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January 2017

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TELEMEDICINE’S

Tipping Point

Virtual visits seen as growing part of more aggressive employee engagement strategies for self-funded health plans


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TELEMEDICINE’S

Tipping Point

Written by Bruce Shuntan

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Volume 99

Whom Do You Trust with Your Customers’ Medical Information? Make Sure Your Vendors and Providers Are Secure

24 ACA, HIPAA and Federal Health Benefit Mandates The Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates 30

EDITORIAL ADVISORS Bruce Shutan Karrie Hyatt

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Self-Funded Health Plans May Have a New Ally in the Fight against Specialty Drug Prices

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Directors and Officers

Liability Coverage

is More Important Than Ever Before

Written by Karrie Hyatt

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TELEMEDICINE’S

Tipping Point Written by Bruce Shuntan

Virtual visits seen as growing part of more aggressive employee engagement strategies for selffunded health plans

S

ome medical visionaries, entrepreneurs and researchers believe the future of health care delivery is telemedicine, also known as telehealth, while skeptics label virtual visits between patients and providers impractical for certain cases and a threat to quality of care. Concern also has been expressed about traditionally low utilization of this service. 4

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TELEMEDICS TIPPING POINT | FEATURE

Whatever the case may be, there’s little doubt about the format appearing especially palatable across the self-insured community. A chief advantage of telemedicine for self-funded employers is savings and the potential to improve productivity and employee satisfaction because of the service’s consumer-friendly nature, according to Mike King, chief sales officer of Teladoc, a pioneer in this field known as the nation’s leading provider of telehealth services with 7,000 clients. “When employees use the service and don’t have to leave work to have a consultation, the employer isn’t losing that employee for several hours while they make the round-trip to a visit,” he explains. “We often hear from benefit managers this is the one benefit that they put in that they actually get thank-you notes from their employees, who are just amazed that a service even exists that they actually can get care 24/7 from home or work or whenever they need it.” Another advantage is that self-funded health plans brand their own telemedicine benefits for a more personalized touch, whereas fully insured plans communicate through health insurance carriers. “When we produce a welcome kit, for example, it’s going to have the employer’s brand on that kit,” King explains. In the self-insured model, there’s a willingness to get more involved in ensuring that telemedicine companies engage their employee population, adds Adrian Davis, CEO of MYidealDOCTOR, a venture-backed mHealth company that seeks to blend technology with top-notch physicians. “Self-funded groups obviously have the capacity to structure those benefits in a way that incentivizes their employees to use the service,” he says.

Rising to new heights The U.S. telemedicine market is expected to reach $4.5 billion by 2018 – an eye-popping gain from $440.6 million in 2013, notes a recent study by business information provider HIS. In addition, a recent Harris Poll found that 64% of the 2,019 U.S. adults it surveyed are willing to have doctor visits via video.

to 59% in 2016 from just 30% the previous year, according to Mercer’s National Survey of Employer-Sponsored Health Plans. In addition, 90% of 133 large U.S. employers surveyed by the National Business Group on Health reported that they will make telemedicine available to employees in states where it is allowed in 2017. That represents a sharp increase from the current 70%. By 2020, the nonprofit group predicted that “virtually all large employer respondents will offer telemedicine,” while utilization also is expected to increase steadily. The rise of telemedicine is seen as part of a larger health care consumerism movement whose multiple moving parts present challenges for health plan management. A telemedicine call typically is $40 compared with $125 for a traditional office visit.

Fueled by star power Some high-profile names are now associated with the telemedicine field. One of the nation’s leading pop psychologists, Dr. Phil McGraw, co-founded a telemedicine

Employers are warming up to the concept, which could save them more than $6 billion a year in health care cost, according to a Towers Watson analysis. Industry observers say the trend clearly has reached a tipping point where it behooves self-insured employers to consider adding this option to their health plan, but also ensure that the benefit is being used by enough people. Telemedicine is on track to becoming a mainstream employee health benefit. For example, these service offerings among 2,544 large employers polled surged

January 2017 | The Self-Insurer

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TELEMEDICS TIPPING POINT | FEATURE

company with his son, Jay McGraw, who’s also executive producer of the talk show “The Doctors.” Their Doctor on Demand website describes the widespread lack of access to health care providers as “a massive, growing problem” in the U.S. It touts 24/7 video visits on smartphone or computers as an antidote to long wait times that mar primary care visits, which could take two to three hours from start to finish, and 25 days on average just to see a psychiatrist or psychologist. Another key player in the industry is John Sculley, former CEO of Pepsi-Cola and Apple Computer who serves as vice chairman of MDLIVE. He once suggested that rather than rely on a political solution to health care challenges, the best approach in the U.S. is to empower consumers with tools such as telemedicine that place control in the hands of patients.  Despite the operational efficiencies that telemedicine brings to a time-challenged society, critics question whether the lower prices come with hidden costs. To wit: a chance that virtual visits could undermine quality and the sanctity of doctor-patient relations. Moreover, concern is mounting about virtually prescribing antibiotics for ailments that traditionally rely on lab tests or physical exams for a definitive diagnosis.

“Most physicians would never accept a phone call from a patient they haven’t met and diagnose and prescribe medication for that patient,” Greg Billings, executive director of the Robert J. Waters Center for Telehealth and e-Health Law, a nonprofit research group, told The Wall Street Journal.

“Yet that is a common practice for many 24/7 health-care services.” Be that as it may, the American Telemedicine Association predicted that its foot soldiers would generate 1.25 million visits by the end of 2016. Teladoc, nation’s leading provider of telehealth services with 7,000 clients, surpassed a key milestone this past November with a record-setting101,600 monthly patient visits. Consults hit a daily high of 4,158, while 425 patient consults during the month’s busiest hour translated into a visit every 8.5 seconds. The surge was attributed to member-engagement initiatives, along with access to abroad network of more than 3,100 board-certified, state-licensed physicians and behavioral health specialists and expansion into clinical specialties. These numbers come at a time when the Centers for Disease Control and Prevention reported total flu visits in 2016 to be below the national baseline, which suggests the trend is gaining traction and acceptance.

Consult commonality Medical conditions that are commonly treated virtually include anything from bronchitis, rashes, pinkeye and urinary tract infections. A growing number of Teladoc members are uploading up to three photos for physicians to review ahead of their “visualized” consultation. Images can be enlarged for a closer look and remain a part of each member’s health record so they can be used for follow-up visits on the phone, a web-enabled secure video platform, , at times the medical condition dictating which platform is appropriate.

A key selling point of telemedicine is that it can help keep patients from flocking to emergency rooms, which obviously is where there’s a propensity for skyrocketing costs. Having the benefit in place allows self-insured employers to increase their ER co-pay because it makes access to care easy and accessible, which King describes as “an extra lever around cost savings beyond just the savings the benefit is going to drive.” If awareness and utilization of these services is high enough, then he says it’s even easier to justify plan design changes. The expansion of telemedicine services or applications may be limited only by a carrier’s imagination. For example, Teladoc recently launched a unique feature that allows a three-way video consultation with an employee caregiver, aging parent and a physician who is based near that relative. Dermatology and behavioral health also represent areas of growth for telemedicine, which can have a far-reaching impact on the latter. “If you think about behavioral health, there is a stigma to going, especially in smaller towns,” King says. “For some individuals, there is still a sense of discomfort with the thought of being recognized when seeking behavioral health, and that can be avoided while patients confidently receive the services they need via telehealth.” And with much of behavioral health being a cash-paid business with higher rates than treating physical ailments, he believes virtual care can go a long way toward helping people finally seek treatment. A common critique of telemedicine is that employees simply aren’t using the service that much. However, in an effort to drive significantly better utilization than the industry average, Teladoc sends a welcome

January 2017 | The Self-Insurer

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TELEMEDICS TIPPING POINT | FEATURE

kit to every household when its service is launched, offers a marketing portal with employer-branded material and conducts social-media outreach. It also embarks on segmented campaigns around cold and flu season, as well as allergy season. The strategy, which was elevated by Teladoc’s recent acquisition of HealthiestYou, has paid off. Average utilization across Teladoc’s entire book of business is between 5% and 6% and slightly more than10% across mature clients in the employer business thanks in part to more effective use of mobile and smart-TV apps from the acquired company.

