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Minds Bodies Holistic Medicine Emerging as Tool to Manage Costs and Outcomes

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The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC) Postmaster: Send address changes to The Self-Insurer P.O. Box 1237 Simpsonville, SC 29681

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SENIOR EDITOR Gretchen Grote CONTRIBUTING EDITOR Mike Ferguson DIRECTOR OF OPERATIONS Justin Miller

Minds Bodies Holistic Medicine Emerging as Tool to Manage Costs and Outcomes

Volume 94

From the Bench Virginia Federal Court Relies on Virginia Economic Loss Rule to Limit Claims by Group Against Broker and TPA

Despite Underwriting Losses, RRGs Remain Financially Stable

INside the Beltway Task Force Makes Congressional Rounds on Behalf of Enterprise Risk Captives

Bruce Shutan

DIRECTOR OF ADVERTISING Shane Byars

August 2016

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2016 Self-Insurers’ Publishing Corp. Ofﬁcers James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary

22 COMMON Investment

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Appeal Games Providers Play: Stick to the Rules for the Win

What do Population Health Management, Captives and Reinsurance Have in Common?

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News from SIIA Members

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August 2016 | The Self-Insurer

Sound

Minds Bodies

Holistic Medicine Emerging as Tool to Manage Costs and Outcomes

he embrace of holistic medicine can add a critical layer of control to selfinsurance.

One key trend springs from the new “bio-psycho-socio-economic” (BPSE) model of sickness and disability, which provides more insight into claims on both the group health and workers’ comp side. Looking at health situations from all angles this way creates a more realistic picture of the dynamics at play. The BPSE model explains why illnesses or injuries that appear identical from the medical point of view end up with widely differing outcomes. Looking for BPSE factors in situations that employers can potentially mitigate also opens up a wider array of potential management approaches for clinicians, case managers, claims payers and employers.

Written by Bruce Shutan

SOUND MINDS & BODIES | FEATURE Another movement involves better coordination between behavioral health and major medical coverage. This coordination is an essential part of a mind-body approach to managing care for employees and their families (and its costs), which has been building for decades and appears to be gaining traction. “The importance of behavioral health in total health management is becoming increasingly apparent to all payers, whether they’re selfinsured organizations, health plans at risk, or even provider payers at risk,” says Peggy DeCarlis, SVP and chief innovation officer at New Directions Behavioral Health, as well as the Association for Behavioral Health and Wellness board chairman.

Adds Janis S. DiMonaco, Ph.D., CEO of HMC HealthWorks, an integrated health care management company: “As forward thinkers, self-insured employers tend to be early adopters of approaches that reduce indirect cost trends, such as disability claims and work-related injuries, while improving overall health status, work-life balance and on-the-job efficiencies.”

“People respond and make decisions about how to behave based on internal as well as external factors – the entire context they find themselves in,” she explains. The BPSE model also acknowledges the impact that other stakeholders have on creating or resolving situations such as families, employers, doctors, claim managers, lawyers, etc. The BPSE model’s predecessor, biopsychosocial, “recognizes that all issues relating to health are products of a complex interaction of any number of factors in these three broad domains.” The Praxis Partners Consortium added the suffix “economic” to create the BPSE model because it is obvious that financial incentives affect the behavior of all stakeholders in these situations. The group operates under the aegis of Webility, which serves as a catalyst for positive change in the workers’ comp and disability benefit systems.

Together, the BPSE model and mind-body approach represent sound strategies that can help simultaneously improve health outcomes and manage costs. But the marketplace needs to fully understand their place in the self-insured arena before progress can be made.

Providers who work within the BPSE model develop a more accurate view of the causes and potential cures of sickness and disability, panelists suggested at SIIA’s Annual National Conference & Expo last October. The goal is for those who are treating pain to reduce the use of opioids and widen their therapeutic repertoire. Examples include cognitive behavioral therapy and self-pain control techniques such as mindfulness meditation and exercise.

Jennifer Christian, M.D., president of Webility Corporation, for example, is concerned about BPSE being used as a euphemism for psychology. Dealing effectively with BPSE issues may not even require getting a psychologist involved. For example, she says health illiteracy, concerns about workplace safety, toxic interpersonal relationships and administrative incentives are also common obstacles to recovery.

“Otherwise, what they’re doing is leaving people in pain to suffer,” observes Christian, who was part of that discussion. She says that for many people with chronic pain “the main problem is coming from the way their brain is interpreting the signals coming from their body and the meaning being attached to it and potentially connecting with people’s bodily memories or old social memories.”

Removing Care Barriers There were $220 billion in behavioral health costs in 2014, according to a recent presentation at the National Press Club by Alan Weil, editor in chief of Health Affairs. While the price-tag is staggering, the percentage of all health expenditures tied to mental health and substance abuse treatment is small (6.4% and 2.2%, respectively). A huge concern is that many serious cases go untreated. For example, about 2.8 million of roughly 6.9 million adults with serious mental illnesses in the U.S. do not receive any mental health treatment, Mark Olfson, M.D., a mental health services researcher and research psychiatrist at Columbia University, noted at that same event. There could be several explanations for why so many people with behavioral health issues are falling through the cracks, beginning with the stigma long associated with these conditions and payers are reluctant to invest in behavioral health. Christian recalls the days of yore when some individuals would be treated for up to 20 years and it was difficult to determine a return on that investment. That calculation is complicated by varying degrees of illness severity, as well as differences between outcomes: patients feeling happier vs. being able to function and work again. “There also has been a lot of money wasted on ineffective psychotherapy,” she says. As an occupational medicine specialist, Christian tends to think the fundamental purpose of health care services is to restore or preserve the patient’s ability to function in life. Therefore, she believes that both clinicians and case managers should stop and think clearly and specifically about what will move the situation August 2016 | The Self-Insurer

SOUND MINDS & BODIES | FEATURE forward toward resolution before ordering a treatment or authorizing a service. The first step should be to determine what needs to be accomplished before assigning a provider with the right skill set to do it, whether it’s a case manager, behavioral health professional or other practitioner. “I think where the market needs to evolve is looking more carefully at the treatment philosophy of the professionals they contract with rather than or in addition to the price,” she explains. “And, actually, they should be looking at outcomes.” She lauds one large payer, Sedgwick, for building an outcomes-based network on the workers’ comp side. Christian recommends using “situation resolution” strategies to speed the return to function and work. She points to “a behavioral health network that has been set up

that specifically recruits clinicians who have a functional-restoration philosophy and focus on helping people who were previously working to get them well enough to go back to work.” The idea is for clinicians to keep their patients focused on restoring the rhythm of everyday life so it feels normal again. One area off limits would be drifting away into an individual’s childhood memories or marital problems that may have predated a leave of absence, which wouldn’t accomplish this purpose.

Early Diagnoses Clinicians and employers alike know that mental and physical health is inextricably linked. DiMonaco says patients with diagnosed diabetes, arthritis, osteoporosis, musculoskeletal conditions, cancer, lower back pain, reflex sympathetic dystrophy hypertension and obesity develop depression and anxiety at rates 30% to 50% higher than the rest of the population. DeCarlis also notes that research shows chronically ill patients with depression, anxiety or substance abuse cost two or three times more than those who do not have those comorbidity factors. But there are real solutions at hand that are gathering consensus. Identifying or preventing psychosocial situations that can progress to medical conditions such as depression, anxiety, overeating, poor sleep, etc., would likely decrease productivity loss from absenteeism or presenteeism, explains Philip Hagen, M.D., a consultant in Mayo Clinic’s Division of Preventive, Occupational and Aerospace Medicine and associate professor of medicine.

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SOUND MINDS & BODIES | FEATURE This could be a sweet spot for bending the cost curve, since he says these losses exceed the direct medical cost for a health condition. What needs to follow is a substantive change in the way care is delivered and envisioned in the selfinsured community.

“Traditional health insurance is not structured to take either a holistic approach to these problems, or a preventive approach,” Hagen says. “But employers who are self-insured have a stake both in medical costs and lost productivity costs – thus, they are more willing to try a proactive approach.” The uptake on holistic approaches has been slow, according to Hagen. One reason is a dearth of well-demonstrated cost benefits, but there’s also uncertainty about whether a doctor, nurse, health promotion specialist, psychologist, health coach, etc., should take the lead. Innovative employers are making progress in this area and Hagen says believes “soft but growing data” show the potential for a 2-3:1 ROI. He also sees movement away from a traditional medical model toward a small group, workplace-based setting that includes a diverse set of practices and skills. Examples would be an emphasis on healthy relationships, stress reduction, mindfulness and healthy sleep. About four and a half years ago, DeCarlis’s firm reached out to four international thought leaders and practice leaders to devise best practices for integrating mind and body care and conduct several pilot programs or trials. They all cautioned against “parachuting a behavioral health practitioner into a primary care practice.” Nearly 70% of patients seen by their primary care physicians have some sort of behavioral health needs, DeCarlis notes. So without a behavioral health specialist on the care management team and the continuation of a siloed approach to treatment, she says these cases simply tumble into a black hole.

New Directions Behavioral Health has been working with a large patientcentered medical home in Kansas City where it’s based, as well as facilities in Arkansas and Florida to measure the impact on behavioral health screeners and biomarkers such as A1C tests for blood glucose levels, low-density lipoprotein cholesterol and body mass index. Encouraging results have been reported over the past year and a half. Steve Melek, a principal and consulting actuary with Milliman, studied claims filed for several years before and after this intervention and found an 11% impact on the medical spend. DeCarlis cites the increasing sophistication of analytics and an ability to share that data with providers for greater insight into their performance as key components to success. “As opaque as cost drivers have been on the medical side, they’ve been even more so on the behavioral health side,” she observes. One troubling trend in behavioral health is opioid addiction, which DeCarlis describes as the nation’s fastest-growing chronic condition. She says abuse of prescription painkillers all the way up to heroin killed nearly 30,000 Americans in

2014, surpassing annual automobile fatalities. Mindful of this problem, she notes that the Centers for Disease Control and Prevention issued guidelines in March for prescribing practices, while just days later the Food and Drug Administration required stronger warning labels on powerful drugs. New Directions Behavioral Health has recruited additional medical directors with addictionology backgrounds to help increase the availability of medicationassisted treatment and stress evidence-based practices. After more than 25 years in managed behavioral health, DeCarlis is hopeful that mind and body medical silos will gradually disappear, as well as the stigma attached to behavioral health. “I think as payers of self-funded accounts increasingly see the impact of true integration, they will demand that this is the way that care is delivered,” she says. When separating promises from performance in care, DiMonaco’s firm has found that the C-Suite is encouraged when presented with documented returns about the merit of including behavioral health in the mix. “If you think about treating symptomatic effects of unhealthy behaviors without addressing root causes, the downward health spiral may decelerate, but not for long,” she explains. “That’s why we frontload EAP programs with wellness and personal care support to engage the whole person. At some point the market will realize the value of this approach and follow suit. Cost trends cannot be reversed without addressing the mindbody connection.” ■ Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee beneﬁts industry for more than 25 years. August 2016 | The Self-Insurer

Bench From the

Virginia Federal Court Relies on Virginia Economic Loss Rule to Limit Claims by Group Against Broker and TPA

nwinding this one in a readily understandable way is no small task. But, once the issues are identiﬁed, it is, at bottom, a relatively straightforward decision involving the duties of a broker and a TPA to their client and the damages recoverable for the alleged breach of such duties.

