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Reference-Based Pricing


Amid closely watched litigation over fair market hospital pricing, alternative methods emerge as a more precise and less adversarial approach for self-insured health plans

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Table of contents


W W W. S I P C O N L I N E . N E T

FEATURES 4 Reference-Based Pricing Under Fire Amid closely watched litigation over fair market hospital pricing, alternative methods emerge as a more precise and less adversarial approach for self-insured health plans By Bruce Shutan

Captives, Parent Companies, State Regulators, and Taxes

12 Captives, Parent Companies, State Regulators, and Taxes

By Karrie Hyatt

ARTICLES 18 ACA, HIPAA and Federal Health Benefit Mandates The Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates 22



News from siia members

The Modernization of Health Savings

Accounts 29 SIEF scholarship

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC). Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681,(888) 394-5688

Self-Insurer’s Publishing Corp.

PUBLISHING DIRECTOR Erica Massey, SENIOR EDITOR Gretchen Grote, CONTRIBUTING EDITOR Mike Ferguson, DIRECTOR OF OPERATIONS Justin Miller, DIRECTOR OF ADVERTISING Shane Byars, EDITORIAL ADVISORS Bruce Shutan and Karrie Hyatt, 2018 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman, Erica M. Massey, President, Lynne Bolduc, Esq. Secretary




Reference-Based Pricing


Amid closely watched litigation over fair market hospital pricing, alternative methods emerge as a more precise and less adversarial approach for self-insured health plans WRITTEN BY BRUCE SHUTAN


hat’s a fair market price for various hospital services? Reference-based pricing (RBP) has long sought to answer that proverbial $64,000 question – and seriously slash balance bills on behalf of self-insured health plan participants. Legal battles have been intensifying, particularly within the past year. Critics charge that the strategy is too adversarial and a shakedown of the hospital chargemaster to procure below-market rates that appear to be both unreasonable and arbitrary. Proponents see it as a necessary tactic to wrest control of prices that vary widely from one market to the next and pad hospital coffers to a point where profit trumps patient outcomes.



Reference-Based Pricing Under Fire

“Some of the larger hospital systems in certain markets are getting much more sophisticated in their challenge to reference-based pricing,” observes Scott Bennett, an attorney with Sixprints LLC who specializes in RBP cases. That strategy includes rejecting some forms of RBP or requiring upfront payment of as much as 50% if a patient’s insurance cannot be verified. These hospitals may balance bill immediately or refuse access to Scott Bennett services. To combat these actions, he says many selffunded groups are considering ways they can be more transparent and identify what the plan covers on the front end of the process.

High-profile litigation During 2018, eight notable federal RBP lawsuits emerged in Oregon, California, Colorado, Nebraska, Utah and Florida involving a dozen significant challenges that included disputes over pricing methodologies, plan language, access to services and balance billing just to name a few of the key issues. Several of them were settled or remanded back to state court, while Bennett says the number of hospitals filing lawsuits has not increased within that timeframe. Also, a recent Supreme Court case in Texas involving a hospital lien held that contract payments involving Medicare multipliers and other accepted payments could be evidence of reasonable, fair market value. Cases often will start with a discovery battle that Bennett says the employer or patient gain significant leverage if the court rules that a hospital has to disclose contractual information and chargemaster details. This gives “an impression that the court is not interested in just applying the chargemaster rate as the benchmark,” he adds. One common type of lawsuit involves an alleged breach of signed patient contracts stipulating payment terms on a hospital admission form, while another involves an action taken against the health plan under ERISA. Bennett says it could be argued that hospitals are receiving surprise reference payments “because they’re expecting an out-of-network payment to be something they can negotiate.” But even if it’s out of network, he notes that payers counter that it must be reasonable and consider balance billing the patient an abusive collection tactic.

Mindful of the leverage fully-insured groups have in negotiating hospital prices, some self-funded groups enlist the services of RBP experts. These specialists can help draft a reasonable agreement, manage costly out-ofnetwork billing, and provide patient advocacy or support. RBP litigation reflects the fact that “self-funded employers aren’t willing to jump back into the fully-insured contracts,” Bennett explains.

New RBP clearinghouse It’s difficult to estimate the number of self-insured employers nationwide that have adopted RBP or track its growth in the absence of a trade organization that deals exclusively with this topic, according to Steve Kelly, co-founder and CEO of ELAP Services, which has been embroiled in RBP lawsuits during the past 11 years. His firm’s RBP expertise business typically grows about 20% to 30% year-over-year as the number of ELAP competitors also has swelled. A new website seeks to measure and examine the RBP phenomenon by acting as an information clearinghouse. RBPricing.com’s mission is to educate the marketplace on this increasingly popular strategy, reports Lester J. Morales, CEO of Next Impact, LLC, an HR and benefits marketing and consulting firm, who was instrumental in its launch. One motivation was the industry’s lack of understanding about the subject matter as the self-insured community transitions from a tire-kicking stage to more sophisticated and widespread use of




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Reference-Based Pricing Under Fire RBP. There also was nowhere to consume agnostic information about the topic, he adds.

RBP has gained considerable traction in recent years because it’s straightforward, simple and provides cost savings at upwards of 30%, observes Merrit Quarum, M.D., CEO of WellRithms. He says another reason is preferred provider networks are failing to provide enough savings or guard against high costs and don’t have the same leverage they once did 10 to 15 years ago. There also are significant regional differences between networks, providers and payers. His colleague, John Hennessy, SVP of business development for WellRithms, believes a pure Medicare multiple can be arbitrary and not necessarily a fair

“We market price. “Facilities are pushing back wanted because it doesn’t meet that definition to make a ‘safe’ forum for of reasonable and customary” pricing, he people, employers and advisers reports. best possible solution, of course, is for payers and to gather intelligence, resources, The providers to avoid a lengthy dispute or costly jury trial. One way to find a reasonable middle ground is through etc., around RBP,” Morales says, Lester Morales

John Hennessy

noting that the approach can save selffunded plans an estimated more than 15% on their health care spend.

rapid dispute resolution, according to Hennessy. He cites as an example the use of arbitration in New Jersey and Texas in “allowing self-insurance to opt into that system” as an early first step to quickly resolving disagreements.

The reason RBP has become more widespread is because self-insured employers “don’t understand what they’re paying” for hospital services, according to Kelly, whose company started a website called the Employer Bill of Rights. “If there can be a dialogue between the employer community and provider community, good things will happen,” he explains.

Apart from the obvious need for more transparency, Hennessy says stop-loss carriers that are “getting clobbered in the network deals” recognize that RBP is an alternative and are starting to price these services.

RBP strategies have surpassed firstmover status, but are still well short of reaching critical mass in movement, observes Ray West, chief growth officer of Maestro Health. Roughly 85% of the new groups his firm has sold have adopted a full RBR strategy that doesn’t include a PPO network or defined discounted network layer. He says PPOs have “put hospitals and providers in a position where the only way they can give you a discount is if they increase the prices.”

