Posts Tagged ‘E-based’

Federal Invisible Risk Sharing Program. Is this a smart amendment to the American Healthcare Act? It may be, let’s discuss and see!

April 13, 2017

The Federal Invisible Risk Sharing Program (FIRSP) appears, at first read, to have provisions that would allow insurers to reduce premiums from current levels and keep them lower in years to come. It lacks some detail that the Secretary “shall” determine but let’s discuss what it could provide. BTW, is it interesting to you that when the Government offers to reinsure the plan they call it “invisible”? Just wondering, that’s all.

The FIRSP amendment Sec. 2205, at its core, would establish a stop loss level for insurers offering health insurance products in the Individual market. The stop loss coverage would reimburse an insurer for claim costs exceeding $1,000,000 on any individual. It would act as re-insurance for insurers so that insurers could set premiums knowing that claim costs for individuals above $1M and costs for members with certain health conditions likely to exceed $1M could be passed off to the “government’s” high risk pool. It would tend to lower and contain premiums as the insurer would not be subjected to claims associated with catastrophic illness or accidents.

This should make pricing plans easier for insurers because, pre-ACA, insurers would often purchase reinsurance for their products to pass off  a portion of their risk, above a certain threshold. Insurers are familiar with the costs associated in these reinsurance arrangements which should help as they negotiate with the government’s actuaries on pricing.

The amendment states that a portion of the premium collected by insurers would go to the government’s pool to cover the government’s risk of paying for claims above $1M. The percentage that a plan will pay to access this reinsurance will need to be determined but it will give the government a taste of what insurers faced trying to price plans with unlimited lifetime maximum benefits. Pre-ACA insurer’s plans would have lifetime limits ranging from $2M to $6M depending on the region. That’s one reason the ACA’s unlimited lifetime benefit was so scary to offer for insurers.

What about the GROUP MARKET
Initially, it appears that FIRSP does not apply to employer sponsored plans in what’s referred to as the group market. The group market has traditionally been divided into 2 or 3 group sizes; small group (2-50EEs), mid-size (51-100EEs) and large employers having 100+ employees.  I would suggest that FIRSP is shortsighted if it only covers individual market and should be expanded. The average size of employers in the small group market is under eight (8) employees per group but employers with less than three (3) employees is common.

The FIRSP would help keep the premiums lower and stable in this market segment and therefore should be included. Of course actions to help in this market segment could cause employers to purchase their coverage directly from insurers and stay away from their state-run exchanges.

If FIRSP does not accommodate the group market then it would lead one to believe that the authors are not supportive of the small group market. That would lead one to believe that it is just a ploy to take a step closer toward single payer because the government would still be controlling the strings.

To include the small group market in FIRSP the reinsurance stop loss level could be increased above the $1M in the individual market and could be negotiated based on region of the country, size of insurer, PPO vs HMO and so forth. Again, a one size fits all approach does not need to apply.

The first draft of FIRSP leaves much to the states which is the Republican narrative these days but also suggests someone is saying “I don’t want to deal with it”. Leaving decisions to the states could be problematic for large populations like those in California or New York. It would be easy for the Feds to establish the means and manner in which reinsurance claims could be paid and thus avoid the liberal minded states tendencies toward single payer. Heck, let a good TPA handle it for the Feds and problem solved.

Your author thinks that FIRSP makes sense but at this point it is just a band aid on the overall flawed AHCA. Any amendment, all by its lonesome, is like a bolt-on accessory for your crappy car. If your car engine does not run then bolting on fog lights and flashy decals won’t help much.
Sorry for over using the metaphors.

But, what do you think? Let me know.
And remember, we are all in this together.

Mark Reynolds, RHU

Should expanding ERISA be a part of Repeal and Replace? Let’s discuss it!

April 6, 2017

The Employee Retirement Income Security Act of 1974, known as ERISA,  was enacted on September 2, 1974, and set the rules to establish minimum standards for pension plans for private employers. Probably due to in part to its name including “Retirement Income Security” people often think that ERISA regulates only pension plans, not true. ERISA also provides for the rules that impact employer sponsored employee health  benefit plans.

