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September 2016

The World’s Leading Alternative Risk Transfer Journal Since 1984

A Matter of



Has the time come to break silos on group medical, wellness and workers’ comp?

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


A Matter of



Bruce Shutan

Has the time come to break silos on group medical, wellness and workers’ comp?

4 15


Volume 95

Recent Challenges to the Uniform Enforcement of Subrogation and Reimbursement Provisions Under ERISA

21 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 26

The Intersection of Wellness and Workers’ Compensation

EDITORIAL ADVISORS Bruce Shutan Karrie Hyatt

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

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

IAIS Issues Timely Paper on Captive Regulation

11 33

SIIA Endeavors National Conference & Expo is scheduled for September 25th-27th at the JW Marriott Austin in Austin, TX


News from SIIA Members

Karrie Hyatt

49 SIIA Chooses Puerto Rico for 2017 International Conference

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A Matter of



Has the time come to break silos on group medical, wellness and workers’ comp? Experts weigh merits of integrated approach for total absence management.


here are many parts of the nation’s health care system that appear perverse to experts and casual observers alike. One, of course, is the endless shuffling of paper that feeds a bureaucratic beast. Another is fee-for-service pricing based on patient volume rather than outcomes. A third could very well be the operation of silos that have long led to communication breakdowns and hamstrung employers in search of better cost-management tools. Indeed, pressure is building on Corporate America to tame rising health plan costs as never before. And it has spawned a movement toward more comprehensive or holistic solutions. Integrating employee health and safety programs certainly can improve control of self-insured costs and outcomes on both sides, notes Jeff Fitzgerald, VP of employee benefits at Innovative Captive Strategies and member of SIIA’s Alternative Risk Transfer Committee. “It makes sense to have one hand know what the other is doing,” he believes, though acknowledging that few employers adopt this outlook and change comes slow to the world of insurance with so many siloed moving parts. Written by Bruce Shutan

Health & Safety | FEATURE “The reality of it is that a small, midsized employer can and needs to look at their XMod rating on their workers’ comp, and they’ll manage that very well,” he says. “Until recently, there hasn’t been the same carryover for how they fund their health insurance.”

Healthier workers means fewer accidents Most larger and sophisticated employers that can afford to self-fund both group health and workers’ comp operate in silos that completely separate these areas, according to Tris Felix, a VP at IMA, Inc. and member of SIIA’s Alternative Risk Transfer Committee. He says even within AIG, which writes workers’ comp, medical and stop-loss coverage, the disconnection is pronounced enough that “they may as well be two foreign countries.” However, he’s a big believer in the integration of employee health and worker safety, noting

“it’s all about the wellbeing of your human capital.” By doing so, there could be enough low-hanging fruit for substantial cost savings. “We know that healthier employees are going to have fewer accidents,”


he explains. One promising example would be to use the same pharmacy benefit manager for group medical and workers’ comp scripts considering that a workers’ comp claimant’s doctor hasn’t a clue what might already have been prescribed by the individual’s general practitioner, orthopedic specialist or psychiatrist. This approach with the right algorithms in place could detect and prevent dangerous drug interactions that trigger a cataclysmic event that could cost $500,000 or more.

The issue is relevant to his firm, which manages both group medical and workers’ comp for clients whose average size is about 120 lives. But for now, he says the focus is on studying the data for correlations between the health of employees and workers’ compensation claims. His suggestion is for employers to measure what they can control and not be overly concerned with finding an integrated product featuring coordination among providers, which will take time to develop. One such scenario would be looking at a group captive for health and group captive for workers’ comp. Cavenagh believes that health and safety silos are quickly eroding as the C-suite becomes increasingly impatient with these rising costs. “One of the key catalysts is going to be when employers realize that they can do something to control the cost of healthcare costs” alongside better safety programs or ergonomics, he says. “Over

Andrew Cavenagh, managing director and founder of Pareto Captive Services as well as a SIIA board member, believes that it makes “complete sense” to view employee health and safety together. He predicts the emergence of best practices to reduce medical and workers’ comp claims rather than the 24-hour care approach that was attempted 20 years ago. This new thinking “is being driven by a necessity on the part of the employers,” Cavenagh explains, and not the product-focus that the insurance industry once pursued.

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time, they’re going to realize that there are buttons they can press.” More resources will be devoted to this task as employers with $10 million to $20 million in revenues fully understand a simple truth. To wit: if they have at least one individual who’s responsible for reducing workers’ comp claims but not healthcare claims, which he points out probably cost five times as much.

A game-changing approach In recent years, the industry has warmed to health, safety and wellness programs offering a return on investment not only for health insurance but also workers’ comp for employers that self-insure both areas.

“But it’s just at its beginning stages, and there’s no insurance company that’s offering an integrated solution in terms of coverage,” observes Mike Schroeder, president and CEO of Roundstone, which offers self-insured and alternative insurance solutions. Instead, employers are simply leading the charge to link these areas and reduce their respective exposures to risk. Felix believes that integrating health and safety could turn self-funded employee health benefits consulting on its head. Under the siloed system, he notes that a Towers Watson on the group health side and Aon on the P&C side would be yielding territory to one another in terms of strategic consulting on behalf of the same employer client. But offering an integrated package could be a game changer. The idea would be to team up consultants who design data-driven wellness strategies for employee populations with safety and loss-control experts on the workers’ comp side. In doing so, Felix says the strategic objective is to create an all-encompassing culture of employee health and safety. “The first brokers or consultants that really figure out how to integrate these [areas] is going to lead a new market wave,” he observes. But he also acknowledges that it would require a substantial investment of time as well as research and development that could stall this approach.


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Health & Safety | FEATURE While earmarking, say, $10,000 for biometric screenings or other wellbeing initiatives to lower health insurance costs is a common scenario, Felix wonders what could happen if the efforts are expanded to break through silos managed by third-party administrators. “What if you could also say you spend that $10,000 to create your healthier employee population, should it have a 2% or 5% impact on your workers’ compensation financing cost?” he suggests. “Nobody can say that empirically today, although smart people know anecdotally that it’s true.” Group captives involving smaller employers that are entrepreneurial and adept at taking risks could help pave the way for a more holistic approach that integrates employee health and safety, according to Felix. “They’re more nimble in many instances than a 10,000 employee, publicly traded firm,” he explains, and therefore, might be more inclined to study these solutions. He believes the real key, whether it’s homogeneous or heterogeneous, “is to have the same basic ownership group that has the data. If it’s two different captives, one on the medical side and one on the P&C side, it doesn’t work. It’s got to be the same employers studying the same data.”

Better tools and measures Spending less than 1% of a multimilliondollar annual health benefits tab on employee wellness or about $10 per employee per month can result in a fairly robust program, Schroeder says. “If you’re self-insured for health, you should see a reduction in your health claims,” he believes, noting the potential for results on the workers’ comp side as well. And as technology advances, the benefits of this integrated approach will continue to trickle down market to middlemarket employers. “A company with 100 employees can actually know where its health claims and workers’ comp claims are coming from, and what kind of program for health and wellness and safety can influence those claims,” Schroeder says.

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As a managing general underwriter pricing health insurance risk as well as running workers’ comp and captive programs, his firm believes the key to success involves efficiently priced services and objective measures.

