Will Health Reform Slingshot Self Funding Sales?
How Agents Can Benefit From Upcoming Changes–

Don’t be Intimidated by Self Funding – It Can Save Your Business

by Mark Reynolds, RHU • This article is intended for all, but may be most use­ful to brokers who manage group health plans for smaller employers with two to 100 employees.
Self-Funded Employee Benefits:
No Longer Reserved for Large Companies Only

by Joseph Berardo, Jr • A growing number of smaller companies, with 100 to 1,000 employees, are beginning to give the self-funded employee benefit plan a second glance.

HMO Hole-In-One:
Ace the Competition with–Our Annual Survey–Part II

Each year, California Broker surveys health maintenance organizations (HMOs) in the state with direct questions about their plans. We then present the answers to such questions here for you—the professional agent or broker. We hope that this valuable information will help you serve your savvy healthcare clients better.

When It Comes To Healthcare Reform, Don’t Forget About Reporting Requirements
by David Zanze •  There is a lot to consider when wading through the reams of regulatory provisions associated with healthcare reform. So, it’s critical that employers are positioned for success now so they can comply with the law and serve their employees as the mandates of this new law continue to take effect.

Dental Solutions in Uncharted Territory
by Todd Whitehill • Are you unsure whether to recommend combining dental with medical insurance? Here are some things to consider before completing your next benefits proposal.

Dental Tourism Fills the Cavity in Healthcare Reform
by Dr. Juan Pablo Eng •The political rhetoric surrounding healthcare reform has died down and, as pieces of the law take effect, the bill’s gaping cavity becomes clear to many: dental coverage.

Beyond The Spreadsheet – Evaluating Dental Benefits For Value
by Josh Nace • The simplest comparison to make, when evaluating proposals, is among the top-level numbers. How much is the premium? How large is the dentist network? What are the basic out-of-pocket costs?

Long-Term Care Partnerships: Their Time  Has Come
by Phyllis Shelton • The long-term care insurance industry is hanging in the balance.

Seminars Address Sweeping Health Reform Changes
by Leila Morris • The recent 2010 Self Funding conference in Century City, sponsored by www.selffundingmagazine.com, focused on dramatic changes that will require insurance companies and brokers to restructure how they do business.

Meeting Today’s Challenges with Premium Financing
by Leila Morris • CMS – Succession Capital Alliance held its second annual premium financing conference in Las Vegas August 17 to 19.

Driving Critical Illness Sales with Education and Communication
by Clea Barth • Employers can use Critical illness to enhance their benefit offerings and increase employee loyalty, with little cost.

Will Health Reform
Slingshot Self Funding Sales?

How Agents Can Benefit
From Upcoming Changes

In the following articles experts give their take on self-funding opportunities and requirements.

Don’t be Intimidated by Self Funding –
It Can Save Your Business

by Mark Reynolds, RHU
This article is intended for all readers, but may be most useful to brokers who manage group health plans for smaller employers with two to 100 employees. The broker with 100 to 200 group clients has probably installed a few self-funded medical plans already and possibly connected with new plans that address healthcare reform. So, if you are a broker with just a few group clients or as many as 30 or 50, this article is for you.
I will address group size; the grandfather issue; minimum medical-loss ratios (MLRs); reporting and transparency; broker compensation; the so-called essential benefit package and plan design and, of course, the language barrier that often causes the most hesitation. Basically, I will cover how brokers can utilize the benefits of self funding (often referred to as “shared funding”) to retain the block of business they manage or grow their business.

The Language of Self-Funding

The language of self-funding often intimidates brokers who focus not entirely group medical, but manage health plans for a handful of employers. Self-funding has a language of its own; it has contracts, plan documents, and transparent administration services that can make even the boldest financial planner or P&C producer shy away.

Listening to experienced self-funding sales reps can sometimes be like listening to a wine connoisseur. Self-funded reps can sound a little snobbish using the terms of their business, such as, “spec and agg,” “terminal liability,” “run-out,” “IBNRs,” “lazors,” etc., but don’t blame them because they can’t help themselves. These terms just explain processes or procedures that are not all that different from what you know in the fully insured market.
The first step is recognizing that offering self-funded plans is just another way for employers to finance their healthcare plans. Think in terms of the terminology of financing healthcare and the rest is mere details. As an aside, remember that a great deal of support is just a call away. Your favorite general agency or carrier rep can refer you to the TPA with expertise and products for you to use. Don’t think that you have to go it alone.

Group Size

Group size is an important point to brokers who manage smaller books of business. Not every one seeks out the larger groups with 150 or more employees. Brokers can now access self-funded medical expense reimbursement (MERP) plans for as few as two employees and traditional self-funded plans for groups with as few as 15 employees. As we kick into 2011, brokers will see new plans designed to give employers specific deductibles as low as $10,000 to employers with as few as 15 employees. The fully insured market currently offers plans with $10,000 deductibles, so the introduction of a true self-funded plan with a $10,000 deductible will prove to be very appealing to brokers and their clients.

Grandfather Status

I discuss grandfather status, up front, for two simple reasons. One is to say forget about it because it is not that important. Some brokers are paralyzed by the fear of losing a group’s grandfathered benefits and cost status by moving to another plan. The premium adjustments caused by the October 1 deadline for starting healthcare reform are minimal compared to the rate adjustments your clients have faced these past couple years.
The other reason to mention this is that, when you install a self-funded plan for your small to medium size clients, the group will have a chance to lower its costs. You also give the group more control over the benefits it provides employees; so maintaining a grandfathered status is no longer important.

Essential Benefit Package

No one is certain what the so-called “essential benefit package” will include, but since a government board is making that determination, it is safe to assume that it may be very broad and expensive. With the self-funded plan that you install, you will give your client the flexibility to design the benefits to their own specifications. Self-funded plans will include the mandated provisions of unlimited lifetime maximums, coverage for children to age 26, preventive care, and so forth. But the employers will decide the core benefits that members use every day, such as office visit co-pays, Rx co-pays, co-insurance, and personal deductibles, to name a few.

Reporting and Transparency

Reporting can be a really scary topic for smaller employers, particularly the W-2 reporting form required by healthcare reform. It may seem insignificant, today, because small employers have not yet faced this issue. Self-funded plans have always provided more claims data, more reports, and much more transparency to show exactly how an employer’s plan is functioning. One of the common complaints that brokers hear from employers is that the carriers never share the employer’s claims information. Your self-funded plan will be different because you employer clients will have access to every bit of data they want.

Many are debating the required W-2 reporting that health reform demands but, if it goes into effect, your employer’s self-funded plan is equipped to provide the required information. Again, this may seem unimportant now, but unless the regulations are modified, your clients will appreciate this reporting capability.

Minimum Medical Loss Ratio

The MLR is the 800-pound gorilla in the room that no one wants to talk about. But, just like the gorilla, you can’t avoid it forever. For some time, many have stated that the minimum-loss ratio may be the biggest issue that brokers face and an issue that brokers should discuss with their clients or prospects. It is such an important issue that it threatens the solvency of smaller carrier plans as well as larger carrier plans in states where the large carrier has a small block of business. Already, there is evidence of large carriers pulling their plans out of states where their block of business is performing poorly or is not significant to their business plan.

Initial signs show that the MLRs are forcing premiums higher in the fully insured market. So, if an employer’s self-funded plan can avoid the burdensome affect of the MLR, the cost will be lower. The self-funded plans you install will overcome this issue because they are exempt from the MLR guidelines. This has several beneficial side effects — not the least of which is that self-funded plans will give employers the opportunity to lower their costs compared to the fully insured plans that they use today. You will see this in the proposals you request starting this month.

Broker Compensation

At the risk of being called an alarmist, I will say again that broker compensation is clearly an important issue for every broker. Whether a broker manages five groups or 500 groups, the broker’s role as a consultant will never be more important as we enter the era of healthcare reform. We know that employers need wise consul to make good decisions. Who is better equipped than our brokers? I was at the DMV, renewing my California driver’s license the other day, so trust me, employers will not be satisfied turning to the government for information. (By the way, it took two trips to the DMV because my first visit was on a Friday, which was a furlough day, but I digress.)

All evidence signals that fully insured plans will be forced to lower broker compensation. I sincerely believe that carriers are resisting this in every way, but the effects of the MLR leave carriers no choice. Initial reports suggest that commissions are being lowered to as low as a PEPM of $15 to a high reported of 3% to 4%. Either way, this is not good for brokers on the front lines.

Self-funded plans will allow brokers to maintain their commissions at much more reasonable levels – often at 6% to 10%, plus it is common to add a broker fee, which increases the broker compensation further.

One final point on this issue is that brokers should not be bashful about their compensation. Experienced brokers earn every dime and, as stated above, employers are going to need experienced brokers more now than ever.


It’s easier said than done to tell brokers not to be intimidated by something new. We have all gotten this advice at one time or another. Self-funded plans, after all, are regulated by the Dept. of Labor under the rules known as ERISA, not the good ol’ Dept. of Insurance so this can be a daunting issue to start. But here are some the keys to remember:
It is still just insurance. It just uses different jargon.
You will be helping clients who will desperately need your help.
Experienced support is just a call away so contact your GA rep or TPA today.
Remember, by presenting self-funded plans, you are showing your clients and prospects how to finance their healthcare in a new way. Let your competition show employers how to use health plans in the old traditional way. You will set your self apart, provide solutions that employers desperately need, and see your business thrive in the era of healthcare reform. q
Mark Reynolds is CEO and president of California based BEN-E-LECT, a third party administrator (TPA) and innovator of employer Driven Health Plans that has been providing solutions to brokers since 1996. As a registered health underwriter, Reynolds has played an active leadership role in the industry for years, serving as a founding member of the Inland Empire Association of Health Underwriters and past president of the Health Care Administrators Association (HCAA). BEN-E-LECT’s corporate office is located in Visalia, California.
Mark can be reached at 559-250-2000.

Self-Funded Employee Benefits:
No Longer Reserved for Large Companies Only

by Joseph Berardo, Jr
A growing number of smaller companies, with 100 to 1,000 employees, are beginning to give the self-funded employee benefit plan a second glance. They like what they see, especially employers who are grappling with high premiums and the escalating cost of care.  Self-funding, once reserved for larger groups, is proving to be an excellent option for smaller entities since it allows for great cost-controls now and for the future.
Here’s a snapshot of the advantages self-funding offers:

Customizable plans that meet the specific healthcare needs of the workforce, rather than being a one-size-fits-all insurance policy. A bonus is that these plans are exempt from state mandates and can have consistent benefits across multiple locations (in multiple states).
Control over the health plan funding helps maximize interest income that would otherwise be generated by an insurance carrier through the investment of premium dollars.
There is liquid cash flow because coverage is not pre-paid; premium taxes are not applicable; insurer’s overhead, profits, and risk margins are not paid; reserves are set and held by employer, not the insurer; and excess reserves are retained by employer, not the insurer.

Explaining How to Manage Risk

The biggest concern for companies in terms of self-funding comes down to finding a way to manage the inherent financial risk in providing healthcare benefits to employees. Fortunately, risk is capped both at the individual member level and at the aggregate plan level. That being said, a company still needs reasonable cash flow, up front, in order to fund incurred claims up to these fixed levels. Employers should also have access to some basic numbers like: claims; claims history (in dollars) over the past two to five years; and claims categories such as catastrophic conditions, chronic conditions, one-time incidences, or “normal” claims. Furthermore, employers should ask themselves these questions:
What was the percentage increase for the past two to five annual renewals?

What percentage of renewals was based on actual claims experience and what percent was based on a pool of similarly sized employers?
What are the employee demographics? This should include average age, number of males and females, number of employees with single coverage, two-person coverage, parent/child(ren) coverage, full family coverage, and average family size.
The good news is that most self-funded companies can mitigate risk and lower administrative costs by working with a health plan management firm that offers:
Stop loss placement and management.
Claims processing/adjudication.
Network access and management.
Medical management

Helping Them Get Started

So the client company has decided to self-fund. What’s next? First, they need to purchase stop-loss insurance to reimburse for claims above a specified dollar level to limit risk on claims. “Stop loss” defines the maximum dollar amount that employers have to pay for their claims during a specified period. There are two main types of stop-loss insurance:
Specific stop-loss insurance protects the plan against an individual who reaches a certain level of claims incurred and paid.
Aggregate stop-loss insurance covers claims incurred and paid that exceed a given amount for the entire covered group.