While its often misinterpreted, especially by legislatures and insurance departments, ERISA also included guidelines for individual employers designed to protect the member’s interests in their employer sponsored health plan. The term ERISA is often overused and misunderstood but ERISA could present a huge opportunity in the effort to reform (improve) our US healthcare delivery & finance system. To do so, it needs clarified, simplified and expanded.

Basically, ERISA made/makes it possible for individual employers to self-fund their employee benefit plans because it provides the regulations for “employee welfare benefit plans” which of course include employer-provided health care plans. Those employer benefit plans are designed to provide, through the purchase of insurance or in this case self insurance medical, surgical,  hospital care and other benefits caused by sickness.

ERISA’s overly broad and general language has made it difficult  for courts to apply the ERISA preemption provisions and provide clarity to employers, insurers, and state regulators. Basically, the preemption authority that ERISA provides says it “shall supersede any and all State laws insofar as they . . . relate to any employee benefit plan.”  There’s more and  I could go on but you get the point which is ERISA has “broad preemption” authority over state insurance commissioners and legislatures that could be both simplified and expanded to help resolve the dilemma of selling across state lines, lack of competition in many regions, cost and access for small employers.

The policy-wonks in Washington, at the direction of HHS, (and us) could easily “wordsmith” the ERISA language to overcome the pitfalls or obstacles that individual state insurance departments and legislatures have created. Here are just a couple ideas for the “wonks” to ponder:

  • Limit individual state’s authority through ERISA to simply monitor insurer financial stability and little else.
  • Prevent individual states from implementing burdensome regulations that stifle competition such as setting minimum or maximum stop loss deductibles.
  • Prevent individual states from regulating how re-insurers determine Aggregate factors in their stop loss plans.

An example of how expanding ERISA could help would be to overcome legislation such as California enacted known as Senate Bill 161. SB161 was created to stifle self-funding for employers with fewer than 100 EEs and push those employers toward the state-run exchange. SB161 mandates both the minimum Specific deductible (minimum of $40,000) and the Aggregate stop loss calculation ($5,000/covered member or 120% which ever is greater) both of which caused stop loss plans to be over priced and not competitive. SB 161 completely shut down the use of self-funding with stop loss on health plans for employers with fewer than 100 EEs. Therefore those employers no longer have access to lower cost opportunities for their employer-sponsored health plans.

There are ERISA experts, far wiser than your author, who may nay-say the ERISA expansion idea. But, why should it be difficult to modify a small piece of IRC code enacted 43 years ago. The healthcare delivery system has changed dramatically since 1974 so let’s simply add a few lines of code specifically aimed at solving the issues we face today.

Expand preemption language and other aspects of ERISA so:

  • Small employers are not arbitrarily restricted access to competitive alternatives.
  • Smaller insurers can compete with the big insurers.
  • More insurers are competing in areas where there’s just one insurer now.
  • Allow fully insured plans to easily sell across state lines.
  • Competition has a serious chance of lowering premium and overall costs

Let us know what you think. It’s a big subject that’s been misunderstood by many for 40+ years, including the courts and scholars, so there is room for discussion.

As I always say, we are all in this together, even though the conversations we hear coming from Washington DC seem to argue against that sentiment.
However, I remain confident that common sense has a chance to prevail because the premium paying public is fed-up with the current status and politicians will need your support in 2018.

BTW, thanks for the emails and positive comments. Talk soon.

Mark Reynolds, RHU



The need for Tort Reform is often associated with increasing healthcare costs and premiums. Is it possible to eliminate the affects of “defensive medicine” with tort reform legislation?

March 23, 2017

For the past 30 years we have heard the cry for Tort Reform. Is it true that providers practice “defensive medicine” out of fear of malpractice lawsuits and does it impact the cost and manner in which providers render care. Tort reform and malpractice awards in California have been somewhat contained because of Tort Reform legislation in 1987, often referred to as the “napkin bill” which refers to the initial process in which two CA legislators drew it up. But, has it helped hold down healthcare costs and premiums?

Don’t worry, this Post is not about that CA legislation or even potential legislative language that might be included in the new American Healthcare Act. Personally, I think it is possible to add straight forward language to the AHCA that would limit malpractice lawsuits but it might not control healthcare costs and thus might not help lower premiums.

