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October 2017


The World’s Leading Alternative Risk Transfer Journal Since 1984

Self-Insurance Institute of America’s th

37 Annual National


strength in


balance Experts in coverage solutions for single entities, groups and public entities, our integrated approach gives self-insureds greater stability and control over their self-funded plan. Unparalleled underwriting expertise, innovative risk management and in-house claims management, work in sync and in perfect balance for best possible outcomes.

Since 1990

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The World’s Leading Alternative Risk Transfer Journal Since 1984

Self-Insurer’s Publishing Corp.


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

Editorial Staff PUBLISHING DIRECTOR Erica Massey SENIOR EDITOR Gretchen Grote

4 SIIA Endeavors On the Record With SIIA President & CEO Mike Ferguson


Volume 108

14 Introducing SIIA Members to Monterrey, Mexico Vibrant and Welcoming City to Host SIIA’s 2018 Latin America International Conference 18 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 24

EDITORIAL ADVISORS Bruce Shutan Karrie Hyatt


Staying the Course How to sustain success in workplace wellness can be much more than behavior modification and a driving force across self-funded employee populations

Editorial and Advertising Office P.O. 1237, Simpsonville, SC 29681 (888) 394-5688

2017 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary

Leading the Political Advocacy Charge for Captives SIIA Active in Protecting & Promoting this Important Segment of the Self-insurance Marketplace

By Ryan Work

10 30

Catching Up with Risk Purchasing Groups


Easy to Swallow Work comp formularies help states rein in claims, improve efficacy and speed return to work


The Future of Self-Funding – An Insider’s Take


News from SIIA Members

October 2017 | The Self-Insurer




On the Record With SIIA President & CEO Mike Ferguson

Self-Insurer Contributing Author David Kirby sat down with SIIA President & CEO Mike Ferguson for a wide-ranging interview to talk about how the association continues to evolve and play an increasingly important role in helping its members be successful in the selfinsurance marketplace.

David Kirby: So let’s jump right in. Why do you think it so important for companies involved in the self-insurance marketplace to be SIIA members? Mike Ferguson: I think SIIA is doing some very important work to promote the expansion of this marketplace, while fending off regulatory threats affecting our members in various ways. Of course, our ability to effectively execute this mission depends on a growing and active membership base. SIIA members are always the first to learn about important industry developments and we consistently deliver important informational and educational resources through a variety of formats from a monthly magazine, multiple educational conferences and various social media platforms. I should also point out the networking value of SIIA membership. Our industry is really relationship-driven and most of the major players are highly active in our association. It’s really hard to count the number of members who have told me they have been able to build highly successful businesses thanks in large part due to the connections they have made through their SIIA involvement. I obviously love hearing these stories and they are great to share with potential members. DK: How has SIIA responded what has seemed to be a growing number of legislative/regulatory threats at the state level?

SIIA President & CEO, Mike Ferguson


The Self-Insurer | www.sipconline.net

MF: We concluded a few years ago that legislative/regulatory threats coming from the state level would likely multiply and we were under-resourced to effectively respond. Our response has included the hiring of an in-house state government relations director and then retaining contract lobbyists in specific states where needed. We currently have four lobbyists on retainer in various states and it is quite possible that we may add additional lobbyists in 2018. And when all else fails, we are not shy about pursuing legal challenges in response to state laws affecting our industry.


DK: Let’s pick up on your comment regarding legal challenges, as I believe SIIA concluded some important litigation earlier this year. Can you provide some details? MF: The association had been fighting the state of Michigan in federal court over that state’s Health Insurance Claims Assessment Act, which we believed should be preempted by the Employee Retirement Income Security Act (ERISA). Our view has been that this case has broad ramifications, particularly for multi-state self-insured employers, so SIIA took a leadership position once again in order to protect the self-insurance marketplace. Unfortunately, the U.S., Supreme Court declined to hear our case upon appeal so we were not able to prevail this time, but no other industry group was willing to take up the fight despite many such groups telling us they supported our efforts. It was a disappointing outcome, but we will continue to monitor ERISA preemption development and stay engaged where necessary. In addition to this current ERISA preemption challenge where SIIA is the lead plaintiff, the association had also filed an amicus brief in a separate federal case concerning captive insurance arrangements. Our brief provided the court a more specific understanding of how and why captives are used, which has become increasingly important given heightened IRS scrutiny of these alternative risk transfer strategies. While the court ruled against the captive insurance company last month, our policy arguments were not rebutted, so this brief may have served a useful purpose going forward. DK: You have commented publicly on several occasions about how important it is for SIIA to become more a major player in terms of political contributions. Can you elaborate a bit on why this should be such a priority and any progress that has been made to move in this direction? MF: I have actually been saying this for the past several years and this objective has continued to move up the list of association priorities. There are two primary reasons for this prioritization, with the one reason being fairly obvious for most members, with the second reason less obvious for those who are not creatures of the DC lobbying world. The obvious reason, of course, is that it is much easier to make and keep friends on Capitol Hill if you provide financial support for their campaigns. This does not mean that if you contribute to a specific member of Congress that they are certain to vote a specific way, but it’s certainly easier to get a meeting with the member and/or their senior staff to explain your issues. Not so obvious to those outside the beltway is that when an organization establishes itself as a political financial player, it raises your “street cred,” so to speak, with other important organizations in town that we may need to partner with on various lobbying efforts. In this regard, I am pleased to report that SIIA is now well positioned with some of the powerful associations in DC, including the U.S. Chamber of Commerce, National Association of Manufacturers, and at least one major union organization.

Our progress has been somewhat slow but steady since we established the SelfInsurance Political Action Committee (SIPAC) about six years ago as a vehicle for SIIA members to channel political contributions to key members of Congress. Things have accelerated this year thanks to this more dedicated focus combined with increased staffing resources and you are now starting to see SIIA really establishing itself as a money player in DC. Obviously we are not the biggest player by any means but it’s solid progress that is sure to greatly assist our advocacy efforts. DK: We’ve been seeing updates about how successful SIIA has been in securing media placements highlighting the positive aspects of self-insurance and/ or captive insurance. How has the association been able to move the needle on this? MF: I can tell you this has been a very deliberate process, which started last year with SIIA retaining a top-notch public relations firm, specializing in media campaigns and issue advocacy to help us tell the selfinsurance story. Since that time we have been working with this firm to craft specific messages that can be pitched to the media. These have included general informational pieces about self-insured health plans, as well as op-eds focused on specific legislative and regulatory developments at both the federal and state level that affect our marketplace, More recently, we have proactively engaged our members to assist us with this media outreach effort by identifying employers who have had positive experience with selfinsurance and/or captive insurance to serve as interview sources for potential stories and to identify interesting industry trends.

October 2017 | The Self-Insurer



This collective work has resulted in media placements in several leading publications including The Wall Street Journal, USA Today, Investors Business Daily, Philadelphia Inquirer, The New York Post, The Pittsburgh Post-Gazette and The New Jersey Star Ledger. SIIA and self-insurance was also featured in multiple radio interviews over the past year. The collective readership reach just this year is estimated to be more than 75 million, so our story-telling efforts are having real results. Going forward, we hope to advance the discussion in the media to highlight how most of the innovation in health care cost containment is coming from the selfinsurance world. Separate pitches are also being developed to highlight how captive insurance is solving many critical risk management needs of mid-market companies.

program format content will be completely new and fresh. Keeping with a Latin America focus, the International Conference will move to Monterrey, Mexico April 17-19. This is a truly world class city that has direct flight service from many major U.S. airports. I was fortunate to visit Monterrey last month and know that our attendees will really enjoy this location. We’ll then be returning to the Charleston Place Hotel May 15-17 for the Self-Insured Workers’ Compensation Executive Forum. This is a creative event with content and networking opportunities valuable to those involved with both single employer workers’ compensation programs as well as group self-insured workers’ compensation funds. A second SIIA event will be held outside of the United States on June 5-7 in London, when we have scheduled the Transcontinental Self-Insurance Symposium. Given Brexit and other related developments in the UK and EU, we thought it would be very timely to convene thought leaders to discuss implications for the self-insurance marketplace on both sides of the Atlantic. Then to finish up the year, we’ll be returning to the J.W. Marriott in Austin, TX on September 23-26 for our National Educational Conference & Expo. This was a new location for us last year and we received very positive feedback from attendees so we look forward to getting back there for the world’s largest self-insurance industry event.

DK: So the association has its big National Conference & Expo coming up soon in Phoenix. Are there any particular highlights you would like to preview? MF: We think it’s going to be a really great event. The program will feature two keynote speakers, nearly 40 breakout educational sessions and the industry’s largest exhibit hall. We are back at the JW Marriott Desert Ridge Resort & Spa, which is a member favorite, and will conclude the conference with what promises to be an unforgettable party event. DK: What does the SIIA conference schedule look like for 2018?

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MF: It has shaped up nicely with something for all of our members, both in terms of content and location. Our 2018 conference season will start with the Self-Insured Health Plan Executive Forum, scheduled for March 5-7 at the Charleston Place Hotel. The October 2017 | The Self-Insurer


MIKE FERGUSON INTERVIEW | FEATURE DK: I noticed that the Legislative/ Regulatory Conference is not on the schedule for next year. What should members know about this decision? MF: We made this decision because there was just not enough member support of this event. It’s really too bad because it was a unique forum for our members to hear first hand from important policy-makers about the legislative/regulatory developments affecting our industry. In lieu of this conference, we are considering organizing a one-day “fly-in” event next spring where our members can visit with their elected representatives on Capitol Hill. Watch for an announcement in the coming months. DK: SIIA has a distinct membership constituency comprised of companies