Paying dividends Higher utilization is expected to leverage the value of telemedicine and from several vantage points. Claims-based analyses of the savings impact of Teladoc’s services are “much more significant than people realize” at $500plus, if not more in some cases, King reports. The data is based on five studies involving 30-day episode of care across various self-funded and fully insured populations with a close watch on ER admission rates. That’s because ER visits can drive unnecessary procedures, hospital admissions and up-coding of patients at a higher level of illness severity. “If it’s late in the evening and someone can’t get transportation or have support at home, they might be admitted sometimes for observation for that reason alone,” King adds. MYidealDOCTOR customers are seeing a 3:1 to 4:1 ROI in terms of hospital, urgent care and primary care costs for so-called ICD-10 codes used to classify diagnoses, symptoms and procedures. About 80% of the company’s virtual visits, which typically last about 10 minutes, are conducted over the phone, while the remaining 20% is through video conferencing. All behavioral health sessions are done strictly through video in either a 25 or 50 minute timeframe. Davis attributes the result to a robust, consumer-centric engagement strategy that produces 38% annual utilization, which he says “is pretty much the highest in the industry.” The effort includes follow-up care calls at 4 hours and 72 hours after each consult, which he says drives compliance and patient satisfaction, as well as helps reduce follow-up visits.

“When you drive utilization, you’re reducing costs for that self-funded employer,” Davis explains. “You’re improving convenience and access for the employees.”

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Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for nearly 30 years.


Directors and Officers

Liability Coverage

is More Important Than Ever Before

D

Written by Karrie Hyatt

irectors and Officers liability (D&O) insurance should be at the top of list of things to think about when recruiting members for a captive Board, or in considering being a Board Director. In today’s litigation-happy environment it is more important than ever for captives to provide their Board members with a comprehensive D&O policy. From emerging risks like cybercrimes to increased actions by state and federal agencies against company Directors, having the right type of coverage to protect the captive’s Board is key to attracting and retaining quality Board members.


LIABILITY COVERAGE MORE IMPORTANT | FEATURE

D&O liability policies cover claims made against Board members or officers of a captive based on actions taken during their tenure. D&O policies generally offer coverage for decisions by the Board that result in adverse financial outcomes and usually only cover monetary damages. Broadly speaking, these policies offer general coverage for “wrongful acts” and are meant to protect the personal assets of Board Directors. Even incredibly conscientious Boards can find themselves at the wrong end of a lawsuit. Clayton Ingram, a former captive insurance regulator now working as an independent Director for captive insurance companies, has experience on both sides. “If you are truly an active Board—and every Board member should understand and be involved in the actions and decisions of the company—then there is always the chance that a decision may one day result in a result that becomes actionable. Litigation without coverage could leave an individual highly exposed to legal costs and recovery.” According to Gary Osborne, president of USA Risk Group, Inc., a US-based captive management company, “We

are always recommending that captive companies get D&O. We are far more adamant about it if it’s a group captive or a risk retention group [RRG], because then it’s not in the same family.” “D&O coverage is especially important for group captives and even more so for risk retention groups which can have many members and wider ranging operations than other types of captives,” said Joseph T. Holahan, of Counsel of Morris, Manning & Martin, LLP’s Insurance Practice. While a pure captive is not as likely to have as many conflict of interest issues as a group captive or RRG, there are still openings for legal action to be directed at the captive’s Board. “If it’s a single parent captive or a family-owned captive we basically try to make sure the

captive is properly covered under the controlling entity’s program,” Osborne said. “Even if it’s a single parent captive we still recommend that any coverage available at the corporate level applies to the captive… We also recommend it even for family-run companies. It’s amazing how even brothers and sisters can decide to fight over anything through a captive.” A captive offering a comprehensive D&O policy can be an important aspect in attracting quality candidates for the Board. According to Holahan, “Board members should rightfully expect the captive to provide D&O coverage, and captives should provide the coverage as a way of attracting and retaining good Board members. If a captive does not provide D&O insurance, the Board members should obtain it themselves.” As captive managers will often serve on the Board of captives they manage, in the role of a domicile’s Resident Director, a strong D&O policy becomes more than an attraction, it becomes a necessity. Osborne added, “Sometimes the captive manager

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LIABILITY COVERAGE MORE IMPORTANT | FEATURE

has to be the resident Director and we point blank won’t do it unless they’re buying D&O coverage, because my own history is that I’ve been sued as a Director of a captive because I was the Resident Director and the state came after me.” Even in the case of a pure captive, or single-parent captive, a comprehensive D&O policy for the captive Board will help protect the Board’s Directors in case the parent company fails. In the last ten years, there have been several cases where a captive domicile regulator took action against a captive that failed due to the failure of its parent.

Legal Actions Captives Face Legal actions against Board Directors are typically summed up as: Breach of duty, or failure to fulfill proper care and loyalty to 12

the company; Misappropriation of company assets, primarily for personal use; Intermixing personal assets with those of the company; Failure to disclose conflicts of interest; and Crimes against the company. For captives, “Many types of disputes can arise, especially with group captives and risk retention groups,” said Holahan. “These include disputes concerning decisions to change or expand the operations of the captive, disputes over return of capital or the payment of dividends, disputes over poor investment returns, disputes over coverage and claims decisions and regulatory actions.” Some of the more common challenges that Osborne has experienced as a captive manager are, “Did you discriminate against a member because they compete with you? Did you partake in self-enrichment? … The argument often comes up that a member

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wasn’t treating everyone equally— undo enrichment or just discriminatory treatment.” Osborne continued, “When you’re on a Board of a captive you’re supposed to be wearing your insurance company hat, many times we see arguments that say you were serving your interests as the insured rather than the interests of the insurance company.” “As a former regulator, I witnessed several cases of outright fraud by companies leaving Boards exposed to action from regulators, investors, and insureds,” said Ingram. “I never would want to be a Board member either actively engaged in such activity or blissfully ignorant of it.”


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LIABILITY COVERAGE MORE IMPORTANT | FEATURE

Key Components to Quality Policies While D&O policies offer fairly general liability coverage, there are some important aspects that captives and Directors need to be aware of. When purchasing a D&O policy, Holahan offers this suggestion, “The D&O policy should include language ensuring the exclusion for wrongful conduct is severable as to each insured. In other words, the policy should state that a finding that one insured has engaged in wrongful conduct will not result in a loss of coverage for other insureds. Otherwise, innocent Directors could find themselves without coverage.” He added, “D&O policies typically include certain exclusions that can cut off coverage for suits brought by a liquidator. Be certain the policy does not bar coverage for such claims.” According to Osborne, if a captive goes to a liquidator or into receivership policy exclusions can be a real problem for Directors. “We’ve seen government action against Directors. We warn people to be careful that their policies may have government exclusions, some of them do. We’ve seen that, when the captive or RRG fails, the state will come after the Director for undue enrichment or failing in their fiduciary duty.” Cyber liability coverage has been a hotly discussed topic in the captive industry for several years. What is not discussed as often is including a clause pertaining to a cyber breach or cybercrime. “Many captives have very little in the way of personal information that could be

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subject to breach and misuse,” said Holahan. “But some types of captives—those covering health care providers, for example—may have quite a lot of personal information in their claims files. D&O policies do not necessarily cover Directors and officers if they are sued in connection with a data breach. Board members should be certain adequate coverage is provided.” Ingram said, “Captives are where the innovation lives in insurance and new risk financing vehicles. This is precisely what makes them exciting, appealing and profitable. With that comes new risk. So far I think D&O coverages I see are keeping up with this. The trick will be to constantly review and analyze your coverage to make sure your activity is not outrunning your comfort zone.”


LIABILITY COVERAGE MORE IMPORTANT | FEATURE

The amount of coverage should also be a major consideration for a D&O policy. Many prepackaged policies generally offer one million in coverage with a $50,000 deductible.Yet, according to Osborne, this might not be enough. “If you’ve got four or five Directors that’s not such a big deal, but if you’ve got ten, it could be an internal fight as well and a million could go fast.”