Phoenix Packaging Operations LLC, et al. v. M&O Agencies, Inc., et al., No. 7:15cv569, in the United States District Court for the Western District of Virginia, June 3, 2016

The Alleged “Facts”

Written by Tom Croft

I put the word “facts” in quotes, because this case came to the Court on motions to dismiss – meaning that all the Court had were the allegations set forth in the Group’s Complaint and the arguments contained in the briefing by all sides on the pending motions. No depositions, affidavits, or other conventional means of “proof ” were involved, such as in a summary judgment proceeding. Rather, the questions presented to the Court

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revolved around the sufficiency of the Group’s allegations in their Complaint under applicable Virginia law. The standard in the federal courts for assessing the sufficiency of the allegations for motion to dismiss purposes has evolved considerably over the past several years. Currently, a complaint must “state a claim for relief that is plausible on its face... [and] must present sufficient nonconclusory factual allegations to support a reasonable inference that the plaintiff is entitled to relief and the defendant is liable for the unlawful act or omission alleged. Determining whether a complaint states a plausible claim for relief is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” [Citations and internal quotations omitted]. Against this legal backdrop, the Court first recounted the allegations of the Group’s Complaint. The Group (“Phoenix”) operates a commercial food packaging plant in Virginia. On July 26, 2013, Phoenix hired Defendant M&O Agencies, Inc. (“Mahoney”) to serve as Phoenix’s exclusive broker of record. This was reflected in an “Agent/Broker Record of Change” signed and dated the same day. Phoenix alleged that its agreement with Mahoney required Mahoney to advise it concerning insurance matters, procure health insurance for its employees and to provide ongoing consultation work related to the foregoing. In late 2013, Mahoney advised Phoenix to self-insure and to procure stop-loss insurance. It also allegedly advised Phoenix to retain the services of a TPA, Tall Tree Administrators, LLC (“Tall Tree”), to administer the trust from which employee benefit claims were to be paid and to procure stop-loss coverage from Gerber Life Insurance Company (“Gerber”).

Approximately a year later, it is alleged that Mahoney represented that the self-insurance arrangements were succeeding and that discussions with Gerber for a renewal of the stop-loss contract for the coverage year beginning October 1, 2014 were going well. At this point, the allegations become somewhat muddled, so I will simply quote from the Court’s opinion: “On August 12, 2014, Mahoney informed Phoenix of Gerber’s renewal proposal for the 2014-15 coverage year. Phoenix approved the renewal proposal on the same day. On September 8, 2014, Mahoney advised Phoenix that Tall Tree required an additional $135,462 to satisfy employee claims as the Trust lacked sufficient funds. On September 9, 2014, Mahoney advised Phoenix that it need not pay outstanding health insurance claims. Tall Tree similarly advised Phoenix on September 10, 2014, explaining that Gerber would pay all claims accruing on after May 1, 2014 pursuant to the aggregate stop-loss provision for coverage year 2014-15. On September 12, 2014, Tall Tree advised Phoenix not to pay the outstanding claims or seek reimbursement until October, as doing so earlier would jeopardize the renewal process with Gerber. On October 13, 2014, Mahoney informed Phoenix that negotiations with Gerber to set rates for the policy period beginning on October 1, 2014 were ongoing. Mahoney also informed Phoenix that Gerber conditioned renewal of the stop-loss coverage on Phoenix providing onsite medical staff. On October 22, 2014, Mahoney informed Phoenix that Gerber had not agreed to a renewal for the 201415 coverage year, but that an amended policy was forthcoming. On October 24, 2014, Mahoney advised Phoenix that Gerber refused to renew stoploss coverage unless Phoenix paid all

outstanding claims from the 2013-14 coverage year. Though Phoenix incurred out of pocket expenses related to outstanding claims near the end of the 2013-14 coverage year, Phoenix received no reimbursement under the stop-loss contract with Gerber. On November 3, 2014, Phoenix terminated its relationship with Mahoney and hired a new health insurance broker. Phoenix learned that Mahoney had instructed both Gerber and Tall Tree not to engage in direct communication with Phoenix. On December 19, 2014, Phoenix procured stop-loss coverage from Gerber for the 2014-15 coverage year. Gerber conditioned the renewed policy on Phoenix paying approximately $1,200,000 in unpaid claims. Additionally, the renewed insurance policy contained a $1,300,000 exclusion for claims arising during the 2014-2015 coverage year for a specific employee. In this lawsuit, Phoenix seeks recovery of its actual loss of $2,500,000 plus $1,000,000 in punitive damages.” [internal citations omitted]. We cannot tell from the Court’s opinion what the $1,300,000 dispute was about, but it sounds like (and this is merely my speculation) a disclosure/ laser problem. Nor can we tell what the specifics of the alleged $1,200,000 in “unpaid claims” concerned, though one could infer, based on the quote from the Court above, that these were allegedly not timely paid under the terms of the earlier stop-loss contract, allegedly due to advice Phoenix received from Mahoney and Tall Tree.

The Court’s Analysis of Phoenix’s Claims and its Application of the Economic Loss Rule The first important conclusion the Court reached was that Phoenix’s claims in the first two Counts of its August 2016 | The Self-Insurer

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Complaint arose out of the agreement dated July 26, 2013, between Phoenix and Mahoney whereby Mahoney became Phoenix’s agent of record. The Court concluded that regardless of the precise terms of this agreement, Mahoney’s alleged failure to procure stop-loss insurance for Phoenix for the 2014-2015 year, “such failure may constitute a breach of the obligations implicit in the agency relationship... .” The second Count of Phoenix’s Complaint alleged “professional negligence” – essentially malpractice – on the part of Mahoney. Because Virginia law, as interpreted by this Court, characterizes such a claim as a breach of contract (and not a tort), the Court found that Counts I and II of Phoenix’s Complaint were essentially redundant and “merged” them for purposes of its analysis. Since both Counts were, according to the Court, simply breach of contract claims, only contractual damages were recoverable. This is the application of the “economic loss rule.” No punitive damages, such as may be available in an appropriate tort-based action, were recoverable. The Court likewise concluded that Phoenix’s remaining claims simply arose out of the agency relationship and were barred by the economic loss rule as well. As for the claims against the TPA, Tall Tree, the Court concluded that all of Phoenix’s claims occurred during the existence of the written contract between Tall Tree and Phoenix and were, essentially, complaints about Tall Tree’s performance under that agreement. As such, they were barred by the Virginia economic loss rule. The Court left intact Phoenix’s claim against its TPA for breach of contract, but, as it did with the claim against Mahoney, limited Phoenix’s potential recovery to contractual damages only. Postscript: After receiving the guidance from the District Court described above on June 3, 2016, the parties agreed to a settlement of the matter, as reported by the Court in a document filed on June 22, 2016. The terms of the settlement were not disclosed in the Court’s report. This case illustrates the potential value of motion practice in the resolution of stop-loss (and, of course other) disputes. I am firmly convinced that the Court’s opinion and its description of the effect of the Virginia economic loss rule led to the early settlement of this matter. ■

Tom Croft is a magna cum laude graduate of Duke University (1976) and an honors graduate of Duke University School of Law (1979), where he earned membership in the Order of the Coif, reserved for graduates in the top 10% of their class. He returned to Duke Law in 1980 as Lecturer and Assistant Dean (1980-1982) and as Senior Lecturer and Associate Dean for Administration (1982-1984). He also taught at the University of Arkansas-Little Rock law school, where he was an Associate Professor of Law (1990-91), earning teacher of the year honors. Tom currently consults extensively on medical stop-loss claims and related issues, as well as with respect to HMO Excess Reinsurance, Medical Excess of Loss Reinsurance and Provider Excess Loss Insurance. He maintains an extensive website analyzing more than one hundred cases and containing more than ﬁfty articles published in the Self-Insurer Magazine over many years. See www.stoplosslaw.com. He regularly represents and negotiates on behalf of stop-loss carriers, MGUs, Brokers, TPAs and Employer Groups informally, as well as in litigated and arbitrated proceedings and has mediated as an advocate in many stop-loss related mediations. Tom can be reached at tac@xsloss.com.

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Despite Underwriting Losses, RRGs Remain Financially Stable This article originally appeared in “Analysis of Risk Retention Groups” – First Quarter 2016

review of the reported financial results of risk retention groups (RRGs) reveals insurers that continue to collectively provide specialized coverage to their insureds while remaining financially stable. Based on reported financial information, RRGs have a great deal of financial stability and remain committed to maintaining adequate capital to handle losses. It is important to note that ownership of RRGs is restricted to the policyholders of the RRG. This unique ownership structure required of RRGs may be a driving force in their strengthened capital position.

Balance Sheet Analysis During the last five years, cash and invested assets have increased at a faster rate than total liabilities. Also, the level of policyholders’ surplus becomes increasingly important in times of difficult economic conditions by allowing an insurer to remain solvent when facing uncertain economic conditions. Written by Douglas A Powell, Sr. Financial Analyst, Demotech, Inc. 14

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Since first quarter 2012, cash and invested assets increased 74.6% and total admitted assets increased 59.5%. More importantly, over a five year period from first quarter 2012 through first quarter 2016, RRGs collectively increased

policyholders’ surplus 56.1%. This increase represents the addition of over $1.6 billion to policyholders’ surplus. During this same time period, liabilities have increased 61.8%. These reported results indicate that RRGs are adequately capitalized in aggregate and able to remain solvent if faced with adverse economic conditions or increased losses.

Liquidity, as measured by liabilities to cash and invested assets, for first quarter 2016 was 71.5%. A value less than 100% is considered favorable as it indicates that there was more than a dollar of net liquid assets for each dollar of total liabilities. This also indicates an increase for RRGs collectively as liquidity was reported at 70.8% at first quarter 2015. Loss and loss adjustment expense (LAE) reserves represent the total reserves for unpaid losses and LAE. This includes reserves for any incurred but not reported losses as well as supplemental reserves established by the company. The cash and invested assets to loss and LAE reserves ratio measures liquidity in terms of the

carried reserves. The cash and invested assets to loss and LAE reserves ratio for first quarter 2016 was 212.7% and indicates a decrease over first quarter 2015, as this ratio was 222.9%. These results indicate that RRGs remain conservative in terms of liquidity. In evaluating individual RRGs, Demotech, Inc. prefers companies to report leverage of less than 300%. Leverage for all RRGs combined, as measured by total liabilities to policyholders’ surplus, for first quarter 2016 was 160.1% and indicates an increase compared to first quarter 2015, as this ratio was 157.9%. The loss and LAE reserves to policyholders’ surplus ratio for first quarter 2016 was 105.3% and indicates an increase compared to first quarter 2015, as this ratio was 100.1%. The higher the ratio of loss reserves to surplus, the more an insurer’s stability is dependent on having and maintaining reserve adequacy. Regarding RRGs collectively, the ratios pertaining to the balance sheet appear to be appropriate and conservative.

