether to pursue these two approaches and understanding how they evolved.

Written by Bruce Shutan

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“Most worksite health centers have established occupational services, especially the older ones, and have added primary care in many cases,” reports Bruce Bartholomew, business development officer for OnSite Care, which integrates occupational medicine with primary care, wellness, disease management and onsite medication dispensaries.

Occ Docs within Reach If a primary care clinic is already established in the workplace, then he believes it’s only natural that there would be a desire to expand into some occ health services that may include drug testing and first aid for workplace injuries. “We kind of got pulled into occupational health care,” Bartholomew explains.

CONVERGENCE OF SERVICES The convergence of occ health and primary care at or near the worksite is quite apparent to Tim Ross, senior VP and executive director of the National Association of Occupational Health Professionals (NAOHP), which he operates with his wife Cindy Ross. Also an administrative Tim Ross director for 15 clinics that include urgent and primary care as well as occ health facilities, he has embraced onsite primary care physician (PCP) arrangements under NAOHP’s direct-to-employer division.

“We as a hospital organization are getting into it because more employers are becoming direct payers,” he reports, noting their preference for customized vs. cookiecutter programs. Ross recently met with a global company hoping to establish an onsite urgent care facility that also would provide occ health services for employees and their dependents.

He predicts more integration of primary care and occ health, adding: “at least in the sense that I see it as hospital systems are going to have to integrate those two within one division in some sense or another.” The result would be blending some of those services and having them overseen by one individual.

Mike La Penna, a principal with the La Penna Group, Inc., who has helped develop model workplace health clinics and wrote the first book dedicated to onsite clinics, recognizes that occ and non-occ clinicians are rightly rabid about protecting their territory and area of specialization.

It wouldn’t make sense, for instance, to have a PCP address environmental factors, ergonomics or safety equipment. Also, there would have to Mike La Penna be a separate recordkeeping function for workrelated injuries to comply with workers’ comp governance if onsite or near-site services include both occ health and primary care.

administering flu shots or checking blood pressure. The medical staff in an occ health setting also can treat minor acute types of urgent care such as treating a headache.

“Almost every primary care clinic that we know of is serving sick-at-work and some key injury-at-work situations,” La Penna observes, adding that preemployment testing represents another issue that could straddle both worlds.

“You’ve got to look at the grey area and decide who goes where and under what circumstances.”

One such scenario may involve back injuries, whose treatment will be the same irrespective of whether an employee shoveled snow at home or lifted a box at work that was too heavy. He says it’s important to first define functions and determine how the occ and non-occ areas morph into one another when dealing with such maladies.

The push-pull nature of these services poses opportunities and challenges alike.

“We often tell the employers, you’ve got a great potential here for tremendous collaboration, cooperation and integration, but by the same token, you’ve got tremendous potential for internally competitive programs which are hugely antagonistic to each other,” cautions La Penna, who’s a big proponent of integration. He believes “important core information can be shared across the record barrier by thoughtful people who are working toward a more common good.”

But there are always occasions when occ health bleeds into primary care, For example, he says occ health may handle some population intervention like

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Occ Docs within Reach GROWING PREVALENCE OF FACILITIES Onsite clinics date back to the late 1930s when Kaiser industrial companies provided medical support for construction, shipyard and steel mill workers – a model that was rolled out to the public in 1945. Heavy manufacturers pioneered this concept, which included managing accidents and injuries at the worksite, as well as speeding Larry Boress up the return to work. Decades later it spread to Silicon Valley and other sectors of the U.S. economy.

“Occ health will always be necessary because productivity is the bottom line, and having it either on site or near site is really critical,” observes Larry Boress, executive director of the National Association of Worksite Health Centers (NAWHC). He describes the clearest benefit to self-insured employee populations as immediate access to care.

One-third of U.S. employers with 5,000 employees or more offer medical clinics at the worksite vs. 24% in 2012, according to 2018 surveys of companies with 500 or more employees done by the NAWHC in conjunction with Mercer and the Benfield Group, a division of AJ Gallagher.

Included in the mix are onsite or near-site occupational health services that include OSHA exams, drug testing, physicals, return-to-work services, travel medicine and disability management to help rein in work comp costs.

Occupational health is often offered as part of a broad range of clinical services at the worksite, cited by 68% of employers surveyed. Another 10% of survey respondents indicated an interest in doing the same within two years. Occ health services are most commonly found in the health care field (45% offer it), followed by government (24%), manufacturing (23%) and financial services (18%).

Most occ health providers work for near-site clinics available to multiple employers typically as part of a fee-for-service operation, according to Boress. In stark contrast, he says 60% of on-site and near-site health and wellness centers “don’t charge anything, and those are more contracted on a cost-plus or per-member-per-month basis.”

There are key differences between onsite and near-site services, the most obvious being a productivity savings associated with the former vs. the latter. “If you have to send somebody off site to seek treatment for a work injury, you lose some control over care management, and people are away longer,” Bartholomew explains.

He says onsite care is not only faster and more accessible, but also can reduce many downstream costs. And in some industries such as health care, Bartholomew notes that medical services are already built into the workplace. Still, that arrangement isn’t always a practical one.

A shared clinic model might be a better fit for smaller companies or those in the same industry and regulatory zone, as well as members of an employer coalition or group captive that band together for competitive pricing. A near-site facility also would work best for employers gathered in industrial parks given their close proximity.

Occ health concerns no doubt run deep in a manufacturing setting where workers may be more prone to workrelated accidents or injuries. “You don’t see a lot of occupational health clinics in phone banks and places where people just do not have physical aspects to their jobs,” Bartholomew explains. It also depends on other factors such as the presence of stress or chronic conditions, which he says can also make workplace mishaps more likely to occur.

Self-insured employers that offer onsite or near-site occ health services surely will reap the benefits of “an improved safety program and lower

“I think companies that have clinics tend to have stronger safety and health cultures, or at least ones that I’ve seen,” injury experience,” he says.

Bartholomew adds.

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Occ Docs within Reach Since there are numerous players serving this market niche, how can selfinsured employers decide which one is the right fit? La Penna has a few suggestions.

Beyond the basic issues of price, hours of operation and access to services, he says it’s critical to gather four or five references. It’s also important to examine the credentials of the board certified physician who’s overseeing the operation and how many hours he or she focuses on that site.

ASSESSING INDUSTRY OPERATORS The nation’s largest onsite or near-site health clinic operator is Premise Health, which Boress says also offers occ health.

Another leading national occ health services provider is Concentra, whose acquisition of U.S. HealthWorks made it an even bigger player in this arena as well as Medcor and Marathon Health.

But most of the occ health services provided involve local, state or multistate programs embracing the primary care onsite or near-site clinic model, according to Ross. “We have a lot more of those types of competition than we do on-site occ med,” he reports, noting that occ health programs are usually localized.

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Another consideration is an onsite or nearsite occ health clinic’s appearance when shopping for a facility operator. He recalls visiting several facilities in Pennsylvania about 25 years ago that didn’t look very inviting. “I didn’t want to sit there,” he says. “There were no magazines. You walk in, and it’s all linoleum and cinderblock construction. It’s not consumer friendly at all.”

But by today’s standards, he’d expect to see an environment that emulates a physician office that’s equipped with the latest recordkeeping and electronic medical records (EMR) functionality. “There are only two or three EMRs that are common to occ health, and if they named one that didn’t seem to ring a bell, I’d say I’m in the wrong place,” he adds.

Finally, La Penna stresses the need to assess the health outcomes across a facility operator’s book of business. Key metrics include access, return to work, presenteeism vs. absenteeism, employee satisfaction, facility staff turnover and confidence. While some of these areas are hard to measure, his point is that any decision should not be based on cost alone.

In assessing onsite or near-site occ health program quality measures, Ross says it’s a matter of determining how many visits it takes to return a work comp claimant to work after an injury, as well as the ratio of follow-up visits.

When quantifying the value of these services, Bartholomew cautions that there’s no “standardized, non-subjective yardstick” by which to measure results and the multiple variables used to calculate clinic outcomes. He says another key consideration is

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Occ Docs within Reach

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Occ Docs within Reach that the duration of injuries and returnto-work strategies “are impacted both by management as well as the provider,” making it difficult to objectively compare results.

Still, there are tools available for helping ease vendor selection. NAWHC, for example, created “The Guidebook for Measuring the Performance of Worksite Clinics” to help hold vendors accountable and include value-oninvestment metrics such as patient satisfaction and productivity gains, and lower absenteeism and hospital ER visits.

About 25% of employers don’t do any measurement at all, Boress reports.

As the old axiom goes, you cannot manage what you cannot measure, but self-insured companies that make an attempt to gather and understand the data will at least be on the right track toward fostering a culture of health and safety.

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Superior case management Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 30 years.

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AUGUST 2019

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FEATURE

Tax Court Deals Blow to

Enterprise Risk Captives

Written by Karrie Hyatt

O O

n April 10, the U.S. Tax Court released its decision in Syzygy Insurance Co. v.

Commissioner, finding in favor of the Internal Revenue Service (IRS). This was the first of three similar cases that are due to be decided this year that involve Enterprise Risk Captives (ERC) electing the 831(b) tax deduction.

Referring to these small to medium-sized companies as “micro captives,” the IRS has been investigating ERC insurers that opt for the 831(b) tax filing for more than seven years.

The department has long suspected that some companies claiming to be captive insurers are really using the 831(b) designation as a tax dodge, especially in regards to estate planning and wealth transfer.

For the last five years the IRS has named these types of captives to their “Dirty Dozen” list—a list the Service releases each year warning tax payers of potential tax scams. In late 2016, the IRS issued Notice 2016-66 which named “micro captives” as “transactions of interest” and required additional financial disclosures from captives opting for the 831(b) election for the purpose of gathering further data on how these captives operate.

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Enterprise Risk Captives Judge Ruwe, who wrote the opinion, narrowed down the case into four parts: (1) were the payments made by Highland Tank to Syzygy and its fronting insurers deductible as insurance premiums; (2) if Syzygy was eligible for the 831(b) tax election during the years 2008 to 2011; (3) if the premium payments to Syzygy should have been considered income, if the court decided the arrangement wasn’t insurance; and (4) if the captive owners would be liable for income tax-related penalties.

On the first point, the Court relied heavily on the Avrahami Syzygy is the third case regarding ERCs taking the 831(b) option to be decided by the Federal Tax Court since 2017. The two other cases were Avrahami v.

Commissioner in 2017 and Reserve Mechanical Corp. v. Commissioner in 2018.

In all three of these cases, the Court’s decision was in favor of the IRS.

“I think it’s important to remember a few things when it comes to the recent IRS tax court wins,” said Ryan Work, vice president of government relations with SIIA. “First, many of the captives in these cases were formed at a time during ERC’s formative years, meaning that the industry has matured and put in place more robust practices.

Second, captive taxpayers have also had wins in cases such as Securitas and RentA-Center, that should not be forgotten simply because of recent wins by the Service”

THE SYZYGY DECISION In 2008, Pennsylvania-based Highland Tank & Manufacturing Co.—a steel tank manufacturer—and its affiliates formed Syzygy Insurance Co., domiciled in Delaware.