The Self-Insurer | www.sipconline.net

involved with self-insured workers’ compensation programs. Can you give us an idea of some association initiatives that appeal specifically to these members? MF: Yes, we have a very active segment of members involved with self-insured worker’s compensation programs, including group self-insured funds. In addition to SIIA’s Workers’ Compensation Executive Forum, some key initiatives are the development of online educational content for group fund trustees, addressing expected regulatory staffing turnover in many states, and identifying issues where SIIA’s lobbying and media relations team can provide value. DK: We’ve seen numerous announcements over the last couple of years of companies upgrading to Diamond or Gold member status, can you talk a little about SIIA’s approach relative to these membership categories and the factors that have contributed to the apparent growth? MF: Unlike many other trade organizations that are relatively homogeneous in terms of size and business focus, SIIA is much more heterogeneous. We have smaller members with varying degrees of industry focus to companies with billion dollar balance sheets that focus exclusively on the self-insurance marketplace. Because of this disparity, it does not make


sense to have a single membership category, so we have created multiple membership categories with different dues rates and benefit packages. This has enabled companies to plug into SIIA at various entry points. With regard to the increase in higher level membership, I think the bigger companies in our industry like what SIIA has been doing and would like to see us continue to “scale,” to put in growth company terms, so that we can further promote and protect their business interests. DK: SIIA has held some high profile International conferences in recent years, most recently in Costa Rica, Panama and Puerto Rico. With Monterrey, Mexico now being added to the destination list, what’s the strategy behind this? MF: We recognize that the insurance industry, like many other industries, has become increasingly global in nature and an increasing number of our members have told us they are looking for new business opportunities outside the United States. In this regard, SIIA believes it can play an important role of helping members identify these opportunities and facilitate the necessary business connections to take advantage of these opportunities. We have decided to continue to focus on Latin America due to the geographic proximity and the fact that there is an uptick in interest in self-insurance and/or captive insurance from multiple countries within this region. DK: How do you view SIIA’s role in the captive insurance space and why this membership constituency appears to be growing fairly rapidly? MF: My view is that SIIA is playing a very unique and useful role in the captive insurance space in that the organization is actively integrating industry stakeholders into the much broader self-insurance world. This is important because mid-market employers are becoming increasingly sophisticated in how they manage risk and understand that they can integrate multiple self-insurance strategies, which may include the formation of a captive insurance company. SIIA brings this all together, giving captive insurance professionals more educational and networking resources.

very preliminary discussions on this with our counterparts in the hospital industry and hope to be able report back to the membership in more detail in the first or second quarter of next year. DK: There certainly sounds like a lot of exciting things going on at SIIA. What advice would give industry executives who want to become more active in the organization? MF: Well of course, become a member if you are not already. Showing up at association events is a big deal because SIIA is a very interactive and social organization and there is no substitute for being there. We also recruit members to serve on our various volunteer committees and participate in periodic grassroots lobbying campaigns, which are great involvement opportunities. I like to say we are happy to put our members to work, so be on the lookout for announcements.

Complementing this integration strategy, SIIA also provides more specialized services for this growing membership constituency. Most notably, our team of lobbyists has been active in responding to ongoing federal regulatory threats related to enterprise risk captives. For these reasons and others, I think SIIA will further enhance its reputation as the key organization for those involved in the captive insurance space. DK: Are there any new SIIA initiatives we can expect to see in 2018? MF: There are at least two new initiatives that our leadership is focused on right now that may take shape next year. First, we are developing a strategy to encourage younger professionals to become more engaged with the association as we believe membership succession planning will become increasingly important over the next several years. The other initiative on the front burner is focused on identifying opportunities for self-insured payers to better collaborate with hospitals with regard to fee charges. We are having some

October 2017 | The Self-Insurer


Leading the Political Advocacy Charge for Captives

SIIA Active in Protecting & Promoting this Important Segment of the Self-insurance Marketplace By Ryan Work


ith Congress easing itself in to the fall legislative session, the advocacy team at the Self-Insurance Institute of America, Inc. (SIIA) would like to provide a brief update on our regulatory and legislative activities on behalf of the captive insurance industry this year.

Notice 2016-66 In November of last year, the Internal Revenue Service issued Notice 201666 (‘the Notice’), which ultimately amounted to a request for information on captive insurance structures, owners and shareholders. SIIA has been active not only on pushing back on the Notice, but collecting information on the burden and cost it has posed for taxpayers. While not ultimately successful in rescinding the Notice, SIIA was able to delay the initial filing deadline from January 30th to May 1st, 2017. 10

The Self-Insurer | www.sipconline.net

Rick Eldridge, Jeff Simpson and John Capasso meeting with Sen. Tom Carper’s office (D-DE)


Subsequently, SIIA spearheaded comment letters formally requesting that, due to its burden on taxpayers, that Notice 20166-66 be considered as part of several Executive Orders (EO 13789, EO 13777) issued to identify regulatory burdens: It remains our belief that the Notice is a taxpayer burden and should be identified by the Administration as such. Just as an example, a survey of participating SIIA members concluded that the cost to comply with the Notice totaled over $21 million and 122,500 total hours. These numbers far exceed the annual cost to prepare the Form 1120PC federal tax return, which typically ranges from $1,000 to $4,000 a year. In fact, the IRS instructions for Form 8886 estimate that it takes a taxpayer 10.16 hours for recordkeeping and 6.25 hours for preparation of the forms. Similar instructions for Form 8918 estimate that it will take a taxpayer 9.79 hours for completion. These estimates are far below the actual total incurred time by SIIA members of 50.97 hours per captive. Throughout this time, SIIA has been engaged with Congress and Treasury in asking for needed revisions to the Notice. In fact, a growing number of Members of Congress have written letters of concern regarding the Notice due to SIIA member discussions. While not likely to be rescinded, SIIA is strongly advocating for changes to the Notice related to filing and disclosure, including the annual filing requirement, among other things. To accomplish this goal, SIIA has held numerous meetings with the IRS and Treasury on this issue, and dozens of meetings with Members of Congress and their staff.

PATH Act SIIA played a crucial role in the ultimate outcome of the Protecting Americans from Tax Hikes Act of 2015 (‘PATH Act’) provisions passed by Congress back in 2015 related to IRC 831(b), which contained a threshold increase to $2.2 million pegged to inflation, as well as restrictions on the use of captives for estate planning purposes. Since that time, we have engaged with the IRS in urging implementation of the new law, as well as to begin the rulemaking procedures outlined in the PATH Act. These efforts were supported by a broad industry wide-stakeholder letter from state captive associations across the country.

SIIA Members Jerry Messick, John Capasso, Senator Heller (R-NV), Mike Lynch, and Ryan Work

October 2017 | The Self-Insurer



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

In addition, SIIA worked with the Joint Committee on Taxation (JCT) in Congress to introduce needed clarifications to the PATH Act, which we feel confident will be included in future tax legislation. These clarifications will ease the implications of the PATH Act on those captives operating in the right way, helping to narrow the scope of the estate planning limitations to those who are truly using it for such a purpose.

Tax Reform In the wake of health care reform attempts, Congress has now turned its attention to tax reform, with a general timeline of consideration this fall. This is important to watch pertaining to the treatment of various business deductions and IRC sections related to tax planning. Recently, SIIA was able to sit down with Chairman Brady as he discussed tax reform. While details were not available at that time, it will likely contain a two-part framework that contains historically low corporate and individual tax rates, along with the simplification of the tax code. With the lower overall rates and simpler code, it seems likely an overall corporate tax rate of somewhere between 24-28% may be achieved, though in return many one-off deductions are likely to go to the wayside. A third tax reform bucket includes a reorganization and modernization of the Internal Revenue Service, which will move separately. Congressional leadership continues to believe they will move tax reform throughout this fall, with more details to be filled in through legislation that will be drafted by the Ways and Means Committee.

Byars at sbyars@sipconline.net for advertising information.


The Self-Insurer | www.sipconline.net

General Captive Legislation SIIA also tracks and advocates for other federal legislation regarding the captive industry. A few key legislative proposals include:

FHLB Participation The Housing Opportunity Mortgage Expansion (HOME) Act was reintroduced in the House in June of this year which, if enacted, would restore the ability of captives to participate in the Federal Home Loan Bank System if they joined before the Federal Housing Finance Agency (FHFA) first proposed rule

Captive Insurers Clarification Act Because of difficulties posed in language included in the original Dodd-Frank law, legislation has been proposed in the past, and likely to be reintroduced sometime this Congress, clarifying that captives be excluded from ‘nonadmitted insurers’ definition for purposes of the law. This clarification means that captive insurers would be taxed and regulated by the state of domicile, not necessarily where the business’s corporate headquarters is located. As you know, the captive policy, legislative and regulatory space remains busy on both the federal and state level. Throughout this complex environment, SIIA remains engaged on behalf of its members to offer a unique and unified industry voice. We also appreciate the hard work of all our captive members in engaging state and federal policymakers and regulators. Mr. Work is vice president of government relations for the Self-Insurance Institute of America, Inc. (SIIA). He can be reached at rwork@siia.org


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Introducing SIIA Members to Monterrey, Mexico

Vibrant and Welcoming City to Host SIIA’s 2018 Latin America International Conference By Michael W. Ferguson


ome business trips are more interesting than others. Such was my recent visit to Monterrey, Mexico to scout hotel options for SIIA’s 2018 International Conference. I have had the good fortune to be relatively well-traveled but had never been to Monterrey before. Candidly, I didn’t need even know much about this city until it came onto our radar screen as a possible location for next year’s International conference. It soon become clear why smart people were telling me we should take a look. First impressions are always important and Monterrey did not disappoint. It was very easy to get there (about a three-hour direct flight from many major U.S. cities), and upon arrival it was easy to quickly navigate through the city’s international airport and access ground transportation.


The Self-Insurer | www.sipconline.net

While I have been working on my Spanish speaking skills, fluency is not within reach at this point so I wasn’t sure how challenging the language barrier would be during my trip. But this turned out not be an issue as there was enough English spoken at my itinerary locations to make communications functional, if not completely conversational. Actually, it was the perfect “Spanglish” mix for my preference. Shortly upon arrival in the city I had a lunch meeting with some leading Monterrey-based hospital executives who provided me an overview of the truly world-class medical facilities that have been developed there and the amazing difference in procedure costs compared to most U.S.-based facilities. This meeting was followed by a tour of one the local hospitals, which was designed to look and feel like an upscale hotel – and they succeeded! Not that I want to be hospitalized, but if I had to be, this was clearly a much better environment than any medical facility I had seen before. As they say, you really have to see it to believe it.

food” in the United States. They were right on both counts. While there were some commonalities, I tried several unique dishes on Monterrey and everything was great. Knowing that SIIA members enjoy great eating experiences, Monterrey will not disappoint. While I felt very safe during my entire visit, even at night, I did directly ask my hosts about any drug violence issues in the area -- even though I suspected this may be overblown by the U.S. media – in anticipation of concerns of prospective conference attendees.

Next year’s conference will showcase Monterrey as a preferred location for medical travel options incorporated as part of self-insured health plans. Before the skeptics pounce, let me say that I understand that traveling outside the United States will never be practical for the majority of self-insured health plan participants for a variety of reasons. But for a certain segment of this population, my view is that it is worth a close look by self-insured health care payers and associated service providers, and SIIA’s conference – scheduled for April 17-19, 2018 – will provide the perfect opportunity. I should note that the conference will also feature additional topics beyond the medical travel angle, including captive insurance trends in Latin America, as well as how certain countries in the region are opening their markets to self-insured health plan arrangements. Now back to my impressions about the city. It was a nice combination of new and old where visitors see modern office buildings and hotels in the city, with picturesque historical areas just a short distance away. And if that was not enough, the entire metropolitan area is surrounded by a beautiful mountain range. My friendly local hosts told me that they were going make sure I ate well during my visit and that much of the food I would eat was not like “Mexican

October 2017 | The Self-Insurer


My hosts assured me that while violence is an issue in some areas of Mexico, Monterrey is a relatively safe city, with the caveat that visitors should take common sense precautions just like in any big city in the United States. Made sense to me. I look forward to returning to Monterrey in April for the SIIA conference and hope to see many association members there. Mr. Ferguson is president & CEO of the Self-Insurance Institute of America, Inc. Detailed conference information will be available on-line at www.siia.org after November 1.