Premium Written Analysis Since RRGs are restricted to liability coverage, they tend to insure medical providers, product manufacturers, law enforcement officials and contractors, as well as other professional industries. RRGs collectively reported over $1.4 billion of direct premium written (DPW) through first quarter 2016, an increase of 3% over first quarter 2015. RRGs reported nearly $950 million of net premium written (NPW) through first quarter 2016, a decrease of 3.1% over first quarter 2015. The DPW to policyholders’ surplus ratio for RRGs collectively through first quarter 2016 was 126.3%, up from 120.9% at first quarter 2015. The NPW to policyholders’ surplus ratio for RRGs through first quarter 2016 was 81.9% and indicates a decrease over first quarter 2015, as this ratio was 83.4%. Please note that these ratios have been adjusted to reflect projected annual DPW and NPW based on first quarter results. An insurer’s DPW to surplus August 2016 | The Self-Insurer

ratio is indicative of its policyholders’ surplus leverage on a direct basis, without consideration for the effect of reinsurance. An insurer’s NPW to surplus ratio is indicative of its policyholders’ surplus leverage on a net basis. An insurer relying heavily on reinsurance will have a large disparity in these two ratios.

In regards to RRGs collectively, the ratios pertaining to premium written appear to be conservative.

A DPW to surplus ratio in excess of 600% would subject an individual RRG to greater scrutiny during the financial review process. Likewise, a NPW to surplus ratio greater than 300% would subject an individual RRG to greater scrutiny. In certain cases, premium to surplus ratios in excess of those listed would be deemed appropriate if the RRG had demonstrated that a contributing factor to the higher ratio is relative improvement in rate adequacy.

Income Statement Analysis In regards underwriting gains and losses, RRGs collectively were not profitable through first quarter 2016 as RRGs reported an aggregate underwriting loss of $12.2 million. The collective underwriting losses were offset by strong investment gains and other sources of income. RRGs reported a net investment gain of $47 million and a net income of $34.3 million. RRGs have collectively reported a net income at each yearend since 1996. The loss ratio for RRGs collectively, as measured by losses and loss adjustment expenses incurred to net premiums earned, through first quarter 2016 was 77.3%, a decrease over first quarter 2015, as the loss ratio was 82.3%. This ratio is a measure of an insurer’s underlying profitability on its book of business.

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The expense ratio, as measured by other underwriting expenses incurred to net premiums written, through first quarter 2016 was 12% and indicates an increase compared to first quarter 2015, as the expense ratio was reported at 11.4%. This ratio measures an insurer’s operational efficiency in underwriting its book of business. The combined ratio, loss ratio plus expense ratio, through first quarter 2016 was 89.2% and indicates a decrease compared to first quarter 2015, as the combined ratio was reported at 93.6%. This ratio measures an insurer’s overall underwriting profitability. A combined ratio of less than 100% indicates an underwriting profit. Regarding RRGs collectively, the ratios pertaining to income statement analysis appear to be appropriate. Moreover, these ratios have remained within a profitable range.

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Conclusions Based on First Quarter 2016 Results Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialized coverage to their insureds. The financial ratios calculated based on the reported results of RRGs appear to be reasonable, keeping in mind that it is typical and expected that insurers’ financial ratios tend to fluctuate over time. The results of RRGs indicate that these specialty insurers continue to exhibit financial stability. It is important to note again that while RRGs have reported net income, they have also continued to maintain adequate loss reserves while increasing premium written year over year. RRGs continue to exhibit a great deal of financial stability. ■ Douglas A Powell is a Senior Financial Analyst at Demotech, Inc. Mr. Powell supports the formulation and assignment of Financial Stability Ratings® by providing analysis of statutory ﬁnancial statements and business information. He also performs ﬁnancial and operational and peer group analyses, as well as benchmark studies for client companies. Email your questions or comments to dpowell@demotech.com.

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INSIDE

the Beltway Written by Dave Kirby

Task Force Makes Congressional Rounds on Behalf of Enterprise Risk Captives

IIA’s “summer soldiers” trudged through triple-digit heat throughout Capitol Hill to rally Congressional support for captive insurance companies that cover the often unique risks of small businesses. This was the latest foray by members of the Enterprise Risk Captive Advocacy Task Force (ERCATF) appealing for clariﬁcation of the new law taking effect in 2017 governing captives that operate under the Internal Revenue Service (IRS) code 831(b). Members of the task force and others in the captive industry have expressed uncertainty with some aspects of the new law as it applies to captive company ownership, valuation and other elements. Previously, SIIA members and staff had made repeated visits to members of Congress, the congressional Joint Committee on Taxation (JCT) and the IRS. “It’s imperative that we make sure that all the key people and committees on the Hill understand the importance of small captives and consider further legislative action to improve the risk mitigation capabilities of small and medium sized businesses,” said Ryan Work, SIIA’s vice president of government relations during a briefing for task force members prior 20

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to their Congressional visits. The congressional meeting schedule put together by SIIA staff focused on senators and representatives of captive domicile states as well as Members of key committees that would be likely to consider future legislation affecting enterprise risk captives.

“It’s important to remember that the glass isn’t even half empty, in fact it’s pretty full,” said committee chair Jeff Simpson. “By increasing the allowable annual premium under 831(b) from $1.2 million to $2.2 million (indexed to inflation), the new law has already proved beneficial to owners of small captives. Now there are just a few more details we need help with from the government.” Task force member Doug Butler of MIJS Captive Management LLC of Atlanta was participating in his first round of Congressional visits with SIIA. “I’m impressed that SIIA members who otherwise may be in competition for some of the same business have come together for the good of our industry,” he said. “It’s important to note at this point that we and members of Congress really want the same outcomes – to operate small captives in the right way for everyone’s benefit.” Kevin Doherty, a longtime member of SIIA’s Alternative Risk Transfer (ART) Committee who also serves as president of the Tennessee Captive Insurance Association, said that SIIA’s leadership provides a good chance for long range success of the small captive industry. “As a non-domiciliary-specific organization, SIIA has unique attributes in federal legislative affairs that can help

Congressional Ofﬁces Visited by SIIA Memebers

Senate

Sen. Lamar Alexander (R-TN) Chairman, HELP Committee Sen. Tom Carper (D-DE) Finance Committee Sen. Chris Coons (D-DE) Finance Committee Sen Bob Corker (R-TN) Banking Committee Sen. Charles Grassley (R-IA) Finance Committee Sen. Dean Heller (R-NV) Finance Committee Sen. Johnny Isakson (R-GA) Finance Committee Office of Senator Tim Scott, SIIA Members Keith Langlands, Joel Pina and Doug Butler

the state organizations focus on the best ways to serve their industries and markets. In this way, SIIA can serve as everyone’s Washington office for captive insurance matters,” he said.

ERCATF “Summer Soldiers”

Sen. Tim Scott (R-SC) Finance Committee Jim Lyons, Majority Tax Counsel Finance Committee

House of Representatives Rep. Marsha Blackburn (R-TN) Energy and Commerce Committee Rep. John Carney (D-DE) Financial Services Committee Rep. Dr. Phil Roe (R-TN) Education and Workforce Committee

Members of the Enterprise Risk Captive Advocacy Task Force participating in the July round of Congressional visits: Bill Buechler, Crow Horwath; Doug Butler, MIJS Captive Management; John Capasso, Captive Planning Associates; Kevin Doherty, Nelson Mullins; Jeremy Huish, Artex; Keith Langlands, Synergy Captive Strategies; Chaz Lavelle, Bingham, Greenbaum, Doll LLP; Josh Miller, KeyState; Michael O’Malley, Strategic Risk Solutions; Joel Pina, Keystone; Joanne Shaver, Intuitive; Jeff Simpson, Gordon, Founaris & Mammarella, PA. ■

Sen. David Perdue (R-GA) Budget Committee

August 2016 | The Self-Insurer

COMMON Investment

Mistakes Made by Captive Owners

hen organizing a captive, new captive owners put a lot of effort into the insurance side of their company – picking the right captive manager and domicile, making sure the underwriting and claims processes are in place. Yet often they treat the captive’s investments as an afterthought, putting it to the wayside until it can no longer be overlooked. According to Carl Terzer, principal of CapVisor Associates, LLC, “Captives should be paying a lot more attention to their investment program and bring more discipline and analytic support to the decision-making process than they are.” Industry analysts estimate that 50% or more of a captive’s profitability comes from their investment program, yet Terzer has found that captive board meetings are primarily about underwriting and liability issues, leaving investments only a small portion of the allotted time. Written by Karrie Hyatt

COMMON INVESTMENT MISTAKES | FEATURE Terzer founded CapVisor Associates in 2008 as investment advisory firm that focuses on the insurance marketplace, providing custom solutions for insurance asset management. He also teaches courses about captive investments for International Center for Captive Insurance Education (ICCIE). With more than 30 years’ experience in insurance asset management, Terzer has seen the growth of the captive industry over the course of his career and with that experience he has seen a lot of mistakes that captives make regarding their investments. Here are five that he has found to be most common.

Investment Policy is an Afterthought

When captives are formed, they will get all the major service providers in place – their captive manager, attorney, claims manager, accountants. How they intend to manage their investments is rarely a part of the early decision making process. Often new captives will leave investment decisions until it becomes an urgent need and then pick an investment manager without knowing how they really want to approach investments. Terzer believes that it needs to be an upfront consideration for any captive, but has found that it seldom happens that way. “Most captive boards are made up of officers of the parent company which could be a construction company or group of doctors or whatever. Their profession is something other than running an insurance company and it certainly isn’t investment management, so they’re really handicapped. That generates an over reliance on the investment manager they pick.” Creating a company investment policy, or Investment Policy Statement

(IPS), early on can help captives make the most of their investment funds. It will also help the investment manager meet the needs and interests of the captive owners. Terzer recommends that companies think about how much of a downturn they would be willing to sustain during a given year and how much liquidity they want to have. Captive owners should make sure they understand the difference between wealth management and insurance asset manager, as well as their investment horizon. They also need to consider how involved they want to be – whether they are going to be monitoring their investments quarterly or if they are more interested in where they will end up in three to five years. Terzer added, “They really ought to be having a much more thoughtful process to developing their investment strategy. It should really be ar ticulated in their policy statement and they should have that in place before they pick their manager. Otherwise, their manager will bring their biases to the table and could unduly influence the captive to do it their way instead of the way the captive would be more comfortable.”

of recommendations from an advisor, such as their captive manager, accountant, or regulator. Terzer likens this method to choosing a new car based on what your neighbors think. “It’s like going to three or four neighbors and saying what three kinds of cars should I look at. It’s absurd. You’d never do that with your own money or decisions, especially if you were aware of a better way. Those car buying decisions you make are worth 30 or 40 thousand dollars, but why use an even less scientific or analytic approach, no data points, for a decision regarding 5, 10 or 50 million dollars of a captive’s money?” Part of this misstep is that many captive owners don’t understand that there is big difference between investment management and insurance asset management. Terzer said this a specialty that many wealth managers may not understand. “Insurance asset management is pretty much an area of expertise unto its own. Just because you can manage assets doesn’t mean you can manage insurance assets, it’s a real specialty within the scope of investment management.”

