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April 2018


The World’s Leading Alternative Risk Transfer Journal Since 1984


SEISMIC SHIFT Disruptive innovation may be coming to a TPA near you as the industry evolves from claims adjudication to more of a strategic role in self-insurance

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

800.800.4007 midlandsmgt.com publicentity@midman.com



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



SEISMIC SHIFT Disruptive innovation may be coming to a TPA near you as the industry evolves from claims adjudication to more of a strategic role in selfinsurance

By Bruce Shutan


Volume 114


Self-Insurance Industry Executives Share Candid Opinions at SIIA Town Hall Event


SIIA Self-Insured Health Plan Executive Forum Attendees Hit the Links SIEF Golf Tournament Results


INSIDE the Beltway: Appeal to DOL on AHP Regulations Continues SIIA’s Two-Decade Effort

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

2018 Self-Insurers’ Publishing Corp. Officers


James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary

Affecting the Future

of Captives Minor changes in 2017 could have lasting affect on the captive industry


RRGs Report Net Income in Third Quarter 2017


Drowning in A Sea of Paper


SIIA Endeavors


Member News

By Karrie Hyatt

April 2018 | The Self-Insurer




Disruptive innovation may be coming to a TPA near you as the industry evolves from claims adjudication to more of a strategic role in self-insurance

nnovation is clearly reshaping the health care landscape. A new year began with news of the blockbuster partnership involving Amazon, Berkshire Hathaway and JPMorgan Chase, which has caused endless speculation about whether it will have the same game-changing impact as online shopping did for brick-and-mortar retailers. The trend is extending to third-party administrators whose role is shifting from health claims payer to strategic partner. The chief beneficiary is their self-insured clientele who increasingly will come to expect more than simple service with a smile. “I think disruption breeds opportunity,” says Dave Reynolds, Sr., president of Capitol Administrators, a Lucent Health subsidiary, who has been a part of the TPA community for slightly more than half his roughly 40-year career in the insurance industry.

Shaking off complacency

Written By Bruce Shutan

The trouble is that as many as 80% of TPAs aren’t doing anything different than their competitors, cautions Vincent Esposito, an executive in the health care arena with a hedge fund background who addressed the topic at SIIA’s national conference in Phoenix last October. “They’re basically a


commoditized service, and they’re not really looking to push the envelope on innovation within health care,” he says. Rather than just adjudicate claims, he suggests TPAs need to help their employer clients actually reduce such claims in the first place by driving better health outcomes if they want to stay relevant. That’s happening, he acknowledges, though not on a wide enough scale.

A sunny forecast Despite concern about complacency across a huge swath of the TPA market, the state of the industry has never been better for several reasons, reports Steve Rasnick, a TPA business pioneer who is president of Self Insured Plans, LLC. One is the Affordable Care Act (ACA), which led most TPAs to sell a lot of minimum essential coverage programs and experience exponential growth in the number of covered lives, “albeit many in the skinny plans,” he says. “Most TPAs have doubled in size since the ACA, and if they haven’t, they should really take a look in the mirror and wonder what they’re doing wrong.”

For example, some TPAs have layered on top of their basic claims-payment function a risk-bearing entity in the form of their own reinsurance company or strategic partnerships with carriers for greater operational efficiency.

Identifying the exact number of TPAs isn’t easy because it depends on how they’re actually defined, according to Rasnick, who says the industry is trying to determine a more accurate measure. An informed estimate places the current number of traditional entities that process medical and dental claims for self-funded single employers at about 200. Another 100 to 150 entities could be added to the mix when counting boutique services such as Section 125, health reimbursement arrangement or Medicare claims specialists.

Another ripe opportunity for innovation and transformative results is on the care management side, he adds. Esposito also has noticed a handful of ancillary, consumerbased technologies erupting in the private market to help support TPAs – from wellness platforms to tracking devices and mobile apps.

An older estimate that someone sent Esposito pegged the number of TPAs as high as 1,000 to 2,000 if virtually every boutique shop is counted, though he notes that about 80% of the business is done by 20% of the TPAs.

The bottom line, according to Esposito, “is any company that’s servicing the health care sector, or at least TPAs, will be technology based.” He says tools of the future will feature a machine learning platform with access to all data and custom-built algorithms that match claims, outcomes, drugs prescribed and doctors seen for predictive modeling.

April 2018 | The Self-Insurer




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TPA performance used to be evaluated based on cost, as well as the accuracy and turn-around time of claims payments, whereas nowadays Rasnick describes the way claims are paid as commoditized, and therefore, “probably the least important of all services that we provide.” Times have certainly changed. Forwardthinking TPAs are investing in infrastructure to bolster every aspect of the claims process and pursue population health strategies to ensure that each health plan member “receives the right treatment at the right time from the right physician who’s doing the right thing,” he observes. The emergence of a four-legged stool model sums up this new dynamic marketplace, Rasnick says. On the clinical side, any meaningful footprint includes keeping patients healthy, as well as evaluating providers based on cost and quality associated with episodes of care vs. mere occurrences. It is supported by investing heavily in technology that manage

claims far better than legacy systems and providing concierge-type customer service. Such efforts may feature attempts to negotiate discounts, as well as help patients interact with their providers and schedule appointments. Determining a better way to interface with health plan members and encourage action will be a cornerstone of success for TPAs that go the extra mile and embrace health care consumerism, Reynolds says. These steps may include reminding them through text messages or other communication channels about doctor visits, taking medicine or filling scripts. The aim is to offer concierge-like service on the member level featuring one-on-one relationships with a nurse practitioner and patient advocacy. He believes these strategies will help drive down claims, especially for the relatively small portion of covered lives who drive most large claims. “The best discount you’re going to get on a claim is one that didn’t happen,” he explains.

Another piece to the puzzle is aggregating the data of small groups to stabilize their volatility and better absorb risk so they can be underwritten as a large group, according to Reynolds. His TPA is doing just that in the cloud and also boasts a huge Medicare databank to help examine claim patterns across that aging population to manage costs and improve health outcomes. Developing better analytical and forecasting tools is expected to help his business stoploss market partners and employer clients conduct a predictive analysis to determine which programs will have the biggest impact.

Competing with BUCAs Some of the biggest TPA disruptors spent enough time in a traditional insurance capacity that they were inspired to take on greater risks. After working for about 30 years on the BUCA (Blues UnitedHealthcare Cigna Aetna) side of the industry, Linnea

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April 2018 | The Self-Insurer



Bentz joined a TPA believing there would be far more opportunities to innovate in that segment. Today she’s a business development executive with Hawaii-Mainland Administrator (HMA), which differentiates itself with integrative technology systems and solutions. The TPA’s more notable services include value-based and reference-based pricing, consolidated invoicing, client-driven teams of concierge account managers, an off-the-shelf pharmacy benefits manager with tiered formularies and heavy presence in the association professional employer organization segment. Other key capabilities include population health management, a customized provider network, internal reporting and compliance function, an information technology system completely built from the ground up and proprietary software. By partnering with a captive solution, HMA can offer self-insurance to small businesses with as few as five covered lives. An ability to trickle that far down the market on a self-funded plan “is why the TPA industry is going to be leading in any health care discussion going forward,” Bentz believes.

Indeed, Rasnick years ago developed products for the small to midsize customers that surrounded him in Naples, Fla., after moving from Chicago where he served large firms such as McDonald’s and Greyhound. That portfolio includes a level-funded plan from 2002 for employers with as few as 15 employees. While roughly 80% of employers with head counts of 200 to 250 people or more selffund, he says the same is true for only about 25% of those with fewer than 100 to 150 lives. “If

I’m a TPA who wants to capture market share, I’m going to go after [that market] because that’s where I believe the carriers are vulnerable,” Rasnick opines. Apart from technology, Esposito believes capital markets will play a role in driving innovation and believes financial instruments with “characteristics better than mortgages” will be used over time to amortize claims and reduce the burden on carriers or reinsurance companies, while also expediting payment to providers. “When you marry financing tools at affordable and digestible rates to different entities, you can change the true risk profile of a group and the way that you do the math in underwriting,” he explains.


The Self-Insurer | www.sipconline.net

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In Delaware, the captive regulators are dedicated exclusively to our captive insurance client’s needs, and work under the direction of our Captive Bureau leadership, directed by Steve Kinion.