“If a vendor can do those two things, then they’re going to have great opportunity in this whole growing marketplace of self-insured employers,” he explains. Roundstone’s 49-point biometric test is seen as a way to get ahead of the claim. “To us, it’s like doing a safety inspection,” reports Schroeder, who also compares it to an executive physical. Developing a culture of health and safety starts at the leadership level, which he

says doesn’t need to know the intricacies of being self-insured other than accepting that everyone must have skin in the game. As part of that effort, Schroeder says employees need to understand that since the company is self-insured, their health and safety is of paramount importance. “If the leader stands up and says that, you’re halfway home,” he adds. Fitzgerald sees the move to embrace health and safety integration as part of a larger employee benefits trend. In short, he says it fits a strategic push beyond boundaries to accommodate growing demand for more flexible work schedules and benefit choices, as well as a benevolent attempt at improving coordination of employee care. The expectation, in turn, is to fuel job loyalty and retention alongside better ROI for the employer.

Viewing this issue as a human capital investment challenge is critical considering how many employees don’t stay in their jobs long enough for wellness programs to work, according to Fitzgerald. He also cites a lack of engagement and buy-in at the corporate level. But with new bold approaches to health care cost management gaining credence, particularly in the self-insured community where employers are more motivated to take risks, it’s possible that these systemic obstacles can be overcome. Integrating employee health and safety efforts could prove to be a solution worth considering. Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for 28 years.

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IAIS Issues Timely Paper on Captive Regulation Written by Karrie Hyatt


ith the steady growth of captives and the addition of dozens of captive domiciles in the last two decades, regulation of all types of captives has been a worldwide concern. Late last year, the International Association of Insurance Supervisors (IAIS) released a guidance paper aimed to help captive regulators oversee their domicile’s captives. The first attempt to help guide captive regulators by the IAIS was in 2006 when the original Application Paper on the Regulation and Supervision of Captive Insurers was released. The updated version released last year was developed over several years with input from the association’s members. It delves deeper into captive insurance than the original report and goes on to describe many important qualities of regulation that are specific to captive insurance companies, while offering advice for captive regulators to develop a successful supervisory approach to captive regulation. The updated version of the Application Paper comes at an important time in the captive industry—with the rapid addition of new domiciles, especially in the United States, the pool of experienced regulators is not keeping up with demand and can be a major obstruction for proper oversight of captive activities. Since 2000, nineteen U.S. states have added captive law to their books and several states have rebooted their captive programs to take advantage of the burgeoning market. Following hand-in-hand is the lack of young talent entering the industry. While the captive industry is still relatively new to the insurance market, those who run it are seasoned professionals. While the industry scrambles to train up new talent, the problem becomes more severe on the side of regulation. Experienced captive insurance regulators are 10

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even less common and as new captive programs struggle to get implemented as fast as companies are trying to form captives, there is a real gap in education and experience. The IAIS’s Application Paper means to shore up that gap. The IAIS is an organization of insurance supervisors and regulators from more than 200 jurisdictions in a 140 countries. Members include the National Association of Insurance Commissioners (NAIC) and 56 jurisdictions in the U.S. and its territories. IAIS was established in 1994 to be the “international standard setting body responsible for developing and assisting in the implementation of principles, standards and other supporting material for the supervision of the insurance sector,” according to the IAIS website. Its mission is similar to that of the NAIC but on a global scale. The IAIS works to provide consistent

standards of regulation of the insurance industry worldwide to help “develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to global financial stability.” To this effect, the Application Paper on the Regulation and Supervision of Captive Insurers seeks to shore up inconsistencies in captive regulation. Over a period of several years the IAIS worked with members through its committees to develop the Application Paper. During the summer of 2015, it released a draft of the paper for member comment. Among the ten companies and captive jurisdictions that submitted detailed comments, the Delaware Department of Insurance’s comment sums up the timeliness of the Application Papers’ release:

“Presently there is continuous growth not only in the number of captive insurers, but more importantly for purposes of this Paper, growth in the number of captive insurance domiciles. However, the growth in experienced captive insurance regulators has not kept pace and therefore experienced regulators are in short supply. While this Paper will assist the experienced regulator, it will be even more important for the new captive regulator because it will provide a blueprint for effective regulation.” This “blueprint” is based on IAIS’s Insurance Core Principles (ICPs) which aim to “provide a globally accepted framework for the supervision of the insurance sector,” as described in the organization’s mission statement. One of the most important points in the Application Paper is that it recognizes that not all captives are the same and will need different levels of supervision. It acknowledges that every captive has a unique set of risks and that they should not all be regulated the same. The way the IAIS defines a captive is fairly straight-forward and it recognizes four types of captives: pure captives, group and/or association captives, rental captives, and diversified captives. Diversified captives are defined as “captives writing a limited proportion of unrelated business in addition to the risks of their owner and/or affiliates.” Most U.S. domiciles do not allow for this type of captive.


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The Application Paper offers guidance to allow regulators the flexibility to approach supervision in a practical way depending on the varying amount of risk of the captive company. In its comment letter, the NAIC supported this provision of the Paper, saying, “Supervisors in jurisdictions with captives should have the authority to address, as necessary and appropriate, the Insurance Core Principles and Standards outlined in the IAIS paper. However, jurisdictions must maintain discretionary authority to supervise each captive as appropriate for that captive’s particular situation (i.e., apply proportionality). The action that is appropriate for one captive may not be appropriate for another.” In addition to suggesting that regulators match their supervision to the level of risk, the Application Paper also provides advice regarding reporting requirements, reinsurance supervision, third-party administrators, working with a captive’s parent company, and adequate capital requirements. It also takes pains to describe how good corporate governance can differ from traditional insurers. This includes making sure that the roles that the parent company, the captive board, and the captive manager are clearly stated and defined; that there are internal controls for risk management; and that the board understands what their obligations are.

With the release of the Application Paper on the Regulation and Supervision of Captive, regulators—both new and experienced—now have a comprehensive guide to creating well-crafted supervisory systems. In the comment letter submitted to the IAIS by Willis Global Captive Management’s CEO Paul Owens, he said, “We see even greater value in the paper moving beyond ‘supervisors should consider’ recommendations to stating what is international best practice. This will provide clearer guidance and facilitate closer alignment of regulatory regimes.” 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:

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Recent Challenges to the Uniform Enforcement of Subrogation and Reimbursement Provisions Under ERISA Written by Catherine Dowie


s most court cases interpreting ERISA mention, ERISA is “not a model of legislative drafting”. This sweeping and complex piece of legislation constantly seems to require clarification, particularly enforcement of plan subrogation rights under section 502(a)(3), which requires that relief sought by the plan be ‘equitable’ (as opposed to legal) in nature. To define the subrogation and reimbursement rights of a modern day plan, the Supreme Court has needed to look back to cases as far back as the 1880s that are rarely if ever relied on outside of the ERISA context nowadays. Prior to the US Supreme Court’s decision in Montanile v. BD. OF TRUSTEES, NAT. ELEVATOR, 136 S. Ct. 651, 577 U.S., 193 L. Ed. 2d 556 (2016), the last half dozen decisions by the Supreme Court had carved a favorable path for self-funded employee benefit plans, ultimately affirming that the clear terms of a plan’s subrogation and reimbursement provision cannot be overridden by state law or traditional equitable doctrines. These strong and uniformly enforced subrogation and reimbursement rights are a critical part of any basic cost-containment strategy and lead to millions of dollars in plan savings every year. September 2016 | The Self-Insurer


