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by Jerry Kalish, Employee Benefit News
It’s ERISA audit time again. Now that the regular tax season is over, accountants soon will be turning their attention to ERISA plan audits. If your retirement plan is subject to the audit requirements, here are the basics you should know - including how not to hire an auditor. Read more
by Nancy L. Bolton, Employee Benefit NewsLike many of our local government and corporate peers, Palm Beach County, Fla., made the switch to the self-funding of our group health plan in 2003, when health trends were hitting 30%, 40% and, in our case, 50% at renewal. After long deliberations and a tiny leap of faith, the county decided to keep those profit margins insurers were trying to capture through their outrageous renewal quotes.
Just a few months into the sixth year of self-funding, the county can report a very comfortable surplus that will see us through a year in which layoffs are certain and raises are tabled. It’s allowed for a small amount of stability in an unstable climate, and I can report with certainty that making the shift to self-funding was the right thing to do. But there have been lessons learned along the way.
A great supporting cast
First and foremost, partner with the best, and trust the guy with the crystal ball. A plan actuary is as key to the success of a self-funded plan as is the claims experience. These guys truly have a gift - or maybe just a really cool calculator - but they are essential.
Of course, it should be said that despite the quality of the plan actuary, the commitment of management - in our case, the Board of Commissioners - to fund the plan according to the actuary’s projections is perhaps more important than the projections themselves. I have known a few great risk and benefits managers that have been run out of town at sunset when their self-insured funds went belly up. Usually, the reason can be traced back to top management failing to fund the plan according to the actuary’s projections.
I never miss the chance to put my plan actuary in front of those top-level decision-makers and let him wow them with numbers, which will highlight his accuracy in years past and provide management with the faith his future projections will bear out.
Also, a savvy benefits consultant is worth his weight in gold when it comes to negotiations with the ASO provider. Palm Beach County enjoys the services of an international consulting firm that brings with it the bargaining power of hundreds of thousands of lives. We’re a large local employer, but we don’t carry the same negotiating strength of an international benefits consulting firm. The cost of the contract with this firm is returned year after year because of the clout it carries with the carriers.
Know your data (really well)
Secondly, know your data. I mean, really know your data. Spend weekends with your data, take it on vacation and never, ever miss a chance to review it hot off the press.
The reporting capabilities of your chosen ASO are as important as its claims-paying skills. Like a number of local government agencies, Palm Beach County still offers an HMO with capitation. If your self-funded plan does the same, insist on transparency. While reviewing data a few months into year three, we noticed a significant jump in the monthly capitation charges.
After much bickering with our ASO provider, we finally were able to peel away the onion layers to reveal the culprit - the ASO had been billing for disease management separately, after also quoting it in the administrative fee. This resulted in a refund to the county of nearly $1 million. There should be no such thing as hidden costs in a self-funded plan.
Follow the money
Last but not least, look for ways to bring cash back into the plan. A considerable amount of money can be recovered through prescription drug rebates. Most employers don’t even think to ask for them. Demand that your plan’s ASO provider share the wealth. During our most recent RFP, we asked candidates to tell us how much of the drug rebates they’d be willing to share with the county. A majority responded that they would return 100% of the rebates.
To date, the plan has recovered over $3 million in drug rebates since negotiating them back to the plan in 2005. We’ll certainly welcome the cash, but those annual recoveries also provide us with the knowledge that the plan needs to improve its generic push. However, it’s better to have those dollars back in the county coffers than in the pockets of our for-profit ASO.
Check your state laws, and if they allow for it, bring that cash back into your plan today and work on your generic push tomorrow.
In addition to the drug rebates, we asked the ASO to help us fund our wellness program. The ASO now provides an annual seed money account for the county to spend on its wellness program. These funds have provided for a number of wellness program perks, which simply wouldn’t have been possible if we’d had to find the funds on our own in the current budget climate. What better way to illustrate the ROI of a wellness program when there’s no initial risk in the investment?