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The Self-Insurer | www.sipconline.net




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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.


The Self-Insurer | www.sipconline.net

Lawsuits are focused on Wellness Program compliance. Are you?


ore and more employers are implementing wellness programs these days to help improve employees’ health. Properly designed wellness programs provide value to both the employee and the employer. Employees’ health improves and, in return, health plan costs go down and productivity goes up. It is a win-win for all involved. But wellness programs are subject to a variety of complex and often ambiguous federal rules and regulations that make wellness program administration a challenge for even the most astute employer and put inattentive employers who sponsor such programs at risk of liability. Two recent lawsuits highlight the regulatory complexity surrounding wellness programs: AARP v. EEOC and Acosta v. Macy’s. Employers who sponsor wellness programs (or who are thinking about implementing a wellness program) and wellness program administrators should take note of these lawsuits. The AARP lawsuit could impact the future design of wellness programs that offer incentives. The Macy’s lawsuit underscores the need to pay close attention to the wellness program requirements. We discuss both below.

AARP vs. EEOC In July of 2016, the EEOC issued regulations under the Americans with Disabilities Act (“ADA”) providing that wellness programs that make disability related inquiries or require an employee to take a medical exam

can offer an incentive and still qualify as “voluntary” so long as the incentive does not exceed 30% of the cost of self only health coverage. At the same time, the EEOC also issued regulations under the Generic Information Nondiscrimination Act (“GINA”) providing that a similar 30% limitation on incentives for providing a spouse’s medical history (i.e., an employee’s genetic information) qualifies as voluntary under GINA. The EEOC’s new regulations appeared to be a reversal of its prior position that anything other than a nominal incentive was generally not permitted by the ADA and GINA because wellness programs with more than nominal incentives were not “voluntary” as required by both statutes. The AARP filed suit in October 2016 against the EEOC claiming that the 30% incentive limitation is inconsistent with the ADA’s and GINA’s voluntary requirements and that the EEOC failed to adequately justify its position that the 30% limitation means that a program is voluntary. AARP does not necessarily argue that the ADA and GINA do not permit incentives; however, AARP argues that the 30% limit is inconsistent with the ordinary meaning of the term “voluntary” because this incentive is too high to give employees a meaningful choice regarding whether or not to participate in wellness programs that require the disclosure of ADA/GINAprotected information. After reviewing the reasoning provided in the preamble to the regulations and the administrative record, much of which cited to HIPAA’s 30% limit as justification for the EEOC’s 30% limit, the court issued a Memorandum of Opinion holding that that the EEOC failed to provide support for its determination that the 30% limit is voluntary as contemplated by the ADA and GINA. The court noted:

Neither the final rules nor the administrative record contain any concrete data, studies, or analysis that would support any particular incentive level as the threshold past which an incentive becomes involuntary in violation of the ADA and GINA. To be clear, this would likely be a different case if the administrative record had contained support for and an explanation of the agency’s decision, given the deference courts must give in this context. But “deference” does not mean that courts act as a rubber stamp for agency policies. See Presley v. Etowah Cty. Comm’n,502 U.S. 491, 508 (1992) (“Deference does not mean acquiescence.”). When choosing from a range of possible interpretations of a statutory term, the agency must give a reasoned explanation for its decision. Absent such reasoning or factual support here, the Court “must conclude” that the agency has made its decision arbitrarily. See Ass’n of Private Colls. & Univs. v. Duncan, 870 F.Supp. 2d 133, 154 (D.D.C. 2012) (citing U.S. Air. Tour Ass’n v. FAA, 298 F.3d 997, 1019 (D.C.Cir. 2002)). (Memorandum Opinion, Civil Action No. 162113 (JDB), Pg. 34). October 2017 | The Self-Insurer


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Having found that the EEOC acted arbitrarily, the court remanded the regulations back to the EEOC for reconsideration. AARP asked the court to vacate the regulations but the court rejected that request because doing so would cause significant disruption to existing wellness programs that are in operation based on the rules. Consequently, the EEOC’s 2016 final ADA and GINA regulations are still in effect—for now. So now what? Inquiring employers and wellness program administrators want to know what the court’s decision means for them now and in the future. The good news is that no changes are required to your wellness program at this time so long as the wellness program complies with the EEOC’s 2016 final ADA and GINA regulations. It is business as usual until the AARP case reaches its final disposition. When that will occur is unknown. The EEOC could appeal


the court’s decision. In the meantime, the EEOC is required to file a status report with the court by September 21st with a proposed schedule for reviewing the rules and any additional administrative proceedings. We will have a better sense of timing after September 21. Absent a successful appeal, the court will eventually assess the EEOC’s reasoning and make a decision. The EEOC has significant flexibility under the Administrative Practices Act and the Chevron case to interpret the term “voluntary” under the ADA and GINA but as noted in the court’s memorandum, the EEOC must give a “reasoned explanation for its decision.” Whether the EEOC will succeed remains to be seen. If the EEOC is not successful, then it is possible that wellness programs will not be permitted to offer any incentives in exchange for disability related information, taking a medical exam, or a spouse’s medical history, absent a change in the law by Congress That would drastically change the look of today’s wellness program. Until then, the best we can recommend is to monitor the lawsuit so that you can make appropriate decisions regarding wellness program design when the time comes. If you have not recently reviewed your program to make sure it does comply with the regulations, this would also be a good time to do so.

Acosta v. Macy’s: On August 16, the Department of Labor (“DOL”) filed a complaint against Macy’s, Inc. (and others) regarding, in part, Macy’s wellness program. Macy’s wellness program in 2014 imposed a premium surcharge on employees who certified tobacco use unless they further

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certified that they completed the reasonable alternative during the plan year (presumably a tobacco cessation program) AND either were tobacco free or had stopped using tobacco products and were working towards being tobacco free. In other words, tobacco users could not avoid the surcharge simply by satisfying the reasonable alternative standard; they also had to stop using tobacco products. As described in court documents, Macy’s plan further stated that the additional premiums resulting from the surcharge would be deposited in the health plan trust and used to pay benefits and plan administration expenses. The complaint filed by the DOL is of particular interest, not so much because the DOL alleges the wellness program violates HIPAA’s nondiscrimination rules, but more so because of the types of violations the DOL alleges Macy’s committed. The DOL alleges, among other things that Macy’s committed the following violations with respect to its wellness program:

a) The program did not satisfy HIPAA’s nondiscrimination rules for wellness programs set forth in ERISA Section 702;

b) Macy’s impermissibly used the plan assets for its own purpose in violation of the prohibited transaction rules in ERISA Section 406.

The HIPAA nondiscrimination violation allegation is interesting because it underscores the DOL’s position reflected in the final HIPAA nondiscrimination rules that you cannot require participants to stop using tobacco products in order to avoid the surcharge. This may seem counterintuitive to many wellness program sponsors. What is the point of having a tobacco cessation program if you cannot require employees to stop using tobacco products, right?

The regulations further note that the reasonable alternative can require satisfaction of another outcome based standard so long as the program does not require satisfaction of a different level of the same standard without additional time to comply. The challenge with applying this rule to tobacco use programs is that there is not a different level of the same standard that is available. A person either uses tobacco products or they do not. If the alternative standard requires them to stop using tobacco products, the alternative standard is not an alternative at all-it is simply requiring them to achieve the original condition. Perhaps it would be permissible for an employer wellness program to provide an alternative standard to a tobacco user that requires a reduction in tobacco use (smoker gets reward if they reduce the number of packs of cigarettes per day from 2 to

But the final HIPAA nondiscrimination regulations, as amended to reflect the requirements of the Affordable Care Act, make it clear that you must offer all who fail to satisfy a health outcome based standard a reasonable alternative regardless of medical necessity. Consequently, if the employee uses tobacco products, he or she is entitled to a reasonable alternative without having to show that a medical condition prevents the employee from stopping.

October 2017 | The Self-Insurer


1)—we could debate that—but it doesn’t appear under the rules—as evidenced by the DOL’s complaint, that requiring them to stop using tobacco products to avoid the surcharge is permissible. The prohibited transaction allegation is even more interesting, and somewhat surprising. The premiums paid by employees, including the additional premiums paid by tobacco users, qualify as plan assets. ERISA requires plan assets to be deposited into a trust (with a few notable exceptions) and used exclusively to pay benefits under the plan and to offset administrative expenses. Under no circumstance does ERISA allow a fiduciary, such as a plan sponsor, to use plan assets for its own personal benefit. Macy’s deposited the additional premiums into the trust and then used them to pay benefits. So how did Macy’s use the plan assets for its own purpose in violation of ERISA Section 406? The DOL is not clear regarding its theory but the specific allegations they make reveal the fundamental elements of the theory. The plan indicated that all plan benefits were paid with employee contributions and if the contributions were insufficient, the employer contributed the difference. The DOL alleges that Macy’s impermissibly collected the additional premiums from tobacco users. When Macy’s deposited the impermissibly collected additional contributions into the trust, it reduced its own contribution responsibility. Therefore,

the act of administering the impermissible wellness program resulted in the use of plan assets (i.e. employee contributions) for its own purpose. So what does this mean for employers and wellness program administrators? It means the DOL is taking wellness program compliance very seriously. We recommend that all sponsors and administrators of wellness programs revisit your existing programs to ensure that they strictly comply with HIPAA’s nondiscrimination rules and to make any necessary changes. If you are considering adopting a wellness program, take the necessary steps to ensure that the program complies before you implement it.

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How to sustain success in workplace wellness can be much more than behavior modification and a driving force across self-funded employee populations


he importance of personal responsibility for living a healthier life isn’t just a blind spot in many discussions about how to reform the nation’s health care system; it’s also critical to the success of selfinsurance. But many workplace wellness programs struggle to sustain successful health outcomes for participants, which can create an uphill battle for cost containment. Which behavior-modification techniques work best? The answer is largely subjective. Leading industry observers offer differing views on the secret to ending unhealthy habits. They range from improving health care literacy to becoming emotionally invested in the right incentives. But they’re also just a piece of the puzzle. Whatever the case may be, self-insured employers can incorporate any number of these or other approaches into their larger pursuit of better outcomes and lower health care costs.