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

“We also recommend clients think about that because the Directors may not all have the same interests,” continued Osborne. “My interest as the resident Director could be different than parent or the other insureds.You can sometimes have multiple lawyers fighting on behalf of different Directors, so if it’s a big Board a million may not go very far.” Attracting and protecting the captive’s Board is an important component for creating and running a healthy company. Making sure the Directors’ have adequate coverage and keeping the policy up-to-date for emerging risks is as valuable as a fully functioning Board. “The main responsibility resides with the Board member. Be involved, informed and active in your fiduciary duty to you company,” advised Ingram. “Don’t be afraid to question and vote your conscience. As an independent Director, my main goal in to keep my companies solvent and in regulatory compliance. That’s why I advocate for at least one truly knowledgeable but independent member on every Board. That is your main insurance. D&O is a secondary, but necessary safeguard.”

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Whom Do You Trust with Your Customers’ Medical Information? Make Sure Your Vendors and Providers Are Secure By Andrew Weaderhorn

I

nformation about us is everywhere. Tracked via computers and transmitted across the Internet, information can be sent around the world with a few clicks on a computer keyboard. Keeping confidential information private is paramount. This is especially important when it comes to information concerning our health care. Beyond not wanting others to know about our most sensitive information, there are numerous reasons to protect medical records because they contain important data points: private health information, social security number, date of birth, home address, contact information, and medical insurance information. 16

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Medical records are a treasure trove for computer hacks and thieves. They can utilize this information to engage in endless mischief. People who have access to this information should protect your right to privacy and the security of your personal health care information. This includes health care providers and other professionals who receive your medical records.

Threats to Protected Health Information (PHI)

There are countless threats to your PHI, which comes from a variety of sources. These can include:

• Healthcare professionals working inside a facility, company or government entity

These threats are real and will only continue to grow. In 2015, Verizon collaborated with several large accounting and insurance firms to study the impact of PHI data breaches in the United States. This report was entitled the Protected Health Information Data Breach Report. According to the report, “There has been a significant increase in reported data breaches involving PHI every year…and this trend will only continue to increase.” It also states that “industries involving healthcare are the most frequently targeted industries to data breach and unauthorized release of PHI… with the most significant reported breaches involving PHI coming from a physical attack from an outside threat.” Of the reported instances contained in the report, there were 1,523 incidents involving medical records, with over 217 million known records disclosed in an unauthorized manner.

Security of Data Shared With Vendors

As noted in the Verizon report, data security is a far-reaching problem. Because of this, many companies are making investments and taking proactive steps to focus more on cybersecurity. The important point to recognize is that data shared with a large organization is also shared with their often smaller thirdparty vendors. The large, recognized company may have significant investments in cybersecurity; however, the investments in security from their vendor relationships are equally important. One such example is Target and the 2013 security breach that exposed millions of Americans and their private financial data. All of the details of the attack have not been released publicly, but enough information is available to understand the important lesson.

• Malware and other malicious programs

• Cybercrime and other data-driven security threats

• Services providers that have access to healthcare information from the people they serve and have daily interactions

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It was reported in Bloomberg that six months prior to the attack Target began installing a $1.6 million malware detection tool made by the computer security firm FireEye, whose customers also include the CIA and the Pentagon. Target told the Wall Street Journal that the initial intrusion into its systems was traced back to network credentials that were stolen from a third-party vendor. Multiple sources named the vendor as Fazio Mechanical Services, an HVAC firm. Investigators determined the primary method Fazio used to detect malicious activity on its internal system was a free version of anti-malware software, which was inadequate. The Target data breach shows that although your systems, or those of a large service provider, may meet the industry standard to provide protection, failure to require third-party vendors to use the same process can lead to huge breaches.

• Security • Availability • Processing integrity • Confidentiality of information processed or maintained

• Privacy of personal information the organization collects, uses, retains, discloses, and disposes of

SOC 2, Type 2 Designation How Do You Ensure Your Data Is Secure? Risk managers face the question of how to ensure their data is safe in their own organization, as well as with their vendor partners. Best practices dictate to examine and view reports on a service organization’s controls over:

A simple way to ensure these controls are followed is to look for a SOC 2, Type 2 designation. A SOC 2, Type 2 report is a formal audit process completed by a Certified Public Accountant following the quality control standards of the International

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Auditing and Assurance Standards Board (IAASB). According to the American Institute of Certified Public Accountants (AICPA), a SOC 2 report is “intended to meet the needs of a broad range of users who need information and assurance about controls at a service organization.” A type 2 report differs from a type 1 report in that “a type 1 report does not include tests of the operating effectiveness of controls and the results thereof; therefore, it is unlikely to provide report users with sufficient information to assess the effectiveness of controls.” The best practices required to achieve a SOC 2, Type 2 designation should play an important role in vendor selection and management, as well as internal security and risk management.

Holistic Approach to Data Security To obtain and preserve a SOC 2, Type 2 designation requires a holistic approach to data security where every decision made considers the security impact and potential for vulnerability. It requires company senior management to run their organization with a new philosophy and perspective.

As you are evaluating the data security at your organization, and those of your vendor partners, consider the following tests, controls, and questions:

Organization and Management Organization and management include management philosophy, security management, and security policies. This addresses the integrity and values of an organization including the qualifications and accountability of personnel. Ask:

• What is senior management’s philosophy concerning data and information?

• Is there a comprehensive security policy in place at the organization?

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Communications

Monitoring of Controls

Communication criteria relate to how employees understand and are able to effectively implement the philosophy and policy crafted by senior management. This includes both formal and information communication to train and evaluate employees on the operation of the system. Ask:

Monitoring of controls uses a variety of techniques to evaluate how well the data security system is operating. The results are reviewed daily and action will be taken on any deficiencies in the system.

• Is there a formal communication of security commitment as a new client or employee?

• Can the organization provide information regarding the design and operation of its system which is communicated to staff and relevant users?

• Is there evidence that normal business operation can continue and data be recovered in the face of a disaster?

• Is there evidence that paid “ethical Risk Management and Design and Implementation of Controls Risk management controls include the ability to identify, evaluate, and monitor potential risks that may threaten data security. As part of a comprehensive plan, these risks should be discussed and evaluated for any necessary changes or adjustments needed in the security policy. Ask:

hackers” have attempted to access the system. Were any corrective actions implemented to address for discovered weaknesses?

• How are potential threats to data security identified? • Is this information documented in a risk assessment report along with an evaluation of changes in internal controls?

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• With employees and company guests, what controls exist to ensure a safe data environment including background checks and physical access?

• What is the procedure to terminate system access?

System Operations System operations involve how well the system detects, evaluates, and mitigates threats to the system in real time. These criteria include the documentation of such events.

• Is there evidence of security incidents that were logged, mitigated, and documented in the system?

Change Management Change management deals with the reality that the world of data security is constantly changing. This criterion evaluates how an organization assesses and identifies needed changes, as well as implements these changes without creating new security risks.

• Is there evidence of an assessment report of the system identifying potential risks? • How are these risks evaluated by management for potential changes to the system?

Data security is of paramount importance in today’s world and it affects every person, and every company, large or small. Given the sensitivity and importance of medical information, it is important to ask critical questions of your own data security and especially that of your vendors. Ensure the providers you work with are up to the highest level of standards to protect your customers’ data.

Logical and Physical Access Controls Logical and physical access controls are relevant to the Target breach as it relates to preventing unauthorized access to the data system. The organization should have the ability to provide and remove access, as well as physically restrict access on-site.

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Andrew Weaderhorn is one of the Founders and Chief Executive Officer of MedSource National (SOC 2, Type 2 Compliant Firm). As CEO and majority co-owner, he has utilized his more than 12 years of experience in managed care services to offer a flexible technology solution to the national claims market, while maintaining a high level of local service. Mr. Weaderhorn’s “hands on approach” is a key factor in helping MedSource National achieve operational success.

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ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

Q& A T

he Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on ACA, HIPAA and other federal benefit mandates. Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Dan Taylor provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte and Washington, D.C. law firm. Ashley Gillihan, Carolyn Smith and Dan Taylor are members of the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com. 24

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2016 Health & Welfare Compliance Highlights: A Walk Down Memory Lane 1 As we look forward to 2017, and the potential promise it holds for HSAs, FSAs, and consumer driven health care, it’s all too easy to overlook the super-hot compliance summer of 2016 and the large number of compliance issues that piled up this year. While some of these obligations may melt away (like snow on the walkway) with a new Administration, others will continue during 2017. This article provides a quick reminder chart (and checklist) of the more significant obligations that should be addressed, barring an early regulatory thaw.