MEET Mike Mr. Grillo joined the Bureau of Captive and Financial Insurance Products in November 2014, he currently serves as a Captive Analyst II. Michael earned his Bachelor of Science Degree in Business Management from West Chester University. He currently holds a Certified Retirement Services Professional (CRSP) designation from American Bankers Association Institute of Certified Bankers. Prior to joining the Department of Insurance, Michael worked in the financial services industry for more than 19 years. His background includes trust and estate administration, institutional custody administration and corporate retirement services management.

Michael Grillo Captive Analyst II

Our team has 15 analysts 12 hold Associate in Captive Insurance (ACI) designation. 12 hold the Accredited Financial Examiner (AFE) designation 9 hold the Certified Financial Examiner (CFE) designation 2 are Certified Public Accountants (CPA) STEVE KINION, DIRECTOR Bureau of Captive & Financial Products Department of Insurance

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So what does the future hold for TPAs and their self-insured customers? Esposito predicts a major bifurcation of massive growth with some TPAs and tremendous shifts in market share that favor innovators as more employers transition to a self-funded solution. As part of his vision, TPAs will consolidate as more associations self-fund the health benefits of their members and administrative-services-only (ASOs) contracts continue to gain in popularity. While acknowledging that ASOs occasionally show up on her radar, Bentz notes the potential for conflict of interest when an employer client is contractually bound to use the carrier’s provider network. That ties their hands, she says, when “all they have to do is lease the network to us.” Thus, it could give TPAs a tremendous competitive leg up with independent-minded customers. “Everything that you used to get from your BUCAs, you now get from your TPAs – only you’re paying less for admin,” she concludes. “I don’t think of a TPA as my competitor. I think of the BUCAs as my competitors.” Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for 30 years.



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STOP-LOSS | DISABILITY | DENTAL/VISION | VOLUNTARY | LIFE For current financial ratings of underwriting companies by independent rating agencies, visit our corporate website at www.sunlife.com. For more information about Sun Life products, visit www.sunlife.com/us. Group 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 REV 7-12. In New York, group insurance policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) 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. Š 2017 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. BRAD-6503f SLPC 28097 02/17 (exp. 02/19)

Affecting the Future

of Captives Minor changes in 2017 could have lasting affect on the captive industry


hile 2017 was not a year of upheaval in the captive industry, there were many issues—small or tangential—that will have an enduring effect on captives. The PATH Act, major cyber security incidents, a decision in the Avhrami case, and last, but not least, the end-of-the-year tax reform all touched the captive marketplace and could impact the future of captives.

State of the Marketplace

Written By Karrie Hyatt

Captive numbers continued to grow in the U.S. in 2017 and are forecasted to increase further in 2018, despite the lingering softmarket. While most captive domiciles are reporting gains in captive numbers, captives formed at a slower rate than in 2015 and 2016. With numbers reported by the beginning of last month, North Carolina led formations with 124. Utah, Delaware, and Montana also had a strong showing with 63, 53 and 42 captives formed, respectively. These numbers were driven by large numbers of cell captive formations, an area in which these domiciles lead. Vermont is still the largest captive domicile in the U.S. with 566 active captives, despite having slightly fewer captives at the end of 2017.


Last year, eight domiciles updated their captive law—Arkansas, Delaware, Georgia, Illinois, Montana, Tennessee, Texas, and Vermont. For the first time in several years, no new state entered the captive domicile arena. In 2018, so far four domiciles are looking to or have already updated their captive law—Georgia, Kansas, South Carolina, and Vermont—with several more likely to follow. Vermont tweaks its captive law nearly every year, part of the reason that it still leads the captive industry.

PATH Act and Notice 2016-66

the IRS was still bearing down on 831(b) captives in the form of Notice 2016-66—in which the IRS labeled them as “transactions of interest” and sought to require additional financial disclosures—and by again naming the subsector to its annual “Dirty Dozen” list. The PATH Act made provisions for inflationary increases and as of January 1, 2018 the IRS, as part of its annual adjustments for inflation, increased the premium limit for Section 831(b) by $100,000 to $2.3 million. As of March, there has been no follow-up to Notice 201666, as the IRS is likely still processing the data it received from 831(b) captives last spring. When the IRS does follow-up, it could prove disruptive to the subsector. Notice 2016-66 stated that the IRS in conjunction with the Treasury Department will decide one of three things after reviewing the requested data: that 831(b) transactions will be removed from “the transactions of interest category in published guidance,” will be designated a “listed transaction”—a tax avoidance scam, or it will be listed as a “new category of reportable transaction.” If either of the second two decisions comes down, it could mean a huge change in management and regulation of 831(b) captives.

The large numbers of cell captives formed last year could have been influenced by the change to the limit of net written premiums for companies using the 831(b) tax option. On January 1, 2017, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) went into effect. The law created tax relief benefits for businesses and families, but it also made changes to the tax code regarding the 831(b) option. The PATH Act increased the premium limit to $2.2 million, from $1.2 million, and requires captives electing the tax option to meet a “Diversification Requirement” in the ownership structure. Ostensibly, the PATH Act should help to stem many of abuses the Internal Revenue Service has accused 831(b) captives of committing, while also allowing small captives to grow. However, even as the PATH Act went into effect,

April 2018 | The Self-Insurer



Cyber Threats 2017 brought cyber attacks to the forefront of the world’s attention, as well as the need for cyber security programs and cyber liability insurance. A large-scale ransomware attack on May 17 affected computer systems worldwide. When the threat was dealt with, many businesses found themselves woefully underinsured against that attack or any kind of cyber attack. In the 2017 North America Cyber Risk Transfer Comparison Report released last year, sponsored by Aon Risk Solutions and independently conducted by Ponemon Institute LLC, most companies fear a cyber


attack yet the uptake of cyber-related insurance is still well below property, plant and equipment (PP&E) coverage. The findings indicate that companies believe information assets to be slightly higher in value than PP&E, but information assets are underinsured by comparison. More than half the respondents surveyed believed that security threats will increase in the coming years, yet companies are still slow to get adequate coverage. Reasons for not purchasing liability coverage is cost, availability, and too many restrictions/exclusions. All reasons that make captives look like the perfect alternative to traditional insurance for insuring cyber liability.

The Self-Insurer | www.sipconline.net

On the other side of the coin, early in 2017, the New York Department of Financial Security (NYDFS) began requiring all NYDFS-regulated entities—including banks, insurance companies, and other financial institutions—to file a Certification of Compliance with NYDFS’ Cybersecurity Regulations office on an annual basis starting February 2018. Companies that are exempted have fewer than ten employees, have less than $5 million in gross revenue, or have less than $10 million in year-end total assets. Most small captives will not be affected by this requirement. Using the NYDFS’s requirements as a model, the NAIC Cybersecurity (EX) Working Group made adjustments to the draft of their own model law that had been in development since 2016. The Data Security Model law is intended to help state insurance departments regulate cyber security. On the whole, it won’t affect very many captives, but it does require risk retention groups to be subject to the regulation. The Cybersecurity Working Group approved the sixth version of the model law last summer and has forwarded it up the committee chain for further approval. It will be several years before the model law is approved and adopted by NAIC member states.

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Avhrami Decision

Tax Law

Last August, the United States Tax Court released its decision in the case of Avrahami v. Commissioner, a highly anticipated decision regarding captive insurance companies electing to use Section 831(b) of the U.S. Tax Code. The captive industry had long-awaited this decision to set case law for the regulation and management of 831(b) captives.

The much-anticipated Tax Cuts and Jobs Act of 2017 was signed into law by President Trump in December. The new law will benefit captives as to their investment income but might make forming a captive less appealing.

The Avrahami case revolved around Arizona small business owners Benyamin and Orna Avrahami and their St. Kitts-domiciled captive, Feedback. The Internal Revenue Service considered Feedback’s tax filings as a “micro captive” as invalid and issued a notice of deficiency for nearly $2.5 million in taxes and penalties for taxes filed in 2009 and 2010. The judge in the case found that Feedback did not qualify as an insurance company and was not eligible for the 831(b) election.

In a “Captive Thought Leader Video” made for Captive.com, Bruce Wright, partner with Eversheds Sutherland (US), said that the increased reserve discount and decreased tax rate could reduce the benefit of having a captive. The reduced tax benefits will be something that shows up in the cost-benefit feasibility study that is performed prior to establishing a captive. In some cases, companies may decide that captive insurance is not for them, but industry experts believe that there won’t be a large downturn in captive formations as none of the other benefits of owning a captive will be diminished.

Because the decision focused narrowly on Feedback’s unique situation, it has not caused any sweeping changes to case law regarding these types of captives. On the whole, the industry was pleased with the decision, but many were concerned that it could strengthen the IRS’s position that captives opting for the 831(b) designation are using it as a tax dodge.

