Jul

The latest on Coventry Health – steady progress

Posted by Joe Paduda on Monday, July 13th, 2009 | Comments

Shawn Guertin, Coventry’s CFO, spoke at the Wachovia investor day conference late last month, and here, so you don’t have to listen to the entire webcast, are the highlights. But if you do want to, it is still available here (although it was due to be taken down a couple weeks ago.)
The net is the company is recovering nicely from the troubles of 2008, and remains committed to building a low cost operating structure in commercial, medicare, part d, medicaid, and workers comp.
– Q1 revenues were $3.6 billion, with an MLR under 81%. That’s good news for CVTY, who had problems in the same Q in 2008, and represents 20%+ growth over that quarter. Commercial health accounts for about half of the company’s total revenue.
– Medicare results were in line with expectations, with the all-important MLR also not surprising anyone at Coventry (or more importantly the analysts). Coordinated Care is growing nicely, and membership will be around 180k this year. Coventry remains convinced this is a good business…
– Part D membership is up substantially this year, with growth of over a half-million members.
– Coventry is continuing to emphasize its core businesses – Medicare, commercial, and workers comp. They are following thru on the exit from Medicare Private Fee for Service (PFFS) which will free up significant capital and are selling off or exiting a few other smaller businesses. Guertin went thru the financials of the PFFS exit; suffice it to say that dumping that business will not hurt 2010 earnings. Once PFFS is shut down, $3 billion will drop off the top line, leaving the company at $10.8 billion annual revenue.
– Commercial risk membership is dropping about 10% – no surprise to anyone in this industry due to the economy. The primary driver is attrition from existing businesses, as fewer employees opt to maintain coverage at their existing customers.
– The individual health business is growing, with membership expected to grow 20%+ this year.
– Work comp remains a favored child at CVTY, and why shouldn’t it; with revenues of about $800 million driving margins of over $500 billion there’s a lot to like. Guertin noted the drop in claims frequency has hurt the company a bit, but this has been offset by sales wins and good growth in WC PBM business. He also said that WC is more insulated from health care reform, and is also attractive as it produces ‘unregulated’ cash flows. Not exactly; as anyone in the network or bill review business can tell you, when a state changes its fee schedule (see California, Ambulatory Care), it can dramatically affect revenues. In CA, the the change resulted in dramatically lower margins for PPOs.
I’d also pick on Guertin’s statement that Coventry “never abandoned medical management principles”. Truth be told, the company didn’t have much in the way of med mgt to abandon. Compared to an Aetna, Coventry’s medical management capabilities are quite limited.
One other point I found quite interesting – regarding COBRA uptake, Coventry hasn’t seen any significant change in the number of folks signing up for COBRA despite the subsidy built into the stimulus package. That is consistent with my sense back in February, and with what other health plans are seeing now.
I won’t be able to perform the same service for the Q2 earnings call (July 28) as I’ll be in Africa with the family on a much-anticipated trip. Any volunteers to fill in?

Jun

Providers’ view of health plans

Posted by Joe Paduda on Monday, June 1st, 2009 | Comments

The Verden Group’s latest ranking of health plans is out, and there’s a bit of turnover at the top.
For those unfamiliar with the Verden Report, it evaluates how well or poorly managed care companies/health plans are doing from the providers’ perspective. It tracks changes to policies regarding pre-certification; reimbursement; claims filing, processing and problem reporting; eligibility verification and other provider-payer ‘interaction’; the volume, timing and communication about those changes, and the accuracy of that communication.
In brief, the Report reports how well, or poorly, payers are treating providers. The Report is very useful, particularly in monitoring healthplans’ relations with providers overall. Healthplans that consistently rate at the bottom end of the scale are going to have a tough time expanding; likely cause themselves, and their insureds, a good deal of agita due to avoidable confusion about healthplan process/policy changes; and I’d argue don’t have a good grasp on one of the essential components of a successful long term strategy – good provider-payer relations.
I emphasize evaluating health plan performance over the long term. From time to time any health plan is going to look ‘bad’ (or at the least not as good as they usually do) because they will have to implement a number of provider-facing changes around the same time.
As an example, look at Aetna’s history (at the top throughout 2008) compared to their current position (fourth). The big healthplan announced a lot of changes (relative to the earlier volume) – but the clarity of their communications about those changes was quite good – best in the industry, in fact.
On another note, New England’s Fallon Community Health Plan was well below average due to significant changes in the list of procedures subject to utilization review. Although Fallon removed ‘a bunch of pre-authorizations on injections and drugs”, Fallon added a pre-cert requirement for more expensive services including kyphoplasty.
This last is why you need to read the report and not just the rankings. Without getting too far into the details, kyphoplasty, a minimally-invasive surgical procedure intended to alleviate spinal compression, is one of those newish procedures that offers minimal – if any – improvement over older, more established techniques.
It is a good thing that Fallon is tightening up standards for approval of this procedure. Even if it adds to providers’ workload.

