Self Insurer July 2019

J U LY 2 0 1 9

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

THE

DIGITAL DIFFERENCE

AS SELF-INSURANCE DIGS DEEPER INTO DATA ANALYTICS AND TECH TOOLS, REVOLUTIONARY RESULTS MAY LIE ON THE HORIZON

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TABLE OF CONTENTS

JULY 2019 VOL 129

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

FEATURES 4

THE DIGITAL DIFFERENCE AS SELF-INSURANCE DIGS DEEPER INTO DATA ANALYTICS AND TECH TOOLS, REVOLUTIONARY RESULTS MAY LIE ON THE HORIZON

By Bruce Shutan

12

INSIDE THE BELTWAY SIIA 2019 DC LEGISLATIVE FLY-IN

ARTICLES 16

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

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BIG PHARMA FACING BIG LOSSES TIED TO OPIOID EPIDEMIC FALLOUT

32

CAPTIVE MANAGERS BRING ADDED VALUE TO THEIR GROUP CAPTIVES

38 BROKER/ADVISOR PERSPECTIVES INSIGHTS FOR AND ABOUT

BROKERS/ADVISORS ACTIVE IN

THE SELF-INSURANCE MARKETPLACE 44

SIIA ENDEAVORS

49

NEWS FROM SIIA MEMBERS

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

JULY 2019

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FEATURE

THE

DIGITAL DIFFERENCE

AS SELF-INSURANCE DIGS DEEPER INTO DATA ANALYTICS AND TECH TOOLS, REVOLUTIONARY RESULTS MAY LIE ON THE HORIZON

I

Written by Bruce Shutan

I

n the Information Age, data analytics, predictive modeling, machine learning, deep learning, artificial intelligence (AI), blockchain and other technology solutions are changing the face of self-insurance.

Disruptors are rapidly entering this space with digital toolkits that include anything from personalized dashboards that tap mobile apps or AI smart speakers to analytic platforms that spot high-cost claimants, care gaps, medical errors, etc.

For self-insured employers, the use of advanced technology is as much about human capital management as it is burnishing health and productivity. Some of the world’s most admired brands are deploying digital tools across the HR ecosystem.

At Hitachi, for instance, AI was used to craft 150 data points that helped identify the causes of poor health among 45,000 employees, according to futurist Mike Walsh. In analyzing the characteristics of highperforming employees, the Japan-based company found that maintaining good mental and physical health was critical for improving worker efficiency and creativity.

IDENTIFYING COST DRIVERS This hypothesis, of course, applies to workplaces around the world. More than half of the U.S. total healthcare spend can be traced to so-called commodity care involving routine medical procedures, lab work, imaging and prescriptions, notes Jim Lewis, founder and CEO of Predictive Health Partners, whose technology solutions identify cost drivers.

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Digital Difference “That’s where we focus,” he says, noting that about half of that roughly $200 billion a year spending is wasteful. Chief culprits include inflated pricing in traditional PPO network facilities and expensive prescriptions whose discounts pharmacy benefit managers (PBMs) peg at a very high Manufacturer’s Suggested Retail Price.

While self-insured employers may get better at managing what they can measure, to paraphrase business guru Peter Drucker, their success will swell as long as certain conditions are in place. Namely: the data mining isn’t siloed, it optimizes real-time insight and produces meaningful action, according to Mayur Yermaneni, chief strategy and growth officer of eQHealth Solutions, a population health company.

Jim Lewis

It’s important for them to trust but verify the reporting component, he says, but they also must be able to turn clinical insight into actionable steps that help consumers change their behavior. The best health care analytics do not require a system login, Yermaneni notes.

They also stratify the risk of all health plan members, automatically assign tasks to the services team and send information about each case to personalized dashboards.

Mayur Yermaneni

ELEVATING EARLY INTERVENTION The firepower of applying bleeding edge technology to self-insurance is clearly early intervention. “If you’re reactive to someone that just spent $200,000 or $300,000, you’ve lost the battle,” observes Neil Godbey, CEO of Advanced Plan for Health, which manages health care costs and risk. “You intervene prior to the time or motivate them to be a better consumer.”

Neil Godbey

His company’s Poindexter technology platform uses a deep learning process as part of its predictive modeling capability to identify individuals who are at risk for an ER visit, inpatient hospital stay or readmission. Deep learning is a subset of machine learning and AI that processes massive amounts of information and spots data patterns.

Poindexter, whose smartphone app is set to launch this summer, can predict coronary, neurological or orthopedic events, as well as heart attack, stroke, diabetes and malignant cancer. The hope is to eventually integrate into this model social determinants on health, including what motivates individuals to make a meaningful difference in their lives.

There are several other avenues available for elevating health plan management.

Tom Witter, president of the Virtual Benefits Administrator health care payer system, is a big believer in gamification for better member engagement and motivation, as well as disciple of the movement toward a real-time health system of the future. The latter embraces a sense of immediacy that consumers of most goods and services have now come to expect through online purchases.

When used together, he says these approaches pack a powerful punch in helping improve patient outcomes and the member experience, plus reduce costs.

Real-time claims adjudication can help self-insured employers and third-party administrators “potentially negotiate better discounts and reimbursement rates with providers,” he explains, because receiving funds right away removes financial burdens and speeds operational efficiency. “Revenue cycle management is a big concern on the provider side,” Witter adds.

REAL-TIME BENEFITS As self-insurance digs deeper into the digital age, the use of real-time data is expected to improve outcomes and revolutionize both the patient experience and claims management. In the case of

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Digital Difference a prior authorization request for services, Yermaneni says the issue is how payers can change the timing of intervention rather than just focus on what was covered or the plan’s risk, regardless of whether the claim is eventually paid or denied.

When clinical decisions are siloed and based on what transpired months ago, he cautions that the data may be somewhat stale. There’s “still a need to understand the timing impact,” he explains. “That’s where we do the operational layer of the data.”

His company’s secret sauce blends a base patient profile built on historical data and claims with a real-time component and qualitative profile that are tied to an algorithm.

“This is where the AI or machine learning comes into play,” he says. eQHealth Solutions offers employers care coordination, which may feature community-based resources, and a host of medical management services that include prior authorization, utilization management, case management and disease management. Three modules are used to examine clinical issues and aggregate electronic health records, as well as offer business intelligence insight and optimize a client’s health care spend. The dual aim of these tools is to improve member outcomes and reduce the plan’s financial burden.

USING THE RIGHT REWARDS Technology offers employers a platform for accessing a narrow network of preferred high-quality providers for routine care and efficacious prescriptions that don’t cost a fortune, according to Lewis. But the trick is designing incentives or rewards that will steer covered lives to these resources.

He suggests that it requires a shift in mindset to think of employees and their dependents as customers who appreciate coupons and saving opportunities. A health

plan could wave cost-sharing on certain procedures such as a CT scan that are done in network, pad health savings accounts or issue gift cards to help pay for an in-network colonoscopy. Lewis likens these scenarios to receiving an income tax refund.

Digital tools certainly can help convey important messages about the way plans are designed. Predictive Health Partners has a platform called Benjamin that reminds health plan members that there will be no copays if they choose preferred facilities on particular procedures. It also provides them with geo-specific maps to help navigate their way to doctor appointments. Mindful that people forget things, he says “you’re just making it as convenient with the technology as you possibly can.”

Predictive Health Partners loads aggregated claims into its database of 250 million Medicare records from the Centers for Medicare and Medicaid Services (CMS), which offers a reference-based price. Side-by-side comparisons are made of every claim based on 6,500 Current Procedural Terminology (CPT) medical codes, which reveal wild price variations. Layered on top of these pricing tools is an independent quality database.

“Ironically, we find that a lot of the really high-quality facilities are actually lower cost,” Lewis reports, admitting to being somewhat surprised. “I think a lot of the cost is that there’s a facility charge embedded in so many of the provider bills.”

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Digital Difference ‘AN ONGOING CONVERSATION’ The use of advanced technology is expected to help self-insured employers transition to more proactive applications for wellness and disease management.

Annual or periodic health-risk appraisals need to become “an ongoing conversation” with employees about their health issues, stress level or life circumstances, suggests Neal Sofian, CEO at tuzag, inc. His firm provides employers with an omni-channel digital conversational AI concierge service that recommends relevant health-related content or resources to individuals like Amazon does for its shoppers.

Those applications may involve anything from managing health and productivity or creating healthy work environments to improving drug adherence after cancer treatment or helping stroke victims learn to walk.

The convergence of organizational development and behavioral health will elevate data-mining to new heights, while do-it-yourself medical testing will enable care to be remotely delivered and monitored, Sofian predicts.

RX PRICE ENGINE With prescription drugs representing the fastest-growing portion of health care costs, Lewis is aggressively targeting this area to help employer clients save money. His firm has created and licensed a direct-to-the-manufacturer price engine for costly specialty scripts that eliminate the PBM and local retail pharmacy. The arrangement, which he describes as the only one of its kind in the marketplace, secures substantial discounts from pharmaceutical

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THE SELF-INSURER

companies whose products are listed on the platform and ships scripts to a health plan member’s home.

example would be high-end biological drugs that need to be administered at a hospital.

“It’s all permission-based and HIPAA compliant,” he explains, in terms of consumers who agree to be included in a database that will alert them to savings opportunities on their prescriptions.

The Rx engine will proactively shop for deals on behalf of these health plan participants.

Godbey recalls how Poindexter predicted with great accuracy the life-saving readmission of a CEO who soon after suffered a heart attack. What will make this app transformational, he says, is an ability to not only intervene prior to a serious health episode, but also arming patients with information to better manage their health and identify the level of provider quality.

One dramatic example of the potential to not only save substantial amounts of money but also lives is a prescription medicine used to treat life-threatening allergic reaction called AUVI-Q. Lewis is able to secure a wholesale price of $300, which the employer picks up, compared to a retail price of $4,800 for just two doses. “The employee doesn’t have any cost, and the employer just saved $4,500,” he reports. Not all prescriptions fit this model. One such

IMPROVING QUALITY MEASURES The trouble with quality data is that it’s difficult to access, isn’t consumer-friendly and databases are limited to CMS, says Godbey, who expects better results within the next two to three years.

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Digital Difference He believes it’s hard for self-insured employers and their employees to compare the quality for individuals who are, say, 65 or 80 and require a hip replacement with someone in need of another medical procedure or those with a malignancy. But even with impeccable data and all the latest technology, he doubts superior health outcomes will be achieved without a patient advocate to motivate individuals to make necessary changes that ward off costly claims.

By harnessing technology to improve outcomes and lower costs, self-insured employers can demonstrate that they’re good stewards of the health plan and avoid litigation, Lewis observes. Citing many unintended consequences associated with cost shifting onto employees, he senses a ticking time

bomb concerning breaches in fiduciary responsibility under ERISA. Some law firms have filed class-action lawsuits on behalf of consumers who they say are being overcharged for medical services, and he sees many more on the way.

