IN CALIFORNIA
• California Settles with MetLife
• State Legislation Goes After Shady Hospital Billing Practices
ANNUITIES & LIFE INSURANCE
• Fixed Annuity Webinar
• LIDMA Now Accepting 2012 Seal of Approval Applications
NEW PRODUCTS
• Supplemental Income Protection Plan
• Prepaid Healthcare Spending Cards
• Travel Accident Policy
EMPLOYEE BENEFITS
• Employers to Hang On to Benefit Programs
• Best Practices for Health and Fitness Month
• Get Ready for Disability Insurance Awareness Month
HEALTHCARE
• Three in Five Americans Misuse Prescription Drugs
• The Truth about the Individual Market
• United Reports Strong Enrollment Growth
• Health Care Reform May Cut Workers’ Comp Costs
California Settles with MetLife
The California Department of Insurance negotiated a multi-million dollar settlement with MetLife Inc. The insurance departments of Illinois, Florida, New Hampshire, North Dakota, and Pennsylvania joined in the negotiation. MetLife has agreed to strict business reforms to ensure it pays out life insurance benefits quickly.
The company will also pay $40 million to state insurance departments. California’s share of the settlement has not yet been determined, but is expected to be approximately $3.5 million.
The agreement was developed along with an agreement by California State Controller John Chiang. That agreement is expected to deliver millions of dollars in death benefits to state controllers’ offices, who will then seek beneficiaries to pay them their benefits.
The Dept. of Insurance charges that, for many years, MetLife selectively used the Social Security Administration’s Death Master File database to cut off payments to annuity holders, but did not use that database to identify deceased life insurance policyholders and pay their beneficiaries. If MetLife learns that a policyholder died, it must conduct a thorough search for beneficiaries using contact information in its records and online search and locator tools. If MetLife does not find a beneficiary within a year of learning of a death, it must transfer the benefit to the appropriate state controller as unclaimed property.
State Legislation Goes After Shady Hospital Billing Practices
The website, www.Californiawatch.org reports that the emergency room practices of a major California hospital chain have prompted new legislation to reduce what critics describe as a pattern of capturing insured patients in order to boost bills.
Sen. Ed Hernandez, D-West Covina, chairman of the state Senate Health Committee, is carrying the bill limiting how much hospitals are paid after they admit a certain rate of out-of-network, privately insured patients.
Because state law is so vague, hospitals can charge insurers top dollar for treating patients from outside their medical networks. Hernandez, who was co-chairman of a Feb. 24 legislative hearing in Los Angeles, said the proposed bill comes after his office heard about a growing hospital practice of avoiding contracts with health plans, filtering patients with commercial insurance through their ER, and billing higher out-of-network charges to maximize profits.
Hernandez introduced his bill after a yearlong California Watch investigation into aggressive billing by Prime Healthcare Services, a 16-hospital chain based in Ontario. Prime spokesman Edward Barrera said, “This poorly written bill unduly gives more power to HMOs and insurance companies…and makes it even more difficult for hospitals across the state to stay solvent.
The bill would only affect hospitals in which, half or more of privately insured patients who are admitted through the emergency room are outside of their care network. Once a hospital reaches that point, it would be paid Medicare rates or a good faith and reasonable estimate of costs.
The move comes as Kaiser and Heritage Provider Network, are suing Prime in Los Angeles County Superior Court. Kaiser accuses the chain of attempting to increase profits by capturing their patients who come into Prime emergency rooms. Heritage says the chain misdiagnoses patients to justify keeping them in Prime hospitals. Prime has denied those claims and filed the first lawsuits in the disputes with the insurers, saying wrongfully withheld payments for patient care.
The lawsuits are ongoing.
During the February hearing, Assemblyman Bill Monning, D-Monterey, and Hernandez heard testimony from a Kaiser emergency room doctor who said hospitals bought by Prime stopped communicating with Kaiser about patients. Sandra Taylor-Davey, granddaughter of a Medicare patient, testified about the difficulties her family faced getting her grandmother moved out of West Anaheim Medical Center, which is owned by Prime. Hernandez’s bill is up for a hearing and vote Wednesday. The California Hospital Association opposes the bill.
