IN CALIFORNIA
• Governor Signs Bills Sponsored by the Commissioner
• Agent Charged In Disability Scheme
• Seniors Warned of Medicare Marketing Scams
• CalPERS Members Get Access to Telehealth
LIFE INSURANCE
• Life Insurance Activity Increases 2.1% in June
• Retirement Planning Is a Top Reason for Buying Life Insurance
HEALTHCARE
• Managed Care M&A Could Shatter 9-Year Record
• Wal-Mart Offers Surgery Care With No Out-of-Pocket Costs
• CMS Policy to Withhold Hospital Payments Did Not Reduce Infection Rates
EMPLOYEE BENEFITS
• Multi-National Companies Seek More Oversight of Employee Benefits
PRODUCT UPDATE
• Universal Life Insurance Product
• Individual Vision Plan
• Index Annuities
WEBINARS
• Indexed Annuity Webinar
• Webinar to address the Retirement Needs of Women Clients
Governor Signs Bills Sponsored by the Commissioner
Governor Jerry Brown has signed seven bills that Commissioner Jones and the California Department of Insurance (CDI) sponsored this legislative year:
• Long-Term Care: Considered to be one of the strongest long-term care insurance consumer protection measures in the country, AB 999 would allow consumers to review policy language before a purchase in order to allow a consumer to make a more informed decision, provide more pooling of claims experience to spread cost more broadly, limit the inclusion of assets in investment yields in premium rates, provide more flexibility in the rate increase review process, and impose stricter loss ratio requirements to help prevent repeated LTC insurance rate hikes on consumers and seniors who need this product now more than ever.
• CO-Ops: AB 1846 establishes a regulatory licensing framework for Consumer Owned and Operated Plans (CO-OPs). CDI now has the oversight to regulate these new non-profit health insurer organizations. With CO-OPs, consumer-driven, nonprofit health insurance issuers would offer health products in the individual and small group markets. In order to encourage the creation of CO-OP health organizations, the federal government has been awarding low-interest start-up and solvency loans to qualified nonprofit entities; to date, more than 20 established CO-OPs located in more than 20 states have been granted more than $1.6 billion in low-interest loans out of a total of $3.8 billion available in federal loan funds. CO-Ops are intended to provide insurance to nearly one million low-income Californians in need of affordable health care.
• Bounty Hunters: AB 2029, the Bail Fugitive Recovery Persons Act, reinstates education, training, documentation, notice, and conduct requirements for bounty hunters under the California Penal Code, an act that had sunset on January 1, 2010. With the sunset of the Act, CDI has seen a significant number of cases in which bounty hunters have overstepped appropriate, if not legal, boundaries in apprehending bail fugitives.
• Health And Disability Fraud: AB 2138 increases the funding to District Attorneys and to CDI to support to investigate and prosecute health and disability fraud.
• Insolvent Insurers: AB 2303 will allow the Insurance Commissioner to take over an insurer that the U.S. Treasury Secretary determines is insolvent or in danger of becoming insolvent. The Dodd-Frank Wall Street Reform Act of 2010 granted the U.S. Treasury Secretary with the authority to make insolvency-related determinations on specified insurers, but let the act of conserving and liquidating the insurers under the state’s jurisdiction. As one of the first pieces of state-level legislation in the Nation to address this procedural gap, AB 2303 ensures a timely process for initiating the conservation and liquidation process of insurers.
• Reinsurance: SB 1216 ensures that California aligns with federal law and is current with NAIC Model language. It also ensures that the Insurance Commissioner has the needed authority to carry out the new reinsurance regulatory activities.
Entrprise Risk: SB 1448 incorporates changes the NAIC made to its Insurance Holding Company System Model Law and Regulations. Controlling persons of a holding company system must disclose an enterprise risk. An enterprise risk is any situation that involves one or more affiliates of an insurer that, if not quickly corrected, would adversely affect the financial condition of the insurer.
Agent Charged in Disability Scheme
Former AFLAC sales associate, Patricia Diane Smith Sledge, was arrested for defrauding $4 million in disability benefits from AFLAC in a fictitious employer scheme. The indictment is part of a crackdown on fictitious employer schemes that deplete federal, state, and private unemployment and disability insurance program resources, at a time when such resources are most needed, reports Imperial Valley News. Sledge was a sales associate at AFLAC who sold disability policies to people with fake businesses and employees. Soon after obtaining the policies, the fictitious employees claimed fake injuries and AFLAC sent disability benefit checks to the claimants. Sledge allegedly received a portion of the proceeds. AFLAC fired Sledge in October 2011 after conducting its own investigation.