Selecting the Wrong Investment Manager

“The primary difference between an investment manager and an insurance asset manager, with regard to taxes,” added Terzer, “Is finding an asset manager who can dynamically balance the captive’s portfolio between taxable and tax-exempt investments. It’s a firm who understands the underwriting and the liabilities side of the captive and manages that portfolio in a manner correlated to what’s happening with the liabilities side of the financial sheet.”

Choosing an investment manager should be like picking out a new car, according to Terzer. As it stands, most captive owners will stop by a few tables at captive conferences to talk to investment manager candidates. Or they will get a couple

This is why a well thought out investment policy can be key to selecting the best investment manager. Like selecting the data points that are most important in a new car, a new captive should look at what they want to accomplish with their investments

“To create an investment policy,” he continued, “A captive can hire a consultant or they can put somebody on their board who’s got investment savvy and has some insurance understanding. Hopefully, that person can lead them to better decisions.”

August 2016 | The Self-Insurer

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COMMON INVESTMENT MISTAKES | FEATURE and select a manager who can help meet those goals. “It’s important for captives to make the selection of their investment manager much more carefully,” continued Terzer. “I realize [new captives] are not all going to use a consultant. I realize that they’re not all going to do the due diligence we feel they should do. However, using a few of these risk-adjusted statistics provided by [a consultant] can be a tremendous help in assessing a manager’s ‘skill’ level – something that cannot be gleaned looking at historical nominal returns. Instead of asking about nominal returns for the last five years, captives should ask for the manager’s Alpha and Information Ratio, then they can compare managers on a risk-adjusted or ‘skill’ basis. A bit of education goes a long way to helping them identify a good manager from an average or not-so-good manager.”

manager. It generally doesn’t take long for a captive to accumulate that much. Even small captives and those in the 831(b) market will often start with a million in capital before writing their first year’s premium.

“[New captives] will be quite limited with a new captive as to what they can do because they don’t have claims experience and they have to remain liquid and represent quality,” added Terzer. “Obviously if they have no claims experience they have to remain fairly liquid, so it needs to be a judgement call.” If captives wait until they have four or five million in the bank, they have waited too long and investing becomes an afterthought. According to Terzer, “The opportunity cost for that is pretty high. In the example, above using 2% bond portfolio return vs .25 basis point on a five million bank balance, the opportunity cost is $87,500 per annum. That pays a lot of bills.”

Investing Too Late Sometimes the biggest mistake a captive can make is waiting too long to start its investment program. Captives will start with their initial capital, start writing policies and collecting premium and putting into their bank account, letting it accrue. Terzer said, “The mistake captives make is often allowing that money to accumulate to too high an amount which has a tremendous opportunity cost. This cost is the difference between the 25-50 bias points a bank may pay on cash balances – a negative ‘real’ rate of return, after inflation – and what a bond portfolio could generate which could be between 1.5 and three percent [per year].” He suggests that when a captive’s bank account accrues to between one and two million, the captive should start to consider their investment program and line up an investment

Investing Too Early Another common mistake is investing before they have enough capital in the bank. Captives will begin operations, have money accumulating and will want to immediately start investing it without much consideration as to how they should invest it. Terzer describes it like this, “The investment manager is very kind and helpful, gives them boilerplate type investment policy statement and guidelines and even helps pick the benchmark they will be measured against. The [manager’s] biases are often apparent in that the documentation reflects the way that they want to manage the money and the risk tolerance that they think is good for the captive, usually with little input from the captive.” August 2016 | The Self-Insurer

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COMMON INVESTMENT MISTAKES | FEATURE “That’s jumping the gun the other direction because now you really have someone else’s plan,” said Terzer. “You’ve got the manager’s plan, so there are all kinds of biases built into that.”

Not Managing from an ERM Approach What all the previous mistakes amount to is a lack of comprehensive approach to managing the liabilities and investments for a captive. Terzer recommends that captives should look at their business from an enterprise risk management (ERM) viewpoint – a company-wide approach to managing risks. ERM, in the case of a captive, is about looking at both liability and investments and approaching them in a balanced way. “They should not, as most do,” he said, “Look at the liability side and then the investment side in silos and make decisions separately. That’s what most companies do and it’s wrong. You have to look at the symbiotic relationship between asset and liabilities – the investment program has to correlate to the underlying liability structure of the insurance company.” Terzer jokes that “If you’ve seen one captive, you’ve seen one captive,” and has found that captives that approach their investments with as much interest as the insurance side can create a much more solid company. ■

Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than 10 years. More information abour her work can be found at www.kerriehyatt.com.

August 2016 | The Self-Insurer

Appeal Games Providers Play: Stick to the Rules for the Win This article represents “commentary” and represents views of the authors. We welcome other opinions on the subject

ealth beneﬁts appeals by providers can be intimidating for a plan. The rules are detailed and especially if the provider is represented by a lawyer the demands can be pretty threatening. In my experience this is all too often aggravated by providers who don’t play by the rules themselves and try to game the appeals process. Appeals of dialysis claims may be one of the most common. There are probably two reasons for this: First, a beneficiary on dialysis typically needs three treatments per week, each of which generates a claim, under plan coverage over a sustained period of time; and second, because of the extreme concentration of the outpatient dialysis market (two very large dialysis chains control two-thirds or more of the market), dialysis rates charged to self-insured plans in particular are greatly inflated. Plans need to control dialysis costs, but when they take steps to control them, providers appeal. Working in this area I’ve reviewed several hundred appeals over more years than I care to remember and seen some pretty creative tricks.

Written by John R. Christiansen 28

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The solution in all cases, however, is to recognize that playing by the rules in fact protects the plan and insisting that providers do the same defeats their

games. With that goal in mind, here are some of the tricks I’ve seen tried and the strategies to deal with them.

Is This an Appeal, or Isn’t It? Not every letter, fax or phone call about a claim counts as an appeal. Providers do sometimes have legitimate questions and there can be claims payment errors which can and should be cleared up without need for an appeal. The US Department of Labor (DOL) recognizes this and lets plans distinguish between claims queries and appeals. When you get a legitimate query, it should get the appropriate answer.

What is less legitimate and more confusing, are letters and calls that demand payment and maybe threaten legal consequences, without identifying themselves as appeals. The game in this case is to try to persuade the plan to pay more without bothering with actually appealing. This is sometimes tried when it’s very clear any appeal would be denied, for example because it is too late. A plan which lets itself be intimidated this way winds up paying more than it should, sometimes much more. The solution is to insist that any appeal be filed as required by ERISA and the plan documents. Plan appeal processes can and should and in the vast majority of cases do, require appeals to be in writing directed to a specific address or office and to include specific information. No demand which fails to meet these requirements should be accepted as an appeal. Any communication to the claimant in response to such a demand should include a statement that it was not accepted as an appeal.

Guess My Authority! The right to appeal claims decisions lies with the beneficiary

who received the health care, or if the beneficiary is not competent (e.g. a minor or not capable of making decisions for him or herself), the beneficiary’s legal representative. The beneficiary’s health care provider does not have its own right to appeal claims decisions, though sometimes some seem not to understand that. A beneficiary can and typically will, assign the provider the right to file claims and receive payments directly. However, this kind of assignment of benefits is not enough to authorize the provider to pursue appeals with the plan. This is a separate authorization to act as the beneficiary’s “authorized representative,” though it can be included in the same document as the assignment of benefits. Most providers’ forms include this kind of authorization, but some do not. In addition, some plans prohibit assignment of benefits, though most do not in order to minimize inconvenience to beneficiaries. A provider’s unsupported assertion of a right to appeal therefore should not be accepted and the provider should be required to provide a copy of the assignment and authorization, signed by the beneficiary. This document should be reviewed and if there is any question the plan documents should be checked, to confirm the provider has valid authority to exercise the beneficiary’s right to appeal.

Bringing Untimely Claims Back from the Dead ERISA is clear: A plan has to allow a beneficiary at least 180 days to file an appeal from the date of an adverse benefit notification on a claim and doesn’t have to accept appeals which are not timely filed. A plan can allow for more time than that, but every plan document I’ve ever seen allows 180 days. This applies to both first-

level appeals and second-level appeals if the plan allows for them. Some appeals ignore this rule and try to include adverse benefit notifications given well over 180 days before. The provider really has nothing to lose by trying this; if the plan makes the mistake of accepting and responding to an untimely appeal, it may have waived the right to reject it as untimely. A plan might therefore accidentally revive an appeal which was dead on arrival. Untimely appeals are easy enough to detect when there is only one or are only a few claims and all were clearly determined more than 180 days ago. In those cases, the easy solution is to reject the appeal as not timely. It’s more difficult where the provider throws together a big batch of appeals of a variety of adverse benefit determinations, some of which are timely and some of which are not. Where it looks like this is being tried the claims and any previous appeal records should be carefully reviewed. If any appeals are found to be untimely, they should be rejected separately from the substantive response the plan makes to any timely appeals. If the plan mistakenly responds to all the appeals substantively, it may revive the untimely appeals as well.

Somebody Said Something, Sometime One of the more common appeal games is the claim that the plan somehow communicated to the provider that it would be paid at a specific rate and that the provider relied on that representation in accepting the beneficiary as a patient. If in fact this happened and the plan (or someone with authority acting on its behalf) did clearly and unconditionally make such a representation, then the plan may very well be stuck with it. August 2016 | The Self-Insurer

This shouldn’t happen and in fact doesn’t happen often. What does happen is that someone acting on behalf of the provider may call the plan (or its administrator) to confirm coverage – or the provider will claim that happened, even if it didn’t. If a call is made, the appropriate response is to confirm that the patient is a beneficiary of the plan, but that the terms of coverage are determined by the plan and not guaranteed. To deal with this gamesmanship the plan, or administrator, should be very clear who is authorized to respond to providers making this kind of inquiry. Those responding to such inquiries should be trained not only in how to respond, but also in responses they should not make and are not authorized to make. There should be records of all such calls, with names of all parties, time and date and content of the call. It might also be helpful to have a standardized recording the caller has to listen to before being connected, which states these limitations. In this game, the provider is trying to set the plan up to have to prove a negative – to prove that the call didn’t happen. The solution is to make sure your records let you do just that.

Let’s Throw It All at the Wall One of the more irritating games I see is the inclusion of issues in an appeal which have little or nothing to do with the actual benefits determinations – just sort of throwing them at the wall and hoping something sticks. Sometimes it seems like this is just laziness – for example, when the appeal letter is clearly a cut-and-paste of an earlier letter to a different plan. (The inclusion of the other parties’ name

by accident can be a dead giveaway.) More often, it seems intended to make responding to the appeal more difficult and make the appeal seem more serious and threatening. Unfortunately, if an issue is raised in an appeal, it does need a response and the response needs to address the merits. This sometimes means several paragraphs (or a few pages) discussing why an issue is actually not presented, or is irrelevant. Fortunately, there are only so many issues that even the most creative mind can develop, so once you’ve seen an issue a few times it’s pretty straightforward to answer it. Unfortunately, you still have the burden of making the response and if you haven’t seen the issue before that can take some work. The good news is, however, that in the process you can and should be able to develop a solid appeal record that would clearly withstand judicial scrutiny.