May

Health plan CEO Compensation

Posted by Joe Paduda on Thursday, May 21st, 2009 | Comments

The fine folks at FierceHealthcare have compiled a list of the top ten health plan CEOs ranked by compensation. The links include details on performance, prior year compensation, and a bit of editorial.
Aetna Ron Williams $24,300,112
CIGNA Ed Hanway $12, 236,740
WellPoint Angela Braly $9,844,212
Coventry Dale Wolf (ret) $9,047,469
Centene Michael Neidorff $8,774,483
Amerigroup James Carlson $5,292,546
Humana Michael McCallister $4,764,309
HealthNet Jay Gellert $4,425,355
Universal American Richard Barasch $3,503,702
UnitedHealth Group Steve Hemsley $3,421,042
Some of these top-ten CEOs saw their compensation drop due to declines in their company stock price or other financial issues (CIGNA, Coventry) while others seem to have been unaffected by deteriorating performance (WellPoint, HealthNet) and settlement of lawsuits (Amerigroup.

May

Silent PPO legislation coming to a state near you

Posted by Joe Paduda on Tuesday, May 19th, 2009 | Comments

Expect the Texas legislature to pass laws tightly restricting PPOs before the end of the biennial legislative session June 1. According to WorkCompCentral, the Senate is making considerable progress on a compromise bill that will closely follow the NCOIL model.
The NCOIL model act includes strong disclosure requirements, standards for network contract and discount disclosure, penalties for PPO’s failure to disclose clients to providers, allows providers to refuse discounts taken without a contract and provides for enforcement under Texas’ unfair trade practices laws. (see the WorkCompCentral article for details)
This is good news for payers and providers alike.
Silent PPOs have long been a major bone of contention, leading to countless lawsuits and counter suits by payers and providers, tying up claims in seemingly endless litigation. Not only will the bill – if enacted – reduce legal hassles and the cost of same, I’m also hopeful that it will force payers to stop their endless, pointless, counter-productive discount-shopping.
Picking providers base on how much they’ll cut their rate is beyond dumb,for reasons laid out in detail elsewhere on this blog. Beyond that obvious problem is the damage that process dies to the payer-provider relationship. It tells the provider they are merely a vendor, a bill, a cost. It devalues their role entirely, transforming what is often an already-tense relationship into open warfare.
Payers have to treat providers intelligently, seek to understand their situation and motivations, and try to work with them. Sure some providers are crooks and frauds, but treating all of them as such just ensures claims will be contentious, difficult, and more costly.