Showing Them The Power of Data Analytics

The success of self-funding lies in data analytics because it gives employers a comprehensive set of utilization data to support decisions related to streamlining inefficiencies and designing strategies to improve population health, both overall and on a personal level.
Health plan management firms provide data about health risk analyses and gaps in care to spur programs that change individual health behaviors. There is a growing mountain of research to demonstrate that effective wellness and disease management programs have a positive impact on healthcare costs. To make the most of this, employers need data that can be parsed and analyzed: pharmaceutical utilization, lab results, inpatient/outpatient days, doctor visits – and potentially disability, workers’ comp, absenteeism, and presenteeism.

An experienced firm with specialized expertise can also assist in claims adjudication and payment while providing services, such as access to preferred provider networks, prescription drug card programs, utilization review, and the stop-loss insurance market.

Take, for example, an employee with diabetes who is non-compliant with taking prescribed medications and not adhering to the standards of care, such as making good lifestyle choices (diet and exercise) for maintaining low HgA1C results. Inevitably, other co-morbidities will surface. Cardiac, circulatory, and vascular problems, in particular, can emerge and ultimately lead to catastrophic costs for the plan. But this is not the only type of cost at stake: when health is compromised, employees become less productive, both personally and professionally.

Data analytics gives employers the ability to take action and provide optimal prevention and wellness programs without losing that personal touch. Employees who have been identified as having low-to-moderate potential for impact may require less attention and health managers can opt to simply send prevention and wellness messages through direct mail. Meanwhile, high-risk employees are better served with a phone call from a health coach. This direct outreach goes a long way toward improving the individual’s health as well as the cost of care.

Finding the Right Health Management/Data Analytics Partner

The best health plan management (HPM) partner must provide the highest level of data analytics on the market, with comprehensive data, a complete analysis of the data, and potential individual and organization wide solutions. Ideally, this HPM partner offers:
Access to a broad provider network.
Predictive modeling analyses.
Member outreach programs.
Integrated solutions that include claims adjudication, eligibility management, and client/customer service.
Data analytics also provides decision-support tools, remote monitoring tools, and real-time care when it is needed, based upon the common sense notion that effective care continues even after the patient leaves the doctor’s office. The ability to personalize medical care allows patients and physicians alike to make better healthcare decisions and tailor preventive, wellness, and treatment methods.
Bringing in an HPM manager in that offers data analytics for the self-funded employer means that they will be able to do the following:
Evaluate health data securely.
Analyze all available hospital, medical, pharmacy, and lab data available for a population.
Identify key health issues for the company and categorize at-risk members.
Compare previous health costs to future projected healthcare costs.
Assist in the development of a wellness plan to address key health issues.
A top-notch data analytics tool is designed to provide a platform for developing a wellness strategy for each specific at-risk member to help members improve their health and reduce costs. If members opt-in to their personal program, a health advocate can be assigned. In conjunction with many online resources, members should be encouraged to proactively address their health issues and use their medical benefits to the fullest extent.

Knowing the Outlook on Self-Funded Companies

It’s the future. Self-funded businesses will find it increasingly feasible to provide coverage to their employees. In fact, for some small firms, self-funding, combined with aggressive and meaningful health management strategies, will be less expensive than offering fully insured benefits to employees through traditional health plans.
Joseph Berardo, Jr., is chief executive officer and president at MagnaCare. He is responsible for the strategic management and financial performance of MagnaCare’s business operations.  www.magnacare.com. He can be reached at 212-867-3606; jberardo@magnacare.com; MagnaCare – Headquarters: One Penn Plaza Suite 2000 New York, NY 10119

Self-Funded: When It Comes To Healthcare Reform,
Don’t Forget About Reporting Requirements

by David Zanze
There is a lot to consider when wading through the reams of regulatory provisions associated with healthcare reform – immediate and eventual insurance market reforms, grandfathered plans, the individual mandate, health insurance exchanges, pay or play provisions, etc. From an administrative standpoint, this new law is likely to increase an employer’s burden as well. The need to produce health trend analysis is not going away. There is the need to produce customized reports along with the new reporting requirements of healthcare reform. So, it’s critical that employers are positioned for success now so they can comply with the law and serve their employees as the mandates of this new law continue to take effect.

Let’s take a closer look at new W-2 reporting requirements under this new law. Employers will be required to disclose the aggregate cost of the applicable employer-sponsored coverage they provide to their employees annually. (An exact date has not been defined through regulations.) The aggregate cost reported is to be determined under rules similar to COBRA regardless of whether the employer or employee pays for the coverage. Employers will use the COBRA valuation of their employees’ benefits on the W-2 form (minus the 2% COBRA surcharge).
Applicable employer-sponsored coverage does not include the following:

Employee salary reduction contributions to a flexible spending arrangement (FSA) under a cafeteria plan.
Contributions from an employee or an employee’s spouse to an Archer medical savings account or health savings account.

To further complicate matters regarding FSAs, employer contributions will be counted and reported. In sum, the law only requires the employer to provide reporting about the aggregate cost of employer-sponsored health insurance coverage. It does not mandate a specific breakdown of the different types of medical coverage. For example, an employee who is enrolled in employer-sponsored health insurance coverage, through a medical plan, a dental plan, and a vision plan, is required to report the total cost of the combination of all of these health related insurance policies.

Other areas of the new law also require employers to adapt to new reporting requirements. Beginning in 2014, large employers (more than 50 full time employees) will be required to report to the Secretary of the Treasury whether they offer full time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer sponsored plan. The employer must provide details about the coverage being offered. Employers must provide the number of full-time employees for each month during the year including their names, addresses, and taxpayer identification numbers. They must also provide the months, if any, when these employees and any dependents were covered under a health benefit plan. The report must be provided to the Secretary of Treasury. Also, a written copy must be furnished to the individual who is the subject of the report.

The following type of data is required for the report:
The length of any waiting period imposed upon employees before eligibility under the plan.
The months, during the calendar year, for which coverage was available.
The monthly premium for the lowest cost option in each of the enrollment categories under the plan.
The employer’s share of the total allowed costs of benefits provided under the plan.
The option for which the employer pays the largest portion of the cost of the plan and the portion of the cost paid by the employer in each of the enrollment categories under that option.
Meeting these requirements will be very difficult, extremely timely, and costly to produce. The delivery of health benefits is rapidly changing, as are the reporting requirements and reporting needs of employers. Employers should make sure they understand exactly what is required under the law and they should work closely with their third party administrators or insurance providers to ensure they are using cutting-edge technologies to comply with these new requirements.

David Zanze is president of Pinnacle Claims Management Inc. with nearly 30 years of experience in the healthcare industry. Pinnacle Claims Management Inc. is an all-inclusive health benefits third party administrator (TPA) that offers competitive, cost efficient claims management with the latest technology. Pinnacle has extensive experience in managing claims, COBRA, and flexible benefits administration as well as a breadth of services to meet the diverse needs of self-insured employers. Pinnacle administers benefits for a diverse range of small to large sized employer groups from all business sectors of the marketplace. For more information, call 866-930-7264 or visit www.pinnacletpa.com.

HMO Hole-In-One: Ace the Competition
with Our Annual Survey

Welcome to Part II of the 14th annual agents’ guide to managed care. Each year California Broker surveys health maintenance organizations (HMOs) in the state with direct questions about their plans. We then present the answers to such questions here for you.

29. Describe the utilization process.

Aetna: Information is gathered from the physician and patient. The nurse consultant or physician reviewer and the attending physician discuss whether a test or treatment is appropriate. The physician reviewer can recommend alternative treatment and further testing. Protocol is reviewed annually. The consulting specialists, who are most familiar with procedure, review and approve any changes.

Anthem Blue Cross:
The utilization management process is delegated to the PMGs/IPAs for our HMO product. They must have established review mechanisms, such as evidenced-based decision criteria and guidelines, which align with accepted medical practice. PMGs/IPAs maintain processes for referral management, pre-service, concurrent, and post-service review. Routine and active oversight is conducted to ensure compliance with regulatory and accrediting agency standards.

Blue Shield: Blue Shield of California (Blue Shield) delegates utilization management to our contracted IPAs/medical groups. We audit these processes annually to ensure compliance with our medical policy guidelines.

CIGNA: CIGNA physicians and nurses perform utilization management for inpatients in coordination with medical groups. To help ensure appropriate care and facilitate discharge planning, CIGNA reviews medical records for hospitalized members and consults with physicians via nurses located on-site at hospitals or by phone. Utilization review for most outpatient services is delegated to IPAs/Medical Groups. CIGNA HealthCare reviews inpatient procedures and hospitalizations, outpatient surgical procedures performed in a facility, transplants, and investigational therapies using Milliman Care Guidelines and CIGNA Coverage Positions. CIGNA utilization nurses (RNs) also conduct case management. Most outpatient referrals for specialists and procedures do not require prior authorization as long as the primary care physician requests them. However, CIGNA performs utilization review of select outpatient services when there is demonstrated value.

Health Net of CA: Health Net provides a multi-dimensional utilization/case management (UM/CM) program to direct and monitor health care services. It involves pre-service, concurrent, and post-service evaluation of the utilization of services provided to members. The UM/CM program is structured to ensure that qualified health professionals make medical decisions using written criteria based on sound clinical evidence without undue influence of Health Net management or concerns for the plan’s fiscal performance.

Kaiser Permanente: Our physicians plan our patient’s care and work with their peers to ensure appropriate treatment plans and use of resources. Utilization Management staff are available to support doctors in the management of member’s health care needs throughout the continuum of care and provide a variety of services such as discharge planning, utilization review, care management, and ensure compliance with internal and external regulatory requirements related to utilization management.

The majority of utilization management, including reviews, is conducted internally as part of our integrated system of health care delivery. Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and the Permanente Medical Groups work in partnership to provide and coordinate medical management and review for our Health Plan members. Please note that department chiefs at the regional and facility levels handle utilization reviews. Members from Palm Springs, Ventura, and the Coachella Valley area receive utilization review via contracted physicians within our affiliated medical groups.

PacifiCare: We use industry-leading medical management programs to ensure that each enrollee receives the appropriate care necessary and that we control unnecessary health care costs for our clients.  Our medical management programs focus on reducing variation, improving the quality of care provided and ensuring cost effectiveness.  We base medical decisions on scientific evidence and all of our medical management services include physician guidance and input.  We developed online, science-based and objective utilization management criteria as well as technology-based clinical decision support systems related to case, utilization and disease management.

30. Describe the Case Management Process.

Aetna: The following are some ways in which cases are identified: through the PCP or pharmacy, during certification reviews, during PMG/utilization management case reviews, and through other internal reporting and sources including member services, claims, and specialty programs. The case manager coordinates services for members who have multiple and complex needs. The case manager works with the PCP and the member to develop a care plan identifying services, frequency, duration, and goals. A team approach includes the PCP, specialist, member, family, caregiver, healthcare provider community, and internal programs to coordinate care, with a focus on member education and maximizing quality outcomes.

Anthem Blue Cross: The PMGs/IPAs perform in-area case management functions. Anthem case managers support PMGs/IPAs for members with exceptional needs or complex medical conditions. When appropriate, they manage out-of-area emergency admissions and help with transfers to in-area care. They also facilitate communication between healthcare providers and ensure that appropriate follow-up care is arranged with the PMG/IPA.

Blue Shield: Case management focuses on early identification and management of members with potentially long-term and catastrophic healthcare needs. Using claims, authorization, and pharmacy data, we identify potential candidates for case management. The case manager helps identify appropriate cost-effective treatment options, and follows members who are receiving alternative levels of care, such as inpatient rehabilitation, skilled nursing facility care, long-term home health services, and hospice services. Members who are using an acute facility three or more times in a six-month period can also be identified for case management. Utilization management, claims, and other medical operations team members can request case management for specific situations. Family members and providers can also request case management.

CIGNA: Members are identified via real-time and claims-based predictive modeling tools, along with referrals from physicians and medical groups, CIGNA clinical staff, and employers. Case managers collaborate with physicians, medical group case managers, members, and employers to facilitate ongoing treatment plans and support the primary care physician. Case managers monitor short-term and long-term goals for inpatient and outpatient care. They document and evaluate the effectiveness of the services provided. Besides traditional complex and catastrophic case management, CIGNA has a number of specialty case management units. They are staffed with RNs who are dedicated to areas, such as high-risk maternity, neonatal intensive care, oncology, obesity, and transplant. CIGNA has an extensive suite of disease management programs, including those for obesity complications and depression. CIGNA also offers online access to wellness information, care management services, and health coaching programs.

Health Net of CA:
Health Net and its delegates provide case maagement/disease management programs to deliver individualized assistance to members in all lines of business who are experiencing complex, acute, or catastrophic illnesses or have exceptional needs. Health Net’s approach to utilization management extends far beyond traditional oversight. Health Net provides outreach to members with chronic conditions such as asthma, diabetes, COPD, heart failure, coronary heart disease, preference-sensitive conditions, and identification of members with cardio-metabolic risk; uses population-based risk stratification and predictive modeling; and partners with physician groups to improve performance.