Alternative approaches

Merrit Quarum

When used across the board, a simple multiplier can be very useful for underwriting, Quarum adds, but it’s not a good reference for a reasonable or expected price, nor is it defensible. Rather than using a Medicare multiplier, his company employs methodologies associated with the legal principle of quantum meruit to reasonable costs based on what providers generally receive for their services. After pursuing this approach in the workers’ comp area for 20 years, he recently began applying it to the group health side for self-insured employer customers.

Moving to dispute resolution and arbitration worked wonders in work comp, Quarum notes, adding that “the evidentiary standards are already in place with respect to what that would look like, so the groundwork has already been laid” for applying it to RBP.



Reference-Based Pricing Under Fire WellRithms recently consulted for National Public Radio and Kaiser Health News on a collaborative “Bill of The Month” series, opining on a reasonable price for medical services the father of a young family in Austin, Texas would be expected to pay. The hospital involved decided to drastically reduce his balance bill to only about $300 from nearly $109,000. “We don’t believe we made this happen,” Hennessy admits, “but we believe our collaborative approach, working with others to shed some light on the inequities in the original bill, was a part of the change that took place.” There are a number of factors that determine fair payments, the largest actuarial base being Medicare reimbursements, according to West. With the Centers for Medicare and Medicaid Services last year reporting a number of hospitals and facilities having profitable operations from Medicare payments, he says “it’s becoming increasingly difficult for them to say they can’t make a profit, especially when they have to report to Medicare every year their cost-to-charge ratios.” Maestro’s RBP approach includes a strong dose of preventive medicine that it considers less adversarial and more collaborative. This fair-market reimbursement model pre-negotiates with hospitals, audits medical bills, increases plan transparency and empowers employees with the resources needed to better understand their cost and quality option tools, as well as access telemedicine advice and decision support. It also paves the way for direct contracting and bundled pricing for employers with promises of a 20% to 30% drop in overall costs on average.



The aim is to help consumers understand hospital charges as well as how to access care, communicate with their doctor and deal with balance bills. As part of their education, employees enjoy freedom of choice without narrow networks.

“It’s not just about post-bill,” West says. Ray West It’s about pre-education and interaction with the doctor upfront to make sure that they have an exposure to the way that the plan works.” ELAP uses a Medicare-plus reimbursement multiplier, which Kelly considers a good starting point, as well as a cost-plus approach and line-by-line analysis of itemized bills – ultimately paying the higher of those two. Kelly describes it as an “evenhanded methodology” that’s friendlier to providers. But occasionally there’s a legal challenge. Hospitals have accused ELAP of designing plans for underpayment and misrepresenting its strategies to employers, which stand accused of violating their fiduciary duty under ERISA. These lawsuits are often dismissed at summary judgment or settled out of court because hospitals are reluctant to endure the painful and revealing legal discovery process. The company faced, and won, its first jury trial about midway through 2018 in Colorado. Jurors were sympathetic to ELAP’s argument on the relative value of medical services and validity of an admissions agreement, slashing a $230,000 hospital bill down to about $700. “We think that employers have a right to their day in court,” Kelly opines. “If we think they’re being charged unfairly, we will stand shoulder-to-shoulder with them and take it to court.” In the closely watched case of Centura Health in Colorado, a jury found that hospital charges were ambiguous. Bennett, who describes getting a jury trial as “a great strategic move on ELAP’s part,” predicts that it will lead to changes in documentation, with more transparent chargemaster rates referenced on hospital admission forms.

Nefarious pattern Since RBP nearly always applies only to out-of-network providers, “the plan has to take into consideration whether or not they’re imposing an undue burden on the member,” explains Mark Flores, an ERISA claim appeal and compliance specialist who co-founded Avym Corp.

Reference-Based Pricing Under Fire He says self-insured employers have a fiduciary duty to disclose ahead of time to their health plan members any limited fee schedule for certain procedures or services. That arrangement also must be evenly integrated across the board without discriminating against any members, while provisions that changed have to be properly ratified and executed into the plan documents. He cites a Department of Labor action against Macy’s for failing to do just that with RBP provisions in the department store’s health benefits plan.

His firm, which ensures that doctors, hospitals and employer plan claims are properly adjudicated and paid when claims are filed to self-insured plans, has seen a nefarious pattern in the marketplace. A payer, for example, might agree to only half of an out-of-network doctor bill for $200, citing RBP as the reason. The third-party administrator then would inform the self-insured employer that they saved them $100, then “invoice the plan for 30% of $100 savings on that balance between the $100 payment and $200 bill charge,” according to Flores.

“Guess how many TPAs or consultants are willing to implement reference-based pricing on a flat fee structure?” he asks rhetorically. “Very few, if any. Why are they going to bother doing it? It’s not their money. It’s the plan’s money.



Reference-Based Pricing Under Fire

They’re telling the plan we’re saving you money, but the ‘savings’ is being shifted to the patient responsibility. They have an inherent conflict of interest to try and generate as much savings fees as possible, even if it means saddling the patient with improper liabilities or exposing the plan to costly litigation.”

West offers another prediction: greater movement toward value-based care and direct contracting. He lauds the Oklahoma Surgery Center’s bundledfacilities model for guaranteeing quality, removing multiple bills and tackling recidivism. Such arrangements are “best deployed for highly definable engagements like knee-replacement surgeries,” he says.

It behooves these assorted vendors and/or TPAs to have out-of-network doctors charging $300 or $400 per procedure “because they’re now going to charge a savings fee based on that billed charge,” Flores says. He predicts a “tsunami, of lawsuits” against plan administrators for allowing TPAs to inflate claims and misrepresent facts in breach of their fiduciary duties.

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

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Captives, Parent Companies, State Regulators, and Taxes


wo recent actions between states and non-admitted captive insurers could have long range impact on how captives and their insureds are taxed.

This summer saw two newsworthy cases involving captives in states on opposite sides of the U.S. First came the cease-and-desist order from Washington’s insurance commissioner against Cypress Insurance Company, a pure captive owned by Microsoft Corporation. The commissioner accused Cypress of operating in Washington illegally and slapped them with a $2 million bill in unpaid taxes and penalty fees. In July, the New Jersey Tax Court decided against Johnson & Johnson’s request for a refund of $55 million in self-procurement taxes that they claimed they overpaid after the New Jersey legislature amended the state’s tax law in 2011.



Captives, Parent Companies, State Regulators, and Taxes Washington Insurance Commissioner vs. Cypress Insurance Co.

On May 9, 2018, Washington state insurance commissioner, Mike Kreidler, issued a cease-and-desist order to Cypress Insurance Company, a pure captive owned by Microsoft Corporation, requiring that Cypress stop selling insurance to its parent company. Microsoft is based out of Redmond, Washington, while Cypress is domiciled in and regulated by Arizona. Formed in 2008, the captive has been providing insurance coverage for Microsoft since that time and had not registered as a nonadmitted insurer in Washington.

The cease-and-desist order established that Cypress had not paid any premium tax on written policies, was not eligible to sell insurance in Washington, and had not place insurance through a fronting company licensed to issue insurance policies in the state. The commissioner also requested $1.4 million in unpaid premium taxes—based on the 2% premium tax charged by Washington for non-admitted insurers—as well as more than $600,000 in penalties and interest.