May

Why hospitals are hurting and the impact on health plans and workers comp

Posted by Joe Paduda on Wednesday, May 6th, 2009 | Comments

Hospitals are in dire shape. 31% of US health care costs are from hospitals, and by almost any measure, they are hurting badly.
Revenues are declining, profitable services are way down, layoffs are announced weekly (layoffs, in healthcare!!), more and more patients are uninsured, and donations have declined dramatically. Those hospital systems that are reporting decent results seem to be doing so through one-time asset sales and other non-operating measures.
As to what’s driving the crisis; if you’ll forgive the creative math, here’s how the calculus works:
Rising unemployment -> more uninsured -> fewer profitable admissions + more charitable (i.e. non compensated) care + more Medicaid (i.e. money-losing) care = big financial trouble for hospitals
Almost all hospitals make their margins on private pay patients. According to Tenet Health’s CEO, (paraphrasing) ‘Tenet’s profits come from the 27% of patients who have commercial managed-care coverage; it breaks even on Medicare patients, and loses money, to varying degrees, on patients with Medicaid coverage, self-paying uninsured and those who qualify as charity cases’.
The latest bad news comes from Massachusetts, via FierceHealthcare and the Globe.
Here’s how the Globe put it:
“59 percent of hospitals statewide reported a drop in elective surgeries in 2008 and into the beginning of fiscal 2009…as more people forgo treatment, hospitals are suffering financially, industry specialists say. Their profits depend heavily on lucrative surgical procedures paid for by private insurers.” And that’s in a state that has fewer folks without health insurance than just about any other state in the country.
On the west coast, the problem is even worse. according to a CalPERS study, “One-third of private payers’ costs went to hospital profits and to subsidize a revenue gap”. Health plans paid hospitals $18 billion in 2005 for care that cost the hospitals $13 billion.
A hidden, but nonetheless significant contributor to hospitals’ woes has been the growth of high-deductible health plans. Patients with these plans seeking elective surgery often don’t have enough money in their deductible accounts to cover the deductible; hospitals are turning these patients away, unwilling to accept the risk of non-payment.
Impact on health plans
Health plans have been dealing with increasing hospital cost inflation for several years; what’s new is the worsening economy has significantly exacerbated the problem. Price has been the primary driver of hospital cost inflation; back in 2003-2004 prices jumped eight percent annually.
Healthplan giant Wellpoint saw hospital trend rates last year above ten percent; in their Q1 2009 earnings call they reported “Inpatient hospital trend is in the low double-digit range and is almost all related to increases in cost per admission. Unit costs are rising due to an elevated average case acuity and higher negotiated rate increases with hospitals.”
Aetna is also seeing significant cost inflation, driven by more services per admission, while HealthNet is enjoying cost inflation just under ten percent
The same trend hammered Coventry Health last year, leading to a big increase in their medical loss ratio, and eventually a management shakeup and re-ordering of priorities.
Impact on workers comp
Unlike group and individual health plans, workers comp patients don’t have to worry about deductibles and copays. Comp is ‘first dollar, every dollar’. And hospitals just love workers comp. Recall that workers comp generates one-fiftieth of a hospital’s revenues – and one-sixth of hospital profits It’s no wonder workers comp medical costs are starting to jump again – driven by cost shifting from hospitals desperate to make up for lost private pay patients
In recent audits (including a large self-insured employer and a workers’ comp municipal trust) the greatest year over year increase in their medical expenses was due to facility cost inflation (primarily hospitals and ambulatory surgical centers). Other clients are experiencing hospital cost trends above 10% year over year, and some are in the 12% range.
Post script – for a detailed review of the hospital perspective on the issues, click here.

