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S&S Benefits.....Opinion, Hearsay & News Review

Why be like everyone else?

S&S Benefits Consulting 219 Darien, Dundee, IL 60118 Phone: 847-428-5353, Fax:847-428-9876,

Email: jseiler_ssbenefits@interaccess.com

Volume 1 Issue 5-Street Talk April 2,1999

HAppy Easter! May your basket be filled!

WE are only three months away from that all important July 1 renewal date when another third of the group business renews. Take a note to see that you are getting started now if you have a July renewal, so those last minute negotiations arenít beginning at the same time you should be making the big decisions. We at S&S try to have at least a pre-renewal on your desk 60 days in advance. Remember, if you are negotiating at the last minute when the underwriters are swamped with other renewals, you may not get the best of hearings, especially if your experience is running poorly. Many larger clients are all but done with their July renewals now.

IF you have a Medicare Risk contract for your retirees, this might be of interest. According to Managed Care Week, some 90 HMO plans have dropped out of Medicare or reduced their services this year. This has affected some 400,000 beneficiaries. The HCFA wonít give the HMOs the ability to cut some expensive benefits and increase premiums. In the meantime medical care costs are on the rise and these plans only received 2% increases for 1999. Of course, most of us could tell that the plans were under priced to begin with, so this should come as no surprise.

WEllmark (Blue Cross & Blue Shield of Iowa and South Dakota) will repay more than $6.8 million to about 200 self funded health care plans as part of an agreement with the DOL according to BI. The problem has long been remedied according to Wellmark officials. The Blues plans billed self-funded plans based on a percentage of paid claims, without the discounts that they had in place! We seem to recall that was probably happening somewhere else too. Do you remember 1 % administrative fees?

MOre Blue news as the Blues of Texas (who are owned by BC of Illinois) are going through the approval to buy Harris Methodist Health plan in Arlington, TX. That plan recorded 1998 losses of $49.6million according to BI. Membership battles and profits again seem to conflict with each other. Meanwhile the Blues of Missouri are still trying to gain insurance department and now court approval to create a for- profit subsidiary called RightCHOICE.

And Anthem is buying the Colorado BC/BS plan for about $165 million. This will enable that plan to avoid a financial crisis according to the chairman of Indianapolis based Anthem.

FOundation Health Systems is selling the Colorado HMO that gave it itís start, plus it is planning to sell itís operations in Louisiana, NM, OK, TX and UT and reduce the companyís debt.

IN other HMO news from BI, United HealthCare reported a $166 million loss for 1998 and Kaiser reported a $266 million dollar loss for 1998 while Oxford reported a $624.5 million net loss.

WIth all this good (sic) news about how the HMO market is doing , is it any wonder that rates are going up? Did all the supposed healthcare analyst experts think they could keep giving away benefits forever?

NOw NCQA is going to require health plans to provide participants with an independent outside review of treatment decisions before receiving NCQA approval. And the Pacific Business Group on Health (PBGH) says it is looking for ways to provide more money for "quality" providers. The big question, even for NCQA, is how to define quality. We think that is especially difficult for any situation, not just California.

Go ask your employees or a couple of friends about two competing hospitals close to each other and it will be hard to figure which one has more "quality." Like beauty, it is many times in the eyes of the beholder and cannot be defined. Even the data sets, which would need to be used to define quality, would differ from one expert to another. Are HMOs really just chasing the ghost of patient choice available in a PPO?

COngress continues to muck up healthcare with patient protection legislation which passed a Senate committee in March. If it heads to the Senate floor expect Kennedy and lawyer friends to allow suits for punitive damages for self funded plans. Lawyers are just licking their chops and buying larger wallets. Now we will need not only state, but also national tort reform. Chances of passage of tort reformÖ.Zip. Youíll be paying the price, benefit cutbacks would follow as discounts disappear and contributions will have to go up, thus increasing the uninsured problem. Leave it to Congress to not understand what happens when we squeeze the balloon.

S&S Benefits Consulting is a partnership of benefits professionals with over 50 years in the health and welfare business. We specialize in the group business and donít try to sell you services where we have no expertise. If we canít help you, chances are, we know who can.