California-based captive manager, Alta Holdings, LLC, provided management services for Syzygy and the captive participated in Alta’s captive pooling program. During the years in question, 2008 to 2011, Highland Tank purchased policies through Altarelated fronting carriers—first U.S. Risk Associates Insurance Co. (SPC), Ltd. and then Newport Re, Inc. During this time, the captive owners relied on advice from Emanuel DiNatale, a C.P.A. with Alpern Rosenthal.

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vs. Commissioner decision and used the same criteria it used to judge that case—how risk was distributed and if the captive provided “insurance in commonly accepted sense.”

The Court found that in terms of risk distribution the premiums paid to Syzygy and its fronting insurers, while not a complete loop, “looks suspiciously like a circular flow of funds.” The court found no evidence of arm’s length contracts and that premiums were not actuarially determined. Citing both the Avrahami and Reserve Mechanical decisions, the Court stated, “We have held that premiums were not actuarially determined when there has been no evidence to support the calculation of premiums and when the purpose of premium pricing has been to fit squarely within the limits of section 831(b).”

Enterprise Risk Captives The Court went on to state, “This means Syzygy’s reinsurance of those policies did not distribute risk; therefore, Syzygy did not accomplish sufficient risk distribution for Federal income tax purposes through the fronting carriers.” In terms of “insurance in the commonly accepted sense,” the Court had concerns regarding the captive’s zero insurance claims over the period of time in question and also in its investment choices.

Based on the information detailed in the Decision about whether or not the payments made by Highland Tanks to Syzygy counted as premium, the Court found that “Syzygy was not operated like an insurance company” and was not considered eligible during the years in

question for the 831(b) tax deduction. It also found that the premiums paid to Syzygy should have been considered taxable income for the captive. As to the fourth point in the Decision, the Court decided that the individual petitioners, or individuals who paid premiums to Syzygy and its fronting carriers, would not be liable for “accuracy-related penalties” as requested by the IRS.

THE SYZYGY IMPACT According to Ryan Work, the lessons to be learned from all three cases is that the IRS is focusing on several key points when it comes to ERCs—appropriate risk and premium, loss history, binding policies, and arm’s length transactions. “The larger question in all three cases also surrounds the viability of risk pooling and how the court is considering that in part of the larger context,” said Work.

The IRS seems to be handpicking cases that they believe will be easy wins that will help establish case law for future legal action. The cases they chose illustrates the key points they are focusing on and allows them to get the court decisions they are looking for. Yet, in the overall scheme of things, the cases that are making it to court are a tiny percentage of the number of captives being audited.

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Enterprise Risk Captives Even with all the negative press from the IRS’s aggressive attitude towards small captives taking the 831(b) tax election, ERCs continue to grow. According to Work, “First and foremost, small and medium size business owners still see ERC captives as an important and viable risk mitigation tool. Rest assured that with all the recent criticism and court decisions, these owners are taking a harder look at ERCs and still seeing them as not only legitimate, but a necessary part of their overall business operation.”

Yet, with the continuing interest that the IRS has in “micro captives,” there has never been a better time for captive owners to look into their captive arrangements to make sure that they are being used properly as insurance vehicles.

“The captive industry needs to continue to take a deep dive look at itself and ensure that managers are creating captives appropriately, both with risk and premium, and that owners fully understand the captive insurance they are forming. This is real insurance with real risk,” said Work.

Based on Avrahami, Reserved Mechanical, and now Syzygy, it looks like the IRS is creating a template with which to approach small captives electing the 831(b) designation. “There is little doubt that the IRS is creating additional guidelines to review captives, both through recent court cases as well as the information collected through Notice 2016-66. While some of this is detrimental to the growth of the captive industry, I believe the industry will come out stronger for it at the end of the day, learning lessons, creating better practices and management guidelines, and helping create a clear future.”

SIIA has been committed to that end by advocating on behalf of ERCs through exploring policy issues, working with and educating regulators, working closely with its member organizations, and being proactive in creating guiding principles such as the Captive Manager Code of Conduct, which was released earlier this year.

That leaves the question, what does the future hold for ERCs? Like many other captive arrangements, they’ve proven their worth to their owners and despite the negative press from the IRS are continuing to grow. Yet these highly publicized tax court decisions could have a negative impact on future growth.

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Not so, according to Work. “I’ve repeated this many times over the past several years, but the future remains bright for ERCs. While there will continue to be short term pain, that pain will weed out the bad actors and, at the end of the day, the industry is going to be better and stronger because of this. The IRS and courts are helping with that, but more importantly, the industry needs to look deeply into practices and internal guidelines and continue to showcase what’s going right and why businesses continue to utilize captives appropriately and for the right reasons. It’s not just about the captives in tax court, it’s about the 99% that aren’t.”

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.

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INSIDE THE BELTWAY

INSIDE the Beltway WRITTEN BY JOANNE WOJCIK

T T

he battle lines have been drawn in the legislative battle to address surprise medical billing, with payers on one side and providers on the other.

Payers and providers agree on several key tenants of surprise billing, including protecting patients from receiving such bills. However, the difference comes down to how much of that payment providers will receive in emergency situations, and those in which a patient receives service in an in-network facility, though by an out-ofnetwork provider. In those cases, payers, which include both the insured and selfinsured employer community, support establishing a reimbursement benchmark for certain medical services—whether it be based on in-network rates or a percentage of Medicare reimbursement rates--and requiring all providers to accept that amount as final payment, regardless of whether they are in network or not.

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SELF-INSURER

THE

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INSIDE THE BELTWAY

Meanwhile, providers--including both hospitals and doctors--want the ability to negotiate their compensation with ‘baseball-style’ arbitration in which each party— both the provider and the payer—submits their best financial offers, and a neutral arbitrator determines which one is the most reasonable compensation for the provider. However, any reimbursement mechanism would only take effect if and when the payer and provider cannot agree on a set rate.

The term “surprise medical bill” describes fees charged when a patient receives care from non-network providers or services not covered by their health benefits. Surprise medical bills occur in 18% of emergency room visits and 15% of in-network hospital stays, according to an analysis of 2017 claims data from large employer plans conducted by the Kaiser Family Foundation.

Surprise medical bills typically arise out of three scenarios: When a patient receives care at an in-network facility but is treated by an out-of-network provider; when a patient receives emergency care from providers, at a facility or by an ambulance service that is outside of their insurance network; or when a patient is transferred to a non-network provider or facility, but not informed that this care is out-of-network, and is not offered an in-network alternative.

While several states have taken action to address the issue, for the more than 100 million Americans covered by a self-funded health plan, these state laws provide no protection and underscore the need for Congressional action. Therefore, the Self-Insurance Institute of America, Inc., has joined forces with a diverse group of payers including employers, health insurance providers and brokers, who support legislation that will protect patients from surprise medical bills and rein in out-of-control health care costs.

Legislation to end surprise medical bills also has bipartisan support in Congress and is backed by the Trump Administration. In fact, SIIA and several of its members sat down earlier this year with White House staff to help develop principles that the president has said he would like to see included in a final bill, which he has promised to sign.

In particular, SIIA members support using a federal reimbursement benchmark set at a median contracted rate, based on geography, rather than a percentage of Medicare, because the latter has the potential to “lead us down the rabbit hole to Medicare for All,” a single-payer, government-run health care program advocated by several Democratic presidential candidates, explained Ryan Work, vice president for federal government relations at SIIA.

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INSIDE THE BELTWAY Such a program would replace almost all other existing public and private plans with a more generous version of Medicare.

“SIIA believes that the innetwork facility offering services of an out-ofnetwork provider should adhere to the terms and conditions set forth in their network agreement,” according to Work, whose team of lobbyists has met with hundreds of lawmakers to present the payers’ position. Work also has authored two letters to lawmakers specifically outlining SIIA’s stance.

SIIA has long favored an approach to surprise medical billing that protects patients from providers charging

excessive amounts for services rendered after their health plan has already made an objectively reasonable payment. In other words, the network contract should apply to any and all services provided by the in-network facility, regardless of whether they are administered by an in-network or non-network provider.

But SIIA opposes arbitration, which is a complex and inefficient process that will ultimately increase patient costs rather than reduce them, according to Work.

Moreover, even arbitration would need some sort of benchmark mechanism in place to prevent out-of-network providers from maximizing costs and payments through a binding arbitration process, Work pointed out.

Congress is currently reviewing four proposals to tackle surprise medical bills:

• S. 1895, the “Lower Health Care Costs Act” introduced in June by Health, Education, Labor & Pensions Committee Chairman Sen. Lamar Alexander (R-TN) and Ranking Member Sen. Patty Murray (D-WA), is an omnibus bill that, along with surprise billing, also addresses prescription drug prices, transparency and numerous public health issues such as improving mental health parity, maternity care and obesity and disease prevention programs.

The proposal also addresses air ambulance service providers, an issue of concern to SIIA members. Air ambulances charged private payers between about 4 and 9.5 times more than what Medicare actually paid for those services in 2016, according to a Health Affairs study by researchers at Johns Hopkins School of

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For more than 35 years, self-funded employers have trusted Sun Life to deliver flexible stop-loss solutions and seamless claim reimbursement. And now, with our new Clinical 360 program, our clinical experts will review your claims data to identify cost savings and care optimization. With high-cost medical and pharmacy claims growing every year, you need your best partner with you every step of the way. Ask your Sun Life Stop-Loss specialist about our latest innovations.

STOP-LOSS

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DISABILITY

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ABSENCE

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DENTAL / VISION

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VOLUNTARY

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LIFE

For current financial ratings of underwriting companies by independent rating agencies, visit our corporate website at www.sunlife.com. For more information about Sun Life products, visit www.sunlife.com/us. Stop-Loss 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 REV 7-12. In New York, Stop-Loss policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) 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. © 2019 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. Visit us at www.sunlife.com/us.

BRAD-6503k SLPC 29427 02/19 (exp. 02/21)

INSIDE THE BELTWAY Medicine and Johns Hopkins Carey Business School. The Alexander-Murray bill would levy a $10,000 fine on air ambulance service providers each time they charge more than the median in-network rate for a particular geographic region set by HHS.

• S. 1531, titled “STOP Surprise Bills Act of 2019”, introduced in May by Sens.

Maggie Hassan (D-NH) and Bill Cassidy (R-LA), largely centers around baseballstyle arbitration. Under the proposal, providers would automatically be paid the difference between the patient’s in-network cost-sharing amount and the median in-network rate for these services, but providers and plans would have the opportunity to appeal this payment amount through an independent dispute resolution process. This measure has gained the support of 24 cosponsors as well as Physicians for Fair Coverage, a group backed by physician-owned businesses that oppose any measure that places caps on their fees.

• In the House, lawmakers are considering the “No Surprises Act” introduced in May by Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR), which takes an approach similar to the Alexander & Murray proposal, implementing some sort of benchmark for determining non-network provider compensation.