Kaiser Permanente: Case management is high-intensity, focused care for our sickest members, including those with high-risk pregnancies, cystic fibrosis, HIV/AIDS, end-stage renal disease, organ transplants, and complications from chronic conditions, as well as the frail elderly and the terminally ill.  Members in need of case management are identified through clinical and utilization data from our disease registries, pharmacy records, hospital and outpatient visits, and laboratory results. Members can also self-refer to case management or be referred by a doctor or family member.
Our case managers, who are master’s-level clinicians or registered nurses, work directly with a member and his or her health care team to plan all of the member’s care and provide intensive coordination of services, including inpatient hospitalizations, transitional care, home care, skilled nursing, medications, referrals to community resources, and outpatient care. Using an interdisciplinary approach, case managers help to ensure continuity of care, including utilization management, transfer coordination, discharge planning, and obtaining all authorizations or approvals as needed for outside services for members and their families. They’re also responsible for identifying quality-of-care problems and monitoring utilization issues.

PacifiCare: We designed our case management program to identify, intervene, coordinate and monitor care plans that provide high quality and cost-effective care for covered persons with catastrophic and complex health care needs.  Our case managers facilitate communication and coordination of care between all parties on the health care team.  This program involves the patient and family in the decision making process to minimize fragmentation in the delivery of health care.  The case manager assesses the needs of the patient and educates them and the health care delivery team about case management, community resources, insurance benefits, cost factors and issues in all related topics so that informed decisions can be made.  The case manager is the link between the patient, the providers, the payer and community.

Can the PCP participate in profits or losses in any way at the plan level or the participating medical group/IPA level?

Aetna: In California, Aetna participates in the IHA/7 health plan program of pay-for -performance. PCPs can participate in that IPA pay-for-performance bonus.

Anthem Blue Cross: Anthem established one of the first pay for performance programs in California. We encourage our PMGs and IPAs to maintain a physician rating system with appropriate rewards for quality medical care. Physicians will get increased compensation for quality care. Our contract is not with the individual PCP. It is with the PMG/IPA with which we have risk sharing arrangements. Through a risk sharing arrangement we share cost savings for in-patient, emergency room, outpatient services and generic prescription rate with the PMG/IPA. The medical group/IPA may get incentives up to 50% of savings depending on the amount of costs saved.

Blue Shield: Blue Shield establishes shared risk arrangements when there is no capitated arrangement in place for a hospital associated with the medical group. Please note that this does not apply to individual physicians, so the shared risk arrangement does not affect payments to the group for professional services covered under capitation. The shared risk fund is established for the group to pay for services related to institutional fees. Funding is made monthly and is tied to membership. Blue Shield pays for institutional services for group members from this fund. The group and Blue Shield share any money left in the fund at the end of the year. Any negative balance is carried over to the following year.

CIGNA: The primary care physician does not participate in plan profits or losses in any way. The relationship between the PMG/IPA and the PCP is based on the contract between the two parties.

Kaiser Permanente: All of our physicians are eligible for an incentive payment based on the performance of our organization. Performance is measured by the collective results of each medical center. Each individual at the medical center can enhance the performance of the entire group. Incentive payments are based on several criteria including quality of care and member/patient satisfaction.

PacifiCare: We use a QIP (Quality Incentive Program) through which medical groups and IPAs can earn additional revenue by improving and maintaining patient safety, patient satisfaction, and quality of care.  The QIP measures key indicators of quality in hospitals and medical groups based on the groups’ service and clinical quality.  The QIP rewards medical groups and IPAs for attaining the required performance.  The better a provider group performs in these categories the more QIP dollars they can earn.

In 2003 the QIP was funded with $14 million and rewarded seventy-fifth percentile performers in 16 measures.  Over 140 medical groups received rewards in 2003 and we achieved average mean score improvements in 12 of the 16 measures.  In turn, average improvement for these measures increased 30 percent, a remarkable achievement.  In 2004 our QIP expanded to include 20 measures, of which 17 improved an average of 20 percent.  The incentive pool was $18 million in 2004 and is $65 million in 2005.  In 2006, we paid out more than $96 million.

How are premiums and risk shared among the plan, MG/IPA

Aetna: The premium is not shared with providers. In California, we have some IPA risk share arrangements and an IPA or medical group share in savings if a target budget is not exceeded.

Anthem Blue Cross: Anthem has a capitated arrangement with the PMG/IPAs, which are responsible for payment of professional services. We promote clinical efficiency through a program of shared savings between the PMG/IPA and Anthem for expenditures related to capitated professional services. We have a program to share the savings for non-capitated inpatient care, outpatient care, and generic pharmacy prescription. Anthem is the largest sponsor of the IHA performance measures in the state and has the second largest pay for performance program in the world behind only the United Kingdom’s.

Blue Shield: Blue Shield establishes shared risk arrangements when there is no capitated arrangement in place for a hospital associated with the medical group. Please note that this does not apply to individual physicians, so the shared risk arrangement does not affect payments to the group for professional services covered under capitation. The shared risk fund is established for the group to pay for services related to institutional fees. Funding is made monthly and is tied to membership. Blue Shield pays for institutional services for group members from this fund. The group and Blue Shield share any money left in the fund at the end of the year. Any negative balance is carried over to the following year.

CIGNA: Most medical group and IPA arrangements are capitated. Capitation does not contain provisions for withhold payments. For example, a lump sum is withheld and distributed later if the provider meets certain utilization targets. The standard contract is shared risk with CIGNA retaining risk for inpatient facility charges.

Health Net of CA: The majority of HMO physician services are paid under a pre-paid capitation payment to the contracted participating physician group (PPG). The PPG, in turn, reimburses the physician directly for services.

Kaiser Permanente:
Kaiser Foundation Health Plan (KFHP) contracts with the Permanente Medical Group (TPMG) in Northern California, and the Southern California Permanente Medical Group (SCPMG) to provide comprehensive medical services to KFHP members. The contractual arrangements are reimbursed at negotiated capitation rates as set forth in itemized budgets. The medical groups are reimbursed at negotiated capitation rates. A small portion is paid on an actual cost basis for specific items. Subject to limits on risk sharing, the medical groups are fully at risk for the capitated portion. They share the risk equally with the health plan for the actual cost portion.

PacifiCare: Currently all of our contracted medical groups and independent physician associations (IPA) participate in a risk-sharing arrangement.  In addition, we contract with several networks of individual physicians in rural areas that do not participate in risk-sharing.  We contract with multi-specialty medical groups and independent physician associations (IPA) primarily through split or professional capitation contracts.  Both contracts provide a monthly age, gender and benefit adjusted capitation.

What happens when a member provider bills a participant for services? How do you deal with the fact that the participant is at financial or credit risk when the dispute is between the provider and the plan?

Aetna: Participating providers are required to accept payment (plus member’s co-payment) as payment in full. Balance billing is not permitted.

Anthem Blue Cross: Our first priority is to protect our membership from inappropriate billing. Our HMO providers are contractually required to refrain from billing members except for co-payments. If a participating provider bills a member, it is brought to the attention of the PMG/IPA liaison and the PMG is directed to pay the claim. If the PMG does not pay the authorized claim in 45 days from receipt, the plan pays the bill and debits the PMGs capitation payment for the ensuing period.

Blue Shield: Our member service representatives typically resolve these cases by contacting the provider¹s office to clarify the correct member liability. Our providers are contractually prohibited from holding members responsible for any charges other than deductibles, co-payments, or non-covered services.

CIGNA: Yes, CIGNA offers a 24-hour health information line staffed with licensed nurses.

Health Net of CA: Health Net’s HMO contracts have a hold-harmless clause that prohibits medical groups from billing or collecting from members, except for standard copayments and non-covered services. In the event a provider balance bills a member, Health Net removes the member from the situation and resolves the matter directly with the provider.

Kaiser Permanente: We are a prepaid, group practice HMO. Kaiser Foundation Health Plan (KFHP) contracts with The Permanente Medical Group (TPMG) in Northern California and the Southern California Permanente Medical Group (SCPMG) to provide comprehensive medical services exclusively to KFHP members. Providers do not bill members for services. Our providers are reimbursed at negotiated capitation rates; therefore, no disputes between the providers and the health plan would put members at financial or credit risk.

PacifiCare: Yes, at the plan level there is a 24-hour nurse line and medical audio library.  Members can listen to pre-recorded health topics or speak with a licensed registered nurse.  The nurse line staff can provide general counseling and triage recommendations.  At the PMG/IPA level, PCPs are contractually required to provide after hours call coverage.

Do you have a nurse or RN on call 24 hours for questions at the plan level? At the PMG/IPA level?

Aetna: Yes, the Informed Health nurse-line is available to members. Network doctors are required to be available 24 hours a day.

Anthem Blue Cross: Anthem has a 24/7 Nurse Advice Line that is available for members. The member’s PCP or other covering practitioner is available to the member after hours and on the weekends if needed for non- emergent issues. The member may access the emergency room as needed for emergencies.

Blue Shield: Yes, as part of Blue Shield’s NurseHelp 24/7 program, members can get around-the-clock online and telephone access to a registered nurse for confidential advice and information about minor illnesses and injuries, chronic conditions, fitness, nutrition, and health related topics.

CIGNA: Yes, CIGNA offers a 24-hour health information line staffed with licensed nurses.

Health Net of CA: Health Net’s Decision Power program includes Health Coaches who are available 24 hours, 7 days a week. Members may call or email through Health Net’s website, www.healthnet.com, with questions or requests for information regarding chronic diseases, significant medical conditions, and medical questions. The Health Coaches are experienced clinicians who are ready to give individualized support through any medical situation.

Kaiser Permanente: Yes.  Our members can easily reach our specially trained advice nurses by telephone 24 hours a day, seven days a week. Using approved protocols, our advice nurses perform comprehensive triage to help members assess their symptoms and determine the level of care they need, such as self-care, an appointment with their PCP, a visit to urgent care, or a call to 911. When certain criteria are met, our advice nurses can also arrange for “telephone treatment” where members can get needed prescriptions for certain common conditions—including urinary tract infections, conjunctivitis, and sinusitis—without having to make an unnecessary visit to urgent care or their doctor’s office.  The California Department of Managed Health Care (DMHC) standard for timely access to this type of assistance is within 30 minutes.

Our nurse advice service is fully integrated into our system of care, not a separate carved-out service. This integration gives our advice nurses instant access to information in our members’ electronic medical records, which enables them to provide more individualized assistance to our members. It also makes it easy for an advice nurse to send a message to the member’s personal physician about the call and its outcome, when appropriate, to facilitate continuity of care and the provision of any needed follow-up services.

PacifiCare: Yes, at the plan level there is a 24-hour nurse line and
medical audio library.  Members can listen to pre-recorded health topics or speak with a licensed registered nurse.  The nurse line staff can provide general counseling and triage recommendations.  At the PMG/IPA level, PCPs are contractually required to provide after hours call coverage.

Do you include treatment by a physician’s assistant (PA) or nurse practitioner (NP), rather than by a physician? Do you guarantee a physician exam for adults when requested by the patient?

Aetna: Yes, but physicians using PAs or NPs are required to oversee services. Members have a right to request a PCP.

Anthem Blue Cross: Treatment by a physician’s assistant or nurse practitioner is included in our coverage, if available at the PMG/IPA level. Members always have the right to see a physician, rather than a PA or NP, if desired.

Blue Shield: Yes, Blue Shield members can elect to be treated by the NP or PA practicing in their PCP’s office; however, the physician partners are responsible for managing treatment decisions. We also guarantee a physician exam for adults.

CIGNA: Yes, when appropriate, physician’s assistants or nurse practitioners can work together with a physician. Yes, members can request an annual physical examination.

Health Net of CA: As long as a physician’s assistant or nurse practitioner is under the physician’s guidance and providing treatments under the scope of his or her license, treatment is covered. Members have the right to have exams conducted by physicians rather than physician assistants or nurse practitioners.

Kaiser Permanente: Yes, members can request a PCP, physician’s assistant (PA), or nurse practitioner (NP).  PAs and NPs are licensed health care practitioners who work in a variety of specialties, including pediatrics, obstetrics/gynecology, cardiology, pulmonary medicine, and gastroenterology. PAs work under the supervision of physicians and NPs work collaboratively with and, when required, are supervised by doctors. NPs and PAs can diagnose and treat illnesses and in most states can order medications.

PacifiCare: Yes, treatments by Physician’s Assistant (PA) and Nurse Practitioner (NP) are included.  However, the member has the right to request a physician examination.

Can doctors be terminated for over utilizing services?