Issue ACA Section 1557

Very Brief Summary

Due Date

• Any “health program or activity” that receives HHS “financial assistance”. Generally, (1) an employer’s plan that receives federal funds (e.g., RDS, EGWP); (2) insurers that receive HHS funds; (3) TPAs that receive HHS funds (e.g., insurers who are TPAs); and (4) employers that provide health services and receive funds from HHS (e.g., health care providers, like hospitals).

October 16, 2016 –

posting required notice and including taglines (e.g., in open enrollment materials).

• Prohibits discrimination based on gender (e.g., categorical exclusion of services related to gender transition).

• Adds accessibility requirements for those with limited English proficiency and communications with individuals with disabilities

January 1, 2017 – health plan designs must be in compliance

• Requires grievance procedure • Posting notice of consumer civil rights. • Post taglines in top 15 non-English languages spoken in the state in significant OFCCP gender identity rules

publications, like claim denial letters, SBCs, and COBRA notices. • Most federal contractors must ensure their plans do not discriminate based on gender, such as by including blanket limitations on services for transgender individuals

PCORI Fee Payment

• Payment on covered lives due each July 31 using Form 720 • Self-insured plans/insurers

August 15, 2016, but OFCCP will consider good-faith progress to update plan

July 31, 2016 (and due again July 31, 2017)

January 2017 | The Self-Insurer

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Issue Transitional Reinsurance Fee

Very Brief Summary • Fee to fund reinsurance payments to help stabilize ACA Marketplace premiums • 2016 is last year that it applies (with payments due in 2017)

Due Date November 15, 2016 – submit enrollment count for current calendar year, and remit second portion payment for 2015 calendar year (if paying 2015 in two installments) January 16, 2017 – remit first portion of payment (or entire payment) for 2016 calendar year. If making two payments, first payment is $21.60 per covered life. Entire payment is $27/covered life

ADA Wellness Program Disclosure

• EEOC requires notice to employees eligible for wellness program, even if not enrolled in benefits.

• Notice must be provided before the employee provides any information in conSee our article in the prior edition of this column

GINA Wellness Program Consent for Spouse

nection with a wellness program.

• EEOC requires written consent of spouse to participate in a wellness program. • Consent must be obtained before the spouse provides any information in connection with a wellness program.

See our article in the prior edition of this column

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November 15, 2017 – if entire payment not made in full, remit second portion for 2016 calendar year ($5.40 per covered life). Effective for 2017 plan year. However, notice must be provided before employee provides any information that will be used for 2017 wellness program. Thus, notice might need to be sent be before 2017 (e.g., during open enrollment). Effective for 2017 plan year. However, consent must be obtained before spouse provides any information that will be used for 2017 wellness program. Thus, notice might need to be sent before 2017 (e.g., during open enrollment).


Issue 2016 W-2

Calendar Year 2016 ACA reporting

Very Brief Summary

Due Date

• Beginning with 2016 tax year, all employers must give W-2 and file W-2 with SSA by January 31, 2017, regardless of whether filing electronically or on paper. Before 2016 tax year, SSA filing deadline was after employee deadline, and varied for paper vs. electronic submissions. • Applies to:

-

Employers with 50 or more full-time or full-time equivalent employees in controlled group

-

Self-insured employers and MEC insurers regardless of number of covered lives

• Forms 1095-B/1095-C must usually be provided to individuals by January 31, but

January 31, 2017

February 28, 2017 – Forms 1094-B/1095B/1094-C/1095-C (to IRS if paper filing)

March 2, 2017 – Forms 1095-B/1095-C (to individual)

IRS extended to March 2, 2017 in Notice 2016-70

• No extension to file Form 1094-B; 1094-C; 1095-B; or 1095-C with IRS

2017 maximum outof-pocket limit

Integrated HRAs and dependent/family reimbursements

• For 2017, $7,150 self-only/$14,300 other than self-only

March 31, 2017 - Forms 1094-B/1095B/1094-C/1095-C (to IRS if electronic filing) 2017 plan year

• New FAQ for plans that use reference based pricing • HRAs can only reimburse expenses of dependent family members enrolled in

2017 plan year

integrated medical plan

• IRS provided transition period through start of 2017 plan year for HRAs that

Health Flex credit contributions and Affordability

reimbursed family members as of 12/16/2015 • Flex credit contributions that might be cashed out or used for non-213(d) medical benefits ignored when determining if coverage is affordable under the ACA

Opt-out payments

• Unconditional opt-outs (e.g., not tied to enrollment in another employer’s medical coverage) must be added to cost when determining if coverage is affordable under ACA. [Transition rule for CB plans].

Health FSA contributions and carryovers

• Update COBRA notices to describe how carryovers impacts premium and that amounts carried over will be available until used or COBRA ends.

• Amend plan to limit maximum carryover period, if desired

2017 plan year

2017 plan year

Now – COBRA notice

Before cafeteria plan year – amend to limit maximum carryover, if desired

January 2017 | The Self-Insurer

27


Issue

Very Brief Summary

Mental Health and Substance Use Disorder Benefits

• New FAQ

Annual Notices

• Part D disclosure to CMS

Due Date In effect

• Cannot use issuer’s entire book of business to determine compliance

In effect

• Part D notice to participants/beneficiaries • Summary Annual Report (if applicable) • Summary of Benefits and Coverage (SBC) (New Template for enrollments after 4/1/17)

• Summary of Material Modifications (SMM – not required if new SPD provided) • Notice of Right to Designate a Primary Care Provider (if applicable) • CHIPRA Notice (be sure to send to all employees, including employees who are not benefit eligible)

• HIPAA Privacy Notice (notice of availability required every 3 years, but suggest providing notice of availability annually so that 3 year period doesn’t need to be tracked)

• Women’s Health and Cancer Rights Act (WHCRA) • Notice of Right to Designate a Primary Care Provider (if applicable) • ACA grandfathered plan notice (if applicable) 2017 Limits

HSA Contribution Limit

$3,400 self-only/$6,750 other than self-only

HDHP minimum deductibles

$1,300 self-only/$2,600 other than self-only

HDHP maximum out-of-pocket

$6,550 self-only/$13,100 other than self-only

ACA maximum out-of-pocket

$7,150 self-only/$14,300 other than self-only

Health FSA contribution limit

$2,600

HCE for 414(q) and cafeteria plan testing purposes

$120,000

Key employee compensation for cafeteria plans

$175,000

Social Security Wage Base

$127,200

Medical Mileage rate

17 cents

References 1 Steven Mindy, a senior associate in our Washington DC office assisted with this article.

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Simplify your payments Reduce costs Transition to electronic payments


Self-Funded Health Plans May Have a New Ally in the Fight against Specialty Drug Prices This article represents “commentary� and represents views of the authors. We welcome other opinions on the subject

By Brady Bizarro, Esq.

T

hroughout the bitter and seemingly endless presidential election cycle, Donald Trump and Hillary Clinton vehemently disagreed on almost every issue, especially those involving health policy. Yet, there was at least one health policy issue on which both candidates agreed: prescription drugs are too expensive. For self-funded health plans, this is old news. The industry continues to face increasing costs overall, and prescription drugs make up a significant portion of those costs. Specialty drugs are particularly culpable. Specialty drugs accounted for 32 percent of all drug expenditures in 2014 despite making up less than one percent of all written prescriptions, according to research conducted by Express Scripts.

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Self-funded health plans employ a variety of cost-containment strategies in an effort to ameliorate the fiscal burden of prescription drugs. These include increased cost-sharing (through copayments, coinsurance, and deductibles) and utilizing manufacturer copay cards and tiered benefit programs. Now, the self-funded industry may be given new tools by the President-elect to fight the pharmaceutical companies. Chief among President-elect Trump’s health policy priorities is his campaign promise to “repeal and replace” the Affordable Care Act. In addition, he has announced at least two priorities which depart from conventional conservative thinking and have important implications for the future of self-funding: requiring price transparency from all healthcare providers and permitting consumers to import drugs from overseas.