Why would I suggest that we can create language in legislation to limit malpractice lawsuits without affecting healthcare costs? Because I am, as we all need to be, a student of human nature which helps us predict the effect of legislation intended to change behavior. Sounds silly but it’s a fact and let’s review why.

By human nature I am referring to the habits one establishes either knowingly or not in our every day life to gain or avoid a certain outcome. Providers fall into a unique category and regardless whether their actions are life-saving or preventive in nature a doctor’s practice will develop habits that may not be easily changed. In a doctor’s world a patient might be in pain plus someone else is usually paying the bill.

That isn’t to say that legislation can’t stop certain human activity completely simply by creating consequences to a certain action. For example, the risk of paying a $175 ticket and increased auto insurance rates for driving while talking on one’s mobile phone seems to have made an impact on that behavior.

However, we must also realize that a doctor’s request for more tests are often more than defensive. They may truly be diagnostic in nature to assist in treatment decisions which add a dimension not common in the habits for most of us in society. For years insurers, self-funded employers and other experts have complained that doctors run-up costs by over prescribing diagnostic tests and procedures, such as MRIs for example, simply to avoid malpractice lawsuits. This is why & where the term “defensive medicine” was  first muttered.

Doctors do have two additional variables affecting their decisions. One variable is the patient who may be expecting or even demanding a battery of tests that the attending doctor does not think are necessary. It’s  common for doctors to treat patients who are truly suffering and may have been for months or years. In those instance, how does a doctor say no to a patient’s demand or even pleading request for more diagnostic procedures. The patient wants the doctor to prescribe immediate pain-relieving treatment. Most of us will never be in that dilemma requiring us to decide the appropriate level of diagnostic cost necessary to determine the correct path of treatment.

The second variable is that in most cases a third party is paying for the doctor’s bill. Sometimes extra tests might seem worthwhile to a doctor if it makes the patient feel better emotionally. Who among us can honestly say we would not prescribe more evaluation even if the cost of that extra evaluation would not lead directly to a better decision. Saying “No” to a patient is not always easy and remember somebody else is usually paying the bill.

Imagine for a moment that you are a doctor who has been forced to practice defensive medicine for 20+ years. You’ve had your Malpractice Insurer scare you with tails of tort awards. You’ve attended countless industry seminars at which the fear of malpractice lawsuits is emblazoned on your brain. Or maybe you work for a large corporate practice that wants to avoid malpractice suits but also enjoys the extra revenues earned by extra diagnostic testing. Imagine any of those situations; then you go back to your practice Monday morning to see patients. How would you overcome the habit of practicing  “defensive medicine”?

But here’s a twist to this story about Tort Reform. I actually believe that after doctors have had time to practice their chosen “healing” profession, in a non-threatening legal environment, that the level of care as well as the cost and outcome of care would be better than it is now. I also think that, in time, patients would start to be more satisfied with the level of care they receive and may even learn to be more interactive with the doctor than they are currently.

I am sure this sounds odd coming from an admitted cynic of human nature. But, while human beings may be flawed in many ways I believe human nature, at least concerning our own healthcare, could begin to do the right thing.

We’ve discussed before that healthcare costs are the summation of the unit cost of care multiplied by the number of units of care consumed. When we talk about Tort Reform and the power of human nature it is easy to see that controlling the resulting value  of that equation is not an easy calculation.

It sounds naïve to state publicly that a solution to healthcare reform which combines patients and doctors and payers then adds big pharmaceutical & medical device companies, plus attorneys and legislators would be an easy system to reform?
However, I think it is possible as you have read in previous posts.

The hard part will probably be convincing legislators that they should want to make a difference and improve our healthcare delivery system rather than just making a difference for their own career or party. Sorry for that one last bit of cynicism.

We still need to discuss what Tort Reform language can be fashioned into the AHCA. We’ll tackle that over the next couple weeks.

Let me know what you think.
And remember, we’re all in this together!

Mark Reynolds, RHU


Can RBP “Reference Based Pricing” help reduce premiums. Absolutely, but there are additional advantages, as well!

March 2, 2017

Reference Based Pricing “RBP” is a method or calculation for setting the reimbursement levels and thus the payments to providers on the services they provide. It is not new, in fact one could say it has been around since the implementation of Medicare back in the 1960s. But few people have heard of it, many people misunderstand it and no one is discussing it in Washington for addressing healthcare reform. So let’s see how it works and how it would help.

