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

Why be like everyone else?

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

Email: jseiler@ssbenefits.net www.ssbenefits.net

Volume 4 Issue 12 Street Talk April, 2003 Issue


The cost of HIPAA Compliance does take its toll. One of the more well known TPAs in Central Illinois, Employee Benefits Corp., (Pearl and Assoc.) was sold to HCH Administration of Peoria, reportedly due to compliance costs.

Weiss ratings said the slumping economy has hit insurers as hard as the rest of the world. Profits reportedly were more than 60% less from 2001 to 2002 and were lower than any other 9 month period in the last ten years. Investment losses have forced companies to dip into capital to maintain required reserve levels.

Maryland regulators have rejected Wellpoint’s proposed acquisition of CareFirst. Regulators said the $1.37 Billion bid was too inexpensive. The insurance commissioner also said that Wellpoint’s record of stingy reimbursements to doctors and hospitals would have a detrimental impact on the quality of healthcare in Maryland! What, they apparently have no Medicare patients in the state?

The Managed Care Information Center reports that the number of HMOs has dropped nationally from 849 in 2000 to 713 at present. They report the number of PPOs increasing from 456 in 2000 to 755 in 2002.

According to Harris Interactive data, the publication of ratings and rankings of hospitals, physicians and health plans has almost no influence on the choices that consumers make. Harris said that many millions have seen the lists, but that less than 1% of people had changed providers as a result. However, Harris does say that plans and providers that received unfavorable scores have taken steps to improve.

Magellan Health Services, the nations largest mental health provider has filed for Chapter 11. The company currently contracts with 2,300 government agencies, unions, businesses and insurance companies. Chances of emergence are apparently considered good since Aetna renewed its contract with Magellan through 2005.

The American Diabetes Association reports that 16M adults have Type 2 diabetes that results in a cost of $92B, or $5,750 per adult year in direct medical costs. Although the total dollar figure is staggering, the cost per person is one of the reasons disease management programs have trouble quantifying savings.

According to an absence management survey by EBN and consultant JHA, only 18% of 1,200 respondents actually track the costs of absences. Many track only direct costs and not costs linked to drops in productivity.

The FDA has issued a warning to Rx Depot, a pharmacy that imports Canadian Rx, saying the company is violating federal law. In a related issue, EBIA reports that reimbursement for drugs imported from Canada is likely not legally allowed under FSA plans because, according to the FDA, those drugs would not have been legally procured.

Blue Cross of Illinois is introducing BlueEdge plans for CDH on July 1st for ASO groups and groups over 151 employee lives. They also report they are beginning to use performance-based incentives for provider reimbursements.

According to an independent study by Allan Baumgarten, Chicago area hospitals lost money on patient care in 2000, but offset those losses through philanthropy and investments. Occupancy levels were up to 61.5% from 55.9% two years earlier. HMO’s also reported lengthier hospital visits. BC had 200 days per 1000 compared to 191 the previous year. Aetna went from 176 to 206 and Urbana’s Health Alliance Plan went form 214 to 224 days per thousand. Enrollment in HMOs dropped to 16.8% of Illinois residents from 18.3% in the prior year.

The Gilead Center in Chicago says that there are 600,000 people in Chicago (22%) from birth to age 64 who don’t have health insurance. Nearly one in five households with an income greater than $75,000 has at least one person without insurance. In Chicago Metro, whites lead the races of uninsured at 324,395 vs. Hispanics at 161,875. Males (366,778) lead females (286,589) and the age group with the most uninsured was 30-49 with (253,708).

CDH with a new twist is coming to the market according to EBN. Insurers are offering the plans to smaller companies with a kicker. Aetna and HealthMarket have a plan that allows rollover of the HRA funds that are funded through premiums. However, when an employee leaves the program, the funds revert back to the insurance company. Let’s attempt to get this straight. The employer buys a high deductible plan and gets lower rates for the higher deductible. But in essence the employer also pays a premium that funds reimbursement accounts. If employees don’t use the accounts, the insurance company keeps the money. Now isn’t that innovative?

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