Americans borrowed $88 billion last year just to pay medical bills, he laments, while 40% of the population is “more afraid of a surprise medical bill than they are the disease or illness itself.” In addition, Lewis sees a high percentage of people who aren’t adhering to care or prescriptions that they’re taking for fear of the cost.

Clearly, employers would like to see better results. Yermaneni says the self-insured market increasingly expects plan administrators to focus more on managing their risk than simply paying bills on time. “At the end of the day, all the analytics and fancy technology in the world does not change the fact that somebody still needs to act on that data,” he says. “Where you make an impact is in changing the behavior of the consumer.”

Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for more than 30 years.

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INSIDE THE BELTWAY

Place for Logo and Corporate Slogan

SIIA 2019 DC Legislative Fly-In

Over 40 SIIA members from around the country met in Washington to participate in SIIA’s Annual Legislative Fly-In. These members were able to meet with over 55 congressional offices to advocate on behalf of the self-insurance industry. These meetings ranged from the offices of the Senate Majority and Minority Leaders, to committee staff and new Freshmen Member offices. Among a number of issues addressed, SIIA members sought to educate policymakers and their staff on self-insurance in general and the Self-Insurance Protection Act, as well as discuss in detail top-of-mind issues such as surprise medical billing and drug pricing transparency. Prior to Hill meetings, members were able to obtain a deeper dive into policy and political issues from the SIIA Government Relations team.

The annual Fly-In is a great tool for SIIA members from around the country to voice their opinion and demonstrate expertise to Congress. By doing so, our industry not only strengthens advocacy outreach, but also creates foundational relationships with Members of Congress and their staff. This direct involvement allows SIIA to broaden support for ongoing legislative initiatives and increased educational outreach.

Barry Koonce, VP of American Fidelity, enjoying his day on the Hill.

Thank you to all the SIIA members who participated in the 2019 Fly-In!

“Sen. Wyden’s office talked about state deference in the surprise billing arena.

They believe patients should be held harmless, which I said we agreed with.

I talked about the downsides of arbitration and the importance of reasonable reimbursement rates. They said the Feds should not get in the way of state regulation in this arena.”

-Catherine Bresler, VP CoreSource Inc.

Thomas Bittner & Steve Suter meeting with Congresswoman Kim Schrier (WA-D)

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Meet SIIA’s Government Relations Committee Chair, Steve Suter!

On behalf of the SIIA Government Relations Com mittee and staff, I want to take this opportunity to introduce myself and explain more about what the committee does. The GRC currently is comprised of 11 SIIA members, who discuss SIIA policy priorities and create positions and solutions with the advice of the SIIA team. This year, our policy focus areas are far ranging and align with many of Congress’ top priorities – surprise medical billing, drug pricing, cost transparency and employer sponsored care.

Brian Johnston, Todd Archer, Tom Belding, and Barry Koonce meeting with Senator James Inhofe’s staff (OK-R)

This year alone, the GRC has created specific issue task forces to establish formal association positions on surprise billing and, recently, a Drug Pricing Task Force to create a self-insurance specific policy proposal to tackle the ever-increasing costs of prescription drugs. While the GRC is the formal policy setting body for much of the work SIIA does, we cannot do it without ongoing input and interest from fellow SIIA members like you. We rely on you for on-the-ground issues, solutions and education. In fact, it is the collective expertise of SIIA members that allows us to educate policymakers, shape legislation and continue to build on the strong foundation of the self-insurance industry.

It continues to be a privilege to lead the GRC this year and continue the growth of SIIA’s policy and political activities.

If I can ever be of help, or if you wish to discuss policy issues, please feel free to contact me or members of the SIIA team.

Steve Suter President & CEO Healthcare Management Administrators Steve.Suter@accesstpa.com

Charlie Carlson & Jovina Arabe-Tassey getting ready for a meeting with Senator Tina Smith (MN-D)

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2

2019 Government

SIIA’s Government Relations Team

Relations

Adam Brackemyre, Ryan Work, Cristina

Committee Members

Antelo, Mike Ferguson, Dakota Jackson,

Steve Suter President & CEO Healthcare Management Administrators

and Chris Condeluci.

Julie Bodmer VP & General Counsel Symetra Life Insurance Catherine Bresler VP, Counsel - Government Relations, CoreSource Inc. Lee Davidson Senior VP Berkley Accident & Health Doug Layman President Gilsbar, LLC Ron Peck, Esq. SVP & General Counsel The Phia Group Aaron E. Pohlmann Attorney Womble Bond Dickinson Jay Ritchie Executive VP Tokio Marine HCC Brad Roehrenbeck General Counsel & VP Medcost William Schmitt VP Business Development Accolade Cheryl Tolbert President & CEO Louisiana Business Group on Health

JULY 2019

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3

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ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

&

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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HHS GUIDANCE: A REMINDER AND SOME RELIEF The Department of Health and Human Services (HHS), through the Office of Civil Rights (OCR), recently issued guidance reminding business associates that it has direct enforcement authority over them for violations of certain requirements under the Health Insurance Portability and Accountability Act (HIPAA).

In addition, OCR announced a change in its interpretation of the regulations regarding the civil monetary penalties under HIPAA. As a result, OCR has reduced the annual cap on civil penalties in some cases. Both were on display in a recent enforcement action.

C.F.R. §§ 164.524(c)(2)(ii) and 3(ii), respectively.

7. Failure to make reasonable efforts to limit PHI to the minimum necessary to accomplish the intended purpose of the use, disclosure, or request.

8. Failure, in certain circumstances, to provide an accounting of disclosures.

9. Failure to enter into business associate agreements with subcontractors that create or receive PHI on their behalf, and failure to comply with the implementation specifications for such agreements.

BUSINESS ASSOCIATE ENFORCEMENT OCR issued guidance reminding business associates that it has direct enforcement authority with respect to business associates that violate certain provisions of HIPAA. This direct enforcement authority was granted under the HITECH Act back in 2009, and was also set forth in the final regulations published by OCR in 2013. Business associates are not subject to enforcement actions for any violation of HIPAA. Only violations of the following 10 requirements will lead to direct liability to a business associate1:

1. Failure to provide the Secretary with records and compliance reports; cooperate with complaint investigations and compliance reviews; and permit access by the Secretary to information, including protected health information (PHI), pertinent to determining compliance.

2. Taking any retaliatory action against any individual or other person for filing a HIPAA complaint, participating in an investigation or other enforcement process, or opposing an act or practice that is unlawful under the HIPAA Rules.

3. Failure to comply with the requirements of the Security Rule.

4. Failure to provide breach notification to a covered entity or another business associate.

5. Impermissible uses and disclosures of PHI. 6. Failure to disclose a copy of electronic PHI (ePHI) to either the covered entity, the individual, or the individual’s designee (whichever is specified in the business associate agreement) to satisfy a covered entity’s obligations regarding the form and format, and the time and manner of access under 45

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10. Failure to take reasonable steps to address a material breach or violation of the subcontractor’s business associate agreement.

CIVIL MONETARY PENALTY CAPS OCR announced a change in its interpretation of the regulations regarding civil monetary penalty provisions under HIPAA. Under its revised interpretation, OCR has limited the maximum annual penalties that may apply to any single violation of HIPAA. Previously, the maximum annual penalty for any violation was $1.5 million.

Although multiple violations may arise in connection with a specific incident, and potential violations could cross several years, the relief is welcome. Under the new interpretation, the annual cap on liability varies depending on the penalty tier under which the violation falls, as follows:

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Culpability

Minimum Penalty Per Violation

No knowledge

Maximum Penalty Per Violation

Annual Limit

$100

$50,000

$25,000

Reasonable Cause

$1,000

$50,000

$100,000

Willful Neglect – Corrected

$10,000

$50,000

$250,000

Willful Neglect – Not Corrected

$50,000

$50,000

$1,500,000

CHANGES ON DISPLAY A recent OCR settlement provides a good illustration of the recent OCR guidance. A company that provides medical record services to health care providers, and thus functions as their business associate, experienced a breach involving approximately 3.5 million records. OCR conducted an audit and found that the company had violated HIPAA by failing to conduct a risk analysis and maintain a written report.

As a result, OCR assessed civil monetary penalties of $100,000 against the company, after finding that the violation was due to reasonable cause. This settlement illustrates the OCR guidance in that the company was a business associate that violated the requirements of the HIPAA Security Rule and was fined directly. And where this violation would have resulted in a penalty of $1.5 million in prior years, OCR limited the penalty to only $100,000. While this is still a significant amount, it is welcome relief to those who may find themselves on the wrong side of an OCR audit in the future.

TAKE STEPS NOW TO ENSURE COMPLIANCE In this day of cyber breaches, business associates should redouble their efforts to ensure HIPAA compliance. Entities should ensure that they have HIPAA Security and privacy policies and procedures in place, that all relationships involving PHI are governed by a business associate agreement (or sub-contractor agreement), and that a thorough risk assessment has been undertaken – with a written report preserving the outcome. Failure to take these compliance steps could result in significant potential liability.

References 1 https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/business-associates/factsheet/index.html

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BIG PHARMA FACING BIG LOSSES TIED TO OPIOID EPIDEMIC FALLOUT

By Sean Donnelly

I

BACKGROUND

I

n 2017, a total of 70,237 people in the United States died from a drug overdose.

A staggering 67.8% of those deaths involved the use of opioids, a startling escalation that has been classified as a national epidemic. Deaths attributed to synthetic opioids have become increasingly prevalent, accounting for 59.8% of all opioid overdose deaths.

Every day, an average of 46 people in the United States die from overdoses specifically involving prescription opioids. The highest prescription opioid-involved death rates in 2017 were in West Virginia, Maryland, Kentucky and Utah1. According to the National Institute on Drug Abuse, drug overdose deaths involving opioids that were prescribed rose from 3,442 in 1999 to 17,029 in 20172.

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In particular, oxycodone (such as OxyContin®), hydrocodone (such as Vicodin®), methadone, and fentanyl have been identified as the most common drugs associated with prescription opioid overdose deaths3.

Fentanyl, a synthetic opioid used to treat severe pain, is one of the chief agents being linked to the recent rash of drug overdose deaths. In 2011, Fentanyl was identified as being the cause of 1,663 deaths; in 2016, that figure surged to 18,335 deaths4.

Natural and semi-synthetic opioids, a category that includes oxycodone and hydrocodone, accounted for 14,495 deaths in the United States in 20175.

On a molecular level, oxycodone is nearly identical to heroin6.

STATES FIGHT BACK Massachusetts In the last decade, more than 11,000 people died from opioid-related overdoses in Massachusetts alone7.

Massachusetts patients who were prescribed opioids for more than one year were 51 times more likely to die of an opioid-related overdose8.

The Attorney General for Massachusetts, Maura Healey, alleged in a recent lawsuit9 against Purdue Pharma that the pharmaceutical giant possessed actual knowledge that its prescription opioid OxyContin was leading to overdose deaths. Since 2009, in Massachusetts alone, 671 people who filled prescriptions for opioids manufactured

by Purdue ultimately died from an opioidrelated overdose10.