In an April 9 letter to Hernandez, the hospital association said the bill conflicts with law, which lays out what emergency room doctors and managed care plans, are required to do when dealing with out-of-network patients. Kaiser and Heritage have accused Prime of subverting the law by routinely failing to notify them when a covered patient lands in a chain hospital.
However, prime general counsel and vice president Michael Sarrao has said its doctors make autonomous decisions about how to handle emergency care. The hospital association said that, when disagreements over the process can’t be resolved, the appropriate forum to resolve disputes remains the courts. Kaiser and the California Association of Health Plans have not taken a position on the bill.
Fixed Annuity Webinar
The National Assn. for Fixed Annuities (NAFA) is holding a Webinar Thursday, April 26 at 10:30 AM Central on how to ramp up annuity sales. For more information, visit www.nafa.com.
LIDMA Now Accepting 2012 Seal of Approval Applications
The Life Insurance Direct Marketing Association (LIDMA) is accepting applications for companies that want a LIDMA Seal of Approval to recognize their implementation of process improvement technologies and procedures.
The LIDMA Seals of Approval can be awarded to member companies that have implemented an applicable technology or process such as Enhanced Part 2
Collection, eSignature, and ePolicy Delivery. LIDMA staff will conduct an inspection for each applicant to ensure the technology or process is active and not just in development or testing mode. LIDMA Seals of Approvals are valid for two years. For more information, visit http://www.lidma.org.
Supplemental Income Protection Plan
Petersen International Underwriters introduced a specialty disability insurance plan with a 10-year benefit period. Before this new plan, the longest monthly benefit period that the market supported was seven years. The plan has uses for personal income protection and business disability uses with high issue limits. While limited to more preferred risks, this extended benefit period is also designed for those who want or need a longer period of payable benefits. For more information visit www.piu.org or call 800-345-8816 or email info@piu.org.
Prepaid Healthcare Spending Cards
United Preference introduced its “Tailored Spend” prepaid card products. Health plans and employers use customizable administrative portals to track when and how funds are being spent. It helps them understand how incentive dollars influence participation in preventative health programs and healthy behaviors. For more information, visit: www.unitedpreference.com.
Travel Accident Policy
California employers can now provide insurance protection if an employee suffers a covered injury while traveling to work by carpool or vanpool, mass transit, or alternative-fuel private-passenger vehicle. All U.S. employees of California-based companies are eligible for this first-of-its kind coverage. Employers can add the optional coverage to Chubb’s global business travel accident insurance policy. For more information, visit http://www.chubb.com/businesses/accident/chubb4688.html.
Employers to Hang on to Benefit Programs
Given the uncertainty surrounding health care reform, employers do not appear eager to make big changes to their benefit offerings, according to a survey by Zywave.
Beginning in 2014, the Affordable Care Act requires employers with more than 50 employees to offer minimal essential health coverage to employees or be subject to a penalty. More than three-fourths of employers plan to continue offering health benefit coverage once this new requirement takes effect. However, a majority is also concerned about being able to offer affordable health coverage to full-time employees. Fifty-one percent say they will definitely continue to offer health benefit coverage, 29% are likely to continue coverage, 3% are likely to discontinue coverage, 1% will definitely discontinue or have already discontinued coverage, and 19% are not sure what they will do when the requirement goes into effect in 2014.
While most employers are committed to continuing health benefit coverage for their employees, 76% have already seen an increase in their organizations health benefit costs or expect to see an increase as a result of health care reform provisions. Thirty-three percent of employers plan to pass these increases on to employees. Eighty-eight percent expect their employee benefit adviser to educate them on health care reform and its implications.
Health care reform requires group health plans that provide dependent coverage of children to make that coverage available to children up to age 26. In response to this requirement, 10% of employers increased the employee share of premiums or benefit costs for all coverage; 9% increased the employee proportion of dependent coverage cost; and 2% eliminated dependent coverage. Fifty-seven percent of employers are concerned about their ability to offer affordable health coverage to full-time employees. The health care reform provisions that employers are most concerned about implementing and administering include: new reporting, disclosure and notification requirements (57%), additional W-2 reporting requirements (49%), and the requirement to automatically enroll new employees in a health plan (40%). To learn more, visit www.zywave.com.