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Return of the Zombie Appeal Plans are required to have at least one appeal level; most have two; and more than two levels of appeal is prohibited. Some providers may nonetheless try to appeal again after appeals have been exhausted.

determinations were based on a reasonable interpretation of the applicable plan language and appropriate information and weren’t biased by a conflict of interest, the court is supposed to uphold the plan’s determinations.

This may be in the form of a specific appeal of the final appeal determination of a claim or claims, or the appeal may be thrown in as part of a batch of claims including some which are valid, as in the discussion of untimely appeals above. As with untimely appeals, a plan which responds to an exhausted appeal substantively risks bringing it back from the dead. As with untimely appeals, then, any attempt to appeal an exhausted appeal should be rejected separately from any substantive response.

Play by the Rules for the Win If a plan sticks to the ERISA rules and its plan language and insists providers do it too, at the end of the appeals process the provider’s alternatives are to (1) accept the payments received, (2) seek external review, an option which is only available if the determinations involved a medical judgment and did not involve a contractual or legal interpretation, or involved a rescission of coverage, or (3) seek judicial review. A plan which takes the appeals process seriously and uses it to build a good record supporting its determinations should be in a good position to defend itself in court.

Given these standards, a plan which has made sure that the appeals record clearly shows the claims considered, the bases for their determination and the reasons for those determinations, will have made it clear that it should win if the provider takes it to court. Nobody wants to start litigation they expect to lose and in this kind of limited litigation the plan wouldn’t even be threatened with uncontrolled legal fees. A provider in this situation has no incentive to try judicial review – and so a plan which makes sure its appeals are played by the rules should win the game. ■ John R. Christiansen has practiced law since 1985, with an emphasis on health care issues since the early 1990s. After practicing in large, national law firm and consulting firm environments for many years, John established his own law firm in 2005 in order to practice more flexibly and serve his clients more directly and personally. John has been legal counsel to Renalogic since it was founded in 2002 and serves as its Chief Legal Officer (“CLO”). As CLO he is responsible for the full range of company legal issues, as well as legal research and analysis, support and quality assurance in the development and implementation of the Company’s services. This includes expert support and analysis on all issues related to dialysis cost containment and chronic kidney disease management, from ERISA plan administration and appeals, to PPACA reforms affecting cost containment options, Medicare Secondary Payor, state licensing and payment laws and PPO and other network contract drafting and interpretation.

Judicial review of plan determinations under ERISA is very deferential to informed plan judgment. An ERISA action is decided by a judge without a jury, based on the record developed on the plan appeals. If the appeal August 2016 | The Self-Insurer

What do Population Health Management, Captives and Reinsurance Have in Common?

ne of the areas in the Affordable Care Act (ACA) with strong possibilities of “bending the cost curve” is the creation of the Accountable Care Organization (ACO). ACOs can place providers at risk in an integrated delivery system designed to transform the financing mechanism from volume-based to value-based financial incentives and reimbursements. Examples of financing changes from traditional fee for service medicine are bundled payment initiatives, patient-centered medical homes, Medicare shared savings programs and ACOs. If an ACO is responsible for managing care for a given population, it must manage that risk. The primary means to do this in the ACO model is through population health management. This article discusses the positive risk management consequences of population health management to a provider entity directly responsible for managing a given population. Also touched on are the potential advantages of a partnership with a professional reinsurer capable of accepting and managing catastrophic medical excess of loss risk exposures which occur in that population. The ACO model will be successful if it manages the population’s health at the primary level and protects itself against catastrophic exposures through reinsurance coverage and managed care services at the catastrophic level.

Written by Mark Troutman 32

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The simple goal of population health management is to keep patients

as healthy as possible and minimize the need for expensive intervention. It accomplishes this by implementing disease management programs for the highest risk and sickest patients, but also by employing wellness programs so others remain healthy.

patients. They also assume responsibility for reviewing health and wellness materials and maintaining the accuracy of their own personal health record. Various sub-populations will require different disease management programs. All subpopulations will benefit from wellness and preventive care.

The Population Health Management Continuum DEFINE POPULATION

MEASURE OUTCOMES

AUTOMATED

& ONGOING

IDENTIFY CARE GAPS The Population Health Management Continuum

DATA INTEGRATION ANAL YSIS MEASURE REPORTING OUTCOMES COMMUNICATIONS

DEFINE POPULATION

AUTOMATED

& ONGOING

MANAGE CARE

DATA INTEGRATION STRATIFY ANAL YSIS REPORTING RISKS COMMUNICATIONS

MANAGE CARE

6. Measure the outcomes – the ACO can’t manage it if it doesn’t IDENTIFY measure it! The ACO must CARE GAPS focus on quality and evidencebased outcome protocols and determine areas of success and areas of needed improvement.

1. Define the population – the ACO must understand the population for which it is responsible for delivering the full complement of medical care.

the distribution of health risks changes continually, this population health management process must be continuously employed. If effective, the ACO will then be a healthcare financing and delivery model which successfully accomplishes the triple aim of healthcare reform: to improve the patient care experience, to improve the outcomes for health populations and to lower the per-capita cost of care.

2. Identify the care gaps – the ACO must assess the current health status of the defined risk population and determine what health care needs are unmet.

Catastrophic Claims Risk

ENGAGE PATIENTS

Because STRATIFY RISKS

ENGAGE PATIENTS Source: Institute for Health Technology Transformation

Source: Institute for Health Technology Transformation

The Continuum of Care Successful population health management relies upon the execution of six critical steps (see diagram: The Population Health Management Continuum):

5. Manage the care – the ACO must focus on evidence-based protocols and practices when it employs preventive, chronic and catastrophic case management programs specifically targeted to the various sub-populations identified.

3. Stratify the risks – the ACO must determine which patients are most likely to become sick and incur major medical costs and place the population in various subgroups to target medical services for specific health issues and conditions. Health surveys and predictive modeling are two tools to accomplish this objective. 4. Engage the patients – the ACO must engage patients to be their own advocates through various preventive, chronic and catastrophic health care management programs designed to monitor and maintain member compliance with all protocols and practices necessary to achieve high quality, cost-effective healthcare outcomes. When members assume joint responsibility for scheduling appointments, understanding treatment options and potential results, they become better healthcare consumers and better

With many health systems forming or acquiring their own health plans, assuming more risk from payers via ACO contracts and even directly contracting with employers in a narrow network strategy, protection from catastrophic medical claims becomes imperative. Although most health systems and ACOs are comfortable assuming risks for a given patient population, the vast majority still prefer risk protection for the catastrophic August 2016 | The Self-Insurer

claims such as traumas, transplants, premature births and hemophilia. Health plans and health systems with an affiliated captive insurance company already have an effective risk management tool at hand. Although the existing captive may have been formed to cover malpractice or professional liability risk, it may have access to capital that would allow it to assume additional types of risk, such as provider excess of loss and/ or employer stop loss risk. The captive as the final risk-bearing entity will need to develop the following skill set or contract with a strategic business partner to do so:

3. Purchase no protection and self-insure the exposure to catastrophic medical claims.

4. Price and administer stop loss coverage on all medical risks placed into the captive.

Excess of loss protection is usually purchased by the ACO to eliminate the exposure to catastrophic medical claims from any single member for which the ACO is at risk. Without this protection, the ACO is at risk of the medical claims exceeding the capitation premium by a substantial amount through outlier claims through no fault of the provider. In the new era of unlimited claim liability in most situations, this coverage is paramount.

5. Provide medical case management support for catastrophic claims in network and out of network. The following diagram outlines one such medical excess of loss reinsurance program involving ACO risk ceded to a captive.

What Options Exist with Regard to the ACO Purchasing Provider Medical Excess of Loss Coverage?

1. Identify risks the health system is assuming from payers via ACO risk contracts, employers via direct contracting, their own employee benefit plan or their own health plan. 2. Develop risk placement Medical strategies for each.

insurance marketplace if permitted by the health plan.

3. Provide fronting services, if necessary, that allow ceding risk to the captive.

Excess

It is common for a health plan that is capitating ACO providers to offer to retain the risk for claims incurred per member above a chosen dollar 1. Purchase “pass-through” claim level. This is often called “passcoverage from the health plan through” reinsurance coverage since providing the capitation. the risk protection for catastrophic 2. Purchase provider excess claims in the capitated population ofofLoss Conduit Reinsurance loss insurance from the is Program passed through to the provider

Medical Excess of Loss Conduit Reinsurance Program Summit Reinsurance Services, Inc.

 

Provides managing underwriter services to conduit company and reinsurer to facilitate and manage the reinsurance program. Services include actuarial, underwriting, reinsurance and Services,claims Inc. processing, managed care agreements between theSummit parties, Reinsurance premium accounting, programs, risk mitigation, and reporting. Provides managing underwriter services to conduit company and reinsurer to facilitate and Retains X% allowance for managing services. manage theceding reinsurance program. Services underwriter include actuarial, underwriting, reinsurance and



agreements between the parties, premium accounting, claims processing, managed care programs, risk mitigation, and reporting. Retains X% ceding allowance for managing underwriter services.



Reinsurer 

Provides excess loss reinsurance to conduit company at $3M.

Reinsurer



Provides excess loss reinsurance to conduit company at $3M.

Conduit Company* Cedent 



Purchases insurance/reinsurance from conduit company as follows: Cedentdeductible o $500,000 o 90% coinsurance Purchases insurance/reinsurance o conduit No annual or lifetime limit from company as follows: o o o

$500,000 deductible 90% coinsurance No annual or lifetime limit

      

Develops policy/treaty. Retains 25% of the net risk premium and cedes Company* balance to Conduit captive through a quota share reinsurance agreement. Develops policy/treaty. Purchases excess from Retains 25% of theloss netreinsurance risk premium and cedes reinsurer $3M. through a quota share balance toatcaptive Retains X% ceding allowance as the insurer/ reinsurance agreement. reinsurer. Purchases excess loss reinsurance from

Captive  Assumes 75% of net quota share risk from conduit company.

Captive

 Assumes 75% of net quota share risk from conduit company.

reinsurer at $3M. Retains X% ceding allowance as the insurer/ reinsurer.

*Issues insurance policy to cedent for provider medical excess or HMO/health plan reinsurance treaty for HMO/health plan medical excess. In some situations the reinsurer also acts as the conduit company.

*Issues insurance policy to cedent for provider medical excess or HMO/health plan reinsurance treaty for HMO/health plan medical excess. The Self-Insurer | www.sipconline.net In some situations the reinsurer also acts as the conduit company.

Catastrophic medical claims aren’t just a probability — they’re a reality.

As a Captive Director, Risk Manager, VP of HR or CFO, QBE’s Medical Stop Loss Reinsurance and Insurance can help you manage those benefit costs. With our pioneering approach to risk and underwriting, we make self-insuring and alternative risk structures possible.