Aetna: When inappropriate use of services, under/over utilization or quality issues are identified, the provider is counseled; an action plan for improvement is developed; and service activity is monitored. The provider could be terminated if performance does not improve.
Anthem Blue Cross: Anthem contracts with the PMGs/IPAs, which contract with the individual providers. If a physician does not correct inappropriate utilization after counseling, they may be subject to discipline, including possible termination, by either the PMG/IPA or Anthem Blue Cross.

Blue Shield:
No, typically Blue Shield providers are not terminated based on utilization issues. However, as part of our quality review, as well as during recredentialing, we request providers to supply us with information around any complaints, quality of care, or utilization issues as part of their contract with Blue Shield.

CIGNA: CIGNA has never terminated a physician’s contract for over utilizing services unless there was evidence that it was hurting the quality of care or was fraudulent.

Health Net of CA: A Health Net peer review team measures and rates adverse action material submitted by providers and various primary source agencies, including the Medical Board of California, the National Practitioner Data Bank, the Healthcare Integrity and Protection Data Bank, Medicare/Medicaid Sanctions, Office of Inspector General, opt-out Medicare reporting, and the claims history for credentialing and re-credentialing. Health Net also investigates allegations made in the community and by the media. The provider has a right to appeal the decision through a fair hearing. Health Net uses quality data in physician management and evaluation to help identify potential provider issues.

Kaiser Permanente: Our integrated health care system ensures that not only our doctors, but our entire network functions at optimal efficiency to manage utilization by implementing best practices. Outcomes from HEDIS and internal utilization reports are available online to doctors and administrators to help them assess appropriate care and access levels, capture long-term performance trends, and identify areas of potential over utilization and underutilization. The reports are also used to drive improvements in quality, access, and member services that result in improved outcomes, increased member satisfaction, and lower costs.  Exceptions to best practice guidelines are identified, investigated, and corrected as needed.

PacifiCare: Yes.  We have terminated a small number of contracts with participating practitioners as well as delegated providers for failing to adhere to quality standards, typically less than one percent annually.  The precipitating events included behavior presenting a potential risk of imminent harm to PacifiCare members and behavior contrary to the requirements of state and federal law.  Our termination procedures adhere to contractual and regulatory requirements, and include informing the provider with required appeal rights and description of the appeal process.

How do you determine with which providers to contract? Do providers get incentives for refusing to contract with other plans (for example, to maintain a semi-exclusive relationship with a managed care plan)?

Aetna: It is monitored based on geographic access with the necessary mix of physician specialties and hospital services. An annual study determines the availability of PCPs relative to residence of member population. Providers don’t get incentives for refusing to contract with other plans.

Anthem Blue Cross: We consider geographic factors, experience of PCPs and specialists, board certification, and quality/reputation factors. We do not provide incentives for refusing to contract with other health plans.

Blue Shield: Blue Shield provider contracting uses criteria based on national guidelines, which address credentialing, licensure, accreditation, affiliations, disciplinary actions, access, cost effectiveness, and quality of care. Blue Shield does not give providers incentives to limit contracting with other managed care plans.

CIGNA: Provider contracting is based on geographic, business, and member needs. Providers must meet credentialing criteria including verification of education and license status. There are no exclusive or semi-exclusive relationships.

PacifiCare: Once we determine that network expansion is necessary, we research available providers in that area.  We contact prospective providers for detailed assessments on their credentialing, quality assurance, and administrative capabilities.  Before contracting, we assess area needs and hold initial discussions to gauge mutual interest.  If this initial assessment is satisfactory, a provider delivery systems team begins contract negotiations.  The length of the process varies depending on the urgency of need for additional providers and the availability of these providers during the auditing and contracting process.  The process usually takes from two to six months.  We do not offer anti-competitive incentives to any physician.

How can a member get information about a doctor’s schooling and malpractice suits?

Aetna: Plan service professionals have access to the plan’s national provider database, which generally includes the medical school of graduation. Malpractice information is not available.

Anthem Blue Cross: Members can get information about a doctor’s board certification status on the Anthem Blue Cross ProviderFinder directory web-based tool. Members can also request information about a doctor’s malpractice and schooling from the Medical Board of California via the Website, phone, in writing or they can contact the PMG/IPA directly.

Blue Shield: Members can access information about a provider’s education on our award-winning Web site, www.blueshieldca.com. To get information about malpractice suits, members can contact the National Practitioner Databank in Washington, D.C. for a fee.

CIGNA: Members can call our Member Services department or look up the information on myCIGNA.com. Malpractice information is available to the public through the state medical board website. A peer review committee, which is staffed by CIGNA doctors and non-CIGNA doctors, reviews individual physicians’ histories before credentialing and re-credentialing the physician into the CIGNA network.

Health Net of CA: To ensure the quality of the Health Net network, all potential participating physician groups (PPGs) are subjected to intensive reviews to ensure they meet or exceed Health Net’s guidelines in the areas of medical management, financial viability and stability, and network accessibility. No incentives are given for refusing to contract with other plans.

Kaiser Permanente: We contract exclusively with the Permanente Medical Groups in Northern and Southern California to provide comprehensive medical services to members including primary care, specialty care, laboratory, and imaging services. Our doctors do not contract with other plans.

PacifiCare: The member can call customer service for educational history, licensing information and board certification.  The member can call the Medical Board of California for malpractice information.

39. What are your grievance procedures?

Aetna: Our customer service professionals can respond to most issues by phone. If the issue cannot be resolved during the call, the customer service professional researches the inquiry and then responds to the member. Our goal is to respond to all inquiries in 15 business days. Members who are not satisfied with the response can file an oral or written grievance. We will forward a written notice stating the result of the review to the member in 30 business days of receiving the grievance. The decision is final and binding unless, in 30 days, the member submits a written request of the notice of the grievance decision for a hearing by the hearing panel/grievance committee. The member’s next course of action is to request an external review. The external reviewer decides in 30 days of the request. Expedited reviews are available when a member’s physician certifies that a delay in service would jeopardize the member’s health. Once the review is complete, we abide by the decision of the external reviewer. The Complaints and Appeals Tracking System was developed to support our national grievances and appeals process.

Anthem Blue Cross: Anthem is responsible for registering, investigating, and responding to member grievances and appeals. The appeal process is not delegated to the PMGs/IPAs. To file a grievance and appeal, the member should call the toll-free Anthem Blue Cross customer service number listed on their ID card or they can also submit a grievance in writing to the Anthem Blue Cross Grievance and Appeals P.O. Box. Members can also file an appeal or grievance online at www.anthem.com/ca. After we review the member’s grievance and appeal, the member receives a written statement of the resolution within 30 calendar days. The member has the right to request an expedited appeal if their condition is acute or urgent. Expedited appeals are resolved within three calendar days.

Blue Shield: We assign a grievance coordinator to call any member filing an appeal so we can gain a clear understanding of their concern. The coordinator researches and forwards the grievance to all appropriate parties. Once a resolution has been made, the coordinator calls the member to inform them of the decision and their available options if they are dissatisfied with the resolution. Members who are dissatisfied with the resolution can request a second-level initial appeal review. During this review, members can appoint a representative or a provider to act on their behalf. If the member succeeds in their appeal and reimbursement is required, the coordinator will complete a payment request and submit it to the Grievance Resolution Department manager or supervisor for approval. All appeals are to be resolved within 30 calendar days.

CIGNA: Members can call Member Services or file a written complaint appeal. The complaint is investigated and reviewed in 30 days (when appropriate) and the member is notified of the decision. An expedited appeal can be filed when the member or provider is concerned with potential loss of life or health or the ability to gain maximum function. When necessary, procedures are modified to meet or exceed applicable regulatory and accreditation guidelines.

Health Net of CA: When members complain about the quality of service provided by the plan or its participating practitioner, the grievance is documented and researched and an acknowledgement letter to the member is sent within five days. The hospital/ PPG/practitioner has seven days to respond to the grievance. The final resolution letter will be sent to the hospital/PPG/practitioner. If it takes longer than 30 days to resolve, a letter of explanation will be sent to the member. The grievance is documented when members complain about the direct provision of care or the quality of care by a participating practitioner. If the matter is urgent, it will be forwarded to a clinical specialist for immediate attention and resolution (if required, care will be provided to the member). An acknowledgement letter and medical records release form will be sent to the member within five days. The hospital/PPG/practitioner has seven days to respond to the grievance. Health Net will determine if the grievance can be resolved with the records at hand if the member does not provide out-of-plan records or if the medical record release form is not signed. If it can’t, the case is closed until all necessary information is provided. After review, a letter to the member will communicate the disposition. The final resolution letter will be sent to the hospital/PPG/practitioner. If the matter takes longer than 30 days to resolve, a letter will be sent to the member to explain the delay and provide an estimated resolution date.

Kaiser Permanente: Our members can submit complaints to the member service representative at the facility through the call center. The complaint is acknowledged within seven calendar days. A response is made within 30 days after it has been submitted. A complaint or grievance will be resolved within 60 days from the date it was received by the plan. An external, independent, third party review process is available to non-Medicare members who have completed the internal grievance/appeals process.

PacifiCare: Our top priority is for members to receive the services they need.  If a problem occurs we encourage members to contact our Customer Service department as their first source for resolution.  This team will make every effort to find a solution to the member’s situation.  If the situation requires additional action, the member may submit a formal complaint requesting an appeal or quality review.  The following is a summary of our formal process for appealing a health care decision. The member must submit a grievance in writing within 180 days of the initial decision to PacifiCare of California. Appeals and Grievance Department. Additionally, members in California may file an appeal using the online grievance form available at www.pacificare.com.

What systems are in place for assessing participant satisfaction?

Aetna: Member satisfaction is measured yearly at the network level using CAHPS 2.0H survey. The plan administers the most recent survey required by HEDIS to assess satisfaction. We also participate in the Consumer Assessment Survey to evaluate member satisfaction with IPA and Medical Groups.

Anthem Blue Cross: We conduct a variety of surveys each year to measure our members’ health and satisfaction to improve the quality of care and customer service. Each year, Anthem collects feedback from the various constituents that impact our business. We listen to all customer groups (members, employers, health care providers and insurance agents/brokers) and take into account the entire health care experience. Our research efforts provide us with a glimpse into the minds of our customers, telling us how best to deliver superior quality and service. We look at the experience through their eyes.

We also collect feedback from our members and providers on an ongoing basis to get an even deeper look at the service experience. A key component of this ongoing survey program is the diagnosis and root cause analysis performed on each call where the surveyed member was neutral or negative about his experience. We use the Member and Provider Call Center Transaction Survey Programs as part of our strategy to improve customer satisfaction. The survey obtains solid, actionable operational-level measures of our customers’ needs and an evaluation of our performance at all key touch points. More than 100,000 surveys are conducted with members annually.

Blue Shield: Our Quality Management and Improvement Program is designed to comply with recognized industry requirements and standards established by the National Committee on Quality Assurance, Knox-Keene regulation, Department of Managed Healthcare, and the Center for Medicare & Medicaid Services. Our Quality Management Committee and the Board Quality Improvement Committee review and amend the program annually. We use HEDIS measures to monitor member satisfaction surveys, member inquiry analysis, disenrollment, member appeals, access to care and quality of service, and medical record audits and office site reviews.

CIGNA: CIGNA uses the HEDIS CAHPS member satisfaction survey. The health plan participates in the Consumer Assessment Survey, which analyzes member satisfaction with medical groups and addresses utilization management, appointment wait times, office staff, etc. We continually monitor and improve member satisfaction.

Health Net of CA: Three online customer satisfaction surveys are conducted among primary constituents: members, employer groups and brokers.

Kaiser Permanente: We conduct ongoing surveys to evaluate member and patient satisfaction with doctors, access to services, and quality of care. Survey feedback is disseminated throughout the organization to target areas for improvement.

PacifiCare: PacifiCare uses the NCQA CAHPS annually to assess patient satisfaction with their care.  Our satisfaction results are reported in our annual HEDIS results.  CAHPS is a mail survey, which fulfills a component of the NCQA accreditation process.  A telephone follow-up and interview occurs among non-responders per NCQA specifications.

Do you participate in outcomes research? Do you provide physician performance review data to the public?

Aetna: Yes, HEDIS is available for public review through the California Cooperative HEDIS Reporting Initiative.

Anthem Blue Cross: Yes, we have tools that support predictive modeling, provider profiling, hospital profiling, disease management, network analysis, quality assessment, regulatory reporting, and HEDIS submission. Additionally, Anthem has acquired HealthCore Inc., a leading outcomes research company. Performance review data for our PMGs/IPAs is available publicly on our website and in provider directories.