In early July, Microsoft announced that it had secured a Washington licensed surplus line broker for Cypress policies and going forward would rely on their fronting carrier to pay premium taxes. On August 9, Cypress submitted a “Demand for Hearing” to the Office of the Commissioner.

not in the business of “making contracts of insurance” as it only insures one party and that business consists of reinsuring Microsoft’s global risks. Third, Washington does not have the authority to regulate or tax insurance contracts made outside its borders. Fourth, if the insurance commissioner has the power to tax premiums, then it must exclude premiums related to risks outside its jurisdiction. Quickly following the “Demand for Hearing,” the Commissioner announced on August 13, that Cypress had come to a settlement agreement with the insurance commissioner’s office. The cease-and-desist order was lifted, and Cypress Insurance Company agreed to pay $573,905 in unpaid premium taxes and $302,915 in penalties and interest—a considerable reduction from the over $2 million the state originally said the company owed.

In the document requesting a hearing, the attorney for Cypress made four arguments. First, Washington cannot regulate self-insurance as it has been decided by the Washington Supreme Court that it is not insurance. Second, Cypress is



Captives, Parent Companies, State Regulators, and Taxes Unfortunately for the captive industry, since the issue was settled out of court the specific details of the settlement will not be known. However, two points to take away are the fact that Cypress was not registered as a nonadmitted insurance company in the state of Washington and also did not use a fronting company. This is a large oversight on the part of the captive.

The second point is that Washington is one of the few states that does not have a direct procurement, or selfprocurement, tax requirement. Selfprocurement taxes are levied by states when a company purchases insurance from an insurer not licensed or registered in the state. Had Washington had selfprocurement tax law on the books, this situation might have been avoided.

Commissioner Kreidler was pleased with the settlement agreement and announced in a press release that the state would be looking further into other captive insurance arrangements in the state.



Johnson & Johnson vs. New Jersey

In 2015, Johnson & Johnson, a multinational corporation headquartered in New Brunswick, New Jersey, requested from the New Jersey insurance commissioner a $55 million refund for over-payment of self-procurement taxes. Since 2008, Johnson & Johnson has been paying self-procurement taxes to the state of New Jersey for the policies underwritten by Middlesex Assurance, their captive insurance company. Middlesex Assurance was formed in 1994 in Bermuda and is currently domiciled in Vermont and only covers risk for Johnson & Johnson.

Between 2008 and 2011, Johnson & Johnson paid self-procurement tax only on risks that were based in New Jersey. After the federal Non-admitted and Reinsurance Reform Act (NRRA) was passed in 2010, the New Jersey legislature updated their tax law to better align with NRRA requirements regarding surplus lines insurance. They began requiring self-procurement taxes on all risk that a company has coverage for, regardless of where that risk is located. Between 2011 and 2015, when Johnson & Johnson first brought up the issue, the company paid self-procurement taxes on all risk insured through Middlesex, not just for the risk within the state. Congress passed the Non-admitted and Reinsurance Reform Act as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which went into effect in January 2011. The NRRA states that only an insured’s Home State


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Captives, Parent Companies, State Regulators, and Taxes may require the payment of premium tax for non-admitted insurance. NRRA defines an insured’s Home State as the “insured’s principal place of business,” and if the insured has business in several states, the Home State would be considered the state in which the most premium is allocated. The Home State has no obligation to share tax revenue with any other state in which the insured has risk that is covered by their insurance policy.

tax refund was based on the assumption that the NRRA was meant to apply only to surplus lines and reinsurance, not self-procurement insurance. They also claimed that the legislative changes made by the New Jersey legislature in 2011 altered the requirements for surplus lines insurance and did not apply to the original law regarding self-procurement tax.

Congress’s intent as regards to including captive insurers in the NRRA was not explicit. Since the legislation was enacted, there has been debate among captive professionals and regulators as to whether captives should fall under the NRRA’s purview.

On June 15 of this year, the Tax Court of New Jersey decided in favor of Director Ficara’s original decision. The court’s decision was founded on two issues. The first was that it was Congress’s intention to apply the NRRA to captive insurers. The second was that the legislation passed in New Jersey in 2011—based on the NRRA— was meant to include self-procurement tax with the changes to the surplus lines insurance requirements, even though the law is not explicit.

In 2015, Johnson & Johnson applied to the New Jersey Department of Insurance for a refund on their self-procurement taxes claiming that they had overpaid their self-procurement taxes since 2011, when New Jersey updated their tax law. Johnson & Johnson’s argument for a


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The director of the New Jersey Division of Taxation, John Ficara, denied the refund claim based on the opinion that non-admitted insurance, as defined by NRRA, includes surplus lines insurance as well as self-procurement. Johnson & Johnson then took the matter to court.

Captives, Parent Companies, State Regulators, and Taxes

While members of Congress have said that the NRRA was not meant to apply to captives, as Johnson & Johnson argued, the law is not specific regarding captives. According to the New Jersey Tax Court’s decision based on NRRA’s Home State Rule definition, nonadmitted insurance includes both surplus lines insurance and captives in that one is placed through a surplus lines broker and the other is placed directly with a non-admitted insurer.

The decision handed down by the New Jersey Tax Court is the first major decision regarding the NRRA and captives. Until this time, there had been no precedent for how states were to proceed in applying NRRA to captive insurance companies. This case will likely be turned into case law for future similar cases. The decision also supports the NRRA’s definition of an insured’s Home State.

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.






Q & A &


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



Benefit Compliance Issues That Arise in Connection With Employer Sponsored Clinic Arrangements: Part Two Many employers, particularly large employers, are evaluating on-site health clinic options as an additional benefit offering. Common reasons for instituting on-site clinics include enhancing worker productivity (i.e., “increasing “presenteeism”), reducing medical costs, integrating various health services, and improving access to care for employees. However, on-site clinics also pose a myriad of compliance obligations, particularly in the employee benefits arena. This two-part article addresses the application of various employee benefit laws to coverage offered through employer-sponsored on-site medical clinics. The impact of the various laws discussed herein will depend on the structure and design of the clinic arrangement, so not all of the issues would apply in every situation. However, the discussion below should give an idea of the employee benefit compliance obligations associated with various arrangements.1 Part One of this article (in the November issue of The Self-Insurer) focused on the compliance concerns that are most frequently discussed with respect to on-site medical clinics include the application of ERISA, HIPAA (and other health information privacy laws, at the federal and state level), and the Affordable Care Act. Here in Part Two we look at other concerns which may also arise including COBRA and other group health plan requirements; the effect on plan participants’ eligibility for Health Savings Accounts (HSAs); and various tax implications for plan participants.