While the primary focus of a captive is about self-insuring risk, no one can deny the added benefit of reduced taxes, especially for small and medium-sized captives. Industry insiders are not expecting to see any established and well-functioning captive retire, but there might be a downturn in the number of captives forming.

Looking Forward Captives electing the 831(b) tax option were, again, the most controversial sector of the industry in 2017 and, until some guidance is released by the IRS, will continue to be in the line of fire. This, and the reduced tax benefits that come as a result of the Tax Cuts and Jobs Act, might have the effect of reducing small captive formations this year. Nevertheless, the non-tax-related benefits of captives continues to expand.

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.

Advocates for the captive industry were quick to advise small captives to revisit their pooling arrangements to be sure that their risk distribution is being used correctly. Since the decision, some small captives have closed shop. However, small captives, primarily cell captives, are still being formed in large numbers. Over the next year, there will likely be more small captives closing down or restructuring as a result of the decision.


The Self-Insurer | www.sipconline.net

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Self-Insurance Industry Executives Share Candid Opinions at SIIA Town Hall Event


undreds of self-insurance industry executives participated in a first of its kind “Town Hall” session held as part of the SIIA Self-Insured Health Plan Executive Forum that took place last month in Charleston SC, and many interesting opinions were shared. These opinions were solicited and collected anonymously in real time via audience polling technology in response to a series of industry and association-related questions presented by SIIA President & CEO Mike Ferguson. And while clearly non-scientific, these responses collectively provide a glimpse into who make up the self-insurance industry and what the thinking is about timely issues, opportunities and concerns. Participation was roughly evenly divided between TPAs, stop-loss carriers/MGUs and vendors. There was significant industry experience in the room, with 77% of respondents indicating at least of decade of experience, and many of them have no plans of finishing up their careers any time soon – more than half saying that retirement is at least 15 years away, if ever. In terms of political affiliation, the breakdown was 61% Republican, 17% Independent, 13% Democrat, 5% Libertarian and 3% Other.


The Self-Insurer | www.sipconline.net

With these basic audience demographics established, the questions turned to a variety of industry matters and were presented to the group at a rapid pace with aggregated answers displaying in real time on two large screens in the front of the room. As expected, some polling results were more interesting than others and we’ll highlight several them as part of this recap article. Despite the amount of general uncertainty in the health care marketplace today, the audience was overwhelmingly optimistic about the future of the self-insurance industry, with 93% saying they viewed it as very or mostly positive over the next three to five years. That optimism is tempered a bit over a longer time horizon, with 84% expressing optimism six to 10 years in the future. When asked about how the Affordable Care Act (ACA) has affected their business, 63% said that it had a “mostly positive” or “somewhat positive” effect on their business. Another 23% responded that their businesses had been negatively impacted by the health care law, with 15% reporting no impact. With those responses noted, the audience was split roughly even on whether they would like to see the law repealed and replaced.

the minimum number of employees a company should have in order to be a viable candidate for self-insurance and 10 was the leading answer, followed by 15, 25 and 50. In a somewhat surprising result, 52% of respondents indicated that they believed there are “partially self-insured” health plans. The group was divided on whether minimum essential coverage (MEC) plans are good or bad for the industry, as well as on the same question relating to level-funded plans. When asked about which strategies/approaches had the greatest potential to achieve significant health plan cost savings, participant engagement narrowly beat out PPO alternatives as the top choice, 34% to 32%. Specialty drug management was chosen by 18% of the audience. Conversely, domestic and international travel were identified as strategies/approaches least likely to achieve significant health plan cost savings, with 69% of the audience picking one or both of these answers. There were several polling questions related to reference based pricing, given that this continues to be a major topic of discussion within the industry. In somewhat contradictory answers 60% said they do not think RBP could be harmful to the industry, yet in the next question that asked “How RBP could be harmful to the industry,” 60% identified balance billing. Hospital/facility access was another top concern with a 31% responses.

The group was presented with an open-ended question asking their opinion on

April 2018 | The Self-Insurer


Large majorities predicted that providers will push for new RBP regulation and that SIIA should defend against such regulation. In response to the last RBP question, 76% of respondents answered “yes” when asked if SIIA should collaborate with the provider community in an attempt to establish commonly accepted RBP arrangements.

Turning attention to stop-loss carrier/MGU business practices, the vote was closely split on whether MGUs are less likely to pay claims versus direct carriers. More than three quarters of the audience believed an “incurred date” is better than “paid date” when considering the eligible stop-loss reimbursement claims.

Slightly more than half the audience indicated they were involved with stop-loss captive programs. And when asked about their predictions of potential market growth over the next three years, the consensus was that there would be moderate growth, with that option receiving 64% of the vote.

There’s been a lot of attention about recent DOL actions intended to create federallyregulated self-insured association health plans so the group was asked how they assessed what AHP market would look like should such structures become viable. Nearly half the audience predicted the AHP market place would be “large and growing,” while a third of respondents expected “moderate formation activity” with limited growth potential. Just over 10 percent assessed minimal interest.

When asked about the future of TPAs and potential existential threats, government regulation edged out BUCO competition, 67% to 65% (audience could choose multiple answers). Technology upgrade requirements and succession planning challenges were also identified as threats by many in the audience.


Capital Group Principals at Work.

In a related question, slightly more than half of the respondents said that SIIA should prioritize its advocacy efforts to promote necessary AHP regulatory changes.

Another 29% believe this should be a “moderate” SIIA priority. About one of five in attendance expressed that this should be a low priority or had no opinion. The last round of questions centered on SIIA activities and initiatives. To begin with, attendees were asked whether they would like to return to the Belmond Charleston Place Hotel and the answer was a resounding “yes,” with nearly nine in 10 saying they would like to be back. Then attendees were polled on other cities they would like SIIA to consider, with the top responses including Nashville, Chicago, New Orleans and San Diego. Since SIIA offers many membership services, the association wanted to know what services were valued the most, so attendees had the opportunity to choose all response options that they considered valuable. Nearly 100 percent chose conferences/ networking events, with 70% picking federal government relations and 59% saying state government relations was an important service.

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September 2017

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The Self-Insurer | www.sipconline.net

Looking forward, SIIA is considering to develop on-line educational content. Nearly twothirds responded that they would be “very interested” in this initiative, with about one third of respondents saying that they were “somewhat interested” in this potential service offering. Circling back to earlier questions related to industry experience and potential retirements, SIIA has been exploring strategies to encourage younger member involvement so the audience was asked their views on the relative importance of this initiative and the response was pretty clear with 76% viewing this a “very important” and another 13% saying it is “somewhat important.” The final polling question was simple – should SIIA repeat this interactive format at future live events and the answer was clear, with 93% of attendees saying that the association should do so. Watch for future announcements in this regard. SIIA members can request the detailed Town Hall polling question responses by contacting Amy Troiano at atroiano@siia.org

April 2018 | The Self-Insurer


SIIA Self-Insured Health Plan Executive Forum Attendees Hit the Links SIEF Golf Tournament Results


riginally established as 501(c)(3) organization affiliated with the Self-Insurance Institute of America, Inc. (SIIA), SIEF has had a vital role in supporting the self-insurance and alternative risk transfer industry for more than 20 years. The foundation’s mission is to raise the awareness and understanding of self-insurance among the business community, policymakers, consumers, the media and other interested parties, and has been modernized in way to provide more direct value to those currently involved in the industry. The foundation is governed by a board of directors comprised of well-known industry leaders including: Nigel Wallbank Chairma Heidi Leenay President Freda Bacon Director Les Boughner Director Alex Giordano Director 22

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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.


The SIEF Board would like to thank the participants in their always popular golf tournament, held in conjunction with SIIA’s Self-Insured Health Plan Executive Forum at RiverTowne Country Club.