24

THE SELF-INSURER

Yet, Healey claims that the company turned a blind eye towards the evidence of OxyContin’s addictive qualities and instead engaged in a large-scale sales blitz in Massachusetts to push sales of the prescription drug while deceiving doctors and patients. Pleadings filed by Healey assert that Purdue’s OxyContin offensive included threatening to fire sales reps whose physician targets failed to write sufficient opioid prescriptions, advocating that the powerful drug be used to treat elderly patients with arthritis, and obscuring the risk of addiction in its marketing materials.

Healey’s case focuses on Purdue’s deceptive practices, which allegedly included making misleading claims in order to push more patients onto its opioids at higher doses and for longer amounts of time, while simultaneously diverting patients away from safer alternatives11.

Additional counts charge Purdue with creating a public nuisance of addiction, illness, and death and interfering with the public health by engaging in deceptive marketing practices that fostered a dangerous epidemic of opioid addiction in the state12.

Further, Healey contends that Purdue acted negligently and recklessly with regard to the known risks of its drugs13, including by intentionally targeting high-prescribing doctors and rewarding them with gifts and money in exchange for them prescribing more Purdue opioids14, even when Purdue knew that its opioids were being misused and harming patients.

In one instance, Purdue’s governing board had allegedly been warned by staff that two Massachusetts doctors had prescribed opioids inappropriately, but it failed to notify medical licensing officials. Purdue made more than $823,000 off those two doctors alone in just two yearsi.

In March, Purdue’s attorneys filed a second motion to dismiss the case that labeled Healey’s allegations as “oversimplified scapegoating,” countering that the company neither created nor caused the opioid epidemic in Massachusetts15.

Instead, Purdue made the case that unlawful opioids like heroin and illicitly-produced fentanyl were the root cause of the great majority of opioid-related overdose deaths in Massachusetts16. Accordingly, Purdue claimed that its FDA-approved OxyContin could not, as a matter of law, be considered the proximate or but-for “cause” of the state’s opioid crisis17. The Massachusetts Attorney General’s Office is currently opposing Purdue’s motion.

Oklahoma Oklahoma ranked as the leading state in the nation in terms of amount of opioids distributed per adult resident in 201618. In 2018, nearly fifty percent of drug overdose deaths in Oklahoma were caused by pharmaceutical drugs. In that same year, of the more than 3,000 Oklahoma residents who were admitted to a hospital for a non-fatal overdose, eighty percent of those overdoses were due to prescription opioid medications19.

At the epicenter of this epidemic, Purdue Pharma was again in the crosshairs of a state lawsuit centered on opioid addiction.

The case brought by Oklahoma, originally filed in June 2017 by the Oklahoma Attorney General’s Office, named opioid manufacturers Purdue Pharma, Johnson

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& Johnson, and Teva Pharmaceuticals as defendants. Rather than face a televised trial, Purdue in this instance elected to settle with the state to the tune of $270 million.

The settlement funds will be used to establish an almost $200 million endowment at the Oklahoma State University’s Center for Wellness and Recovery for the purpose of addiction treatment and research.

More than $100 million of the settlement proceeds will be used to fund a new addiction treatment and research center at Oklahoma State University. $20 million of that amount will be earmarked for addiction treatment medicines.

Another $12.5 million in settlement funds will be dedicated to use by cities and counties to help fight the opioid epidemic.

In late May, Teva Pharmaceuticals reached its own $85 million settlement with the state. The case against the remaining defendant, Johnson & Johnson, is moving forward with a bench trial that began on May 28th.

The complaint filed by the Oklahoma Attorney General20, Mike Hunter, revealed that Purdue’s OxyContin sales skyrocketed from $48 million in 1996 to $3 billion in 200921.

Hunter alleged that Purdue misrepresented the risks of opioid addition in its marketing materials and promoted unproven benefits in an effort to boost sales. According to the complaint, Purdue caused “catastrophic damage” in Oklahoma by engaging in a false and deceptive marketing campaign that deluded both doctors and patients into thinking Purdue’s opioids were actually less harmful than had originally been warned by the medical community22.

Specifically, Hunter claims that Purdue falsely downplayed the risk of addiction associated with OxyContin and erroneously maintained that scientific studies had supported the prescription drug’s low risk of addiction23.

One Purdue sales manager is quoted in the complaint as being trained to say that OxyContain was “non-habit forming,” going so far as to admit he was instructed “to say things like [OxyContin] is ‘virtually’ non-addicting…It’s not right, but that’s what they told us to say.”24 The complaint also alleged that Purdue misrepresented the benefits of its opioids, including by falsely promoting that OxyContin had been studied for use with arthritis and recommending that it was effective in treating chronic noncancer related pain25.

Abbe Gluck, a professor at Yale Law School, theorized that Purdue’s decision to settle the case was largely driven by its apprehension that these allegations by the state would be “publically aired against it during a televised trial,” thereby risking “exposure to what could have been an astronomical jury verdict.”26

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THE SELF-INSURER

New York For the first time since the onset of the opioid crisis, criminal charges have been levied against the individual executives running a drug distribution company.

The United States Attorney’s Office for the Southern District of New York (USAO), in cooperation with the New York Division of the U.S. Drug Enforcement Administration (DEA), announced in late April that criminal charges were filed against two executives of Rochester Drug Co-Operative, Inc. Rochester, which is one of the largest wholesale pharmaceutical distributors in the United States, was accused of unlawfully distributing both oxycodone and fentanyl and conspiring to defraud the DEA. Most notably, the company’s former chief executive officer and former chief compliance officer were both individually charged with the illegal distribution of controlled substances, a felony offense.

For its part, Rochester admitted culpability for the unlawful distribution and agreed to pay a $20 million fine and allow for future oversight of it operations by an independent monitor.

If Rochester adheres to the government’s terms over the next five years, the USAO has agreed to dismiss the charges against the company.

The press release from the USAO underscored that the unprecedented charges “should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication.”27

With respect to the individual executives, the USAO alleged that they conspired to distribute oxycodone and fentanyl outside of the scope of professional practice and not for a legitimate medical purpose28.

The former executives were also cited with having lied to the DEA about conducting due diligence on new pharmacy customers when no proper review was ever performed33.

These customers were ultimately supplied with opioids from Rochester despite the company and its executives allegedly knowing that the drugs were in turn being sold and used illicitly34.

Laurence Doud, the former CEO, was charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the United States, which carries a maximum term of 5 years.

William Pietruszewski, the former Chief Compliance Officer, pled guilty in April to charges of conspiracy to distribute controlled substances, conspiracy to defraud the United States, and failing to file suspicious order reports with the DEA.

PROACTIVE OPTIONS FOR

The indictment alleges that they willfully failed to report suspicious orders of controlled substances to the DEA and likewise failed to advise the DEA that Rochester’s customers were diverting the controlled substances for illegitimate use29.

SELF-FUNDED PLANS

In particular, over an approximately five-year period, Rochester received 412 orders of fentanyl and 2,530 orders of oxycodone from its pharmacy customers that the company designated as “suspicious.”30

Plan participants that misuse or intentionally abuse prescription opioids are more likely to incur high-dollar medical charges, whether in the form of emergency room visits, lengthy inpatient hospital stays, or recurrent physician visits.

Of those almost 3,000 orders that Rochester’s internal compliance team red-flagged, the former executives only reported four total orders to the DEA at the direction of Rochester’s former CEO31.

One member of Rochester’s compliance team explicitly warned the CEO and other executives that this practice could place the company in the DEA’s “cross-hairs… because of [its] willful blindness and deliberate ignorance.”32

Statistics provided by the Centers for Disease Control and Prevention indicate that over 1,000 people per day receive emergency medical services as a result of misusing prescription opioids35.

JULY 2019

27

In 2014, there were over 1.27 million emergency room visits and hospital inpatient stays for opioid-related issues, which represented a 99% increase for emergency room treatment and 64% increase for inpatient care from just 200536.

These increased emergency room visits, extended hospitalizations, and even a rise in workers’ compensation claims stemming from opioid addiction are putting a considerable financial strain on employers and the plans they sponsor.

Opioid abuse can cost an employer-sponsored plan an additional $10,000 to $20,000 in annual excess costs per patient37.

Almost one-third of prescription painkillers covered by employer-sponsored plans are abused38.

Fortunately, there are a number of options available to self-funded plans to combat the epidemic and mitigate the rising costs associated with opioid abuse:

(1) Plan Design – Employers can customize their plans to discourage opioid abuse and instead incentivize participants to utilize pain management alternatives, such as acupuncture, chiropractic care, physical and behavioral therapy and heat-focused massage.

(2) Insist on Compliance with CDC and FDA Guidelines – Employer-sponsored plans should confirm whether the providers in their networks are properly following opioid prescription guidelines established by the Centers for Disease Control and Prevention (CDC). The CDC guidelines were

28

THE SELF-INSURER

established as a baseline for providers to follow to better ensure that opioids are prescribed safely and appropriately in order to minimize the chances of abuse or misuse. Additionally, plans should take steps to make sure their participants are aware of, and diligently follow, the Food and Drug Administration’s (FDA) guidelines that instruct patients on how to properly discard surplus opioids before they can be accessed by other household members who do not have a prescription.

(3) Establish a Limit – CDC studies have revealed that the likelihood of a patient becoming addicted to opioids spikes on day four of use. Consequently, Plans may want to consider placing a three-day limit on the use of opioid prescriptions for initial pain treatment39. Plans should work directly with their utilization

management vendor and pharmacy benefit manager to establish strict dosage caps and dispensation/refill limits.

(4) Plan Participant Education – Employers need to take proactive steps to ensure that their employees are fully-informed of the dangers of opioid addiction and misuse. Group discussions and annual meetings are useful forums for discussing the dangers of opioid side effects, recognizing the symptoms of painkiller abuse, and identifying helpful resources available to employees such as substance abuse hotlines.

(5) Identify Vulnerable Participants – Plans should analyze their prescription drug data to identify plan participants with a history of excessive prescription drug use who may be more prone to abusing opioids. Plans should then work with their vendors and administrators to preemptively reach out to providers and pharmacists in order to steer susceptible participants towards pain management alternatives, establish prescription limitations, and make such participants aware of assistance networks and other resources at their disposal to help them through substance abuse issues.

Sean Donnelly joined The Phia Group, LLC in 2013 and currently serves as Associate General Counsel. In his role as Associate General Counsel, Sean is primarily responsible for handling the drafting, negotiation and enforcement of The Phia Group’s contracts and agreements. He also serves as a key advisor to The Phia Group’s management on legal and regulatory compliance issues, business governance issues and internal policies and procedures. Sean earned his B.A. in Political Science with Distinction from the University of Michigan and his J.D. from Boston College Law School.

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References: 1) Preceding statistics derived from Scholl L, Seth P, Kariisa M, Wilson N, Baldwin G. Drug and Opioid-Involved Overdose Deaths — United States, 2013–2017. MMWR Morb Mortal Wkly Rep 2019;67:1419–1427.