Coverage for on-site clinics can potentially be subject to COBRA, which may raise thorny practical issues. Under COBRA, an on-site clinic is not treated as a group health plan as long as: (1) the health care consists primarily of first aid that is provided during the employer’s working hours for treatment of a health condition, illness, or injury that occurs during those working hours; (2) the health care is available only to current employees; and (3) employees are not charged for the use of the facility. Treas. Reg § 54.4980B-2, Q&A-1(d). While there is some leeway under this provision (e.g., “primarily” consisting of first aid), the definitional provision seems to clarify that an exempt arrangement is restricted to treatment of illnesses or injuries that occur “during working hours.” Application of COBRA to an onsite clinic would mean that all of COBRA’s notice, disclosure, and election requirements and procedures would apply to the clinic with regard to any employee who is eligible for clinic services. See generally IRC § 4980B. Thus, individuals who lose coverage due to a COBRA qualifying event (e.g., termination of employment for employees) must be extended an opportunity to extend coverage. COBRA raises some difficult compliance challenges, including that:

• An open enrollment right must be extended under all employer sponsored plans each year. Thus, if COBRA applies to clinic operations, each electing qualified beneficiary would be eligible to enroll (or re-enroll) in other health plans sponsored by the employer each year at annual enrollment.



This could significantly expand the COBRA rights available to individuals beyond what the employer originally anticipated (potentially affecting the actuarial calculations for any health plans);

• The right to elect COBRA for an on-site clinic could mean that employees who are not enrolled in the employer’s group health plan or any other COBRA-covered benefit would still be entitled to elect to continue receiving clinic benefits, which could be administratively difficult; and

• Offering on-site clinic access to (potentially disgruntled) former employees could be problematic, for various reasons. [Employers may want to offer an alternative arrangement (such as a commercially available walk-in clinic) for COBRA coverage.]


Other Group Health Plan Rules

A stand-alone plan for on-site clinic coverage could be problematic under various group health plan rules, many of which can be onerous (for example, HIPAA’s portability and nondiscrimination rules and the Mental Health Parity and Addiction Equity Act (MHPAEA)). This is particularly true if the arrangement is an ERISA plan; however, some of the laws noted below apply more broadly, and could capture an arrangement that is not an ERISA plan.2



While this is not an exhaustive list of potentially applicable laws, employers should consider the application of the following rules:

• QMCSO requirements (for plans that cover dependents) (ERISA § 609); • Uniformed Services Employment and Reemployment Act (USERRA) continuation coverage and reinstatement rights (38 USC § 4301);

• Family and Medical Leave Act (FMLA) maintenance of benefit requirements (29 USC § 2614); and

• Medicare Secondary Payer (MSP) requirements (42 USC § 1395y) and, depending on whether prescription drugs are covered, Medicare Part D creditable coverage disclosures (42 CFR §423.56). Absent specific guidance, it is likely best to assume that these rules would apply – particularly if the arrangement is an ERISA group health plan.3 Given these compliance requirements, the combination of the clinic into a larger group health plan (which should already be set up to address these requirements) would likely be preferable to establishing a separate plan.


Impact on HSA Eligibility

Under IRC § 223, health coverage (including coverage offered through an on-site clinic) would make an individual ineligible for HSA contributions unless (i) the coverage meets certain (e.g., high deductible) requirements or (ii) the individual pays fair market value for treatment until they satisfy their deductible.4 See IRS Notice 2008-59. To meet the first requirement, the coverage must not offer significant benefits in the nature of medical care or coverage other than preventive care or permitted coverage.5 While the determination of what is “insignificant” would depend on the facts and circumstances, the IRS has indicated that physicals, immunizations, allergy shots, nonprescription pain relievers, and treatment of injuries caused at a plant should be considered insignificant benefits. Id. While this is an issue that can cause problems for participants in high-deductible health plans if not considered in advance, many employers have adopted innovative approaches (e.g., putting employer funds in the HSA for clinic visits) to address this issue.


Tax Issues


Finally, as a self-insured plan, coverage for an on-site clinic would be subject to the nondiscrimination testing requirements under IRC § 105(h). Thus, the plan could not discriminate (with respect to either eligibility or benefits) in a way that favored highly compensated employees. The employer would need to run nondiscrimination testing to ensure that IRC § 105(h) was not violated (unless the on-site clinic is part of a larger group health plan, in which case the testing for that plan would encompass the clinic).

CONCLUSION With the increasing popularity of onsite health clinics, it is becoming more important to understand the benefits compliance issues raised by this type of arrangement. This white paper addresses, at a relatively high level, the various compliance issues raised by employer-sponsored on-site clinics. Employers should consult with their own legal counsel to further analyze the issues outlined above as applied to any specific situation.

1 Please note that this white paper does not address all regulatory issues that will be applicable to the clinic, particularly aspects relevant to health care providers and medical facilities – e.g., OSHA standards; fraud and abuse rules (including the Stark Law, Anti-kickback laws, and the False Claims Act); or rules regarding corporate practice of medicine, disposal of medical waste, dispensing of pharmaceuticals, or clinical laboratories. 2 See, e.g., 42 USC §12112(a), which applies the ADA’s nondiscrimination provisions to “employee compensation, job training, and other terms, conditions, and privileges of employment.” This is broad enough to capture arrangements that are not ERISA group health plans. The ADA nondiscrimination regulations also have a broad reach; 29 CFR §1630.4 provides that it is unlawful for a covered entity to discriminate on the basis of disability with respect to “fringe benefits available by virtue of employment, whether or not administered by the covered entity.” In addition, the PDA, at 42 USC § 2000e(k), mentions “fringe benefit programs,” which the regulations at 29 CFR § 1604.9 define broadly as “medical, hospital, accident, life insurance and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions, and privileges of employment.” 3 Unfortunately, the group health plan provisions discussed herein are not uniform, and generally have different definitions of what type of plan or arrangement would be subject to the rules (except that they all would, based on the definition in the statute and/or regulations, likely include employer-sponsored on-site clinics). A detailed analysis of the application of each of these requirements—including any sub-regulatory guidance issued by the relevant agency – is outside the scope of this white paper. 4 Note that coverage provided only after the deductible has been satisfied would not endanger HSA eligibility. 5 IRC § 223 defines permitted coverage as “coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care,” and preventive care as preventive coverage “within the meaning of section 1871 of the Social Security Act, except as otherwise provided by the Secretary).”

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The Modernization of Health Savings Accounts WRITTEN BY Krista J. Maschinot


ealth Savings Accounts (HSAs) were originally introduced as part of the Medicare Prescription Drug, Improvement, and Modernization Act that was signed into law by President George W. Bush on December 8, 2003. While the contribution amounts have increased gradually since this time, no other significant changes have occurred. Congress is addressing this issue and attempting to help individuals and families afford the ever increasing medical expenses plaguing the United States.

HSAs are highly regulated, tax-exempt savings accounts that both individuals and employers may contribute to on behalf of individuals covered by certain highdeductible health plans (HDHPs). These accounts are designed to help individuals set aside funds to be used for the qualified medical expenses of the individuals, their spouses, and their tax dependents.



Unlike flexible spending accounts (FSAs), HSAs are not subject to mandatory “use it or lose it rules� and while FSAs are not portable, HSAs are portable as they are owned by the individual, not the employer, and can follow the individual as he or she changes jobs similar to a 401(k) or an individual retirement account (IRA).

were previously omitted, and allowing for direct primary care physician arrangements to be accessed by individuals covered under an HDHP.

HSAs can be invested similar to a retirement account and have the ability to grow over time making them a valuable retirement vehicle. They are funded on a pretax basis through a cafeteria plan and result in a triple tax savings for the individual as they are funded with pretax dollars, grow tax-free, and are not taxed upon withdrawal so long as they are used to pay for qualified medical expenses.