The SIEF Board would like to thank and congratulate the winners:

Winning Team: Les Boughner, Mark Jacobs, Simon Kilpatrick, & Mark Sims

Closest to Pin 1st - Jim Haidet

Winning Team

Longest Drive 1st - Sherri Tetachuk

They would also like to thank the sponsors: Considine & Associates HealthClaim Solutions ELMC Holdings, LLC HealthJoy Hines & Associates, Inc. Springbuk

RiverTowne Country Club


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the Beltway written by Dave Kirby

Appeal to DOL on AHP Regulations Continues SIIA’s Two-Decade Effort


wenty-one years ago Larry Thompson worked with SIIA leaders on draft federal legislation to enable association health plans (AHP) under ERISA. That 1997 bill was passed by the House of Representatives but foundered in the Senate, and through the years similar frustrating results occurred twice more. “This is one of the longest-pursued issues in SIIA’s history along with defense of ERISA protection of self-insurance,” observes Thompson, a former SIIA president who now serves as chairman of the Government Relations Committee. He is founder of Inventavis, provider of strategic guidance to members of the health plan industry. 26

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Fast forward to last month when Thompson saw a majority of SIIA members attending a “Town Hall” meeting at the Self-Insured Health Plan Executive Forum in Charleston SC support the organization’s continuing pursuit of federal regulations that would allow AHPs to operate nationally. “It was a good idea twenty-one years ago and it still is,” Thompson says. Last fall a Presidential Executive Order directed federal agencies to guide formation of fully-insured and self-insured AHPs serving employer groups and self-employed individuals that would be able to expand affordable employee health plans in multiple states.

“Today’s challenge is a little different,” Thompson says. “It is possible that operating under the federal agencies, AHP regulations could be more favorable to our industry than under any of the earlier congressional bills.”

parties on its potential issuance of a “class exemption” that would exempt self-insured MEWAs from the non-solvency requirements of state MEWA laws. SIIA’s formal comments provided on March 5 reflected its belief that the exemption offers a more reasonable – and appropriate – way of regulating self-insured MEWAs through a uniform set of federal requirements that would govern AHPs’ provision of employee health coverage in multiple states. “In reviewing the approximately 700 comments the DOL received, it is apparent that smaller employers are universally in favor of the DOL exemption and the traditional insurance industry opposes it,” Thompson said. “Depending on how the issue plays out, there may arise the necessity of broad grassroots activism to demonstrate support of AHPs as a beneficial tool of smaller businesses.” States have taken various approaches to MEWA regulation. California, for example, has banned formation of new ones. (That’s particularly irritating to Thompson, a longtime Californian.) A total of 23 states have more or less stringent regulations for the groups, and other states are considering regulatory action. “We don’t know whether the federal agencies will include their decision on a class exemption along with the basic AHP regulations, or will take up those separately,” Thompson said. “A lot will depend on how that works out.”

The wild card, of course, is that AHPs would be seen by individual state regulators as multiple employer welfare arrangements (MEWA) which have been viewed skeptically in some states. With various levels of complexity, state MEWA regulations are a patchwork of rules that would be impossible for any AHP to follow. Acknowledging this reality, the DOL recently asked for comments from interested


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SIIA’s formal comments to the DOL on issuance of a class exemption remain available at www.siia.org. In summary, SIIA’s request to issue the exemption to provide national uniformity were based on these points:

• Self-insured MEWAs offer quality and affordable coverage; • Such an exemption will promote healthcare choice and competition; • A class exemption will not put at risk the appropriate regulatory oversight of self-insured MEWAs.

• State financial reserve and contribution requirements will continue to apply;

• Self-insured MEWAs already provide adequate consumer protections. SIIA also advised that actuarial soundness and underwriting practices should be put in place in developing the Request for Information (RFI) that is a precursor to a potential future rule-making process and can influence final AHP regulations. Further comments or questions are invited by Ryan Work, SIIA Vice President of Federal Government Relations, at rwork@siia.org.

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April 2018 | The Self-Insurer


RRGs Report Net Income in Third Quarter 2017 This article originally appeared in Demotech’s “Analysis of Risk Retention Groups – Third Quarter 2017” Written By Douglas A. Powell, Senior Financial Analyst, Demotech, Inc.


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

Balance Sheet Analysis Since third quarter 2016, cash and invested assets (2 percent), total admitted assets (2.5 percent), and policyholders’ surplus (2.5 percent) have increased modestly while liabilities increased 2.5 percent. These reported results indicate that RRGs remain adequately capitalized in aggregate and are able to remain solvent if faced with adverse economic


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conditions or increased losses. The level of policyholders’ surplus becomes increasingly important in times of difficult economic conditions by allowing an insurer to remain solvent when facing uncertain economic conditions.

In evaluating individual RRGs, Demotech, Inc. prefers companies to report leverage of less than 300 percent. Leverage for all RRGs combined, as measured by total liabilities to policyholders’ surplus, for third quarter 2017 was 151 percent. The loss and LAE reserves to policyholders’ surplus ratio for third quarter 2017 was 103.4 percent. The higher the ratio of loss reserves to surplus, the more an insurer’s stability is dependent on having and maintaining reserve adequacy.

Liquidity, as measured by liabilities to cash and invested assets, for third quarter 2017 was 68.4 percent. A value less than 100 percent is considered favorable as it indicates that there was more than a dollar of net liquid assets for each dollar of total liabilities.

Regarding RRGs collectively, the ratios pertaining to the balance sheet appear to be appropriate and conservative.

Loss and loss adjustment expense (LAE) reserves represent the total reserves for unpaid losses and LAE. This includes reserves for any incurred but not reported losses as well as supplemental reserves established by the company. The cash and invested assets to loss and LAE reserves ratio measures liquidity in terms of the carried reserves. The cash and invested assets to loss and LAE reserves ratio for third quarter 2017 was 213.5 percent. These results indicate that RRGs remain conservative in terms of liquidity.

fo r

S er v

ice O rganiz a

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The DPW to policyholders’ surplus ratio for RRGs collectively through third quarter 2017 was 76.2 percent. The NPW to policyholders’ surplus ratio for RRGs through third quarter 2017 was 45.6 percent. Please note that these ratios have been adjusted to reflect projected annual DPW and NPW based on third quarter results. An insurer’s DPW to surplus ratio is indicative of its policyholders’ surplus leverage on a direct basis, without consideration for the effect of reinsurance. An insurer’s NPW to surplus ratio is indicative of its policyholders’ surplus leverage on a net basis. An insurer relying heavily on reinsurance will have a large disparity in these two ratios.

O rga ic e




RRGs collectively reported nearly $2.8 billion of direct premium written (DPW) through third quarter 2017, an increase of 3.5 percent over third quarter 2016. RRGs reported nearly $1.7 billion of net premium written (NPW) through third quarter 2017, an increase of approximately 1 percent over third quarter 2016.



Since RRGs are restricted to liability coverage, they tend to insure medical providers, product manufacturers, law enforcement officials, and contractors, as well as other professional industries.

nizati on s


Premium Written Analysis



April 2018 | The Self-Insurer


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

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Income Statement Analysis RRGs collectively reported a $9.8 million underwriting loss through third quarter 2017. However, RRGs collectively reported a net investment gain of nearly $210 million and a net income of $173.5 million. Also of note, RRGs have collectively reported a net income at each year-end since 1996. The loss ratio for RRGs collectively, as measured by losses and loss adjustment expenses incurred to net premiums earned, through third quarter 2017 was 74.7 percent. This ratio is a measure of an insurer’s underlying profitability on its book of business. The expense ratio, as measured by other underwriting expenses incurred to net premiums written, through third quarter 2017 was 19.9 percent. This ratio measures an insurer’s operational efficiency in underwriting its book of business.

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

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The combined ratio, loss ratio plus expense ratio, through third quarter 2017 was 94.6 percent. This ratio measures an insurer’s overall underwriting profitability. A combined ratio of less than 100 percent typically indicates an underwriting profit.

Douglas A Powell is a Senior Financial Analyst at Demotech, Inc. Mr. Powell supports the formulation and assignment of Financial Stability Ratings® by providing analysis of statutory financial statements and business information. He also performs financial and operational and peer group analyses, as well as benchmark studies for client companies. Email your questions or comments to dpowell@demotech.com.

Regarding RRGs collectively, the ratios pertaining to income statement analysis appear to be appropriate. Moreover, these ratios have remained within a profitable range.

Conclusions Based on Third Quarter 2017 Results Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialized coverage to their insureds. The financial ratios calculated based on the reported results of RRGs appear to be reasonable, keeping in mind that it is typical and expected that insurers’ financial ratios tend to fluctuate over time.

For more information about Demotech visit www.demotech.com.

The results of RRGs indicate that these specialty insurers continue to exhibit financial stability. It is important to note again that while RRGs have reported net income, they have also continued to maintain adequate loss reserves while increasing premium written year over year. RRGs continue to exhibit a great deal of financial stability.