Best Practices for Health and Fitness Month
May is Global Employee Health and Fitness Month. So Healthyroads is offering employers nine best practice tips to encourage organizations to build a culture of wellness at their worksites:
1. Understand Your Goals – Study claims data, absenteeism, and other issues to understand the causes of increasing health costs. Then develop a wellness program that addresses those issues. For example, does the employer have a lot of smokers? Smoking-related health issues may be increasing health care costs. Are work-related back injuries increasing medical utilization?
2. Know what motivates employees – Set achievable goals and create incentives to motivate healthy changes.
3. Get senior management to support health improvement initiatives – Encourage company leaders to set an example for healthier lifestyles. A manager who is ready to quit smoking, lose weight, or get fit can encourage employees. Conversely, if senior managers smoke, employees will have a hard time believing the company’s commitment to go smoke-free.
4. Build a champions network – This network should include representatives of the entire company who support company-wide health improvement initiatives.
5. Provide consistent communications throughout the year – It may take sending many messages to get through to people. Use various ways of communicating with posters, emails, meetings, contests, bulletin boards, word of mouth, and onsite health activities. Different approaches work for different people.
6. Offer onsite health activities throughout the year – This will generate awareness and enthusiasm, especially when you sponsor competitions.
7. Promote a culture of wellness – Encourage healthy alternatives at luncheons; offer healthy foods in vending machines; organize lunchtime run/walk clubs; invited community health and wellness professionals to provide lunch and learn seminars; and sponsor things like health fairs, onsite massage therapy, and gym membership discounts.
9. Initiate and integrate – Wellness programs should be included in the employee benefit plans (medical, prescription drug, disease management, EAP, etc.) to provide a seamless program design that streamlines communication and education. For more information, visit Healthyroads.com.
Get Ready for Disability Insurance Awareness Month
The LIFE Foundation is coordinating Disability Insurance Awareness Month (DIAM) to help educate consumers about the critical role that disability insurance plays in a sound financial plan. The campaign focuses on a simple message: Protect Your Paycheck to help the public understand the benefit disability insurance provides. LIFE has developed new educational resources and a DIAM e-Kit, which offers insurance agents and benefit specialists the resources they need to implement their own marketing and communications initiatives. The kit can be accessed at www.lifehappens.org/diam.
Three in Five Americans Misuse Prescription Drugs
Women and men of all ages, income levels, and health plan coverage misuse pain and other prescription medications, potentially putting their health at risk, according to a study of nearly 76,000 laboratory tests by Quest Diagnostics. The majority of Americans tested misused their prescription drugs, including potentially addictive pain medications. Sixty-three of patients tested through Quest Diagnostics were inconsistent with clinician orders. Many Americans take prescription medications in ways that put their health at risk – from missing doses to combining medications with other drugs without a clinician’s oversight.
The study found high rates of inconsistency with clinician orders among all specific drug classes tested, including opioid pain medications, such as oxycodone (including OxyContin(44%), central nervous system depressants like alprazolam (including Xanax(50%), and the stimulant amphetamine (such as Adderrall(48%).
“Keith Heinzerling, MD said, “These results are sobering and suggest that changes in prescribing medications and educating patients in appropriate prescription drug use are urgently needed,” said Dr. Heinzerling. The entire report is now available at www.QuestDiagnostics.com/HealthTrends
The Truth about the Individual Market
by Greg Scandlen
Reprinted with permission from http://healthblog.ncpa.org
The individual market for health insurance has been long disparaged for being too expensive and too restrictive. The criticisms about health insurance are usually based on what the individual market is doing. The promise by supporters of the Affordable Care Act that people will no longer be turned down for coverage is an example. This is already illegal in all but the individual market. Even there, denials are a miniscule issue. According to a recent report by Milliman, based on new reporting by carriers required by the National Association of Insurance Commissioners (NAIC), there are only 10,300,000 people covered by individual health insurance – 3% of the population of the United States. And denials would happen only at the time of application for coverage, not after someone is already covered.
The trade group America’s Health Insurance Plans (AHIP) reports that 87% of all applicants for individual coverage are accepted. Out of 1,763,000 applicants who were medically underwritten in 2008, AHIP reports that 223,000 were denied coverage. This is less than one tenth of 1% of the country’s population. I beg your pardon, I never promised you a rose garden. The other criticism of the individual market is that it is too expensive.