One modernization that HR 6311 will make is to increase to the contribution limits for individuals and families to $6,900 and $13,300 respectively. These amounts are the current annual limits on deductibles and out-of-pocket expenses for HSA-eligible HDHPs.

Contribution limits increased For 2018, the contribution limit (for employer and employee combined) for an individual is $3,450, while the limit for a family is $6,900 (increased from the original $2,600 for individuals and $5,150 for families).

In addition, individuals with HSA-qualifying family coverage who were previously deemed ineligible due to their spouse being enrolled in a medical FSA will now be permitted to contribute to an HSA.

The House of Representatives passed the Restoring Access to Medication and Modernizing Health Savings Account Act of 2018 (HR 6199) and the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018 (HR 6311) on July 25, 2018.

As the names imply, the bills focus on updating and modernizing the current laws surrounding the use of Health Savings Accounts (HSAs). These updates include increasing the contribution limits for both individuals and families, expanding coverage to include qualified medical expenses that



Coverage expanded Under the current law, the funds in an HSA may only be used to pay for qualified medical expenses pursuant to IRC Section 213(d), which include amounts paid:

“(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, (B) for transportation primarily for and essential to medical care referred to in subparagraph (A), (C) for qualified longterm care services (as defined in section 7702B(c)), or

(D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)). In the case of a qualified long-term care insurance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D).” HR 6199 further expands the permissible eligible expenditures to also include gym memberships and certain physical exercise programs (up to $500 for individual and $1,000 for family) along with feminine care products and other over-the-counter medical products.

Direct Primary Care permitted A Direct Primary Care service arrangement (DPC) is an alternative to a tradition health care plan wherein individuals pay a flat fee each month, similar to a membership fee, to a primary care physician that covers all of the individual’s primary care service needs.

For services that are outside the realm of primary care, additional fees will apply. At the current time, individuals cannot use their HSA funds to pay for the DPC monthly fee as they do not qualify as medical expenses under IRC Section 213(d).

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20 Plus years of industry knowledge, expertise, and unsurpassed service Strength of Liberty Mutual which holds an A rating by both Best and S&P Plan Mirroring availability Disclosure statements no longer required on renewal business Liberty Mutual entered the Employer Stop Loss Market through its acquisition of TRU Services, LLC in April 2017.

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Other issues surrounding DPC arrangements include the fact that when a DPC is offered outside of the employer’s health plan it is considered to be a second health plan and impermissible other coverage as Section 223(c) of the Internal Revenue Code (IRC) states:

“[S]uch individual is not, while covered under a high deductible health plan, covered under any health plan-


which is not a high deductible health plan, and


which provides coverage for any benefit which is covered under the high deductible health plan.”

As a result of this Code section, individuals are not permitted to be covered under an HDHP and to also be offered other coverage, include a DPC, outside of the employer’s self-funded health plan as (1) a DPC is not an HDHP and (2) a DPC offers benefits that are already covered under the employer’s HDHP.



Further, individuals are not permitted to use their HSA funds for services related to DPCs, as DPCs are considered to be health plans and use of such funds would be deemed impermissible other coverage. If the DPC is a benefit under the employer’s self-funded health plan, the following consideration applies. An HDHP is not permitted to provide any first dollar coverage for benefits until a minimum deductible has been satisfied with the exception of preventive care services.

Since the services provided by DPCs and other primary care physicians are not always considered preventive care, there will be times where the patient’s care is still subject to the deductible. As a DPC does not typically include a fee for service, there is no fee to apply to the deductible which is problematic.

• Permit the use of employmentrelated health services and employer sponsored onsite medical clinics for limited use without violating HSA eligibility restrictions;

• Allow for rollovers of health FSA balances from year to you (up to three times the contribution limit); • Allow for transfers of up to $2,650 for individuals and $5,300 for families from FSAs and HRAs to HSAs when enrolling in a qualifying high-deductible health plan with an HSA;

• Allow spouses to make annual catch-up contributions of up to $1,000 to an HSA; and If enacted, HR 6311 will help solve the issues surrounding the ability of DPCs to be used along with HSA-eligible HDHPs. Specifically, it would permit DPC service arrangements to no longer be treated as health plans, thus no longer disqualifying an individual from contributing to an HSA.

Additionally, the monthly DPC fees would qualify as medical expenses, meaning individuals would be permitted to use their HSA funds to pay for such fees (with a cap of $150 per individual and $300 per family per month).

• Permit working seniors currently enrolled in Medicare Part A to contribute to an HAS when covered by a qualifying HDHP.

While these bills passed the House in July of this year, there has been no action on either in the Senate and December is quickly approaching. As the tax advantages offered in each are beneficial to both employees and employers, employers should monitor the bills as the year comes to a close.

Krista is an attorney with The Phia Group where she focuses on health plan document design and the regulatory issues affecting the administration of employee benefit plans. She received her Juris Doctor from The Catholic University of America and is admitted to the Bar in the Commonwealth of Massachusetts.

Other changes The bills, again, if enacted, would also:

• Allow up to $250 for individuals and $500 for families to be covered for non-preventive services under HDHPs;

DECEMBER 2018 27

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SIEF SCHOLARSHIP SIEF Looks to the Future: 2018 SIEF Scholarship Winner


he transition from college life to the professional world appears to pose no great future challenge for Anna Petrides, a junior at the University of South Carolina who is this year’s Self-Insurance Educational Foundation (SIEF) $2,500 scholarship winner. Anna already manages a wide variety of achievements including a 3.7 GPA in USC’s Darla Moore School of Business where she majors in risk management/ insurance.



Along the way, she finds time for a class project to consult on risk management and security strategies for the university. She is social chairman and chairman of the Honor Committee for the USC chapter of Phi Mu Fraternity. Life as a marathon is more than a metaphor for Anna: she finished this year’s Charleston Marathon and serves as a coach and mentor to elementary school-aged girls in Columbia.

“Every industry is nourished by its inflow of young talent, and Anna is a prime example of the young people we covet for ours,” said Nigel Wallbank, SIEF chairman.

SIEF Scholarship winner Anna Petrides and SIEF Chairman Nigel Wallbank

While growing up in Annapolis, Maryland, Anna says she was drawn to the field

“My classes here really opened my eyes to all the implications of insurance – it really makes everything possible for business, organizations and individuals.” of finance.

A USC professor introduced Anna and her classmates to the concept of captive insurance and its opportunities for entrepreneurial creativity. Subsequently she won an internship at the Columbia office of a national financial services organization, working on business analysis and research for its captive insurance clients. A second internship found Anna working in audit and business compliance functions for the South Carolina Office of the State Treasurer. She is now pursuing internships for next summer with interviews ranging as far afield as Chicago.



SIEF conducts ongoing fund-raising activities including the popular golf tournaments at many Self-Insurance Institute of America (SIIA) events to support the scholarship program and other educational activities.