Individual Self-Insurers, Single-Parent and Group Captives For more information, contact: Phillip C. Giles, CEBS 910.420.8104 phillip.giles@us.qbe.com

August 2016 | The Self-Insurer

from the health plan providing the capitation. In this way, the providers are incented to arrange for all medical care per member, but to not worry about random and unpredictable catastrophic claims, both in network and out of network. It is important to understand if the ACO is at risk from one or more payers. This will affect its decisionmaking on how provider excess of loss insurance is purchased. If a provider entity is receiving capitation from a single source (government or commercial payer), that capitation source may be best able to offer protection against catastrophic losses. Any such protection from the capitation source does not normally provide coverage against catastrophic exposures to individuals other than for members capitated by that one entity.

the health plan include a competitive premium with reduced expenses and profit charges, simplicity of premium and claim payments, ease of implementation and ongoing management, compliance with “PIP” regulations, transparency in rate and education on coverage options.

Potential benefits of buying medical excess of loss as “pass-through” from

The provider can accept global risk (for all claims) or risk for any specific set of medical services that are expressed in the capitation agreement. The capitation

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agreement will usually have a section which outlines the Division of Financial Responsibility (DOFR) between the payer and the provider ACO. Physician Incentive Plans (PIP) that place the physician groups at substantial financial risk are regulated by CMS regulations. The health plan and delegated provider ACO must comply with these regulations and limit the exposure to individual claims to specific levels as shown in the following PIP table:

Panel Size

Single Combined Limit

Separate Combined Limit

Separate Professional Limit

1-1000

$6,000

$10,000

$3,000

1,001–5000

$30,000

$40,000

$10,000

5,001–8,000

$40,000

$60,000

$15,000

8,001–10,000

$75,000

$100,000

$20,000

10,001–25,000

$150,000

$200,000

$25,000

>25,000

None

In conclusion, as ACO arrangements multiply, effective risk management strategies and tools exist to protect and support the ACO in its mission. ■ Mark Troutman is president of Summit Reinsurance Services, Inc., a managing underwriter for catastrophic medical excess of loss programs for Zurich North America. Mark Troutman can be reached at mtroutman@summit-re.com.

The panel size can take into account the total at-risk membership (Commercial, Medicaid and Medicare) the ACO provider may have from other payers. There is varied compliance with these PIP regulations which have not been changed for institutions since their inception (e.g. imposing an aggregating specific deductible for the entire member population in addition to the per member deductible is perhaps subverting the prescribed PIP coverage requirements). New PIP guidelines may be forthcoming from the Centers for Medicare and Medicaid Services (CMS) later in 2016.

Medical Management Support One of the services also potentially offered the ACO provider in such a catastrophic claim reinsurance arrangement is additional managed care claim management resources. These can be categorized as follows:

1. Care management – interface with health plan case managers to provide case-specific research and consultation, including validation of diagnosis and disease progression, evidence-based treatment options, outcomes research and access to clinical expertise. 2. Comprehensive medical management evaluation – full scale evaluation of utilization management, case management and disease management programs and processes, procedures and benchmarks for the ACO. This includes analysis of communications and workflows between utilization management, disease management and case management departments and how they might improve. Benchmark comparisons are made to standard (e.g. Milliman) care guidelines. 3. Cost management – additional support for complex bill analysis, provider contract analysis and negotiation of in-network and out of network claims including national PPO access and pharmacy benefit management programs.

August 2016 | The Self-Insurer

SIIAEndeavors Mark Your Calendar for the Next Month’s 36th Annual National Conference & Expo in Austin, Texas

elf-Insurance Institute of America’s (SIIA) upcoming National Conference & Expo is scheduled for September 25th-27th at the JW Marriott Austin in Austin, TX. This is the world’s largest event focused exclusively on the self-insurance/alternative risk transfer marketplace and typically attracts more than 1,700 attendees from around the United States and from a growing number of countries around the world. The National Conference & Expo will feature more than 40 educational sessions focusing on self-insured group health plans, captive insurance, self-insured workers’ compensation programs and international selfinsurance/ART trends.

Health Care Sessions include...

ThE FuTuRe Of StOp-LoSs – InDuStRy LeAdErS WeIgH In A

large segment of the self-insurance marketplace is directly linked to the stop-loss insurance marketplace, so the future of stop-loss is an important consideration for employers, TPAs and other industry service providers. This moderated panel discussion will feature senior executives representing leading director-writers and MGUs addressing forward-looking questions about the future of stop-loss. Audience

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participation will be encouraged. Panelists include Tom Doran, President, Medical Risk Managers, Steve Gransbury, President, Accident & Health, QBE North America, Mike Kemp, Head Accident & Health NA, Swiss Re Corporate Solutions, Brad Nieland, Vice President, Stop-Loss, Sun Life and Bob Baisden, President, International Assurance of Tennessee, Inc.

MeRgEr, AcQuIsItIoN & FuNdInG StRaTeGiEs FoR TpA OwNeRs/ ExEcUtIvEs There continues

to be significant activity within the TPAs marketplace, where mergers, acquisitions and private equity deals

seem to be announced on a regular basis. Given this fast-paced financial environment, it is more important than ever for TPAs owners/executives to have a corporate growth strategy in place so they are prepared when opportunities present themselves. Orlo (Spike) Dietrich, Managing Director, Ansley Capital Group, LLC will provide expert guidance on how TPAs should best position themselves for major financial transactions.

FrOm VeNdOr To PaRtNeR – ThE SeLfInSuReR EmPlOyEr’S PeRsPeCtIvE Many self-

insurance industry service providers

IHC

Risk Solutions

Our

world-class capabilities

A powerful combination

By integrating IHC’s business we are complementing this highly-regarded firm’s wealth of expertise with our own financial strength and global capacity. It’s a powerful combination of expertise and capabilities, and we believe it offers enhanced value to any employer seeking to self-fund their healthcare benefit plan. But there’s another belief that we share with IHC, and that’s in the paramount importance of understanding and supporting the needs of our customers and building strong, enduring partnerships. We wouldn’t have it any other way. We’re smarter together. swissre.com/esl Insurance products underwritten by Westport Insurance Corporation and North American Specialty Insurance Company.

August 2016 | The Self-Insurer

have increasingly positioned themselves as long term business “partners” and not merely “vendors” for their clients. But what really is the difference? Mark Hopkins, CBP, Director, Compensation & Benefits of SWM International, an experienced corporate benefits executive with many of years of experience dealing with both vendors and partners shares his perspective. The presentation will also offer some “crystal ball” predictions on what self-insured employers may need from their true business partners in the future.

growing number of accountable care organizations (ACOs). He will also provide unique insights on the continued evolution of the ACO marketplace and what it means for TPAs, stop-loss carriers and other selfinsurance industry service providers.

ThE MiD-MaRkEt SeLf-InSuReD EmPlOyEr ExPeRiEnCe WiTh MeDiCaL TrAvEl Taking a page from the

SpEcIaLtY PhArMaCy MaNaGeMeNt StRaTeGiEs FoR SeLf-InSuReD EmPlOyErS Specialty pharmacy

travel surgery playbooks that the large, high-profile companies have followed over the past few years, mid-size or smaller employers and plan sponsors now recognize that the site of service significantly impacts the cost of care and is a key determining factor in selecting where to have procedures performed – everything from MRIs and diagnostics to complex surgeries. Learn how Third Party Administrators and employers are educating and incenting employees to make better choices – from reducing coinsurance to eliminating copayments, paying travel expenses or cash rewards. The goal is to help employees seek the right care at the right time in the right place. Panelists include Mark Kendall, Senior Partner, HUB International, Simeon Schindelman, CEO, Brighton Health Plan Solutions and Carrie Hatch, Chief Operating Officer, Ameriben.

TpAS EnTeRiNg ThE AcO WoRlD Dale N. Lyman, Head of

Network and Cost Management Strategy at Meritain Health, an Aetna Company, will describe how one of the country’s leading third party administrators has successfully adapted its business practices to partner effectively with a

life

continues to be a major cost driver for most self-insured health plans. Patrick Gallagher, Chief Actuary, Integro Insurance Brokers and Gary L. Cellini, PharmD, MBA, HealthCare Management Consultant, Cellini & Associates, LLC will provide useful analysis on the latest market trends and present some tangible strategies to help plan administrators get a better handle on these significant costs.

PrIvAtE InSuRaNcE ExChAnGe CoNsIdErAtIoNs FoR SeLf-InSuReD EmPlOyErS Private insurance

exchanges have grown in popularity over the last couple years in both the fully-insured and self-insured market segments. Shandon Fowler, Sr. Director of Product Strategy, Benefitfocus, Tevi Troy, Chief Executive Officer, The American Health Policy Institute and Alan Cohen, Strategy Officer and Co-Founder of Liazon will focus on how self-insured plan sponsors and administrators should evaluate private insurance exchange options to determine the relative value, potential drawbacks and implementation details and related costs.

BuNdLeD PaYmEnT SoLuTiOnS FoR SeLf-InSuReD PaYeRs www.wspactuaries.com | Email: services@wspactuaries.com

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Mark Stadler, CEO, BridgeHealth will discuss what TPAs and self-insured employers should know when

evaluating bundled payment solutions for various types of medical providers and procedures.

ReFeReNcEd-BaSeD PrIcInG – ThE HoSpItAl’S PeRsPeCtIvE While there

reference, contracts have been developed that keep the more efficient providers revenue neutral while encouraging broader financial efficiency. Ron Dewsnup, President & General Manager, Allegiance Benefit Plan Management and Marilyn Bartlett, Administrator, Health Care and Benefits Division, State of Montana will discuss the goals, process and outcomes of the development of a network of Medicare reference-based contracted providers.

has been increased discussion within the self-insurance industry on the relative merits of various referencebased pricing approaches, this session will look at this trend from the opposite direction. Emily Scott, Esq., Attorney, Hirschler Fleischer, who has advised multiple hospitals on how to respond and interact with selfinsured payers taking RBP approaches shares her unique insights on how hospital administrators view common points of contention, as well as oppor tunities for more collaborative payment arrangements.

FeRtIlItY/InFeRtIlItY TrEaTmEnT CoVeRaGe TrEnDs FoR SeLf-InSuReD EmPlOyErS While employers

that sponsor self-insured group health plans are not required to cover any form of fertility/infertility treatments, an increasing number of self-insured employers are starting to do so voluntarily in various ways. Karin Ajmani, President, Progyny will discuss coverage trends generally and provide self-insured plan administrators more detailed information, including plan design consideration, on what they need to know when considering fertility coverage options.

DaTa-DrIvEn MeDiCaRe ReFeReNcE CoNtRaCtInG The State of Montana and other employers have expressed a desire for transparency, comparability, consistency and predictability in healthcare pricing. Using data comparing allowed amounts to Medicare as a common

LaW & DiSoRdEr – ReCeNt LiTiGaTiOn ShAkInG Up ThE StAtUs QuO FoR SeLf-InSuReD HeAlTh PlAn AdMiNiStRaToRs Courts have been busy since the passage of ACA, which has created some confusion over mandatory benefits, fiduciary liability, rights to subrogate and other plan administration details. Add to this pending ERISA preemption case rulings and the shifting legal terrain continues to shake up the self-insurance marketplace. Ron Peck, Esq., Senior Vice President & General Counsel, The Phia Group will highlight legal developments over the past year and preview what may be ahead.