• Another arbitration bill mirroring the Hassan & Cassidy measure was introduced in the House just prior to the July 4th recess by Reps. Raul Ruiz (D-CA) and Phil Roe (R-TN).

As these bills go through the committee markup process, it is highly likely that some sort of compromise could be worked out that establishes a benchmark based on in-network reimbursement rates and applies arbitration only to those medical bills above a certain threshold amount, according to Work.

“The providers are really spending money and putting pressure on members of Congress to flip towards arbitration,” Work said. “We’ll see how this debate heads over the next few months, but I really see a more middle-of-the-road compromise between a benchmark and arbitration.”

Regardless of what the final measure contains, it is very likely that something will pass this year, according to Work.

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“There’s a big bipartisan focus. The Administration, and the Department of Health and Human Services specifically, has been pushing this transparency agenda,” he said, pointing to the executive order that the president signed on June 24 that calls for upfront disclosure by hospitals of prices for common tests and procedures to give patients the information they need to shop for better deals.

“It is important to note that this is the third executive action this year related to price transparency,” he noted.

“The Affordable Care Act addressed accessibility, now the focus is on cost and transparency.”

What are clients saying about our EmCap® program?

“You have become a key partner in our company’s attempt to fix what’s broken in our healthcare system.”

- CFO, Commercial Construction Company

“Our clients have grown accustomed to Berkley’s high level of customer service.”

- Broker

“The most significant advancement regarding true cost containment we’ve seen in years.”

- President, Group Captive Member Company

“EmCap has allowed us to take far more control of our health insurance costs than can be done in the fully insured market.”

- President, Group Captive Member Company

“With EmCap, our company has been able to control pricing volatility that we would have faced with traditional Stop Loss.”

- HR Executive, Group Captive Member Company

People are talking about Medical Stop Loss Group Captive solutions from Berkley Accident and Health. Our innovative EmCap® program can help employers with self-funded employee health plans to enjoy greater transparency, control, and stability.

Let’s discuss how we can help your clients reach their goals.

This example is illustrative only and not indicative of actual past or future results. Stop Loss is underwritten by Berkley Life and Health Insurance Company, a member company of W. R. Berkley Corporation and rated A+ (Superior) by A.M. Best, and involves the formation of a group captive insurance program that involves other employers and requires other legal entities. Berkley and its affiliates do not provide tax, legal, or regulatory advice concerning EmCap. You should seek appropriate tax, legal, regulatory, or other counsel regarding the EmCap program, including, but not limited to, counsel in the areas of ERISA, multiple employer welfare arrangements (MEWAs), taxation, and captives. EmCap is not available to all employers or in all states.

Stop Loss | Group Captives | Managed Care | Specialty Accident ©2017 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved. BAH AD2017-09 7/17

www.BerkleyAH.com

A QQ& A

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

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T 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, Dallas 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.

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DOL CRACKS DOWN ON HEALTH PLAN TAX AVOIDANCE SCHEMES WITH CRIMINAL SANCTIONS; EMPLOYERS AND EMPLOYEES MAY BE LEFT HOLDING THE BAG A recent federal-state criminal enforcement action demonstrates the continued commitment of the Department of Labor (DOL) and other federal agencies in combating fraudulent tax avoidance schemes involving health benefit arrangements.

Promoters face the worst consequences; however, employers and employees who innocently participate in these schemes may be held liable for income and employment taxes that should have been paid.

This article discusses the recent criminal case and provides guidance to help identify faulty schemes. The article also addresses legitimate plans, including the tax treatment of benefits under traditional fixed indemnity health coverage, such as excepted benefit hospital and other fixed indemnity policies.

DOL AND STATE AUTHORITIES JOIN FORCES IN PROSECUTING

In the recent case, the promoters collapsed the two steps of the classic double dip into a series of paper transactions that in effect did nothing more than reduce participants’ taxable wages and related employment taxes.

The scheme caused millions of federal FICA and personal income taxes to be underpaid. The only actual money that changed hands was the required promoter’s fees paid by employers and employees.

Several regional offices of the DOL, the DOL’s office of inspector general, a number of state authorities, the IRS criminal investigation division, and the FBI participated in the joint investigation.

In prosecuting the case, the DOL relied on ERISA § 519, which prohibits false statements and representations in relation to a multiple employer welfare arrangement (MEWA).

The recent case publicized by the DOL involves a version of what is commonly referred to as the classic “double dip”1. The original double dip first appeared in the early 2000s, and consists of two basic steps: (1) employees pay for their portion of the cost of an otherwise excludable employer health plan through pre-tax salary reduction; and (2) employees are paid a portion of their salary reduction contribution purportedly on a tax free basis, to bring their take-home pay back up to the pre-salary reduction level.

A conviction in the case was secured through a guilty plea. According to the DOL, among the sanctions, millions of dollars of assets of the defendants had been seized and, consistent with ERISA §§ 411 and 504, the defendants are barred from employment, consultation activities and any type of service or position related to employee benefit plans or labor unions for 13 years.

In the original scheme, the payments were characterized by the promoter as “reimbursements” for the cost of the health plan. The promoter pockets a fee from employers and employees from the purported tax savings. The problem is that the purported tax-free payments are in fact taxable wages subject to income and employment taxes and withholding, and the IRS made that clear in Revenue Ruling 2002-3. Subsequent IRS memos have addresses more recent variations on this theme.

For employers and employees who may be duped into these schemes, the chilling aspect is that, as noted by the DOL, “the employer-clients and employeeparticipants are now individually responsible” for underpaid employment and income taxes.

FRAUDULENT TAX SCHEME

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Penalties on underpayments may be waived by the IRS for employers and employees who were not aware the arrangement was fraudulent, but the amount of unpaid taxes, plus interest, can still be collected. As regulators continue to pursue these unlawful arrangements, employers need to be sure they are dealing with a legitimate plan in order to avoid unexpected tax liabilities for themselves and their employees.

RECENT “WELLNESS PLAN” TAX AVOIDANCE SCHEMES: IF IT

 Employees increase their insurance benefits without changing their paychecks.

 Employees will be able to purchase supplemental insurance products without reducing their take-home pay.

LOOKS TOO GOOD TO BE TRUE, IT PROBABLY IS

 FICA tax savings for you as the

Variations on the class double dip have continued to appear over the years. Many recent schemes are frequently cloaked as part of an otherwise innocuous “wellness plan”. These newer arrangements, marketed primarily to small employers, promise the same “win-win” -- tax benefits for both the employer and the employees, with no reduction in employee take-home pay. They also have the same fatal law -- the promised tax benefits are not real.

 Tax savings pay for additional

The IRS has addressed various arrangements in a series of memos starting in 2016.

The activity around the “wellness plan” tax avoidance schemes appears to have slowed somewhat with the issuance of the IRS guidance, but there are reports that some promoters are still at work. What do the fraudulent schemes look like? Let’s take a look.

employer and your employees; employees get the same takehome pay.

benefits.

Promoters may claim that the plan/ materials are proprietary and may ask the employer to sign a non-disclosure agreement. Some arrangements require the purchase of credit life insurance and borrowing.

Core features of the arrangements

Typical promoter claims Promotional materials may vary, but the promises of tax benefits are similar.

Statements that may be used by promoters to describe the benefits of the arrangement may include claims such as:

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Regardless of the particular terms used to describe these arrangements, they have the same essential core features.

To avoid being exactly like the classic double dip, the current “wellness plan”

schemes add an additional trigger (“wellness plan” compliance) as the basis for bringing the employee’s pay back up to the pre-salary reduction level.

Step 1: The employee makes a salary reduction election.

• If the promised tax benefits are realized, the salary reduction election reduces employee and employer payroll taxes (FICA, FUTA) and employee income taxes.

• The salary reduction election reduces employee’s paycheck.

Step 2: Bring the employee’s paycheck back up to the pre-salary reduction level.

• The employee receives purportedly tax-free payments (“wellness payments”) equal to most of the employee’s salary reduction amount. The amount of salary reduction returned to the employee is generally reduced by a promoter’s fee.

• In order to receive the payment, the employee is required to take certain actions. Examples of typical payment triggers include:

o Participating in certain activities that are generally related to health but do not involve a medical expense

o Calling a toll-free telephone number or checking a web-site that provides general health information

o Attending a seminar or webinar that involves general health information

o Talking to or checking in with a health coach

STOP! What’s the problem? The payments in Step 2 are taxable, which reduces the employee’s tax-home pay. In order for the payments in Step 2 to be tax free, the employee must be reimbursements for an incurred medical expense. The activities involved, although perhaps health related, do not involve medical expenses as defined under the federal tax rules – at least not expenses that exceed the amount of payments made. Thus, the purported tax savings evaporate.

WHAT DOES WORK? Using a cafeteria plan to pay for health benefits on a pre-tax basis, including supplemental fixed indemnity health insurance It’s actually pretty straightforward to take advantage of a cafeteria plan so that employees can pay for qualified benefits on a tax-free basis through employee

salary reduction. Employee salary reduction amounts may be used to pay for their share of the employer’s major medical plan, as well as to purchase supplemental health insurance policies, such as specified disease, hospital or other fixed indemnity health policies on a pre-tax basis.

These fully-insured supplemental policies pay a fixed dollar amount as set forth in the policy based on a medical event trigger, such as a visit to the doctor, a hospital stay, or the diagnosis of a particular condition or disease (such as cancer). Tax benefits of such pre-tax arrangements are straightforward and distinguishable from the “tax gimmick” marketed under the “wellness plans”.

The tax treatment of benefits paid under fixed indemnity health polices is well established and depends on whether the premium was paid on an after-tax or pre-tax basis.

 If the premiums for the policy are paid by the individual on an after-tax basis, then the benefits received are not subject to tax.

 If the premiums are paid on a pre-tax basis (through employer contributions or employee pre-tax salary reduction through a cafeteria plan), then whether the benefits are taxable depends on the individual’s unreimbursed medical expenses. If the amount paid under the policy does not exceed the individual’s unreimbursed medical expenses, then the amount received is not

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includible in the employee’s income. However, if the amount received under the fixed indemnity policy is more than the individual’s unreimbursed medical expenses, then the “excess benefit”, meaning the amount in excess of such unreimbursed medical expenses, is taxable.

IRS Revenue Ruling 69-154 sets forth the “excess benefit” rule, and includes some detailed examples. Under Revenue Ruling 69-154, determining the amount, if any, of taxable benefits under a fixed indemnity health policy paid for with pre-tax dollars involves a variety of factors which are known only to the employee (and not the employer or insurer).

These factors include what other fixed indemnity policies the individual has, the total amount of medical expenses, and the amount of reimbursed medical expenses. If the employee has more than one fixed indemnity policy, such as a policy paid with post-tax dollars, the calculation may be more involved, as the employee may need to allocate expenses between the various policies. The employee will make this determination with their tax advisor when filing their personal income taxes for the year in question.