Under US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 569 U.S., 185 L. Ed. 2d 654 (2013), while plans that fail to adequately protect their rights with strong language may find themselves subject to various state regimes and restrictions when seeking subrogation or reimbursement, private, self-funded employee benefit plans are supposed to be able to enjoy uniform application of their plan terms nationwide. That uniform application of plan terms, the heart of ERISA, has recently been called into question by a handful of federal district and circuit court decisions across the country in the subrogation context. Some of these courts have held that the outcome of a case (and therefore a plan’s ability to recover) can be decided based entirely on if a lawsuit is initiated by a plan instead of by a plan participant. Two years ago the 2nd Circuit decided Wurtz v. Rawlings Co., LLC, 761 F.3d 232 (2d Cir. 2014). This was one of the first cases to address the issue of if all lawsuits related to subrogation and reimbursement under section 502(a)(3) of ERISA can be filed in or removed to federal court. Generally speaking, the party that files a lawsuit gets to determine the court it is heard in and the issues to be littigated that will determine which courts have jurisdiction over the case. When a defendant responds to a lawsuit, any counterclaims or defenses they make do not usually expand jurisdiction to courts the plaintiff could not have brought their case in. Certain counterclaims and defenses are an exception to this general rule, including those brought under certain provisions of ERISA. So if a participant files a lawsuit in state

court claiming that state law prohibits the plan from seeking reimbursement (a claim that a participant would generally not bring in federal court), a plan subject to ERISA would, ideally, have the ability to remove the case to federal court and claim that state law should not be enforced in defiance of plan terms under ERISA. The problem facing courts centers on the interpretation of if a suit filed by a plan participant to avoid reimbursement to a plan could have been brought under 502(a)(3) (essentially if it can be classified as akin to a ‘claim for benefits’) and if the underlying litigation impacts an independent legal duty of the defendant (the plan in the cases discussed here). If both of these criteria are met, a case filed in state court by a participant can be properly removed to federal court by a plan.

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This issue has also been the subject of multiple lawsuits beginning in the state courts of Illinois.   The 7th Circuit (where Illinois is located) is traditionally very favorable to self-funded ERISA plans, having gone so far as to suggest that an attorney be jailed for failing to reimburse a self-funded benefit plan (see CENTRAL STATES v. Lewis, 745 F.3d 283 (7th Cir. 2014)).  In two separate cases attorneys representing participants in self-funded benefit plans issued full payment to those plans in accordance with their terms and federal law, and turned around and sued the plans in state court!  In clear defiance of the Plan’s terms, the attorneys sought contribution to their fees from the selffunded benefit plans.  These self-funded plans removed the cases to federal court, seeking to enforce the plan’s terms. In Wurtz, the subrogation vendor for a fully-funded policy sought reimbursement from plaintiff ’s in personal injury cases in New York.  New York is notoriously anti-subrogation, and the insureds filed an action for the return of funds they had sent to the vendor and a declaration that New York law barred any right of recovery the carriers might claim.  Suit was filed in New York state court against the subrogation vendor, who sought to have the case removed to federal court, claiming that the federal courts had jurisdiction to hear the case based on ERISA.  While the district court agreed with the vendor, the 2nd Circuit ultimately disagreed, holding that because ERISA was being raised as a defense, the cases were not being brought ‘under’ ERISA, and therefore the case belonged in state court. The 2nd Circuit held that the claim by the participant for enforcement of NY law in defiance of plan terms was not akin to a claim for benefits, and so could not be heard in federal court. While a note in the case makes clear that it does not apply to self-funded employee benefit plans, the legal theories underlying the decision itself could have significant consequences for fully-insured and self-funded plans alike.  The 2nd Circuit itself acknowledged that its decision was ‘in tension’ with many other federal circuit courts. Recognizing the threat to federal uniformity of plan administration, the Self Insured Institute of America and the National Association of Subrogation Professionals filed a brief with the Supreme Court urging reversal of the 2nd Circuit.  Unfortunately, the Supreme Court declined to hear the case, allowing the disagreement between the circuits, and uncertainty for plans, to stand. The most shocking part of this decision was that it is undisputed that if the suit had been filed by the party seeking reimbursement under the terms of a Plan, rather than seeking to enforce state law in opposition to the terms, the case would have been properly heard in federal court.


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Unfortunately, the federal district court ultimately held similarly to the 2nd Circuit in Wurtz, stating that if the plan had wanted to be heard in federal court, they would have needed to file suit against the plan participant. The plans took the district court’s advice and filed a separate suit in federal court. They asked the federal court to enjoin the attorneys from pursuing any action that would force the plans to violate the plan’s terms.  Unfortunately, the plans were rebuffed yet again!  Citing the federal anti-injunction act, while the federal courts acknowledged the plan’s strong position on the merits of their claims, they held that the plans would be required to litigate this matter in front of an Illinois state court.  While the 7th Circuit has historically been favorable to self-funded plans, Illinois has not.   The Illinois Supreme Court held in Bishop v. Burgard, 198 Ill. 2d 495, 764 N.E.2d 24 (2002) that the common fund

doctrine would even apply in the case of a private, self-funded plan that clearly called for full reimbursement without any deduction for attorney fees and costs. While this case was decided before the Supreme Court’s decision in US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 569 U.S., 185 L. Ed. 2d 654 (2013), it was in clear defiance of the vast majority of circuit courts which had held that the common fund doctrine could not overcome clear plan terms. The most recent case out of the Illinois and the 7th Circuit has settled, and so that case cannot be appealed to the Supreme Court to resolve the existing circuit split. Most recently, in Noetzel v. Haw. Med. Serv. Ass’n, No. 15-00310 SOM-KJM, 2016 BL 242341 (D. Haw. July 27, 2016) the federal district court for the district of Hawaii has rejected the logic of the Wurtz case, siding with the benefit plan and allowing the case to remain in federal court.  Given the past procedural posture of this case, we anticipate that the parties will appeal the ruling to the 9th Circuit and can only hope that this case, or one like it, is heard by the Supreme Court in the near future.

State courts are less likely to have the same familiarity with the complex preemption issues inherent in ERISA as federal courts and may impose widely varied requirements on plans seeking relief. Many states impose very specific, and often conflicting, regulations on recoveries.  Many states impose costly notice requirements utilizing short deadlines, some require plans to either collect on their own behalf or utilize a vendor that meets numerous statespecific requirements in order to operate there. Access to knowledgeable and diligent subrogation experts has never been more important to cost-containment and plan solvency. We can only wait and hope that an appropriate case is ultimately successfully appealed to the Supreme Court to

resolve this circuit split and re-establish the uniform enforcement of plans’ rights.

Catherine Dowie advanced from The Phia Group’s recovery department to The Phia Group’s legal team in 2014. As a Paralegal and Legal Liaison, Catherine is responsible for handling complex subrogation and recovery cases and recovers millions of dollars each year for self-funded employers. Catherine also spearheads legal research efforts for The Phia Group’s recovery team, ensuring that The Phia Group can assist health plans in taking full advantage of their recovery rights. Catherine is currently working toward her J.D. at Suffolk University School of Law, where she attends classes in the evenings. Catherine earned her Bachelor of Arts from Smith College and is also a Certified Subrogation Recovery Professional (“CSRP”).

For self-funded plans, this means that a subrogation recovery can literally come down to a race to the court house. If a participant or their attorney refuses to reimburse or otherwise honor the plan’s recovery provisions, plans have a decision that needs to be made quickly.  Either file suit against the appropriate parties in federal court under 502(a)(3) to enforce the terms of the plan, or run the risk that the participant will file in state court.  Even assuming that a plan will ultimately receive a favorable outcome, litigation is likely to be more prolonged and outcomes more uncertain in front of a state court.

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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 September 2016 | The Self-Insurer


MHPA’s more limited equality provisions required parity between annual and lifetime dollar limits applicable to medical benefits and mental health/substance abuse benefits.