By Bruce Shutan

The trouble with offering a premium differential or health savings account deposit is that they fail to generate tangible value across many employee populations, cautions Don Doster, president and CEO of gBehavior. “There’s no attachment to ‘I did something and I got something.’ The rest of the world, from an incentive perspective, just does not work that way.”

None of the major incentive providers such as Maritz or O.C. Tanner are involved in the employee health and wellness space, he notes. Rather, the industry is chock full of consultants or advisers with a health care background who lack experience in behavioral economics. “That’s why the programs just aren’t designed correctly,” says Doster, who got his start as an industrial psychologist focused on employee safety.

Carrots and sticks The most effective way to sustain healthy behaviors is through fun and games – not genetic testing that invades medical privacy or makes people feel guilty about their physical challenges, opines Al Lewis, a seasoned health and wellness expert who founded Quizzify.

Given the significant recidivism rate for crash diets and smoking cessation programs, he passionately believes health literacy is the key to unlocking wellness success. Conventional approaches don’t work because most people typically revert to their original unhealthy behaviors, he explains. While wellness participants may lose and regain weight multiple times, Lewis says they will always retain knowledge. He cites a few simple truths people will not forget anytime soon: granola bars hide enormous amounts of sugar under different names in their ingredients label, heartburn pills are suspected to have major long-term adverse effects, Colgate brand toothpaste contains an ingredient that the U.S. Food and Drug Administration bans from other personal-care products and CAT scans have 500 times the radiation of X-rays. Like behavior modification, however, employee education may be a mere cog in the wellness wheel. Another longtime leader in this space advocates a comprehensive multiple treatment approach. Don Powell, Ph.D., president and CEO of the American Institute for Preventive Medicine, developed a behavior-change intervention model featuring five components. Behavior modification is the first letter in an acronym known as BEMEM, which he describes as “the straw that stirs the drink.” It allows wellness program participants to choose from a menu of more than 500 techniques and concepts that fit their life. “Clearly,”

“research has shown that we’re a function of our environment and respond to antecedents as that which occurs prior to a behavior and the consequences of that behavior, whether it’s rewarding or punishing.” he says,

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Next up is education. Program participants might learn, for instance, why lighting up one cigarette increases the likelihood that another will follow about 10 or 15 minutes later based on biochemical changes within the body, as well as how quitting can reverse the disease process. Motivation follows with the help of a health coach who demonstrates various techniques and simplifies program compliance. In some cases, people will snap a colorful wristband with a motivational message inscribed on it every time they crave a cigarette or have an ice cream sundae, while smokers will substitute sugarless gum or toothpicks assembled in a box that looks like a pack of cigarettes.


Another critical element is enjoyment, which may include online challenges or wearable devices, as well as insightful or funny health coaching sessions. It’s followed by a maintenance stage, which may include wallet cards with messages reminding participants of proven program techniques designed as relapse prevention. There’s also unlimited inbound phone call accessibility through a 24-hour type hotline. “We’re able to demonstrate pretty significant quit rates with tobacco cessation,” reports Powell, whose program success is 50% or higher. He says weight loss is difficult to measure objectively and has higher recidivism than other areas of behavior change, while stress management tends to be highly subjective. Still, 82% of employees he has studied say their stress level has decreased.

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Freedom of choice Industry research suggests that wellness program participants are fundamentally motivated by choice and empowerment, according to Doster. He says the former wields tremendous power when they decide “where to shop and what to buy” when cashing in rewards with the highest perceived value, which is why his firm provides a comprehensive incentive inventory in an online marketplace. As for the latter source of motivation, the thinking is that individuals must be emotionally invested in incentives so they feel empowered to pursue their goal. Doster says wellness participants could receive a $25 gift card for agreeing to a few simple terms such as logging into a wellness portal, syncing their device to

upload important information and completing a biometric screening. Incentives also might have a seasonal appeal. For example, employees could cash in larger rewards for Christmas shopping that are tied to receiving a colonoscopy or mammogram, or maintaining a certain A1C level. gBehavior has made inroads by using the same methodology that credit card companies, hotels and airlines have infused in their respective reward programs. For example, the percentage of 4,000 employees at one particular self-insured employer client who used 10plus key metrics governing healthy behaviors increased to 54% from only 14% in a two-year period. Doster is such a strong believer in his approach that his entire compensation is tied to a client’s program engagement and effectiveness rather than a standard per-employee per-month fee. The problem with cash or gifts, some caution, is that they can create an entitlement mentality among wellness participants who come to expect it from one year to the next and send the wrong message. “Are

incentives going to help somebody stay off cigarettes or continue to lose weight?” Powell asks. “Maybe, but then you have to keep on giving the incentive. If you withdraw the incentive, there’s a tendency to go back to the previous behaviors.” Another danger associated with rewards is that employers could squander their investment in employee health and wellness. Lewis acknowledges that crash-dieting contests represent a way to get the competitive juices flowing, but he says it’s “in exactly the wrong direction.” That’s why his company, which questions how conventional wellness can generate any credible return on investment, pays people to play trivia. Rather than deny human nature in an attempt to influence short-term changes, he seeks to channel their fascination with trivia and, in the process, permanently improve health literacy.

While people may be tempted to cheat on their diet and risk the shame of being found out, Quizzify actually encourages cheating with health literacy trivia to help people retain valuable information that will lead to healthier living. The hope is that they’ll also be deeply motivated by the fun factor. As part of his crusade to instill wellness program participants with helpful knowledge, Lewis also rails against the “use of ridiculously over-utilized, inappropriate medical services” such as scans, stents, infusions and hysterectomies. “You should be able to reduce your use of unnecessary medical care through health literacy, and you should be able to find people who are at risk,” he says. The key is to follow U.S. Preventive Services Task Force guidelines, Lewis says. With regard to specific health screenings, the suggestion is that women receive a pap smear every three years, while colonoscopies happen every 10 years after age 50, glucose and cholesterol levels are checked once until age 35 as a male and 45 as female, then every few years afterward. “Self-insured employers tend to obsess with making employees go to the doctor when they’re not sick,” he observes. “The literature says it’s a complete waste of time and money.” His mnemonic in terms of general medical check-ups: two in your twenties, three in your thirties, four in your forties, five in your fifties and annually after that.

Industry pioneers One self-funded entity that’s leading the way on health literacy is the city of Chelmsford, Mass., which Lewis says has established an unrivaled culture of health and experienced a significant uptake on wellness. “It’s the best success I’ve ever seen in a municipality and close to the best I’ve ever seen in a selfinsured entity,” he reports.

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Others include the Hilliard City School District and PTA Plastics, whose Employee Stock Ownership Plan he says plays right into the internal pressure to succeed faced by employers that pay or adjudicate their own medical claims. “Self-insured companies stand to benefit the most from behavior-change activities because it’s money right back in their pocket,” adds Powell, who says a medical self-care program also has built-in incentives that can complement workplace wellness. Fiat Chrysler Automobiles, which self-insures its health plan, has built a “very active” wellness program over the past 20 years, he says, noting “there aren’t a lot of companies that have shown that degree of consistency with wellness for such a long period of time.” The program’s efficacy drove its recent recognition by the National Business Group on Health. Powell also believes Taft-Hartley funds represent another leader in wellness and medical selfcare in the self-insured community. These industry pioneers also have an opportunity to convey the sheer power of pricing out medical services that will help move the needle on wellness. “In health care, unlike anything else, there’s no correlation between what you pay and the quality of care,” Doster opines. “In fact, oftentimes the cheaper the care the higher the quality of the provider because they do so much volume.” He says steering wellness participants to the right outpatient facility for a surgical or imaging procedure, or providing the lower-cost generic or therapeutic equivalent to an expensive brand-name prescription drug, could translate into big savings for self-insured companies.


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A heavy manufacturer that has been in business for nearly a century saved more than $5 million in the first two years of an employee health and wellness program, Doster says of a self-funded client. The granular approach included accruing reward points for routine surgeries performed at facilities with the best track record on cost and quality, as well as weaning diabetics off their medication. It also featured preventive medicine. An employee was immediately taken to the hospital following a biometric screening that uncovered serious hypertension. “When they looked historically at the claims that they had vs. the claims they have now,” he happily says, “there’s no comparison.” Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for nearly 30 years.

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Risk Purchasing Groups


isk Purchasing Groups (RPGs) rarely make the news but they are one of the most utilized forms of self-insurance in the United States. RPGs, like risk retention groups, were enabled by the Liability Risk Retention Act in the mid-1980s. The federal law allows for operation across state lines and has become a convenient way for groups with similar risk to purchase bulk liability insurance. During the first 15 years of their existence RPGs’ numbers fluctuated widely. According to the Risk Retention Reporter, a monthly journal that has monitored RPGs since 1987, during the last decade, RPG numbers have been climbing and are set to break a record in the coming months.

Some Background

by Karrie Hyatt

A risk purchasing group is a self-insurance entity organized solely to purchase liability insurance for individuals or organizations that share similar liabilities—physicians purchasing medical liability, insurance agents purchasing professional liability. RPGs typically operate on a multi-state basis to purchase insurance coverage as enabled by the Liability Risk Retention Act (LRRA). The LRRA preempts various aspects of state regulation and extends the preemptions to PG members and also to their insurers, as well as to agents and brokers or others representing the PG.

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Congress passed the LRRA in 1986 in response to the lengthy hard market of the 1980s.The LRRA allows businesses, professionals, nonprofit organizations, and governmental agencies to establish two types of self-insurance pools—those which retained risk, risk retention groups (RRGs), or those that purchase liability insurance on a group basis (RPGs). The main difference between RRGs and RPGs is that a RRG is an actual insurance company owned by their members. RPGs are not insurance companies, but groups of insurance buyers who band together to purchase liability insurance coverage on a group basis from a qualified insurance company. While RRGs, as insurers, typically retain a certain amount of risk and look to reinsurers to offset the rest, RPGs transfer risk and are not usually concerned about reinsurance. RPGs require no capital contributions from members.This makes it easier to form RPGs and they can be up and running in a matter of months, while RRGs typically take at least a year to 18 months to organize before they become operational. RPGs are required to register in every state in which they will operate using registration forms either developed by the state or uniform registration forms developed by the National Association of Insurance Commissioners (NAIC). Each state has different requirements for PGs operating in their state, whether domiciled or registered. Some states require an initial fee and some states require taxes to be paid on premium (usually by the RPG’s insurers). The definition of liability in the LRRA excludes workers compensation and property. Where commercial insurance buyers require other types of coverage, such as workers’ compensation and property that cannot be covered in the RPG, some RPGs utilize wrap-around or parallel programs 32

to meet the needs of RPG members. RPGs can also be used for the cross-selling of other products and services.