DOI: http://dx.doi.org/10.15585/mmwr. mm675152e1.

2) See National Institute on Drug Abuse, Overdose Death Rates (Revised January 2019). Retrieved from: https://www.drugabuse.gov/related-topics/trends-statistics/ overdose-death-rates.

3) Prescription Opioid Data, Centers for Disease Control and Prevention. Dec. 19, 2018. Retrieved from: https://www.cdc.gov/ drugoverdose/data/prescribing.html.

4) Spencer, Merianne Rose; Warner, Margaret; Bastian, Brigham A.; Trinidad, James P.; and Hedegaard, Holly. National Vital Statistics Reports (Vol. 68, No. 3). National Center for Health Statistics, Centers for Disease Control and Prevention. Mar. 21, 2019. Retrieved from: https://www.cdc.gov/ nchs/data/nvsr/nvsr68/nvsr68_03-508.pdf.

5) Opioid Overdose Deaths by Type of Opioid, Henry J. Kaiser Family Foundation. Retrieved from https:// www.kff.org/other/state-indicator/opioid-overdose-deaths-by-type-of-opioid/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Natural%20 and%20Semisynthetic%20Opioids%20(e.g.%20oxycodone,%20 hydrocodone)%22,%22sort%22:%22desc%22%7D. 6) First Amended Complaint at 8, Commonwealth of Massachusetts v. Purdue Pharma, L.P., et al, Mass. Superior Court, 1884-CV01808 (BLS2).

7) Complaint at 4, Commonwealth of Massachusetts v. Purdue Pharma.

8) First Amended Complaint at 8, Commonwealth of Massachusetts v. Purdue Pharma.

12) First Amended Complaint at 270-272, Commonwealth of Massachusetts v. Purdue Pharma.

13) First Amended Complaint at 272, Commonwealth of Massachusetts v. Purdue Pharma.

14) First Amended Complaint at 12, Commonwealth of Massachusetts v. Purdue Pharma.

15) Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 1, Commonwealth of Massachusetts v. Purdue Pharma.

16) Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 5, Commonwealth of Massachusetts v. Purdue Pharma.

17) See Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 3, Commonwealth of Massachusetts v. Purdue Pharma.

18) Petition at 2, State of Oklahoma v. Purdue Pharma L.P. et al., District Court of Cleveland County, State of Oklahoma, CJ-2017-816.

19) Gerszewskii, Alex. Attorney General Hunter Announces Historic $270 Million Settlement with Purdue Pharma, $200 Million to Establish Endowment for OSU Center for Wellness. Office of the Oklahoma Attorney General. Mar. 26, 2019. Retrieved from http:// www.oag.ok.gov/attorney-general-hunter-announces-historic-270-million-settlement-withpurdue-pharma-200-million-to-establish-endowment-for-osu-center-for-wellness.

20 See State of Oklahoma v. Purdue Pharma L.P. et al., District Court of Cleveland County, State of Oklahoma, CJ-2017-816.

21) Petition at 1, State of Oklahoma v. Purdue Pharma.

22) Petition at 12, State of Oklahoma v. Purdue Pharma.

23) Petition at 12, State of Oklahoma v. Purdue Pharma.

24) Petition at 13, State of Oklahoma v. Purdue Pharma.

25) Petition at 12-13, State of Oklahoma v. Purdue Pharma.

26) Hoffman, Jan. Purdue Pharma and Sacklers Reach $270 Million Settlement in Opioid Lawsuit. The New York Times. Mar. 26, 2019. Retrieved from: https://www.nytimes. com/2019/03/26/health/opioids-purdue-pharma-oklahoma.html.

27) Manhattan U.S. Attorney And DEA Announce Charges Against Rochester Drug Co-Operative And Two Executives For Unlawfully Distributing Controlled Substances. The United States Attorney’s Office – Southern District of New York. Apr. 23, 2019. Retrieved from: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-and-dea-announce-chargesagainst-rochester-drug-co-operative-and.

28) Information at 1, U.S. v. Pietruszewski, U.S.D.C. for the S.D.N.Y., 19-cr-___ (WHP).

29) Information at 2-3, U.S. v. Pietruszewski.

9) See Commonwealth of Massachusetts v.

Purdue Pharma, L.P., et al, Mass. Superior Court, 1884-CV-01808 (BLS2).

30) Information at 3, U.S. v. Pietruszewski.

10) First Amended Complaint at 9, Commonwealth of Massachusetts v. Purdue Pharma.

32) Indictment at 5, U.S. v. Doud, U.S.D.C. for the S.D.N.Y., 19-cr-285.

11) First Amended Complaint at 10, Commonwealth of Massachusetts v. Purdue Pharma.

34) Information at 4, U.S. v. Pietruszewski.

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31) Information at 3, U.S. v. Pietruszewski.

33) Information at 4, U.S. v. Pietruszewski.

35) Petition at 10, State of Oklahoma v. Purdue Pharma.

References (cont.):

36) Petition at 10-11, State of Oklahoma v.

Purdue Pharma.

37) Kirson, Noam Y.; Scarpati, Lauren M.; Enloe, Caroline J.; Dincer, Aliya P.; Birnbaum, Howard G.; and Mayne, Tracy J. The Economic Burden of Opioid Abuse: Updated Findings. Journal of Managed Care & Specialty Pharmacy. Vol. 23, Issue 4. Retrieved from: https://www.jmcp.org/ doi/10.18553/jmcp.2017.16265.

38) Coombs, Bertha. U.S. Companies Losing $10B a Year Due to Workers’ Opioid Abuse. CNBC. Apr. 20, 2016. Retrieved from: https://www.nbcnews.com/business/ business-news/u-s-companies-losing-10byear-due-workers-opioid-abuse-n559036.

39) For a full description of the first three options and other useful measures available to plans see: Qualo, Philip. The Opiod Crisis: How Employers & Self-Funded Health Plans Can Combat This Epidemic.

The Phia Group. Mar. 5, 2019. Available at: https://www.phiagroup.com/Media/Posts/ PostId/830/the-opioid-crisis-how-employers-self-funded-health-plans-can-combatthis-epidemic. i) Willmsen, Christine and Bebinger, Martha.

Massachusetts Attorney General Implicates Family Behind Purdue Pharma in Opioid Deaths. WBUR. Jan. 16, 2019. Retrieved from: https://www.npr.org/sections/healthshots/2019/01/16/685692474/massachusetts-attorney-general-implicates-family-behind-purdue-pharma-in-opioid-.

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CAPTIVE MANAGERS BRING ADDED VALUE TO THEIR GROUP CAPTIVES Written By Karrie Hyatt

O O

ne of the most important aspects of joining a group captive is the benefit that any captive provides—access to risk management and cost containment concepts. Group captive managers are taking that idea a step further adding educational opportunities for captive members to learn about the latest developments and best practices in insurance management, as well as by fostering communication and idea sharing among group owners and across groups.

“Something that’s really driving the growth of group stop loss captives is employers recognizing when they join, they are opening a toolbox of all kinds of cost containment strategies that the traditional market does not offer them,” said Michael A. Schroeder, president of Roundstone. “Captive funding strategies allows middle market companies to get access to risk management cost containment ideas that the Fortune 500 companies are applying.”

32

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We’ve got your back. Four words that anyone seeking to self-fund healthcare benefits needs to believe, particularly when contemplating the financial risks associated with catastrophic medical events.

That’s why we’re firm believers at Swiss Re Corporate Solutions in building strong relationships, understanding exactly what our partners expect of us, and creating innovative ways of fulfilling those expectations. By working closely together, we combine our expertise and capabilities with our brokers, payers and advisors to provide enhanced value for your clients – not to mention extra peace of mind.

When it comes to employer stop loss solutions, now, more than ever, we’ve got your back.

We’re smarter together.

Corporatesolutions.swissre.com/esl Insurance products underwritten by Westport Insurance Corporations and American Specialty Insurance Company. © Swiss Re 2018. All rights reserved.

For captive managers that manage group captives, promoting risk management techniques among the companies in the group captive is the key to growing a wellmanaged captive. Often there are cost-saving techniques that they offer members right away. Many companies, including Roundstone, work to develop techniques and data to help the captive members take the best possible advantage of the captive funding mechanism.

CONFERENCES, FORUMS, AND SYMPOSIUMS

One of the most important ways that captive managers can provide value added service is through conferences, symposiums, and meetings. These get togethers are organized outside captive Board meetings and are attended by owners, advisory committees, and brokers. Some captive managers have one large conference a year with select meetings organized two or three times a year, some focus on smaller meetings just among captive owners. The thing they all have in common is education.

“Once a year, Roundstone brings together our captive participant employers, prospective customers, and benefits advisors for our Roundstone Medical Captive Forum,” said Schroeder. “At this educational event, we engage attendees and help teach them how to implement health insurance strategies like a Fortune 500 company. This target is to focus on solutions with high engagement, low fixed cost, and high ROI [return on investment] that are simple to implement.”

Roundstone also offers an annual meeting, called the Captive Participant Meeting, for employers and advisors that are currently a member in one of their group medical captives. In this meeting, said Schroeder, “Participants share overall group performance, success stories, and cost-saving tools and tactics.

Furthermore, breakout sessions are included that focus on topics pertaining to continuous healthcare spend improvements. While there is employer anonymity when metrics are presented, attendees are able to learn cost containment solutions from one another.”

Twice a year, Roundstone also brings together it’s top performing benefits advisors for the Roundstone Advisors Council. There they discuss value-added services and openly discuss ways to improve Roundstone offerings to the advisors’ employer clients.

Collaboration and sharing is the driving force behind the educational opportunities that Berkley Accident and Health provides its group captive members. According to Jim Hoitt, senior vice president, “Collaboration is a foundational attribute of these group captive programs, it’s really what sets participation in a group captive apart from just managing your self-funded plan on your own.

We don’t need to do much encouraging [of members]. These employers understand that the more positive influence they can have on their fellow members—via the sharing of ideas—the better their potential results will be.”

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THE SELF-INSURER

Roundstone keeps in touch with their group captive members through email newsletters that feature risk management and cost containment best practices. Reaching out via newsletter opens a two-way street. According to Schroeder, “Roundstone encourages employers to provide us with any additional comments or concerns through our monthly e-newsletters.”

“We host an annual collaborative risk management symposium that a number of our programs utilize to conduct member meetings,” continued Hoitt. “Some hold their member meetings just after our symposium so they can formulate action plans based on the information gathered from that event.”

Schroeder continued, “We encourage our captive members to provide us with feedback through digital surveys as well as through personal interviews.

Sometimes, we even capture opinions through video and use them in our marketing materials. Roundstone also creates success stories in collaboration with our CSI [Cost Saving Investigators] team and our Regional Practice Leaders.”