Celebrating 10 years of Employee Benefit Group Captives We’ve been innovating for a very long time. Ten years ago, Berkley Accident and Health was an industry pioneer with EmCap®, our employee benefit group captive program. Today, we are a market leader with an impressive track record of building and managing successful captives. For group captives, it’s a clear choice. Choose the team with a decade of experience and success. These statements are 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

© 2018 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved. BAH 2018-14


Specialty Accident www.BerkleyAH.com




s a successful 2018 comes to an end, we now look ahead to 2019. To help you stay informed and engaged in 2019, SIIA has an excellent line up of educational and networking events planned for the coming year.

Kicking things off for 2019 is the Self-Insured Health Plan Executive Forum, scheduled for March 18-20, 2019 at the Westin Charlotte Downtown in Charlotte, NC. This popular SIIA educational and networking event brings together senior executives representing key business partners supporting self-insured group health plans, including third party administrators (TPAs), stop-loss carriers/MGUs, brokers/ consultants, captive managers and leading service providers, with the objective of promoting improved collaboration in order to grow the self-insurance marketplace in a responsible way.



ENDEAVORS This year’s Forum will continue to follow the interactive program introduced in 2018, with faster-paced and highly interactive educational sessions, enhanced by new technology features that will actively engage audience members from the beginning to the end. The Self-Insurance Educational Foundation, Inc. (SIEF) will be hosting a Top Golf Event in conjunction with the Forum on March 18th, and there will be a SIIA Future Leaders (SFL) “Mini-Program” at the beginning of the event.

Self-Insured Workers’ Compensation Executive Forum, May 7-9, 2019 at the Westin Nashville in Nashville, TN 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 risk management strategies and innovative ways to prevent and manage loss, this event will offer tremendous networking opportunities that are specifically designed to help you strengthen your business relationships within the self-insured/ alternative risk transfer industry.

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The International Conference will be May 14-16, 2019 at the JW Marriott in Miami, FL. This event is designed to help attendees identify and understand self-insurance/captive insurance global business opportunities — including counties that are considering allowing employers to self-insure, captive insurance company formations and medical travel partners.

miami, fl



ENDEAVORS We wrap up the year with SIIA’s 39th Annual National Educational Conference & Expo, September 30-October 2, 2019 at the Marriott Marquis, in San Francisco, CA. The SIIA National Conference & Expo is the world’s largest event focused exclusively on the self-insurance/captive insurance marketplace and typically attracts more than 1,700 attendees from around the United States and from a growing number of countries around the world. Registrants will enjoy a cuttingedge educational program combined with unique networking opportunities, and a world-class tradeshow of industry product and service providers guaranteed to provide exceptional value in four fast-paced, activity-packed days. This is truly a can’t miss event!

For more information, including registration, networking and advertising opportunities and exhibiting info, please visit www.siia.org.

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NEWS FROM SIIA MEMBERS 2018 DECEMBER MEMBER NEWS 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 membernews@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 at jivy@siia.org. DECEMBER 2018


NEWS Diamond Members Healthy, Wealthy, and Wise: Berkley Accident and Health Celebrates 10 Years of Providing Employee Benefit Group Captives Hamilton Square, NJ -- Berkley Accident and Health, a Berkley Company®, is celebrating the 10th anniversary of EmCap®, its employee benefit group captive solution. Berkley Accident and Health was one of the first in the industry to offer group captive programs designed to help small and midsize companies take better control of their health plans. Since the launch of the first program in December 2008, EmCap has grown to 30 different programs and has clients in 46 states. This year alone, more than 200 new clients have joined EmCap programs.

“Ten years ago, group captives were a game-changer because it has made self-funding possible for many small and midsize companies. We found that they knew all the advantages of self-funding but lacked the size and scale to really make it work,” said Jim Hoitt, Senior Vice President, Captive Division. “That’s where group captives really excel – they give employers the greater size and stability needed to put selffunding within reach.”

In 2008, employee benefit group captives were a brand-new concept. They turned out to be very appealing to employers, mirroring current trends toward greater data transparency and cost control. Today, group captives are a major movement within the self-funding industry. At its core, EmCap is a funding strategy that enables small and midsize companies to self-fund their employee health plans like large companies do. Self-funding offers many benefits, but smaller self-funded groups can find annual budgeting a challenge, because claim costs can be hard to predict. In an EmCap program, multiple employers join together to share claims and create a larger, more diverse risk pool. This can smooth year-to-year fluctuations and allows EmCap to act like a “shock absorber” to reduce the impact of larger claims on individual employers. Additionally, if claims are lower than expected, the captive program can return the savings back to its members. “It’s an honor to celebrate this milestone,” said Christopher Brown, President and CEO. “We are particularly grateful to our brokers, consultants, and member companies that have put their trust in us and contributed to EmCap’s tremendous growth and success.” A large part of that success is the loyalty of its members, who view EmCap as a long-term partnership. Once companies join, they overwhelmingly stay – EmCap’s five-year member retention rate is 90%. EmCap is



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Why Choose Zebu Compliance Solutions? Because healthcare needs solutions. Health spending is approaching 20% of GDP, with outcomes in the bottom 20% of developed countries. Fraud, abuse, carelessly wasted resources and redundant paperwork burn almost half of our healthcare dollars with an ROI of ZERO. Yes, Zebu will save you time. We’ll save you hassle. We’ll save you from compliance mistakes. We might even save your bacon in an audit. But our bottom line is about our nationally shared bottom line. About spending the right dollars for the right care. About delivering care not because there is something we could do to the patient, but because there’s a right thing we should do for the patient. And we want to help you do those things, profitably, and for all the right reasons. Healthcare done right is justice for everyone: providers, payers, and most importantly, patients. We’re passionate about making a difference, and look forward to making a difference with you. - Francesca Hartop, Founder/President

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NEWS distributed only through a limited network of credentialed brokers, each of whom has a deep understanding of captives. Looking forward to the next 10 years, Berkley Accident and Health sees a bright future and continued expansion for employee benefit group captives. To accommodate EmCap’s growth, the company has added resources, including program and account managers, specialized underwriters, and business development staff. This increased support will help to position Berkley Accident and Health well for another decade of serving the marketplace. About Berkley Accident and Health Berkley Accident and Health is a member company of Berkley that provides an innovative portfolio of accident and health insurance products. It offers four categories of products: Employer Stop Loss, Group Captives, 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. W. R. Berkley Corporation is a Fortune 500® company. Visit BerkleyAH. com.



QBE North America Publishes Case Studies Highlighting Successes from its Medical Risk Management Team QBE’s in-house risk management staff is comprised of highly experienced Medical Insurance Risk Consultants, all of whom are licensed Registered Nurses, many of which also hold a specialized Certification in Case Management (CCM). QBE’s Medical Risk experts have a strong history of applying best-in-class practices to optimize outcomes and deliver meaningful medical cost reductions for our selffunded clients. QBE’s medical reviews routinely decrease direct expenses to the employer’s plan. QBE’s medical risk team has regularly prevented claims from penetrating the specific stop loss layer, ultimately adding to the positive impact on the self-funded plan’s profitability and performance. We work in partnership with you to achieve one main goal: to help clients with risk mitigation strategies that can help save money. Integrating our services into our product suite allows us to offer clients added value, completing QBE’s comprehensive solution for mitigating medical risk.