Blue Shield: Yes, Blue Shield conducts outcomes research for disease management programs and participates in broader research efforts. Blue Shield is a sponsor/participant in IHAs Pay for Performance project. Collaborative studies may be published. For example, the California Cooperative Healthcare Reporting Initiative and California’s Office of the Patient Advocate provides public reports of medical group performance and information technology measures.

CIGNA: CIGNA is accredited by the NCQA and participates in reporting HEDIS clinical outcome data, which is available for public review. CIGNA HealthCare participates in the Integrated HealthCare Association’s Pay for Performance program. It provides data at the medical group level, which is reported to the public annually through the state’s Office of Patient Advocate. CIGNA also participates in the California HealthCare Foundation’s CHART hospital quality initiative. Through myCIGNA.com, the company offers an array of information about provider and hospital quality for its members.

Health Net of CA: Medical groups are rated on wide-ranging quality of-service and quality-of-care measurements. Results are available at www.healthnet.com, where members can view the Hospital Comparison Report and Participating Physician Group Report on a number of quality-of-care and service measures.

Kaiser Permanente: The most recent developments in medical out comes research are incorporated into our evidence-based Clinical Practice Guideline program, assessed by our New Technologies Committee, and incorporated into our extensive library system with online capabilities. In addition, our clinicians are involved in a broad scope of clinical, epidemiological, and health services research projects. We earned ratings of “Excellent” in the latest review by the National Committee for Quality Assurance. We also routinely get high scores in many outcomes based surveys, such as HEDIS, Leapfrog, and METEOR, which measures our member satisfaction. Physician performance reviews are not available to the public.

PacifiCare: Yes.  Outcome results are incorporated into our provider group profile, which compares each provider group with network averages.  We release these performance results to the public through our quality index profiles.  The reports look at clinical, service and administrative quality measures.  PacifiCare motivates provider compliance by intervening aggressively when deficiencies are found and by sharing best practices when excellence is identified.

Do you notify members when their PCP is no longer a member of the plan? How?

Aetna: Yes, members are notified by letter. They are apprised of transition of care issues and instructed on how to select a new PCP.

Anthem Blue Cross: Yes, PMGs/IPAs are required to provide 90 days notice to the plan when a physician within the PMG/IPA leaves the group or is terminated from our network. The PMG/IPA must offer the services of another PCP within the group. The plan provides at least 60 days’ notice in writing to all members enrolled with the terminating PCP. This letter includes the name of their new PCP or medical group.

Blue Shield: Yes, Blue Shield provides written member communication of any network changes 60 days before the effective date of the change, as per Department of Managed Healthcare regulations.

CIGNA: If a PCP is no longer a member of our health plan, members are notified by mail about 60 days before the effective date and are encouraged to choose a new PCP.

Health Net of CA: Health Net Participating Physician Groups and individually contracted physicians are required, by contract, to notify us of any changes to the provider network including new physicians joining the PPG, address and telephone number changes, and physician terminations. Health Net notifies members when their PCP leaves the network or becomes affiliated with a different contracting PPG. Members can follow their PCP to a new contracting PPG. Members can choose a new PCP within the network or remain with their PPG if their PCP is no longer available in our network. When possible, members will receive a written notice within 30 to 60 days of the provider’s decision to leave the network. Provider listings are available at www.healthnet.com and are updated daily.

Kaiser Permanente: Yes, each medical center has developed general protocols to facilitate the transition of care to another doctor and members assigned to a PCP are provided notice of the PCP’s departure 60 days in advance when possible. All patients who are scheduled to see the physician for outpatient care are contacted to reschedule with another plan doctor if prior notice to a member is not able to be provided due to timing of the physician’s departure.

PacifiCare: Yes.  PacifiCare sends a notification letter to all affected members 30 days prior to the termination date of a physician or medical group.  The member selects a new PCP or medical group.  If the member does not select a PCP or medical group within 30 days, we automatically assign a PCP or medical group that is geographically closest to their residence.  If the member is unhappy with the assigned provider, he or she may request a change at any time by calling customer service.

What action is the plan or the IPA/MG taking to have online eligibility, administrative changes, referrals, etc?

Aetna: We participate in the Work Group for Electronic Data Interchange, the Computerized Patient Record Institute, and the American National Standards Institute. A monthly eligibility file is provided to IPAs and Medical Groups.

Anthem Blue Cross: Through our Internet application, Employer-Access.com, group administrators can process eligibility transactions including additions, changes, and cancellations. (Changes are processed in real-time, assuming a confirmation response is received.) The administrator can also order ID cards; perform quick inquiries on employees; and locate providers via our provider finder. The “EmployerAccess.com” application features confidential and secure data through user ID and personal  identification numbers, drop-down menus for easy point-and-click operation, and easy to follow hyper-link steps to guide the administrator through electronic enrollment, benefit changes, and maintenance processes.

Blue Shield: For IPA/medical group terminations, we use a standardized communication and transition process. First, we analyze network access using GeoAccess software to determine how a provider termination affects the member. Second, we determine which primary care physicians (PCP) in the terminating IPA or medical groups are affiliated with other contracted IPA/medical groups. We then transition affected members, as necessary. If a member’s PCP is affiliated with another contracted IPA/medical group, the member goes to the new group and maintains their PCP. If their PCP is not affiliated with another contracted IPA/medical group, the member goes to a new PCP in a new medical group. Letters relating this to the members are mailed at least 60 days before the effective date of the transition. Employers also get written notification along with copies of the member letters.

CIGNA: CIGNA recently enhanced the provider website offering easy access to online eligibility, detailed benefit information, claims tracking, and a new claim coding disclosure tool, which offers an immediate response to inquiries. For members, myCIGNA.com offers online eligibility tools, claims support, and other tools that allow members to select or change their PCP and get personalized medical information and provider quality data. In addition, CIGNAaccess.com provides a single point of access to online tools and services to help make benefits administration easier. CIGNAaccess.com is a resource for employers in employee support, benefits administration, and security administration.

Health Net of CA: At www.healthnet.com, brokers, employers, providers, and members can perform wide-ranging administrative functions, including eligibility verification. In September, Health Net announced that it is moving into the mobile space with iPhone capabilities that allow members to conduct a wide variety  of business transactions with us with the push of a button. In addition, our Broker Solutions site provides online applications, product and rate information, provider directories, email access, and more. Members can access secure information about their coverage, and correspond with Member Services, order ID cards and forms, file grievances, change addresses, check eligibility/benefits, change PCPs/ PPGs, view a pharmacy drug list, search for providers, look up information for their specific needs, get pharmacy refills, and more. In addition, Health Net uses the Internet to help employer groups make processing eligibility changes and pay bills. It is a free service to employer groups. Employer groups can log onto www.healthnet.com or eServices.healthnet.com.

Kaiser Permanente: Eligibility files are processed by our extensive mainframe system, which is linked to our California Service Center in San Diego. Account representatives update membership online and nightly (via electronic media files from purchasers). When the membership is updated, eligibility is updated automatically. Nightly interfaces supply membership eligibility information to other clinical systems. These files feed all claims and membership systems. A computer tape back up is maintained.

PacifiCare: PacifiCare providers can check eligibility and claim status; print common forms; and view the specialty referral list at www.pacificare.com.  We offer a paper and electronic referral process.  In California, providers can access iExchange via the Web for electronic preauthorization requests and hospital admission notifications.  The process varies for networks that are delegated and managed by contracted providers.  Some providers have electronic referral systems in their own specialist network and others use paper submission.  We do not track electronic referrals for these providers since they track these statistics internally.

44.   How has your plan changed from last year?

Kaiser Permanente: The following changes occurred as contracts renewed in 2010:
Kaiser Permanente is in compliance with the new legislation for Health Care Reform including the Patient Protection and Affordable Care Act (PPACA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).  We will continue to make changes as legislation warrants.  For more info please see: http://xnet.kp.org/reform/index.htm

PacifiCare: There are no significant changes to the general plan
structure from last year; however, there is flexibility on how plans are quoted.  Clients requesting customization work closely with their broker to determine the best possible options for their company.

Dental Solutions in Uncharted Territory

by Todd Whitehill
Are you unsure whether to recommend combining dental with medical insurance? Consider the following information before completing your next benefits proposal.

Producers have been working in uncharted territory for the past 18 to 24 months. During 2009, we knew that changes were on the horizon for the United States healthcare system, but the extent or possible impact was unknown for employee benefit plans.

Since the Patient Protection and Affordable Care Act was signed into law in March, insurance carriers and producers have been waiting for specific details on the reform that we can use to educate employers and design benefit plans. Federal agencies have substantial responsibility and authority to fill in the details of the legislation through subsequent regulations. Because many details are still forthcoming, we’ve had to recommend benefit options that seem to fit with anticipated changes.

One option to strongly consider is placing your ancillary business with a carrier that specializes in a specific line of coverage. Many medical carriers offer discounts for bundling all lines of coverage, but this may lead to problems down the road especially with the uncertainties of health care reform.
Here are three points to consider when discussing with employers the pros and cons of placing ancillary dental coverage with their medical carrier, simply for a pricing discount on the medical premium.

1. Cost Savings – Ben Franklin once said, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.” Medical carriers that add a dental option frequently tout the cost savings employers will enjoy by working with one carrier for two or more products.

Some medical carriers offer a flat discount for employers that agree to an ancillary dental plan. While the advertised price may be attractive, producers should carefully evaluate the quality of the plan and the carrier’s pricing history, and inquire when any discounts will expire. A carrier may increase the price of the dental insurance to help offset the discount given for medical. Others may offer a discount on the medical-dental combination for one year, and then at renewal employers may experience a substantial rate increase that enables the carrier to recover its losses.

Experience with dental is important. Because dental plans have high utilization, medical carriers that are inexperienced in offering dental plans may encounter significant problems and unforeseen expenses when processing the volume of dental claims. Inexperienced carriers may choose to subcontract to dental carriers to provide claims processing services, which may add another layer of administrative costs.

Before placing the dental benefit with a medical carrier, consider whether all claims – medical, dental, life and disability – will go through the same claims processing system. Single-system claims processing can increase the occurrence of errors and ultimately lead to unhappy members. Dedicated dental carriers have processing systems designed to handle dental claims only, resulting in more efficient and accurate payments.

Are there Costs for Unbundling?

Producers should also consider the potential pitfalls and costs of possibly unbundling a combined medical-dental plan. What are the hidden costs of changing the plans if an employer has problems with one of the plans and needs to find a different carrier for the benefit? Will the carrier continue the discounted price for the product that the employer retains? If not, the producer may need to research and evaluate new plans and new carriers for all lines of coverage. It may be more advantageous to give the employer the best product available in each separate line of coverage from the start.
Should it be now or later? It may seem easier to worry about potential problems at a later date – take the discount offered this year and deal with potential price increases next year. However, it may be wiser to learn all the options and possible repercussions of decisions up front in order to make the best long-term decision for steady business operations.

2. Dental Networks – When comparing networks, producers should not only analyze access to participating providers, but also analyze the negotiated discount. Discounts can range from zero to 5% at the low end for some networks, or up to 25% to 30% for others. Providers are typically more willing to negotiate a better discount with dental carriers than with medical carriers. Dental carriers are usually able to process claims and pay dental offices more quickly for patient care than a medical carrier. The efficiency of the carrier’s payment schedule is vital for dental offices that want to maintain smooth business operations.

As you review plan proposals from carriers, evaluate the dental network to determine the claims processing schedule, discounted rates, access points, and panel turnover statistics.

3. Plan Design Variations – Dental plans vary considerably among insurance carriers. Some plans have restrictions or prerequisites as to how long members must wait before receiving benefits and there may be limitations on coverage options. Sometimes this information is listed in the fine print, so employers and employees may not be aware of these specifications until coverage is denied.

Designing a plan that fits a group’s needs should be an important focus for the carrier. Insurance carriers that specialize in dental coverage have greater expertise and flexibility in customizing plan designs with a range of options and pricing to meet specific needs of the employee group.

Which Choice Is Best?

When choosing whether to recommend a combined medical and dental plan to employers, keep in mind the value of dental insurance to employees and the important differences among dental and medical coverage, insurance carriers, and plan designs. Experienced dental carriers offer many advantageous services, including quality plans with high-value dental coverage that employers and employees can count on.
Todd Whitehill is a Group Sales representative in Southern California for Ameritas Group, a division of Ameritas Life Insurance Corp. (a UNIFI company), with headquarters in Lincoln, Neb. Ameritas Group is a leading provider of dental and eye care products and added hearing care to its product portfolio in 2008.

Dental Tourism Fills Healthcare Reform Cavity

by Dr. Juan Pablo Eng
Much of the political rhetoric surrounding healthcare reform has died down and, as pieces of the law take effect, the bill’s gaping cavity becomes clear to many: dental coverage.