What’s So Great About RPGs? RPGs have the ability to obtain tailor-made coverage for its members no matter which state they reside in. With almost 1,000 established RPGs, this alternative risk transfer (ART) mechanism insures many different types of groups. Trade associations, unions, franchise owners, business groups, and physicians are only some of the types of groups that obtain liability insurance through RPGs. The ability to obtain customized insurance for its members is one of the key benefits of belonging to a risk purchasing group. With the bargaining power provided by group purchase, the RPG is typically able to secure broader coverage and better policy terms while using their group purchasing power to negotiate more favorable rates insurers than would be possible on an individual basis, or even in some other kind of group-buying arrangement. An advantage for insurers of RPGs is that they can carve out profitable market niches and can realize economies of scale which gives them a greater ability to compete in the marketplace. Agents and brokers, in helping insurance buyers in developing insurance programs that are tailored to their needs and provide relevant coverage, have a better chance of success in a competitive marketplace. State over-regulation, complex business arrangements, set liability parameters, and market volatility can be challenges for RPGs and their related companies. Despite the intention of the LRRA, RPGs, similar to risk retention groups, face burdensome regulation in non-domiciliary states. RPG managers, for 30 years now, have been vocal in their criticism of excessive regulation in the shape of forms, fees, and taxes from non-domiciliary states. The LRRA intended for risk purchasing groups to only have to give notice to states where they would be doing business and to be regulated only by their state of domicile. The Risk Retention Reporter publishes a quarterly update on the state of risk purchasing group state requirements in the Purchasing Group Users’ Handbook. The most recent update shows that 31 states require fees from RPGs doing business in their states, with 10 only requiring initial fees and 21 requiring both initial and annual fees. Fees range from $25 to $500 with most states requiring $100 to $200 in initial or annual fees. Taxes on premium, which in most cases is paid by the insurer, range from 0.5% to 6%. Another detraction from risk purchasing groups is the fact that they are limited to only offering liability insurance. If members require more coverage than just liability—such as property and workers’ compensation—RPGs utilize cross-selling arrangements. While a perfectly adequate work-around, it contributes to another issue—complex business arrangements. As RPGs involve at least three key parties—insurance buyers, insurance companies, and agents/brokers—it is essential that all parties understand, agree to, and perform their respective roles and responsibilities. If any of the parties do not fulfill their part of the operation, it could undermine the whole enterprise.

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RPGs in 2017 According to the Risk Retention Reporter, as of July, there were 992 risk purchasing groups domiciled in 48 states and the District of Columbia. The only two states with no RPGs domiciled are Alaska and New Mexico. The states that have domiciled the most RPGs are Delaware, with 193, and Illinois, with 182. California comes in a distant third with 79 groups domiciled. RPG numbers have been steadily climbing since 2004. Prior to that, RPGs had been at the mercy of market forces—with numbers declining during soft markets and growing during hard markets. For more than a decade RPGs have shown themselves to be resilient to the insurance market and are getting ready to hit a record 1,000 groups which may happen before the end of the year. Healthcare is the largest business area that risk purchasing groups operate in, similar

to risk retention groups. But where RRGs operate in a limited number of business areas, RPGs are more wide-ranging in the business areas they represent. After healthcare, property development is the largest sector. Property development covers the subsectors of contractors, home inspectors and security, landowners and developers, property owners and managers, and real estate professionals. The ART mechanism is especially popular with property owners. The professional services (insurance brokers, attorneys, consultants, etc.), manufacturing & commerce (energy, distributors, wholesalers and retailers, etc.), and transportation (trucking, commercial vehicles) sectors are all heavily represented with risk purchasing groups. Unlike risk retention groups, there are a lot of RPGs in the leisure, government & institutions, and hospitality sectors. The business area of leisure is mostly represented by companies involved in sports and recreation—hobbyist clubs, fitness, and event

companies are represented here. In government & institutions, day care operators, non-profits, religious institutions, law enforcement, education groups, and government employees all have RPGs. Currently, there are no risk retention groups represented in the hospitality business sector. Restaurants, hotels, and liquor providers all make use of risk purchasing groups in this area. Since RPGs have proved resilient to market forces, offer the power of bulk insurance buying, and serve a wide range of business and institutions, even when they reach 1,000 groups the number is likely to keep growing still, providing access to comprehensive liability insurance through the power of group purchasing. (Special thanks to the Risk Retention Reporter, www.rrr.com, for providing the current data for this article.)

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.

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Easy to Swallow Work comp formularies help states rein in claims, improve efficacy and speed return to work By Bruce Shutan


elf-insured employers that have long fretted about pharmaceuticals representing the fastest-growing portion of their group health plan costs often rely on drug formularies to manage that soaring tab. The same can be said about applying this tool to self-insured workers’ compensation programs. When such formularies dovetail with utilization review processes, they give claims examiners an initial screening for prescribers to make more prudent selections. “All the states that have adopted a formulary have seen dramatic savings in their work comp system,” reports Paul Papanek, M.D., an occupational physician in Los Angeles and member of the American College of Occupational and Environmental Medicine (ACOEM) Board of Directors, which has played an instrumental role in promoting this approach. Savings have surfaced in largely three areas: using generics as an alternative to brand-name drugs, as well as reducing potentially dangerous opioid prescriptions and policing “compounded” drugs. Papanek, who’s also a clinical faculty member at the University of California at Irvine, believes the magnitude for more of the right drugs being prescribed is huge, especially for opioids, and can generate double-digit cost savings. One avenue is to impose limits on how long certain opioid prescriptions can be renewed.


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With regard to compounded scripts, he says they involve an inappropriate mix of medications by “shady practitioners” across the U.S. For example, pharmacists might apply topical versions of ibuprofen along with a muscle relaxant, counter-irritant and gabapentin that don’t even penetrate the skin. The motivation is simple: “They’ll charge a couple thousand bucks per tube,” he says. “Phony compounded medications account for about one in six pharmacy dollars in California, and it’s just a complete charade… Physicians who write for these things are rarely, if ever, able to demonstrate in the utilization review process that the medication is justified in the literature.”

The use of work comp formularies also has the potential to decrease administrative costs. States that have pioneered this approach are reporting significant improvements in the efficiency of authorization approval for at least routine drugs, Papanek notes.

“If something’s not on the formulary, then you’ve got to go through a UR process,” he says. While some cases will require special attention, he says “the hope is that the current formulary will handle 90% to 95% of the decisions about prescription approvals.” What states are doing A number of states, including Texas, Nevada, and Washington experienced dramatic cost savings after implementing formularies for their state workers’ compensation systems. Earlier adopters of this approach include Texas, Oklahoma and North Dakota. There are roughly a dozen such states now using work comp formularies with another four or five in the pipeline, according to Papanek. Fifteen state work comp programs have adopted their own specific clinical guidelines. He says the International Association of Boards of Compensation, which tends to represent state work comp boards, has embraced the use of these formularies.

October 2017 | The Self-Insurer


DOL report sounds warning A 2016 report by the U.S. Department of Labor (DOL) noted that state-run workers’ compensation programs are “the only major component of the social safety net with no federal oversight or minimum national standards.” As a result, the research expressed concern that inadequate benefits could impoverish injured claimants. Among a list of policy areas that the report labeled deserving of exploration: “Whether to develop programs that adhere to evidence-based standards that would assist employers, injured workers, and insurers in addressing the long-term management of workers’ disabilities to improve injured workers’ likelihood of continuing their productive working lives.” Paul Papanek, M.D., an occupational physician in Los Angeles and member of the American College of Occupational and Environmental Medicine Board of Directors, is skeptical about any meaningful involvement of the DOL, noting the department’s reluctance to speak about state work comp systems for at least 30 years. “They feel like it’s not their bailiwick, and they’re going to stir up trouble if they do,” he explains.

Two commercially available work comp formularies were developed by the Reed Group and ODG. The former is based on ACOEM guidelines that have been partially or fully grafted onto work comp regulations in California, Montana, Nevada, New York and Utah. Eight other states use the ODG Drug Formulary published by the Work Loss Data Institute, which relies more heavily on consensus decision-making than ACOEM and lists medications in table format categorized by drug class, generic and brand name, generic equivalent, cost and proprietary preferred drug status. With regard to this last column, ODG indicates whether or not it recommends a particular drug as a preferred first-line treatment and included on its formulary. Upon closer review, California and Utah have adopted a hybrid approach of ACOEM, ODG and other guidelines that differ in some details and methodologies. Nearly half of all states haven’t yet adopted formal treatment guidelines. Several programs, notably Washington State, have developed a different way of deciding how a claims examiner should assess the merits of a prescription, Papanek explains. While most formularies are just an alphabetical listing of scripts grouped by drug type, the Reed Group starts with a diagnosis and ties its suggestions to evidence-based literature. That could have a powerful impact, albeit with a few caveats involved. “ACOEM recognizes that the use of drug formularies has produced significantly lower direct costs for drugs in workers’ compensation cases,” according to the group’s 2016 report, which includes recommendations for state legislators and other policy makers in state labor agencies. However, it also recognized “that if the details of a formulary system are not well managed, formulary use may delay care for some patients and increase administrative costs.”


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Reading the tea leaves Although the Golden State is considered a thought leader in health and safety as well as other areas such as environmental regulation, Papanek describes the state’s work comp system as cumbersome, litigious and bureaucratic. But by recently mandating a work comp formulary, he believes it’s finally heading in the right direction. The hope or expectation is this new formulary will serve as more of a quality improvement tool than reference book on the shelf. California’s legislature “could read the tea leaves as well as anybody about three years ago and saw the data from many other states, including Texas and Ohio, that had put a formulary in place and saw not just cost savings, but improvement in quality because it became harder to write for the wrong drug,” he explains. About 10 years ago, Papanek says ACOEM decided that existing treatment guidelines governing anything from low-back pain and ankle sprains to certain toxicological exposure required a rigorous, evidence-based determination in the medical literature of what works. The group has since published its third edition of guidelines, which fill hundreds of pages. “Some people don’t like them because they get into the weeds, but they’re very good,” he exclaims. The overarching goal, of course, is to determine which medications have been shown to hasten a claimant’s recovery. That could mean assessing the value of Motrin, ibuprofen or OxyContin to treat low-back pain. As part of this effort, the guidelines also gauge the efficacy of physical therapy or certain PT approaches working better than others, number of appropriate office visits to treat various maladies, etc. “We agree with much of what Dr. Papanek is saying about the importance of having evidence-based guidelines in place for treating workers’ compensation injuries,” observes Ron Nassif, VP of PRIME at Keenan & Associates, an industry-leading California insurance brokerage and consulting firm for health care organizations and public agencies.

in place that have reduced pharmacy spend to $3.2 million from about $8 million, he cautions that legislation is still needed to support these efforts.  