Medicare, the largest single purchaser of prescription drugs in the U.S., is prohibited by law from negotiating prices with pharmaceutical companies. By contrast, in the United Kingdom, brand-name drug prices are generally much lower because the government and the industry negotiate agreements which contain set spending caps and require drug companies to reimburse the government any amount which exceeds the cap.

As part of Trump’s plan for “Healthcare Reform to Make America Great Again,” the Presidentelect proposed that Congress must:

While some of these agreements do contain an opt-out provision for the reimbursement

Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. Congress will need the courage to step away from the special interests and do what is right for America. Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers. It is hard to overestimate the savings a self-funded health plan can realize if permitted to import drugs from overseas. One of the main reasons why prices for brand-name drugs are typically lower in most developed countries than in the U.S. is because of increased negotiating power. In the U.S., the government has forfeited its negotiating power.

requirement, most pharmaceutical companies agree to these contracts as-is in order to gain access to a much larger market. Also consider the case of Canada, which is often touted as a prime example of a source of low-cost prescription drugs. The Canadian government negotiates with pharmaceutical companies on behalf of the public. As a result, brand-name and even generic drugs are less expensive in Canada than they are in the United States. In 2004, the median

January 2017 | The Self-Insurer

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prescription drug prices in Canada were nearly 79 percent lower than those in the U.S., according to the Patent Medicine Prices Review Board Annual Report. The 2013 report revealed that Canadian consumers still paid less than half of what U.S. consumers paid for patented-drug products. If the President-elect succeeds in pushing through legislation which ends the ban on foreign drug imports, U.S. consumers could realize similar savings.

A joint study by the Infectious Disease Society of America and the HIV Medicine Association found that the increase in price would result in an average bill of $634,500 per year for most patients.

This would not be the first time that a politician has attempted to lift the ban on importing foreign drugs. The Safe and Affordable Drugs from Canada Act of 2015 was sponsored by Senator John McCain (R-AZ) and had bi-partisan support, including from Senator Bernie Sanders (D-VT).The bill remains stalled in the Senate Committee on Health, Education, Labor, and Pensions.

In response to the public outcry, the CEO of Turing Pharmaceuticals defended his company’s actions, citing the need to modernize the drug and create new alternatives with fewer side effects. A year later, the price of the drug is $375 in the U.S., and between $1 and $2 per pill internationally.

There was also an attempt to permit importation in 2009 while the Affordable Care Act was being pushed by Democrats, but that effort also failed. Despite failed past attempts, there are many reasons to think that the importation of prescription drugs from overseas may actually become legal (at least in some form) under a Trump Administration.

Turing Pharmaceuticals is not the only company to drastically increase the price of its brand-name drugs and face near-universal criticism.

First, public support for change and increased price transparency is at an all-time high, especially in light of recent, high-profile price-gouging controversies. In August 2015, Turing Pharmaceuticals acquired the exclusive rights to distribute Daraprim, a drug used to treat AIDS-related symptoms. A month later, the company raised the price of Daraprim from $13.50 per pill to $750 per pill overnight, an increase of over 5,500 percent (before 2010, the drug cost $1 per pill).

Mylan, a global generic and specialty pharmaceuticals company, faced an even bigger political firestorm in the summer of 2016 when it raised the price of a two-pack supply of its popular EpiPen to $608 (the same two-pack EpiPen is available in the United Kingdom for $69).

January 2017 | The Self-Insurer

33


The EpiPen, which sold for $100 as recently as 2009, is an epinephrine auto injector device used to control allergic reactions to food and environmental allergens. What made this case more contentious was a media report revealing that over the past eight years, while the price of EpiPens increased 461 percent, the salary of Mylan’s CEO rose 671 percent, up to $18.9 million a year. Although many experts agree that these examples are egregious, it is important to note that there are enormous costs associated with pharmaceutical research and development. Furthermore, there is a very real need to encourage drug development as a matter of good public health and public policy. This is why the U.S. government provides regulatory protections to assist pharmaceutical firms in the development of life-saving drugs. Nonetheless, recent polling confirms that Americans are fed up with the price of brand-name drugs. Nearly eight in ten Americans agree that drugs are too expensive, and almost 86 percent agree that pharmaceutical companies should be required to reveal how drug prices are set, according to a survey released by the Kaiser Family Foundation in September 2016. In addition to the public outcry over specific pricing controversies, the Food and Drug Administration (FDA) has sent mixed signals regarding the agency’s willingness to enforce the ban on foreign drug imports. The FDA’s website explains that the agency has a policy “that it typically does not object to personal imports of drugs that FDA has not approved under certain circumstances . . .”Those circumstances include when less than a three-month supply is

imported, and when the consumer importing the drug verifies in writing that it is for her own use and provides contact information for the doctor providing her treatment.

Perhaps most importantly, Presidentelect Trump will enjoy the benefits of a Republican-controlled House and Senate. While in recent weeks he has shown signs of scaling back some of his campaign promises, this particular health policy initiative enjoys bi-partisan support. As such, there may be no better opportunity to push through legislation lifting the ban on safe, dependable imported drugs. Brady Bizarro Esq. is a staff attorney with The Phia Group, LLC.

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SIIA Sets Course for Next Round of Health Care Reform

I

n early December, members of the Self-Insurance Institute of America’s (SIIA’s) Government Relations Committee (GRC) met in Washington, D.C. to debrief on election impacts, discuss potential health care reform policy changes ahead in 2017, and plan for key advocacy activities on behalf of the self-insurance industry. As a SIIA member driven committee, the GRC is tasked with providing guidance to professional staff regarding policy positions and related advocacy priorities. With a unified Republican government taking office in January, Congress is already in the process of planning repeal and replace options surrounding the Affordable Care Act (ACA) that will be considered early next year. As part of this process, the incoming Trump Administration will likely defer to Congress in terms of what portions of the ACA to repeal, interim fixes to the Exchange markets prior to replacing, and what longer-term modifications and replacements will look like. 36

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Given that congressional Democrats are likely not willing to repeal a large portion of the ACA, Republicans will use a process known as “budget reconciliation”, requiring a simple majority vote in the House and Senate.The key to this process is that legislation moved under reconciliation cannot be amended once passed out of committee. In addition, only provisions that impact spending or tax revenue can be included in any reconciliation draft, meaning that using such a legislative vehicle cannot repeal all of the ACA. Thus, congressional leaders will likely use budget reconciliation to repeal a portion of the ACA, including the Cadillac Tax, employer mandate and HSA limits. Similarly, the new Administration will also use its regulatory power to reduce or eliminate various regulatory requirements. While the congressional repeal activity is expected to occur in the first two months of the year and include a two- to three-year transition period, Congress will not pivot immediately to a longer term effort to replace the ACA. Any replacement legislation, which will need to be hashed out between the House, Senate and Administration, is expected to follow a House Republican healthcare blueprint released earlier this year.

SIIA Government Relations Committee Discussions At the direction of SIIA GRC Chairman Larry Thompson of Pomco, GRC members discussed key components of potential ACA replacement provisions being considered by Congress and their impacts on the self-insurance industry. It was concluded that most anticipated “replace” provisions would not directly affect our industry, thus the committee agreed that SIIA should take neutral position on many these provisions. The committee did, however, identify several provisions that could potentially affect SIIA members determining that that the association should take proactive positions as follows:

• Oppose limiting the tax deduction for employer-based health plans; • Support strengthening of wellness programs and the use of Health Savings Accounts;

• Support inclusion of SIIA’s Self-Insurance Protection Act language; and • Support Association Health Plan provisions contingent that actual legislative language encourages self-insured AHPs and does not create any adverse consequences to the broader self-insurance marketplace.

SIIA’s board of directors subsequently approved the GRC policy recommendations at its meeting the following day. The GRC also reviewed and approved a SIIA comment letter in response to proposed changes to the Department of Labor (DoL) 5500 form. The letter focuses on explaining why the DOL should not be requesting information related to stop-loss insurance arrangements. With ACA-related policy direction now provided, SIIA is already preparing for 2017 - meeting with congressional staff, building relationships through the Self-Insurance Political Action Committee (SIPAC) and having technical conversations with our members. We continue to actively advocate before Congress and the Administration for self-insured and captive insurance arrangements. This past year, the Self-Insurance Protection Act (SIPA) was included in the Republican healthcare framework and is in a good position to be included in any future health care legislation. With your help, SIIA continues to grow and strengthen our advocacy efforts, allowing us to hit the ground running in 2017 to ensure an employer-based self-insured marketplace remains growing and vibrant.