SeLf-InSuReD EmPlOyEr RoUnDtAbLe DiScUsSiOn SeSsIoN Self-insured employer attendees are invited to participate in a private roundtable-style discussion session designed to facilitate candid discussion on key plan administration issues and concerns. This session will also serve as an opportunity for participants to provide input/suggestion on how SIIA can maximize its value proposition for self-insured employers. (Industry service providers will not be allowed to attend this session.)

BrOkEr RoUnDtAbLe DiScUsSiOn SeSsIoN Broker attendees are invited to participate in a private roundtable-style discussion session designed to facilitate candid discussion on the role of brokers within the self-insurance marketplace. This session will also serve as an opportunity for participants to provide input/suggestions on how SIIA can maximize its value proposition for brokers. August 2016 | The Self-Insurer

CEO, HS Technology Solutions Inc., Tim Martin, Esq., EVP & General Counsel, Payer Compass, LLC and Adam Russo, Esq., CEO, The Phia Group.

ReFeReNcE BaSeD PrIcInG–ExPlOrInG DiFfErEnT StRaTeGiEs AnD ApPrOaChEs While referenced based pricing is often viewed as a specific cost management strategy, there are actual several variations of referenced based pricing now being utilized within the self-insurance marketplace. For this moderated panel discussion, we have pulled together several of the industry’s leading RBP experts who share their unique perspectives on the different approaches that self-insured employers and TPAs may want to consider as it relates to payment arrangements with impor tant medical care providers. Panelists include Mike Dendy, CEO, Advanced Medical Pricing Services (AMPS), Steve Kelly, President & CEO, ELAP Services, Edward Day,

AcA AnD HeAlTh BeNeFiTs CoMpLiAnCe UpDaTe: WhAt WoRkS AnD WhAt DoEsN’T Keep abreast of the latest developments impacting employer sponsored health plans. John Hickman, Esq., Partner, Alston & Bird, LLP will cover topics including a deep dive on new and proposed legislation and regulatory guidance, the employer responsibility (“pay or play”) requirement and ACA reporting obligations, reference based pricing, employer clinics, MEC/skinny plans and wellness program rules.

Captive Insurance Sessions include...

YOUR VERY OWN BULLDOG FOR CLAIMS SAVINGS

InTrOdUcTiOn To CaPtIvE InSuRaNcE FoR MiDdLe-MaRkEt CoMpAnIeS In this beginner level session, Bob Davidson, Managing Director of Iroquois Captive Services, LLC will provide a general overview of captive insurance with additional focus on the types of captive programs best suited for middle market companies, such as enterprise risk captives, stoploss captive programs and P&C group captive programs.

CaPtIvE ReGuLaToR PaNeL DiScUsSiOn Regulators from leading captive insurance domiciles including Raymond Martinez, Senior Deputy Commissioner, Company Services Group, North Carolina Department of Insurance, David Provost, Deputy Commissioner, Captive Insurance,

hen it comes to claims savings, you want a bulldog – someone

who’s guaranteed to protect your best interests. That’s why third-party administrators and self-insured groups rely on HHC Group to save the maximum amount of money possible on their medical claims. Armed with advanced technology and driven by a dogged work ethic, our resourceful team never gives up on your medical claims.

LEARN MORE. CALL

301.963.0762

OR EMAIL

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sales@HHCGroup.com

ACCREDITED

INDEPENDENT REVIEW ORGANIZATION (EXTERNAL)

ART programs for more diverse risk exposure. With recent tax code changes increasing the annual premium limit to $2.2 million and imposing some ownership restrictions to qualify for the 831(b) tax election, the evolution of ERC use may accelerate further. Michael Serricchio, Senior Vice President of Marsh Captive Solutions and Patrick Theriault, Managing Director of Strategic Risk Solutions, Inc. will share their opinion and perspectives on this topic as part of a moderated panel discussion.

Vermont Department of Financial Regulation, Michael Corbett, Director, Captive Insurance Section, Tennessee Department of Commerce & Insurance, Steve Kinion, Director, Bureau of Captives and Financial Insurance Products, Delaware Insurance Department and W. Jay Branum, Director of Captives, South Carolina Department of Insurance will participate in a moderated discussion session where the hottest industry issues will be addressed. Audience participation will be encouraged.

MaRkEt TrEnDs FoR StOp-LoSs CaPtIvE PrOgRaMs Stop-loss captive programs have become one of the fastest growing segments within the captive insurance industry. Andrew Cavenagh, Managing Director of Pareto Captive Services will look at the size and scope of the market today, current challenges/opportunities and preview how the market may evolve in the years ahead.

WhErE Do We Go FrOm HeRe? ThE PaSt, PrEsEnT AnD FuTuRe Of ErC CaPtIvE ReGuLaTiOn Fred Tuner, Founder of Active Captive Management and Ryan Work, Vice President, Government Relations for the Self-Insurance Institute of America, Inc. will discuss the impact of how changes to federal regulation can impact state regulation of insurance. How 831(b) was recently changed is but one example of this – a change to the tax code that has impact on the business of certain kinds of insurers. Panelists will discuss the reasons why the tax code was recently changed, what happened with regard to how the tax code was amended and a discussion of the current regulatory climate with regard to the small captive industry space. Panelists will also discuss the history of IRC Section 831(b) as responsive to the insurance crisis of the 70s to the mid-80s. This session will provide a history lesson on why this important provision of the Code was created and implemented.

ThE EvOlViNg UsE Of EnTeRpRiSe RiSk CaPtIvEs (ErCs) The use of Enterprise Risk Captives (ERC) has steadily increased over the past few years as smaller and mid-sized companies have established these

TaKiNg MuLtIpLe BiTeS Of ThE SeLf-InSuRaNcE/ CaPtIvE InSuRaNcE ApPlE Sophisticated employers are increasingly incorporating multiple selfinsurance/captive solutions as part of a more holistic approach to managing financial risks. Timothy LaMotte, CPA, Chief Financial Officer, Northern Tree Service, Inc. and Bob Ryals, Risk Manager, TCW, Inc. will showcase two case studies of real world employers who have taken multiple bites of “the self-insurance/captive insurance apple,” explaining what strategies work best based on size and risk profiles and discuss how various self-insurance strategies can best work in concert.

CoSt CoNtAiNmEnT StRaTeGiEs AnD OpPoRtUnItIeS FoR EmPlOyErS In StOp-LoSs CaPtIvE PrOgRaMs SelfInsured employers continue to be trailblazers on implementing effective health care cost containment strategies. Scott Byrne, RVP Western Territory of Berkley Accident & Health and Michael Madden, Division Senior Vice President, Ar tex Risk Solutions will explore strategies that can work par ticularly well when employers are August 2016 | The Self-Insurer

The Self-Insurer | www.sipconline.net

pooled together as part of stop-loss captive programs. It will also highlight certain cost management services that smaller and mid-sized self-insured employers can only access, or access at a lower cost, when pooled with other employers.

AdVaNcInG ThE InTeReStS Of ThE CaPtIvE InSuRaNcE StAkEhOlDeRs – ThE SiIa StOrY SIIA

has spearheaded several important initiatives over the past year to advance the interests of the captive insurance segment of the self-insurance industry. Michael W. Ferguson, President and CEO of the Self-Insurance Institute of America, Inc. will highlight these initiatives and preview what’s ahead for 2017. n

We will give a preview of self-insured workers’ compensation programs and international self-insurance/ART trends in our September article. Detailed conference information, including registration forms, can be accessed online at www.siia.org/national, or by calling (800) 851-7789. We look forward to seeing you in Austin this September!

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August 2016 | The Self-Insurer

NEWS

SIIA Diamond, Gold and Silver member companies are leaders in the self-insurance/captive insurance marketplace. News highlights are provided from these upgraded members. News items should be submitted to Wrenne Bartlett at wbartlett@ siia.org. All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at www.siia.org. For immediate assistance, please contact Jenn Ivy at jivy@siia.org.

from SIIA

Members Written by Wrenne Bar tlett

DIAMOND MEMBER NEWS

Berkley Accident and Health Announces 2016 Winners of Captive Risk Achievement Award

erkley Accident and Health, a W. R. Berkley Company,® is proud to announce the winners of the 2016 Risk Achievement of the Year (RAY) Award. The RAY Award recognizes Captive insurance members who exemplify best practices in their health risk management and outstanding commitment to their employees’ health and well-being. Winners of the RAY Award are employers who self-fund their employee health benefits. Instead of purchasing traditional health insurance, the employers self-fund, purchase Stop-Loss insurance and join together to share risk through a Captive arrangement. Because of this, there is a strong incentive to maintain a healthy workforce and encourage employee wellness. The award honors Berkley Accident and Health’s Group Captive insurance members who demonstrate excellence in health risk management and have adopted innovative programs that help to lower health risk factors. Above all, winning companies display an outstanding commitment and care toward their employees. The 2016 winners were: • ConServe – This recipient shows how an impressive focus on employee health and well-being can help deliver a dramatic drop in medical costs over the past 3 years. An Inc. 5000 fastest-growing company, ConServe offers a wide range of health risk assessment, preventive screenings and education, as well as regular nutritional promotion and challenges, wellness fairs and flu clinics. • Pawtucket Credit Union – Pawtucket Credit Union stands out because of the innovative culture of health and wellness it developed among employees for the past ten years, long before it was mainstream. This winner has been recognized as a “Fit and Friendly Company” by the American Heart Association, won the Rhode Island Worksite Health Award and been honored by the Governor of Rhode Island for its dedication to the health of its employees. ■

■

BridgeHealth Announces New Executive Management Team Representatives of BridgeHealth Medical, Inc. (“BridgeHealth”), the country’s leader in lower cost, high-quality, bundled surgical case rate benefit plans, announced a new executive management team to lead the company as it 46

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continues to grow and expand its operations and services.

team leadership roles at a variety of commercial carriers.

Mark Stadler joined BridgeHealth as Chief Executive Officer (CEO) and is responsible for the strategic direction of the organization. Jeff Waggoner is President and Chief Operations Officer (COO). Together, they are responsible for the overall management and growth of the company.

Robley Moor, Head of Casualty North America, states: “Christine’s strong casualty underwriting background provides a solid foundation from which we will continue expanding our portfolio. A great fit for Corporate Solutions, she is dedicated to maintaining long-term broker and client relationships.”