What’s Required Under MHPAEA? The MHPAEA established complicated testing requirements to determine whether financial requirements and quantitative treatment limitations on mental health and substance abuse benefits are applied in a manner consistent with corresponding medical benefits. A full discussion of those requirements is beyond the scope of this advisory, but such testing requires a full analysis of the claims under the plan in six separate classifications:

The Next Big Thing Audits Regarding The Mental Health Parity And Addiction Equity Act

Inpatient, in-network;

Over the last six years, employers and insurers have been working diligently to adapt to the ever changing landscape under the Affordable Care Act. Meanwhile, the agencies have also issued comprehensive regulations under the Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) that have gone largely unnoticed. But this is quickly changing. Over the last several weeks we have seen a significant uptick in Department of Labor (“DOL”) investigation and enforcement activities with respect to the MHPAEA. Employers and insurers would be wise to redouble their compliance efforts in this area.

Inpatient, out-of-network;

Outpatient, in-network;

Outpatient, out-of-network;

Emergency care; and

Prescription drugs.

Background The MHPAEA amended Section 712 of ERISA, Section 2705 of the Public Health Services Act and Section 9812 of the Internal Revenue Code, and is designed to require true benefit parity between medical benefits for physical conditions and mental health and substance abuse benefits. The MHPAEA applies to employer group health plans and insurance coverage offered in connection with group health plans. If a plan provides medical/surgical benefits and mental health or substance abuse benefits, the plan must provide parity with respect to (i) financial requirements (e.g., deductibles, copayments, coinsurance and out-ofpocket maximums) and quantitative treatment limitations (e.g., number of visits or treatments or days of coverage) and (ii) nonquantitative treatment limitations (“NQTLs”)(e.g., medical management standards). MHPAEA generally became effective for plan years beginning on or after October 3, 2009 (January 1, 2010 for calendar year plans). The effective date was delayed for some union plans until the collective bargaining agreement in place at that time terminated. For years prior to 2010, the Mental Health Parity Act (MHPA), the precursor to MHPAEA, applied. 22

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If a “type” of “financial requirement or treatment limitation” (such as a copayment) applies to at least two-thirds of the medical/ surgical benefits in a “classification” (or subclassification) of benefits, the application of that “financial requirement or treatment limitation” to mental health or substance abuse benefits in that same classification (or subclassification) cannot be more restrictive than the “predominant” financial requirements or treatment limitations that apply to the plan’s medical/surgical benefits. By way of example, if the predominant copayment for outpatient in network visits is $25, the applicable copayment for mental health provider outpatient in network visits cannot exceed $25.




Just having group benefits expertise is not enough. At AmWINS, we have taken specialization one step further by creating a practice that enables our team of specialists to collaborate with one another quickly, helping you give the best options to your self-funded clients. That’s the competitive advantage you get with AmWINS Group Benefits.



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For most plans, we understand that insurers and TPAs performed this test to determine the necessary design for compliance. We further understand that many insurers/TPAs performed this testing across their book of business, rather than on a plan-by-plan basis.

DOL Guidance and Investigation Activity As noted above, many plans relied on data across their insurer/TPA’s book of business to determine compliance. However, there was some indication that plan specific testing was required based on the final MHPAEA regulations. On April 20, 2016, DOL, IRS and HHS (the “Agencies”) issued guidance in the form of FAQ 31 that addressed the practice of testing for compliance across a book of business. In Q8 of the FAQ, the agencies stated that a plan or issuer cannot base its analysis on an insurer’s entire overall book of business for the year. To the extent plan-specific data is available, each selffunded and fully-insured plan must use such data in making their compliance projections.1 FAQ 31 can be found at https://www.dol. gov/ebsa/faqs/faq-aca31.html. We have recently become aware of several plan investigations in which DOL has alleged compliance violations with plan-specific testing requirements. This seems to suggest that DOL will attempt to enforce the planspecific testing requirements for prior years, notwithstanding the recent nature of its FAQ guidance.


Penalties These enforcement actions should be cause for concern for employers and insurers, as significant penalties can result under the Code. MHPAEA violations can give rise to a $100/day/employee excise tax under Code § 4980D. Certain limitations and exceptions apply, as set forth in Code § 4980D.2 So plans that may have relied on an insurer/ASO provider’s book of business calculations to set its financial requirements and quantitative treatment limitations may be at risk for significant penalties if later testing reveals that the financial requirements and quantitative limitations were not appropriate when only plan-specific claims are used. In addition to the IRS taxes, participant claims may be asserted and DOL might choose to sue employers for breach of fiduciary duty based on their failure to comply with MHPAEA. Accordingly, employers may want to begin conducting testing for the years from 20102015 to assess any potential liability. But these financial requirements and quantitative treatment limitations are not the only plan design issues that should be reviewed. Plan sponsors may also want to review their plans’ NQTLs to ensure they are also compliant. The Agencies recently issued guidance to assist plans with identifying NQTLs that could run afoul of the MHPAEA. Federal MHPAEA regulations contain an illustrative, non-exhaustive list of NQTLs, which include: • medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative (including standards for concurrent review); • formulary design for prescription drugs;

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• network tier design; • standards for provider admission to participate in a network, including reimbursement rates; • plan methods for determining usual, customary, and reasonable charges; • fail-first policies or step therapy protocols; • exclusions based on failure to complete a course of treatment; and • restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage. The Agencies’ outline of potential problem practices should be carefully reviewed. That guidance can be found at https://www.dol. gov/ebsa/pdf/warning-signs-plan-or-policynqtls-that-require-additional-analysis-todetermine-mhpaea-compliance.pdf

Summary The DOL is actively investigating plans for compliance with MHPAEA; this is not a theoretical problem. Employers and insurers should take heed and begin reviewing their plan designs for prior years to determine whether they have any potential liability.

References Insured small group and individual market plans are subject to slightly different rules with respect to conducting plan-level tests.


2 Code § 4980D and the footnote should be “Code § 4980D(d) provides an exemption from the excise tax for fully insured employers with between 2 and 50 employees.




Whether addressing ACA changes, high dollar claims or unique types of medical risk, PartnerRe Health’s experience and innovation are focused on helping our clients. We listen to your goals and challenges, leveraging our deep resources to deliver customized Medical Reinsurance and Employer Stop Loss solutions.

Find out what you can expect from a true partner at Underwritten by PartnerRe America Insurance Company Executive Office: 450 Sansome St., San Francisco, CA 94111 Form HAD0815 04/2016


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The Intersection of

Wellness and Workers’ Compensation


orporate wellness is a buzzword describing any number of programs from encouraging physical fitness to Employee Assistance Programs. Large and small employers have embraced wellness in its various forms, viewing it as both a perk to employees and a sound business strategy of the employer. Implementations of corporate wellness programs continue to grow as the offerings of these programs continue to expand.

By Mark Pew Senior Vice President of PRIUM 2

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According to the “2015 Employee Benefits” research report published by the Society for Human Resource Management, 70 percent of U.S employers offer a general wellness program, up from 58 percent in 2008. Programs include health and lifestyle coaching, weight loss programs, on-site or subsidies for offsite fitness centers, nutritional counseling, smoking cessation programs, standing desks, and stress reduction programs. According to an April 2016 “Health and Well-being” survey conducted by Fidelity Investments and the National Business Group on Health, 87 percent of employers offer emotional or mental well-being programs with 54 percent offering stress management and 27 percent offering resiliency training. Additionally, 76 percent provide financial health programs.


TO A TRUE PARTNER IN STOP-LOSS. The benefits of smart coverage, when it matters most. Sun Life is #1 in stop-loss for a reason:* our unparalleled expertise and innovative benefits and services help protect self-funded employers. Our new benchmarking tools arm you with customized data in an appealing, client-ready format. Coupled with our cost-containment products, you can tailor the perfect solution for each client. Put our expertise to work—call your Sun Life rep today.