Note that, in one of the memos shutting down abusive “wellness plan” tax schemes (dated Dec. 12, 2016), the IRS inadvertently used some overly broad language which caused confusion about whether the long-standing rule that only “excess benefits” under fixed indemnity health policies are taxable. In a subsequent memo (dated April 24, 2017), the IRS made it clear that nothing

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had changed with respect to traditional fully-insured fixed indemnity arrangements.

In particular, the April 2017 re-confirms the continued validity of Rev. Rul. 69-154.

The April 2017 memo also has a helpful example of a traditional fixed indemnity health plan that pays fixed amounts on the occurrence of health events such as a medical office visit or a hospital stay where the premiums for the policy are paid on a pre-tax basis through a cafeteria plan. The plan pays $200 for a medical office visit.

If the covered individual’s unreimbursed medical costs as a result of the visit were $30, $30 would be excluded from the employee’s income and the excess amount of $170 would be taxable.

LEGITIMATE WELLNESS PROGRAMS There are many legitimate wellness programs that comply with applicable legal requirements, including the federal tax rules in the Internal Revenue Code, as well as rules from the Department of Labor and the Equal Employment Opportunity Commission that relate to the amount and type of rewards that can be offered under the wellness plan. The following chart provides a high level guide as to how legitimate wellness programs are structured compared to “wellness plan” tax schemes.

The program is funded by…

The benefits (rewards) vary by…

Any increase in take home pay (after any salary reduction)..

Benefits are..

The wellness program is more likely to be a legitimate plan if …

The employer

Wellness activities engaged in and health results

Is generally nominal

Taxable unless deposited in a health reimbursement arrangement (HRA) or health savings accounts (HSAs)

The wellness program is more likely to be suspicious and a tax avoidance scheme if…

Through employee salary reduction

Amount of salary reduction contributed

Could be significant and may vary by salary reduction amount

Purportedly tax free

CONCLUSION No “wellness” plan or complicated arrangement or signing of a confidentiality agreement is needed to reap the legitimate tax benefits for employer health plans; just a straightforward salary reduction arrangement under Code Section 125. Will there be a reduction in tax-home pay? Yes, but there are also real tax savings on the premiums compared to paying on a post-tax basis and the employee will also receive value in the form of the insurance purchased through the plan.

References: 1) See, DOL press release https://www.dol.gov/newsroom/releases/ebsa/ebsa20190619. The facts and background of the case are drawn from this press release.

We watch the trends.

We share our knowledge.

We deliver solutions you can trust.

There’s no simple way to overcome the rising claims trend in today’s market. But we know that incorporating smart practices into our business model is helping us to gain more control of the situation. We’re making informed decisions based on data analytics and industry knowledge; using the insight of in-house experts to create thoughtful solutions; and choosing our cost containment partners wisely as we work to protect our clients’ financial well-being.

Learn more about our efforts to help manage the unpredictable at hmig.com.

STOP LOSS

MTG-3173 (1/19)

MANAGED CARE REINSURANCE

Products are underwritten by HM Life Insurance Company, Pittsburgh, PA, HM Life Insurance Company of New York, New York, NY, or Highmark Casualty Insurance Company, Pittsburgh, PA.

BROKER/ADVISOR PERSPECTIVES

INSIGHTS FOR AND ABOUT BROKERS/ADVISORS ACTIVE IN THE SELF-INSURANCE MARKETPLACE

Written by Wendy Keneipp

EMPLOYEE COMMUNICATION IS MORE COMPLICATED THAN YOU THINK

I I

doubt anyone disagrees that having good communication with employees is a core business necessity. But I don’t believe everyone really understands and/or appreciates the critical role it plays in employee engagement, and particularly as it relates to the benefits package.

As health plans become more complex within an organization, the communication must also increase along with it. And as generations in the workplace become further separated with vastly different life experiences and expectations, communication must take on a different face and role with the employee population.

Brokers, or advisors, have been communicating benefits packages for decades and relatively little has changed over time. Employee enrollment meetings, printed enrollment guides, benefits websites. Pretty standard stuff that resembles broadcast communication, and a look-it-up-yourself approach.

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When we put the importance of benefits into context of the balance sheet for the company and the relative importance to the employees, it begs the question: Should we be doing more to help our employees understand and value the benefits package so we can better attract and retain team members?

In talking with brokers, a common complaint is that HR often doesn’t want to make a change, citing a lack of willingness from employees. Unfortunately, this is also rarely followed by any hard evidence to back up these claims.

To find out what employees really want and how much change they’re willing to accept for a benefits package they perceive as highly valuable, advisors need to be the ones conducting employee surveys, or better yet, employee focus groups, and get the answers direct from the employees.

WHAT THE DATA SAYS According to the 2019 MetLife Employee Benefit Trends Study, employees rank benefits as the third most important item when selecting and remaining with a company. First – salary, second – a positive work environment, and third – benefits.

Yet, there’s consistently a disconnect between employee perceptions and employer perceptions of what they feel the employees want and value.

This comes out regularly in studies and in anecdotal conversations with brokers.

MetLife shares that 67% of employees are satisfied with their benefits, down 4% from last year. And the comparison is 73% of employers believe their employees are satisfied with the benefits they offer.

If they had the opportunity to leave the bias of the employers out of it (i.e., HR doesn’t want to disrupt the employees and add work to their plates; Finance doesn’t want to do the due diligence to make the changes), and let brokers hold meetings directly with employees well before the renewal cycle begins, the path the employer chooses to take at renewal may be notably different.

Without input from the employees themselves and effective communication on what an “increase in complexity” could be for a health plan, the employers are, at best, making a guess on behalf of an entire population. Realizing the full value of that benefits investment is going to be very hard to attain with this type of approach.

Employers need better data, through communication, to make better benefits decisions for their program and financials both.

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When employers approach benefits from a perspective that is disconnected from the employee base, then they are typically motivated to make decisions based on cost and the least amount of effort possible.

Unfortunately, this effort to hurry up and get it off their plate includes not making time to properly communicate the benefits package and ensure the recipients know what they have and how to use it effectively. With this approach, it’s no wonder employees and employers too often think of benefits as a significant source of frustration.

WE NEED A DIFFERENT TYPE OF MESSAGE As work and life blend more and more through the use of technology, flexible and remote work options, and the significant diversity in today’s jobs, it’s no surprise that benefits takes on a more blurred approach as well.

According to the MetLife study, employees are expecting more from employers. They want their employers to be a source of information, resources, and education for how to manage their health, wellness, and finances.

Good communication is at the core of this. When employers don’t communicate effectively with employees about the benefits offerings, employees are left with a disconnect between the products and how they can be helpful to their personal lives.

When we leave things to the imagination, we hardly ever get the results we’re looking for. Employees will typically underestimate the value of the products because they don’t understand how they really work or how they work in conjunction with all the other items. When we don’t understand something clearly, human nature is to just ignore it and stick with what we know.

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That’s how we properly assess risk – enabling our clients to focus on their businesses. We provide innovative stop loss solutions to protect self-funded employers from potentially catastrophic losses and flexible captive solutions that range from fronting and reinsurance arrangements to our turnkey stop loss program. We offer specialized solutions for specialty markets, including Taft Hartley and multiemployer organizations. We also offer fully insured organ transplant coverage to self-funded plans. Our clients have been benefiting from our expertise for over 40 years. To be prepared for what tomorrow brings, contact us for all your medical stop loss and organ transplant insurance needs.

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The leading publication, Healthcare Tech Outlook, recognized PharmPix as a Top-10 Management Solutions Provider in 2019.

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Advisers must help employers with this communication to draw very clear lines in a way that hasn’t traditionally been done. Let’s use finances and financial security as an example. When you pair a group of benefits together with explanations of how they work to protect an individual and their family from financial ruin, it starts to paint a new picture for the employee.

• Healthcare can get very expensive, very quickly. That’s why we have health insurance to cover costs and protect upper spending limits.

• Health, accident, and mental health issues arise that could cause us to be unable to work, and thus the need for disability insurance to protect our income and our ability to pay bills and maintain the basics of housing, food, transportation.

• Unexpected events unfortunately occur where we lose loved ones and it’s a crushing blow emotionally and potentially financially. Which is why we need life insurance.

• Retirement looms large and the financial burden is daunting, leaving many

BUT THERE’S A MAJOR DISCONNECT WITH THIS APPROACH – EMPLOYERS AREN’T READY The Open Enrollment Readiness Benchmark (OERB) is a monthly survey that tracks employers’ readiness in four key areas leading up to open enrollment.

From the consistently low scores in the communication topics, it becomes apparent that there isn’t sufficient attention paid to the communication of the program. Which is an unfortunate too-busy-to-get-better excuse because employees tend to value their benefits more when they understand them better.

not even knowing where to start. This is where retirement programs come into play.

Of course, there are many other options for offerings, but this is a quick look at how we draw these ideas together. Here’s an example for how this could be communicated to the employees:

“There are many ways that Americans can get really upside down with their finances very quickly and may never be able to recover. As an employer, we want to play a part in helping you have as complete a financial safety net as possible. This is a collection of benefits that we offer to help you create as many overlapping lines in that net as we can.”

Pair this message up with some visuals and you’re offering a more complete financial picture and increasing the incentive for employees to begin taking ownership of their own financial wellbeing. When employees recognize they have the needs and accept ownership of those needs, the chances of them placing value on the benefits increases appreciably.

Out of a score of 100 in each area, some of the communication topics in the survey were well into the red (below 40), on the green-yellow-red scoring system.

• Planning/designing employee communications – 15

• Answering employee questions – 23

• Documenting worker feedback – 19

• Reviewing enrollment engagement metrics – 16

• Reviewing worker feedback – 18

• Soliciting additional feedback – 16

• Planning year-round employee engagement – 26

While these numbers vary from month to month, the communication numbers steadfastly remain some of the lowest.

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Your claims.

Our focus.

Anthem Stop Loss proactively manages your claims so you don’t have to.

Imagine partnering with a team of experts who are dedicated to making sure your claims are submitted and processed, so your reimbursements aren’t delayed. That’s the power of active claims management. We proactively manage your claims to keep your cash flow flowing. Here’s how: • We verify all groups administered by the Blue plans, Aetna, UnitedHealthCare and associated Pharmacy Benefit Managers are submitting your claim reports so there are no bottlenecks.

• We work directly with Third-Party Administrators and other groups to make sure nothing falls through the cracks.

• We look for opportunities to mitigate costs for specialty care, transplants, out-of-network and large-dollar claims.

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Stop Loss coverage provided by Anthem Life Insurance Company. In New York, coverage provided by Anthem Life and Disability Insurance Company.

112177MUBENASL 12/18

But the numbers reflecting the tactical preparation of plan designs and advisor selection maintain some of the highest scores.

it has the unfortunate opportunity to negatively influence the employers’ sentiment toward benefits and possibly even their employees.

ALL THE MOVING PARTS COMMUNICATION IS AN INDUSTRY STRUGGLE The differences in the scores are indicative of a larger problem with communication across the entire industry – employers have been taught ineffective ways to make buying decisions and manage their benefit programs.

