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TABLE OF CONTENTS

OCTOBER 2019 VOL 132

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

FEATURES 4

siia endeavors

ON THE RECORD WITH SIIA PRESIDENT & CEO MIKE FERGUSON

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IN SEARCH OF HEALTH CARE’S HOLY GRAIL

CONSENSUS IS BUILDING THAT DIRECT CONTRACTING WITH THE HIGHEST QUALITY PROVIDERS WILL NOT ONLY IMPROVE CLINICAL OUTCOMES BUT ALSO BEND THE COST CURVE. WHILE COMPREHENSIVE AND STANDARD MEASURES ARE ELUSIVE, PROGRESS IS BEING MADE. By Bruce Shutan

ARTICLES 18 22

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 OUTSIDE THE BELTWAY

28 BROKER/ADVISOR PERSPECTIVES INSIGHTS FOR AND ABOUT BROKERS/ADVISORS ACTIVE IN THE SELF-INSURANCE MARKETPLACE

34

THE TOWER OF BABEL – TALKING HEADS TALKING PAST EACH OTHER

42 ADDITION OF THIRD-PARTY BUSINESS CONVERTS CAPTIVES INTO PROFIT-CENTERS 50

CAPTIVES AND CREDIT RATINGS, TO RATE OR NOT TO RATE?

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NEWS FROM SIIA MEMBERS

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

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ENDEAVORS

SIIA ENDEAVORS

On the Record with SIIA President & CEO Mike Ferguson

SIIA President & CEO Mike Ferguson

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he Self-Insurer’s Editor Gretchen Grote sat down with SIIA President & CEO Mike Ferguson for a wide-ranging interview to talk about how the association continues to evolve and play an increasingly important role in helping its members be successful in the self-insurance marketplace.

Gretchen Grote: It seems SIIA been particular busy with a variety of new initiatives, can you catch our readers up where the association has been focusing its efforts? Mike Ferguson: I have been with SIIA for about 25 years, and we are busier now than ever to advance our membership service capabilities. There are three initiatives of particular importance this year.

First, we successfully launched Canoe, on on-line education and information platform for those involved in the self-insurance and captive insurance marketplace. We continue to expand high quality content including conference sessions, studio videos, webinars and interviews. You can think of Canoe as the “Netflix” for self-insurance and SIIA members receive a free subscription as part their membership dues.

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ENDEAVORS Canoe is also where you can view SIIA News & Views, which is the second exciting initiative I want to mention. This is a monthly video news program created for the self-insurance industry. There is nothing like it and our members really seem to like it. Everyone should watch for a new addition the first Monday of each month.

The third big ticket priority has been to build out SIIA’s Future Leaders initiative, designed to get younger SIIA members more involved in the organization. We recently held a well-received mentor connection event and have incorporated special content and networking opportunities as part of our upcoming National Conference & Expo.

To help steer SIIA going forward we established a Future Leaders Committee and that group will soon be planning activities and related member services for 2020 so stay tuned to hear about what’s next.

GG: I see that SIIA has been proactively reaching out to the broker/adviser community. What is the thought process behind this? MF: While the membership has historically included some forward-thinking brokers/ advisers, our past experience has been that the majority of brokers/advisers have not fully appreciated the advantages of self-insurance and how this could be a growth opportunity for their businesses. But it’s clear now that times are changing, with selfinsurance becoming the approach of choice for those advising employers on how to best control health care costs. SIIA is excited about all the positive momentum and invites this new generation of self-insurance advocates to become members of our organization. We believe by joining our organization it will give them access to useful information and educational content, as well as to a large number of potential business partners who can help deliver self-insurance solutions for their clients. And while we obviously think these membership benefits are important, I would suggest that the value of SIIA involvement is even broader than that, as it will position them to be an active industry participant given that our organization is where the important industry players connect to solve problems, influence policy-makers and identify strategies to grow the self-insurance marketplace. GG: We’ve seen numerous announcements over the last couple of years of companies upgrading to Diamond, Gold or Silver member status, can you talk a little about SIIA’s approach relative to these membership categories and the factors that have contributed to the apparent growth?

terms of size and business focus, SIIA is much more heterogeneous. We have smaller members with varying degrees of industry focus to companies with billion-dollar balance sheets that focus exclusively on the self-insurance marketplace. Because of this disparity, it does not make sense to have a single membership category, so we have created multiple membership categories with different dues rates and benefit packages. This has enabled companies to plug into SIIA at various entry points.

With regard to the increase in higher level membership, I think the bigger companies in our industry like what SIIA has been doing and would like to see us continue to “scale,” to put in growth company terms, so that we can further promote and protect their business interests.