Apr

Coventry Healthcare – Q1 2009 progress report

Posted by Joe Paduda on Tuesday, April 28th, 2009 | Comments

This is a big day for mid-tier healthplan Coventry. After a year of turmoil and ups and (mostly) downs, CVTY has been under the leadership of returning CEO Allen Wise for a full quarter. Today Coventry announced Q1 results, which were projected to include earning of 24 cents a share, according to analysts surveyed by FactSet Research. The company surprised analysts when it reported earnings of 30 cents and projected 2009 revenues just under $14 billion.
The quick take – medical losses are coming under control through higher pricing, commercial membership is down, governmental plan membership is up, Coventry will exit the Medicare PFFS business, they are going to retain the workers comp business and Coventry is not for sale.
Details
While the results look pretty poor in comparison to Q1 2008, recall those results were wrong, as the company had yet to figure out its medical loss ratio problems were quite severe. On balance, this quarter looks reasonably solid.
The primary driver of improved results appears to be the renewed focus on the company’s medical loss ratio, which had slipped badly during the previous two years.
Here are some of the highlights.
– Net earnings were down about 65% due to higher expenses.
– Health plan commercial group risk MLR (medical loss ratio) was 80.9% in the quarter, down 230 basis points from the prior quarter. This is a big win as it appears the turnaround in healthplan performance has come earlier than expected.
– Commercial membership decreased 2.5% to 2.8 million. This is not good, as this is the profitable core of the company, Coventry’s bread and butter. The good news for the company was they increased pricing across most plans – this increase drove the improvement in MLR although it undoubtedly contributed to the drop in top line.
Coventry is selling more employer plans, but ingroup membership is down – people just can’t afford to pay their share of the premiums, even when subsidized by their employers. This is one of those canary-in-the-mine issues that has broad implications, far beyond this one mid-tier healthplan.
– Medicare Advantage membership was up 114,000 during the quarter; the MA MLR was 90.5% in the quarter, down 40 basis points from the prior quarter.
– Medicare private fee for service (PFFS) is not doing well, and it looks like Coventry will exit this business. This business grew dramatically over the quarter, with membership up some 75,000 to 318,000, driving revenues of Wise noted Coventry’s board will have a (non scheduled) meeting April 30 which happens to be the day before Coventry has to decide whether it will stay in this business.
Don’t bet on it. If Coventry does exit the Medicare PFFS business, top line impact will be significant – likely more than a couple billion dollars.
– Medicare Part D membership of 1,501,000 grew by 570,000. Notably, Humana dumped 180,000 Part D members: these were the folks who cost the company about a buck a share in earnings in 2008 due to higher than expected costs. One analyst thinks Coventry picked up some of the members dumped by Humana…
Wise expressed confidence in the results, saying he’s “reasonably comfortable” with Q1 results. CFO Shawn Guertin made a point of noting that most growth in Part D was not in their high-tier products and he feels ‘comfortable’ as well.
– Workers comp – Wise stated he is committed to maintaining and eventually growing the workers comp segment as it is profitable and returns good margins. He’s “absolutely committed to this business.” Guertin reiterated the company’s positive view of comp, saying results are very strong (or words to that effect). (work comp accounts for about 6% of Coventry’s revenue, with much of that from their PBM FirstScript).
More on this later.
Wise closed his opening comments by saying “the company is not for sale”. I’d note that few companies that are for sale advertise that fact.
What wasn’t covered
Once again, there was almost no discussion of core medical cost drivers – nothing beyond a couple lines from Wise about Coventry’s desire to invest in chronic care management for their Medicare members and two softball questions from analysts about cost drivers. (One was answered with the statement that facility unit costs and outpatient facility utilization appear to continue to be the problem. The second question referred to the company’s strategy regarding addressing unit costs by negotiating hospital contracts coming up for renewal and the potential impact of MS DRGs etc. Guertin’s answer was it is tough, hand to hand combat, about a fifth to a third of their hospital contracts come up for renewal this year… There was no declarative statement and certainly nothing substantive to say we’re focusing tightly on these areas or types of service. He did not respond to the MS DRG topic, and there was no follow up from the analyst.)
In what other industry would analysts not ask deep, penetrating questions about the underlying costs the company’s main product? Costs that are going up in the high single digits each year? Costs that are causing enrollment declines in the company’s core business? Costs that hammered the company last year, that drove the stock down by almost 90%? Costs that were acknowledged to be poorly understood in several of the calls last year?
Medical costs account for $11 billion – about 80% – of the company’s $14 billion top line – and there were two superficial questions?
Wow.

