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

Why be like everyone else?

S&S Benefits Consulting 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 !!!!

Volume 3 Issue 3-Street Talk March, 2001 Issue

Our thanks to Judy T, who pointed out something the spell check didnít. In our last issue we wrote verses when we should have written versus in our verses (if we could take license to call them that) about insurance.

Surveys abound about the increases expected for health care costs. A Watson survey has healthcare increases averaging 10.3% with Rx increasing 14.6% in a survey of 360 large employers. A T-P survey says the average will be 13% in a survey of 221 Fortune 1000 employers. Of course, averages are just that. Once, a respected insurance company representative told a client experiencing an above average rate increase and complaining about it, "If your feet are in the icebox and your head is in the oven, on average you should be comfortable."

According to a Mercer study, there has been a slight decrease in the number of self-funded companies. Indemnity self-funded plans dropped from 73% to 68%, PPOs dropped from 70% to 67%, POS went from 50% to 48% and HMOs went from 10% to 7%. Some of this may be temporary due to the volatility of the reinsurance market which is again demanding 30% to 50% increases due to leveraging on catastrophic claims and the need to become profitable.

New HHS Secretary Tommy Thompson has put the HIPAA privacy bill on Hold. The bill was supposed to go into effect 2/26/2001 with compliance by 4/14/2003. Among other things, the bill could have the effect of having to have patient permission to release any information on a claim. Blind underwriting on large claims would definitely drive up costs. In the meantime, John McCain seems to have jumped in bed with Ted Kennedy to propose a patientís rights bill that would be worse than any previous legislation. Essentially the bill should have been called the "Trial Lawyers Profitability Act." The bill would allow unlimited damages in state court with a $5M cap in federal court and the right to sue even after a third party review settlement.

Cigna news from Bloomberg said 4th Q profits are down 3.7% on revenue increases of 5.6%. HMO profits were up while indemnity and disability profits were down. Rate increases averaged 11%. Some of the money will go to pay a $300,000 fine imposed on Cigna for late claim payments on itsí Georgia HMO business. The fine was the largest issued by the Georgia Department of Insurance under prompt pay rules.

Two groups representing 7,000 docs filed 11 lawsuits in Connecticut in conjunction with the state attorney general against Cigna, Anthem Blue Cross, Aetna/U.S. Healthcare, Oxford and Connecticare HMOs. They cited arbitrary denial of care without explanation, failure to keep medical staffs at appropriate levels and the withholding of doctor payments.

In the meantime, Cigna, Aetna and Humana are reporting double-digit increases in ER visits over the past two years. The sense is that patients are having trouble getting to see their PCP. ER care costs six times more than care in a doctors office, which is prompting some plans to reward doctors who keep evening and weekend office hours.

Anthem, which is the BC licensee in 8 states and provides insurance to more than 7million customers in IN, CO, KY, OH, CT, NH, NV and ME, is preparing to demutualize. We are sad to see another mutual go. While going stock allows companies to raise capital more easily, mutual companies tend to be able to stick to solid long-term goals while stock insurance companies seem to feverishly react more to Wall Street than their customers with their long-term plans.

The 11th Circuit Court of Appeals has found that discounts through a leased and silent PPO which did not have a direct contract with the hospital or the insurance company (EHI- Humana) were not allowed. A non-network hospital had a contract with MedView who leased its discounts to HIS who leased them to EHI. The court ruled EHI could not take the discount of 25% on a non-network claim since it did not have a contract directly with MedView or the provider. This type of silent arrangement has been outlawed in Texas as well. If you are interested in receiving discounts on out of network services that are legal, S&S Benefits is aware of legal arrangements that can be made in certain circumstances if you are a large employer.

According to a Mercer survey of 433 large and mid-sized employers, time-off and disability programs cost employers an average of 14.3% of payroll, with indirect costs adding another 7%. While employees take an average of 5 sick days per year, 37% of employers donít capture the information or under-record it.

Another E-health company withdrew from the market. InsWeb Corp., abandoned efforts to provide health insurance rates on line. A recent study said only 2% of health insurance purchases are made on line.

Clout? CalPERS, the giant health purchaser in California, rejected all ten 2002 HMO bids it received. The increases in the bids ranged from 5.5% to 41%. It will be interesting to see if they get new and better bids by their March 20 deadline in the current environment.