It’s referred to as Reference Based Pricing because the reimbursement to providers is determined (based) on a percentage relative to what the Federal Government would pay providers under Medicare. For marketing purposes some try to use clever descriptions such as Value Based Pricing or Virtual Pricing but the basic concept is fairly simple.

How reimbursement levels are set for Medicare
Medicare and Medicaid payments to providers are determined by CMS. The Omnibus Budget Reconciliation Act of 1989 introduced a new way to determine reimbursements to providers. It was called the resource-based relative value scale (RBRVS).

The intent was to create a uniform and objective payment system to address the large payment disparities produced under the traditional usual, customary, and reasonable (UCR) standard. The new scheme was adopted over a five-year transition period. The reimbursement level factors in both the CMS determined cost of a service rendered by geographic area plus a reasonable profit level for providers. Medicare and Medicaid (Medical in California) pay for healthcare for three large groups of Americans: Seniors (65+), folks under 65 who are qualified as disabled, and the poorest of our citizens (Medicaid). Due to the populations it covers, Medicare/Medicaid are the largest payers of healthcare services in the United States.

Obviously, Medicare wants to keep its claim costs controlled, at least tax payer hope so,  but Medicare also realizes that providers must be paid fairly  in order to  accept Medicare patients. This symbiotic relationship between payer and provider is a benefit for healthcare providers. In addition, the majority of providers will accept Medicare level reimbursement because providers don’t want to miss out on that huge base of potential customers. Finally, with this market power, Medicare can set its reimbursement levels lower than most if not all PPO plans and providers will still accept it.

Now apply RBP to private plans
If Medicare can control its costs as described above then why not apply RBP to private plans for the benefit of Individual & Family Plans and for employer group plans. RBP is being tried on Employer Self-funded or Stop Loss plans in many areas so it is not new but it is also not wide spread or common.

Typical reimbursement levels applied on private RBP plans are 125% to 150% of Medicare which means if a doctor would accept $100 from Medicare a private plan would pay $125 to $150 for that service. Sounds reasonable doesn’t it?

This RBP method may not save insurers a great deal on Office Visits or simple x-Rays compared to PPO plan discounts but it makes a huge difference when applied to expensive services such as MRIs & CT scans, surgeries and treatments for cancer and other serious illnesses. I have witnessed premium levels reduced 15-40% compared to similar PPO plans simply because providers would be reimbursed using RBP.

Remember from earlier posts in which we discussed the impact of access vs. costs. If premiums can be reduced simply by paying providers at a level 25% to 50% higher than what the same provider would accept from Medicare then don’t you think we should try it?

How have provider’s reimbursement levels been determined traditionally?
Applying discounts to provider’s retail charges in private plans has occurred in four general methods and date back to 1973 and in some circumstance even earlier.
Those three methods are:

  • PPO or Preferred Provider Network– This method was allowed by laws enacted back in 1973. These new laws allowed providers to group together to set pricing. That sounds simple but without the PPO Law of 1973 it would have been unlawful for providers to share and set prices due to anti-trust and collusion laws in existence.
    • As one expects in a capitalistic free market society new companies were started for the sole purpose of pulling individual providers together into a “network” which was then rented to health plans as a PPO Network. The health plans wanted to rent the PPO networks to make it easier for plans to set premiums and pay claims. A new market was thus created.
    • As more companies built their own PPO networks to rent to health plans it caused competition and helped keep reimbursements to providers controlled.
  • Retrospective Reimbursement– This method, created in the late 1980s, help’s control larger claims and is usually unseen by members. This method negotiates with providers after a claim is incurred in an attempt to further reduce the cost of claims  of a larger dollar amount. If a plan can negotiate a hospital/surgery bill down from $300,000 to $250, 000 then it is a worthwhile incentive.
    Again, companies were formed to help plans negotiate these larger cost claims.
  • UCR or Usual, Customary & Reasonable– this method, the oldest method, is applied by collecting what doctors charge in every zip code in the US for every service code under which claims can be submitted. In other words, in every zip code it is determined what the average provider charges for every service available. Of course, there are private companies that collect this information and sell it to plans.
    Then plans can use this information to determine how much their plan will pay on a claim by paying a percentage of the average cost for a zip code. It’s often called a “cutback” and if you have ever gone “out of network” on a PPO plan then you have seen this method applied to your claim.
  • Capitation- This is how HMO plans pay providers. A set amount is paid to a provider each month regardless if the provider sees any patients. As everyone knows, on HMO plans members declare their PCP (Primary Care Physician) which is the provider the member must see first before going to a specialist, etc. That PCP gets paid to manage the care for the patient and gets paid the capitation fee regardless if the patient is seen or not.