This leads to employers making important decisions on plan design and price and simply lumping in the advisor selection as a part of it. While plans may be similar across advisors, the approach an advisor and their partners take to communication and execution of the programs is going to vary widely. And that leaves a gaping hole for the employees when it comes to understanding the benefits offered.

Employee sentiments tend to mirror results of the OERB. A study from Maestro Health confirms the lack of communications, showing that up to 35% of employees don’t really understand their healthcare coverage and/or medical bills. And 62% don’t feel their employers are a resource for related questions.

When employers pour thousands of dollars into their employees and it comes back unappreciated, unused, and a source of friction,

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Brokers and advisors have the opportunity to bring these groups together with an effective communication program. But good programs today are not one-stop-shops.

We’ve got too much diversity in the workforce to create a single channel program that will address all workers.

We need to communicate in person, in writing, through video, and it needs to be shared in various electronic and print formats. It should come via websites and apps.

It should be available 24/7 through Q&A and chat bots, it should include direct access to advisors, concierge, and doctors.

Adding to this, a strong program today now has the added burden of taking personalization into consideration. Your employees may be most interested in personal finances, or physical or mental well-being, or dependent care.

Each employee is going to have their own priorities and circumstances and doesn’t want to hear a shotgun approach to year-round communication. As an example, talking to everyone about eldercare is not going to be valued by everyone. But for team members who have aging parents, this may be a high priority and of high value.

When you learn their areas of interest, you can customize communications to the groups for which they’re relevant. This can include both general education and product information, which could have the added benefit of increasing or expanding coverage, as well as teaching them how to effectively use what they currently have.

Clearly, creating successful communication has become much more complicated over the years. And, yes, these are tall orders to create communication and education programs taking all of these factors into consideration, but it can be done.

For advisors, they need to be prepared to vet vendors, organize a comprehensive program, learn how to create effective messaging, and manage the programs for the employers. And they need to charge accordingly.

And for the employers, not only do they need to be prepared to make the investment of both time and money, but they need to make the investment in the right advisor with the right program. Taking the time and making the investment into teaching employees how to get the most from their benefits will benefit everyone.

Wendy Keneipp

Wendy Keneipp, partner at Q4intelligence, is a business strategy and marketing/sales coach, working with independent agencies to transform them from legacy sales organizations into modern, client-focused advisory firms. In an industry starved for effective marketing, Wendy delivers a clear advantage by helping agencies create their own results-oriented messages that connect with their buyers and develop marketing and sales systems to take advantage of the new ways buyers seek out answers.

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HOW SELF-INSURED HEALTH PLANS ARE HELPING EMPLOYERS COMPETE IN A CHALLENGING TALENT MARKETPLACE

P

Written by Philip Qualo, J.D.

P

rior to joining The Phia Group, LLC, an experienced health care cost-containment company specializing in self-insured plans, my knowledge and experience with the self-insured industry could fit on the tip of my pinky.

My previous work experience was exclusively in the fully-insured sector, where I quickly learned that uttering the words “self-insurance� was considered almost offensive. On a more personal level, I had been covered under various fully-insured health plans since my very first job after graduating law school. From the start, my experience with fully-insured plans jaded my perception of health benefits.

I eventually accepted that medical insurance was a necessary evil that I would have to learn to live with. Although my employers genuinely cared about the well-being of their employees, the ability to offer comprehensive medical benefits became increasingly difficult due to the monumental annual increases in the cost of fullyinsured coverage.

38 THE SELF-INSURER

As employers who sponsor fully-insured health plans are generally limited to an “off the shelf” one size fits all plan options designed by their respective carriers, the limited ability to design benefits to meet the specific needs of their employees is an additional obstacle.

As a fairly healthy individual who has never broken a bone or required surgery (knock on wood), I have spent most of my adult life stuck paying a premium for benefits that I rarely used. I viewed medical insurance as an unpleasant necessity, expensive but necessary just in case I was hit by a bus. This was especially the case when I experienced the dreaded fully-insured high deductible health plan.

Although high deductible plans have become a popular compromise for employers to keep healthcare premiums at an affordable rate, as a low claims plan participant I struggled with the fact that I was not only paying a high premium, but also paying out of pocket for occasional provider visits and generic medications from my own hard-earned money.

Where most employers usually avoid describing their health benefits in the interview process, my experience interviewing with The Phia Group was complete the opposite and opened my eyes to not only the beauty of self-insured health plans, but how it can be used as an effective recruiting tool.

“Ummm… can you repeat that?”, I exclaimed, as my eyes widened in bewilderment. “Which part?”, the Talent Acquisition Specialist asked, “The part about no co-pay for generic medications, no co-pay if I choose to take part in the Direct Primary Care (“DPC”) program, or the list of incentives that can actually result in extra cash in your pocket for helping the plan contain costs?”

Needless to say, this was the first time ever, in my lengthy professional career that I ever considered healthcare benefits as a factor in making my decision to work for an employer. Since enrolling in our health plan over a year ago, my health plan contributions have been consistent and more affordable than they’ve ever been.

Due to my infrequent need to seek medical services, in all my years covered by a high deductible health plan, I never reached my deductible amount – not once. So, in reality, I was paying for coverage that I never really used.

Unfortunately, the astronomical profits that fully-insured carriers were reporting at that time did not help to alleviate what I perceived as an unpleasant necessity.

Then I interviewed with The Phia Group, my current employment, who not only specializes in self-insured health plans, but practices what they preach by sponsoring their own self-insured health plan for their employees.

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Most importantly, my trauma from paying the full cost for health services under a fully-insured high deductible health plan had finally faded, as the total I have spent on healthcare since I joined The Phia Group has totaled $0. This is when I first realized how important offering and sponsoring a self-insured plan can be, as self-insurance can be an employer’s “secret weapon” for marketability in an ever-increasing competitive market for top talent.

WHY IS THERE A STRUGGLE TO FIND & RETAIN TOP TALENT? In May 2019, the White House1 announced that the unemployment rate in United States had dropped to 3.6 percent—the lowest unemployment rate since December 1969, according to a Bureau of Labor Statistics’ (“BLS”) household survey.

Although this was great news for our economy as a whole, a low unemployment rate can be a challenge for employers seeking to expand their workforce and attract and retain top talent. Although U.S. job growth has been consistently strong, a low unemployment rate indicates there are more jobs than there are job seekers.

Another challenge employers are currently facing is increasingly high turnover rates, or what is generally referred to as high “quit rates” meaning voluntary separations initiated by employees. According to the April 2019 Bureau of Labor Statistics Job Openings and Labor Turnover Survey Highlights2, high quit rates are indicative of a robust job market. Therefore, the quit rate can serve as a measure of workers’ willingness or ability to leave jobs.

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According to the survey, there were 3.5 million quits in the U.S. in April 2019.

This number far exceeded the number of discharge or layoffs for April, which was estimated at 1.8 million. Employers who sponsor self-insured plans and who choose to use the services of Third Party Administrators (“TPAs”) have been found to save more money on their health plans per enrolled person than they would have with traditional insurance. This is because TPAs work to manage an employer’s selfinsured plan based on the employer’s specifications instead of according to an insurance carrier’s policy.

THE RECRUITING & RETENTION ADVANTAGES FOR EMPLOYERS WHO SPONSOR SELF-INSURED HEALTH PLANS Due to the limited pool of job seekers, and increasingly high quit rates, employers are reviewing their compensation packages, and more importantly, their benefit offerings, to determine what leverage they have to compete in this employee-centered job market.

In a 2017 survey conducted by the Society for Human Resource Managers3 (“SHRM”) on the strategic use of benefits, the results yielded that organizations that take a strategic approach to their benefits programs, by leveraging benefits to recruit and retain employees, are nearly twice as likely to have more satisfied employees and to report better business performance compared with organizations that are not strategic with their benefit programs.

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This survey reveals that benefits are a key driver in recruitment and job satisfaction.

If an employer’s offerings fail to meet employees’ health and financial demands, they risk losing top talent to organizations with more complete coverage options.

Employers who sponsor a self-insured health plan have a notable advantage over employers who offer fully-insured coverage, especially when it comes to adjusting their benefits to attract top talent. In order to meet the unique needs of job seekers and candidates as well as current employees, self-insured health plans allow for more flexibility and control over the terms of a plan.

Employers have the opportunity to work directly with their service providers to customize their benefits to fit their needs and adjust them over time as needed. More importantly, plan sponsors have the ability to incorporate cost-containment incentives for their employees that allows the employer to not only save money, but also use those savings to enhance their plan offerings and offer them at a low cost.

On the other hand, employers who offer fully-insured health plans are generally limited to the costly options available from the carriers within their respective states.

In this context, budget conscious employers are usually forced to forego the more comprehensive health plan for the most affordable option, which usually has less than favorable coverage and results in employee dissatisfaction.

BOTTOM LINE According to a survey conducted by America’s Health Insurance Plan4, 56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job. In addition, the survey found that 46 percent of U.S. adults said health insurance was either the deciding factor or a positive influence in choosing their current job.

For employers who offer self-insured health coverage, the ability to design and modify their plans and enhance savings can be a valuable resource to attract top talent in this expanding job market. In sum, communicating the value of selfinsured health benefits to job-seekers, potential job candidates, and existing employees, can be an employer’s secret weapon in competing for talent in this job market as well as employee retention.

References: 1) https://www.whitehouse.gov/articles/unemployment-ratefalls-lowest-level-nearly-50-years-u-s-economy-adds-263000new-jobs-april/ 2) https://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf 3) https://www.shrm.org/hr-today/trends-and-forecasting/ research-and-surveys/Documents/2017%20Employee%20 Benefits%20Report.pdf 4) https://www.ahip.org/wp-content/uploads/2018/02/AHIP_ LGP_ValueOfESIResearch_Print_2.5.18.pdf

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Philip Qualo, J.D., joined the The Phia Group, LLC in June 2018. In his current role as a Compliance and Regulatory Affairs Consultant, Philip provides consulting services to employers, third-party administrators, brokers, and vendors on an array of topics focused human resource and employee health benefit plan compliance. He proactively monitors the legal and regulatory environment to identify legal, regulatory and compliance-related gaps and advises internal and external stakeholders on areas of risks.

He earned his J.D. from Villanova University School of Law and his B.A. in both Philosophy and English from Loyola University Maryland. Philip’s professional experience has ranged from practicing employment law, specializing in disability litigation, to managing federal grants and advocating for underserved communities on behalf of National Alliance on Mental Illness (NAMI).

20 Plus years of industry knowledge, expertise, and unsurpassed service Strength of Liberty Mutual which holds an A rating by both Best and S&P Plan Mirroring availability Disclosure statements no longer required on renewal business Liberty Mutual entered the Employer Stop Loss Market through its acquisition of TRU Services, LLC in April 2017.

Since then we have merged our brands and are issuing

Specific Advance Funding ability with enhanced features for qualified producers

the Liberty Insurance Underwriters Inc. (LIU) Policy.

You will receive the same service you have grown to

152 Conant Street

know of TRU, but with the strength of Liberty Mutual.