This case is related to two other charged cases involving the same fictitious employer scheme, and is the ninth in a sweep of charged fictitious employer cases in the last year. On November 30, 2011, Navesia Samuels, 33, from Orange County, was charged with mail fraud for her involvement in fictitious employer schemes that defrauded multiple state workforce agencies, including California’s Employment Development Department (EDD) and AFLAC, with a total loss of approximately $400,000 in unemployment and disability benefits. On March 28, 2012, the grand jury indicted four related cases and a total of seven defendants with fictitious employer schemes involving the defrauding of federal and state unemployment and disability insurance programs, as well as AFLAC. Bobby Langley, 46, from Los Angeles, was charged with mail fraud for his involvement in fictitious employer schemes that defrauded multiple state work force agencies, including California’s EDD and AFLAC, with a total loss of approximately $113,000. Ray Blaylock, 45; Dameon Crandle, 42; Chad Emanuel, 44; and Joseph Hollins, 43, all from Los Angeles, were charged with mail fraud for submitting fraudulent unemployment and/or disability insurance claims to California’s EDD as fictitious employees of fictitious business Tranquil Communications, with a total loss to EDD of approximately $164,000. William Samuels, 25, was charged with mail fraud for submitting fraudulent unemployment insurance claims to EDD as a fictitious employee of Couture Recovery Services, with a total loss to EDD of approximately $25,000. Finally, Marilyn Jones, 49, from Los Angeles, was charged with mail fraud for participating in the fictitious employer schemes by signing the doctor’s certification section of the fictitious employees disability claim forms in exchange for money, with a total loss to EDD and AFLAC of approximately $106,000. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
Seniors Warned of Medicare Marketing Scams
Insurance Commissioner Dave Jones warned seniors and their advocates to beware of shady sales practices during the 2012 annual open enrollment period for Medicare Advantage Plans and the Medicare Prescription Drug Program. Open enrollment begins October 15 and runs through December 7. Jones offers these tips:
• Medicare has no official sales representatives so the program doesn’t send people to solicit your business.
• Federal regulations prohibit unsolicited sales calls or marketing in educational or care settings.
• Guard your personal information. Never give out your social security number, bank account numbers, or credit card information over the telephone.
• Verify that the person you are dealing with has proper authority to act on behalf of the plan.
• Federal Regulations also prohibit offers of free meals for listening to sales presentations or for signing up in a particular plan.
Jones urges the public to report deceptive practices to the Department at 1-800-927-HELP (4357). Consumers can also visit our web site at www.insurance.ca.gov
CalPERS Members Get Access to Telehealth
Through Blue Shield of California’s HMO plans, 350,000 CalPERS members now have around-the-clock access to Teladoc’s network of California-based, state-licensed, board-certified physicians. Teladoc offers affordable and convenient healthcare consultations for routine medical issues via phone, any time, day or night. Online video is available 7:00 a.m. to 9:00 p.m., local time, seven days a week. When using the service, CalPERS members initially provide a thorough medical history. Upon requesting a consultation, members get a call back from a California-licensed, board certified physician within an average of 22 minutes. To ensure continuity of care, Teladoc can provide its members with a detailed electronic health record (EHR) that can be sent to the primary care physician. CalPERS members who are enrolled in Blue Shield of California HMO health plans can contact Teladoc by calling 1-800 TELADOC (835-2362).
Life Insurance Activity Increases 2.1% in June
U.S. application activity for individually underwritten life insurance increased 2.1% in June, all ages combined year-over-year, according to the MIB Life Index. The Index has posted positive numbers in eight of the past nine months, however quarterly numbers show easing growth. In the first half of the year, the MIB Life Index is up 2.8% year-to-date, compared to the same six months last year. June’s numbers were up 2.2% from those of May, a strong posting versus historical numbers for this time period. U.S. application activity grew across all three age groups for the second consecutive month: birth to 44 — up 2.0%, 45 to 59 — up 0.7%, and 60+ — up 4.5%, year-over-year. For more information, visit www.mibsolutions.com/regLI.
Retirement Planning Is a Top Reason for Buying Life Insurance
Retirement planning is cited as a top reason that people 18 and older buy life insurance, according to a study by Northwestern Mutual. One in four Americans is incorporating life insurance into their retirement planning. Marriage stands out as the most common driver (32%) for purchasing life insurance while other factors include the birth of a child (22%) and home ownership (19%). Americans 55 and over are the most likely age group (31%) to cite retirement planning over other reasons for buying life insurance — versus 25% for those ages 45 to 54 and 19% for those 44 and under. For more information, visit http://www.northwesternmutual.com.
