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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 IF YOU WOULD RATHER RECEIVE THIS VIA E-MAIL !!!! www.ssbenefits.net

Volume 4 Issue 2 Street Talk February, 2002 Issue

So many changes in so little time leaves a lot to remember. We’ll try to keep you up to date. First Andersen and Enron, then Mike Segal from Near North on fraud charges. Not a good year for the big time experts in Chicago.

Fortis has completed its acquisition of Protective Dental Care for $300 million. Protective was known as an outstanding provider of voluntary indemnity dental benefits.

Forbes magazine has ranked Wellpoint as the best large health insurance company for 2001, 53rd overall of all companies in America. Remember that this ranking rates more to finance than to any other measure. Cigna plans to cut 2,000 jobs (4.5% of its workforce) as part of a restructuring of its health care unit to save $45 million in 2003.

Geography appears to play a role in Rx usage. Script numbers are higher in the South and Midwest according to a study by Express Scripts of over 500,000 adults and 200,000 children. Adults obtaining at least one script per year ranged from a high of 71% in Kansas to a low of 58% in CA. The ave. # of scripts per member year ranged from a low of 8.3 in NY to 12.2 in KY.

Colorado Governor Bill Owens is talking about eliminating state mandates in order to lower the cost of care in Colorado. Finally at least one member of government figures it out!

BC/BS of NC and BC/BS (Horizon) of NJ are starting discussions with state regulators to convert to for profit and go stock. They say they don’t want to merge with Anthem or Wellpoint. In the meantime, Anthem is merging with BC/BS of KS (policyholders voted yes and are waiting on state approval) while Wellpoint is picking up BC of Maryland. Wellpoint is also buying the troubled MethodistCare in Houston, gaining 78,000 members and a toehold in Texas to compete against BC/BS of TX and Aetna. Stockholders of RightChoice have approved the Wellpoint merger with RightChoice of MO.

Humana is dropping the Employer’s Health name from their lexicon. Too bad, since that name was trusted.

BC/BS of IL announced that JD Powers has ranked its HMO IL highest in Chicago in overall member satisfaction. It is hard to think of Powers rating anything but cars.

Caremark will provide Rx for the State of Illinois 400,000 employees. Advance PCS has taken over the Rx for BC of NJ and Express Scripts has taken over the business of the Capitol Blues in PA from Merk-Medco. Merk has announced that it is spinning off Medco. This will remove the conflict of the drug company operating the PBM.

Average physician compensation rose 2.27% to $147,232 for PCP docs and 4.3% to $256,494 for specialists. Medical and surgical supply costs for multi-specialty groups rose by more than 9% and staff costs rose 5%.

A new Harris poll of 927 adults found that 67% of those with employer provided plans graded them with and A or B with only 8% giving a D or F. Talk is that Hillary was shown the results and she concluded the poll was wrong. Kennedy concurred. McCain asked for polling reform.

A member of the Disease Management Purchasing coalition has concluded that nearly all DM programs overstate their effectiveness for the population as a whole, since the program results are usually only stated for known high cost claimants and not for the whole population. Really?

HMO failures declined in 2001, down to 8 from 19 in 2000.Insurance company failures increased form 38 to 40. Pay for performance is coming to California HMOs. Six companies have put together a bonus pool of approximately $100 Million to reward doctors based on performance. 40% of the doctor’s score will be on patient satisfaction. The other 60%??

The Mental Health Parity Act has been extended the act to Dec.31, 2002. Technically, the act had reached sunset on 9/30/01. Did you miss it?

Blue Shield of California is initiating a plan where patients who use more expensive hospitals pay higher copays. This could be more common as both employees and groups have to choose between access and cost.

Buck’s latest trend survey for 2002 trend projects 17% for Indemnity, 14.9% PPO, 14% POS, 13% HMO and 18.4% Rx cards (down from 20% in 2001).

Great West was recently struck down in the US Supreme Court on a subrogation claim. However, it does not appear that subrogation was the issue, but rather the fact that Great West was trying to claim money that was not in possession of the defendant (the money was assigned to a trust). Therefore, subrogation clauses still appear to be valid legally. That should produce a sigh of relief from plan sponsors and insurance companies.