Those four methods of setting reimbursements to providers are still the primary tools for controlling what providers get paid. To an outsider it may seem odd to set reimbursement levels in a free market country but can you imagine what providers and hospitals would charge if there was nothing in place to set reimbursements. Yikes!

Now Back to RBP because there are advantages in addition to controlling costs
If RBP becomes more prominent among plans then we may see several additional advantages in addition to lower premiums. Here’s a couple:

  • When RPB becomes more prominent or even common then it will begin to function as a PPO by default. If providers accept the RBP reimbursement then you create a virtual PPO which will eventually provide more providers for your choosing.
    * Remember, “If you like your doctor you can keep your doctor”? Well in a virtual PPO setting its possible that you will be able to see any doctor you choose. That’s one.
  • Out of Pocket costs for members will be lower. Your plan will still have a stated OOP but if your provider of choice accepts lower reimbursements then your out of pocket on each service will be lower and your money will last longer. That’s two.
  • Over time providers learn to be more efficient and will set their budgets based on these RBP payment schedules which can further stabilize pricing. That’s three!

It’s a simple statement but the cost of healthcare can be reduced to the simple equation of “Unit Cost of Care” times the number of “Units consumed”. If we can reduce Unit Cost then its a start.

More plans are using the RBP method for reimbursement today than 5 years ago and the trend is toward even more. Most of the growth is in single employer plans that are self-funded by the employer. Clearly employers, which pay the lion’s share of healthcare cost in the US, are incentivized to control cost. So, just as the federal government is trying to control Medicare cost, employers are finding RBP helpful to control their cost.

If carriers could implement RBP on fully insured group plans as well as Individual & Family Plans then the growth in RBP would quickly establish a true virtual PPO Network.

Will legislators interfere in this RBP trend that is growing every year? Probably, but it’s hard to argue with the results. If healthcare cost is Unit Cost times Number of Units Consumed then we must either reduce the unit cost or the number of units consumed. Which do you think would be easier to reduce?

Let me know what you think.
And remember, we’re all in this together!

Mark Reynolds, RHU

Why is there opposition against insurers and health plans selling across state lines?

January 12, 2017

It’s easy to do plus it can improve quality and pricing while maintaining compliance.

From our last post, the idea of GI with a common sense approach to Pre-ex periods sparked some interesting emails. Newer brokers in the business for 5 years or so thought it was confusing. Experienced brokers in the business longer and certainly those prior to 1992 understand the logic and agreed with the idea for the most part.

In fact, many believe that if the Bush administration would have introduced GI with Limited Pre-ex at the same time that HSAs and HRAs were codified back in 2002 that we might never have heard of the Affordable Care Act. It wouldn’t have been needed!

Moving on, today let’s discuss the selling of health insurance across state lines. Many experienced insurance folks believe that this might be the toughest of all issues to address. It may sound easy to the non-insurance person but dealing with various state DOIs is never easy.

First obstacle many will say is that there is no proof that plans sold across state lines for example, from Iowa to California, will be any more competitive or appealing. But an even bigger obstacle is the political nature of multi-state DOIs “territorial-stay off my turf” attitudes that may feel obligated or find it opportunistic to interfere.

Some DOIs may argue that multi-state plans will not be consumer friendly or they will be wrought with trouble because of various issues such as specific state mandates and other regulatory rules.
To that attitude I say baloney.