“There comes a point in time to put a stop to the abuse patterns and circumvention of the fee schedule, and to guide providers to more appropriate prescribing,” according to Nassif.

Measuring value There are certain wrinkles in work comp that don’t show up anywhere else and must be addressed, according to Papanek. For example, it may be necessary to make exceptions on a formulary for medications that are used only in the inpatient setting. “If somebody is in the hospital or emergency department, you don’t want to tie that doctor’s hands because it might involve an extraordinary circumstance,” he cautions. While value-based purchasing has long

Noting how his home state is in dire need of a formulary for opiate use, he appreciates the support California lawmakers are finally giving to this critically important issue. While Keenan has put programs

October 2017 | The Self-Insurer


garnered attention or intrigue on the group health benefits side, Papanek laments that “work comp is one of those systems that is late to the game in terms of value-based controls over physicians prescribing or ordering.” He describes value as a compound metric involving quality over cost, both of which need to be measured separately. With fewer inappropriate drugs being prescribed, the thinking is that it will lead to higher quality of care, as well as reduce side effects such as drowsiness that can slow a return to work. “You require providers and prescribers to think a little longer and harder about whether they really want to write for yet another opioid or set of refills,” Papanek says. In the final analysis, a work comp formulary ensures that claimants are “treated promptly, fairly and consistent within medical practice standards established within the community,” Nassif adds. “Unnecessary tests, procedures, medications, etc., results in cost avoidance through the use of evidence-based guidelines.”


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

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As a leader in Group Captives, Berkley Accident and Health can steer you in the right direction. With EmCapÂŽ, our innovative Group Captive solution, we can help guide midsize employers to greater stability, transparency, and control with their employee benefits. With Berkley Accident and Health, protecting your self-funded plan can be smooth sailing. This example is illustrative only and not indicative of actual past or future results. Stop Loss is underwritten by Berkley Life and Health Insurance Company, a member company of W. R. Berkley Corporation and rated A+ (Superior) by A.M. Best, and involves the formation of a group captive insurance program that involves other employers and requires other legal entities. Berkley and its affiliates do not provide tax, legal, or regulatory advice concerning EmCap. You should seek appropriate tax, legal, regulatory, or other counsel regarding the EmCap program, including, but not limited to, counsel in the areas of ERISA, multiple employer welfare arrangements (MEWAs), taxation, and captives. EmCap is not available to all employers or in all states.

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The Future of Self-Funding – An Insider’s Take

Editor’s Note: This article represents “commentary” and represents views of the authors. We welcome other opinions on the subject. by Adam V. Russo, Esq.


am proud to say that I have been involved with the Self-Insurance Institute of America (“SIIA”) for more than half of my lifetime, and I hope to continue to be deeply immersed in it, and the industry it represents, for the rest of my career. I have learned so much from its members and leaders, and from it I have gained hope for the future of our industry. I believe it will continue to evolve, even as we face obstacles from all fronts. Yet – even as I gain hope for the future of our industry, I also witness people who are not grasping the opportunities presented to them, and I worry. We all go to the conferences, we all here the speeches, we all read the articles, we all hop on a webinar or two and for the most part what we hear is informative yet reactionary. Presenters, panelists, and experts dutifully tell us what to do when certain events occur or things happen to us and our clients. We are advised how to get out of sticky situations or how we can make a quick buck taking advantage of others’ despair.


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We are told how to make the best of the situation we find ourselves in. To me, it gets old and rather frustrating. Why isn’t anyone telling us to create a new situation, a new paradigm shift, a new environment? We see glimpses of it when we talk about things like reference based pricing, medical tourism, carve outs, and other out of the box methodologies, but I think it’s time for a bigger leap. What we aren’t being told or hearing from our industry at large is how we can shape the future of health insurance and self-funding. Too many brokers, HR representatives, lawyers, administrators, and carriers are sitting back, fat and happy, working within the borders of the status quo. Anyone or anything that tries to knock these walls down is immediately branded as a disruptor or a menace to our industry. We have so many entities in health insurance that are making so much money ensuring everything just stays the same, that we are all forgetting about the one entity that matters most in all of this…the clients – the actual employee benefit plans and their hard working employees whose money we are spending. Unfortunately, too often they are an afterthought, if they are thought of at all.

plan assets and to do right by the client; not just by taking advantage of scenarios and issues presented by the current environment, but by taking steps to change that environment. The reality is that Obamacare and Trumpcare have not and will not fundamentally reduce the high cost of health care. No government program or act of Congress will move the needle when it comes to affordability of healthcare. Only the private sector – we – can drastically alter the future of our industry, promote its growth and lower the overall cost of care. How can we do this? By actually showing a willingness to change how we do things – stop being lazy – and put in the hard work necessary to write new types of plan documents, carefully review bills, process claims on a plan by plan basis, collaborate with each other preemptively, implement controversial cost containment measures, stop shying away from responsibility and openly advertise our ideas, issues, and solutions. No third party administrator (“TPA”), for instance, can compete with the large carriers by trying to beat them at their own game. This is why reference based pricing has received so much attention over the past few years. But even proponents of this pricing methodology would tell you it’s not perfect; but it is a step in the right direction – questioning the status quo, sacrificing what is easy, and challenging those who’d abuse the plan participants and their benefit plans for the sake of helping others. The reality is that over 99% of self-funded plans still rely on networks and their discounts,

Many in our industry, at the end of the day, forget who the client is. We serve the employee members of the self-insured companies we represent. We have a moral, ethical, and professional duty to be prudent with

October 2017 | The Self-Insurer


and so do a vast majority of TPAs, despite the fact that they will never get a better rate than the large carriers, will never be able to cap payments below the network rate based on plan document imposed limits, and will continue to run afoul of stop-loss carriers seeking to apply their own caps on what is payable. This is just the beginning. As we try to win a game against the entities that wrote the rules, eventually we’ll either recognize the futility and create our own game, or we’ll fail. Focus on the actual overall claim spend rather than claim discounts. Focus on innovative and personalized plan language that matches the needs of the employee population, not some cookie cutter plan design that makes auto adjudication easier to do.

The bottom line is that whatever we do, do it with the realization that we are spending someone else’s hard earned money. Every day workers are paying their colleagues claims with the cash out of their own pockets, so don’t just accept a 10% discount; fight for that employee and their money by actually scrutinizing the charges. Act as if that truck driver’s pay check is your pay check.

Not All Self-Funding Is the Same It’s not easy to change the status quo. It’s certainly tough to do across all of your clients. That’s why you should start small. It’s time to step up to the plate and identify one plan that you can empower. As many of you have heard me say before, not all self-funded plans are the same.

TPAs need to do more to show brokers and employers that by working with them, the plan administrator can have control and create savings; they are actually at the college level of self-funding. Instead of purchasing prepackaged plans, employers and brokers want to modify plans to fit the needs of their employees and clients. An employer with a large percentage of older employees may want to focus on chronic pain benefits, whereas an employer with a younger workforce might adapt the plan to cover family planning or incentivize these younger employees with wellness and preventative care measures as we have done internally.

When it comes to reducing healthcare cost and plan management, you may need some help. Is what you are doing effective? What are you doing that’s different? Are your employees engaged and willing to help? Are your employees “educated consumers” Are your employees and management satisfied?

The thinking that got us to this point is not the thinking that will lead us out. Pequot Health Care is a Common $ense Partner that works for YOU. Contact Sales and Marketing at 800-219-1226 or sales@prxn.com Providing access to cost effective provider networks Native Owned & Operated


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Yet, while a college degree is great to have, it’s still not enough to get the top jobs those need a PhD. The problem with most TPA “college level” plans is their reliance on the networks and the desire to compete on the discount level. It has been proven that this will never work, so the best option is to reach that PhD level of self-funding where the emphasis is on overall claims costs, control, customization, employee incentive programs, and data analytics. This is everything that the national carriers aren’t emphasizing and thus should be our focus. We have an in-house recruiter here at The Phia Group who identifies and recruits the best and the brightest to work at our company. While we don’t have a fancy office with ocean views in downtown Boston, we

have one thing that we know blows away anything the rest of the employers in our city have to offer – the best self-funded plan available in the marketplace. In case you are wondering, my second floor corner office has a beautiful view of the dumpster in our rear parking lot. According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey. In my state, the average co-pay is $25 for urgent care and generics, where we have no copay. My wife, four children and I pay $357 a month for the greatest self-funded coverage available on the market where any other family in Massachusetts would be paying on average $1320. How do we do this? We built a program where our employees care about the overall cost of care and their behavior is dictated by both quality of outcomes and overall claims costs. It shouldn’t be revolutionary, but it is in our industry, as we do everything to empower our plan. So I have a simple message for all of you, a challenge actually. Offer something to the market that no carrier could ever do because it goes against their business model. It is an

October 2017 | The Self-Insurer


opportunity to have more success than ever imaginable but it takes work - lots of it. If you put the work in, the positive results will come pretty rapidly. The actual claims cost per employee in our organization is $5,858 per year, compared to the norms of around $12,000 for a self-funded plan in our region. This is front page sales material that every TPA should jump on instead of talking about the network discount that you cannot come close to matching. By the way, we utilize a blue cross network for claims but the reason our plan is successful has nothing to do with network discounts. What we have done successfully is turn our patients into health care consumers.


To get to this higher level, and make “oddities” the “status quo,” we need fresh eyes and new blood in our industry. We need a new generation to look to self-funding as their industry of choice; fertile ground to try new methods for plan creation and administration. This won’t be easy and will take years to accomplish but the time is now to get these young professionals on board, engage with the leadership at SIIA, and see the new processes begin to take shape.

Getting Younger People Involved in Our Industry Let’s face it – our industry is getting older. The term self-insurance doesn’t really attract anyone except for those of us who have experience, or truly recognize the opportunities it presents for innovation. For those of us who can see how advanced and exciting this industry is that it truly is the “secret” weapon against the rising cost of healthcare; that it is the key to providing the best care for the lowest cost to this nation’s workers – that is attractive.