Self-funding a group medical plan can be an excellent way to hedge the risk of medical inflation and carrier uncertainly in today’s economy. Partner with the pros, stay on top of the data and ask the ASO to share the wealth.
by Karrie Andes, Employee Benefit News
Staring down at the toilet in the hospital restroom, it became painfully clear to my stepfather that his yearly routine outpatient test had turned into anything but routine. Although he had been through this test a million times before, this time he was making friends with the hospital commode. Read more
by Timothy E. Cahill and Blaise J. Guzewicz, J.D., Socrates, Inc.Subrogator Spring/Summer 2009
Subrogation strategies have never been more important for health plans and plan sponsors. Economic uncertainty, intense competition and potential regulatory changes are sure to exert downward pressure on income for months, even years, to come. Healthcare payers need the right tools and techniques in place to preserve revenue in this difficult operating environment. Read more
by Dustin Cassady, Recclaim Software Solutions
Subrogator Spring/Summer 2009
The exchange of recovery dollars in the subrogation industry is primary still in the dark ages. Up until credit cards and Automated Clearing House (ACH), the only option for collecting recovery dollars from carriers or uninsured motorists was good, old paper checks. However, thanks to advances in technology, additional options for accepting payments are available - ranging from credits and electronic funds transfer (EFT) to check conversion and ACH to check 21 (business checks, money orders). Read more
by, Malcolm B. Futhey III and Carrie Eaker Kerley
Lawrence & Russell, LLP, Memphis, Tennessee
Medicare statutes and regulations provide for a right of subrogation through the Medicare Secondary Payer provisions. However, the scope and strength of this right for Medicare Advantage organizations have been cast into confusion given Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003). To complicate the matter, attorneys for members and liable insurers constantly present arguments that even further misconstrue Engstrom’s holding. A subrogating party may assert several strong arguments in response, ranging from clarification of the Engstrom decision and progeny to an explanation of the Medicare structure and the applicable regulations. This article provides a brief background of Medicare and the Medicare Secondary Payer rules, as well as addresses the typical issues that arise regarding the Engstrom decision. Read more
House now on a July timeline: The three House committees with healthcare reform jurisdiction all held hearings last week. Mark-ups and floor action are expected in July and Speaker Pelosi has set a deadline of House floor passage before the August recess. Meanwhile, the independent HIS Network estimated that a House healthcare reform bill would cost U.S. taxpayers $3.5 trillion. Read more
by Lisa Wangsness of The Boston Globe, www.boston.com
WASHINGTON - The face of the insurance industry in Washington is a slight, soft-spoken former AFL-CIO employee benefits director with a penchant for data-driven logic. She has the confidence and intellectual agility of a skilled debater, but prefers to dwell on areas of agreement. On healthcare, Karen Ignagni often sounds like the lifelong Democrat that she is. Read more
by Michelle Massey, Texarkana Bureau, http://www.setexasrecord.com
MARSHALL - After turning over nearly $400,000 to buy what they thought was an ERISA employee welfare benefit plan, two Virginia doctors believe they were the victims of an elaborate nationwide theft ring and are suing to get their money back. Read more
by Amanda Bronstad of The National Law Journal, www.law.com
An association representing the restaurant industry has filed a petition for writ of certiorari before the U.S. Supreme Court to overturn a ruling by the U.S. Court of Appeals for the 9th Circuit upholding a law requiring employers in San Francisco to provide health insurance to their employees. Read more
The ERISA Industry Committee, www.eric.org
Washington, D.C. — The ERISA Industry Committee (ERIC) earlier today submitted comments to the Department of Labor’s Employee Benefits Security Administration in response to a “request for information” regarding the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Read more
The ERISA Industry Committee, www.eric.org
Washington, D.C. — In a letter sent today to Members of the five congressional committees with jurisdiction over health care reform, The ERISA Industry Committee (ERIC), a Washington, D.C.-based trade association representing America’s major employers, expressed concern over proposals that could weaken the current employment-based health system.
The ERISA Industry Committee, www.eric.org
Washington, D.C. — Michael Stapley, President and Chief Executive Officer of Deseret Mutual and Vice Chair of The ERISA Industry Committee, a Washington, D.C.-based trade association representing America’s largest employers, testified today before the House Education and Labor Committee where he urged Congress to first “do no harm” in seeking to reform the U.S. healthcare system. Read more
An inquiry by a TPA to the New York Insurance Department asked whether stop-loss insurers are subject to the prompt-pay rules of Insurance Law § 3224-a. In April 1982, the Insurance Department issued Circular Letter 7, which provides that stop-loss insurance is not reinsurance, but rather a form of accident and health insurance that may not be placed by excess line brokers. In 1999, the Legislature confirmed that stop-loss insurance is a form of accident and health insurance by enacting Insurance Law § 4237-a. Read more
Anderson v. Dergance, 2009 U.S. Dist. LEXIS 51593 (N.D. Ill. June 18, 2009)
This ERISA plan reimbursement case applies the Sereboff holding to find in favor of an ERISA plan’s claims to specifically identifiable funds held in an attorney’s trust account following a personal injury settlement. Read more