Managed Care M&A Could Shatter Nine-Year Record
The year 2012 could be the biggest year for mergers and acquisitions in the managed care sector in nearly a decade, primarily due to two major third-quarter transactions. With still a quarter to go, the aggregate value of managed care deals this year has topped $13.4 billion, which is more than any full year for the past five years, according to Stephen Monroe, partner at Irving Levin Associates and editor of The Health Care M&A Report. By the end of 2012, aggregate deal values could be even higher than in 2003, a year that included the Anthem/WellPoint Health Networks transaction which was valued at more than $16 billion. The largest managed care deals of the most recent quarter are Aetna’s agreement to acquire Coventry Health Care Inc. for $7.3 billion including the assumption of debt and WellPoint Inc.’s proposal to purchase AMERIGROUP Corp. for roughly $4.9 billion. Read the full report and rankings here: http://www.snl.com/InteractiveX/Article.aspx?cdid=A-15951124-12849
Wal-Mart Offers Surgery Care With No Out-of-Pocket Costs
As health care costs continue to rise, Wal-Mart is introducing a first-of-its-kind Centers of Excellence program that will offer associates heart, spine, and transplant surgeries with no out-of-pocket cost at the following hospitals and health systems in the U.S.: the Cleveland Clinic in Cleveland, Ohio; Geisinger Medical Center in Danville, Penn.; Mayo Clinic sites in Rochester, Minn., Scottsdale/Phoenix, Ariz., and Jacksonville, Fla.; Mercy Hospital Springfield in Springfield, Mo; Scott & White Memorial Hospital in Temple, Texas; and Virginia Mason Medical Center in Seattle.
The new Centers of Excellence program is being expanded from covering transplants, which began with the Mayo Clinic in 1996, to include treatment for certain heart and spine surgeries. Wal-Mart’s associates and their dependents who are enrolled in the company’s medical plans will receive consultations and care covered at 100% without deductible or coinsurance, plus travel, lodging and food for the patient and a caregiver.
Patients must be healthy enough to travel for the surgeries. Four of the designated health care systems — Cleveland Clinic, Geisinger Medical Center, Scott & White Memorial Hospital and Virginia Mason Medical Center, will offer specific procedures for cardiac surgery that include open heart surgery for coronary artery bypass grafting, heart valve replacement/repair, closures of heart defects, thoracic and aortic aneurysm repair and other complex cardiac surgeries.
Three of the health care systems — Mercy Hospital Springfield, Scott & White Memorial Hospital and Virginia Mason Medical Center will perform spine procedures that will include cervical and lumbar spinal fusion, total disk arthroplasty, spine surgery revisions and other complex spine surgeries. Transplants will continue to be provided by the Mayo Clinic.
In providing this service at no cost to its enrolled associates, Wal-Mart has worked with these Centers of Excellence health systems to provide exclusive and unique bundled pricing arrangements for these types of procedures. Through Centers of Excellence, Wal-Mart is working with all the health care organizations to collectively share best practices that will allow collaboration around best measures of service and new industry findings in comparison to industry practices.
While reviewing associates’ medical experience with Mayo Clinic, benefits executives from Wal-Mart discovered that Mayo physicians often found other cost effective ways to treat patients, such as medications, before pursuing transplant options, said John Noseworthy, M.D., Mayo Clinic president and CEO, Mayo Clinic. For more information, visit http://www.walmart.com and http://www.samsclub.com.
CMS Policy to Withhold Hospital Payments Did Not Reduce Infection Rates
A recent study by the New England Journal of Medicine finds no evidence that the 2008 CMS policy to reduce payments for central catheter–associated bloodstream infections and catheter-associated urinary tract infections had no measurable effect on infection rates in U.S. hospital. In October 2008, the Centers for Medicare and Medicaid Services (CMS) discontinued additional payments for certain hospital-acquired conditions that were deemed preventable. A total of 398 hospitals or health systems contributed 14,817 to 28,339 hospital unit–months, depending on the type of infection.
A study in the American Journal of Infection Control finds that the policy has led front-line hospital staff to enhance their focus on infection prevention and change their practices. But one-third of respondents said their hospitals needed to shift resources away from non-targeted infections in order to focus on targeted infections. Infection preventionists also expressed concern that hospitals focused more on improving physician documentation and coding practices to avoid negative financial penalties, rather than enhancing infection prevention efforts to improve patient outcomes. Finally, a quarter of respondents reported that their hospitals performed unnecessary diagnostic testing, upon admission, to avoid potential financial penalties. For more information, visit www.apic.org.
Multi-National Companies Seek More Oversight of Employee Benefits
A study by Aon Hewitt and the American Benefits Institute finds that multinational companies are aiming to significantly increase the oversight of their employee benefit programs worldwide to counter rising costs and financial risks.