State Government Relations Activities SIIA is also committed to advocating on the state level to improve state laws and regulations and the GRC discussed key developments in several states. Some discussion highlights are as follows: In Maryland, SIIA provided critical information about stop loss to the Insurance Administration, which issued a generally favorable stop loss report to the legislature. In New Mexico, SIIA has been working to allow carriers to file stop new products January 2017 | The Self-Insurer

37


and rates without meeting ACA health insurance medical loss ratios. In New York, SIIA continues the fight to re-open the stop loss market for groups of 51-100. Finally, in Washington, SIIA members met with insurance department staff to address some concerns about recent regulatory guidance and the department will be re-examining its form and rate filing requirements early next year. To hear more about SIIA’s activities on the state and federal levels related to health care reform, make your plans today to attend the Self-Insured Health Plan Executive Forum in Tucson March 28th and 29th. In addition, you can directly participate in our advocacy process as we return to Washington, D.C. on May 3rd and 4th for the SIIA Legislative/ Regulatory Conference. If you have questions or would like to discuss SIIA’s policy activities in further detail, please contact Ryan Work, Vice President of Federal Government Relations (rwork@siia.org) or Adam Brackemyre, Vice President of State Government Relations (abrackemyre@siia.org).

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Foundation Plays Key Role in Supporting the Self-Insurance Industry

O

riginally established as 501(c)(3) organization affiliated with the Self-Insurance Institute of America, Inc. (SIIA), SIEF has had a vital role in supporting the self-insurance and alternative risk transfer industry for more than 20 years. The foundation’s mission is to raise the awareness and understanding of self-insurance among the business community, policymakers, consumers, the media and other interested parties, and has been modernized in way to provide more direct value to those currently involved in the industry. The foundation is governed by a board of directors comprised of well-known industry leaders including: Nigel Wallbank Chairman Heidi Leenay President Freda Bacon Director Les Boughner Director Alex Giordano Director 40

The Self-Insurer | www.sipconline.net


SIEF has participated in many endeavors to further their mission over the years including sponsoring essay contests and internship programs geared for college students pursuing degrees in insurance and/or risk management, producing and maintaining a website that serves as on online hub for objective information about self-insurance, sponsoring the participation of high profile, professional and government speakers to participate at SIIA conferences, underwriting an annual survey report of the stop-loss marketplace, and producing high quality publications that provide reference information about self-insured group health plans, group self-insured workers’ compensation programs and captive insurance companies.

SIEF has also coordinated multiple educational sessions on Capitol Hill, which have been designed to help congressional staff members understand the basics about self-insurance and captive insurance.

For more information SIEF or to contribute, please visit www.siefonline.org.

The foundation’s financial support comes entirely from voluntary contributions and from participation in various fundraising events, including raffles with a variety of prizes and the always popular golf tournaments held in conjunction with SIIA events. All contributions to SIEF are tax deductible, so by financial supporting the foundation you can also reduce your company’s tax liability -- a true win-win situation.

In 2017 SIEF will have two golf tournaments. The first will be in conjunction with the SIIA Self-Insured Health Plan Executive Forum on March 28, 2017 at the Starr Pass Golf Club in Tucson, Arizona. The second will be in conjunction with SIIA’s 37th Annual National Conference & Expo, on October 8, 2017 at the Wildfire Golf Club at the JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona.

The golf tournaments are open to all conference registrants, and promise to be an excellent opportunity to network with executive-level industry colleagues and peers. The tournaments will be a scramble format and you can either sign up as an individual or reserve a foursome. All skill levels are welcome!

Don’t miss this exclusive opportunity to better your handicap, refine your putting skills and support the foundation dedicated to ensuring the development of tomorrow’s leaders in the self-insurance/captive insurance industry. This is also a great event to promote your company’s corporate brand through a variety of sponsorship opportunities. For sponsorship information, contact Shane Byars at 800/851-7789, or via e-mail at sbyars@siia.org.

January 2017 | The Self-Insurer

41


SIIA

Endeavors written by Bruce Shuntan

SIIA has a busy year ahead with numerous educational and networking events ahead in 2017 that every member will find of great value.

Highlights include:

Winter Webinar Series SIIA will hold a six-part winter webinar series, which will cover a variety of topics relating to self-insured group health plans, captive insurance companies and group self-insured workers’ compensation funds. “Webinar Wednesdays” will begin January 18, 2017 and run each week through the end of February.

International Conference April 18-19, 2017 at Condado Vanderbilt Hotel in San Juan, Puerto Rico SIIA’s 2017 International Conference is focused on helping U.S.-based companies identify and understand potential business opportunities related to self-insurance/captive insurance in key countries throughout Latin America and the Caribbean. In addition, the event will provide a truly unique networking environment designed to connect U.S. attendees with attendees from Latin America for purposes of exploring partnership and/or business development opportunities.

Self-Insured Health Plan Executive Forum (formerly known as the TPA/MGU Excess Insurer Executive Forum) March 28-29, 2017 at the JW Marriott Tucson Starr Pass Resort & Spa in Tucson, AZ The educational focus for this event will be expanded to address the interests of plan sponsors, in addition to third party administrators and stop-loss entities.

42

Legislative/Regulatory Conference May 3-4, 2017 at the Washington Marriott Metro Center Hotel in Washington, DC SIIA’s Legislative and Regulatory Conference is your opportunity to hear directly from the policy-makers who will shape the health policy agenda in 2017 and beyond. Experience the political process first hand by participating in SIIA’s popular “Walk on Capitol Hill”. Meet with your federal legislators in their Capitol Hill offices and let your voice be heard. SIIA staff will set up your appointments, provide you with “talking points” and lobbying materials in advance of your meetings.

The Self-Insurer | www.sipconline.net


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Self-Insured Workers’ Compensation Executive Forum May 16-18, 2017 at The Omni Grove Park Inn in Asheville, NC SIIA’s Annual Self-Insured Workers’ Compensation Executive Forum is the country’s premier association sponsored conference dedicated exclusively to selfinsured Workers’ Compensation. In addition to a strong educational program focusing on such topics as risk management strategies and innovative ways to prevent and manage loss, this event will offer tremendous networking opportunities that are specifically designed to help you strengthen your business relationships within the self-insured/ alternative risk transfer industry.

37th Annual National Educational Conference & Expo October 8-10, 2017 at the JW Marriott Desert Ridge Resort & Spa in Phoenix, AZ SIIA’s National Educational Conference & Expo is the world’s largest event dedicated exclusively to the self-insurance/alternative risk transfer industry. Registrants will enjoy a cutting-edge educational program combined with unique networking opportunities, and a world-class tradeshow of industry product and service providers guaranteed to provide exceptional value in four fast-paced, activity-packed days. For more details on session information, registration and sponsorship opportunities, please visit www.siia.org. We look forward to seeing you in 2017!

At Tokio Marine HCC, we understand market trends. That’s why we can properly assess risk – allowing our clients to go about their business. Our medical stop loss clients have been benefiting from that expertise for over 35 years. To be prepared for what tomorrow brings, contact us at tmhcc.com for all your medical stop loss, group life and disability needs.

We call it mind over risk.

Tokio Marine HCC - Stop Loss Group A member of the Tokio Marine HCC group of companies tmhcc.com TMHCC1047 - 12/16

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Your

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We’ve got your back. Four words that anyone seeking to self-fund healthcare benefits needs to believe, particularly when contemplating the financial risks associated with catastrophic medical events. That’s why we’re firm believers at Swiss Rwe Corporate Solutions in building strong relationships, understanding exactly what our partners expect of us, and creating innovative ways of fulfilling those expectations. And that’s also why we’ve integrated IHC Risk Solutions into our business. The result is a powerful combination of expertise and capabilities that offers brokers, advisors, payers and their employer clients enhanced value – not to mention extra peace of mind. Now, more than ever, we’ve got your back. We’re smarter together.

swissre.com/esl Insurance products underwritten by Westport Insurance Corporation and North American Specialty Insurance Company.


