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

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 December, 2003 Issue

Unicare has announced that it received a rating of excellent from NCQA. They have also closed the Rush-Pres St. Luke's doctors to any new HMO members or to any members making changes. The docs will stay in force for existing members and the PPO. Meanwhile, Advocate and UHC continue to fight it out in Chicago. UHC continues to enter into direct contracts with Advocate docs.

How does the public feel about the health system? In the annual Health Confidence Survey, 40% still give marks of Good or better and another 30% say it is Fair. Those who rate the system poorly has risen from 15% in 1998 to 28% in 2003. Of those with employer based health, 50% are at least very satisfied and another 40% are somewhat satisfied.

A Harris survey says that 55% of employers offer exercise program benefits and 18% of employees participate. Diet and weight loss programs are offer by about 45% of employers, while 6 to 7% of employees participate.

Blue Cross of IL has created a new plan for the Chicago Public Schools and City of Chicago. Large copayments will be required for members to use NW Memorial Hospital, Rush, and Advocate Christ and Lutheran General hospitals (among others). For all customers, Blue Cross of Illinois is changing mail order copayments from one copayment per prescription to two for PPO plans.

First Health shares fell as much as 24% upon announcement that they will gain fewer new corporate clients and lose some higher margin clients, resulting in earnings stalling for the year. Cigna has announced a quarterly profit after overcoming a huge loss from a year ago. However Cigna is selling its pension and investment business to Prudential Financial and Moody’s has reduced its rating of Cigna’s credit to just one rung above junk status (Baa3).

Express Scripts has reported higher profits on increased utilization of mail order and generic prescription drugs. The Rx business in general continues to thrive. AdvancePCS has been chosen to administer a discount Rx card for the AAA. The savings are expected to average 20% off of retail.

According to a Milliman survey of 79 HMOs, 46 are saying that they either have or will be developing a consumer directed product. We find that to be the antithesis of HMOs and further evidence of the lack of credibility to the theory that HMOs can cut costs through utilization savings. It appears that the only valid savings in these plans may well be the restricted networks and non-payment for out of network benefits. However, these are usually offset by the wastes of capitation and larger administrative costs for HMOs.

The number of inpatient days per thousand was 260 in 1996. It then lowered by year until the year 2000. The average number of inpatient days per 1,000 members has now risen from a low of 230 in 2000 to 256 in 2003 according to Milliman.

The American Association of PPOs reports that 49% of employees are in PPOs, with 31% in HMOs and 14% in POS plans. Just 6% of insureds are enrolled in indemnity plans.

Hewitt Associates has recently been moving some of its FSA customers from CBCA and other administrators to an in-house plan. We wonder if they failed to announce that they are opening a call center in India to handle inquiries from their FSA customers? Nothing like paying the big bucks to Hewitt for service from New Dehli. Verizon and Boeing will be very happy?

After letting go many sales staff members, CBCA appears to be on the road to self-destruction. They are also putting customers on one of the inferior claims systems they own and abandoning their better claim system. Apparently large numbers of clients from acquired TPAs are bolting whilst management is bumbling.

The MGU RE Moulton has been sucked up by their owner, American United Life (AUL) under the auspices of One American Financial Partners. AUL was RE Moulton’s lead carrier.

UHC is reducing its payments on non-network claims nationally to the system that they’ve been using in Illinois (basically limiting covered expenses to what they would be on an in-network basis).

New MSA limits for 2004 are individual deductibles ranging from $1,750 to $2,550 with family deductibles at $3,500 to $5,100. New HSA legislation has passed as part of Medicare reform. Both employer and employee will be able to fund HSAs with pre-tax money that can be rolled over. Deductibles can be as low as $1,000 individual and $2,000 family.

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