VALUE ADDED SUCCESS STORIES

During their annual symposium, Berkley Accident and Health fosters an additional form of sharing. To fill short gaps between programming, they ask different group captive members to present case studies about their own successes. “What makes our symposiums cool is that nobody is there to keep secrets, everybody has their proprietary approach, but the idea is to share as much as you can because it makes the whole community better,” said Hoitt.

KEEPING IN TOUCH ALL YEAR LONG

Group captive managers also foster communications within captive programs throughout the year. At Berkley Accident and Health, their captives schedule additional meetings several times a year. “With over 30 group captive programs in our portfolio, there is a great amount of diversity in the member meeting schedules,” said Hoitt. “In general, outside of board meetings, we see programs meeting in person one to two times per year for risk management focus. Additional meetings might be conducted via teleconference for smaller ad-hoc committees or advisory groups throughout the year.”

Group captive managers are going above and beyond to create the best possible scenario for their clients. Whether it’s fostering cooperation among group members or coming up with focused ideas to help individuals within the group, captive managers doing all they can to ensure the success of the group captives they manage.

Roundstone offers cost-savings recommendations on a quarterly basis based on a group’s performance. The recommendations come from the company’s Cost Saving Investigators (CSI). “The CSI Team is not a single department, but rather a collection

JULY 2019

35

of professionals across several of Roundstone’s departments. They use their expertise to deliver the value of transparency and control to our captive participants,” said Schroeder.

Here is an example of how Roundstone’s CSI Team works to help group captives and their individual members. According to Schroeder, “This past year, an educational services organization enrolled in one of Roundstone’s medical group captives experienced reoccurring high cost claims. One individual in particular had amassed over $60K in claims related to their prescription drugs alone. The Roundstone CSI Team quickly identified this claimant’s specialty drug costs as an area for improvement and recommended the employer switch their pharmacy benefits manager (PBM).

36

THE SELF-INSURER

“A PBM is an intermediary between insurers and drug manufacturers. This organizations work towards reducing pharmacy spend and providing greater access to medications. If a company’s employer-sponsored healthcare benefits are covered by a full-insured plan, they may not realize the potential for cost saving with an independent PBM. Being self-funded means employers have the ability to work with an independent PBM where prescription drug cost savings may be realized.

“After closely investigating the claimant data of the educational organization, the Roundstone CSI Team recommended the company switch to an independent PBM with 100% pass-through savings to the group. This switch allowed the high claimant to decrease their annual claims on prescription drugs by nearly 47%. In fact, this company is expected to realize cost-savings of $28K just from this one employee.”

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While the CSI Team is unique to Roundstone, many captive managers use practical means to test out cost containment strategies. For Berkley Accident and Health, they will test approaches developed during their symposium and meetings on a small scale before launching it group-wide. According to Hoitt, “One common approach is to have a few employer members volunteer to “pilot” or test out a new cost solution or plan strategy and then report back to the remaining membership of implementation, service, and overall results.”

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.

The approach has helped their group captives find efficient strategies for things like changing benefit language to steer procedures to more cost-effect facilities or to replace their PBM with a more transparent model.

In the spirit of sharing that is a key function for Berkley Accident and Health, they encourage collaboration among group captive programs.

“We’ve also seen a tremendous amount of sharing across programs, where the strategic sponsor of one program provides another program with vendor solutions that have worked effectively for them,” said Hoitt. “We have referred to this openness for collaboration amongst members, brokers, and captive programs as an ecosystem for health risk management.”

JULY 2019

37

BROKER/ADVISOR PERSPECTIVES

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

TOO MANY EMPLOYEE BENEFIT AGENCIES AREN’T BUILT TO LAST Written by Kevin Trokey

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e are thrilled to be partnering with SIIA to bring you this new monthly feature. As you can see from the banner and tagline, we are going to be discussing the dynamics of employee benefits brokers, how they can be more successful, and how their partners can be more successful in working with them.

As a quick point of introduction, Q4intelligence is an agency development firm working exclusively with independent agencies to more effectively and efficiently grow and lead their practices. My partner, Wendy Keneipp, and I will be sharing our observations, insights, and ideas here in this column on a monthly basis. We hope you will find our articles interesting, thought-provoking, and challenging, but don’t be shy about pushing back on us or letting us know topics you would like us to address. With that, let’s do this!

REALITY CHECK We have the privilege of speaking at industry events on a regular basis. When doing so, we regularly ask, “Who grew up with the goal and went to school with the aspiration of getting into insurance?” This question never fails to elicit outright laughter but rarely lifts more than a couple of hands. The reality is that this is a very accidental industry.

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However, despite our accidental nature, it is always interesting how many of us stay once we get here. Of course, when you really look at what the industry has to offer, the surprise isn’t that surprising at all. Insurance brokers/advisors have the opportunity to impact the business of their clients like no other advisor. They have the opportunity to impact them strategically, financially, operationally, and, because of the connection to their clients’ employees, even emotionally.

Brokers/advisors can’t do this alone; they need healthy partnerships in order make this kind of impact.

When you add in that those same advisors make a great income, have nice working environments, and, other than 4th quarter, have great work/life balance, it’s no surprise why so many accidental arrivals stick around. However, none of

this is as guaranteed or predictable as it once was. Virtually everything that has made the industry so attractive is under attack. But it doesn’t have to be that way.

As a foundation, let’s discuss how the legacy habits of the industry will be the downfall if we don’t let them go.

BUILT TO LAST? – NOT SO MUCH Whether your own, work in, or partner with agencies, it is critical to understand the basic structure of the typical agency.

The Achilles heel of the insurance industry is that too many agencies have been built and run as lifestyle businesses and the owners refuse to let go. But don’t think that this lifestyle business model is limited to the family-owned agencies. This mentality is alive and well even in the largest of brokerages.

The fact that owning (or working in) an agency can be a lifestyle business is what has made starting one so attractive to so many owners. Their main goal has been to achieve and maintain a certain income, which allows them to achieve a certain lifestyle. At least prior to ACA, that lifestyle meant a pretty casual, some would argue almost “part-time”, yet very financially lucrative, career.

THE SIMPLE LIFE There was a time when that approach worked well, back when the role of a broker was purely transactional. Back when the broker was the only resource employers had access to when they needed to learn about, and make, insurance product decisions. Back when insurance was the only need a broker needed to address for their clients.

What a simple time that was!

A broker’s job was best described as getting insurance quotes and then being there when clients needed help. The thing is, as basic as those responsibilities were, there was a huge financial reward.

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I’ve suggested many times that the financial reward for this mediocre effort was excessive. But, as excessive as it may have been for the effort put forth, the independent broker system was still the most cost-effective way for the carriers to distribute their product.

OF COURSE, TIMES CHANGE For so many reasons (exchanges, technology, carrier consolidation, etc.), the transactional aspect of an insurance broker’s job has been commoditized.

And, as things become commoditized, their value naturally decreases.

And, pointing out the obvious, as value decreases so does the financial reward.

And, continuing down the obvious path, as financial rewards decrease, the lifestyle of the owner is threatened.

That threat becomes even greater when you stop and recognize that while the transactional part of a broker’s job is

being devalued, the demands of their clients are growing exponentially. Clients need help, advice, and guidance in ways they never have before, putting significant pressure on the broker to be able to deliver.

It’s a double whammy for the lifestyle business. At the same time the financial reward to which owners have become accustomed is being slashed, their clients are expecting them to build a more sophisticated operation.

Less money along with the stress and pressures of building a more sophisticated business is NOT what most owners signed up for.

SO KT, WHAT ARE THE OPTIONS? When it comes to protecting the lifestyle, there are only three paths an agency can take. Two of the three options threaten the very survival of the independent agency system.

Option 1 The path too many agencies are taking is to cut back on expenses (training, staff, infrastructure) in an attempt to protect margin (and their lifestyle). Of course, they are cutting back at a time when the needs of their clients demand they double down on these investments, rather than cutting them.

Inevitable outcome - These agencies will either fade to black or eventually succumb to the second option.

Option 2 That second option is to sell the agency under the naïve belief that someone else will protect their lifestyle. You’ve probably heard the siren’s song, “Sell to us, we’ll take care of EVERYTHING! We’ll provide you with everything you need. We’ll take care of all the detail stuff. We’ll leave you alone to run your office the way you always have. Your lifestyle will be better than ever.”

It’s a hypnotic message that too many are falling for.

Inevitable outcome - Yet, when the new owner snaps his/her fingers and the acquired owner wakes up, they find their new reality is anything but what was promised.

Selling, merging, or whatever euphemistic label you want to apply, is not necessarily a bad idea for some agencies. But it is not conducive to the original owner maintaining the lifestyle to which they had become accustomed. They are now part of a much more corporate environment that will, inevitably,

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put new responsibilities, demands, accountability, and limitations on the original owner. They are no longer in control.

Option 3 And, then there’s the third option, which is to fight back against the threats to the current situation. No doubt it’s the most difficult, but it is also the most rewarding, on so many levels. Not only does it require a significant change in how the lifestyleowner operates, it requires two significant changes in business operations.

Change 1 - The first change is to listen to the needs of the clients. The clients will say, “Yes, the insurance decisions have become more complex than ever before, but we also need help communicating that benefit program.

We need help with compliance, technology, attracting/retaining employees, wellness, employee engagement (and this list goes on).”

And, while most agencies have resources to help with these needs, very, very few have made the investment into training, education, and processes to ensure they are used effectively, and that clients’ problems are truly addressed as a result.

You are not in the product business any more Toto; you are in the advice and results business.

It’s not about the products (insurance or non-insurance) you have to offer, it’s about the advice and results you can deliver around the problems those products are intended to address.

Protecting plans and patients across the U.S.

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No Guarantee of Results – Outcomes depend upon many factors and no attorney can guarantee a particular outcome or similar positive result in any particular case.

Inevitable outcome – When prospects/clients learn of your ability to impact their business beyond insurance, the dynamic of the relationship changes.

You are no longer seen as a vendor, but as an advisor (as cliché as it may sound). You are no longer associated solely with the expense of an insurance product, but you are seen as an investment into their own success.

Change 2 – This is almost impossible until Change 1 has been implemented. However, once it is, this one becomes pretty easy. It is about taking on the threat to your revenue.

Once clients see their broker/ advisor as an investment, when they understand the many ways that advisors can deliver improved results to their business, they will be willing to pay for those results. This advice-and-results approach makes it much simpler to move into a fee-based arrangement with clients.

BE AN ACTIVE PARTICIPANT There really is nothing wrong with a lifestyle business as long as the business environment is conducive to such a model. I believe this industry can still provide unbelievable lifestyles, not just for owner, but also for the team.

But the industry has grown beyond its transactional, spreadsheet-dependent past. The lifestyle dream can still be a reality, but it’s forcing agency owners to wake up and become more active participants in building that reality.

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It is no longer enough to have an agency built to serve the needs of the carrier by simply distributing and helping service their product. It is now all about truly serving the growing, more complex, needs of their clients.

We have to do this together

Will it take hard work? Yes! Will the results be worth the hard work? HELL YES!!