2nd Floor Beverly, MA 01915

For more information please contact: Rocko Robinson, Senior VP of Underwriting and Sales

Email: Robert.Robinson01@libertyIU.com

Phone: 978-564-0200 Fax: 978-564-0201 Website: www.truservices.com

ENDEAVORS

SIIA ENDEAVORS

T T

he 2019 SIIA National Conference & Expo will be September 30th - October 2nd at the San Francisco Marriott Marquis. This is the world’s largest self-insurance event, which most recently attracted nearly 2,000 registered attendees from throughout the United States and from several countries around the world.

Attendance is comprised of all segments within the self-insurance marketplace, including self-insured employers, third party administrators, captive managers/ advisors, stop-loss insurance carriers/MGUs, brokers and key service providers.

The event blends a substantive education program, with more than 40 general and breakout sessions, a huge exhibit hall, and multiple organized networking opportunities. Taken collectively, this is a must attend event for anyone involved with self-insured group health plans, middle-market captive insurance companies, and self-insure workers’ compensation programs, including group self-insured workers’ compensation funds.

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ENDEAVORS This year’s general sessions include:

experts now argue just that.

Work, Laugh, Repeat: How Technology Contributes to a Funnier World

Given that poor eating habits directly contribute to numerous health conditions (covered under self-insured health plans) and exasperate other conditions, which may be connected to workers’ compensation claims, it makes sense for self-insured employers to pay close attention to this evolving dietary debate.

In a hilarious, multimedia-intensive presentation, renowned business humorist and award-winning Chicago Tribune humor columnist Greg Schwem, Business Humorist, Corporate Emcee, and Syndicated Humor Columnist will make audiences of all ages howl with laughter as he explores the complex relationship between technology and the changing role of humor in the workplace.

In short? The smart phone, the virtual meeting and other tech marvels have made for a funnier work environment.

Complete with true, hilarious, tech-addled stories gleaned from over 20 years speaking for some of the world’s most recognizable companies and business associations, Greg’s keynote also tackles serious issues including generational differences and the rising fear of being able to laugh in the workplace.

Re-Thinking the Food Pyramid – Implications for Self-Insured Employers For several decades the American public has been encouraged to follow dietary guidelines established by the federal government in the form of a “Food Pyramid” with a variation of this structure published more recently. But what if the government has gotten it wrong and the health of the American public has been put at undue risk? An increasing number of medical professionals and nutritional

Vinnie Tortorich, Author, Fitness Confidential Host, Fitness Confidential Podcast is one the country’s leading fitness experts and creator of a new documentary questioning mainstream dietary guidance. He will share his unique perspective and takes questions from the audience.

Continuing Education credits will be available at SIIA’s 2019 National Conference.

The credits will include CEU for Adjusters and Agents (Producers), CLE for attorneys, and CPE for accountants. Please check www.siia.org often to see updates on approved states. You can enroll for CE Units when you register for the conference.

There will be no cost for registered conference attendees.

The event will also include a huge exhibit hall with more than 130 companies showing off the latest products and services developed for self-insured employers and captive insurance companies, so this will be a true one-shop-stop for anyone in the market for new services providers/business partners.

Make sure you plan accordingly and stay for the end of conference party! For those who have attended previous SIIA national conference parties, you know these are not to be missed and San Francisco will not be an exception.

Detailed event information can be accessed on-line at www.siia.org, or by calling 800/851-7789. We look forward to seeing you in San Francisco!

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NEWS

NEWS FROM SIIA MEMBERS

SIIA Diamond, Gold & Silver Member News SIIA Diamond, Gold, and Silver member companies are leaders in the self-insurance/captive insurance marketplace. Provided below are news highlights from these upgraded members. News items should be submitted to membernews@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 at jivy@siia.org.

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THE SELF-INSURER

NEWS

DIAMOND MEMBERS TPAC CELEBRATES 20 YEARS OF SPAGGREGATE, THE FIRST TRUE LEVEL-FUNDED STOPLOSS OFFERING ON THE MARKET Minneapolis, MN -- TPAC Underwriters, Inc. (TPAC), a leading Managing General Underwriter focused on writing profitable business through creative reinsurance solutions, is excited to announce 20 successful years of its Spaggregate underwriting solution. Spaggregate, TPAC’s proprietary level- funded stoploss product that is a blend of traditional specific/aggregate stop-loss and a fully insured program, is considered to be the original level-funded, aggregate-only stop-loss product and the first of its kind in the nation.

TPAC underwrote its first Spaggregate case in May 1999, delivering a truly level-funded product that ensured predictability of claims costs and the lowest maximum cost to groups—all without lasers. Throughout the past two decades of utilizing this innovative program, TPAC has underwritten more than 2,000 Spaggregate policies for over 750 employer groups.

Originating from a desire to formulate a better way to successfully underwrite low benefit plans, TPAC designed Spaggregate to help employers by establishing a fixed monthly budget for claims coverage within a client’s selffunded health plan. With foundational features including low maximum cost, no lasers, creativity in plan design, transparency, control and flexible contracts, Spaggregate offers the ideal

combination of predictability, savings and control to meet every client’s benefits needs.

Patrick Sanders, the President of IMS (Insurance Management Services), says, “The Spaggregate product has been a game changing funding mechanism for our clients since 2004, particularly those coming from the fully insured market.”

“We at TPAC feel an incredible sense of accomplishment with the success and savings our clients have experienced using our Spaggregate product throughout the past 20 years,” said Michael Meloch, President of TPAC. “Our goal has always been to provide unique underwriting solutions, and we plan to continue to drive innovation in the reinsurance market with Spaggregate and our other products designed to not only meet our clients’ needs but also optimize their plan spend.”

About TPAC TPAC Underwriters, Inc. is a Managing General Underwriting firm located in Minneapolis, Minnesota. In business since 1991, TPAC works to write profitable, creative business with our reinsurers in Traditional Medical Stop-Loss, Spaggregate, and HRA/HSA plans through Third-Party Administrators, fully-funded capitated drug card programs, Life and AD&D products. Visit www.tpac.com.

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NEWS BERKLEY ACCIDENT AND HEALTH APPOINTS CLINT LIPTAC AS REGIONAL SALES MANAGER Hamilton Square, NJ -- Berkley Accident and Health, a Berkley Company®, has appointed Clint Liptac as Regional Sales Manager for its EmCap® Group Captive division. In this role, Clint will be responsible for business development and existing relationships in Washington, Oregon, Idaho, Nevada, California, Arizona, and New Mexico.

“Clint has an established track record of opening up new markets and developing strong relationships. His multi-faceted experience in employee benefits will be a valuable asset to our clients,” said Brad Nieland, President and CEO of Berkley Accident and Health. “I am very excited to have him as part of our team.”

Clint comes to the Berkley Accident and Health team with over 25 years of sales experience on the TPA, brokerage, and carrier sides of insurance. Clint has held several account executive positions throughout the years that have allowed him to develop lasting relationships all over the western U.S. Clint Liptac will be based in Bend, Oregon.

BERKLEY ACCIDENT AND HEALTH PROMOTES KEN KAPRELIAN TO NATIONAL DIRECTOR OF BUSINESS DEVELOPMENT FOR ITS STOP LOSS DIVISION Hamilton Square, NJ – Berkley Accident and Health, a Berkley Company®, has promoted Kenneth Kaprelian to National Director of Business Development for its Stop Loss division. In his new role, Ken will collaborate with Berkley Accident and Health’s traditional Stop Loss sales team to develop new broker partnerships and grow existing ones. He will also be responsible for overseeing various broker and client related initiatives.

“The National Director of Business Development is a critical role to support Berkley’s rapidly growing Stop Loss business, and I’m thrilled to have Ken operating in this capacity,” said Brad Nieland, President and CEO of Berkley Accident and Health.

“Adding Ken as a key consultative resource for our brokers and clients strengthens our business and positions us well for continued growth.”

Ken has nearly 30 years of employee benefits experience with the most recent 17 years concentrating in stop loss and self-funding. He brings a proven track record of strong communication and relational skill resulting in successful and sustainable long-term growth.

A graduate of the University of Delaware, Ken is based out of the Raleigh, NC area.

About Berkley Accident and Health Berkley Accident and Health is a member company of W. R. Berkley Corporation, a Fortune 500® company. Berkley Accident and Health provides an innovative portfolio of accident and health insurance products. It offers four categories of

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products: Employer Stop Loss, Group Captives, Managed Care (including HMO Reinsurance and Provider Excess), and Specialty Accident.

The company underwrites Stop Loss coverage through Berkley Life and Health Insurance Company, rated A+ (Superior) by A.M. Best. Visit BerkleyAH.com and BenefitsCaptives. com.

ELAP SERVICES CO COFOUNDER AND CEO STEVE KELLY WINS 2019 EY ENTREPRENEUR OF THE YEAR AWARD WAYNE, PA -- Steve Kelly, cofounder and CEO of ELAP Services, has been named a winner of the EY Entrepreneur Of The Year® 2019 Award in the Services category in Greater Philadelphia. The award recognizes entrepreneurs who excel in areas such as innovation, financial performance, and personal commitment to their businesses and communities, while also transforming our world. Kelly was selected by an independent panel of judges, and the award was presented at a special gala event at the Kimmel Center for the Performing Arts on June 19.

The award recognizes Kelly’s leadership, both at ELAP Services and within the Philadelphia community, as well as the company’s unwavering commitment to helping employers and their employees receive quality healthcare at a fair and reasonable price. Through partnerships with regional health systems, including Penn Medicine, ELAP Services offers employers a new kind of health plan that brings together world-class healthcare with a cost-containment solution.

Delaware Advantage • Delaware takes captive insurance company licensing to a new level that Speeds to Market the licensing process.

• Delaware is the first in the nation to electronically offer a conditional certificate of authority as part of the general application.

• Delaware’s conditional certificate of authority means receiving a license to conduct insurance business the same day of submitting the application to do business.

STEVE KINION, DIRECTOR Bureau of Captive & Financial Products Department of Insurance

Trinidad Navarro

Insurance Commissioner

BUREAU OF CAPTIVE & FINANCIAL INSURANCE PRODUCTS Delaware Department of Insurance 1007 Orange Street, Suite 1010 Wilmington, DE 19801 302-577-5280 | captive.delaware.gov Trinidad Navarro, Insurance Commissioner

NEWS

In his acceptance speech, Kelly thanked EY for the recognition as validation of the concept and mission of ELAP Services. According to Kelly, “We were not an overnight success; it took us 12 years to get here. There were a lot of sleepless nights, but it was all worthwhile. We want to take the momentum generated by this award to become a stronger, more positive corporate citizen of Philadelphia.”

ELAP Services was founded to address the national issue of skyrocketing healthcare costs that overburden employers and their plan members, who lack representation in the ongoing healthcare debate. Since its founding in 2007, ELAP Services’ reference-based pricing solutions have dramatically reduced healthcare costs for more than

450 self-funded employers with some 300,000 plan members nationwide. ELAP Services’ 200 employees work with employers to custom design self-funded plans and serve as plan member advocates, reducing an employer’s healthcare costs by as much as 30%.