The study is based on insights from global benefit directors at 140 of the largest multinational companies based in the U.S. and Europe. Most employers are still allowing flexibility for their local operations to make decisions; corporate policies tend to be more a guideline rather than a mandate for local operations. Fewer than one-in-five companies are confident that local practices are in line with corporate guidelines and fewer than 10% said they are confident that corporate controls are adequate to reduce financial and operating costs and risks.
James Klein, president of the American Benefits Institute said, “Globalization poses a unique set of strategic and compliance challenges for multinational employer-sponsors of benefit plans. To continue their commitment to health coverage and retirement security for their employees, they must manage the growing risks associated with plan sponsorship. It appears that centralization of corporate benefits governance is already helping to mitigate some of these challenges by improving communication between headquarters and worldwide operations.”
Other Key findings include the following:
• 88% of companies say that employee benefits are on the agenda for boards and senior management of their companies due to the costs and risks of benefit programs.
• About 70% of employers are leveraging their global scale to reduce costs of benefit operations and are implementing stricter controls and corporate oversight in both mature and emerging markets.
• More than 90% of companies expect to have corporate benefit policies in place over the next three years. However, less than 60% of organizations are certain that their local benefit plans will be aligned with corporate guidelines.
• On average, only about 40% of companies have formal structures in place. Of this group, an average of 65% said that protocols such as this are effective. On the other hand, only 16% rated their governance protocols as effective when established informally or in an ad hoc manner.
As the American Benefits Council’s research and education affiliate, the Institute is keenly interested in globalization’s affect on employer-sponsored health and retirement benefit plans, added Klein. As the world itself gets smaller, the decisions employers make regarding benefit plans take on even more significance for the success of multinational companies.
For more information, visit www.aonhewitt.com.
Universal Life Insurance Product
ING launched a universal life (IUL) product that offers the potential for long-term accumulation and death benefit coverage for individuals and businesses. ING Indexed Universal Life emphasizes choice and flexibility. Policyholders have four different crediting strategies available to them as well as the ability to allocate their premiums across the strategies. Also available are new options that hold particular appeal for executive benefit and premium financing programs. For more information, call 866-464-7355 and select option 6.
Kaiser Permanente Leads the Nation with Six 5-Star Medicare Health Plans
The Centers for Medicare & Medicaid Services that of 563 Medicare Advantage plans rated nationwide, only 11 Medicare health plans with prescription drug benefit earned five stars for 2013 — the highest overall rating for quality and service. Six of those plans were Kaiser Permanente Medicare plans. The Kaiser Permanente 5-star Medicare plans are those operating in California, the Northwest, Hawaii, Colorado, Ohio and the Mid-Atlantic States. Kaiser Permanente’s Georgia region is the top-For more information, visit kp.org/medicarestars or medicare.gov.
Individual Vision Plan
Aflac launched Aflac Vision Now. The new individual vision insurance plan will offer enhanced benefits with increased benefit payments for regular eye examinations and vision correction procedures with no increase in premium. For more information, visit aflac.com/business.
Index Annuities
The Standard is expanding the options for its Index Select Annuity (ISA), a single premium indexed deferred annuity, with the introduction of the ISA 10. With the highest interest rate cap offered by The Standard, the ISA is designed for people who are looking for an annuity to maximize their earnings potential while minimizing their risk. ISA policyholders can choose from the ISA 10’s nine-year surrender-charge period, in addition to the five- or seven-year options that were introduced earlier in 2012. With the ISA, policyholders are able to allocate funds between an index interest account and a fixed interest account. The portion of funds allocated to the index interest account will not lose any value if the S&P 500 goes down. For more information, visit www.standard.com.
Indexed Annuity Webinar
Ever wonder why someone would want to purchase an indexed annuity while caps hover in the 3.00% range? How about why a prospect would choose to lock themselves into a product, while the industry faces historical-low interest rates? Join NAFA and guest presenter, Sheryl J. Moore, as the indexed annuity expert discusses why she is about to purchase an indexed annuity herself. It will be held Thursday, October 25, 2012 10:30 a.m. to register, visit https://www1.gotomeeting.com/register/253469232.
Webinar to address the Retirement Needs of Women Clients
The Webinar, “Women in Retirement: Managing Longevity” will be held
Tuesday, October 30 at 1:00 p.m. to 2:00 p.m. PST. A longer lifespan means women have more time to enjoy their retirement. The Webinar, sponsored by InvestmentNews, will focus on the ins and outs of buying long-term-care insurance for women and what to do when rates suddenly go up, ideas for building income-generating portfolios that improve the chances of your women clients not outliving their savings; and Making smart decisions about Social Security that will help your women clients maximize their benefits. For more information, visit http://e.ccialerts.com/a/tBQdbQgAVIbIpB8uhRCAp2Ce66o/in6