GG: I understand SIIA expanded its government relations teams again this year. What can you tell us about this? MF: Thanks to the increased membership support I just mentioned, SIIA was able to add another senior level lobbyist to its government relations team. This year we recruited for someone who could help specifically with outreach to congressional Democrats and we found Cristina Antelo who has turned out to be a perfect fit.

While SIIA is not a Republican nor Democratic organization we have historically had stronger connection with

MF: Unlike many other trade organizations that are relatively homogeneous in

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ENDEAVORS Republican members of Congress and other policy-influencers. With the addition of Cristina we have been able to better balance out our advocacy capabilities.

GG: I guess on a related note, you have commented publicly on several occasions about how important it is for SIIA to become more a major player in terms of political contributions. Can you elaborate a bit on why this should be such a priority and any progress that has been made to move in this direction? MF: I have actually been saying this for the past several years and this objective has continued to move up the list of association priorities. There are two primary reasons for this emphasis, with the one reason being fairly obvious for most members, with the second reason less obvious for those who are not creatures of the DC lobbying world.

The obvious reason, of course, is that it is much easier to make and keep friends on Capitol Hill if you provide financial support for their campaigns. This does not mean that if you contribute to a specific member of Congress that they are certain to vote a specific way, but it’s certainly easier to get a meeting with the member and/or their senior staff to explain your issues. Not so obvious to those outside the beltway is that when an organization establishes itself as a political financial player, it raises your “street cred,” so to speak, with other important organizations in town that we may need to partner with on various lobbying efforts.

In this regard, I am pleased to report that SIIA is now well positioned with some of the powerful associations in DC, including the U.S. Chamber of Commerce, National Association of Manufacturers, and at least one major labor organization.

Our progress has been somewhat slow but steady since we established the SelfInsurance Political Action Committee (SIPAC) about seven years ago as a vehicle for SIIA members to channel political contributions to key members of Congress. Things have accelerated over the past two years thanks to this more dedicated focus, combined with increased staffing resources, and you are now starting to see SIIA really establishing itself as a money player in DC. Obviously, we are not the biggest player by any means, but it’s solid progress that is sure to greatly assist our advocacy efforts.

GG: So how has SIPAC positioned itself, given that we are approaching another hot election year? MF: The 2020 elections will be here before we know it, so SIPAC is already planning with targeted contribution to several candidates in important and competitive races. Before this election cycle is over, SIPAC expects to support more candidates for federal office than ever before, and we couldn’t do it without support

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ENDEAVORS from our members. This support allows us to further leverage our membership and offer support to candidates who understand and are helpful to our industry. It is also important to note that SIPAC supports both Democrat and Republican candidates to ensure that we are not viewed as a partisan organization.

GG: How do you view SIIA’s role in the captive insurance space, as this membership constituency continues to grow?:

becoming increasingly sophisticated in how they manage risk, understanding that they can integrate multiple self-insurance strategies that may include the formation of a captive insurance company. SIIA brings this all together, giving captive insurance professionals more educational and networking resources.

I am also pleased to announce that SIIA is now ramping up its political advocacy in Washington, DC to order to better position the captive insurance market segment with key policy-makers. Unfortunately, many of those who influence the legislative and regulatory process affecting captives have minimal or no understanding of why an increasing number of employers rely on them to deal with risk management strategies. We intend to change that, and you will be hearing more about these efforts in the months ahead.

GG: My view is that SIIA is playing a very unique and useful role in the captive insurance space by integrating its stakeholders into the much broader self-insurance world. This is important because mid-market employers are

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ENDEAVORS GG: SIIA has a distinct membership constituency comprised of companies involved with self-insured workers’ compensation programs. Can you give us an idea of some association initiatives that appeal specifically to these members? MF: Yes, we have a very active segment of members involved with self-insured worker’s compensation programs, including group self-insured funds. In addition to SIIA’s Workers’ Compensation Executive Forum, some key initiatives are the development of online educational content for group fund trustees, addressing expected regulatory staffing turnover in many states, and identifying issues where SIIA’s lobbying and media relations team can provide value. We also expect to focus more on getting younger members involved consistent with the association’s broader Future Leaders initiative.

Consistent with this objective, we have incorporated a dedicated Fusion educational track as part of the San Francisco conference, which features topics that we believe will be of interest to multiple membership constituencies. These sessions have the added benefit of getting people in the same room who normally would not be, so we anticipate some organic networking will occur.

GG: SIIA’s Fusion initiative seems to be getting a lot of attention lately. What is this all about?