Health plans can easily be sold across state lines in an internet connected shop-for-anything and buy-anything by smart phone world . Here’s why:

  • Brokers will still be the delivery system to insure quality and appeal
  • Individual states can still regulate brokers and carrier solvency
  • ERISA guidelines can be modified to overcome DOI objections
  • Plus ERISA (DOL) is quite capable of regulating compliance.
  • Just ask any TPA!
  • Plans would be built to serve the public not the political bureaucracy
  • It would all be GI so if a plan is not appealing it can be replaced
  • Eliminate wasteful mandates (last count there were over 1500)
  • Competition between insurers would increase driving premiums down
  • That’s just a short list and I know there are a few more details

The opposition may come from those determined to see a single-payer system. However, it is clear to see that the ACA is failing and did so mainly because it tried to takeover healthcare rather than just improve affordability and access to healthcare.

We need new ideas injected from people with real world experience like TPAs, brokers, consultants and smaller insurers. Make no mistake those opposed to fixing the ACA will object to selling plans across state lines and even some in favor of repeal may be opposed.

But if the goal is to deliver a real solution to our current high-price, low-quality, no-transparency healthcare system then we need to be guided by principles that deliver lower cost, better benefits and guarantee access.
We need to allow for the selling of health plans across state lines.

I am interested to hear your feedback on this idea because it’s complicated and controversial plus there are many details to work out. Let me know.

Next post will be either transparency or pricing ideas. Please stand by.
Remember, you have a new email at which to reach me.

Also remember, we are all in this together.

Mark Reynolds, RHU



New Era for Healthcare Solutions

January 6, 2017


She’s not exactly Employer Driven but certainly adorable.

January, 3rd 2017

We have seen Healthcare Reform, now we must fix the Reformed

Today, we start a new ERA in the life of this Blog. The intent has always been to help brokers and employers understand the changing healthcare market but now we have a renewed sense of excitement, direction and energy.
BTW, you have a new email at which to reach me-

We know that with a new administration there will be changes to healthcare and we all remember how confusing and unsettling the years 2010-2014 were for everyone. Over the coming months we will address dozens of issues and ideas related to fixing healthcare and its financing. Since we know the ACA is in for some modification, if not repeal, then the discussion will center on its replacement.

In the coming weeks we will discuss replacement issues such as:

  • Plan designs
  • Premiums & pricing
  • Pay or Play mandates
  • Taxes & fees
  • Exchanges
  • PPOs
  • Transparency
  • Cross state plans
  • Pre-ex conditions
  • Group plans
  • GI for Individual Plans “IFPs
  • and much more

Today let’s address a topic that will be used or rather misused by some to make headlines, scare the public, and complicate any changes. It is the topic of “Guarantee Issue (GI) and pre-existing conditions” for IFPs (Individual & Family Plans). The ACA provided for GI but relied on the mandate for enrollment.

The mandate for citizens to get covered was supposed to push everyone into healthcare coverage which would theoretically make it easier for insurers to price and profit from their plans.  As you know, not only did premiums increase astronomically to the average person on IFPs, (and small employers too) but plans were built with “skinny” PPOs and benefit designs that left members with a lot of out of pocket.
Resulting in the opinion – “why pay for insurance that doesn’t pay anything?”

Plus, reports show that 20-25 million citizens still don’t buy health insurance. So, the individual mandate did little to help.

So, let’s agree that GI is absolutely required for IFPs. That means there are two ways to address affordability:

  1. Make the penalty for not being covered substantial such as $3000/yr or 9.5% of gross annual income. Would that be sufficient to drive citizens to buy a health plan?
  2.  Allow a common sense and reasonable Pre-ex condition. We can look back 25 years to see a model that can accommodate this goal. It’s simple and it’s defendable. Here it is:
  • Make all IFPs be GI, but with a reasonable pre-ex period for late enrollees.
  • First to clarify, if a citizen has coverage but changes to another plan there is no pre-ex period. As long as coverage has no gap longer than 60 days – No Pre-ex.
  • But for late enrollees, a one year pre-ex period which will allow insurers to stabilize premiums yet guarantee access to anyone wanting to buy a plan. Call it a 12/6 pre-ex.
  • If a citizen does not buy their own plan when first eligible s/he could still get GI at a later time but with a one year Pre-ex for illness treated during the previous 6 months. The illnesses would be defined so no carrier shenanigans can occur.
  • This is the way it was addressed before HCR in the 1990s. If those IFPs had been GI then the issue of access would never have been brought up.
  • This would address the human nature tendency to “buy insurance after your house is on fire”. It would also allow insurers to develop competitive pricing.
  • Last and maybe most important. It’s a defendable common sense approach. All Americans could support this approach as fair, especially when premiums are reduced and stabilized! Americans would get behind a policy that had teeth in it for to penalize those trying to slide by. It would also be a good talking point on TV News.