In 2008, a CBS News report stated that approximately 100 million Americans do not have dental insurance and even those with insurance plans are typically required to pay a significant share of the procedures beyond the standard preventive care.

In an attempt to make sure dental coverage wasn’t completely ignored by the new healthcare reform bills, Congress has mandated that children and young adults under 21 will receive increased access to dental care through Medicaid, the Children’s Health Insurance Program (CHIP) and state insurance exchanges. If you’re over 21 and lack dental insurance, you’re on your own.

What makes this especially troubling is how vital dental coverage is for Americans’ overall health and wellness. Former United States Surgeon General David Satcher rightly called untreated dental and oral diseases a “silent epidemic” affecting millions of Americans. In recent studies, oral health problems have been linked to numerous diseases including heart disease, diabetes, and even dementia. And more studies are released every day proving former Surgeon General C. Everett Koop’s simple declaration, “You are not healthy without good oral health.”

How, then, can dental insurance providers offer plans that are both affordable to their clients and profitable for them? One viable solution is to take advantage of dental tourism providers, whereby U.S. patients travel across international borders to receive quality dental care and treatments at a fraction of the cost versus standard U.S. treatment costs.

In fact, consumers are more willing than ever before to travel internationally for safe, effective, and affordable healthcare. Two in five survey respondents said they would be interested in pursuing treatment abroad if quality was comparable and the savings were 50% or more, according to a 2008 report by the Deloitte Center for Health Solutions. And for dental care, the comfort level for traveling abroad is even higher due to the fact that dental procedures are non-invasive and less risky.

Mexico has become a major destination for dental tourism, allowing many Americans who live close to the U.S.-Mexico border to reap the benefits of dental tourism without traveling far from home. For instance, according to the Medical Care Journal nearly one million Californians, about 952,000 adults, cross the Mexican border each year to save money on healthcare, and dental care ranks among the most common medical services sought after by medical tourists, according to Patients Beyond Borders by Josef Woodman, a best-selling consumer guide to medical tourism.

Dental tourism providers have the ability to offer significant discounts on top-quality dental care while offering the same treatment quality as in the U.S. In fact, many of the dentists and dental practitioners who run international dental clinics and offices are U.S.-trained or equivalently trained.
Insurers that are willing to think outside the box can create profitable plans that meet their members’ needs while decreasing patients’ out-of-pocket costs significantly. The legwork it takes to approve these clinics for inclusion in plans will more than pay for itself in payment savings and customer satisfaction.  Here are just a few examples of the cost savings that patients can expect to receive by accessing their dental treatments and care internationally.

Braces in the U.S. cost $5,000 – The average cost internationally is $1,500.
Porcelain crowns in U.S. cost $950 – The average cost internationally is $250.
Tooth implants in U.S. cost $2,000 – The average cost internationally is $850.

In addition to benefiting insurers and patients, dental tourism greatly benefits employers. By offering a quality dental coverage option for employees, employers can greatly improve employee motivation and increase retention rates as well. Dental tourism providers offer U.S. insurance companies, employers, and patients an affordable dental plan that features the highest quality dental professionals, patient care and technology available.
While dental tourism won’t completely solve Americans’ lack of access to quality dental care, it is clear that dental care cannot be overlooked as a part of individuals’ health and wellness. So, in light of the recent healthcare reform policies that exclude dental coverage, dental tourism can offer real opportunities to create a healthier America without adding to taxpayers’ burdens, busting patients’ budgets or increasing plan costs. q
Dr. Juan Pablo Eng is the founder of DentiCenter, a leading Mexico-based dental care company that provides high-quality, affordable treatment along the U.S.-Mexico border. A USC-trained periodontist, the DentiCenter offers its services in six full service, convenient dental office locations, Tijuana, Mexicali, Reynosa, Otay, San Luis R.C., and Nuevo Progreso. DentiCenter is the only dental center in Mexico that is an in-network provider for Delta Dental and Aetna, two of the largest U.S. health insurance providers. It is consistently reviewed according to their Quality Assurance Programs. DentiCenter has served more than 40,000 patients since 1991 and 97% of those patients are from the U.S.  For more information on our services, please visit www.denticenter.com.

Beyond The Spreadsheet –
Evaluating Dental Benefits For Value

by Josh Nace
The simplest comparison to make, when evaluating proposals, is among the top-level numbers. How much is the premium? How large is the dentist network? What are the basic out-of-pocket costs?

Employers have made difficult decisions as premiums and operating expenses have continued to rise in the general employer benefits market. Many have had to lay people off, move to smaller spaces, and reduce or discontinue benefits. Despite this challenging business climate, an enormous majority of companies don’t examine benefits for quality, according to a 2010 Kaiser Family Foundation and Health Research and Educational Trust report.

Only 34% of companies in the survey, that employ 200 or more people, say they evaluate performance indicators of clinical and service quality. Worse still, only 5% of companies that employ three to 199 people say they review these quality indicators.

With so few employers making an effort to review the quality of benefits, brokers have an open opportunity to bring additional value to their role in guiding a group through their decision-making process.

For health plans, there are certain indexes to help discern quality, such as the Consumer Assessment of Healthcare Providers and Systems. But things are less cut and dried for dental plans.

Dental benefits are most quickly and easily defined by the basic numbers. The employer’s budget is often the most visible factor and is a good starting point. From there, many companies look at the dentist network to see how many of its members will be able to continue seeing their current dentist.
They will compare the common numbers relating to maximums, deductibles and out-of-pocket costs related to different types of procedures and orthodontia. While these numbers give excellent basic information on how much a subscriber will pay, they don’t get down to the details of what the subscriber will actually receive and experience with their benefits.

The best way to ensure that your clients get the most value for their money is to look beyond the spreadsheet for quality indicators. The following sections describe different ways to identify value when comparing dental benefits.
Out-of-Pocket Costs for Employees

Out-of-pocket costs are often a part of basic proposal review, but some of the finer details may not be immediately apparent. Watch for pricey upgrade charges on crowns and dentures and make sure the benefit levels track as you would expect them to through the entire schedule. Watch out for any odd maximums on orthodontia. If orthodontia is particularly important to your client, make sure all relevant procedures are included.
You should be certain that the plan covers a wide range of procedures and includes the most up-to-date treatments. A plan that does not cover a current procedure can cause your clients to pay the dentist’s usual and customary fee outside of their dental benefits.

Access & Availability

Access is often considered before availability. But, availability should be considered at almost the same level. While it’s a real negative factor if there aren’t any network dentists near the group’s employees, it doesn’t do much good to have a dentist nearby if they don’t have availability for nine months. The dental plan you are considering for your clients should be able to provide numbers for access and availability so you can ensure a smooth transition for their employees.

You can look deeper into the dentist network by examining the different types of offices that would be available to your clients. It’s a good sign to see both large and small offices to address the different wants and needs of your clients. Be wary of dentist networks that count a large number of dentists in an office since these dentists may be splitting time among a number of different offices.

Exclusions and Limitations

Just like you would look at deductibles and maximums when reviewing basic benefit numbers, it is important to pay close attention to the exclusions and limitations that are built into a plan. It’s important to compare them to other proposals you received, to the group’s existing plan, and to similar plans that you have information on. Watch for odd limitations, such as a one cleaning per year limitation and other out-of-the-ordinary limitations on common procedures. It’s is also a good time to look at and compare any dollar amount deductibles or maximums.

Bundled Benefits

We’ve all been quoted for medical with dental and/or vision bundled together. It always looks good on the surface because it all goes together and they’ve built in a discount. It may seem like a win-win for your clients. But, as the broker, it’s important to make sure that it really is a win-win. You may find that you can find better coverage separately even when accounting for the discount.
Also, keep in mind the specialty of the company you are working with primarily. Remember that a particular plan specializes in what it does and may not be as knowledgeable about the bundled benefits.

Quality Assurance

It’s a great idea to ask how a dental plan helps to ensure quality care. You can find how quality assurance fits into the plan’s priorities and how the plan identifies and handles potential quality issues. The quality assurance plan, as mandated by the Department of Managed Health Care, should be a comprehensive document of procedures and guidelines to foster quality care for dental plan members. An excellent question to ask is now the dental plan handles grievances. Every plan encounters grievances, but it is the way the plan treats the member and resolves issues that makes the real difference.

Plan Design

A dental plan representative should be able to explain how the plan is designed to encourage proper treatment. Dentists are largely honest in treating appropriately and laying out all options for care, but the dental plan should be intentional to keep its compensation neutral. The plan should not provide incentives for dentists to over-treat or under-treat their patients. Also, it should not compensate more than market value across the range of procedures. This helps to remove the potential incentive for a dentist to perform one type of procedure over another because it is compensated in a more generous way.

Credentialing of Dentists

Find out what steps are involved in credentialing a dentist for inclusion in the dentist network. It should, of course, include a background check to confirm their education, degrees, and work history. It should also include a criminal background check and a malpractice check. Additionally, you can check with the state to see if any formal action has been taken against a particular dentist and find how it was resolved. This can be done through the Dental Board of California (http://dbc.ca.gov/).

Removal of Dentists

At some point, in any large-scale network of dentists, some dentists will be unwilling to operate under the dental plan’s standards. It shows great mettle and commitment to quality for a plan to reduce the size of its network voluntarily. Too often, the size is considered before the quality of the dentist network. If you can find examples of a plan that has removed dentists from its network for quality issues, it’s a sign of the plan’s commitment to taking action to ensure quality instead of just putting words on a paper.

In Conclusion

There is much more to consider when reviewing dental benefits for your clients. Be wary of bundled benefits. They can be excellent, but it’s easy to take them at face value without really examining what you’re getting for your money. Also take care to look at the dental plan’s commitment to quality care, access and availability. You should be able to find out satisfying answers to all of the above
points before making a final decision on dental benefits for your clients.
Josh Nace is executive vice president of Dental Health Services based in Long Beach, where he has worked for the past 12 years. He has been active in the insurance business both in California and Washington State. Josh served as President of the Washington Association of Health Underwriters and received the association’s highest agent award – Barry Thoma award in 2009. Josh is married with two children and is an avid Lakers and Dodgers fan.

Long-Term Care–
You Can’t Put A Price On Dignity

by Phyllis Shelton
The long-term care insurance industry is hanging in the balance. On one side, Medicaid expansion is making people think that the state will pay; on the other side, the CLASS Act making people think the federal government will pay and rate increases are hanging over us like the “average of 40%” bombshell that a major carrier announced recently.

The only thing I see that can make a difference fast enough is worksite sales and the Partnership provides the lift for producers to get this done, plus the new combo products for older clients.

Some producers have told me that they struggle with selling LTCI because of how upset people are about rate increases on existing policies. Carriers list valid reasons of low investment earnings, higher utilization of the benefits, and a low lapse rate as many more people keep the policies than anyone thought. I believe the biggest reason for rate increases is that we haven’t sold the masses. The ratio of eight million policies in force versus 230 million Americans over 18 simply isn’t enough to spread the risk enough for affordable pricing. That’s only a 3% market penetration, according to the 2009 NAIC Experience Reports and Census Bureau. That’s why we must sell long-term care insurance as fast as we can if we are going to make a difference.  At 567,107, the National Association of Insurance Commissioners 2009 LTCI Experience Reports tells us that more LTC insurance policies have been sold in California than in any other state, but California is number 33 in market penetration.  A mere 1.8% of the 31 million people over 18 years old are LTC insurance policyholders in the Golden State.

Here is why this must change. The nation is being engulfed by a tidal wave of entitlement mentality. The feasibility of funding long-term care with taxpayer dollars through the Medicaid program is bleak with 150 million employees versus 58 million people on Medicaid today. That’s a 2.5 to one ratio of taxpayers to current Medicaid recipients.  However, this ratio doesn’t take into account the fact that the Patient Protection and Affordability Act of 2010 adds an additional 16 million adults with incomes effectively under 138% of the poverty level by 2019 and expands Medicaid home care benefits, according to a report by Health Affairs.

A common prediction, for many years, has been that the Baby Boomers hitting Medicaid for long-term care would be an economic disaster for state governments and taxpayers. But the recent pressure from younger, nondisabled adults winding up on Medicaid for healthcare adds an unexpected weight to an already staggering payment system.

High unemployment has turned many young families to Medicaid for healthcare and this pressure on state budgets is exacerbated by the corresponding loss of state income tax and sales tax as the unemployed aren’t able to contribute their normal share. However, these young parents who normally work are in better health than many of the 16 million childless adults yet to be added.  This population is among the poorest of health in our country as being victims of mental illness and chronic disease keep them chronically out of work and keep some of them homeless.