Our articles will continue to talk about how brokers and their partners can navigate the current challenges, partner together in more than a cliché sense of the word, and, together, make an impact on the businesses of America like never before.

I don’t know about you, but I take much greater pride in being part of a business that is built to make others more successful at what they do. That’s way more rewarding than simply putting together the fanciest spreadsheet.

Benefits brokers/advisors may be on the front line with the employers, but they can’t make the necessary impact alone. That’s where everyone reading this column comes into play.

Are you with us?!

Kevin Trokey is the Founding Partner of Q4intelligence, a marketing and sales enablement firm committed to the preservation and transformation of the independent agency system. He writes prolifically regarding the many challenges being faced by today’s agencies, providing guidance to overcome those challenges. He is a frequent industry speaker and was recognized by the National Association of Health Underwriters as their speaker of the year in 2016.

Fully-Insured to Self-Funded Analysis

Compare different risk structures when a group is currently selfisured so that an employer can measure the expected impact of different deductibles.

Help your clients make educated decisions as to whether their group should be self-funded or stay fully-insured.

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To learn more contact Ted Wilson at twilson@wspactuaries.com.

www.wspactuaries.com

YOUR BEST PARTNER LEADS THE WAY

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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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.

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ENDEAVORS

SIIA ENDEAVORS

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IIA held its annual International Conference May 14-16, 2019 at the JW Marriott Miami in Miami, Florida. This unique industry event is designed to help attendees understand self-insurance/captive insurance business opportunities and strategies with a multinational perspective. The international conference brings attendees together in a more personal setting and provides attendees a unique experience to make invaluable connections.

“The SIIA international conferences always offer synergetic networking opportunities and educational sessions. I felt that this year’s conference in Miami approached healthcare from a worldly point of view including expert panelists and partnership opportunities from Central America to Europe to the United States” said Daniél C. Kimlinger, PhD, MHA, SPHR, SHRM-SCP, Chief Executive Officer of MINES and Associates.

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ENDEAVORS The mission of the SIIA International Committee is to promote global networking, while exchanging market knowledge of self-insurance and alternative risk management strategies, as well as effective emerging global health management trends.

Liz Mariner-Ford, Senior Vice President for Risk Strategies Health Care Practice and Chairwoman of the SIIA International Committee said, “Some of the trends highlighted this year were the growth in utilization of telemedicine, digital health and insurtech, here in the US and worldwide. This is bringing new cost controls to health care delivery, while creating better outcomes and employee/ patient experience”.

“The SIIA International conference branched out from just focusing on the Latin America region. Presentations were made about trends at Lloyd’s of London as well as the Continental European insurance market. While LATAM remains an important area of opportunity, SIIA got back to a broader, global mission with these topics,” stated Michael Feighan, SVP – US Head of Accident & Health of Aspen

Insurance. “Many attendees noted the high quality of the presentation material.

From telemedicine to net promoter scores for customer healthcare experience, the sessions were forward-thinking and very relevant.”

“The meeting was quite informative and attended by very senior presenters. They took great strides to draw distinctions between the US environment and especially that of our southern neighbors. Johns Hopkins looks forward to the SIIA’s growth into other world regions including the EU and Pacific Rim,” affirmed Mark Creveling, Business Development Advisor at Johns Hopkins Occupational Medicine.

The educational program featured top industry experts who shared their unique expertise on market opportunities outside of the United States, as well as how U.S.based self-insured employers are providing benefits for workers stationed in foreign countries.

Pascal Orliac

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ENDEAVORS SESSION HIGHLIGHTS INCLUDED:

Global Disability Trends A 35-year-old has a 50% chance of becoming disabled for more than a 90-day period before age 65 - and yet disability protection is much less prevalent than say life or health insurance.

Disability providers in the US and internationally offer an array of fully insured and self-funded solutions with a variety of absence management and claims support services designed to streamline the process and get employees back to work as soon as reasonably possible. The disability provider’s data also reflects the effects of an aging workforce, medical advances, and the power of early intervention.

Jonathan Callund, Representante Cono Sur for WorldCare and Jennifer Fleck, FSA, MAAA, Consulting Actuary of Milliman provided an overview of market ‘best practices’ in the US and key countries in Europe and LatAm where privately insured disability solutions are prevalent and evolving - and increasingly in demand by Employers and Employees alike.

Global Telemedicine The Past, Present and Future - Part A: Making Telemedicine Work with International Plan Participants Part A of this two-part session explored the cultural, linguistic and logistical challenges faced by employers who wish to provide telemedicine options for their local and international plan participants.

Richard Heinzl, Global Medical Director of WorldCare, Elliot Mondrow, CEO of Equatel Health, Robb Suchecki, VP, International Healthcare for Pan-American Life Insurance Group and Dr. Jonathan Wiesen, MD, CEO and CMO of MySpecialistMD will give practical advice will be provided on how to overcome these challenges in order to make quality health care more accessible for employees based both within and outside of the United States.

Global Telemedicine- The Past, Present and Future Part B: Connecting the Dots to Maximize Telemedicine ROI

Attendees at one of the networking receptions

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Telemedicine is most effective when it is offered in concert with multiple complementary strategies involving data analytics, wellness implementation teams, corporate HR and Finance

ENDEAVORS support, and proactive employee communications.

Mario Anglada, CEO of Hoy Health, Neil Gordon, CEO of Intervent and Michael King, Chief Growth Officer of Teladoc connected the dots to help structure a telemedicine program in a way that is most likely to deliver positive results for employees and the bottom line.

Health Insuretech The health-tech industry is booming. Investments have taken off with venture capitalists pouring billions into start-ups, many of which are having a disruptive - and yet really positive - effect on insurance.

Carmen Effron, Founder & President of C F Effron Company, a 20-year consultant with insuretech advisory expertise, discussed the customer experience implications of these changes.

International Self-Insurance Strategies Employers now have self-funded options for benefit plans that cover International Benefit exposures. Philippe de Dreuzy, Country Manager - USA of AXA Partners, Harvey Mitgang of MHS International and Les Boughner, Chairman of Advantage Insurance Management (USA) LLC discussed Employer Stop loss, Captives and related Services that are currently available.

Europe Market Update — London and Beyond This panel featured two people directly involved in the European insurance and healthcare market.

Daniel Revilla, Regional Head of LatAm at Lloyds of London, discussed current developments at Lloyd’s, and provided insight into “the world’s insurance marketplace” at this seminal moment of Brexit.

New technologies in the wellness economy are expanding as consumers seek products and experiences that promote health and well-being - with significant impact on improving the cost effectiveness of self-insurance solutions for healthcare.

Brij Sharma, Managing Partner of Naples Technology Ventures, a leading expert with a 30-year background as a successful entrepreneur shared first hand stories from start-up companies that focus on healthcare services.

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ENDEAVORS Pascal Orliac, Co-founder of Care2care discussed the changing health insurance models in Continental Europe, including opportunities for access to lower cost medical and prescription drugs afforded to American consumers.

Past and Future Perspectives of Self-Funding in Mexico

Carlos Chávez, Administrative Director of NOVA clinic and Jorge Rodríguez Healthcare Risk Management Director, LATAM at Global Excel discussed personal experiences of self-funding in Mexico from an employer and provider perspective.

While there is no substitute for being there, you can check out some of these session on Canoe, SIIA’s online platform for live conference session recordings, educational videos, interviews, commentary and industry updates.

At Meritain Health, we are your Advocates for Healthier Living!

We strive to help our members lead healthy, productive lives.

That's why we offer tools and services to promote long-lasting health and well-being.

For more information, visit www.meritain.com

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If you have not already done so, check out this great membership benefit now at www.siiacanoe.org. Please also keep in mind that all employees of SIIA member companies have free access to Canoe upon setting up their own unique passwords to go along with your company’s member ID. In this regard, please spread the word within your organization so that others can access this great content, including Live Conference Session Recordings, Webinars, Studio Videos, Interviews and SIIA News & Views.

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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NEWS DIAMOND MEMBERS HM INSURANCE GROUP HIRES COREY DOWNS AS NEW DALLAS REGIONAL SALES

HM Life Insurance Company and HM Life Insurance Company of New York are rated “A” (Excellent) by A.M. Best Company, one of the country’s oldest and most respected rating agencies. Through its insurance companies, HM Insurance Group holds insurance licenses in 50 states and the District of Columbia and maintains sales offices across the country.

DIRECTOR Corey Downs has joined HM Insurance Group (HM) as director, Dallas Regional Sales. He will work to grow and maintain the HM Stop Loss book of business in the company’s Dallas territory, which includes the northern Texas, West Texas, Oklahoma and Arkansas markets.

With more than 15 years of experience in the insurance industry, Downs comes to HM from OneAmerica Financial Partners Inc. where he served as a senior sales representative. Prior to that, he held benefits and account executive positions at Assurant Employee Benefits and The Hartford.

Downs has a bachelor’s degree in Kinesiology, Sports Management from Texas A&M University.

About HM Insurance Group HM Insurance Group (HM) works to protect businesses from the potential financial risk associated with catastrophic health care costs.

The company provides reinsurance solutions that address risk situations confronting employers, providers and payers. A recognized leader in employer stop loss, HM also offers managed care reinsurance nationally. Contact Jennifer Mahan, Marketing & Communications Consultant, at (412) 544-1359, jennifer.mahan@hminsurancegroup.com and visit hmig.com.

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SUN LIFE U.S. APPOINTS TAMMI WORTHAM AS VICE PRESIDENT OF HUMAN RESOURCES WELLESLEY, Mass. -- Continuing to focus on talent development and employee engagement, Sun Life U.S. announced that Tammi Wortham has been appointed vice president of Human Resources.

Most recently, Wortham was vice president of Group Benefits Client Services at Sun Life, leading the largest unit in the U.S. business with a team of more than 700 people. In that capacity, she introduced strategies to enhance the delivery of an integrated, seamless client experience, including the launch of a robotics center of excellence.

“Tammi brings so much energy and forward thinking to Sun Life. People gravitate to her as a strong and innovative business leader, and I’m excited for her to be heading our HR function,” said Dan Fishbein, M.D., president of Sun Life U.S. “Tammi’s people skills and dynamic leadership style combined with her exceptional business acumen make her the ideal choice to take our employee engagement, talent and diversity initiatives to the next level.”

NEWS holds a master’s degree in organizational psychology from the University of Hartford and a bachelor’s degree in biology from the University of Missouri – Columbia. Wortham sits on the finance committee for the Women’s Fund of Western Massachusetts and is licensed

by FINRA. About Sun Life

In her prior role, Wortham also fostered initiatives to encourage employees to share and build upon their successes in helping Sun Life’s members and employer clients.

She initiated a number of activities designed to further engage employees in Sun Life’s client-centric culture and spearheaded a program that allows developing talent to gain experience and exposure to more aspects of the business.