As we discuss these issues in the coming weeks I look forward to your feedback and your ideas. Please send me your ideas! We can’t trust Republicans to get it right any more than we trusted the Democrats in 2009 and 2010. Let’s make sure that the wisdom and working knowledge of brokers and employers is heard.

I look forward to starting up our discussions again.
And remember, we are all in this together.

Mark Reynolds, RHU                                                                                                                                                        559-250-2000

The Media has started its daily drum beat criticizing rate increases as carriers work to implement the Affordable Care Act. Don’t be fooled!!

January 16, 2013

January 16, 2013

Beginning just after the façade known as the “fiscal cliff”  lost its media luster the national media began its blitz of stories concerning health insurance carrier’s request for rate actions across the US. Actions that are needed, by the way, as the american health insurance carriers prepare for 2014 and the final stages of ACA implementation. As I say above, do not be fooled by this.

This is the media’s collusive effort, with supportive Democrats, to demonize the insurance carriers and thus push our citizens into giving state legislators and state insurance commissioners absolute rate authority. Media stories will criticize insurance carriers as being greedy and try to make the case that the premiums asked for by carriers are not necessary.

What other industry on the planet is told what to produce, how to offer it, what must be covered including experimental treatment, threatened about their product, then restricted to what the company needs to charge for the product. None.  No other industry except the american health insurance company.

Two things to remember:

  1. Carriers are mandated to accept individuals guaranteed issue with no pre-existing condition limitation, with mandated benefits for maternity, preventive, and lifetime limits. But citizens are not forced to buy the product until they get sick and will then be willing to buy the coverage. No, I did not forget about the Mandate Tax Penalty but get real…is $95 per year tax going to encourage any person to buy insurance before they need it?
  2. Also, because of the massive mandated benefits, restrictive pricing, no underwriting, etc, the carriers really have few options to consider when pricing their product. They are not allowed to give too many options and of course if they misprice their product and run out of money then who will be there to bail out an “evil and now mismanaged” insurance carrier. Answer…NO ONE.

So, do not be fooled by the daily flow of news flashes coming across your email that paint a picture which makes the carriers look like they are being excessive. Also, just as in 2009, when the infamous Anthem increase of 39% pushed HCR forward, the news flashes are spotlighting carrier request for their individual products not group. The ACA restrictions on individual plans are the scariest to price because of  what I said above regarding mandated benefits and people not forced to buy.

Group products will certainly see increases because the regulations and restrictions coming in 2014 force it but the media is trying to fool the American public into thinking the double digit increases about which it is reporting also pertain to group.

Don’t be fooled and don’t miss an opportunity to challenge what you read.

Finally, if given the slightest chance, we should defend the  american health insurance companies which are being forced to do what no other industry in the world is forced to do.

The ACA is real and it is going to be implemented. But, that does not mean that the battle to do what is right is over. Don’t give up and don’t give in!

Thanks for listening.

Mark Reynolds, RHU

HRAs Are Not Affected by the ACA’s $63 per EE per year Reinsurance Fee

January 16, 2013

January 9, 2013

HRAs are, and have been, misunderstood by many people for years and that continues to be the case regarding ACA’s $5.25 PEPM Reinsurance Fee. The point of this message is to inform you and confirm for you that HRAs integrated, or “wrapped” with a group health plan are not affected and will not pay this fee.


Many have not heard of the Three Rs (3Rs).  The ACA established three risk-spreading programs (hence 3Rs) to provide payments to health insurance issuers that cover higher-risk populations.  These three programs which will be effective in 2014 are:

  • Transitional Reinsurance Program
  • Temporary Risk corridor Program
  • Risk Adjustment Program

These three programs, one of which is temporary, are intended to help spread the risk created by the ACA and the newly insured for the issuers of coverage.

This story hit the news a few weeks ago as another fee with in ACA. You may recall the headlines “ACA has hidden $63 per year fee for employers”.

