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

Wellpoint has purchased DeCare, a dental health administrator of approximately 4 million members spread over 21,000 group customers. The acquisition will bring Wellpoint in contact with 9 million members nationally compared to over 35 million for its medical plans.

Most of the news this month is a re-hash of the same old statistics (or lack thereof) on ROI for wellness programs and disease management or the continuing saga of whether or not CDHP plans do anything more than shift cost to the consumer. S&S Benefits has been involved recently with some other issues which may provoke some discussion.

Although we favor self-funding for larger clients and those who wish to have access to their claim experience, in these times we feel the independent stop loss market needs some serious revamping in order to maintain its competitiveness with the insurance carrier market (be it self-funded or fully insured). Stop loss carriers continue to lose business to less competitive offers from insurance carriers because they insist on treating the brokers, consultants and TPAs like they are the enemy. To be sure, many brokers have not disclosed important claim information as part of the stop loss quote process. However, when supplied with TPA large claim case management data, monthly aggregate reports and pre-cert reports from approved TPAs, many stop loss carriers are still refusing to lock in quotes or reserving the right to re-rate based on updated information until they receive claim reports that are within 15-30 days of the effective date.

In addition, some stop loss vendors have been known to refuse to pay on claims that could not have been known about and were not on the standard approved reports they received (even though those reports are standard and contain all the information they normally request). It’s like they think the employer or TPA knows everything that could possibly be happening in terms of large claims on a large employee group (including the dependents of the employees) and then purposely withhold the information. By not locking in their quotes until very late in the process, stop loss carriers are leaving themselves open to competition from those who actually accept the fact that there is risk in the medical care business. Since many insurance carriers are able to lock in their quotes 90 to 60 days in advance, it becomes increasingly hard to ignore them and use the independent stop loss market. Since we at S&S Benefits are in favor of increased competition, we are upset that such practices in the stop loss vendor market are reducing their market share. We hope they wise up.

In all fairness, it should be pointed out too that insurance carriers are guilty on the back end of disclosing information. They continue to act like HIPPA applies (it doesn’t) and do not release the large claim diagnosis and prognosis information necessary to receive competing quotes, while insisting on obtaining that information in order to quote. BCBSIL is famous for this.

We are also discouraged by the insurance carriers who continue to play games with their network discounts. Brokers continue to be dense enough to not know or not care what game the carriers are playing. Carriers quote “average discounts” by market area that they say are greater than independent PPOs. When comparing data on an actual group, these “averages” are used as a comparison point to actual discounts of an independent network. In fact, they are not true claim by claim comparisons with other networks. Why? It is because nobody has data where actual discounts by provider are disclosed unless someone provides the data in error. Why is the data not available? It is because provider contracts do not allow disclosure of both the provider identifiers and discounts in the same file.  Ask UHC or BCBS to provide such a file. You won’t get it….never the data shall match. Certainly the carriers will never disclose that information to an independent source, so why should they be trusted when they say their discounts are better?  Independent TPAs have no way to reprogram the discount data without a massive cost. They re-price the claims using the data provided by the network. There is no reason or incentive for them to do anything different. On the other hand, we have numerous reported instances of insurance carriers  saying that they could adjust their fixed costs to compete with TPAs by passing through a lesser discount to the employer! If they are willing to do that, why would we trust what they say are their discounts? What’s more, we have seen discount data from carriers where ineligible (duplicate charges) are counted as discounts in order to overstate negotiated discounts. If you ever see a quote where the primary PPO fee is a percentage of savings, be it from a carrier or a TPA, run for cover because you are going to get hosed. The same is true if they are willing to reduce fees in place of reduced discounts to the employer. Since competition is so stiff and consultants who actually understand the business are so few, it’s easy to get misled into a bad deal. Now we’ll get off our soapbox until a future date. Comments or questions?