Today, the elderly and disabled make up only one-fourth of Medicaid beneficiaries, but consume two-thirds of the benefit dollars. Younger Americans make up three-fourths of Medicaid recipients but consume only one-third of the dollars, according to the Kaiser Commission on Medicaid Facts. What will happen when the 16 million new adults are added (many with chronic health conditions) so that young and old alike are consuming large amounts of Medicaid dollars?

On top of everything else, the home care expansion could induce a woodwork effect, as people who would only use the Medicaid nursing home benefit as the ultimate last resort become more comfortable claiming home care benefits.

What kind of tax increases will it take to support this many people on Medicaid?   The workforce is projected to grow only 10% by the time these additions are complete, according to the Census Bureau.

Unlike the federal government, states are required to balance their budget, which means cutting services and jobs. The Center on Budget and Policy Priorities (CBPP) says that states are making choices between funding Medicaid and funding education, according to a report by the Center on Budget and Policy Priorities. The 2010 Fiscal Survey of the States makes it really clear where the priority lies. In 2010, California was one of 35 states that made total education cuts of $7.8 billion versus only $1.5 million in Medicaid, according to a report by the National Association of State Budget Officers.

No one is connecting the dots that positioning long-term care insurance as payer of first resort and Medicaid as payer of last resort will help tremendously to take the burden off state budgets.

Look at the budget shortfall and the cuts California has already made to balance its budget: California has a 21.6% budget shortfall for FY2011 and has cut public health, K-12 and higher education, the state workforce, services for the elderly and disabled and is on the list of states with tax increase activity. California has cut funding for the children’s health insurance program, nearly all funding for HIV/AIDS patients, and has eliminated funding for the domestic violence shelter program.  California has reduced K-12 aid to local school districts by billions of dollars and has cut funding for adult literacy instruction and help for high-needs students.  The University of California increased tuition by 32% and reduced freshman enrollment by 2,300 students; the California State University system cut enrollment by 40,000 students, according to reports by the Center on Budget & Policy Priorities.

America has a choice to make. We can use Medicaid to pay for the health insurance of younger people or we can use it to pay for the long-term care of the Baby Boomers. We can’t do both. If we try, families need to know that, in order to pay for Medicaid, they will pay higher property tax, higher sales tax, and higher tuition and there may not be scholarship money for their children. Here’s the real kicker — after surviving the mortgage crisis, families can still lose their home to estate recovery because they didn’t plan ahead for long-term care.

This means that producers have to equip themselves to sell long-term care insurance in the workplace. Selling LTC insurance one at a time to individuals won’t get the job done.  If most employers offered voluntary LTC insurance as an employee benefit, we would have a chance to reach the masses quickly with lower premium and underwriting concessions so most Americans can get it. Some carriers extend the abbreviated underwriting to spouses as well. No employer contribution is required, so that gets rid of the cost objection.

Most employees can afford at least a small policy since the premium is so much lower at younger ages. At age 25, long-term care insurance costs less than a Starbucks a day. And with the right kind of education, younger employees realize that anyone could need long-term care due to an accident, stroke, or other disabling illness like a brain tumor or MS. The biggest concern Americans have when asked about long-term care is not to be a burden on their children, according to an Age Wave/Harris Interactive survey published earlier this year. All we have to do is show them that the way to prevent that from happening is by buying long-term care insurance.

And yes, they will buy it at young ages — sometimes for that very reason. I’ve been able to help Blue Cross Blue Shield of Tennessee offer long-term care insurance through health insurance brokers since 2005 with amazing participation rates. Here’s a story from one of those enrollments: Robert was 27 years old and his young wife was only 24. He called for a personal consultation for help in choosing the benefits when his employer offered long-term care insurance. When the insurance producer who took the call asked him why he was interested, he gave this compelling reply, “My father just had a stroke and moved in with us. I have a four-year-old son. I don’t want my son to ever go through this.”

The other big win from the educational process is that extended family members are eligible, which decreases the time employees have to miss work to be caregivers, and that’s the big deal for employers.

The program that makes all this possible is the Partnership for Long-Term Care. By providing asset protection equal to the benefits paid out when one applies for Medicaid, these plans pave the way for younger enrollees who can’t afford long benefit periods but understand that it is essential to start a long-term care insurance plan as young as possible. Now you have two questions:

1) Does it work?

You be the judge. Let’s look at the approximately 20 years of experience of the four original Partnership states: Connecticut, New York, Indiana and California.  Of the approximately 325,000 people insured through a Partnership plan, less than 500 have actually had to access Medicaid, according to the most recent reports provided by Partnership Directors for Connecticut, New York, Indiana and California. The First Quarter 2010 report from the California Partnership for Long-Term Care shows the number is only 57 out of 132,000 policies purchased since the California Partnership began. The Partnership not only works, it’s a home run.

2) Isn’t this the same thing the CLASS Act is trying to do?

Maybe, but the CLASS Act has the wrong benefit structure to accomplish this. Think about it – having a small daily benefit and an unlimited benefit period results in people hitting Medicaid sooner rather than later because they can’t make up the difference in what the insurance pays and the charge for care.  When they go on Medicaid, the CLASS Act benefit goes to pay for the cost of their care. They can keep 5% if in a facility and half if they are at home. However, the CLASS Act program is not Partnership-compliant so people will still have to spend down to qualify for Medi-Cal.

Eighty million Baby Boomers are starting to turn 65 in 2011 and they have a 61% chance of needing the type of long-term care that will trigger benefits with long-term care insurance. So we all have a significant opportunity to make a difference by funneling private pay dollars into our economy with long-term care insurance benefits, which will ultimately lessen the reliance on Medicaid, the taxpayer-supported funding method.

Most importantly, we have an unprecedented opportunity to enable our clients and their families to retain the decision making power of a private pay patient as long as possible.  If you are puzzled by that thought, think for a moment what it is like to visit a hospital emergency room with no health insurance. One radio talk show host made the observation that long-term care insurance allows people to keep their dignity when extended care is needed. It’s our job to make that sure every person we know has the opportunity to consider long-term care insurance, because you can’t put a price of any kind on dignity.

Phyllis Shelton is President of LTC Consultants, a company that has provided educational materials and producer training to the long-term care insurance industry since 1991. See www.ltcconsultants.com for a description of the 11/9/10 Anaheim training and her three books: Long-Term Care: Your Financial Planning Guide, 2008; Phyllis Shelton’s WORKSITE Long-Term Care Insurance TOOLBOX, 2010; The ABC’s of Long-Term Care Insurance, 2010.

Healthcare Reform–Seminars Address
Sweeping Health Reform Changes

by Leila Morris
The recent 2010 Self Funding conference in Century City, sponsored by www.selffundingmagazine.com, focused on dramatic changes that will require insurance companies and brokers to restructure how they do business. Bernie Tillotson, managing director of the Employee Benefits Div. for Andreini & Company, said he expects healthcare costs to escalate as a result of the new health reform law. David Reynolds, president and CEO of Capitol Administrators expects employers to shift more costs to employees.

Terry Headly, president-elect of NAIFA said, “We will continue to see a strong move to HSAs.” “People like their HSA accounts,” added Janet Trautwein, executive vice president and CEO of the National Assn. of Health Underwriters (NAHU).

Tillotson lamented that middle market groups are already frustrated over the cost increases. “We had one group that got a 73% rate increase. You can only cost shift so much until they [employers] drop coverage.”

The National Health Reform Conference, which was held concurrently, featured Michael Bertaut, senior healthcare intelligence analyst for Blue Cross/Blue Shield of Louisiana. He provided a wealth of information on health reform including his short list of what he’s worried about:
When does it make sense to protect grandfathered plans?
Under the new health reform law, the insurance industry will be absorbing fixed fees of $8 billion in 2014, rising to $14.3 billion by 2017 without raising rates dramatically.
Will carriers be able to provide affordable coverage under the new health reform requirements? (Health insurance reforms would discontinue rating on health status, eliminate the use of gender and several other rating factors, and set limits on age rating.) All products have to be guarantee issue, community rated, include vision and dental for kids, be subject to a weak individual mandate, and have no gender differentials, and have a 3:1 age band (The rates for the oldest person in the pool would be no more than three times higher than for the youngest person).
Will enrollment periods be tight enough to prevent people from only joining health plans when they get sick?
Will rate increases become a political football?
What if “essential benefits” means adding high cost procedures that are not covered today?
Under the employer mandate, starting January 1, 2014, employers must offer health coverage to anyone who averages 30 hours of work a week or more. The rule applies if the employer has employed over 50 full-time employees on business days in the previous calendar year. Part-time workers’ hours would be averaged into the total count of full time employees. The employer must offer an affordable, essential benefit plan. “Affordable” means that premiums are less than 9.5% of employee’s household income. Bertaut questioned how employers would be able to find out what a worker’s total household income was.

Bertaut warned that, if a company offers an employee an incentive to leave the health plan and that employee turns up in new high-risk pools, the employer must repay the high-risk pool for all the claims the pool paid on behalf of the employee.

The Dreaded Medical Loss Ratio

Under medical loss ratio rules, insurance companies must spend 80% of all premiums on qualified healthcare expenses. They cannot have more than 20% overhead (including profits) on all individual and small group business. But, the government has not sorted out what exactly a “medical expense,” is, said Bertaut. He predicts that industry groups will be active in lobbying when it comes to how to define a medical expense.
Bertaut said that broker commissions are under the gun and more brokers may leave the profession as a result. The problem, for many small employers, is that is that they need brokers because they don’t have HR staff. Bertaut expects more brokers to cope with these lower commissions by selling self-funded plans so that they can get a fee from the group.

Janet Trautwein, executive vice president and CEO of the NAHU predicts that many smaller health plans will have problems meeting medical loss ratio targets. “Some of the smaller companies may be pushed out as a result of medical loss ratios. She noted that the importance of brokers has not been overlooked in health reform. The National Association of Insurance Commissioners (NAIC) approved a resolution stating that implementation of health reform should “recognize and protect the indispensable role that licensed insurance professionals play in serving consumers.”
Health Exchanges

Under the new health reform law, a family making $55,000 cannot pay more than 8.1% of their family income for health insurance. Thus they will receive $9,045 in Federal aid to purchase a health policy, which is a 67% subsidy. The Secretary of HHS has to establish procedures to allow agents and brokers to enroll individuals in qualified health benefit plans in the individual or small group markets as soon as the plan is offered through an exchange. The procedures will also allow brokers to help individuals apply for premium credits and cost-sharing subsidies for plans sold through an exchange.

The “Qualified Health Benefit Plans” provision requires health insurance issuers to charge the same premium rate without regard to whether the plan is offered through an exchange or offered directly through an agent.

Grandfathered Plans

Bertaut explained that a grandfathered plan is exempt from many provisions in the health reform law. A grandfathered plan is a group health plan or health insurance coverage that was already in effect on March 23, 2010. Theoretically, a plan can remain grandfathered indefinitely, but it’s extremely hard to hold onto that status.
Trautwein said, “It’s hard to imagine that any client can stay grandfathered for any period of time because benefits don’t stay static. Bertaut noted that a health plan would lose its granfather status with any of the following business changes:
Engaging in merger, acquisition, or restructuring with the express purpose of growing or shifting employees to a grandfathered plan.
Transferring employees from a terminated grandfathered plan into another grandfathered plan en masse to lower costs without a bona fide employment- based reason for doing so.
Bertaut said that there are many unanswered questions, such as whether a plan will lose its grandfather status by switching from insured to self-funded or from an HRA/HSA CDHP to a PPO. Also, what kind of provider network and formulary changes will trigger the loss of grandfathered status?

Dependent Coverage

Bertaut explained that, under the “dependant to age 26” rules, a health plan has to offer dependent coverage to a “child” up to age 26 with no other restrictions. This is true even if your “child” doesn’t live with you and makes more money than you do.

The Rise of Self Funded Plans

According to experts on the self-funding panel, selling self-funded health plans is one of the most effective ways for brokers to deal with rising healthcare cost and falling commissions. One creative solution, for the middle market, is to offer a self-funded plan through a group captive. Captives, which had their start in the 1960s, are simply insurance companies that are owned or controlled by the insureds. But, in the past, only large companies were able to form captives. Group captives now allow middle-market companies to assume more risk. Michael Shroeder, president of Roundstone Management, Ltd. said that coverage by a stop loss insurer opens up self-funding to a broader market.

Reynolds said that, when it comes to self-insured plans, “We have had great success with a homogenous [industry] groups. Groups like to know who their partner is.” Tillotson said that the challenge is the time and effort it takes to establish a self-funded plan and educate the employer group. It can take four to six months to launch a program.