Since 1986, EY has honored entrepreneurs whose ingenuity, spirit of innovation and discipline have driven their companies’ success, transformed their industries and made a positive impact on their communities. Now in its 33rd year, the Entrepreneur Of The Year program has expanded worldwide to recognize business leaders in more than 145 cities in over 60 countries.

As a Greater Philadelphia award winner, Kelly is now eligible for consideration for the Entrepreneur Of The Year 2019 National Awards. Award winners in several national categories, as well as the Entrepreneur Of The Year National Overall Award winner, will be announced at the Entrepreneur Of The Year National Awards gala in Palm Springs, California, on November 16, 2019. The awards are the culminating event of the Strategic Growth Forum®, the nation’s most prestigious gathering of high-growth, market-leading companies.

Reimagine · Rediscover Benefits Flexible, customized health plan options to meet the self-funded employer’s unique needs 50

THE SELF-INSURER

www.healthscopebenefits.com ● 800-884-0287

NEWS About ELAP Services ELAP Services specializes in healthcare solutions that reduce insurance costs for self-funded employers. The company offers a full-service program that ensures employers, their employees, and health systems receive a fair price for healthcare. From custom plan design to member advocacy, ELAP offers a portfolio of services that support clients with successfully navigating the changing healthcare climate and effectively managing their costs. Founded in 2007, ELAP has grown to serve more than 450 organizations, reducing their costs by as much as 30%. Headquartered in Wayne, Pa., ELAP is a company of the Water Street Healthcare Partners, a strategic investor focused exclusively on the healthcare industry. Visit www. elapservices.com.

About Entrepreneur Of The Year® Entrepreneur Of The Year®, founded

by EY, is the world’s most prestigious business awards program for entrepreneurs. The program makes a difference through the way it encourages entrepreneurial activity among those with potential and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global awards program of its kind, Entrepreneur Of The Year celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in more than 145 cities in over 60 countries. Visit www. ey.com/en_us/entrepreneur-of-the-year.

THE PHIA GROUP ANNOUNCES PACE CERTIFICATION The Phia Group proud to announce their Plan Appointed Claim Evaluator (PACE) Certification program will be launching on August 1, 2019.

Details: The PACE Certification program will educate you using 3 distinct chapters of information:

• Chapter One - Explore the ins and outs of self-funding while learning about its risks and rewards. This chapter will transform any individual into a selffunding pro.

• Chapter Two - Take a deeper dive into the laws that apply to selffunded plans. We cover it all, from federal preemption to adverse benefit determinations and appeals.

• Chapter Three - Explain what PACE is, what PACE does, and how it’s obtained, implemented, and utilized.

The PACE Certification program is free of charge and will create immense value for your organization. By going through the Certification program, you, or a select person, or team, within your organization, can become PACE Certified. Once PACE Certified, the Program participant(s) will become highly educated PACE business owners and will serve to assist your organization in growing your PACE business, enhancing your PACE revenue, and assuring your appeals processes are the most compliant and best in the industry. Those who complete the Certification will also receive a PACE

AUGUST 2019

51

NEWS About The Phia Group

Certification Fact Sheet, providing an easy to understand summary of the content and best practices covered, which will allow you to maximize the lessons learned within your business.

The Phia Group, LLC is an experienced provider of health care cost containment techniques offering comprehensive consulting services, legal expertise, plan document drafting, subrogation and overpayment recovery, claim negotiation, and plan defense designed to control costs and protect plan assets. Visit www.

PhiaGroup.com.

Additionally, the PACE Certification program will provide education on selffunding in general, claims and appeals regulatory education, and overall best practices surrounding fiduciary duties, claims, and appeals.

SUN LIFE U.S. APPOINTS JENNIFER COLLIER TO LEAD STOPLOSS & HEALTH BUSINESS WELLESLEY, Mass. -- Sun Life U.S. has named Jennifer Collier senior vice president of Stop-Loss & Health, the largest independent stop-loss insurance provider in the country, with 2,300 employer clients covering more than 4.7 million people, and $1.7 billion in premium.

The PACE Certification program will be released to all those interested starting August 1, 2019. Please see the PACE Certification flyer for more information.

Collier joins Sun Life from Cigna where most recently she was chief operating officer of its middle market operations. As a registered nurse and MBA, Collier brings both clinical and business management expertise to risk and cost management strategies for Sun Life’s self-funded employer clients. Many employers self-fund their health plans, which can leave them vulnerable to high-cost claims. Stop-loss coverage

Please contact Tim Callender (tcallender@phiagroup.com) or Garrick Hunt (ghunt@phiagroup.com) for more information.

Offers a strategic approach to prescription drug benefit programs that delivers cost savings, superior risk management and clinical designs that are sustainable over the long term.

Delivers risk solutions to the US health reinsurance market, with a focus on HMO reinsurance, provider excess, medical excess, captive reinsurance, and specialized employer stop-loss.

Serves employer groups, labor groups, small health plans, coalitions and third party administrators.

Serves brokers and their clients with best-in-class underwriting, actuarial, cost containment, claims, and reinsurance-based risk management services.

Mary Ann Carlisle, CEO mcarlisle@elmcgroup.com 484.433.1412

Dan Bolgar, CEO dbolgar@sequoiaris.com 952.221.7770

ELMC Risk Solutions has assembled some of the most innovative minds in stop-loss reinsurance and prescription drug consulting businesses.

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THE SELF-INSURER

elmcgroup.com

NEWS protects self-funded employers from these claims, which impact 85% of selffunded employers in any given policy year.

“Jen’s experience brings a unique perspective in leading our stop-loss business and continuing to develop expanded solutions for our self-funded clients,” said Dan Fishbein, M.D., president of Sun Life U.S. “Our StopLoss & Health business is focused on recognizing trends that can help selffunded employers reduce and manage costs while improving medical care for members. Jen’s background is an ideal fit for Sun Life’s approach to guiding clients through complex, high-cost claims, and I look forward to bringing her expertise to our dedicated clinical and claims teams.”

business, including the development of new health initiatives and solutions, such as the Clinical 360 program which combines data analytics and clinical expertise to identify cost containment and improved treatment options for self-funded employers and their employees. In 2018 Sun Life’s Clinical 360 program achieved over $6.2 million in savings for employers.

Before joining Cigna Collier was a cardiac nurse at a Connecticut hospital, and earlier in her career she focused on increasing states’ capacities to serve children with disabilities through grants from the U.S. Department of Health and Human Services.

She received her Bachelor of Science in nursing from Saint Joseph College, and her MBA in finance and marketing from the University of Connecticut School of Business.

Collier spent 17 years at Cigna, where she held senior leadership roles in U.S. commercial business, spanning national accounts to small business lines, including clinical operations, strategic implementation, underwriting, and stoploss.

“I am thrilled to be working with the Stop-Loss & Health team at Sun Life, and seeing first hand all of the innovative approaches they have fostered in managing high-dollar claims,” said Collier.

“The right balance of clinical and cost management is how we achieve better outcomes for patients while providing effective solutions for our clients.”

Sun Life has been in the stop-loss business for over 35 years and offers extensive risk management expertise and tools that help self-funded employers effectively manage the cost of their employee medical benefits. As head of Stop-Loss & Health, Collier will oversee all aspects of the Stop-Loss

AUGUST 2019

53

NEWS

About Sun Life Sun Life is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of March 31, 2019, Sun Life had total assets under management of C$1,011 billion. Visit www.sunlife.com.

In the United States, Sun Life is one of the largest group benefits providers, serving more than 60,000

employers in small, medium and large workplaces across the country. Sun Life’s broad portfolio of insurance products and services in the U.S. includes disability, absence management, life, dental, vision, voluntary and medical stop-loss. Sun Life employs approximately 6,000 people in its U.S insurance and asset management businesses. Group insurance policies are issued by Sun Life Assurance Company of Canada (Wellesley Hills, Mass.), except in New York, where policies are issued

by Sun Life and Health Insurance Company (U.S.) (Lansing, Mich.). Visit www. sunlife.com/us.

GOLD MEMBERS PARTNERRE HEALTH ADDS NEW TEAM MEMBERS: TRAVIS BRENDEN, TRACY HASTINGS, DUANE PFAFF, TERRI BROBERG, STEVE BENNETT, AND LUCY ALLEN We are pleased to announce several new additions to PartnerRe Health. Joining us primarily in our Minnesota office are Travis Brenden, Chief Underwriting Officer, Tracy Hastings, Chief Finance and Operations Officer, Duane Pfaff, Head of Finance, Terri Broberg, Senior Underwriter, Managed Care, Steve Bennett, Senior Underwriter, Managed Care and Lucy Allen, Client Partner, Managed Care.

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Berkshire Hathaway Specialty Insurance is proud to bring our exceptional strength, experience and market commitment to the medical stop loss arena.

It’s a home run for your organization.

www.bhspecialty.com/msl Atlanta | Boston | Chicago | Houston | Irvine | Indianapolis | Los Angeles | New York | San Francisco | San Ramon | Seattle | Stevens Point Adelaide | Auckland | Brisbane | Cologne | Dubai | Dublin | Hong Kong | Kuala Lumpur | London | Macau | Melbourne | Munich | Paris | Perth | Singapore | Sydney | Toronto

NEWS Kelly Munger, Head of Health, commented “Please join me in welcoming the newest members of our team to PartnerRe. Many of you are familiar with one or all of them and know the deep technical and commercial skills that they bring to us. They also share a commitment to PartnerRe’s innovative and client centric approach and will aid in the continued growth and development of our US Health business.

They will be reaching out to our producers over the coming weeks and I am confident that, together we will continue to provide the service and expertise that our clients have come to rely upon.”

About PartnerRe Ltd. PartnerRe Ltd. is a leading global reinsurer that helps insurance companies reduce their earnings volatility, strengthen their capital and grow their businesses through reinsurance solutions. Risks are underwritten on a worldwide basis through the Company’s three segments: P&C, Specialty, and Life and Health. For the year ended December 31, 2018, total revenues were $5.6 billion. At March 31, 2019, total assets were $24.0 billion, total capital was $8.4 billion and total shareholders’ equity was $7.0 billion. PartnerRe enjoys strong financial strength ratings as follows: A.M. Best A / Moody’s A1 / Standard & Poor’s A+. Contact Ali Duerr, AVP, Marketing & Communications, at ali.duerr@partnerre.com and visit www.partnerre.com/health.

COLLECTIVE HEALTH RAISES $205M SERIES E LED BY SOFTBANK Employee health benefits platform company Collective Health has raked in a massive $205M Series E funding round led by mega-investor Softbank as it looks to boost its nationwide growth and build on momentum with its employer customers.

The San Francisco-based company serves around 200,000 members across more than 45 self-funded employer clients with care navigation tools and healthcare resources that make benefits easier to access and understand, stripping away administrative burden and lowering healthcare spending in the process.

A large part of the company’s value proposition in is updating and unifying the range of technology systems into one streamlined platform. The company largely functions as a third-party administrator for self-funded employers and works to effectively administer benefits and negotiate provider networks.