NEWS

from SIIA

Members

2017 JANUARY MEMBER NEWS

SIIA Diamond, Gold & Silver Member News SIIA Diamond, Gold, and Silver member companies are leaders in the selfinsurance/captive insurance marketplace. Provided below are news highlights 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 Jennifer Ivy at jivy@siia.org. If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy and jivy@siia.org.

Diamond Members Phil Christianson Appointed Chief Executive Officer of HealthSmart HealthSmart, a leading independent provider of managed care solutions for self-funded employers across the country, announced that Phil Christianson has been named the Company’s new President and Chief Executive Officer, succeeding Tom Kelly, who has resigned from the Company to pursue other interests. Mr. Christianson, who brings more than 30 years of experience in health benefits administration, technology and operations to HealthSmart, became CEO effective November 14, 2016. 46

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“We are very appreciative of Tom’s service to HealthSmart, and very pleased that Phil Christianson will lead HealthSmart’s growth as its new CEO,” said Joe Driscoll, a member of the Company’s Board of Directors. “Phil has repeatedly improved companies serving employers, payers, and providers, and is highly respected within the healthcare industry for his expertise, versatility, and results for clients. We are confident in Phil’s ability to improve the focus of HealthSmart upon customer needs and to advance our mission of providing clients with the highest quality and most cost effective healthcare solutions.”

“HealthSmart will continue to respond to dynamic industry changes and create new opportunities,” said Christianson. “HealthSmart has nurtured customer relationships and has built a powerful platform across several market segments, and I look forward to working with the Board and the talented HealthSmart team to continue delivering outstanding execution for our customers and new growth opportunities created by market changes, regulation, and technology.” Mr. Christianson previously served as President and Chief Executive Officer of Payment America Systems, Focused Health Solutions, RealMed, and Corporate Benefit Services of America, leading each to differentiated and improved services for employers, payers, physicians and hospitals. He also led divisions of The Walt Disney Company and United Health Group. Just prior to joining HealthSmart, Mr. Christianson acted as an advisor to and investor in related health services and information technology companies. Mr. Christianson earned a Master of Business Administration from The University of Southern California, a Juris Doctorate from Loyola Law School, and a Bachelor of Arts, summa cum laude, from California Polytechnic State University, San Luis Obispo. About HealthSmart For more than 40 years, HealthSmart has offered a wide array of customizable and scalable health plan solutions for self-funded employers. HealthSmart’s comprehensive service suite addresses individual health from all angles. This includes claims and benefits administration, provider networks, pharmacy benefit management services, business intelligence, onsite employer clinics, care management, a variety of health and wellness initiatives and web-based reporting. The Company’s headquarters is in Irving, Texas, with regional hubs throughout the country. HealthSmart’s mission is to improve member health and reduce healthcare costs.

Symetra Financial Corporation and Its Subsidiaries Ratings Affirmed by A.M. Best A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Symetra Life Insurance Company and its subsidiary, First Symetra National Life Insurance Company of New York (New York, NY). Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb+” and the existing Long-

Term Issue Credit Ratings (Long-Term IR) of Symetra Financial Corporation (Symetra). The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Bellevue, WA, unless otherwise specified. The rating affirmations reflect the organization’s continued very good riskadjusted capitalization and strong balance sheet, as well as favorable operating earnings and increasing business diversification. Symetra’s financial leverage is roughly 16% as of Sept. 30, 2016, which is favorable relative to industry and peer benchmarks.  On Feb. 1, 2016, the company became a wholly owned subsidiary of Sumitomo Life Insurance Company. The merger was accounted for under the acquisition method of accounting (purchase accounting, or PGAAP). Therefore, A.M. Best notes that year-over-year financial comparisons reflect a difference in accounting methods. It is anticipated that under the new ownership, there will be no material change to business strategy and operations, or to the level of risk within the current balance sheet structure. Historically, Symetra has had a more significant investment allocation to commercial mortgage loans than industry peers. However, the company has a proven track record of favorable performance within the portfolio, which has a lower average loan-to-value and loan size.   Symetra has been a market leading carrier in the medical stop-loss space; however, A.M. Best notes the company has increased its focus on overall diversification of the enterprise by working to grow its group benefits and individual life and retirement segments. As a result, the company has reported good operating results on a combined basis across all segments, through the first three quarters of 2016, although materially lower than the prior year due in part to volatile mortality experience and new business strain. A.M. Best expects

January 2017 | The Self-Insurer

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that Symetra may be challenged to report significant growth in its individual life segment due to intense competition in the market; however, the company has enhanced greatly its distribution and its product suite more recently. A.M. Best remains concerned regarding earnings sustainability across key product lines given the continued low interest rate environment and evidence of lower net investment yields throughout the industry. About A.M. Best A.M. Best is the world’s oldest and most authoritative insurance rating and information source.  Visit www.ambest.com. 

Gold Members Change Healthcare Releases Enhancements to its SmartPay Solution The Merchant Services Enhancement is Designed to Optimize Payments; Lower Cost to Collect for Providers and Payers Change Healthcare, a leading provider of software and analytics, network solutions and technology-enabled services designed to enable smarter healthcare, has released a Merchant Services enhancement to its SmartPay solution. Adding Merchant Services to SmartPay equips payers and providers with simplified pricing and consolidated billing to support consumerpreferred channels and payment methods. Out-of-pocket costs rose 37 percent from 2009 to 2013, with the average patient

paying more than $1,000 per hospital visit, according to a study conducted by the University of Michigan. In addition, more than 12 million Americans are paying an average of $149/month for their health insurance premiums through the Healthcare Marketplaces1.  Knowing that consumers are now responsible for more of their healthcare bills than ever before, Change Healthcare has created a solution that will help streamline the consumer collections process by offering a wide variety of payment options that fit individual preferences through its SmartPay solution suite. “We offer our clients, both providers and payers, a suite of consumer messaging and payment solutions that transforms complex healthcare transactions into a more personalized, digital experience similar to what consumers have in retail or online settings,” said Stuart Hanson, senior vice

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president and general manager, consumer payment solutions. “Bundling Merchant Services within our SmartPay solution suite optimizes our ability to help our clients deliver a positive, consumer-centric experience, while also helping to increase their revenues and lowering cost to collect.” SmartPay with Merchant Services combines diverse payment applications with merchant processing functionalities for credit card, debit card, physical check, and electronic check transactions.This configuration delivers streamlined onboarding, simplified pricing, efficient operations, and centralized billing to support consumer-preferred channels and payment methods.

The SmartPay solution suite includes: •

Point of Service Collections

Patient Pay Online

Patient Phone Pay

Patient Lockbox

To learn more about how Change Healthcare’s Intelligent Healthcare Network™ brings value to its partners through innovative solutions, visit Change Healthcare at www.changehealthcare. com or follow @Change_HC on Twitter.

About Change Healthcare Change Healthcare is a leading provider of software and analytics, network solutions and technology-enabled services designed to enable smarter healthcare. By leveraging our Intelligent Healthcare Network™ – the single largest financial and administrative network in the United States healthcare system – payers, providers and pharmacies are able to improve efficiency, reduce costs, increase cash flow and more effectively manage complex workflows. Learn more at www.changehealthcare.com.