Apr

Why PPO litigation is increasing

Posted by Joe Paduda on Tuesday, April 14th, 2009 | Comments

PPOs, or Preferred Provider Organizations, have been around for a couple dozen years. They are networks of credentialed (with varying degrees of rigor) doctors, hospitals, and ancillary providers that have agreed to provide lower rates for ‘members’ in return for some measure of exclusivity/promise that patients will be directed to use them. I’d note that this ‘promise’ is often not fulfilled, at least in the eye of the provider. That’s a whole separate issue, one we will likely get to in a future post.
As one good friend puts it, ‘PPOs are a box of contracts’, and not many PPO firms do much more than recruit, credential, negotiate, and contract.
Their popularity waxes and wanes, roughly in line with the underwriting cycle (as cost trends decrease, PPOs tend to grow, as cost trends increase, buyers seek more controlled networks and medical management systems).
Typically PPOs are owned by a large group health plan or specialty company such as a workers comp managed care firm. Many PPOs were built to market/sell to health plans and workers comp payers – Rockport, Coventry, and Interplan are examples of ‘vended PPOs’, as opposed to those built for the exclusive use of a healthplan.
The problem
There can be several issues with PPOs; lack of direction by the payer, inaccurate data, failure to maintain credentialing standards and ‘stacking’ are some of the more prevalent.
But of late another issue has been appearing more and more frequently – providers claiming they are not subject to a PPO contract and therefore should be reimbursed at U&C, or in the case of workers comp in many states, the state fee schedule.
Digging into the disagreements that arise when payers assert the providers are subject to a contracted discount, it looks like there are a few contributing factors.
First, some providers have contracts with many health plans and networks, and it canbe tough to keep them all straight. And, the PPO may have changed its name, merged with another firm, or been acquired since the original PPO contract was signed.
Those are the easy ones.
A knottier issue is caused by the mechanism of ‘provider selection’. When the provider’s bill comes into the healthplan/bill repricer, it is ‘checked’ against a database to determine if it is from a contracted, or participating, provider (known as a ‘par’ provider). This checking could occur either at the health plan/repricer, or the bills could be electronically sent to the PPO for the PPO to check par status and apply the discount.
What determines ‘par’ status is often the source of the problem. For example, PPOs want as many ‘hits’ as possible, so they err on the side of counting a provider as par if at all possible. The more hits, the more money they make (often), and the better they look to the payer. Payers like more hits because then the managed care folks can show the savings they deliver due to the discounts. So the payer side of the equation is motivated to use logic that assigns as many bills as possible to the par bucket.
To do that, payers often use a provider TIN (tax identification number) as the only criterion to determine par status. If a bill is from a provider with a TIN that matches some contract somewhere in the PPO company’s database, than the discount is taken. Payers may also use address, provider first name last name, and/or phone, but most try to use as few criteria as possible.
But large provider groups and hospitals and health systems often use the same TIN for many different service areas – outpatient surgery, inpatient, rehab, pharmacy, hospitalists, occupational medicine. And they rarely offer the same discount deal across all service types and locations. Some service types may not even participate due to the internal structure and demands of the health system.
Here’s real world example, provided by a consulting client. A bill from an occ med clinic hits a payer, who determines it is a par provider due solely to the TIN match. A 30% discount is taken, and the check cut. But the occ med clinic is not part of the original contract, which specifically states that discount is for inpatient medical services only.
The provider complains to the payer, who contacts the PPO, who eventually pulls the contract, says ‘oh, yeah, here’s the problem’, asks the occ med clinic to resubmit the bill, after which the bill may – or may not – be paid correctly.
Now multiply this by the hundreds, and it is easy to understand why some providers, fed up by the paperchase, are getting downright litigious. This leads to providers suing payers over a few dollars on an office visit – not to get those few dollars, but to force the payer to apply the correct repricing methodology.
If the PPO is the one doing the repricing (as is often the case), there is considerably less incentive to fix the problem. The PPO doesn’t have to handle all the calls (although in many cases they are involved at some level), figures many providers will not fight it as it isn’t worth it, and even if they do that’s a small price to pay for all those fees.
And that’s one major reason there’s so much litigation in the PPO world these days.