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Drowning in A Sea of Paper Written By: Tim Callender, Esq.


he challenges of setting up and administering an employer-sponsored, self-funded health plan are many. One of the largest challenges a self-funded plan sponsor faces is reconciling the vast number of documents that make a self-funded health plan “go.” When navigated correctly, these challenges yield immense results in terms of rich benefit delivery within a fiscally responsible health plan mechanism. Still, challenges remain and should be discussed openly so that we can continue to grow and strengthen our industry. The task of reconciling governing documents is challenging for anyone, but it can be an especially daunting job for any plan-sponsor, broker/consultant, or interested party mostly familiar with the fully insured platform. In that relatively simple world, everything “goes” with minimal paperwork – at least in the front of the house – but, this simplicity comes at a significant cost and with a significant lack of control and customization. Clearly, for most employers that really look into the options, self-funding is the way to go. But, if you want to play in the self-insured world and reap the significant financial benefits of the self-funded model – get ready to read, re-read, audit, reconcile, and review more paperwork than a forensic accountant scouring financial records written in invisible ink. 34

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In the interest of staging the optics for this brief piece, let me be incredibly clear that I am 10,000% a believer that self-funding is the best model to deliver rich and affordable health benefits, and the success of the self-funded industry is a personal goal and passion of mine. I am a firm believer that all stakeholders in the self-funded space are vital for the success of this model. The comments made herein are not meant to demonize any one player, nor am I out to state that any particular stakeholder causes more complication than anyone else. Rather, I hope that through an honest, and a little self-critical conversation (laced with humor), we can identify some brutal truths regarding our great industry so that we can continue to work together for the betterment of selffunding, as a whole! To approach this in an organized fashion, let’s make a list of some of the array of paperwork needed for a self-funded health plan to fully function (at least the top documents most commonly involved). From there, we can explore one or two examples that reflect “problem areas,” and/or bullet points that we should all think about when reflecting on these documents. Not all problems will be (or should be) explored in this article, but, hopefully, this conversation gets the wheels turning


and points us toward improvements and solutions. Governing Plan Document / Summary Plan Description – This is the cornerstone of every self-funded health plan. Without a governing plan document, you have…. Well… a nebulous concept of a health plan devoid of any defining rules or benefit structure, with all the details living in someone’s head and likely spread across a series of emails and meeting notes! Good luck with a government audit on that one! Items that could be “problem areas” include:

• Does the plan document contain benefit carve outs that fly in the face of a network contract?

• Is the plan document written before the current plan year is even over? • Was the plan document compared to the relevant stop-loss policy to look for coverage / reimbursement gaps? Summary of Benefits and Coverage (SBC) – Thank you Affordable Care Act! As we all know, health insurance is confusing and saturated with paperwork. Well, thankfully the ACA saw fit to “simplify” health coverage by requiring, yes, you guessed it, more paperwork! Better hope your SBC lines up with your SPD or you might be SOL with the DOL while listening to OPP in the LBC.

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Items that could be “problem areas” include:

• Do the benefit examples in the SBC actually match up with the intended benefits of the plan document (what if a plan member relies on the SBC for benefits and the plan document has not been fully written/issued yet…?)

• Was the benefit structure of the Plan fully finalized before issuing pre-enrollment SBCs (in other words, how many people have pushed SBCs out, just to “get them done,” while recognizing that the benefit structure of the plan document is likely to change by the time it is finalized?).

PBM Agreement – And then, let’s add drugs. No, I don’t mean “let’s add drugs” in the context of a 1970s Grateful Dead, San Francisco acid test – rather, and as if it’s not confusing enough, let’s take a completely separate entity, bring them to the party to assist with a plan’s Rx benefits, and then, in the frantic insanity that is a 60 hour work week, hope that we all read over the PBM agreement to see if it lines up with the intent of our health plan and that the language in the plan document echoes that same alignment – oh, and maybe stop-loss to? Items that could be a “problem area” include:

• Is there a clear alignment in the contracting (and the plan document!) regarding which entity might handle / administer claims and appeals for particular Rx benefits? – Has the language in the plan document, as required by the PBM, been reconciled with the Plan’s stop-loss policy, network agreement, and/or SBC?

Network Agreement – Where to start…? Items that could be “problem areas” include:

• How many parties are expected to be bound by a particular network agreement?

• Are there inconsistencies in how particular benefits should be paid as laid out between the network agreement and a plan’s governing plan document?

• Is the Plan administering a reference-based pricing program, and, if so, have network obligations been taken into account?

• Have all vendor contracts, and their roles, as related to the administration of a plan, been reconciled against the roles and responsibilities of the plan, as laid out in the network contract?

• Are there inconsistent medical management criteria as laid out between the plan document, the network contract, the PBM contract, and other documents?

April 2018 | The Self-Insurer


Items that could be “problem areas” include:

• Who is the named fiduciary outside of the Plan Sponsor (are there others – are there shared duties – are there fiduciary inconsistencies between the ASA, the plan document and the various vendor contracts involved?)

• Are all vendors mentioned and/ or properly referenced within the ASA?

• Does the ASA properly outline a

• Are the benefit payment timelines (and appeal timelines), as between the plan document and the Network Agreement, cogent so as to assure the Plan is not losing a network discount or risking a prompt-payment Network Agreement breach term?

Stop-Loss Policy / Agreement – Too often we see material variances in the wording of definitions and exclusions, as between plan documents and stop-loss policies. To state the obvious, this can create significant coverage gaps, manifesting in reimbursement denials that are not necessarily invalid. Common discrepancies include a disconnect in a “medical necessity” definition or an “experimental and investigational” definition. Additionally, what about notice provisions? While not directly related to a misalignment between plan document and stop-loss terms, this concept can create havoc when a plansponsor does not pay especially close attention to the notice requirements present in a stoploss contract. More specifically, does the contract require the sponsor to provide notice to the carrier any time the Plan modifies benefits? If so, and if the Plan fails to do so, a significant (and likely valid) coverage gap may exist. Items that could be “problem areas” include:

• Pretty much everything I’ve written above, plus this one, often forgotten gem: gaps that might exist between a plan document and an employer-sponsor’s employee handbook, related to leave of absence provisions, which may lead to eligibility issues and subsequent reimbursement denials at the stop-loss level. Administrative Services Agreement (typically with a TPA or a carrier on its ASO platform) – This document can tend to be the “unifier” or the “great divider.” So many solutions and pieces that make up a self-funded plan all fall together in the ASA. This document is key. I’ll say it again, KEY.


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scope of duties and responsibilities in a way that mirrors the intent of the Plan and as reflected in all other governing plan documents?

Employee / Employer Handbooks – This one just splashed onto the scene in a pretty incredible way over the past year or so. Items that could be “problem areas” include:

• As discussed above, have the handbook, plan document, and stop-loss policy been “bounced together” to assure there are no issues that might result in valid reimbursement denials?

• Leave of absence provisions and plan document eligibility provisions… Plan Amendments – I had a dream once, about a Plan that had not had its plan document restated in 8 years, and, during that time, the Plan Sponsor had amended the plan 16 times. All amendments existed as separate documents, referencing one another from time to time, and, oftentimes, referencing various vendors that no longer worked for the Plan. Then, the Plan Sponsor came to me and hired me in November to restate the plan for a January 1 kick off. I woke up screaming. That kept me up at night.

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Notifications (of material modification; open enrollment; HIPAA privacy notifications; etc.) – While many of these may not need to line up with a plan’s specific benefit grid, network alignment, or the definition of “maximum allowable,” you can easily see how a bit more paperwork, directly impacting the member’s understanding of a plan, can be cumbersome and can easily cause confusion if not handled carefully, especially when bundled into an envelope (or email) containing a plan document and an SBC! Miscellaneous Vendor Contracts – Take everything discussed above and add in a few more. Time to turn up the volume!

Tim serves as the Vice President of Sales and Marketing for The Phia Group, LLC. Prior to his current role, Tim served as a health care lawyer, staff attorney and lead PACE counsel for The Phia Group. Tim received his Bachelor’s Degree from The College of Idaho, prior to obtaining his Law Degree from The University of San Diego School of Law. Tim operates out of The Phia Group’s office in Boise, Idaho.

All the above is enough to strike fear into the heart of the most diligent and thorough paper pushing accountants, advisors, and attorneys. But, it is the price of admission and a piece of our business that we should be aware of and work through carefully. As a best practice, every Plan Sponsor should engage in expert gap reviews of all documents and should do so on a routine basis. To conclude, and hopefully provide some closure and definition to my thoughts, I will leave you with this: our industry is complicated. There is no denying it. Let’s acknowledge it, be willing to criticize it, and even be willing to poke fun at it. But, at the end of the day, let’s recognize that our industry – our platform – is the best. So, we owe it to each other, as stakeholders in this space, to work hard to accomplish the goal of aligning the documents that govern the administration of a self-funded health plan. Should the first and foremost guardian of this alignment be the Plan Sponsor? Absolutely – and with expert guidance! We are all in this together and should strive to achieve harmony in a Plan’s governing documents, wherever possible, together. All boats rise.