But the effort does pay off. He noted that persistency is very good with self-funded groups. He explained that these plans bring down healthcare costs and put control back in the employer’s hands. Tillotson added that another benefit to self-funded plans is that they are already compliant with the health reform law so grandfathering is not an issue. “When you offer them such a solution, employers want to refer you to their friends,” said Shroeder.
Leila Morris is editor of California Broker Magazine. As a reporter and editor, she has written about diverse business and legislative issue throughout her career. She has a B.A. in Political Science from St. Mary’s College of Md.

Premium Financing: Meeting Today’s
Challenges with Premium Financing

by Leila Morris
CMS – Succession Capital Alliance held its second annual premium financing conference in Las Vegas August 17 to 19. Two hundred people attended the event, which highlighted traditional premium financing and its many applications in both estate and business planning.

The energy level was high with anticipation from the attendees to learn more about traditional premium financing formats and applications. Julian Movsesian, president of CMS – Succession Capital Alliance stated, “Both new and seasoned advisors attended the event to learn more about applying leverage in the planning for their high net worth clientele.”

The conference drew advisors, carrier executives, CPAs, and representatives from top legal firms throughout the country. Platinum Sponsors for this year’s conference were Pacific Life and NFP, along with Aviva, John Hancock, Axa Equitable, and Sun Life as Gold Sponsors.
The agenda encompassed a wide variety of case studies, applications, and strategic planning, which maintained a high level of participation among attendees.

The Advantages of Premium Financing

Premium financing enables high net worth clients to leverage their capital by financing their life insurance premiums with a third-party lender. It allows clients to continue to seek investment opportunities outside of the policy with their personal capital.

Dean De Marco, chief operations officer of Succession Capital Alliance said that premium financing can be an attractive option for high net worth clients to consider. In today’s economic environment, clients are experiencing a tightening of credit, which limits their opportunities for business expansion and investment. “In light of this environment, we continue to obtain lending capital and have expanded our lender portfolio,” De Marco said.

A properly designed premium financing strategy is complex and requires a complete understanding of the many moving parts before the clients take on the risk of acquiring debt. During the conference, speakers continually expressed that the advisor must first establish whether the client has a need for life insurance and whether the client has sufficient assets to pay ongoing premiums. As stated by Tim Whitmore, “A client needs to understand the importance of owning life insurance and must have the resources from which to pay premium. Financing is only an option once this has been established.”  He explained that any form of permanent life insurance can be financed with the exception of variable products. The premium flexibility of universal life insurance allows for a design that maximizes the benefit of leverage.

The conference featured a panel of executives from major life insurance carriers. Mark Teitelbaum, vice president of Advanced Markets for AXA explained the ins and outs of applying leverage to purchase an index universal life (IUL) policy for business purposes. As demonstrated at the conference, premium financing is a strategy that can be applied in both business and estate planning. Using premium financing lowers the cash flow needed to purchase a life insurance policy on the business owner or key employee; supplemental income goes to the policy owner.
Premium financing can also be used to purchase a life insurance policy that will provide cash to buy a partner’s business interest in the event of death.  By leveraging an IUL policy, the premiums can be funded to allow a company to provide a supplemental employee retirement plan (SERP) to employees without tying up assets. It can also provide capital to purchase a business interest using a buy-sell agreement.

Richard Falzalore, director of estate planning for CMS/SCA, demonstrated how life insurance and premium financing can work together in estate planning. Premium financing can be used to reduce the cost of buying a life insurance policy. In turn, the policy can be used to pay estate taxes upon death, allowing more money to go to the heirs.

Conference speakers stressed that premium financing goes well beyond just matching a client’s needs to a particular life insurance product; a great deal of due diligence is required to render a leveraged strategy that offers economic merit. Also, lenders are paying very close attention to the borrower’s ability to qualify for a loan. Tim Whitmore, vice president business development said, “A client’s financial statement, recent tax returns, and investment account statements are essential in initially determining if a client will qualify.”

Another issue in premium financing is having multiple lender platforms. Movsesian said, “We don’t put all of our clients with one bank. Each lender has a different sweet spot. Knowing this, we are able to place a considerable amount of business.” Whitmore added, “When you seek a lender, you look for the one that is best suited based on borrowing strength, asset liquidity, and the borrower’s ability to service the debt. It is important to understand the difference between being design driven, versus being lender driven.”

Placing new business is only a part of working with an experienced premium-financing firm. It is equally important to service the client, the loan, and the design each year thereafter. Movsesian said, “What goes on behind the scenes takes so much work. On these large transactions, you need to work on the renewal process. The first year is the easy part. You have to stay on top of it year after year. You will have trouble if the lender decides not to renew the note.”

The Life Insurance Industry Perspective

In addition to the educational portion of the conference, executives from the life insurance industry gave their take on the premium financing market and the life insurance marketplace in general. Mark Teitelbaum of AXA said that it is impossible to predict what Congress will do when it comes to estate tax, but nothing involving overturning estate tax is gaining traction in committee. He said, “Your client will see some kind of transfer tax in the form of capital gains or estate tax.”

Eric Mills, director of Advanced Markets for Pacific Life, said that the industry is using premium financing to purchase a wide array of permanent life products. Product flexibility and design flexibility have enhanced sales. Randy Zipse, director of Advanced Markets, and Senior Council for John Hancock Life Insurance Company noted that there have been some changes in medical underwriting concerning premium financing. Underwriters want to know how the insured will repay the loan. Zipse stated, “Our underwriters look at the financial stuff more than they did in the past. If you don’t include exit strategy, it can be a problem.” He warned that agents would have problems with carrier and bank underwriters if they tried to submit premium-financing deals without having some expert guidance.

Cracking the Code to the Elusive CPA Referrals

A panel of CPAs provided some insight on what they are looking for in an insurance partner. Insurance agents can offer to CPA partners a comprehensive suite of insurance and estate planning products and strategies that will enhance the CPA’s entire product line. While CPAs will always be skeptical of commission-based vendors, they will embrace partners who show the same client-centric approach that they take. The insurance platform must deliver the same quality, independence, and objectivity that clients have come to expect from their CPAs. How the agent approaches the CPA firm is equally important. The key is not to sell to CPAs, but to educate them.

Dean De Marco summed up the theme of the conference by saying, “Premium financing fits perfectly in today’s economic environment as clients look for sophisticated services from their advisors. At a time when client service has become more and more important, offering premium financing allows advisors to differentiate themselves from their competitors.”
California Broker Magazine editor Leila Morris has a B.A. in Political Science from St. Mary’s College of Md.

Voluntary Benefits–Driving Critical Illness
Insurance Sales With Education and Communication

by Clea Barth
Critical illness insurance can be an effective tool in meeting the needs of both employees and employers. Employers can use this coverage to enhance their benefit offerings and increase employee loyalty, with potentially little cost.

Employees can use critical illness insurance to reinforce their financial safety net with another layer of protection to their health and disability insurance coverage. The challenge is that awareness of the product is still low among employers and consumers.

Benefits to the Employee

Critical illness insurance can play a valuable role in an employees’ financial protection plan and addresses concerns that weigh heavily on their mind. MetLife’s Critical Illness Insurance Awareness study reveals that 55% of full-time employees are somewhat or extremely concerned about the financial impact of a critical illness on their families, with only 27% feeling confident they could pay for a medical emergency.

The costs of a critical illness, such as cancer, a heart attack, or stroke, can be significant, even for those who have medical and disability coverage. This is because the family faces a spike in out-of-pocket expenses associated with the illness, such as potential travel expenses as well as childcare and housekeeping arrangements. In addition, family income may suffer when an ill family member is unable to work, even when there is some disability income protection in place.

Experiencing a critical illness can reduce a family’s income by more than $12,000 in the first year alone. Out-of-pocket medical costs can add up to about $3,000 in the first year after diagnosis. However, 46% of full-time working Americans have less than $5,000 in savings available to cover expenses if they, their spouse, or significant other were diagnosed with a major illness and 28% have less than $500, according to the study.
In addition to the demonstrated need for critical illness insurance, employees are interested in the product. About 75% of employees who don’t own critical illness insurance or never heard of it find the concept appealing once the product’s features are explained. Most are even willing to pay the entire premium. A core appeal of critical illness insurance is its flexibility; a lump-sum benefit eliminates the need for ongoing insurance claims paperwork and the benefit can be used at the employee’s discretion.

Benefits to Employers

Including critical illness insurance as a voluntary offering within a comprehensive benefit program can help employers improve employee benefit satisfaction and employee retention. A link between benefit satisfaction and job satisfaction can be seen in MetLife’s 8th Annual Employee Benefits Trends study.

Eighty one percent of employees who are satisfied with their benefits are also satisfied with their jobs. Only 23% who are dissatisfied with their benefits are satisfied with their jobs.

In addition to job satisfaction, benefits can play an important role in creating loyalty toward the employer. Sixty-five percent of employees feel that benefits such as dental, disability, and life insurance are important contributors to their loyalty toward their employer. However, employers underestimate the importance of these benefits, with only 39% saying that these insurance products are strong drivers of employee loyalty. When you consider the value that employees place on health and financial products, adding critical illness insurance, as a complement to other benefits, may be a strategic choice to drive improved employee loyalty.

Adding critical illness insurance as a voluntary benefit can expand an employer’s benefit portfolio and help meet retention goals with minimal cost and effort. In addition, by purchasing critical illness insurance through the workplace, employees enjoy group rates and no (or limited) medical underwriting in many circumstances.

The Critical Illness Insurance Challenge: Lack of Understanding

Just 17% of employees say they have critical illness insurance, according to the critical illness study. This can mean that producers have selling opportunity to help employees limit their exposure to serious illnesses and strengthen their financial safety net. The primary challenge is that critical illness insurance is not widely known or understood. A key part of offering critical illness insurance is to create an effective education and communication campaign so that employees can better understand the protection that critical illness insurance offers and how it fits into their financial safety net.

The first step is to address the numerous misconceptions that people have about critical illness insurance. The study revealed that three in five employees confuse critical illness coverage with health insurance and one in five confuses it with disability insurance or a government insurance program. Some employees initially said they had critical illness insurance. But once critical illness insurance was explained to them, they realized that they didn’t have a policy.

A critical illness insurance policy typically offers a lump-sum payout that individuals can use for medical and non-medical expenses related to specific medical conditions, including cancer, stroke, heart attack, major organ transplant, kidney failure, and coronary artery bypass graft.
Advances in medical detection and treatment are improving survival rates for people with these medical conditions. However, without a strong safety net, financial recovery may lag behind physical recovery. Sixty percent of those with a critical illness were still incurring medical expenses three to five years after initial diagnosis, according to the study.

Improving Education and Communication

While it does not take a large financial investment for employers to add critical illness insurance to a voluntary benefit program, it does require a commitment to improving benefit communications. The connection among effective benefit communications, benefit satisfaction, and job satisfaction can be seen in the employee benefits study. Eighty percent of employees who feel strongly that their employers’ communications are effective in educating them about their benefits are also satisfied with their benefits and their jobs. Only 10% who don’t feel that their benefit communications are effective are satisfied with their benefits and only 30% are satisfied with their jobs.
Employers can start with a few simple steps to improve education and communication:

Draw the connection between benefit offerings and employees’ financial concerns. Position the benefit program as a solution that can assist employees.
Increase the frequency of communication. This helps reinforce the employer’s commitment to employees and helps employees become more engaged in the benefit program.
Keep the message simple and the materials straightforward. Focus on the value that the benefits offer the employee.
Keeping the product simple is one key way to ensure that the benefit communications are straightforward and effective. The lump sum that critical illness insurance offers eliminates the need for ongoing claims paperwork. There is also flexibility for the employee. Those surveyed for the critical illness insurance study stated that, overwhelmingly, that if they received with a lump sum payment of $10,000 from a critical illness policy, they would use it to pay out-of-pocket medical expenses despite having medical coverage. They would also use the money to pay typical household bills like a mortgage, rent, and utility bills.

Having wellness and disease management is another benefit to offering a full suite of disability coverage, medical coverage, and critical illness insurance coverage. For example, at claim intake, the disability carrier should be able to provide employees with a warm transfer and/or referrals to disease management specialists provided through the employer. This process ensures that employees are aware of valuable resources that may help them manage their illness.

Selling critical illness insurance takes some time, upfront, to explain the benefit, but the result is a typically favorable response from employers and employees. Critical illness insurance can help reinforce employees’ financial safety net and complement other coverage in a comprehensive benefit program while building employee loyalty. You can help increase the value of an employer’s benefit offering by helping employers see the value of offering critical illness insurance and focusing on effective communications about this protection.
Clea Barth is vice president, Critical Illness Insurance Products for MetLife.