Life’s brighter under the sun *The #1 ranking is based on the 2014 year-end Sun Life Stop-Loss premium of $1.03 billion and on our analysis of publicly available financial information and third-party market share data. Group stop-loss insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states, except New York, under Policy Form Series 07-SL. In New York, group stop-loss insurance policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Windsor, CT) under Policy Form Series 07-NYSL REV 7-12. Product offerings may not be available in all states and may vary depending on state laws and regulations. © 2015 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada. PRODUCER USE ONLY. BRAD-5073


SLPC 26354 01/15 (exp. 01/17)

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According to Optum’s 2015 whitepaper entitled “Beyond ROI: Building employee health & wellness value of investment,” the three primary reasons for an employer to invest in a health and wellness program is to reduce employee health risks, reduce health care costs and improve employee productivity. A likely outgrowth of that is increased employee retention through higher job satisfaction and employee morale, especially to the millennial generation, via a “culture of health.” A 2015 Limeade and Quantum Workplace study entitled “Workplace Well-Being: Provide Meaningful Benefits to Energize Employee Health, Engagement, and Performance” provides additional insights into how having a culture of health helps the employer’s bottom line. If the responding employees felt cared for, 38 percent were more engaged, 17 percent more likely to be working there in one year, and 18 percent were more likely to “go the extra mile” for the organization. So a healthy and happy employee has a positive effect on both the employee and employer. That is both intuitive and statistically proven. But how does that intersect with workers’ compensation? A culture of health combined with a culture of safety, should reduce work-related injuries and associated lost-time due to co-morbidities or poor attitudes. Perhaps it can have an even broader impact. Let’s examine the results of two programs launched by an employer and a carrier.


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The University of California system had an issue with re-injury. Of reported work comp claims in 2007, 61 percent were the first claim for that employee. However, 20 percent of those claims were from employees who had two claims, nine percent had three claims, and 10 percent had four or more claims. The highest number of work related injuries to a single person was an astonishing 54. That’s a problem. Not surprisingly, the cost of an employee with only one claim ($5,620) was lower than the cost of claims for employees who had submitted four or more claims ($10,133). In a workplace of over 200,000 employees, a 39 percent re-injury rate is an astounding number of impacted employees, departments, productivity, and costs. In fact, the university’s actuarial analysis estimat-

ed that “subsequent claims” produced an annual cost of $26 million each year. Things hadn’t changed much by 2011 when 63 percent of claims were first-time claims. Obviously something had to change. In October 2011 the university implemented its WorkStrong Program system-wide. The program was described as follows: “WorkStrong is an occupational wellness initiative designed to promote recovery and prevent future workplace injuries. The program was developed with the expertise and collaborative support of University of California staff in wellness programs, occupational health and recreational sports.” The goal was to increase returnto-work, reduce re-injury, and reduce work comp costs by promoting physical wellness (weight, nutrition, cardiovascular, core strength) and psychological wellness (life balance, stress management, “feel

better”). During the pilot phase, eligibility was based on employees who had suffered at least two work-related injuries within a 24-month period. Upon full implementation it was expanded to “all injuries for employees with co-morbidities who can benefit from the program,” basically any injured worker. The program comprised:

• Fitness and post-rehabilitation training with certified trainers and professionals designed to promote recovery from injury or promote better fitness, as well as coaching on injury prevention strategies, exercises and fitness improvement

• Nutrition and weight management

current diet and eating habits and offer suggestions and strategies for a healthy, balanced diet

• Life balance and stress reduction strategies, modalities and activities to increase awareness about stress levels and managing stress

• Workplace safety assessment and consultation to ensure a comfortable and safe work environment

• Ergonomic assessments to ensure proper workplace setup

• Behavior modification strategies and tools to integrate lessons learned into daily life

training and consultation with a registered dietician to assess

We can’t stop the unexpected. We can stop loss. • More than 35 years of stop loss experience • Ranked number 3 among third party stop loss carriers1 in the nation • Consultative approach and flexible contracts that match your unique needs Contact your local Voya Employee Benefits sales representative or call 866-566-2316 1

Ranking of top stop loss providers in the United States based on yearly premium as of 4/25/2016 by MyHealthGuide Newsletter: News for the Self-Funded Community, and does not include managed health care providers.

Stop Loss Insurance is underwritten by ReliaStar Life Insurance Company (Home and Administration Office: Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Home Office: Woodbury, NY; Administration Office: Minneapolis, MN). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state. ©2016 Voya Services Company. All rights reserved. CN0707-25797-0717 175487 08/01/2016

September 2016 | The Self-Insurer


With the anticipated annual cost of subsequent injuries at $26 million and expected program cost of $5.6 Million, the break-even point was calculated as 20 percent in direct savings. Its actual incurred loss from subsequent claims was 56 percent less than budgeted, more than offsetting the cost of the program. The number of re-injuries at 10-12 months was over 60 percent less for participants than what was expected without the program, and that percentage drop continued through to the 27-30 month range. Additionally, the work comp accrual rate dropped from $1.65 in 2004-2005 to $1.07 in 2014-2015. These were outstanding results, but the most important result might be this quote from one of the participants: “My pain has gone away (after a year of pain). I am healthier in every sense of the word - physically, mentally, and spiritually. I feel very fortunate to have been a part of this WorkStrong progr am - thank you!”


For more information about the WorkStrong Program, contact Kevin Confetti, Deputy Chief Risk Officer for the University of California system ( He was the driving force behind its development and continues to be a public advocate of its benefits. In fact, Kevin’s presentation about the WorkStrong Program at a 2014 SIIA event prompted the initiation of a similar program. Todd Greer, senior vice president for Insurance Program Managers Group (IPMG), was so impressed by WorkStrong’s outcomes that he facilitated the development and deployment of IPMG’s own program, Enhanced Case Management. Obviously the University of California system has some built-in advantages since it has all of the in-house clinical, occupational and psychological resources required for such a program. IPMG created a network of resources via centers of excellence on a regional basis, and a cap of $5,000, for the program’s resources and services in nutrition, functional fitness, stress management and opioid intervention. Their model focuses on service: targeting, engagement, administration, delivery and compliance. The process starts with a series of red flags that trigger a roundtable discussion to confirm the presence of comorbidities. If complicating factors are confirmed, the process elevates to an IPMG clinician for a face-to-face meeting with the injured worker. Their collaborative – and integrated – team of underwriting, claims, risk management and nurse case management interact with both the treatment provider and plaintiff attorney so that all stakeholders are aware of and supportive of the new approach. IPMG’s aim, as with WorkStrong, is to generate a lifestyle change. That aim is not typically included within the compensable scope of work comp, but IPMG understands that without those lifestyle changes the claim can become more complex and costly, in financial and clinical terms. From 2010 thru 2016, Enhanced Case Management had incurred 32 percent less cost per employee and 65 percent less cost per claim Those savings were

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not achieved through cost containment but instead by an investment in helping the injured worker. In this case, less cost doesn’t mean less benefits but less lost time, lower expensive medical procedures and administrative costs and higher ability to settle. And, happier injured workers – “I knew I needed to lose some weight, but this program gave me the motivation and skills on how to do it. My girlfriend had also been wanting to lose weight so she decided to do this with me. Since the start of the program I have lost over 35 pounds and 15 inches of fat. My girlfriend has lost nearly 50 pounds just by eating the same way I am. We feel great! The program has really changed both of our lives.” These two programs yielded similar results, providing a successful model whether an employer or a carrier. Which organization will be next adopting such a program? The proper commitment of time and money and focus, combined with proven templates, should yield a similar culture of health. But those positive outcomes cannot be achieved without taking the first step in identifying the issues, devising a solution, and staying true to the vision through implementation. Will that take courage and vision and maybe even some faith? Yes. But aren’t employees worth it?