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IIA’s Annual Self-Insured Workers’ Compensation Executive Forum, May 15-17th at the Belmond Charleston Place in Charleston, South Carolina is the country’s premier association sponsored conference dedicated exclusively to self-insured Workers’ Compensation. In addition to a strong educational program focusing on such topics as excess insurance and risk management strategies, this event will offer tremendous networking opportunities that are specifically designed to help you strengthen your business relationships within the selfinsured/alternative risk transfer industry. The conference will kick off with a First Time Attendee Meet N Greet. This informal gathering is a great way to meet SIIA’s Workers’ Compensation volunteer leaders and network with other first-time attendees. Find out everything you need to know to make the most of your time during the conference.


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A medical stop loss grand slam. A trusted business name. A stellar balance sheet. An executive team with 30 years of experience. Creative, tailored solutions. Berkshire Hathaway Specialty Insurance is proud to bring our exceptional strength, experience and market commitment to the medical stop loss arena.

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Educational session highlights include:

WC Conference 101: What I Wish I Would Have Known with Kristina Brooks, President/ CEO of Innovative Insurance Solutions LLC, Sally Pace, CEO of Connect Healthcare Collaboration, LLC and Mike Zucco, Business Development of AL Trucking Association Fund As you start your path at the conference, don’t miss this session to lay your foundation. You’ll hear from newcomers and seasoned veterans alike on what they wish they had known as they began this journey. We’ll cover the basics of what to look for when launching a workers’ comp program, along with how to get the most out of the sessions to help set you up for success.

How to Effectively Use a Captive for Change in Your Self-Insured Program with Courtney Claflin, Executive Director of University of California’s Captive, Fiat Lux

Conference Kick-Off with Mark Pew, Senior Vice President of PRIUM In order to set the stage for the collaborative and inclusive learning environment expected at this conference, we’ll kickoff the event with an interactive session. Separated into small group tables moderated by SIIA Work Comp committee members and facilitated by Mark Pew, learning relationships will be established to ensure what is discussed by the subsequent speakers will be relevant and actionable. Assuming that small group members are from different industries and even have different perspectives, we will use outlines of the coming content to stoke the fires of what the takeaways could be.

The Future of Workers’ Compensation Starting Backwards with Michael Morris, Administrator/CEO of HomeBuilders SIF The consistent constitutional attacks on the grand bargain of numerous state workers’ compensation systems appear to be on the rise. Several publications, including one from the federal government, have cited the 1970 National Commission on State Workmen’s Compensation Laws created by Congress as establishing 84 recommendations, including 19 essential recommendations. These 19 essential recommendations are being presented as a benchmark for state workers’ comp systems. What are these recommendations? Do employers agree that they are a fair benchmark? How does your state compare to other states and the benchmark?”

Have you ever wondered if you should form a Captive? Or if you have a Captive, are you maximizing it’s benefits and opportunities it may afford you? Courtney Claflin, Executive Director of the University of California’s Captive, Fiat Lux, will present a Captive primer that will provide a background on the formation and use of Captive’s for selfinsured’s. He will also present a case study of how the University effectively used their Captive to re-engineer their risk financing model, produce cost savings, and expand and provide new coverages to one of the largest higher education systems in the country.


The Self-Insurer | www.sipconline.net








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20 Years of a Construction SIG with Stu Thompson, CEO of The Builders Group From startup to growth to decline to prosperity. What lessons were learned so you may avoid them and the characteristics of a successful SIG are the takeaways from this session. This session will highlight the 20 years The Builders Group of Minnesota - a construction SIG - has been in business. From its modest beginning to explosive growth to overcoming the Great Recession to a financially strong SIG. Highlights will include the importance of a strong Board of Directors, dealing with regulators, the need for professional investment policy oversight, the importance of outside vendors, and the value of getting involved with a professional organization.

Addiction to Pain: A Journey Out with Fernando Branco, M.D., Chief Medical Officer of Midwest Employers Casualty Company, Becky Curtis of Take Courage Coaching and Alice Fleenor, Coach at Take Courage Coaching The search for relief from incapacitating pain takes many down a road that ends in a swamp of misery. We throw money at the problem with limited positive effect. Physicians have been blamed for the over-prescription of opioids, often justified, but they use the common tools at their disposal. The pharmaceutical industry realizes significant profit margins from these medications. Are they the bad guys? Bottom line is that we want solutions for our health issues and they provide one type of solution, that’s their business. What can we do to control the situation? This session will focus on one road out of that swamp. We have a challenge in our modern world – the culture of victimhood is pervasive.

Why a Good Telemedicine Solution Can Positively Impact Your WC Program with Elisha Krempetz, Vice President of Concentra Have you wondered what telemedicine/telehealth is and why you should include it as another tool in your program? In this informative session, you will find out that it is, what you need to look for in a good solution, what an employer has to do to make a telemedicine solution successful and the key things make for easy billing/reporting/measuring outcomes.

Using Data to Drive Outcomes with J.J. Schmidt of York Risk Services Most organizations are awash in data. But for many, data remains an untapped resource. Predictive analytics – extracting information from a variety of data sources and using it to identify patterns that indicate trends and predict future outcomes -- create the opportunity for employers and risk managers to

• Reduce claim durations and claims costs;

• Improve care and outcomes for injured workers;

• Guild accountability into the organizations claims management program;

• Quantify the value of predictive analytics for claims programs;

• Create strategies to manage risk better in the future to drive organization success


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“The most significant advancement regarding true cost containment we’ve seen in years.” - President, Group Captive Member Company

“EmCap has allowed us to take far more control of our health insurance costs than can be done in the fully insured market.” - President, Group Captive Member Company

“With EmCap, our company has been able to control pricing volatility that we would have faced with traditional Stop Loss.” - HR Executive, Group Captive Member Company

People are talking about Medical Stop Loss Group Captive solutions from Berkley Accident and Health. Our innovative EmCap® program can help employers with self-funded employee health plans to enjoy greater transparency, control, and stability. Let’s discuss how we can help your clients reach their goals. 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.

Stop Loss | Group Captives | Managed Care | Specialty Accident ©2017 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved. BAH AD2017-09 7/17


Catastrophic Case Management with Michael Choo, MD, Chief Medical Officer at Paradigm Outcomes and Kevin Confetti, Deputy Chief Risk Officer of the University of California Although the most costly, catastrophic cases can be the easiest to manage because the nature of the injury lends to the tendency to just say “yes”. But are you saying “yes” to the right things? How do you know? What information and analysis are you using to substantiate saying “yes”? Kevin Confetti, Deputy Chief Risk Officer of the University of California, will present a case study of the Catastrophic Case Management Program the University uses through Paradigm Outcomes. Through the use of actual case examples, learn how the University has utilized this program to produce excellent outcomes in the management of their catastrophic injuries.

The Not-To-Be Missed Wrap-Up with Mark Pew, Senior Vice President of PRIUM At the end of the conference, we’ll reconvene the small groups from the kickoff and talk about what was indeed learned from the content and any action items that can be shared. It will be a summation of what has occurred throughout the event. For more conference information, including registration and hotel information, please visit www.siia.org.

First 90 Days Starting with Safety with Shelly Brotzge, CPCU, ARM-P, CWCC, Senior Client Advisor - Group Self Insurance at Midwest Employers Casualty Whether it’s filling a position vacated by a former employee or expanding staff for a growing organization, bringing a new employee into the workplace presents safety and workers’ compensation challenges that must be addressed from the first days on the job. The workforce will continue to change as current staff retire and new workers come in to the workforce. Technology will affect how job tasks are performed prompting opportunities for new and existing workers. The one thing that will not change is the need to keep workers safe from work-related injuries and illness. To be effective, safety must be addressed early, often, and become part of the organization’s culture.


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Koehler LLC

At Symetra, we strive to reduce the complex, the confusing and the complicated. In other words, we ...

eliminate the noise As one of the nation’s first stop loss carriers, we bring a level of expertise and plan design flexibility most carriers can’t match. We’re known for writing clear, user-friendly policies that mirror the plan document and for following through on our promises, paying claims on, or ahead of, schedule—even the large and catastrophic ones. It’s all part of our goal to ensure there are no surprises, no gotchas, no noise.