YOUR BEST PARTNER EARNS YOUR TRUST EVERY DAY Employers of all sizes experience high-cost medical claims. As an independent stop-loss provider with strong financial ratings, we’re here for you. Listening to you. Helping you design a stop-loss plan that meets your needs with specialized options. Delivering hassle-free claims reimbursements. Want a partner that earns your trust every day? Go with Sun Life. Ask your Sun Life Stop-Loss specialist how we can put our expertise to work for you.

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)

NEWS Responding quickly and efficiently makes all the difference to a company’s bottom line. Click to download Case Study: Medical Risk Management Savings for Selffunded Plans (PDF download). The document describes specific proof points of where we’ve helped our clients save money.

Visit the QBE North America website to access and download several other thought leadership articles and technical white papers: http://www.qbena.com/newsroom/ qbe-insights.aspx. About QBE

Sun Life Financial Reports Third Quarter 2018 Results - Stop Loss Sales Decrease TORONTO -- Sun Life Financial Inc. announced its results for the third quarter ended September 30, 2018. Third quarter reported net income was $567 million and underlying net income was $730 million. A Leader in U.S. Group Benefits

QBE North America, an integrated specialist insurer, is part of QBE Insurance Group Limited, one of the largest insurers and reinsurers worldwide. QBE NA reported Gross Written Premiums in 2017 of $4.6 billion. QBE Insurance Group’s 2017 results can be found at www.qbena.com. Headquartered in Sydney, Australia, QBE operates out of 37 countries around the globe, with a presence in every key insurance market. The North America division, headquartered in New York, conducts business through its property and casualty insurance subsidiaries. QBE insurance companies are rated “A” (Excellent) by A.M. Best and “A+” by Standard & Poor’s. Contact Phillip C. Giles, CEBS at phillip.giles@us.qbe.com, 910.420.8104 and visit www.qbena.com or follow QBE North America on Twitter.

SLF U.S.’s reported net loss was $267 million, compared to the $72 million net income earned in Q3 2017, due to ACMA(1) primarily related to changes in assumptions for policyholder behavior in In-force Management.

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NEWS Underlying net income of $139 million was up $18 million from the same period in the prior year, benefiting from the lower income tax rate in the U.S. and favorable investment experience, partially offset by less favorable mortality experience. The after-tax profit margin for Group Benefits(2) was 6.4% as of the third quarter of 2018, compared to 4.5% as of the third quarter of 2017. SLF U.S. Group Benefits sales decreased 14% compared to the third quarter of 2017 as a result of a decrease in medical stop-loss sales, partially offset by growth in employee benefits sales. The U.S. business released its annual stop-loss research report, providing brokers and employers with deep understanding into high-cost medical conditions and healthcare trends and providing them with data based, actionable insights. We also marked an integration milestone from our 2016 employee benefits acquisition, by transitioning the final product to the SLF U.S. group benefits portfolio. About Sun Life Financial Sun Life Financial Inc. (“SLF Inc.”) is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life Financial has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of September 30, 2018, Sun Life Financial had total assets under management (“AUM”) of $984 billion. Visit www.sunlife.com.



Zelis Healthcare Announces Acquisition of NetMinder, Expanding Network Bedminster, NJ -- Zelis Healthcare, a healthcare technology company and marketleading provider of integrated healthcare cost management and payments solutions, announced its acquisition of NetMinder and its parent company, The Ignition Group. Sunrise, Florida-based Ignition Group is a healthcare network analytics company and market-leading provider of dental and vision network analytics solutions to healthcare payers and insurance intermediaries nationwide. NetMinder is now an operating unit of Zelis Network Analytics.

“We are pleased to welcome the NetMinder team to our growing Zelis family. NetMinder’s strength in dental and vision further extends our lead in the healthcare network analytics market,” said Doug Klinger, CEO of Zelis Healthcare. “We’ve delivered market-leading data and analytical tools to our payer clients for 14 years,” said Aaron Groffman, President and founder of The Ignition Group. “Joining forces with Zelis enables us to expand our reach, gain access to leading-edge technology resources and serve our current payer clients and the broader market even better in the years ahead.” About Zelis Healthcare Zelis Healthcare is a healthcare technology company and market-leading provider of integrated healthcare cost management and payments solutions including network analytics and design, network access and cost management, claims cost management and electronic payments to payers, healthcare providers and consumers in the medical, dental and workers’ compensation markets nationwide. Zelis Healthcare is backed by Parthenon Capital Partners. Visit www.Zelis.com. About NetMinder The Ignition Group, the data management company that powers NetMinder, has been analyzing and interpreting competitive provider data since 2004. NetMinder delivers industry-leading network comparison data to make brokers and insurance sales teams more effective and provider network managers more efficient. The Ignition Group’s executive team has decades of experience in the health insurance industry and regularly analyzes data to identify industry issues Visit www. netminder.com.









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NEWS Gold Members Collective Health Names Karen Boone To Board of Directors Collective Health announced that Karen Boone, former President, Chief Financial and Administrative Officer of RH, has joined its Board of Directors. Karen brings more than 20 years of experience in financial planning and has led administrative functions including oversight of human resources, investor relations, accounting and legal. She will provide strategic guidance for Collective Health, which continues to make a dent in American companies’ $1.2 trillion annual healthcare spend—often the second biggest line item behind payroll—by offering self-funded employers a modern technology-driven approach resulting in a better benefits experience. “We’re beyond thrilled to welcome Karen, whose track record as a leading financial and administrative executive for several global organizations speaks for itself,” said Ali Diab, Co-founder and CEO of Collective Health. “As a Collective Health customer during her time at RH, Karen’s first-hand experience aligning financial and HR teams, along with her acute understanding of generating ROI from a company’s healthcare investment is invaluable to us and our clients.”



“There’s an evolution happening in the C-suite where companies are waking up to the idea that healthcare shouldn’t exist in a black box, rather it’s an investment to be optimized,” said Karen Boone. “We are all consumers of healthcare and we deserve a better user experience, just as employers deserve to understand where their spend is going and to demand more from their investment. Collective Health has the vision and leadership to make both happen and is challenging the status quo by applying technology and design to today’s antiquated systems.”