Once again…

This $63/yr, $5.25/month per employee fee does not apply to HRAs that are integrated with a group health plan.

So, the employers providing their group health plan through BEN-E-LECT’s EDHP™ Plans do not need to worry about this fee.

However, there will be other fees to worry about so watch for that information throughout the coming weeks.

Mark Reynolds, RHU

Employers are required to give members 60 day notice of any material plan modification (Mod). Here’s the fine print…only for mid-year modifications.

January 16, 2013

January 3, 2013

In my opinion, one of the biggest issues to face brokers and employers in 2013 will be ACA’s rule that employers must give members at least 60 day written notice of any material plan modification. We say this because this rule is unknown to many, misunderstood by most, and interpreted differently by some.

First, let’s clarify that this 60 day rule does not apply to modifications made at time of renewal on the group’s plan anniversary.

So, having clarified that it applies to mid-year mods only, let’s bullet a couple items.

  • Material mods include both increases and decreases in benefits
  • Change in premium is a material mod
  • Small employers may be impacted more than large employers
  • Changing from one carrier to another mid year is a material mod
  • Some carriers are defining a mid-year carrier change differently than others

We state that this will be a big issue because history tells us that people, and by that I mean employers, particularly small employers, don’t usually make their health plan decisions 75-90 days in advance of the desired affective date. I have heard many people state that small employers will just have to change their ways about making timely decisions. I agree but I am not sure that it will happen that way.

As brokers counsel small employers about new plans it may become common for brokers, carriers, and TPAs to let employers assume the responsibility and therefore liability of complying with this rule. Let’s face reality, if a small employer can comply with Essential Benefits and reduce its cost 25% by enrolling on one of BEN-E-LECT’s EDHPs™ how are brokers going to stop that.

BEN-E-LECT will comply with the carrier’s guidelines, as it always has, but do what the employer requests. The employer can simply sign BEN-E-LECT’s newly created enrollment form called the Statement of 60 day Notice Compliance and away the group goes.

One final note, this notice was/is intended to benefit our citizens who are usually uniformed or disinterested. So the result of this form actually makes it harder for employers to improve benefits and do the right and moral thing for their employees. Watch in the coming days for more information about how carriers are applying this 60 day rule. We have already witnessed two large carriers handle a mid-year new enrollment in a diametrically different way.

More to come, but don’t worry because we will keep you abreast of the goings and comings of these rules.

Mark Reynolds, RHU

Some Thoughts About Healthcare Financing And It’s Reform

January 16, 2013

October 15, 2012

Summary of Coverage and Benefits (SBC): makes one feel so comfortable and informed, doesn’t it…It may be well intended but misses the target by a longshot for HRA or MERP plans.

If I told you that I would send you a federally regulated, PPACA required outline of what your benefit plan covered to be called your Summary of Benefits and Coverage, you might expect to receive a document which would clearly and easily inform you of the benefits provided by your medical plan. Well….upon receipt you would be sorely disappointed.

PPACA’s intent of providing a document to help members understand their benefits and compare against other plans was well intended. The fact is that this document does just the opposite. For a society that gets its information from “Live with Kelly and Regis” and “Entertainment Tonight” the SBC is to long and too confusing, and in most instances…inaccurate.

Members are used to seeing a two, possibly three page HRA/MERP Schedule of Benefits with three columns on it. First column identifies the benefit i.e.: Office Visit, the second column states what the member pays, and the third column states what the plan pays. There are variations, of course, and RX, out of pocket, and out of network may be illustrated differently but members can easily identify their benefits and what their costs might be if they use their plan.

Since October 1st, our office has created several thousand SBC formulas and distributed hundreds of finalized SBCs to our web portal, EMPOWR™, to help our clients meet their PPACA SBC requirements.

Members require an easy to read and understandable outline of their benefits, which is why BEN-E-LECT will continue to create and distribute our standard Schedule of Benefits in addition to the SBCs.

Our advice to our Broker Partners is: don’t use the SBCs to explain the member’s plan and encourage the employers to not use the SBC as well.

Health insurance and medical plans always have and always will confuse folks so, while being compliant, we all still need to do what we can do to help members understand and access the benefits their employer provides.