Learn more at symetra.com/eliminatethenoise.

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. Symetra Life Insurance Company, not a licensed insurer in New York, is the parent company of First Symetra National Life Insurance Company of New York. Each company is responsible for its own financial obligations. Fourteen 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-6280



from SIIA



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.


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Member FDIC






Connect to a smarter HSA We make HSAs so easy that choosing the right partner is exceedingly simple. As your partner, we provide you with the healthcare solutions, products and customer service you need to reach your goals.


HSAs + Payments + Card Solutions

Berkley Accident and Health

Diamond Members Sun Life Launches an Exciting New Partnership with Collective Health Sun Life launched an exciting new partnership with Collective Health, an innovative healthcare technology company with an advanced digital workforce health management system designed for employers who self-fund their employee health plans. Collective Health and Sun Life will offer employers a seamless experience by integrating stop-loss insurance into the platform and collaborating on data analytics to provide employers with more opportunity to manage risk and keep healthcare costs down, and give employees a better healthcare experience. Industry data show 60 percent of workers in the U.S. are covered by self-funded medical plans. More employers are continuing to convert from fully insured plans. The Sun Life/ Collective Health partnership is a major step toward bringing this growing sector innovative ways to administer their employee benefits, effectively manage risk, drive down costs, and maintain the protection of stop-loss for high-dollar claims. Learn more at sunlife.com.

Appoints Edward Murphy as Regional Sales Manager Berkley Accident and Health, a Berkley Company®, has appointed Edward Murphy as Regional Sales Manager for its rapidly growing Stop Loss business. In his new role, Ed will be responsible for business development and existing relationships in the upper Midwest region of Illinois, Indiana, Ohio, and Wisconsin. “Ed brings knowledge of both the Stop Loss business and TPA operations to Berkley Accident and Health, and we are excited to have him join our team,” said Christopher Brown, President and CEO. “Ed’s background will directly benefit our distribution partners and policyholders, as they navigate the increasingly complex world of employee benefits,” continued Brown.


A N D R E D E F I N I N G H O W C O M PA N I E S PAY F O R A N D A C C E S S H E A LT H C A R E ELAP Services is a leading healthcare solution for selffunded employers across the U.S., offering unparalleled cost savings and advocacy services. ELAP’s services, which encompass plan design, claims auditing, member advocacy and legal defense, emphasize collaboration and strengthen partnerships. ELAP builds meaningful connections with employers, members, and hospitals and health systems, to ensure a fair price for quality healthcare. ELAPSERVICES.COM 610-321-1030


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Prior to joining Berkley Accident and Health, Ed held successful sales and leadership positions at two national third-party administrators (TPAs), where he made longlasting connections in the Midwest area. He was also responsible for claims and customer service at a large managed care organization. This diverse background has made Ed highly skilled at uncovering clients’ needs and customizing the right solutions to best meet those needs. Ed Murphy will be based out of the company’s Chicago, IL office. About Berkley Accident and Health Berkley Accident and Health is a member company of W. R. Berkley Corporation, a Fortune 500® company. Berkley Accident and Health provides an innovative portfolio of accident and health insurance products. It offers four categories of products: Employer Stop Loss, Group Captive, Managed Care (including HMO Reinsurance and Provider Excess), and Specialty Accident. The company underwrites Stop Loss coverage through Berkley Life and Health Insurance Company, rated A+ (Superior) by A.M. Best.

on the growth of Milliman’s stop-loss management and employee benefits businesses. Prior to Milliman, Khoja spent 13 years with Mercer Health and Benefits as a principal and actuary, most recently serving as Central Market Stop Loss Center of Excellence leader and an employee benefits consultant to a range of mid-market employers. Khoja is a frequent conference speaker on stop-loss marketplace issues and the author of multiple industry survey reports. “I could not be more pleased to have Mehb join MRM’s leadership team,” said MRM Chairman Mike McLean. “Mehb’s impressive background is deeply rooted in understanding both the client and carrier sides of the medical stop-loss equation. His expertise will be especially valuable to MRM clients in today’s fluid healthcare environment as employers continue to look for solutions to help them efficiently manage employee benefit costs.” Khoja received a Bachelor of Arts in actuarial science and finance from the University of Illinois at Urbana-Champaign. He is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. Symetra Financial Corporation acquired Medical Risk Managers, Inc., in May 2007. MRM operates independently of Symetra’s stop-loss business, underwriting self-funded business for multiple partners. Medical stop-loss insurance coverage helps protect employers that selfinsure their employee benefit plans against large, potentially catastrophic claims.

Mehb Khoja Named President of Medical Risk Managers, Inc. Symetra Financial Corporation today announced the appointment of Mehb Khoja as president of Medical Risk Managers, Inc. (MRM), a managing general underwriting and consulting firm specializing in medical stop-loss insurance and a wholly owned subsidiary of Symetra. Khoja will be responsible for the strategic and operational management of the South Windsor, Connecticut-based company. He succeeds Thomas Doran, who departed MRM last year. Khoja brings an extensive background as a healthcare actuary and management consultant to his new role, joining MRM from Milliman in Chicago, where he focused April 2018 | The Self-Insurer


About Medical Risk Managers

Silver Members

Medical Risk Managers, Inc. is a full-service managing general underwriting and consulting firm that specializes in group stop-loss insurance. Founded in 1984, the South Windsor, Connecticut-based company provides clients with underwriting, actuarial, stop-loss claim adjudication, network evaluation, accounting support and strategy consulting. For more information, visit www.mrm-mgu.com.

Professional Benefits Administrators (PBA) Has Opening for Proven Sales Professional

About Symetra Symetra Financial Corporation is a diversified financial services company based in Bellevue, Washington. In business since 1957, Symetra provides employee benefits, annuities and life insurance through a national network of benefit consultants, financial institutions, and independent agents and advisors. For more information, visit www.symetra.com.


Job description: Sales Executive Position Summary Professional Benefits Administrators (PBA) is looking for a proven outside sales professional to take our growth to the next level. Interested candidates should possess 8-10 years of sales experience within the Employee Benefits ecosystem, with the ability to quickly impact PBA’s growth by identifying new broker prospects and closing third-party administrator agreements with C-level executives interested in the many benefits of PBA’s core service offerings. The ideal candidate is a disciplined self-starter; possesses a “just get ‘er done “spirit; as well as the desire to develop, maintain, and grow relationships with clientele. We are looking for a proven “hunter” that is hungry to make a difference. Responsibilities include prospecting targeted brokers that meet PBA’s qualification criteria and then aligning with key decision makers within those brokers to endorse the PBA value proposition,

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collaboratively negotiate agreements and close contracts with the broker’s individual clients. Responsibilities

• Be able to quickly understand if a client agreement is not going to happen, be able to walk away and move on to another qualified broker

• Identify qualified broker prospects

• Record and track agreement sign-

• Generate and/or qualify sales leads

ing milestones to ensure projects are completed in a timely manner

within geographic territory

• Win over brokers to gain access to their clients

• Build trustful relationships with brokers to pitch benefits of PBA to their own business, as well as the benefits of TPA to their clients

• Present PBA value prop, educate clients and negotiate terms for agreements, and getting to contract closure in a timely manner to meet quarterly revenue goals

Skills and Knowledge Qualifications

• 8-10+ years of experience in channel selling within the Employee Benefits ecosystem

• Must have reliable transportation • Proven track record of closing deals by following a disciplined sales process, including a commitment to prospecting, qualifying, discovering client needs, handling objections and the confidence to ask for the order

• Possess an entrepreneurial spirit and the desire to develop, maintain, and grow relationships with clientele

• Experience using Salesforce.com, as well as MSFT Office and other business software

• A sense of urgency, a no-nonsense focus on results, and the ability to work remotely and independently

• Proven ability and personal presence to converse with and persuade stakeholders at all levels of management, including C-suite executives

• Strong business acumen with the ability to understand economic impacts and ROI

April 2018 | The Self-Insurer


• Capacity to interact and communicate effectively with internal resources and executives

• A proven ability to handle complexity • Effective listening skills, ensuring the sales prospects needs are clearly understood and they are a match for the program

• Ability to effectively work under tight deadlines and manage projects independently • Resourcefulness in solving problems • Excellent people skills and an upbeat and enthusiastic attitude • Interested candidates can e-mail resumes to jobs@pbaclaims.com

Additionally, PBA promises three things to all employees:

• employee investment • work-life balance • growth opportunities With experience dating back to 1985, PBA has dedicated our growth and success to our outstanding team and core values: Trust, Commitment, Team Work, Communication, and Integrity. We are privately owned and here to stay. Come join the PBA team and be an exciting addition to our innovation and success! Visit www.pbaclaims.com.