This initiative is still in the early development stage and we are optimistic that it will take form in a way that delivers real value to our members that they will not be able to get anywhere else.

MF: SIIA’s membership is comprised of individuals with diverse expertise and business contacts within the broad self-insurance marketplace. The Fusion initiative is intended to facilitate the sharing of information and business referrals among members involved with self-insured health plans, captive insurance and self-insured workers’ compensation programs. Several members have been doing this very effectively on an individual basis, but we hope to greatly expand these types of interactions, which have the potential to be game-changers for many companies.

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

For more information visit www. siia.org.

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FEATURE

In Search of

Health Care’s

Holy Grail

CONSENSUS IS BUILDING THAT DIRECT CONTRACTING WITH THE HIGHEST QUALITY PROVIDERS WILL NOT ONLY IMPROVE CLINICAL OUTCOMES BUT ALSO BEND THE COST CURVE. WHILE COMPREHENSIVE AND STANDARD MEASURES ARE ELUSIVE, PROGRESS IS BEING MADE.

T T

he insatiable quest to slash employee health care costs can undermine health plan management if cost-sharing strategies drive plan design. That’s why employers increasingly have realized that improving clinical outcomes is the more prudent path to that corporate objective. The key to arriving at this coveted destination is through assessing quality of care. However, it has proven challenging for both fully insured and selfinsured employers to wrap their arms around such data. Systemic problems still exist with quality measures, industry observers point out, though hopeful signs remain.

Written by Bruce Shutan

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There are multiple public and private-sector resources that vet quality medical information and credential organizations. Apart from the Centers for Medicare and Medicaid Services (CMS), Agency for Healthcare Research and Quality and National Quality Forum to name a few, some of the industry’s leading agnostic players include The Joint Commission, which was founded in 1951, as well as the Utilization Review Accreditation Commission (URAC) and National Committee for Quality Assurance (NCQA), both of which were founded in 1990.


Holy Grail These organizations largely focus on a multitude of disease-specific related outcomes, though apples-to-apples comparisons are highly elusive. “Some of them are actually measuring similar things, but not exactly the same, which makes it extremely complex to be able to appropriately report,” explains Stephen Parodi, M.D., chairman of the Council of Accountable Physician Practices (CAPP), an affiliate of the AMGA Foundation, as well as a physician executive at Kaiser Permanente specializing in infectious disease. In addition, there are several service providers focusing on quality data such as Quantros, which a panelist at SIIA’s national conference in Austin last year described as the only one that aggregates quality info from both CMS and commercial payer populations. Others include Emperica, Embold Health, Grand Rounds and Accolade, which recently acquired MD Insider. Karen Marlo

“Add on to it all of the money flowing from Silicon Valley into tools for employers, and it’s pretty impressive,” observes Karen Marlo, president of Resigility LLC and an employer relations consultant to NCQA. “There are a lot of people investing in these apps to change behavior.” NCQA’s initial mission was to help large U.S. employers select a quality HMO. A year later the group created the Healthcare Effectiveness Data and Information Set known as HEDIS whose more than 90 evidence-based metrics determine health plan performance.

always be manufacturing. Now that so many of us sit at a desk, that lower-back pain is not discriminating and is hitting multiple segments.” There also are a series of NCQA metrics around common chronic illnesses as well as behavioral health, which she describes as “a huge issue that’s bubbling up more and more in a scary way.” As such, antidepression medication management is critically important considering a lack of adherence to care among people who are hospitalized after a serious mental illness. The focus is clearly on marrying quality and price data to steer people with chronic or serious conditions to highquality providers with the best clinical outcomes at a reasonable cost. Indeed, the marketplace is teeming with service providers that help self-insured employers connect these moving parts.

Deerwalk, Inc., a population health, data management and health care analytics software company, mines quality But some health care leaders say less is more when it comes to measuring quality. data from nearly 1,000 different data For example, CAPP would like the industry to adopt fewer but more meaningful sources. The information is integrated measures. For example, Parodi notes that several CAPP groups are assessing physical with Quantros provider quality ratings and cognitive functions beyond an ability to perform activities of daily living instead by practice area and matched against of simply meeting, say, HEDIS measures for getting hemoglobin A1C for diabetes to health plan claims. It’s also paired with a certain level. In short, they want to know whether patients are thriving rather than a reference-based pricing tool whose simply surviving. multiplier is pegged to a percentage over Medicare reimbursement, and This coalition of more than 30 of the nation’s most integrated medical groups and enriched with risk scores as well as other health systems includes 80,000 physician leaders who hail from the Permanente utilization-based metrics. medical groups, Mayo Clinic, Cleveland Clinic, Geisinger, Intermountain and others.