Mark Pew, Senior Vice President of PRIUM, has been focused since 2003 on the intersection of chronic pain and appropriate treatment. That ranges from the clinical and financial costs of opioids and benzodiazepines to the corresponding epidemic of heroin use and the evolution in medical cannabis. Educating is his job and passion. Contact Mark at, on LinkedIn at markpew, or on Twitter @RxProfessor.

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 also has advertising opportunities available. Please contact Shane

Byars at for advertising information. September 2016 | The Self-Insurer


We’re proud of our mileage.

This year, Symetra Life Insurance Company celebrates an important milestone—40 years of helping brokers, employers and administrators successfully navigate and protect their self-funded plans. As we look toward the next leg of the trip, we’re excited for what’s to come and hope you’ll join us for the ride. When it comes to stop loss, we don’t just know the road, we helped write the map.

To learn more, visit

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. Twelve 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




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

Through the Looking Glass – Making the Unseen Visible with Predictive Analytics

Collateral Challenges One of the challenges faced by employers who retain risk is managing the collateral associated with that risk. Both self-insured collateral held by states and deductible collateral held by carriers require careful monitoring. Mark Walls, Vice President Communications & Strategic Analysis, Safety National will moderate a discussion between Joseph Braun, Assistant Vice President – Credit Risk, Safety National, Pamela Ferrandino, EVP and Senior Principal, National Casualty, Willis Towers Watson

“If you don’t know where you are going, any road will get you there.” – Cheshire Cat.You may have access to more data (numbers, charts, statistics, facts, etc.) than you know what to do with, but still have no idea where it is leading you or what it is trying to tell you. In this session, Freda Bacon, Administrator, Alabama Self-Insured Worker’s Compensation Fund and Kimble Coaker, CEO, AL Trucking Association Fund will attempt to cut through the numbers and examine how an organization can not only find the road it’s on, but identify where it is going, where it wants to go and select the road to get there through the use of predictive analytics. They will examine case studies involving both the underwriting and claims side of operations.

September 2016 | The Self-Insurer


Catastrophic medical claims aren’t just a probability — they’re a reality. As a Captive Director, Risk Manager, VP of HR or CFO, QBE’s Medical Stop Loss Reinsurance and Insurance can help you manage those benefit costs. With our pioneering approach to risk and underwriting, we make self-insuring and alternative risk structures possible.

Individual Self-Insurers, Single-Parent and Group Captives For more information, contact: Phillip C. Giles, CEBS 910.420.8104

QBE and the links logo are registered service marks of QBE Insurance Group Limited. Coverages underwritten by member companies of QBE. © 2016 QBE Holdings, Inc.


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and Matt Cohen,VP Client Services, Sedgwick Claims Management Services, Inc., on the different options for collateral and strategies to minimize the amount of collateral being held.

What Does the Medicare Secondary Payer Act Mean for You? With Medicare in financial distress, the Centers for Medicare and Medicaid Services (CMS) is stepping up its enforcement of the Medicare Secondary Payer Act (MSP), resulting in several amendments to protect Medicare’s interests. Learn what the MSP Act and resulting amendments mean for you as Rafael Gonzalez, Vice President, Strategic Solutions for Optum discusses the latest updates, the information to be reported, the steps to resolve liens, and how a set-aside allocation comes together, including the factors to consider when deciding whether to submit.

Managing an Increasingly

Medication Trends Shaping

Impaired Workforce

Workers’ Compensation

With legalized medicinal and recreational marijuana rapidly becoming a reality and use of other drugs like opioids and heroin reaching near-epidemic levels, employment practices are becoming progressively challenged. Not only does this create issues from a human resources standpoint, but it also creates the need for a major overhaul of traditional loss prevention and claims management practices. In this session Mark Pew, Senior Vice President, PRIUM and Mark Walls, Vice President Communications & Strategic Analysis for Safety National will investigate the changing demands that these trends are putting on organizations and how they are responding to them.

Ensuring the right decision is made so that the injured worker receives the right medication at the right time, and is cost effective, has its challenges. Understanding the medication trends that influence cost and utilization can help ensure optimal outcomes clinically and financially. During the presentation, Tron Emptage, Chief Clinical Officer, Helios and Paul Peak, PharmD, Director Clinical Pharmacy, Complex Pharmacy Management, Sedgwick Claims Management Services, Inc. will examine medication costs and utilization trends, and discuss the importance of collaboration to help achieve better outcomes for payers and workers alike.

Don’t let risk take your Health Plan out. Find out how Renalogic’s CKD Management program can significantly reduce medical spend and halt members’ progression to dialysis. For those members in dialysis, Renalogic can save up to 78% off of full-billed dialysis charges, inclusive of fees. Stop by Booth #214 at SIIA's 36th Annual National Educational Conference & Expo!

One-Time & Monthly Data Analysis

Chronic Kidney Disease Management & Education

Dialysis Cost Containment

For a FREE Health Plan risk assessment, e-mail or call (866) 265-1719.

September 2016 | The Self-Insurer


Service Director Health and Risk Management Services, Insurance Program Managers Group (IPMG) will provide an overview of results and the impact of health management services that target employee health and comorbidity and the impact it has on frequency and severity for a public entity pool. International Sessions include:

SIIA International Conferences Update The SIIA International Committee is focused on developing opportunities in Latin America and the Caribbean. Joseph Antonell, Consultant - Business Development, Equian and Robert J. Repke, President, Global Medical Conexions, Inc. and the Chairman of the SIIA International Committee will focus on the highlights of our 2016 meeting in Costa Rica and our upcoming 2017 meeting. Opportunities are abound in Latin America. Please join them to hear more about business that might be a good fit for you.

Emerging Markets - Part 1

The Enemy Within: Dealing with Fraud in Your Pool No one wants to hear that even though you believe you are doing everything “right” rigorous annual clean audits, regular external reviews by reinsurance partners, an active internal audit function, and rigorous policies regularly reviewed through the AGRIP Recognition Standards - things can still go wrong. In this case, we will hear about one pool’s very personal experience - recently concluded with the criminal sentencing of a long-time employee - and the lessons learned. From discovering the fraud - which involved embezzlement of over $1 million over a 10 year period - to working with the authorities, managing the public relations, and dealing with employee morale. By sharing this experience, it may prevent it from happening in other pools / funds. Dubravka Romano, Associate Exec Director for Risk Management Services for Texas Assoc. of School Boards will present.

Employee Health Management and Workers’ Compensation Review how comorbidity management programs can impact benefit utilization and claim frequency. Workers’ compensation claims are often complicated because of employee health comorbidity that influences normal injury recovery. Brian Devlin, Senior Vice President, Risk Management Services, Insurance Program Managers Group (IPMG) and Kim Gaston, Clinical Field


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Emerging Markets has been identified as one of the top three or four significant growth opportunities for insurance companies as they continue to be challenged overall by economic and regulatory headwinds, digital transformation and cyber security, and shrinking profit margins. Which are the most relevant, emerging insurance markets for growth? Where are the top US carriers investing to enter and/or expand their life, health and group benefits businesses overseas? Which products and customer buyer segments should be targeted? What are the critical success factors to win in this sector of the international insurance arena? A panel of proven industry experts from across the direct carrier, reinsurance intermediary and brokerage distribution areas will present and lead a discussion that addresses these questions and issues.

Would you navigate uncharted waters without a compass?

