Hearsay & News Review
Group has inked an $8 billion agreement to buy Pacificare. The deal is expected
to close in late 2005 or early 2006. The deal will require regulatory and
shareholder approval. The deal helps United address the needs of older Americans
due to PacifiCareís strength with the Medicare market.
FTC and Evanston Northwestern Healthcare fight has had closing arguments and the
FTC Administrative law judge is expected to rule by the end of the summer on the
issue of whether the acquisition of
was anti-competitive. The FTC is trying to force ENH to divest the hospital.
The FTC argued that the dealt to acquire
resulted in the raising of insurerís rate payments to the system by 40%-60%
vs. prior annual increases of 4%-8%.
has acquired another TPA, Administrative Services Group based in
The TPA is more commonly known as Commonwealth Administrators. Fiserv already
owns Benefit Planners, Benesight, Fiserv Health, Harrington Benefits and Wausau
Benefits along with Avidyn Health. They continue to let the TPAs operate
in Crainís July 11th edition portrays Hewitt as a possible takeover
target. Since the stock has dipped 15% to $26, speculation is that a company
such as IBM or HP may want to make a splash into HR Outsourcing on a relatively
inexpensive basis. Hewitt employees and partners control 53% of the outstanding
shares according to Crainís. The same article mentioned ACS buying a majority
share of Mellonís HR Consulting unit and EDS (Ross Perotís company) buying a
majority stake in Towers Perrinís HR unit. As we mentioned in an earlier item
this year about these outsourcing companies, our personal experience shows that
outsourcing the HR functions appears to be the way to go if you really dislike
federal definition of marriage is the union between a man and a woman. This
definition defines the tax consequences of an ERISA plan offering coverage for
same sex domestic partners, regardless of state laws to the contrary. COBRA does
not apply in the event of divorce or death of a same-sex spouse. Reimbursements
from flexible spending accounts are only permitted for medical expenses of
opposite sex spouses and legally dependent children. Pre-tax deductions must be
treated as taxable income for same-sex spousal premiums and the employer portion
of any employer contribution is not tax deductible unless the same sex spouse
meets the legal definition of being a dependent. If a plan is self-funded and
the same-sex spouse received benefits of $150,000 for something such as a kidney
transplant- the entire $150,000 may become taxable to the employee. Just some
notes for those employers considering adding this option.
to a report by the
on Addiction and Substance Abuse at
, the number of Americans who admit abusing prescription drugs nearly doubled to
over 15 million from 1992 to 2003. The study did not say if the measured stress
level of employees had doubled over the same time period. Of course, we also
never knew how much we had wrong with ourselves until we experienced all the
drug company direct to consumer advertising.
is converting its pharmacy claim processing from Caremark to Argus in September
to avoid competing with the services of Caremark for processing claims on a
self-funded plan. Humana members do not interact with either processor, since
they are used solely for processing and data functions of Humana contracts.
Humana says the process of change will be seamless and not affect employees or
employers. When have we heard that before?
Scripts has announced that they are buying specialty pharmacy company Priority
Healthcare for $1.3B. Blue Cross/Blue Shield of Tennessee has announced an
agreement to purchase Gordian Health Solutions which provides disease management
Association Health plan bill passed the U.S. House and awaits Senate action.
Insurance carriers such as Blue Cross are lobbying against passage and TPA
associations are lobbying for passage of the bill. Back in the 1980ís there
were many of these types of plans. They were known as MEWAs (Multiple Employer
Welfare Associations). Most states outlawed MEWAs on anything other than a fully
insured basis, simply because so many of the plans failed. Most carriers will
not write such plans on an insured basis (and there are far fewer carriers now
than there were in the 1980s). Many
of the failures were due to corruption, or improperly underwriting and rating
the plans. The failures had many companies scrambling to find insurance while
their claims under the MEWA plans went unpaid. There are positives and negatives
to these plans and perhaps they could succeed with proper regulation and
watchful eyes on the funding and reserving, so it will be interesting to see how
this plays out and who insures any such plans if the legislation passes.