About PBA Based in Oakbrook, Illinois, Professional Benefits Administrators (PBA), is one of the leading third-party administrators in the industry. Simply put, we specialize in managing our clients benefits and claims so they can manage their business! Our driving force is to empower our customers to navigate the complex healthcare system and exceed their expectations.

Gold Members Zurich Insurance again named one of the Top Companies for Executive Women by the National Association for Female Executives Zurich Insurance has been named one of the 2018 Top Companies for Executive Women by the National Association for Female Executives (NAFE). The award recognizes American corporations where women have significant clout to make the decisions that affect their company’s future and its bottom line. It’s the third consecutive year Zurich has earned this honor.

“We are honored to again be recognized by NAFE as a top company for executive women. Zurich believes having a diverse workforce drives better outcomes, inspiring confidence in our employees and our customers to help them reach their full potential,” said Kathleen Savio, CEO of Zurich North America.


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The NAFE survey tracks and examines how many employees have access to programs and policies that promote advancement of women and how many employees take advantage of them, plus how companies train managers to help women advance. “NAFE’s annual scrutiny of women’s progress at American companies offers essential data about the movement of women into top leadership in the private sector,” said Betty Spence, president of NAFE. “In this first year of having five NAFE Top Companies with boards of 50% or more women, we point to a synergy between the greater presence of women on the board and an increase in the number of winning companies with women CEOs and with 50%-plus women in the C-suite (10 companies).” Zurich has a robust employee resource group for women called the Women’s Innovation Network or WIN. This group

plays a critical role in the development and engagement of women with more than 1,800 members in North America. WIN provides a professional network for inspiration, development and connection to colleagues across Zurich and has more than 5,000 members in 15 countries. Zurich also was selected by Working Mother magazine as one of the 100 Best Companies from 2014 through 2017. About the Methodology The 2018 NAFE Top Companies application includes some 200 questions on female representation at all levels, especially the corporate officer and profit-and-loss ranks. The vetting process includes tracking access and usage of programs and policies that promote the advancement of women as well as the training and accountability of managers in relation to the number of women who advance. In order to be eligible for the NAFE Top Companies survey, entrants must have a minimum of 1,000 employees, two women

on the Board of Directors and be a public or private company. NAFE also separately names the Top 10 companies in the nonprofit sector. The full report on this year’s winners is online here. About Zurich Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 53,000 employees, it provides a wide range of property and casualty, and life insurance products and services in more than 210 countries and territories. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.

At Meritain Health, we are your Advocates for Healthier Living. We strive to help our members

health and well-being.

visit www.meritain.com.

April 2018 | The Self-Insurer


In North America, Zurich is a leading commercial property-casualty insurance provider serving the global corporate, large corporate, middle market, specialties and programs sectors through the individual member companies of Zurich in North America, including Zurich American Insurance Company. Life insurance and disability coverage issued in the United States in all states except New York is issued by Zurich American Life Insurance Company, an Illinois domestic life insurance company. In New York, life insurance and disability coverage is issued by Zurich American Life Insurance Company of New York, a New York domestic life insurance company. For more information about the products and services it offers and people Zurich employs around the world go to www.zurichna.com. 2012 marked Zurich’s 100-year anniversary of insuring America and the success of its customers, shareholders and employees.

About NAFE The National Association for Female Executives (NAFE), founded in 1972, serves 20,000 members nationwide with networking, tools and solutions to strengthen and grow their careers and businesses. Working Mother magazine publishes the annual NAFE Top Companies list. NAFE.com provides up-to-date information, a community for women in business, and access to member benefits. NAFE is a division of Working Mother Media, owned by the Bonnier Corporation.

Clinical Intelligence OneArk® Suite is a state-of-the-art pharmacy benefit platform

that enhances the whole process for PBM, TPA, health plans and employer groups letting you take control of your pharmacy benefit.

Our sophisticated platform helps you prevent claim errors at the source; increasing your long term profitability. Experience the benefits of clinical controls. Discover our platform today.

Core Services Available: Claims Adjudication Platform

Rebate Management

Retail Network

Schedule your live demo at sales@onearksuite.com For more information visit onearksuite.com

Take a look at our tour dates and discover why we are revolutionizing the PBM industry.


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BOSTON, MASSACHUSSETS AMCP Annual Conference April 23-26 | Booth #237

SCOTTSDALE, ARIZONA NCPDP Conference May 7-9 | Booth # 202

AUSTIN, TEXAS SIIA Conference September 23-26

Crafted for confidence.

At the heart of a smart business decision is the integrity of the transaction. With HM Insurance Group, you can count on the consistent delivery of coverage that is designed to protect financial wellbeing. You can rely on our responsiveness so you can focus on your business goals. And you can be confident in the quality of protection that has expert risk evaluation, financial stability and market knowledge at its core. Make connections and learn more about our people and products at hmig.com

STOP LOSS MTG-3059 (5/17)



Chairman of the Board* Robert A. Clemente CEO Specialty Cace Management LLC Lahaska, PA

Nigel Wallbank Chairman Heidi Leenay President

President/CEO Mike Ferguson SIIA, Simpsonville, SC

Freda Bacon Director

Chairman Elect*

Les Boughner Director

Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA

Alex Giordano Director

Treasurer and Corporate Secretary* David Wilson President Windsor Strategy Partners, LLC Princeton, NJ

Directors Joseph Antonell CEO/Principal A&M International Health Plans Miami, FL Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA Mary Catherine Person President HealthSCOPE Benefits, Inc. Little Rock, AR Kevin Seelman Senior Vice President Lockton Dunning Benefit Company Dallas, TX

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

HEALTH CARE COMMITTEE Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem, NC

Robert Tierney President StarLine East Falmouth, MA

INTERNATIONAL COMMITTEE Robert J. Repke President Passport For Health Novato, CA

Committee Chairs

WORKERS’ COMP COMMITTEE Mike Zucco Business Development AL Trucking Association Fund Montgomery, AL

CAPTIVE INSURANCE COMMITTEE Michael P. Madden Division Senior Vice President Artex Risk Solutions, Inc. San Francisco, CA GOVERNMENT RELATIONS COMMITTEE Lawrence Thompson CEO BSI Fresno, CA

*Also serves as Director


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high expectations


enhanced capabilities


peace of mind

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

SIIA New Members Regular Corporate Members Bruce Holley Partner Accent Insurance Atlanta, GA Linda Jones Corp Secretary Advance Benefit Management Systems USA, Inc. Charleston, SC Jennifer Wilson CEO ARMSRx Windermere, FL Chason Ishii President Atlas Insurance Agency, Inc. Honolulu, HI Rob Thorn Vice President, Sales AWPRx Longwood, FL Kevin Doherty Attorney Dickinson Wright PLLC Nashville, TN Cynthia Chow Marketing Manager Insurity Hartford, CT Kathy Scira Managing Director, CEO Jasper Consulting Services Inc. San Antonio, TX


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Cheryl Tolbert President & CEO Louisiana Business Group on Health Baton Rouge, LA Steve Berna Pharmacy Actuary Remedy Analytics Milwaukee, WI LG Hanzel Principal & Vice President, Busine Development RxResults Little Rock, AR Alexa Gates Event Marketing Manager Springbuk Indianapolis, IN Lisa Chapman National Account Representative Therapy Direct Chattanooga, TN Shelley Harrison Boston, MA

Employer Corporate Members Evan Umphress Sales Manager - Account Management IUHP Indianapolis, IN Ted Rafferty Human Resources Director Optimed Health Partners Kalamazoo, MI

Better Service. Better Performance.

Experience Zelis Healthcare.

Network Analytics & Design

Claims Cost Management

ePayments & Compliance

Zelis Healthcare is a healthcare information technology company that provides solutions which address pre-payment to payment needs across the claims life cycle.

Find out what Fully Integrated Healthcare Cost Management can do for you! Visit us at Zelis.com Copyright 2017 Zelis Healthcare. All rights reserved.

Zelis Healthcare Proudly Welcomes EthiCare Advisors into Our Team of Cost Management Specialists

The EthiCare acquisition further enhances Zelis’ ability to deliver better service and better performance as we help payers maximize savings on healthcare claims.

EXPERIENCE ZELIS HEALTHCARE and see what fully integrated cost & payment management can do for you. Contact Zelis Healthcare Today. zelis.com

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Self-Insurer April 2018  

Self-Insurer April 2018