Apr

Why your hospital costs are going up

Posted by Joe Paduda on Wednesday, April 8th, 2009 | Comments

There’s little doubt hospital reimbursement methodology is going to change dramatically over the next few years.
We’re going to see a shift from fee for service to global episodic reimbursement, a shift that has already begun. I’ll get into that next week, but for now, there’s increasing evidence that private payers’ hospital costs are rising in large part due to several recent changes in reimbursement policies.
Over the last year, there have been three major changes in hospital reimbursement: the implementation of MS-DRGs (increase in the number of DRGs to better account for patient severity); a 4.8% cut in Medicare hospital reimbursement spread over three years; and the decision by the Centers for Medicare and Medicaid Services (CMS) to stop paying for ‘never ever’ events – conditions that are egregious medical errors requiring medical treatment.
The net result of these changes has been a drop in governmental payments to hospitals, the decision by several major commercial payers to not pay for never-evers, and increased cost-shifting from hospitals to private payers.
The implementation of MS DRGs and the accompanying decrease in reimbursement looks to be the most significant of the changes, and is already having a dramatic impact on hospital behavior patterns. By adding more DRG codes, CMS is acknowledging there are different levels of patient acuity – that performing a quadruple bypass on an otherwise-healthy patient takes fewer resources than doing the same operation on an obese patient with diabetes and hypertension. While these different levels were somewhat factored in to the ‘old’ DRG methodology, the new MS-DRGs better tie actual costs to reimbursement. (for a more detailed discussion, see here)
Here’s one example.
CMS projected that these changes would reduce Medicare’s total reimbursement for cardiovascular surgery by about $620 million, while orthopedic surgeries are projected to see an increase in reimbursement of almost $600 million.
Orthopedic reimbursement is increasing because there are now more MS DRGs for orthopedic surgery, and the additional DRGs will likely mean hospitals will be able to get paid more in 2009 and beyond than they were last year.
Hospitals are going to work very hard to get more orthopedic patients in their ORs, and they are going to carefully examine these patients to make sure they uncover every complication and comorbidity – because a ‘sicker’ patient equals higher reimbursement.
What does this mean for private payers?
Orthopedic costs will likely rise because hospitals will get better at allocating costs. But cardiovascular costs will also increase due to cost shifting.
Heads they win, tails you lose.

Mar

Providers rating health plans

Posted by Joe Paduda on Thursday, March 26th, 2009 | Comments

There is a growing movement on the part of providers that is turning the tables on health plans. Providers have long objected to profiling, ranking, and rating as done by health plans, complaining (with and without justification) that the systems/algorithms used were inaccurate, unfair, superficial, and/or misleading.
Now providers are giving health plans a taste of their own medicine, and for United Health, it is bitter stuff indeed.
One of the first surveys that evaluated providers’ opinions of health plans was the survey conducted by the Verden Group. Their Q4 ratings of health plans is out, and once again Aetna is looking good. The rankings are driven by providers’ views of health plans, the complexity and difficulty of their interactions with health plans, and plans’ tools and processes that affect providers. Reimbursement policies are also factored in, as is the cost to the provider of complying with health plan policies.
While the report does not include all health plans, it does cover around forty of the largest.
There is always movement up and down the ratings scale, but Aetna is consistently at or near the top. Other plans seem to bounce around due to changes in reimbursement policies, more or less onerous prior authorization requirements, changes in ease of access to patient eligibility and medical record information – with jumps up or down the rating scale commonplace. The lowest score wins in the Verden scale; Aetna is the only plan to not only score in the single digits in Overall Rankings, but to do so every quarter.
Health plans that partner with providers – provide ready access to eligibility data, reduce the administrative burden of pre-certs and appeals, pay quickly, minimize policy/process changes so providers aren’t constantly confused about the current requirements, and add value in the form of access to member medical data are going to do much better over the long term.
A hospital-focused survey was just released, and it confirms Aetna’s leadership position. United HealthGroup is at the bottom of the rankings (it is towards the bottom in the Verden survey, although one of its operating units, (Oxford) is ranked quite high. The survey was conducted by Davies Public Affairs, identified a sharp differences between the ‘best’ and worst plans. Here’s how they put it:
“For the first time, the survey revealed a preferred partner for hospitals and physicians. Aetna received a 64% favorable rating (compared to a 34% unfavorable rating), which was 9% better than CIGNA, the second-best rated plan and a full 48% better than the worst rated plan, UnitedHealthcare. The survey reveals a strong preference from hospitals based on trust, honesty, business practices and good faith negotiations.
“Aetna is clearly the preferred health insurance partner for hospitals and health systems across the United States,” said Brandon Edwards, President/COO of DAVIES. “When you combine this survey data with recent publicly traded health plan earnings announcements, it’s clear that provider trust and satisfaction are leading indicators of organic membership growth. This bodes well for Aetna, and perhaps CIGNA, as they look at 2009 commercial enrollment retention, as well as 2010 commercial enrollment growth.”
The survey revealed that 82% of respondents indicated an unfavorable opinion of UnitedHealthcare, {emphasis added] which is actually an 8% improvement for them over last year. This contrasts with an average unfavorable rating of 34% among all other insurance companies in the survey.”
It gets worse.
“One striking finding is that UnitedHealthcare was not the largest payor in terms of revenue for the average hospital, and its reimbursement rates were not significantly lower than other major health plans. UnitedHealthcare is paying as much or more than other insurance companies for healthcare services but they are viewed as the worst performer by a large margin. [emphasis added] The survey makes clear that dissatisfaction is driven by distrust, dishonesty, flawed business process, inadequate claims processing, claims denials and other business process problems.”
I was excited when the company I worked for – MetraHealth – was acquired by UHG fourteen years ago. At the time United was the most respected health plan company and was seen as the model that others would aspire to. After working for United for a couple years, I had to leave. My sense was ‘if this is the best health plan out there, I’ve got to stop working at health plans.’
Looks like nothing’s changed.
The full Davies survey is here; the Verden Quarterly Report is here.