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We need to sell this to the youth of this country. At my organization, we have begun to identify young talent that will hopefully energize our industry by selling them on the excitement and career opportunities – as well as capability to make the world a better place – that the self-funding industry has to offer. The great news is there aren’t many other industries that present to young professionals the opportunities that ours does. From a legal perspective, for young people walking out of law school with a degree, where else can they find the fast growing legal opportunities that we have? We have hired attorneys straight from law school and within two years they are able to publish articles, be involved in true litigation, and speak on a stage in front of hundreds. This does not happen in the probate or criminal law world. The laws are so new, and so many issues are still not resolved or are

being actively challenged, small wonder that our industry is engaged in more pivotal cases than any other.

when it comes to actual claims data, scoring mechanisms to identify future claims risks, and overall plan design options.

There are many new litigation issues ranging from balance billing to fiduciary responsibility. In fact, Obamacare is still a rather new law when you think about it. The number of legal inquiries we get from the industry just proves that there is so much still unknown in the self-funding universe and this should be viewed as a selling point to recruit the best legal minds and talent. As we battle physicians and facilities over unjust charges, we need legal acumen to change the industry for the better for our clients.

It is vital that we as an industry create an educational track developed specifically for young professionals that must address both technical industry information, as well as career development content, including why the self-funding industry compares favorably to other professional fields, in particular the major healthcare carriers.

The same can be said for IT, data analytics, software opportunities, actuarial needs, accounting positions, and sales and client management needs. From a data analytics standpoint, there are many untapped areas

To promote the industry as a whole, we need to incorporate structured opportunities for young professionals to have quality face time with influential senior industry executives. This can be a huge start to a broad, multi-year initiative to promote self-funding as a great career path for the younger generation. We want and need these individuals for the sake of our

October 2017 | The Self-Insurer


An Integrated Healthcare Solution Focuses on Member Care and Cost Savings It’s all about you — cost savings and member care that’s always on and meets you where you are.


future and to preserve and grow our interests both in our lines of business and the future protection of our livelihoods in Washington DC.

Self-Funding is Growing We are in a booming business sector right now and the statistics prove that. The Employee Benefit Research Institute stated in July 2016 that the percentage of private establishments offering health plans (at least one of which is self-insured) has increased from 28.5% in 1996 to 39% in 2015 (a 36.8% increase). Between 2013 and 2015, the percentages of companies offering health plans with at least one self-insured plan has increased for mid-sized companies from 25.3% to 30.1%(a 19% increase); and for small establishments from 13.3% to 14.2% (a 7% increase). Similarly, the percentage of health-plan-covered workers enrolled in self-funded health plans has increased from 58.2% to 60% (a 3% increase) from 2013 to 2015. The largest increases in self-funded plan coverage among covered workers have occurred in establishments with 25-99 employees and with 100-999 employees.

Over this same period, the portion of large employers (those with 500 or more employees) offering health plans reporting they self-fund at least one plan has increased from 71.6% in 1996 to 80.4% in 2015. Overall, 63% of employers are fully or partially self-insured, compared to only 44% in 1999. As more employers turn to self-funded health plans for flexibility and cost control, health insurance companies are tweaking their business models to adjust to what we are doing. They do not want us to take away their business and if anything, they want to take our clients away.

At AmWINS Group Benefits our team of specialists wakes up every morning committed to bringing your team innovative solutions to the opportunities and challenges you and your self-funded clients face. That’s the competitive advantage you get with AmWINS Group Benefits.

October 2017 | The Self-Insurer


Your trusted MGU partner.

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Life’s Risky.TM Choosing Sutton isn’t. A self-insured approach to employer medical plans can be a cost-effective alternative to a traditional group policy. But if claim amounts exceed what was forecasted, a business can face severe financial strain, possible lawsuits and even bankruptcy. Founded in 1978, Sutton Special Risk has grown into a premier MGU providing Stop Loss, Accident & Health, Life and Contingency products and services for a diverse range of clients worldwide. Our consultative approach, underwriting expertise and attention to service enable us to respond quickly and effectively to your clients’ needs.

Grab a coffee with Arleigh Kennedy at the SIIA National Conference or call her at your convenience to discuss your stop loss needs. 781.670.6881 or akennedy@suttonspecialrisk.com

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Attempting to beat them at their own game will not happen. They have the networks; they have the bargaining power with the physicians and the hospitals. As self- funding continues to be more popular among larger employers, the carriers will do what they need to do to keep these clients. Every client I speak to states the same thing. They have never been so busy or have had so many prospects. The opportunity to create a permanent change in the insurance world is now. Let’s embrace it.

Empower Your Plans We all know the advantages to self-funding but we have to change the way we market, charge, operate and discuss the benefits of it. TPAs cannot compete with the large carriers on discounts, so instead let’s put our marketing and sales efforts on actual claim costs per employee per year. The CFOs at every employer will pay attention to that number and start asking brokers questions. Those brokers will turn to us for answers. Unlike the large carriers, we can and should share client data with them as it’s their money. We should be analyzing trends and identifying areas of high risk exposure. We should then be modifying their plan documents to fit their unique needs. This is what we can do and the competition cannot. We all know that employers with self-funded plans are paying the claims on behalf of their employees and family members. As a result, they retain ownership of all the data and have greater control over plan design, benefit coverage, premium contribution, and claim information. We need to focus on the ability of employers to design a plan that specifically fits the culture and need of the organization. It allows the employers an opportunity to



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analyze claim utilization and be creative with benefit features that are targeted to improve the overall health and well-being of the group. TPAs need to explain to the broker community that their hands are tied when it comes to curbing healthcare spend in their current carrier environments. The only way to have claims freedom and allow the employer to truly reduce their risk and overall claim spend is by maintaining control. That’s the message – that’s the flyer – that’s the sales opportunity. We all need to take a look in the mirror and decide what we truly care about when it comes to health care. If lowering the overall cost isn’t your first answer, in my opinion, you are doomed to failure. Until self-funded plans, stop loss carriers, third party administrators, brokers and plan members are all aligned on lowering claims costs nothing will change. By having skin in the game and rewarding patients with a share of the claims savings, your plans will see results. It’s contagious around our office as people talk about the savings checks they have received. Even the small stuff can made a difference as not only do the dollars matter, the change in future behavior is equally or more important. The overall advantages to employers with customized plan design approaches must be spelled out constantly. Whether we are talking about carve out programs, direct contracts, incentive plans, wellness options, cost savings opportunities, and steerage initiatives, multiple plan design mechanisms are the Achilles heel of the carrier world. Let’s make a pact to focus our marketing and sales efforts on actual claim spend versus the average discounts on charges we cannot control. Our ability to negotiate claims, identify fraud, overpayments and abusive billing practices, and use cutting edge technologies to identify savings opportunities are all huge advantages. We can prosper by being disrupters so let’s get loud.

Adam V. Russo, Esq. is the Co-Founder and Chief Executive Officer of The Phia Group LLC; an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets. The Phia Group’s overall mission is to reduce the cost of plans through its recovery strategies, innovative technologies, legal expertise, and focused, flexible customer service.


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We’re invested in the people behind the numbers.

When you win, we win. When you work with Pinnacle, we start by getting to know your organization’s business goals, geographic and industry mixes, risks and corporate culture. You can trust that our consultants will provide you with the highest levels of professional expertise and service. We will communicate with you in your language, not ours. The result is a true partnership to help guide you through the available options and make better business decisions. We believe in the importance of relationships, not transactions.

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from SIIA


Diamond Members Artex Risk Solutions Receives Captive Award

SIIA Diamond, Gold & Silver Member News

SIIA Diamond, Gold, and Silver member companies are leaders in the self-insurance/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.

Artex Risk Solutions is thrilled to announce that they received the 2017 US Captive Review Award for Captive Management – Group Captives. Recognized and judged by a group of peers within the industry, this serves as a wonderful affirmation of the work that the team does for clients across the United States. This is the second year that Artex has won the award, which was previously given to them in 2015.

Pictured from Left to Right are Richard Cutcher, Editor of Captive Review and Kevin Heffernan, Artex’s Executive Vice President – Operations, North America

QBE’s Phillip Giles selected for Captive Professional of the Year QBE North America is proud to announce and congratulate Phillip Giles (QBE North America’s Vice President of Sales & Marketing, Accident & Health) for winning the Captive Professional of the Year award at the U.S. Captive Awards dinner on August 7 in Burlington,

“I am deeply honored to be recognized amongst such a high caliber of industry peers. Each of us encourages development, awareness and integrity within the captive and alternative risk industry,” said Giles. Vermont.


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Judges’ comments: Phil Giles has delivered consistent and impressive growth since joining QBE North America and made himself a go-to resource in the medical stoploss arena. While well-known to the captive community, he is keen to share his expertise and resources for the benefit of others. Phil was also recognised within QBE as a ‘Global Top 10 Employee’ in 2016. The winner of the Captive Professional of the Year award has demonstrated innovation, is a forward thinker and displays a strong commitment to the US captive insurance industry. Giles was selected by the U.S. Captive Awards’ Captive Industry Panel. Earlier this year, Giles was named to Captive Review’s worldwide Power 50 listing of the industry’s most influential individuals. http://captivereview.com/news/winnersannounced-us-captive-review-awards-2017

Silver Members

Tour Stops

WellNet’s Fall Broker Tour

• Houston, TX - 9/18/17

Offers Self-Funded Insights

• Dallas/Ft. Worth, TX - 9/19/17

with Focus on Reference Based Pricing

• Chicago, IL - 9/20/17

WellNet’s Fall Broker Revolution Tour is coming to a city near you. This tour is for brokers and consultants whose clients are tired of the carrier lip service.

• Denver, CO - 9/21/17

Key Take Aways

• New York City, NY - 9/27/17

• Focus is on Reference Based Pricing

• Lay Out the Causes of the Underlying Problem in the Healthcare Economics

• Identify the Levers of Change That Can Move Us Toward Solutions

• Give Examples and Ideas That are

• Philadelphia, PA - 9/25/17 • Tyson’s Corner, VA - 9/26/17

• Princeton, NJ - 9/28/17 • Indianapolis, IN - 10/2/17 • Cincinnati, OH - 10/3/17 • Cleveland, OH - 10/4/17 • Charlotte, NC - 10/5/17 • Nashville, TN - 10/6/17

Already Working in Healthcare About QBE QBE North America, an integrated specialist insurer, is part of QBE Insurance Group Limited, one of the largest insurers and reinsurers worldwide. QBE NA reported Gross Written Premiums in 2016 of $4.6 billion. QBE Insurance Group’s 2016 results can be found at www.qbena.com. Headquartered in Sydney, Australia, QBE operates out of 37 countries around the globe, with a presence in every key insurance market. The North America division, headquartered in New York, conducts business through its property and casualty insurance subsidiaries. QBE insurance companies are rated “A” (Excellent) by A.M. Best and “A+” by Standard & Poor’s. Additional information can be found at www.qbena.com, or follow QBE North America on Twitter.

