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

Another lawsuit has been given class action status against Unum Group seeking declaratory relief (not monetary) from Unum engaging in practices of illegally denying disability claims. Unum had previously settled another lawsuit in 2004 with insurance regulators in 49 states to reconsider 200,000 claims and pay a $15M fine. Unum has almost completed that process and said about 30% of the original decisions were changed and contends that those actions should negate this latest suit.

A report by PwC reveals that there is a tremendous variation among health plan Pay for Performance programs. Nearly 60 different indicators of physician performance are used among the ten plans surveyed. Only 40% of plans surveyed provide quality data that is public on physician performance. The lack of universal quality measurements gives mixed results.

As expected, DirigoChoice, the Maine health plan for low income individuals and small business is more costly than expected and Anthem has announced that they will no longer provide coverage under the program, which began in 2005. The program was expected to attract 100,000 enrollees, but only has 15,000. Still, the state has had to make almost $23M in “experience modification” payments for higher than expected costs to Anthem since the insurer and state had no way to project costs when the program began. This once again proves the point that just having insurance coverage does not mean that costs will be reduced. In fact, for most of these programs, costs are far higher than expected.

Humana has agreed to buy KMG America, an insurance benefits provider of voluntary products and stop loss insurance. United Healthcare is combining Spectera, Unimerica and United Healthcare Dental under the brand name UnitedHealthcare Specialty Benefits.

Choose your survey:  A new Mercer survey of 1,557 employers shows that health insurance costs are expected to increase by 9%, before plan adjustments lower the increase to 6.7%. At least 56% of employers say that they will require employees to pay a larger share of costs through either a higher premium contribution (36%) and/or higher plan cost sharing (29%). According to the KFF 2007 study of 2000 employer’s health insurance costs, the cost of employer provided insurance went up 6.1% with the average annual family premium of $12,106 in 2007. Employees paid $3,281 of that premium. For single coverage the average cost was $4,479 with the employee paying $694. The increase is the lowest since 1999. A new Hewitt study of major companies found that average rate increases in 2007 were 5.3% with 8.7% expected in 2008. The average annual cost per employee in the study was $7,982 in 2007, increasing to $8,676 in 2008. Towers Perrin is forecasting an increase of 7% in 2008 to an average cost of $9,312 with employers expected to pay 78% of that amount.

A study by SHPS of 1000 employers found that cash incentives that reward desirable health behaviors correlated to lower health costs when used in concert with case and disease management, biometric testing, EAPs and on-site clinics. The study said consumer directed plans, P4P networks and premium cost sharing had little impact on costs. Accurate eligibility management also had significant impact on costs. Another survey by the International Society of Employee Benefit Specialists of 470 employers showed that 37% offer a CDH plan with 33% of those doing so expecting to achieve lower health costs. 47% expected to introduce consumerism in the hopes of long term change. 31% of those surveyed believed CDH was too new to offer a plan now.

Underwriters are a skeptical bunch. In a survey, only 18% of respondents agreed that the use of coinsurance would reduce Rx trend by 2%. Only 25% agreed that health risk assessments would reduce Medical/Rx trend by 1.5%. However, 46% said coordinated care services would reduce trend by 3.9%. A study cited in USA Today says that separate routine physical exams cost about $7.8B a year and much of that money is wasted. Three-fourths of the patients surveyed had seen their doctors for other problems in the previous year and any necessary tests could have been ordered in those visits.

Blue Cross Blue Shield of Illinois has filed an injunction against Libertyville , IL , Condell Hospital to stop them from prematurely ending their PPO contract on September 30^th. Condell wants a 30% increase in reimbursements and says the Blues have not paid them since June. The Blues say Condell owes the Blues several million dollars from advance payments the insurer made to the hospital in anticipation of future services. Condell will still accept Blue Cross HMO members through the end of the year. The Blues are also still in negotiations with Rush University Medical Center . The dispute with the Blues and Condell highlights the Blues method of advance payments that breeds hospital dependency and results in the lack of certifiable discounts provided to the employers they pay claims for.