As a leader in Group Captives, Berkley Accident and Health can steer you in the right direction. With EmCapSM, 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. Stop Loss | Group Captives | Managed Care | Specialty Accident Insurance coverages are underwritten by Berkley Life and Health Insurance Company and/or StarNet Insurance Company, both member companies of W. R. Berkley Corporation and both rated A+ (Superior) by A. M. Best. Coverage and availability may vary by state. Š2015 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved. BAH AD-2014-0141


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Emerging Markets - Part 2 Emerging Markets has been identified as one of the top three or four significant growth opportunities for insurance companies as they continue to be challenged overall by economic and regulatory headwinds, digital transformation and cyber security, and shrinking profit margins. Which are the most relevant, emerging insurance markets for growth? Where are the top US carriers investing to enter and/or expand their life, health and group benefits businesses overseas? Which products and customer buyer segments should be targeted? What are the critical success factors to win in this sector of the international insurance arena? A panel of proven industry experts from across the direct carrier, reinsurance intermediary and brokerage distribution areas will present and lead a discussion that addresses these questions and issues.


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Panelists for both Emerging Markets sessions include Greg Arms, Senior Advisor, E4 Health, Inc., Michael Feighan, Curtis Olson, Consultant, Curtis W. Olson Consulting and Alex Rizo, Vice President, Pan American Life Insurance Group. Detailed conference information, including registration forms, can be accessed on-line at, or by calling 800/851-7789.

We look forward to seeing you in Austin this September!


The Self-Insurer |




SIIA Diamond, Gold & Silver

Lucent Health

Member News SIIA Diamond, Gold, and Silver member companies are leaders in the selfinsurance/captive insurance marketplace. Provided below are news highlights from these upgraded members. News items should be submitted to Wrenne Bartlett at All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at For immediate assistance, please contact Jennifer Ivy at If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy and


from SIIA


SIIA Announces Lucent Health as Newest Diamond Member The Self-Insurance Institute of America, Inc. (SIIA) announced that Lucent Health has upgraded to Diamond member status. Diamond membership signifies the highest level of support for SIIA and demonstrates a company’s leadership position within the self-insurance/ alternative risk transfer marketplace. “Given that our company continues to expand its marketplace investment and presence, it has become increasingly important to become more engaged with our key trade association,” said Lucent Health CEO Brett Rodewald. “Diamond membership is a perfect opportunity to ramp up our association involvement while helping to make sure SIIA has the necessary financial resources to effectively protect and promote our significant business interests.” Lucent Health, based in Nashville, dramatically reduces employer healthcare risks and costs while improving employee access to innovative healthcare services. Lucent Health developed the most advanced risk-reduction solution for self-funded healthcare groups and continues to lead the industry revolution with its innovative e2 MEC/MVP, reference based pricing and captive services while serving over 140,000 members and processing $600 million in claim value annually. Learn more about Lucent Health on-line at

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The Phia Group

HM Insurance Group

The Phia Group, LLC Witnesses Substantial HM Life Insurance Company Named Growth in Adoption of its PACE Program Employers, plan advisors, and third party administrators are tapping into The Phia Group’s Plan Appointed Claim Evaluator (“PACE”) service. The Second Quarter of 2016 brought with it substantial growth in the number of lives on-boarded; increasing the total number of lives protected by PACE by 69%. With increasing frequency, employer (plan sponsors), plan advisors, and TPAs are being deemed to be fiduciaries of the self-funded plans they service, and are being held to a higher standard of care as it relates to prudent management of plan assets and handling of complex claims and appeals. The Phia Group developed PACE; allowing these fiduciaries to transfer fiduciary authority over decision making, in response to final appeals, to an objective third party “PACE.” The PACE makes the most difficult decisions, takes on fiduciary liability for improper directives, and handles repercussions such as external appeals to IROs and Stop-Loss reimbursement issues. To meet the increased demand for PACE services, The Phia Group has established a satellite office in Boise, Idaho; staffed by team members dedicated to the PACE program, and led by Attorney Tim Callender and Claim Evaluator Specialist Joanna Wilmot.

to 2016 Ward’s 50 Top Life-Health Insurance Companies -- Selection Tied to Strong Financial Performance HM Life Insurance Company, a member company of HM Insurance Group (HM), has been named to Ward’s 50 Top Performing Insurance Companies for 2016. This is the eighth consecutive year that the national stop loss carrier has been among this elite group that was selected from more than 700 life-health companies across the country. “Being recognized for our financial stability and ability to grow while maintaining strong capital and underwriting results is an important demonstration to our clients and business partners that they can have confidence in placing their stop loss business with HM,” Matt Rhenish, president and chief operating officer at HM Insurance Group, said. “Being consistently named to this list is particularly significant given the climate of today’s insurance market.”

is an important objective of Ward Group to compare the performance of the Ward’s 50 benchmarks with the rest of the industry. With that in mind, the Ward’s 50 benchmarks showed more favorable statutory return on average equity, greater growth in policyholder surplus, greater growth in net premium income and lower expenses relative to net premiums.

GOLD MEMBERS KeyState KeyState Upgrades to Diamond Membership The Self-Insurance Institute of America, Inc. (SIIA) announced that KeyState has upgraded to Gold member status, the second-highest level of membership. The KeyState Companies provide banks and corporations with solutions in the areas of investments, treasury, regulatory compliance, corporate governance, and risk management. They work hand-in-hand with tax, legal, and accounting/audit advisors to provide efficient solutions. Learn more at

Companies identified for Ward’s 50 pass safety and consistency screenings and achieve superior performance over the five-year period included in the analysis. It

Visit for online demonstrations and learn more today.

September 2016 | The Self-Insurer



Risk Solutions


world-class capabilities

A powerful combination

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


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Guardian Life Insurance

Zurich Accident & Health

Guardian Celebrates Opening of New Office Complex in Hanover Township

Zurich Insurance to Participate in ‘First

The Guardian Life Insurance Company of America® (Guardian), one of the nation’s largest mutual life insurers and a leading provider of employee benefits, announced the opening of a new office complex for its employees located in Hanover Township at 6255 Sterners Way. A ribbon cutting ceremony was held yesterday with federal and local government officials, company executives and employees. Guardian’s President and Chief Executive Officer Deanna M. Mulligan, Chief Operating Officer Scott Dolfi and Board of Directors member John A. Somers were joined by Lieutenant Governor Mike Stack, State Senator Mario Scavello, State Representative Marcia Hahn, Executive Deputy Insurance Commissioner Seth Mendelsohn and the Hanover Township Board of Supervisors & Manager for the ribbon cutting. The new building will comprise 281,680 gross square feet of space and was built on a thirty-one acre site. The office complex was built to be LEED- certified and was designed to adhere to the latest standards for energy efficiency.  Its innovative design enhances work/ life integration for employees, increases the ability to work collaboratively for the customers’ benefit, and promotes a flexible work environment.

of its Kind’ Cyber Portal Project to Help Businesses Build Resilience against Cyberrelated Supply Chain Risks Zurich Insurance will serve as a key industry consultant on a ‘first of its kind,’ public private partnership announced today by the University of Maryland and the National Institute of Standards and Technology (NIST). Bringing together expertise from government, academia and the private sector, the partnership has embarked on a research project to help companies ascertain the effectiveness of their information security and cyber supply chain best practices, with an end goal of helping organizations increase their cyber risk assessment and management capability.

