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

Why be like everyone else?

Last issue we promised you a little insight into the percent of savings calculations that at least one major local carrier uses to charge for access to their PPO. We follow through on our promises, so here goes…. Some PPOs use this calculation for their access fees, in particular, Affordable (HealthCare Compare, now known as First Health). Others using percent of savings on certain cases include Beech Street (now merged with Capp Care) NPPN (now part of Health Plan Services) and USAMCO. OK now, pull out your PPO savings report for your PPO and see the dollars reported as saved over the past year or so. Divide that figure by the number of employees covered by the PPO for that time period. Take an aspirin. Having done this a number of times, we’ll tell you that your access charge is probably between $9 per ee/mo and $17 per ee/mo if you have 50% of your charges in the PPO. Compare to standard network access charges of $2.00 to $5.00 per ee/mo. for many excellent networks. If you have 200 ees and are paying $5 too much, that’s a savings you could have of $12,000 per year! Are your PPO discounts that much better than the next network? Unless you only have a minimal number of employees using a PPO in a low cost rural area, chances are the percent of saving methodology is costing your company a lot of money. Now, pick up the phone and call S&S. We'll help you. Keep in mind that those that charge on a percent of savings also usually do the repricing before your administrator sees the claim. You could be paying your percent of savings access charge on duplicate charge and ineligible charges as well as for eligible charges. The repricing and billing mechanism of the PPO usually does not pay the claims. Plus, if the PPO generally contracts with higher priced hospitals in your area, they really love you as a client.

NOw lets see what else is happening. Mercer reports in a Nov. article that employers providing early retiree coverage fell from 40 to 38%, while those providing coverage to Medicare eligible retirees fell from 33 to 31%. Retiree costs dropped 1% due to more enrolling in managed care plans. Meanwhile, Hewitt reported in the Daily Herald that increase of 7-10% are expected in 1999 verses 3.7% in 1998 for all plans. Copays for doc visits are rising from $10 to $15 and drug cards are going from a standard of $5G/$10 to $10G/$15B.Towers Perrin is quoted in BI that HMO rates will rise 8%, indemnity by 5%, POS by 5% and PPO by 4%. Remember, these are averages and you are probably experience rated. Why are drug costs going so high? Try 131 new drugs in 1996 and 121 new drugs in 1997. One employer made the mistake of adding a drug card and saw cost rise from 70K to 200K according to BI.

NEw laws! Amendments to ERISA effective 1/1/99 provides for coverage for reconstructive surgery following a masectomy. You need to notify all your employees! Reconstruction of the other breast is also allowed to achieve symmetry. Another amendment to ERISA holds that benefits may not be restricted for hospitalization in connection with childbirth to less than 48 hours for vaginal delivery or less than 96 hours for cesarean. This applies to mother and child.

CHarlie Norwood is at it again! He has reintroduced PARCA that would allow patients to sue insurers, HMOs and other health plans for punitive damages Employers could also be sued under PARCA if they exercised the authority to review claims. Undoubtedly there have been problems with improper denial or delay of care, but Norwood has the legal community licking their chops. They’ll be the big winner if this passes, not the patient or the employer. Costs would rise even more. It appears that we need national tort reform, but how do you accomplish that when most of our national and state legistlators are lawyers?

REmember, Ira Magaziner? BI reports that he asked a federal appeals court to clear him of a judge’s accusation that he made false statements in a legal testimony about the structure of the health care task force. Just wondering if he knows the meaning of the word "is."

MEt Life is reported to be in the process of demutualizing and BI reported they expect to complete the conversion by late 1999. The company expects greater flexibility and broader access to capital markets. In our modest opinion, they might also expect to be subject, like the rest of the market to the paranoia of stockbrokers when a sheik in Kuwait sneezes while placing a sell order.