Speed to Market

We now offer a Conditional Certificate of Authority on the same day the application is received for licensing a Captive Insurance Company. • Recently passed, HB 334 authorizes the Insurance Commissioner to issue conditional certificates of authority (“COA”) to captive insurance company applicants. • These conditional COA’s authorize the captive insurance company applicant to conduct business while the Commissioner completes the review of the application materials. • Conditional Certificates of authority will be issued only upon receipt of evidence of the minimum capital and surplus required by Chapter 69 of Title 18 of Delaware Code and a certification from the captive owner that the application materials comply with the requirements of Chapter 69. • A captive insurance company is granted a Conditional Certificate of Authority for a fee of $3600. • Delaware applies Know Your Customer; only certain managers may submit applications for a conditional license. “Delaware is the first in the nation to electronically offer a Conditional Certificate of Authority as part of the general application. This is a huge step in the right direction for streamlining the process for businesses looking to form a captive in Delaware.” Trinidad Navarro, Insurance Commissioner

STEVE KINION, DIRECTOR Bureau of Captive & Financial Products Department of Insurance

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

BUREAU OF CAPTIVE & FINANCIAL INSURANCE PRODUCTS 1007 North Orange Street, Suite 1010 Wilmington, DE 19801 302-577-5280 - captive.delaware.gov

Trinidad Navarro, Insurance Commissioner

NEWS Karen spent the last six years with RH leading several key financial milestones and transactions, including the Initial Public Offering in November 2012, and two public follow-on offerings in 2013. Her extensive experience in strategic and financial planning brings a unique perspective to Collective Health’s Board of Directors as the company continues to bend the healthcare cost curve for employers, while helping better align HR and Finance teams. Prior to RH, Boone spent 15 years at Deloitte, most recently as an Audit Partner. In that time, she specialized in service primarily to retail and consumer products companies, including The Gap Inc., Williams-Sonoma, Inc., and Ross Stores, as well as health care company McKesson Corporation, among others. Additionally, Karen sits on the Board of

Directors of Sonos and serves as the company’s Audit Committee Chair. Karen joins fellow board members, including Mohamad Makhzoumi of NEA, Scott Nolan of Founders Fund, and Jeff Immelt, the former Chairman and CEO of GE. About Collective Health Collective Health is powering the Employer-Driven Healthcare Economy with the first Workforce Health Management System––giving employers a platform to simultaneously manage their healthcare investment and take better care of their people. With more than 120,000 members and 30 enterprise clients, Collective Health is reinventing the healthcare experience for self-funded employers and their employees across the U.S. Founded in October 2013 and headquartered in San Francisco, Collective Health is backed by NEA, Founders Fund, GV, Sun Life, and other leading investors. Visit www.collectivehealth.com.

Look no further. Everyone claims to keep sight of the customer. But do they really? We do. At Companion Life, you can count on teamwork with individual attention. That’s a real advantage. We anticipate trends, identify opportunities, but, most importantly – we listen to you. We brainstorm with our partners. Together, we create products and solutions or carve out new distribution channels to get an early foothold in the market. Looking to the future is a large part ofour vision. We focus on relationships and listening. Together, we’ll go places. Call us. We’ll take the time to listen.

stop loss limited benefit health plans short-term medical medicare supplement Rated A+ by A.M. Best Company. Rating as of Dec. 19, 2017. For the latest rating, visit ambest.com.



800-753-0404 Companion Life’s Specialty Markets








• Web based platform to quote, underwrite and enroll • Broker and Employer Dashboards to measure enrollment campaigns • Mobile app for employees to complete underwriting and enroll in benefits • Electronic signature and submission of employer paperwork via DocuSign • Aggressive compensation • Attract and retain clients on one Enterprise System

An AmWINS Group Company

Contact GBS today at sales@gbsio.net to find out more.

SIIA 2018

BOARD of directors & committee chair

Chairman of the Board*

Robert A. Clemente CEO Specialty Cace Management LLC Lahaska, PA


Mike Ferguson SIIA, Simpsonville, SC

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

Treasurer and Corporate Secretary* David Wilson President Windsor Strategy Partners, LLC Princeton, NJ *Also serves as Director

SIEF Board of Directors Nigel Wallbank Chairman Heidi Leenay President Freda Bacon Director Les Boughner Director Alex Giordano Director




Committee Chairs

Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA

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

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 Robert Tierney President StarLine East Falmouth, MA

HEALTH CARE COMMITTEE Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem, NC INTERNATIONAL COMMITTEE Robert J. Repke President Passport For Health Novato, CA WORKERS’ COMP COMMITTEE Mike Zucco Business Development AL Trucking Association Fund Montgomery, AL SIIA FUTURE LEADERS COMMITTEE Craig Clemente Chief Operating Officer Specialty Care Management Lahaska, PA

WANT TO IMPROVE THE HEALTH AND PRODUCTIVITY OF YOUR EMPLOYEES? YOU’LL NEED MORE THAN A WELLNESS PROGRAM AND SOME HEALTH DATA. You need a comprehensive view of workforce health & the systems and expertise to turn data into action.

YOU NEED IN-SIGHT FROM IPMG. In-Sight provides a single, integrated platform for all employee health, injury, workers’ compensation, absence and engagement activity — and the specialized teams that use your data to proactively minimize risks and promote productivity.


SIIA new members DECEMBER 2018 Regular Corporate

Silver Corporate



Anthony Milone Founding Partner BenAdvance, Inc. Rye, NY

Mary Jones US Region Health City Cayman Islands Grand Cayman, Cayman Islands

James Senge SVP Ebix Health Ebix Pittsburgh, PA

Jim Napoli CEO Medliminal Manassas, VA

Janis DIMonaco President/CEO HMC HealthWorks Jupiter, FL William Donaldson President Mindful Insurance Solutions, Inc. Sacramento, CA George Papagelis Managing Principal OneDigital Health and Benefits Farmington, CT Katherine Donaldson Marketing Coordinator OnSite Care Salt Lake City, UT Mark Pew Senior VP, Product Development & Marketing Preferred Medical Louisville, KY



Do you aspire to be a published author? Do you have any stories or opinions on the self-insurance and alternati ve risk transfer industry that you would like to share with your peers? We would like to in vite you to share your insight and submit an article to The Self-Insurer ! distributed in a digital and print format to reach over 10,000 readers around the world. The Self-Insurer has been delivering information to the self-insurance /alternative risk transfer community since 1984 to self-funded employ ers, TPAs, MGUs, reinsurers, stoploss carriers, PBM s and other service providers.

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

Byars at sbyars@sipconline.net for advertising information.

Paying Usual & Customary IS PAYING TOO MUCH

Zelis Healthcare drives over $1 BILLION IN ANNUAL SAVINGS on out-of-network charges Cost variances on out-of-network claims make budgeting for healthcare nearly impossible for the self-insured. Zelis Healthcare delivers savings with a proven, comprehensive approach that includes market-driven and acceptable reimbursement, expert support and member advocacy processes. Reduce your liability and experience sustainable cost management. Partner with Zelis to get your share of $1 billion in annual savings.

Better Service. Better Performance.

Copyright 2018 Zelis Healthcare. All rights reserved.

Contact Zelis today at 888.311.3505 or visit zelis.com to find out how our pre-payment solutions are helping control the rising cost of healthcare.


Through our integrated PREPAYMENT REVOLUTION Zelis is the market leader in integrating network solutions, payment integrity and electronic payments to deliver insights that drive even greater savings before a claim is paid. Working in a prepayment environment, we price the claim correctly before you pay, avoiding unnecessary costs, time and reducing member and provider abrasion. In fact, 85% of the time we find claim savings that other vendors don’t. We do this by focusing on every step of the pre-payment claim cycle and delivering value-driven solutions from payment to reconciliation.

Contact Zelis today at 888.311.3505 or visit zelis.com to find out how our pre-payment solutions are helping control the rising cost of healthcare.

Better Service. Better Performance.


Copyright 2018 Zelis Healthcare. All rights reserved Copyright 2017 Zelis Healthcare. All rights reserved.

Profile for SIPC

Self Insurer December 2018  

Self Insurer December 2018