INNOVATIVE STOP LOSS AND ANCILLARY SOLUTIONS At BenefitMall, we know that employer groups benefit most from treating their health plan as an investment rather than an expense. Our team of self funded consultants can help you succeed by offering: • Unbiased Expertise and Review • Initial Placement, Implementation and Renewal of Coverage • Claims Audit, Submission, Tracking, and Resolution Services • Reporting, Compliance Services and Plan Document Review • Billing and Premium Collection • Ancillary Products and Services

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September 2016 | The Self-Insurer


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“We continuously look for ways to help our customers understand and protect themselves from risk,” said Linda Conrad, head of Strategic Business Risk for Zurich in North America and a named industry consultant on the project. “As Zurich remains heavily committed to the cyber space, we look forward to sharing our expertise and helping bring greater insight to cyber risk assessment.”

SILVER MEMBERS AXIS Insurance John Tatum Joins AXIS Insurance as Executive Vice President & Head of U.S. Programs AXIS Capital Holdings Limited announced that John Tatum has joined AXIS Insurance as Executive Vice President & Head of U.S. Programs. In this new position, he is responsible for all programs and binding authorities for AXIS Insurance across the U.S. market. Mr. Tatum reports directly to Carlton Maner, CEO of the U.S. Division for AXIS Insurance. Mr. Tatum works out of AXIS Insurance offices located in Chicago, IL and Alpharetta, GA. Commenting on the appointment, Mr. Maner said, “AXIS Insurance has been successfully expanding its programs business writings in recent years, reflecting a broader appetite across multiple distribution channels. John brings a wealth of diverse experience and knowledge to our team, and his appointment will allow us to accelerate our growth in this space while maintaining a balanced and high-quality book of business.”

Mr. Tatum has over twenty years of experience in the insurance industry and joins AXIS Insurance after 15 years at CNA Financial Corporation. He was most recently the Senior Vice President of CNA’s Middle Market, Construction and Large Casualty Business Units. As part of his responsibilities, he led CNA’s Commercial Affiliation Marketing (CAMTM) Programs for over 10 years. Earlier in his career at CNA, Mr. Tatum held a number of underwriting and marketing roles. Mr. Tatum received a Bachelor’s degree in Economics from Princeton University and his M.B.A. with distinction from Cornell University. Additionally, he completed the Insurance Executive Development Program at the Wharton School of the University of Pennsylvania.

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Chubb Accident & Health Chubb Names Michael Kessler Chief Reinsurance Officer Chubb Limited announced that Michael Kessler has been appointed Vice President, Chubb Group and Chief Reinsurance Officer. Mr. Kessler succeeds William O’Farrell, who has served as the company’s Chief Reinsurance Officer since 2005 and is leaving Chubb to pursue other business opportunities. In his new role, Mr. Kessler has management responsibility for the design and purchase of reinsurance programs for Chubb and its business units globally, managing the company’s reinsurance recoverable asset and overseeing relationships with its reinsurers and reinsurance brokers. Mr. Kessler will also serve as Chairman of Chubb’s Reinsurance Security Committee and as a member of its Global Credit Committee. He reports to John Keogh, Executive Vice Chairman and Chief Operating Officer of Chubb Limited. Mr. Kessler has 25 years of experience in insurance and actuarial consulting. Since 2008, prior to ACE’s January 2016 acquisition of Chubb, he has served as Chief Actuary for the company’s international general insurance business. Mr. Kessler holds a BA in Mathematics from Cornell University. He is a Member of the American Academy of Actuaries, a Fellow of the Casualty Actuarial Society and holds the Chartered Financial Analyst designation.

September 2016 | The Self-Insurer


Guardian® in sync

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Guardian Stop Loss. Experience that will give you confidence. Stop loss insurance comes down to one thing. Who do you trust? After all, a large claim can put a real crimp in your cash flow while you await reimbursement. We have a 155-year tradition of putting customers first, including: A long track record of financial stability and exemplary financial ratings

Clear, unambiguous contracts that we stand behind

Turnaround time of just 2–3 days on claims, whether $10K or $10M1









ASO The Guardian Life Insurance Company of America®, 7 Hanover Square, New York, NY 10004. GUARDIAN® and the GUARDIAN G® logo are registered service marks of The Guardian Life Insurance Company of America and are used with express permission. 1

Upon receipt of information from the payer.

Guardian’s Stop Loss Insurance is underwritten and issued by The Guardian Life Insurance Company of America, New York, NY. Policy limitations and exclusions apply. Optional riders and/or features may incur additional costs. Plan documents are the final arbiter of coverage. Financial information concerning The Guardian Life Insurance Company of America as of December 31, 2015 on a statutory basis: Admitted Assets = $48.1 Billion; Liabilities = $42.0 Billion (including $37.0 Billion of Reserves); and Surplus = $6.1 Billion. Ratings as of 02/16 and are subject to change. Policy Form #GP-1-SL-13. File # 2016-21397 Exp. 8/17

SIIA Chooses Puerto Rico for 2017 International Conference

The Self-Insurance Institute of America, Inc. (SIIA) announced that it will hold its 2017 International Conference April 18-19 in San Juan, Puerto Rico at the Condado Vanderbilt Hotel. The location selection reflects SIIA’s continued focus on Latin America to help its members to identify and understand self-insurance-related business opportunities in emerging markets within the region. As part of the selection process, SIIA president & CEO Mike Ferguson visited recently with more than a dozen leading business executives and government officials in Puerto Rico to better understand the advantages that this U.S. Territory offers, both as a location for the conference, and as a hub for medical travel, captive insurance and the sourcing of professional services in support of the domestic self-insurance industry. The detailed event program will be released later this year, but a preview will be provided during SIIA’s National Conference & Expo, scheduled for September 25-27, 2016 in Austin, TX.

September 2016 | The Self-Insurer


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


Joseph Antonell Chief Executive Officer/Principal A&M International Health Plans Miami, FL Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA Andrew Cavenagh President Pareto Captive Services, LLC Philadelphia, PA Mark L. Stadler Chief Marketing Officer HealthSmart Irving, TX Robert A. Clemente Chief Executive Officer Specialty Care Management LLC Lahaska, PA David Wilson President Windsor Strategy Partners, LLC Junction, NJ

Committee Chairs

ART COMMITTEE Jeffrey K. Simpson Attorney Gordon, Fournaris & Mammarella, PA Wilmington, DE GOVERNMENT RELATIONS COMMITTEE Jerry Castelloe Principal Castelloe Partners, LLC Charlotte, NC HEALTH CARE COMMITTEE Leo Garneau Chief Marketing Officer, SVP Premier Healthcare Exchange, Inc. Bedminster, NJ INTERNATIONAL COMMITTEE Robert Repke President Global Medical Conexions, Inc. Novato, CA WORKERS’ COMP COMMITTEE Stu Thompson CEO The Builders Group Eagan, MN

*Also serves as Director


The Self-Insurer |

SIIA New Members Regular Corporate Members Terry Madge Managing Partner ACE Benefit Partners Walnut Creek, CA Thomas Partlow Acorn Health Solutions Lafayette, CA Richard Keane Executive Vice President Advance Medical Westwood, MA Michael Birdman President & COO Benovate Minneapolis, MN Gary Burns Director of Stop Loss Underwriting Blue Shield of California Costa Mesa, CA Erwin Padinger Meditar S.A. Rosario, Argentina Martty Martinez President PHARMPIX – OneArk Suite Guaynabo, Puerto Rico Robert Walling III Principal & Consulting Actuary Pinnacle Actuarial Resources Inc. Bloomington, IL

Employer Member Joe Hostetler VP Finance & Administration Kissimmee Utility Authority Kissimmee, FL Nathan Pierce Sr. Manager Business Development St. Luke’s Health Partners Boise, ID

Profile for SIPC

Self insurer sept 2016  

Self insurer sept 2016