BUILDING CROSSWALKS Quality data can help self-insured employers avoid a massive number of inappropriate medical procedures that continue to be performed across the U.S. One particularly helpful area encourages the use of imaging studies for low-back pain within the first 28 days of an incident, Marlo notes. “Musculoskeletal is a major cost for a lot of employers,” she observes. “It used to

Jeff Rick, chief operating officer of Deerwalk, says this approach offers “at least the raw materials” on which some meaningful reporting can be done, adding that “there’s fairly significant lift to take that data out of a CMS environment and actually make it useful for an analytic purpose or for a self-insured employer,”

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Holy Grail which he says isn’t for the faint of heart. “One of the things we very quickly realized is that the provider IDs provided by Quantros, and by extension CMS, are not NPIs [national provider identifiers) or anything of the sort,” Rick explains. “So we had to spend a significant amount of time building that crosswalk between those and maintaining the crosswalk between those IDs.”

Jeff Rick

STANDARDS AND EDUCATION The challenge for employers is essentially twofold, according to Marlo. She says one involves making sense of quality data in the absence of standardized metrics. A seasoned health industry executive couldn’t agree more. Scott Ray, CEO of 6 Degrees Health who previously worked in a transplant centers-of-excellence network, doesn’t have much confidence in today’s quality metrics. Quality data largely comes from CMS, he says, leery of the federal government’s ability to master this area. Beyond that, a smattering of proprietary information is collected from commercial entities. “Why would Blue Cross want to share the quality data they have with Cigna?” Ray asks rhetorically.

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Another issue is getting employee populations to use price transparency and quality data tools, which Marlo says involves a significant communication and education campaign. But that’s just the tip of a larger iceberg. She recalls, for example, how one large firm confided in her a wish to simply eliminate the bottom 10% of performing network physicians. The fact is, measuring quality isn’t cut and dried. If the same procedure performed on two patients results in different outcomes, it could be based on how their bodies reacted rather than a physician’s performance, Ray says. Outcomes also could be skewed. Some facilities that perform only five to 10 kidney transplants a year may have a perfect track record because they cherry pick the easiest cases and refer tough ones to the Mayo Clinic and Johns Hopkins, he explains.

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Holy Grail In addition, Ray believes it’s difficult to compare hospitals when facilities have their strengths and weaknesses and may not ace every procedure. Indeed, there’s tremendous complexity lurking in the health care system. In the case of organ transplants, pre- and postop considerations must be assessed alongside the actual procedure. “It’s not just having a great surgeon; it’s about having all these other components,” he explains. Whereas deciphering the worst and mediocre health care facilities is fairly straight forward based on current quality data, identifying the best performers is tricky “because we don’t have the full picture,” explains Rob Archibald, the company’s chief technology officer. 6 Degrees Health, whose software platform features transparent hospital financial and quality data, is in discussions with Quantros and other vendors to determine the best way to move forward with quality data.

SEALS OF APPROVAL That path ultimately hinges on credentials and track records. Self-insured employers should consider the accreditation status of organizations when making direct contracting decisions, suggests Mark A. Crafton, executive director for The Joint Commission’s Strategic Alliances Division of Business Development, Government and External Relations. He says The Joint Commission’s Gold Seal of Approval will

“identify organizations that have met national standards associated with improved clinical quality enhanced patient safety.” help them

Performance measurement and review of clinical quality data is an inherent aspect of all accreditation and certification programs associated with The Joint Commission, which accredits more than 22,000 organizations nationwide. “Organization performance on standardized measure sets is evaluated during the accreditation survey and for disease-specific Mark Crafton certification, during both the on-site review and mid-cycle engagement,” Crafton explains. “Standards within the Performance Improvement chapter of all manuals require organizations to make PI a priority, establish targets of acceptable performance and make demonstrable improvements.” Several Joint Commission certification programs require participation in national clinical registries that can be used to benchmark performance against national, state and regional peer groups, as well as organizations with similar characteristics. The Joint Commission requires registry participation in most cardiac certification products, and total hip and knee replacement, Crafton adds.