Milliman’s analysis of the NAIC reports finds that is simply not true. In fact, the premium per member per month for individual (non-group) coverage is $211.67 while the small group premium is $333.25 and large group is $333.74. Milliman also finds that the individual and small group markets have similar administrative costs on a per member/per month basis ($40.49 and $43.82, respectively), but are higher than large group ($31.29), mostly due to distribution costs (marketing.) But because premiums are lower for individual coverage, similar expenses result in higher percentage of premiums. Thus, the individual market has a lower loss ratio (80.9%) than small group (83.7%) or large group (89.3%).
What about market domination? Milliman finds there are three states where a single carrier has 90% or more of market share in the large group market, two states for the small group market, and not a single state in the individual market. The number of states where a single carrier has 60% or more is 21 for large group, 17 for small group, and 15 for individual.
So what’s going on here? The individual market is somewhat more competitive, has similar administrative costs, and considerably lower premiums than the small group and large group markets. Yet it is widely disparaged. Why? The biggest reason is denials of coverage for new applicants. Only seven states require companies in the individual market to accept all applicants (guaranteed issue), but 33 of the remaining states have a high-risk pool that will enroll people who are denied, and for the rest, Miliman reports, “The state may designate an insurer of last resort, have a specified product that is issued on a guaranteed basis, or require that each market participant insure a quota of high-risk people.
Now, it may be that these risk pools are underfunded and too restrictive, but the insurers can hardly be blamed for that. That is the responsibility of state legislatures. And it hardly seems rational to turn the entire health care system on its head to solve a problem that affects much fewer that one-tenth of 1% of the population. The other problem, of course, is that benefits in the individual market are less generous than in the group market. These plans very often don’t cover prescription drugs or maternity, or require a separate rider for these benefits. But if the market wanted to buy coverage for these benefits, it is certain the insurers would be happy to sell them. But, when people buy their own coverage they tend to be more cautious in getting value for their money, and don’t load up on things they don’t think they will need.
The biggest problem in the individual market is that it isn’t subsidized. The health insurance marketplace continues its march toward change as California’s Department of Insurance proposes new controversial rules on small business self-insurance and officials mull increasing premiums on those with unhealthy lifestyles.
United Reports Strong Enrollment Growth
UnitedHealth Group’s first quarter results show strong enrollment and revenue growth in each of its benefit businesses as well as well as diversified revenue growth at Optum. Over the past year, fee-based offerings grew to serve 955,000 more consumers while risk-based commercial products decreased by 110,000 people.
Nearly 5 million consumers participated in UnitedHealthcare’s consumer-directed health care products by the end of the first quarter of 2012.
In Medicare Advantage, UnitedHealthcare served 330,000 more people in the past year – a 15% increase. Growth in active Medicare Supplement products continued, with the number of people served increasing by 200,000 or 7% in the past year, including 105,000 people in the first quarter of 2012.
However, as of March 31, 4.2 million members participated in the company’s standalone Part D prescription drug plans. Participation decreased by 615,000 people in the first quarter. Pricing benchmarks for the government-subsidized low income Part D market came in below the Company’s bids in a number of regions.
The Company expanded its Medicaid services to 200,000 more beneficiaries, including 65,000 people in the first quarter. Recent awards in Hawaii, Washington and Ohio are expected to add to the Company’s membership over the next year.
In the first quarter of 2012, OptumHealth’s revenues increased 29% year-over-year. The revenue increase was driven by 2011 market expansions in clinical care and services for payers and the military as well as strong growth in care services and carve-out specialty risk offerings. For more information, visit www.unitedhealthgroup.com
Health Care Reform May Cut Workers’ Comp Costs
A new study from the RAND Corporation reveals that health reform has the potential to reduce Worker’s Comp. costs. The study looked at data from Massachusetts. In 2006, Massachusetts implemented a health care reform package with several provisions similar to those in the Patient Protection and Affordable Care Act. Using data from Massachusetts, the study found that Workers’ compensation billing frequency for emergency room visits and inpatient hospitalizations fell by 5% to 10% as a result of reform while billed charges and treatment volume were not measurably affected.
Paul Heaton, author of the study and an economist at RAND said that when employees have other health insurance, that insurance pays for treatment that would otherwise be billed to workers’ compensation. The study, “The Impact of Health Care Reform on Workers’ Compensation Medical Care: Evidence from Massachusetts,” can be found here http://www.rand.org/pubs/technical_reports/TR1216.html.