• Share Resources that will Drive Prospecting and Generate New Leads

• Learn How to Build a Better Health Plan at a Much Lower Price Point Using Referenced Based Pricing

• Frame the Conversation to Help Your Employers Understand Their Power to Provoke Real Competition Over Cost and Quality

WellNet Healthcare Plan WellNet gives businesses and brokers the data, tools, and people necessary to make better, more informed decisions regarding their healthcare options through Level-Funded Health Plans and integrated Medical, Rx and Population Health Management. Contact Keith Lemer, Chief Executive Officer, at 800-8084014, klemer@wellnet.com and visit www. wellnet.com.

• Each tour stop offers drinks, heavy apps and engaging education

October 2017 | The Self-Insurer


Synergy Comp Named One of Inc. 5000’s Fastest Growing Private Companies in America For the second year in a row, Synergy Comp Insurance Company is pleased to announce that it has been named one of America’s Fastest Growing Companies by Inc. Magazine. Synergy ranked 4463 in this year’s ranking with a 53% growth rate over the past 3 year period. Several members from the Synergy Comp team will be headed to Palm Desert, CA to accept this prestigious award. Synergy attributes their growth to a dedicated commitment of results to their clients. By creating safer work environments for high mod workers’ compensation accounts in Pennsylvania, Michigan, Maryland and New Jersey, they are truly making an impact. Workers are in safer work conditions, managers are better trained in safety and

workers’ compensation premiums go down over time. It’s a win for the insured, the agent and Synergy. One key to success for Synergy is that they consistently look for feedback. With a net promoter score of +83 their clients are more satisfied than Costco, Nike or Coca-Cola. Net promoter score asks clients how likely they are to refer a friend to the business. Apple ranks at an +89 score. Eric Brown, CFO of Synergy Insurance Company, had this to say about their success: “We are so proud at Synergy Comp of our engaged employees and valued agency partners to achieve this prestigious award for the second year in a row.  These results are a testament to the culture at Synergy Comp and embracing our mission of delivering promised results through commitment and continuous improvement.” If you are interested in working for a growing company that cares about their team, consider Synergy Comp Insurance Company. They offer a great team environment, excellent benefits and opportunity.You can find open opportunities on their career page.

A Long Tradition of Insurance Solutions for Companies that Self-Fund Their Medical Plan Helping to better manage the risks associated with catastrophic claims

Manage the risks of self-funding.

AIG’s Group Benefits business has decades of experience in helping companies manage the risks of self-funding through stop loss, specified disease organ transplant, group captive, and Taft-Hartley solutions. Learn about all the ways AIG’s Group Benefits business is here for you. Talk to one of our representatives or visit us online at aig.com/us/benefits.

The underwriting risks, financial and contractual obligations, and support functions associated with products issued by National Union Fire Insurance Company of Pittsburgh, Pa., are its responsibility. National Union Fire Insurance Company of Pittsburgh, Pa., maintains its principal place of business in New York, NY, and is authorized to conduct insurance business in all states and the District of Columbia. NAIC No. 19445. Coverages may not be available in all states. © 2016. All rights reserved. AIGB100939 R03/16


The Self-Insurer | www.sipconline.net


Self-funding your health plan is a long and winding road.

For more than 40 years, Symetra Life Insurance Company has helped brokers, employers and administrators navigate and protect their self-funded medical plans. Whatever changes are on the horizon, we’ll be here to guide your path. We helped pioneer the medical stop loss business, and we’ve been through every twist and turn along the way. When it comes to stop loss, we don’t just know the road, we helped write the map.

To learn more, visit symetra.com/stoploss.

Stop loss, filed as the Excess Loss policy, is insured by Symetra Life Insurance Company, 777 108th Avenue NE, Suite 1200, Bellevue, WA 98004. In New York, stop loss, filed as the Excess Loss policy, is insured by First Symetra National Life Insurance Company of New York, New York, NY. Mailing address: P.O. Box 34690, Seattle, WA 98124. Thirteen years of stop loss for First Symetra National Life Insurance Company of New York. Symetra® is a registered service mark of Symetra Life Insurance Company. SLM-6245


Ullico Partners with AGIA

Gold Members Health Care Management Administrators and McKesson Health Solutions Have Become SIIA Gold Members The Self-Insurance Institute of America, Inc. (SIIA) announced that Health Care Management Administrators and McKesson Health Solutions have upgraded to SIIA Gold member status, confirming their leadership positions within the self-insurance marketplace. This latest membership announcement is part of an ongoing strategic initiative to increase membership support of the association so that it is better positioned to protect and promote the business interests of organizations involved in the self-insurance/captive insurance marketplace. Upgraded members (Silver, Gold and Diamond) receive a variety of additional membership benefits. Details can be accessed on-line at www.siia.org, or by contacting SIIA Membership Director Jennifer Ivy at jivy@siia.org. Learn more about McKesson Health Solutions at www.mckesson.com and Health Care Management Administrators at www.accesshma.com.

Affinity to Administer Benefit Programs The Union Labor Life Insurance Company (Union Labor Life) has selected AGIA Affinity to provide administration services for its portfolio of individual and group life and health supplemental products. Founded more than 90 years ago, Union Labor Life provided union members and their families the insurance protection that was often unavailable to them in traditional insurance marketplaces. The company continues to honor its legacy by providing an unparalleled combination of insurance expertise and experience to the union workplace.

Almost all of the industry’s leading company’s, including McKesson Health Solutions, will be represented at SIIA’s upcoming National Conference & Expo, scheduled for October 8-10, 2017 in Phoenix. Event details can be accessed on-line at www.siia.org, or by calling 800/851-7789.

Lockton Associates and Partners Are Experts At: F O C US E D O N C L IE NT S . Medical Benefits

Life & Disability

Retirement Services

Risk Management

Serving Employers Around the World



Insurance • Risk Management • Surety Expertise

444 W. 47th Street, Suite 900 Kansas City, MO 64112 • 816.960.9000

Lockton Dunning Benefits www.lockton.com © 2017 Lockton Companies. All rights reserved.


The Self-Insurer | www.sipconline.net

Medical stop loss insurance from Berkshire Hathaway Specialty Insurance comes with a most trusted name and the stability of an exceptionally strong balance sheet. Our executive team has 30 years of experience and a commitment to tailoring solutions and paying claims quickly. All of which is key to ensuring your program’s success for years to come. With so many choices, you can make this one with certainty.

Asheville | Atlanta | Boston | Chicago | Houston | Irvine | Indianapolis Los Angeles | New York | San Francisco | San Ramon | Seattle Stevens Point | Auckland | Brisbane | Dublin | DĂźsseldorf | Hong Kong Kuala Lumpur | London | Macau | Melbourne | Singapore | Sydney | Toronto

www.bhspecialty.com/msl 2

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“Our goal is to consistently deliver the value that our clients expect from us,” said Stephanie Whalen, Vice President, Group Operations at Union Labor Life. “AGIA Affinity solidly matches our needs to reach that goal on every level, from their mission, to the exceptional support and focus we desire in order to drive Union Labor Life’s brand deeply at every client touch-point.” “We are inspired by Union Labor Life’s passion and strong commitment to their union clients and the membership they serve,” commented Chris Burke, President & CEO of AGIA Affinity. “This is a win-back for us. We’re thrilled that they returned to us after a thorough market review. Union Labor Life cited our shared philosophies, relentless focus on execution, and our defined processes for continuous improvement as reasons for their decision. We look forward to a long and mutually beneficial partnership.”


About Ullico The Ullico Inc. family of companies provide insurance and investment solutions for labor organizations, union employers, institutional investors and union members. Founded 90 years ago, the company takes a proactive approach to anticipating labor’s needs, developing innovative financial and risk solutions and delivering value to our clients. Our products are tailored to promote financial security and stability for American workers. The Ullico Inc. family of companies includes The Union Labor Life Insurance Company; Ullico Casualty Group, LLC.; Ullico Investment Company, LLC.; and Ullico Investment Advisors, Inc. For additional information, visit www.ullico.com.

The Self-Insurer | www.sipconline.net

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

October 2017 | The Self-Insurer


SIIA New Members Regular Corporate Members Stanley Guibaud CEO 360 Health Systems, Inc. Doral, FL

Twinsburg, OH James Patton CEO FairPrice Healthcare, LLC Austin, TX

Patrick Crites President Ann Erickson Health Payer Consortium Business Manager Actuarial Strategies & Tactics, Inc. St. Louis, MO Scottsdale, AZ Christine Cooper Attorney Dave Barrington Koehler Fitzgerald LLC Director of Business Cleveland, OH Development Araya Russ Carpel Latham, NY CEO Level Funded Health Patrick Shuler Deerfield Beach, FL President Corporate Benefits Group, Inc. Jim Giesler Cape Coral, FL Phoenix Benefits Management Cumming, GA Darren Eckbert, MBA SVP of Sales, Commercial Megan Schmidt & Managed Markets Vice President, Sales & Client EnvisionRx Services


Priority Health Grand Rapids, MI Jason Talley Claims Counsel Risk International Fairlawn, OH Coralee Degeorge Sr. Product Manager SelectHealth Murray, UT Roger Roundy CEO The Alivint Group Logan, UT

Yvonne DiLauro Captive Insurance Director/ Insurance Specialist Deborah Medical Associates Insurance Company Browns Mills, NJ Debbie Hainke Benefits Manager Idaho School District Council Self-Funded Benefit Trust Boise, ID Joel Geddes, Jr. Chairman PCIC Pacific Capital Insurance Company Incline Village, NV

Employer Corporate Member Sonya Kohl Kenneth Bram AUSCO, Inc. Farmingdale, NY

Pulmonary Associates Inc. Las Vegas, NV

Perry Williams Work Comp Provider Relations Craig Hospital Englewood, CO

It is with great sadness that we report the death of Armor Killingsworth of Palm Desert, CA. Armor served on the SIIA board and the publications committee for many years. At 94 years of age he just may be the last of the greatest generation to have served SIIA. He piloted a B24, commanding a crew of 11, through many missions in the Pacific. He was appointed by General Macarthur to an all officer multi service unit to liberate U.S. personnel from Japanese prison camps. A consummate gentleman with a giant personality and known for his sense of humor, he brought to the board his strength of character and purpose that was invaluable to SIIA in its early years. Armor owned a very successful Third Party Benefit Administration company in California. He served on various boards, including Best Life Insurance Company, a leading excess insurance carrier.

“Armor was a very special person whose dedication and support of the self-insurance community was second to none and a true friend� said Jim Kinder, Founder and CEO of SIIA Armor Killingsworth 1923-2017 62

The Self-Insurer | www.sipconline.net


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Self Insurer oct 2017  

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