“I am thrilled to be joining a talented team of HR professionals who strive every day to make Sun Life a strong partner to its employees as well as our employer and member clients across the country,” said Wortham. “Joining HR gives me a new path to continue the great work we do in developing our people and embracing efforts that allow people to bring their best selves to work every day by actively encouraging inclusion in the workplace.”

Named one of the Boston Globe’s 2018 Top Places to Work in Massachusetts and Best Place to Work for LGBTQ equality for 11 consecutive years by the Human Rights Campaign’s Corporate Equality Index, Sun Life supports a number of employee inclusion networks and public initiatives that Wortham will oversee, such as closing the gender pay gap and LGBTQ workplace equality.

Wortham is a sponsor of Sun Life’s Black Excellence Alliance inclusion network and co-chair of the United Way of Massachusetts Bay Women’s Leadership Breakfast, sponsored by Sun Life. Before coming to Sun Life, Wortham held senior positions at Prudential overseeing customer service operations in group insurance and retirement services, and led annuities operations at The Hartford Financial Services Group. She

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 Financial 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.

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NEWS SWISS RE CORPORATE SOLUTIONS APPOINTS KATIE MCGRATH AS HEAD ACCIDENT & HEALTH NORTH AMERICA NEW YORK, -- Swiss Re Corporate Solutions appoints Katie McGrath as Head Accident & Health North America, effective June 10. In this role, Ms. McGrath will oversee Swiss Re Corporate Solutions’ rapidly growing Accident & Health (A&H) business. Based in Windsor, CT, Ms. McGrath will be responsible for A&H strategy, underwriting, marketing, claims and operations.

“We are thrilled to have someone of Katie’s caliber join our team,” states Ivan Gonzalez, CEO North America, Swiss Re Corporate Solutions. “I am confident that her knowledge and experience will help us to continue to deliver agile and innovative solutions to clients in the employer stop-loss space.”

Ms. McGrath succeeds Mike Kemp who announced his retirement this year. Mr. Kemp will work with Ms. McGrath to ensure a smooth transition.

With twenty-five years of insurance experience, Ms. McGrath has held numerous leadership positions of increasing responsibility within the A&H space. She holds a Bachelor of Science from Virginia Tech and an MBA from Rutgers University in New Jersey.

Swiss Re Corporate Solutions serves the A&H sector by providing financial protection from a wide range of risks in the area of employer stop-loss insurance.

About Swiss Re Corporate Solutions Swiss Re Corporate Solutions provides risk transfer solutions to large and midsized corporations around the world. Its innovative, highly customized products and standard insurance covers help to make businesses more resilient, while its industry-leading claims service provides additional peace of mind.

Swiss Re Corporate Solutions serves clients from over 50 offices worldwide and is backed by the financial strength of the Swiss Re Group. Visit corporatesolutions.swissre.com.

STOP LOSS INSURANCE SERVICES INC., AN AMWINS GROUP COMPANY, INTRODUCES AMWINS SELFFUNDING ANALYTICS Worcester, MA -- Stop Loss Insurance Services Inc., (“SLIS”), an AmWINS Group company, announced a new service that can evaluate a benefits broker or consultant’s opportunity to transition an employer group from a fullyinsured to a self-funded basis.

The new service, known as AmWINS Self-Funding Analytics, enables brokers and consultants to:

• Evaluate a group’s risk in terms of capital, expected return, and likelihood of improving upon a fully-insured benchmark

• Analyze and recommend the best risk structure for their clients, given a group’s risk tolerance

• Review multiple stop loss scenarios to find the optimal outcome

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NEWS • Help a client decide whether their group should transition to self-funding or remain fullyinsured “This new analytical resource leverages data from more than 10 million lives and over $100 billion in billed charges and is calibrated and customized to each client’s situation,” said Gerald Gates, President of SLIS. The new analytics capability adds to SLIS’ already extensive suite of products and services and is offered at no charge to evaluate alternative funding scenarios for fully-insured clients.

of self-funding and the potential savings associated with that model,” said Rebecca Bocek, President-National Sales Director of SLIS. About Stop Loss Insurance Services Stop Loss Insurance Services (SLIS), an AmWINS Group Company, provides brokers, consultants and third-party administrators (TPAs) a competitive edge by serving as a time-saving resource that is singularly focused on self-funded benefits solutions. Benefits professionals become more productive and successful in their core business by putting SLIS to work in this highly specialized segment of their practice. With more than 25 years of focused experience in self-funding, SLIS is known for deep expertise, strong market relationships and hands-on service, backed by the security of AmWINS Group, the largest insurance wholesaler in the U.S. Contact Gerald Gates at 508.373.0773, gerald.gates@amwins.com and visit stoploss.amwins.com.

“This new service provides brokers and consultants with the ability to educate their clients about the rewards and risks

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NEWS About AmWINS Group, Inc.

secure optimal outcomes for employees and their families.

AmWINS Group, Inc. is the largest independent wholesale distributor of specialty insurance products in the United States, dedicated to serving retail insurance agents by providing property and casualty products, specialty group benefit products and administrative services. Based in Charlotte, N.C., the company operates through more than 115 offices globally and handles premium placements in excess of $16 billion dollars annually.

Visit www.amwins.com.

“Captive members are employers who self-fund their employee health benefits.

Rather than buy traditional health insurance, they self-fund with stop loss protection and then join together to share risk through a group captive arrangement,” said Brad Nieland, President and CEO, Berkley Accident and Health. “As a result of aligned incentives and a healthy focus on employee wellness and risk management, the RAY award winners have taken control of their health care spending – and the results are very impressive.”

BERKLEY ACCIDENT AND HEALTH ANNOUNCES 2019 WINNERS OF CAPTIVE RISK ACHIEVEMENT AWARD, RECOGNIZING OUTSTANDING HEALTH RISK MANAGEMENT AMONG STOP LOSS GROUP CAPTIVE MEMBERS Hamilton Square, NJ -- Berkley Accident and Health, a Berkley Company®, is proud to announce the winners of the 2019 Risk Achievement of the Year (RAY) Award. The RAY Award winners were announced at the 2019 Berkley Captive Symposium held recently at the Westin Grand Cayman.

The RAY Award recognizes Group Captive members who have shown exceptional dedication to health risk management in the previous year.

Nominees must demonstrate a strong commitment to employee health and wellness, adopt programs that help lower health risk factors, and show measurable results. Above all, winning companies seek to promote a culture of health and

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The 2019 winners are:

• J.F. Sobieski – This commercial and residential Plumbing and HVAC contractor has gone above and beyond in pushing new programs to increase the health and well-being of their employees. Through their biometric screenings, conducted for the first time this year, Sobieski identified numerous undiagnosed conditions and individuals who were predisposed to health conditions which would otherwise go untreated until complications were evident.

They also implemented a comprehensive wellness program managed by a third party vendor. This included an RV to conduct on-site screenings at each job site. One key element was to offer incentives to increase participation in biometrics and other cost control programs. Additionally, Sobieski created their own branded fitness program called “Industrial Athlete” that is focused on 3 distinct job classifications within the organization.

NEWS • Reid Companies – This familyowned company is a marketer and supplier of transportation fuels and owns and operates Crosby’s retail convenience stores and quick serve restaurants. The company has historically spent about 36% less on its medical claims on a PEPM basis, compared to other companies in their group captive program.

They are a finalist for the western New York Healthiest Employer Award due to their impressive employee engagement. They have increased their overall employee engagement by 27% in just one calendar year and an impressive 92.5% of the participants met the requirements to earn their incentive. 86.6% of their population now fall in the low-risk category, and they reduced the high-risk category to only 7.5% of their population.

This comes from a continued emphasis on total well-being and a commitment to monthly activities that support the mission of a healthy workforce.

The 2018 realized financial results allowed the organization to reduce the employee deductible and employee contributions levels for the 2019 plan year. They were also able to reduce their out-of-pocket maximum and added alternative therapies and bariatric procedures to their offerings.

The 2018 honorable mentions were:

• Alexander Thompson Arnold – An honorable mention goes to Alexander Thompson Arnold (ATA), a regional accounting firm serving Tennessee, Kentucky, Mississippi, and Indiana. ATA has taken a holistic approach to health and wellness by educating their team on the importance of mind, body, and spirit.

Based on their organization’s trend data that showed an increase in claims and Rx utilization associated with anxiety/depression and heart health, they implemented a Tax Season Wellness Challenge that focused on behaviors and activities that encourage mindfulness, nutrition, being thankful, and moving.

They received no increase to health plan costs from the 2018 to 2019 plan year and reinvested a large portion of the savings back into their wellness initiative to offer more challenges and rewards for 2019 and were able to keep employee health premiums unchanged for 2018-2019. The most exciting component added this year was a reinvestment in the communities they serve. The new wellness platform allows individuals and office locations to earn points that equate to dollars that are contributed to civic and nonprofit organizations at the local level.

• Northwest Real Estate Capital Corp. / Tamarack Property Management – This property management company which specializes in affordable housing has encouraged their plan participants to be accountable for their well-being. The organization has been committed to providing the tools necessary for the employees to take advantage of their health benefits and begin a personal health journey.

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NEWS • Maco Bag – An honorable mention goes to Maco Bag, a manufacturer of flexible packaging products and contract packaging services.

Maco Bag mandated participation in the annual benefits/wellness fair and emphasized financial wellness in 2018 with quarterly HEALTHY lunch and learns.

They also offer onsite healthy catered lunches once a week, giving employees an easy way to get a nutritious meal. They have had 30 people activate their MDlive telemedicine program accounts, bringing utilization of telemedicine up to 23.3%.

According to the Organizational Healthy Report provided by Simply Well, Maco Bag improved health conditions among employees who were screened in 2017 and 2018, which yielded a savings of $3,500 each in avoidable medical expenses for their plan.

• Fisher Printing, Inc. – An honorable mention goes to Fisher Printing Inc., a family owned commercial web printer that specializes in printing advertising circulars for local and nationwide retailers located in Illinois and California. Fisher Printing has implemented biometric screenings and other wellness initiatives over the past several years, with the recent year demonstrating the most improvement in their population.

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This resulted in an estimated cost avoidance of over $28,000, after factoring in other costs to support the program. Fisher Printing has structured their premiums to increase participation year over year. Both employees and spouses are encouraged to participate in the biometric screenings.

Their third-party vendor tracks several criteria of a Personal Health Score Component, and employees improved dramatically in nearly every category, including a 75% improvement in blood pressure levels and an 83% improvement in LDL cholesterol levels.

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 products: Employer Stop Loss, Group Captive, 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. Contact Linda King, Director, Marketing, at LKing@berkleyah.com and visit www.BerkleyAH.com.

GOLD MEMBERS RISK STRATEGIES WELCOMES INDUSTRY VETERAN WARD HUMPHREYS TO ITS REINSURANCE TEAM Risk Strategies, a privately held, rapidly growing national insurance brokerage and risk management firm, is pleased to announce the addition of Ward Humphreys as senior vice president to the Reinsurance team of its National Health Care Practice.

His hiring is part of an ongoing strategic effort by the firm to build out this specialty practice with the most-talented and experienced health care professionals.