Mar

Fraud in Florida’s small group market

Posted by Joe Paduda on Wednesday, March 18th, 2009 | Comments

Small employers are increasingly dropping health insurance. Premiums are prohibitively expensive and dire economic times are forcing owners to cut costs.
In an effort to control costs, some are resorting to what can only be characterized as fraud.
I recently returned from a trip to the Sunshine State, where I had the opportunity to meet with two prominent brokers. During the course of conversation one gentleman related the following.
An employer had contacted their cpa firm asking some questions about employee benefit payroll deduction requirements. To date they had paid 100% of premium but wanted to begin to have the employees contribute. This, in part, was the response the client received. Subsequent conversations between my colleague and the CPA firm indicated the broker that had taken the cpa firm down this path was doing it for others. In a separate conversation a my. Olleague had with a representative of another carrier, that person confirmed that this type of stuff was not uncommon. And we wonder why the cost of group is higher and is increasing at a faster rate ……..
Here’s the email the CPA firm received from the fraudulent broker.
“The cost of health insurance is a problem that we all are trying to grasp. We as employers are attempting to take care of our employees but control the ever rising costs. You have the ability to change your health insurance policy to either method the most common is a percentage of the single premium however, some employers use the flat dollar method as well.
I would recommend that you consider the change to HSA plans with the use of individual policies. The company can pay the premium or portion and contribute to or not to the HSA plan. The cost of individually underwritten plans are about half the cost of group plans. You can maintain group policy if you have employees that can not be underwritten as long as you have at least two.
We changed to this method this year including the full funding of the single person HSA and saved $10k. This savings does include the full family premium and HSA deductibles paid for two (XXX and me).
The negatives that you will have is the potential of uninsurable and the initial fear that the employees may have. The employee will have to pay the cost of benefits from the HSA account until the full deductible is meet then thereafter no out of pocket costs. The typical deductibles range from $1250 single to $2500 family. Even if you have not reached your deductible you will only pay the insurance companies costs.
The other negative is maternity benefits for individual plans are very weak (after one year on plan only pays $1500) so if you have any potential mothers this is something that needs to be considered.
I do have a contact if you need that assisted us with United Health Care in the transition. I personally believe that the HSA plans are the way to go.”
This is fraud.

Category: Manage Care – Group Health