■

Swiss Re Corporate Solutions Appoints Christine Harman and Gabriel Poppie to US Central Region Leadership Positions

Swiss Re Corporate Solutions strengthens its North American Central Region leadership team with two appointments. Christine Harman joins the company as Senior Vice President, Head Casualty, US Central Region. Gabriel Poppie is named Senior Vice President, Head of Sales Central Region. Both will be based in Chicago, Illinois. Ms. Harman will be responsible for leading the company’s Central Region Casualty team and growing its capabilities and revenue in the umbrella and excess liability lines of business. A proven leader in the Chicago marketplace, Ms. Harman brings almost 20 years of industry experience including claims, underwriting and

Mr. Poppie, who has been a key account manager at Swiss Re Corporate Solutions since 2013, will become Head of Sales Central Region. In his new role, he is tasked with generating new business, managing relationships with key regional brokers and driving growth. With over 16 years of industry experience, he is an expert in a wide range of industries and segments and new business origination. Mr. Poppie began his career in 2000 with Marsh in St. Louis. Sylvain Bouteillé, Head of Sales North America, says: “Swiss Re Corporate Solutions has a strong focus on internal talent development. Gabe has been a great asset to our key account management strategy in North America. I’m delighted that he will lead our regional sales activities. He is committed to strengthening our regional relationships.” ■

■

AIG Announces Bill Edrington as Vice President of Stop-Loss and Voluntary Distribution Development Bill Edrington has joined AIG as Vice President of Stop-Loss and Voluntary Distribution Development. He will be responsible for driving top-line growth and retention of AIG’s Stop-Loss, Organ Transplant and Voluntary Benefits coverages nationally. He will manage key national

strategic relationships and StopLoss panel partnerships and provide subject matter expertise to support regional field leadership and regional distribution teams. Bill comes to AIG with a successful track record in Stop-Loss sales and sales leadership with key carriers in the market. Most recently, he served as Managing Director of Marketing and Business Development at Symetra. He will be based in AIG’s Atlanta office and can be reached at william. edrington@aig.com. ■

■

QBE North America Named to Short List for U.S. Captive Service Awards MARBLEHEAD, MA – QBE North America is pleased to announce that it has been added to the short-list for the U.S. Captive Service Awards in the Insurance Company of the Year category. QBE North America’s Accident & Health Division is a leading writer of Medical Stop-Loss and one of only a few direct-writing carriers to specialize in the development and securitization of “true” captives for medical Stop-Loss. QBE works exclusively with Single-Parent and tightly controlled Group Captives and delivers unparalleled expertise through a dedicated captive underwriting team, skilled specifically in both medical self-funding and alternative risk transfer mechanisms. ■

■

GOLD MEMBER NEWS

Re-Solutions Announces Addition of Tina Nissinen as Vice President MINNEAPOLIS, MN – Re-Solutions, a Risk Strategies company, is pleased to announce the addition of Tina August 2016 | The Self-Insurer

Nissinen as vice president. Nissinen’s hiring is part of Re-Solutions’ ongoing strategy to expand its market presence and attract the most-talented and experienced professionals. Prior to joining Re-Solutions, Nissinen was an account executive managing HMO Reinsurance and Provider Excess client relationships and program placement at Towers Perrin/Towers Watson and, most recently, at Stratis Risk Solutions Insurance Services, LLC. As the newest member of ReSolutions’ market-leading team of professionals in the life, accident and health markets, Nissinen will help solidify the company’s position as one of the nation’s premier independent accident and health (A&H) reinsurance intermediaries and consultants. ■

■

Blue Cross Blue Shield of Massachusetts and Indigo Insurance Services is looking for a Stop-Loss Sales Executive As an Indigo Stop-Loss Sales Executive you’ll have the support of one of the nation’s leading insurance companies and the flexibility and growth potential of running your own business. You’ll solve clients’ needs through consultative and

We know the bottom line is important to you. Go direct with Prime PPO and realize immediate cost savings. We’re your primary PPO solution, providing nationwide coverage customized to your needs. Nearly instant repricing, PPO network customization, provider disputes averaging under 1% nationally, and virtually 100% provider retention sets us apart. Let us help you to maximize your penetration and work comp savings while offering you highly competitive primary PPO network access rates.

See you at the Vermont Captive Insurance Assoc. (VCIA) and Workers’ Comp Institute (WCI) Conferences !

www.PrimeHealthServices.com info@primehealthservices.com 866-348-3887

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solution based selling, by building relationships with contacts in your territory to identify, develop and close sales opportunities. Roles include: • Sell Indigo Insurance Services Medical Stop-Loss product through insurance brokers, third party administrators and consultants. • Build and establish relationships with key sources to market our product to some of the nation’s leading employers. • Construct and maintain a business plan for your designated territory based on sales and strategic initiatives. • Call on existing and potential customers to not only prospect new customers but also to develop a book of business. • Meet annual targets and individual sales goals. For more details and to apply go to https://bcbsma.wd5.myworkdayjobs.com/ BCBSMA/jobs ■

■

SILVER MEMBER NEWS

Alabama’s Self-Insured Worker’s Compensation Fund Launces New Website The Alabama Self-Insured Worker’s Compensation Fund is pleased to announce the launch of its brand new website. The Fund’s new site officially launched on Friday, July, 8th at www.asiwcf.org. The CompInfoCenter login will remain in the same place on the homepage. The Fund’s goal with this new website is to provide its visitors, members and brokers an easier way to learn about its worker’s compensation program and services. They will be constantly updating our content with helpful information, articles, blogs, company announcements and client successes in the News section. ■

■

6 Degrees Health, Inc. Expands Its OURproviders™ Network with Four Regional Transplant Leaders BEAVERTON, OR – 6 Degrees Health is proud to announce the addition of four new transplant providers. Joining the OURproviders™ Network are:

• • • •

MedStar Georgetown University Medical Center MedStar Washington Hospital Center University Health System and UT Medicine San Antonio Broward Health Medical Center

“The addition of these providers is a great step for our network. Each of them give patients in those regions access to another high quality transplant center and some nationally ranked specialties.” states Neal Franzer, Director of Operations for 6 Degrees Health, Inc. CEO, Scott Ray, also commented, “We are excited to see continued growth in our transplant network and we will be expanding on our new orthopedic network in the next few weeks.” ■ If you would like to learn more about the beneﬁts of SIIA’s premium memberships, please contact Jenn Ivy and jivy@siia.org.

Do you aspire to be a published author? Do you have any stories or opinions on the self-insurance and alternative risk transfer industry that you would like to share with your peers?

We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIA’s official magazine is distributed in a digital and print format to reach over 10,000 readers around the world. The Self-Insurer has been delivering information to the self-insurance/alternative risk transfer community since 1984 to self-funded employers, TPAs, MGUs, reinsurers, stoploss carriers, PBMs and other service providers.

Articles or guideline inquiries can be submitted to Editor Gretchen Grote at ggrote@sipconline.net

The Self-Insurer also has advertising opportunities available. Please contact Shane Byars at sbyars@sipconline.net for advertising information.

August 2016 | The Self-Insurer

SIIA would like to Recognize our Leadership and Welcome New Members Full SIIA Committee listings can be found at www.siia.org

2016 Board of Directors CHAIRMAN * Steven J. Link Executive Vice President, Midwest Employers Casualty Co. Chesterﬁeld, MO CHAIRMAN-ELECT Jay Ritchie Senior Vice President, HCC Life Insurance Company Kennesaw, GA PRESIDENT & CEO Mike Ferguson SIIA, Simpsonville, SC TREASURER & CORPORATE SECRETARY* Duke Niedringhaus Senior Vice President, J.W. Terrill, Inc. Chesterﬁeld, MO

Directors

Committee Chairs

Joseph Antonell Chief Executive Ofﬁcer/Principal A&M International Health Plans Miami, FL

ART COMMITTEE Jeffrey K. Simpson Attorney Gordon, Fournaris & Mammarella, PA Wilmington, DE

Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA Andrew Cavenagh President Pareto Captive Services, LLC Philadelphia, PA Mark L. Stadler Chief Marketing Officer HealthSmart Irving, TX Robert A. Clemente Chief Executive Officer Specialty Care Management LLC Lahaska, PA David Wilson President Windsor Strategy Partners, LLC Junction, NJ

The Self-Insurer | www.sipconline.net

GOVERNMENT RELATIONS COMMITTEE Jerry Castelloe Principal Castelloe Partners, LLC Charlotte, NC HEALTH CARE COMMITTEE Leo Garneau Chief Marketing Ofﬁcer, SVP Premier Healthcare Exchange, Inc. Bedminster, NJ INTERNATIONAL COMMITTEE Robert Repke President Global Medical Conexions, Inc. Novato, CA WORKERS’ COMP COMMITTEE Stu Thompson CEO The Builders Group Eagan, MN *Also serves as Director

SIIA New Members Regular Members Company Name/ Voting Representative

Bill Ashley Allied National Inc. Overland Park, KS Bill Buechler Director Crowe Horwath, LLP Franklin, TN Kevin Lombardo President Dorn Denver, CO Albert Fogle Employee Benefits Consultant Northrim Benefits Group Anchorage, AK Brian Miller VP Operations Partners MGU Scottsdale, AZ Bernie Dal Cortivo Senior VP Sales & Marketing WINFertility White Plains, NY

Silver Members William Blankinship Director of Business Development Capstone Associated Services Ltd. Houston, TX Bailey Smith COO & Partner Reliant Health Partners LLC Memphis, TN

Employer Member Irma Mondragon Executive Assistant L.A. Firemen’s Relief Assoc. Los Angeles, CA

2016 Raffle

Your participation makes it possible for us to sponsor educational initiatives and projects that have included briefings on self-insurance for congressional staff members on Capitol Hill and many other endeavors. Until Tuesday, Sept. 27, all contributions to the SIEF raffle will enter you a chance to win one of several fabulous prizes!

JW Marriott Starr Pass Resort & Spa Tucson, Arizona Relax during your two night stay and daily breakfast for two at the beautiful JW Marriott Starr Pass Resort in Tucson, Arizona. Nestled against the saguaro-covered per Raffle foothills of Tucson Mountain Park, JW Marriott Starr Ticket Pass Tucson Resort & Spa offers a tranquil yet animated mountaintop setting as natural as the surrounding desert itself.

JW Marriott Desert Ridge Resort & Spa Phoenix, Arizona

During your two night stay, experience the beauty of Arizona’s Urban Heart at JW Marriott Phoenix Desert Ridge Resort & Spa. We invite you to enjoy our stunning per Raffle 316 acres in the Sonoran Desert, complete with luxury Ticket amenities, personal service, invigorating recreation and excellent dining.

$500 Amazon Gift Card

$100 American Express Gift Card

per Raffle Ticket

Amazon.com Gift Cards never expire. Amazon.com is the place to find and discover almost anything you want to buy online at a great price.

Shop at millions of merchants with Amex gift cards. Funds do not expire and refundable if lost/stolen and no additional fees.

Enjoy an incredible 5 Night Stay on Whidbey Island, Washington Your stay at this beautiful 3 bedroom, 2 ½ bath, 2 story home on the 18th per Fairway of Useless Bay Country Club Raffle Ticket on Whidbey Island, Washington, will be a trip to remember. You will be busy with the included 4 rounds of golf at the private country club, swimming at the Country Club pool and wine tasting at 3 wineries. You can round out your vacation with additional local activities* such as salmon fishing, whale watching tours, day trips to the San Juan Islands, take a ferry to Port Townsend and visit antique shops or attend the wood boat festival, live theatre and Shakespeare in the park, local art exhibits and antique stores. *Additional activities are not included in home use.

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The Self-Insurance Educational Foundation (SIEF) is a 501 C 3 non-profit educational | The Self-Insurer August 2016 foundation affiliated with the Self-Insurance Institute of America, Inc. (SIIA).51