Collective Health was founded in 2013 and has raised a total of $435 million. Over the past year the company said it seen 85 percent membership growth.

On the employer side, Collective Health’s platform gives companies visibility into their total range of healthcare costs, which can be used to inform more efficient resource allocation and benefit offerings.

“There’s no question about the scale of the problem, we spend $1.2 trillion on healthcare and the industry still operates in the fax era of technology,” said Collective

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Health co-founder Rajaie Batniji.

The capital injection will help the company expand its range of enterprise customers, as well as bring new healthcare partners onto its platform including new local and national medical networks and integrated digital health products.

Collective’s customer base – which includes clients like Zendesk, Pinterest and Activision Blizzard – has been largely limited to technology companies.

“One of the biggest changes we’ve been focused on is moving firmly out of the early adopter phase and into mainstream with clients in nursing, retail and CPG.” Batniji said.

“We’re really moving into a diversity of sectors because if we’re going to transform healthcare we have to prove that this is a solution that works for everybody.

Investment dollars will also go toward continuing development of the company’s tech stack with faster payment systems, faster fraud detection and machine learning-based technology that can better personalize and guide member health recommendations.

Additionally, the company is focused on growing its 500-person headcount across its San Francisco headquarters and its satellite offices in Chicago and Lehi, Utah.

“The complexity around healthcare coverage is making us sick and we see the opportunity here to make the member experience better and fundamentally improve the healthcare system. We firmly believe that this will

NEWS lead to improved health outcomes and people being healthier,” Batniji said.

Member FDIC

Dependable Modular

Connect to a Flexible HSA Partner

The investment into Collective Health represents a major healthcare bet from Softbank’s Vision Fund, which has backed companies like Slack, Uber and Nvidia.

In healthcare, Softbank has invested in a number of mainly biotech-focused companies including Relay Therapeutics, Roivant Sciences and Zymergen. Also participating in the funding round were investors including DFJ Growth, PSP Investments, Founders Fund and NEA. Softbank will be receiving a board seat as part of the deal.

“With US healthcare costs at $3.65 trillion in 2018, Collective Health is reinventing the healthcare experience for companies and their employees,” SoftBank Investment Advisers Senior Managing Partner Deep Nishar said in a statement.

Dedicated

Integrated

“Their innovative business model and technology platform are not only helping employers understand and optimize their healthcare spend, they are also providing employees with a better healthcare experience.”

About Collective Health

No Two Clients are the Same. That’s why UMB offers a wide range of HSA custodial options that support and differentiate your CDHP offering. You get choice and control to select the solution that aligns with your business goals.

HSA.UMB.com/Flexible

HSAs + Payments + Card Solutions

While medical technology continues to take giant steps forward, somehow the systems driving health coverage are still stuck in the past. The experience we have today is confusing. It’s painful.

And we all deserve better. Collective Health was founded on the belief that better is possible. Driven by our mission to make understanding, navigating, and paying for care effortless, we’ve evolved the way health benefits work.

AUGUST 2019

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NEWS

More than 151 million Americans count on an employer for coverage.

That’s why, with the technology to create a more intelligent solution and the compassion to know that every person matters, we deliver a connected healthcare experience for companies across the nation who want the best for their employees. Contact National Leader of Direct Provider Solutions, Eric Parmenter CLU, ChFC, RHU, REBC, CEBS, SPHR, MBA at eric. parmenter@collectivehealth.com and visit collectivehealth.com.

PARTNERS MANAGING GENERAL UNDERWRITERS WELCOMES CAROLINE GRAHAM SEID Phoenix, AZ -- Partners is excited to announce that Caroline Graham Seid has joined our team as an Executive Underwriter.

Carol brings more than 35 years of experience in the insurance industry to Partners.

Prior to joining Partners, Carol spent 22 years with Symetra (and its predecessors) selling and underwriting stop loss. Previously she held account management and consulting positions with Independence Blue Cross, Coopers & Lybrand and Johnson & Higgins. Carol and her husband Jay have five children (ranging in ages from 2429). In her spare time Carol reads, gardens, collects art and travels. Carol is an avid sports fan but follows football and ice hockey passionately.

Commenting on her new role, Carol said, “It is an incredible opportunity to be a part of the dynamic team at Partners.”

Please feel free to contact Carol with questions about her new role, or about becoming a Producer-Partner: caroline.seid@partnersmgu.com, 480.565.8952.

Every benefit plan needs a strong partner

CoreSource has the expertise needed to bring benefit plans to the next level. From cost containment solutions designed to ensure money is appropriately spent, to advanced reporting that gives a deeper look into plan performance.

Our cutting edge solutions have propelled us to be one of the strongest in the industry.

Learn more about CoreSource’s self-funded capabilities at www.coresource.com.

Expect more. Benefit more.

SERVICE

VALUE

©2019 CoreSource

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FLEXIBILITY

EXPERTISE

ENGAGEMENT

R450-1879_R6-19

NEWS

About Partners Partners Managing General Underwriters is an entrepreneurial organization underwriting medical Stop Loss for the self-insured marketplace.

Licensed in all 50 states, our team is comprised of seasoned professionals with a long history in employee benefits.

We offer a unique opportunity unlike anything in the marketplace and it’s available only to our Producer-Partners.

Visit www.partnersmgu.com.

SILVER MEMBERS H.H.C. GROUP CELEBRATES START OF ITS 25TH YEAR OF SAVINGS, SOLUTIONS AND SERVICE H.H.C. Group announced it is starting its 25th year as a national healthcare insurance consulting company. H.H.C. Group provides cost-containment services to ERISA plans, TPAs, selfinsured and government entities.

Founded in 1995 by Bruce Roffe’, its president and CEO, the company’s mission from day one has been to assist payors in minimizing their liability for the medical services provided to their enrollees/members.

H.H.C. Group offers an ever-growing suite of targeted solutions to meet payers evolving needs. It utilizes a combination of industry expertise, technical innovation, highly-trained staff, and dedication to superior customer service to meet its clients’ needs and exceed their expectations. Importantly, it continues to add services to meet emerging marketplace challenges.

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“From day one we have worked to help our clients achieve their cost-containment goals. We’re dedicated to meeting their existing and future needs in the everchanging healthcare insurance environment,” said Dr. Roffe’. “We started by just negotiating claims. Over the years, we have added, and continue to add, more services to meet emerging marketplace needs. Our clients come for the savings and stay because we deliver on our promises, offer sound advice and provide exceptional, personalized customer service.”

H.H.C. GROUP WELCOMES ADA PETTIES AS A REGIONAL VICE PRESIDENT OF SALES H.H.C. Group is proud to announce the addition of Ada Petties as a Regional Vice President of Sales with responsibility for the Midwestern United States. Ada brings experience in the health care field, sales client service.

Immediately prior to joining H.H.C. Group Ada served as a Utilization Review Coordinator at Holy Cross Hospital in Silver Spring, MD. There she gained an indepth understanding of the provider, payer and patient components of the healthcare system. Ada also brings extensive sales and client service experience, gained in her 10 years as a Home Mortgage Consultant at Well Fargo Bank. A Maryland native, she has a Bachelor of Science Degree in Business Administration.

About H.H.C. Group Services H.H.C. Group’s services include Claim Negotiation, Claim Repricing, Reference Based Pricing, DRG Validation, Medical Bill Review (Audit), Claims Editing, Medical Peer Reviews/Independent Reviews, Utilization Reviews, Data Mining, Disease Management Independent Medical Examinations (IME), DRG Validation, and Pharmacy Consulting.

For additional information about H.H.C. Group and our services, visit www.

HHCgroup.com and contact Bob Serber at rserber@HHCgroup.com or 301-9630762 ext. 163.

SIIA 2019 BOARD of directors & committee chair ROSTER

CHAIRMAN OF THE BOARD*

DIRECTORS

COMMITTEE CHAIRS

Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA

Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem

PRESIDENT/CEO

Mary Catherine Person President HealthSCOPE Benefits, Inc. Little Rock, AR

CAPTIVE INSURANCE COMMITTEE John R. Capasso, CPA, CGMA, PFS President & CEO Captive Planning Associates, LLC Medford, NJ

CHAIRMAN ELECT*

Kevin Seelman Senior Vice President Lockton Dunning Benefit CompanyDallas, TX

Mike Ferguson SIIA Simpsonville, SC

David Wilson President Windsor Strategy Partners, LLC Princeton, NJ

TREASURER AND CORPORATE SECRETARY* Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA *Also serves as Director

SIEF BOARD OF DIRECTORS Nigel Wallbank Chairman Heidi Leenay President Freda Bacon Director

Jeffrey K. Simpson Partner Womble Bond Dickinson (US) LLP Wilmington, DE Robert Tierney President StarLine East Falmouth, MA Peter Robinson Managing Principal Integro Re San Francisco, CA

GOVERNMENT RELATIONS COMMITTEE Steven B. Suter President & CEO Healthcare Management Admtrs., Inc. Bellevue, WA CHAIR, INTERNATIONAL COMMITTEE Liz D. Mariner Ford Senior Vice President Re-Solutions, a Risk Strategies Company Minneapolis, MN CHAIR, SIIA FUTURE LEADERS COMMITTEE Craig Clemente Chief Operating Officer Specialty Care Management Lahaska, PA CHAIR, TPA BEST PRACTICES TASK FORCE Ron Dewsnup President Allegiance Benefit Plan ManagementMissoula, MT CHAIR, WORKERS’ COMP COMMITTEE Mike Zucco Business Development ATA Comp Fund Montgomery, AL

Les Boughner Director Alex Giordano Director

AUGUST 2019

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SIIA new members august 2019 REGULAR CORPORATE MEMBERS

SILVER CORPORATE MEMBER

Bernardo Baraya Winter Garden, FL

Chris Chen President Verikai Inc. San Francisco, CA

David Fear, Sr. Partner Dickerson Insurance Services Roseville, CA Heather Summers TPA Manager Group Management Services, Inc. Richfield, OH Philip Boyle Director People’s United Insurance Agency Hartford, CT Steve Overton CEO Plansight, Inc. Midvale, UT Brian Olsen Employee Benefits Advisor Pritchard & Jerden, Inc. Atlanta, GA Paul Pruitt Chief Marketing Officer Shared Health Alliance St. Louis, MO Tom Kane Executive Vice President, Director of Life & Health Stephens Insurance LLC Little Rock, AR

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.

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IS 1 TRILLION

DOLLARS

in annual healthcare waste & abuse too much?

YES. At Zelis Healthcare, we’ve combined our technology, expertise, and services to pull waste from the system, improve workflow and deliver industry leading levels of service and performance.

Every Network. Every Claim. Every Payment. Every Day. In fact, over 85% of the time, we identify additional savings other companies are unable to find.1

Contact Zelis today at 888.311.3505 or visit zelis.com to find out how our pre-payment solutions are helping control the rising cost of healthcare.

Better Service. Better Performance.

zelis.com Copyright 2019 Zelis Healthcare. All rights reserved.

Data on File. Zelis Healthcare. 2018.

1

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