Prior to joining Risk Strategies, Humphreys was a senior vice president at Willis Re and he brings to Risk Strategies more than 30 years of insurance and reinsurance experience.

Humphreys has built his career on the basis of superior customer service and advocacy and has in-depth expertise in all medical lines, including traditional excess of loss, quota share and excess for employer stop loss programs, capital motivated reinsurance, managed care reinsurance, aggregate excess for MSSP ACO downside risk, and excess of loss for bundled payments.

As the newest member of Risk Strategies’ market-leading team of professionals in the life, accident and health reinsurance markets, Humphreys will help solidify the company’s position as the nation’s premier independent accident and health (A&H) reinsurance intermediary and consultant. Humphreys will be based in Risk Strategies’ Philadelphia office while serving clients nationwide.

NEWS “We are absolutely delighted to hire someone with the market stature, abilities and talents that Ward possesses,” said Tony Plampton, Managing Director of the Risk Strategies Reinsurance team. “Ward will play a key role in Risk Strategies’ continued growth as we build upon our excellent market reputation and presence. Ward will be a great fit with our team of experienced industry professionals, providing guidance and expertise to clients within Risk Strategies’ positive entrepreneurial environment.

Ward Humphreys can be reached at: Cell: 215.432.4734, Email: whumphreys@re-solutions.net About Risk Strategies Risk Strategies is a privately held, national firm with offices across the country. As a leading U.S. insurance broker, the company offers sophisticated risk management advice as well as insurance and reinsurance placement for property & casualty, health care and employee benefits risks.

Risk Strategies serves commercial companies, non-profits, public entities and individuals, and has access to all major insurance markets. Ranked among the top 20 brokers in the country, Risk Strategies has offices in more than 50 locations nationwide including Boston, New York City, Chicago, Atlanta, Dallas, Los Angeles, Miami, Minneapolis, Nashville, and San Francisco. Visit www.risk-strategies. com/healthcare.

SILVER MEMBERS NOVA HEALTHCARE NAMED AMONG BEST COMPANIES TO WORK FOR IN NEW YORK FOR THE 2ND YEAR IN A ROW, BEST PLACES TO WORK IN HEALTH CARE FOR 1ST TIME BUFFALO, NY -- Nova Healthcare Administrators (Nova) recently received two honors for its workplace culture. Nova was recognized among the best workplaces in New York State, as well as the best health care employers in the nation this spring.

In April, Nova was named one of the Best Companies to Work for in New York for the second consecutive year. Earning the coveted Best Companies to Work for in New York distinction for both 2018 and 2019, Nova ranked 9th out of 19 finalists in the medium-sized businesses category in its first year entering and 11th out of a larger finalist pool of 23 for the current year.

In May, Nova was selected as a finalist in Modern Healthcare’s Best Places to Work in Healthcare for 2019. Final rankings for this recognition program that honors workplaces with high-performing cultures throughout the health care industry will be announced in September.

Both awards programs evaluate, and rank places of employment based on employee satisfaction and engagement as well as workplace practices and policies.

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NEWS With ongoing initiatives including flexible work schedules, monthly company-wide meetings focused on team building, a year-round dress down program to benefit charity, annual Associate Appreciation Day celebration and numerous opportunities for associates to receive recognition, Nova strives to foster a productive and positive work environment.

Nova’s new HSA product delivers health benefit incentives for employers while effectively putting health care decisions back in the hands of the consumers with a tax-advantaged, flexible, portable, and future-focused savings solution. Nova’s HSA also provides 24/7 access to reimbursement account information.

“We are thrilled to once again be recognized for our efforts to create a rewarding company culture at Nova,” said Laura Hirsch, President of Nova. “We are committed to cultivating an environment that allows our associates to thrive, empowering them to serve our clients in a way that embodies Nova’s values of passion, trust, teamwork and Additionally, Nova’s clients will benefit accountability.” from advanced reporting tools as well as the ability to seamlessly modify their NOVA LAUNCHES HEALTH SAVINGS ACCOUNT PRODUCT plan designs. For clients with other benefits administered by Nova, the BUFFALO, NY -- Nova Healthcare Administrators (Nova) is pleased to unveil its latest revamped web portal will feature data on product offering, a health savings account (HSA), following an expansive update to a consumer engagement, such as health cloud-based benefits administration platform that provides enhanced functionality in spend and online user access. For clients addition to the new HSA product. Expanding upon an already robust suite of services with benefits through other carriers, the and capabilities, Nova’s HSA will be offered in addition to flexible spending accounts system will effectively integrate their (FSAs) and health reimbursement arrangements (HRAs). file feeds. Flexibility and client-focused support are critical in building benefits that aim to recruit and retain talent.

“The addition of health savings accounts, coupled with and enhanced administration platform, positions Nova to continue our remarkable growth within the health care space,” said Nova’s President, Laura Hirsch. “We are focused on the relationship to member spend and health care costs to better serve our clients and improve overall health outcomes while lowering their spend— and we don’t plan on stopping any time soon.”

About Nova Headquartered in Buffalo, NY, Nova is a wholly-owned affiliate of Independent Health. Evolving over the last 30 years, Nova aims to manage trend to reduce health care spend and improve health plan performance. Nova works with flexibility to provide clients the solutions they need in the way they need them including medical, dental, vision,

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NEWS COBRA, reimbursement account administration, and private-labeled partnerships. Nova provides clients with unique reimbursement pricing arrangements, customized strategies and personalized service. Visit www. novahealthcare.com.

ACS BENEFIT SERVICES ANNOUNCES CARRIE DARNELL AS DIRECTOR OF CLIENT RELATIONS Winston-Salem, NC – ACS has announced the addition of Carrie Darnell, SPHR, as the company’s new Director of Client Relations. Reporting directly to ACS Chief Executive Officer, Kari L. Niblack, she will be responsible

for establishing, cultivating and managing relationships with customers, brokers and consultants at multiple levels, as well as clearly articulating ACS’ value story to improve customer growth and retention.

Darnell brings 24 years of leadership experience and front-line medical plan management expertise to ACS, including 15 years in senior human resources management and nine years of service in the United States Navy.

Darnell comes to ACS from MedCost Benefit Services, where she worked as an Account Manager for three years. Prior to that, she served as Employee Relations Manager at Renfro Corporation in Mt. Airy, NC for more than nine years.

“Innovative and client-centric solutions are essential to an exceptional client experience and successful plan management,” Darnell said in a statement. “I am very excited to join ACS in such a dynamic role adding to their passionate commitment to clients.”

ACS CEO Kari Niblack resonated that sentiment stating, “ACS’ greatest strength is our people. Carrie comes to ACS with a strong and far-reaching background of military service and HR experience gained through her executive leadership roles that will significantly strengthen our Client Relations team and add tremendous value for our clients.”

LEARN | PLAN | SAVE | PROTECT RECOVERY DOLLARS MULTIPLIED

PLAN DOCUMENTS PERFECTED

FIDUCIARY DUTY SHIFTED

LEGAL EXPERTISE SECURED

www.phiagroup.com | 781-535-5600 | info@phiagroup.com JULY 2019

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NEWS About ACS Benefit Services Founded in 1982, ACS Benefit Services was formed on the realization that there needed to be better benefit solutions and health plans available in the marketplace. Since then, ACS has grown to be a leading third-party administrator by focusing on the future of the industry, creating long-term solutions and predicting the benefit administration needs of our employer groups. For more information, visit ACSbenefitservices.com.

CUSTOM DESIGN BENEFITS EMPLOYEES SHARE INSIGHTS INTO THEIR WORKPLACE Cincinnati -- Custom Design Benefits is woman-owned company that works with employers that choose to self-fund their employees’ medical expenses rather than pay a premium to an insurance carrier to handle costs. Using their TrueCost and PPO models, Custom Design Benefits helps keep those self-funded medical expenses in check.

Specifically, the company’s TrueCost model includes a reference-based pricing plan where the company secures direct contracting agreements with health care providers. Additionally, the model features a “co-pay only” design to keep payments and paperwork simple for employees and their family.

As employers continue to expand their benefit programs in order to attract top talent, Custom Design Benefits works with them on other solutions as well, including flexible spending accounts and health savings accounts.

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The company’s TrueCost model has resonated with employers burdened by high costs, and Custom Design Benefits is one of the top five benefit providers in the greater Cincinnati Area. In addition, the company recently expanded to the Columbus area after securing a direct contracting agreement with one of the area’s largest hospital systems, Mt. Carmel.

While cost containment is the most obvious reason that employers select Custom Design Benefits for their healthcare needs, it’s not the only reason. The company strives to provide a high level of personalized service for each and every one of its customers. That friendly service is engrained in the company’s culture, which emphasizes the idea of doing everything “The Custom Way.” The Custom Way is a set of 23 fundamentals that describe Custom Design Benefits, how they do their work, and how they treat their clients, partners and each other.

“Through our employees’ commitment to taking care of our clients and members, we’ve achieved a 95% excellent customer service rating from our clients the past several years.” said Julie Mueller, President & CEO. “The Custom Way” formalizes and reinforces the customer service principles we practice; Take Care of Our Clients, Deliver Results, Be a Fanatic About Response Time, and Own It are just a few of the fundamentals that drive our personalized, professional customer service.”

In addition, Custom Design Benefits encourages different points of view, as evidenced by the Custom fundamental “Challenge the Process”. The company recognizes employees who make recommendations for process changes that improve customer service for clients or increase internal efficiencies.

The company furthers its goal of being easily accessible to its clients by investing in top-tier technology; their 24/7 Portals allow Employers, Members and Providers to easily access information at their own convenience. The technology doesn’t try to replace its personal relationships with clients, members and providers, but it can assist; many members like the accessibility of the mobile-friendly platform.

About Custom Design Benefits Custom Design Benefits serves over 500 clients headquartered in Ohio, Kentucky and Indiana, with members located across the United States. Custom Design Benefits has a strong connection to local communities and never hesitates to pitch in wherever they’re needed, participating in a number of community service and charity initiatives. Visit www.customdesignbenefits.com.

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

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SIIA new members july 2019

REGULAR CORPORATE MEMBERS

EMPLOYER CORPORATE MEMBER

Nicole Floyd Regional VP of Sales HUB International Northwest Bothell, WA

Andres Jimenez Sr. Manager, Claims and Risk Services Florida Insurance Alliance Lake Mary, FL

Lonnie Rainville General Manager Nesika Health Group Roseburg, OR

Sawyer Clark Director of Marketing & Communications OccuNet/Fairos Amarillo, TX

Shane Wolverton Senior Vice President, Corporate Development Quantros Greenville, SC

Gary Becker CEO ScriptSourcing, LLC Baltimore, MD

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Byars at sbyars@sipconline.net for advertising information.

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In fact, 85% of the time we find claim savings that other vendors don’t. We do this by focusing on every step of the pre-payment claim cycle and delivering value-driven solutions from payment to reconciliation.

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.

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