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Specialty Care Management and Phia Group Announce Strategic Partnership LAHASKA, PA - Specialty Care Management, LLC (“SCM”), the premier source of innovative catastrophic claim cost containment services, is pleased to announce that it has formally developed a strategic alliance with The Phia Group, LCC. The Phia Group is the self-funded industry’s most acclaimed provider of plan support services, including plan document products, claim recoupment, and consulting.  Headquartered in Braintree, MA, The Phia Group is a pioneer in healthcare cost-containment, continually working to reduce, “the cost of plans through its recovery strategies, innovative technologies, legal expertise, and focused, flexible customer service.”  This strategic alliance with The Phia Group keeps SCM on the cutting edge; emphasizing the management of catastrophic claims with

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a special focus on dialysis care, and combating excessive treatment and billing presently associated with it.   “Our joint venture with The Phia Group allows SCM to expand and enhance the array of services we already provide with an eye toward developing unique programs to further cost containment,” explains Rick Garrison, President of SCM.  “This alliance adds a new dimension to SCM’s business and gives us the opportunity to offer even more robust cost containment strategies.” With The Phia Group, SCM will now offer a Renal Claims Defense program, eliminating exposure to legal and medical costs associated with renal dialysis claim analysis, repricing, and containment.  Both The Phia Group and SCM have proven records of innovation and performance, and are excited to bring forth new programs and strengthen existing ones.  “The Phia Group is pleased to work with Specialty Care Management,” remarked Ron E. Peck, The Phia Group’s Senior Vice President and General Counsel, “because SCM appreciates the importance of powerful plan document language, and they understand the need to operate in accordance with those terms.  They have worked with us to prepare a potent defense strategy – protecting both benefit plans and participants.”  For more information about Specialty Care Management LLC, please contact Rick Garrison at 267-544-0365 or email at marketing@specialtycarecm.com. For more information about The Phia Group, please contact The Phia Group’s Sales Executive, Garrick Hunt, at 781-535-5644 or Info@PhiaGroup.com.

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Silver Members Windsor Strategy Solutions Announces Major Data Update for Actuarial Advisor Rating Model and Health Benefits Consulting Suite Windsor Strategy Solutions, a leading health care actuarial software firm, announced a major update to its industry-leading rating manual, Actuarial Advisor, and its Health Benefits Consulting Suite. With this update, the model’s detailed claim distributions are based a new claims data set that is more than five times larger than Windsor Strategy Solutions used previously. The data set is updated annually in order to capture and utilize the most recent healthcare trends. The size and richness of the database allows for the development of claim distributions reflecting 34 medical service categories, 8 pharmaceutical categories and over 200 claim size ranges. “With this larger and more detailed data set we have further enhanced the capabilities of Actuarial Advisor, the most comprehensive and flexible actuarial rating manual available today,” said Todd Owen, CEO of Windsor Strategy Solutions. The Actuarial Advisor rating manual accommodates a wide range of user inputs, including plan designs, trends, demographics and provider network discounts. Users are able to generate and evaluate customized rates for both fully insured and excess loss health insurance programs.

The new data set also powers the company’s Health Benefits Consulting Suite. This suite is comprised of three powerful and easy to use tools that help benefits consultants and their clients make improved decisions on the design of their health plans. The Health Benefits Consulting Suite includes the following tools: Actuarial Assistant Risk Decision Support Experience and Migration Predictive To arrange a demonstration of Actuarial Advisor, or the Health Benefits Consulting Suite, please contact Neeru Sachdeva at nsachdeva@wspactuaries.com or 609.275.6550. More information, as well as online demos of the tools in the Health Benefit Consulting Suite, are available at our website: www. windsorstrategy.solutions January 2017 | The Self-Insurer

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Windsor Strategy Solutions develops cutting edge software for employee benefits professionals who want powerful and easy to use tools that deepen their understanding and consulting capabilities for their client’s health benefits plans. Our Health Benefits Consulting Suite and Actuarial Advisor rating model are used by consultants, brokers, TPAs, MGUs, reinsurers, stop-loss carriers and consulting actuaries. About Windsor Strategy Solutions Located in Princeton Junction, NJ. Windsor Strategy Solutions, is an actuarial software firm focused on innovation in health plan pricing and design. For more information, contact Todd Owen at towen@windsorstrategy.solutions. and visit www.windsorstrategy.solutions.

Underwriting Management Experts Hires Joseph �Joe� Byers as New Executive Vice President of Sales Underwriting Management Experts (UME) is pleased to announce the hiring of Joseph “Joe” Byers as their new Executive Vice President of Sales. Joe comes to UME from Zurich Accident & Health where he most recently served as Vice President/National Sales Manager, leading management of the sales team and strategic distribution of their Medical Stop Loss product. An employee benefits professional for more than twenty years, Byers possesses extensive TPA, broker and carrier experience related to business development, marketing and underwriting of Medical Stop Loss. He earned his bachelor’s degree in marketing from Temple University.   Anne Marie Chapman, Chief Executive Officer of UME, says that,

“Joe is a great addition to the UME executive team, and we are looking forward to his leadership in expanding our client relationships. I am confident that his expertise will be of benefit to our valuable partnerships as well as our team here. His extensive list of qualifications, spanning twenty years, makes him uniquely qualified for this role at UME.” A results-oriented individual, Byer’s strengths include excellent communication and problem-solving skills, an astute understanding of all facets (underwriting, policy, claims) of the stop-loss product and a proactive approach to developing viable solutions for meeting the specific needs of individual clients. In his role as Executive Vice President of Sales, Joe will be responsible for assisting in the growth of existing partnerships, as well as identification and development of new partnerships to offer UME’s stop-loss solutions to a broader audience of partners and clients. Joe can be contacted directly at 412-7362905 or jbyers@umexperts.com.

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About UME Underwriting Management Experts (UME), is a full service MGU. We provide flexible, innovative stop-loss, captives and life products that meet the unique needs of our partners. UME offers professional expertise, personalized service and creative solutions to an ever-changing market place.  Contact Robert “Bobby” Glorioso, Executive Personal Assistant, at 855-315-5088 and visit www.umexperts.com.


SIIA would like to Recognize our Leadership and Welcome New Members 2016 Board of Directors CHAIRMAN* Jay Ritchie Executive Vice President Tokio Marine HCC – Stop Loss Group Kennesaw, GA PRESIDENT/CEO Mike Ferguson SIIA, Simpsonville, SC TREASURER & CORPORATE SECRETARY* Duke Niedringhaus Senior Vice President, J.W. Terrill, Inc. Chesterfield, MO CHAIRMAN-ELECT* Robert A. Clemente CEO Specialty Care Management LLC Lahaska, PAKennesaw, GA

Directors Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA Joseph Antonell CEO/Principal A&M International Health Plans Miami, FL Kevin Seelman Senior Vice President Lockton Dunning Benefit Company Dallas, TX Andrew Cavenagh President Pareto Captive Services, LLC Philadelphia, PA Mark L. Stadler CEO BridgeHealth Denver, CO

Mary Catherine Person President HealthSCOPE Benefits, Inc. Little Rock, AR David Wilson President Windsor Strategy Partners, LLC Princeton Junction, NJ

Committee Chairs CAPTIVE INSURANCE COMMITTEE Michael P. Madden Senior Vice President Artex Risk Solutions, Inc. San Francisco, CA

HEALTH CARE COMMITTEE Kari L. Niblack Executive Vice President of Client Engagement & Services Apex Benefits Indianapolis, IN INTERNATIONAL COMMITTEE Robert Repke President Global Medical Conexions, Inc. Novato, CA WORKERS’ COMP COMMITTEE Stu Thompson CEO The Builders Group Eagan, MN

GOVERNMENT RELATIONS COMMITTEE Lawrence Thompson Senior Vice President, Sales & Client Services POMCO Group Syracuse, NY *Also serves as Director January 2017 | The Self-Insurer

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SIIA New Members Regular Corporate Members Eric Buck President & CEO Eliance Health Solutions Lancaster, PA David Schraeder Senior Vice President Hartford Steam Boiler Inspection & Insurance Company Houston, TX Tina Angelone Marketing OneBeacon Morristown, NJ Jeffrey Moffat Premium LLC Bigfork, MT

Employer Member Zenna Gustafson Human Resource Director Pajco Inc. Cape Girardeau, MO

Do you aspire to be a published author? Do you have any stories or opinions on the self-insurance and alternati ve risk transfer industry that you would like to share with your peers? We would like to in vite you to share your insight and submit an article to The Self-Insurer ! 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 employ ers, TPAs, MGUs, reinsurers, stoploss carriers, PBM s and other service providers.

Articles or guideline to Editor Gretchen Grote at ggrote@sipconline.net also has advertising opportunities available. Please contact Shane

Byars at sbyars@sipconline.net for advertising information.

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Find out what Fully Integrated Healthcare Cost Management can do for you! Visit us at Zelis.com Copyright 2016 Zelis Healthcare. All rights reserved.


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