ESTABLISHING QUALITY INCENTIVES But providing quality information isn’t enough “to move market share and help consumers get to high-value providers,” cautions Cheryl DeMars, CEO of an employer-owned nonprofit cooperative known as The Alliance. “That's why we established our Quality Path Program, which focuses on about 70 shop-able tests and procedures, and first assesses quality of care, not only at the hospital level, but individual physician level, using a high bar for quality.” Physicians and hospitals that pass muster move on to the contracting phase wherein lower bundled prices with warranties for care are negotiated based on the Alliance’s purchasing power. The group, which is nearly 30 years old, features more than 240 self-funded employers. Members are scattered across Wisconsin, northern Illinois and eastern Iowa where almost 100,000 covered lives receive care from providers whose compensation is tied to performance and not volume. These self-insured groups are able to save an estimated 10% 14% of their total health care spend.

Cheryl DeMars

“We use quality information, coupled with price, to help our employers implement incentives, primarily through plan design, to create a pathway for their employees to go where care is good and costs are lower,” DeMars reports.

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Holy Grail

Stephen Parodi The Alliance uses quality measures produced by CMS, as well as medical specialty societies in orthopedics and other key areas, to find best available information that matters to both consumers and employers. Ideally, she says it’s best that providers accept any quality methodology or assessment being used as “valid and a fair reflection of the care that they deliver.” While mounting demand for health care transparency serves as a tailwind for quality measurement engines, DeMars believes the recently introduced Lower Health Care Costs Act could strengthen that effort with the establishment of a national data warehouse. In spite of obstacles to health data quality measurement, Parodi is sanguine about the future. He already has seen “demonstrable improvements,” citing a recent paper published by the National Bureau of Economic Research. Groups that are integrated and multi-specialty in nature saw about a 36% reduction in Medicare expenditures relative to single-physician practices, the report noted, which squares with CAPP’s mission. Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 30 years.

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A QQ& A

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

&

T T

he Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on ACA, HIPAA and other federal benefit mandates.

Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Dan Taylor provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte, Dallas and Washington, D.C. law firm. Ashley Gillihan, Carolyn Smith and Dan Taylor are members of the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com.

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A NEW ERA OF HRAS BEGINS IN 2020 After a little more than 18 months after the President’s Executive Order, the Departments of Labor, Treasury, and Health and Human Services (the “tri-agencies”) issued their long-awaited final regulations on health reimbursement arrangements (HRAs). The final regulations expand HRAs in ways that could significantly change the health benefits landscape (especially for small employers) by establishing two new HRAs:

• An HRA that is integrated with certain individual market coverage (IMC) and Medicare (individual coverage HRA (ICHRA)). A nonintegrated general purpose HRA that is considered an excepted benefit (excepted benefit HRA (EBHRA)).

The final regulations are effective for plan years beginning on or after January 1, 2020. These new designs should, subject to the availability of traditional individual health insurance coverage, significantly expand the possibilities for defined contribution health coverage—igniting a new HRA-Era beginning in 2020. We address this new guidance in a two-part series. This article addresses the EBHRA, which can be paired with traditional group health plan coverage. Last month we addressed the ICHRA.

EBHRA

Practice Pointer: The aggregate $1,800 contribution maximum does not apply to FSAs or HRAs that reimburse only excepted benefits, such as dental or vision benefits. • The employee must also be offered nonexcepted, nonaccount-based group health plan coverage from the same employer, but the employee does not have to enroll in that coverage.

• The employee cannot also be offered an ICHRA.

• The terms and conditions of the EBHRA must be the same for all “similarly situated” individuals (as defined by the HIPAA wellness nondiscrimination rules).

What is an EBHRA? The second of the two new HRAs created by the regulations is a non-integrated, excepted benefit HRA (EBHRA). This new HRA qualifies as an excepted benefit, which means it can reimburse general medical expenses without integration, so long as it satisfies the following conditions:

• The maximum annual contribution to the EBHRA is $1,800, adjusted for inflation. This does not include carryover amounts, which may be unlimited. If the employer offers any other HRA or other account-based group health plan to the employee for the same time period (other than one that reimburses only excepted benefits), the aggregate annual contribution for all such HRAs cannot exceed $1,800.

Who are similarly situated employees?

“Similarly situated” employees for EBHRA purposes are employees within the same employment-based classification that is consistent with the employer’s usual employment practices, such as full-time, part-time, hourly, salaried, or worksite location.

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Does ERISA and HIPAA apply to an EBHRA?

PEERING INTO 2020

ERISA and all that comes with ERISA applies to EBHRAs. However, since it is an excepted benefit it is exempt from the health insurance reforms and HIPAA’s portability and nondiscrimination rules. A plan document and Form 5500 may be required, requests for reimbursements must be handled in accordance with ERISA’s claims and appeal procedures, and the employer must furnish participants with a summary plan description (SPD) in accordance with ERISA Section 102—just to name a few of ERISA’s requirements.

Beginning in 2020, the following HRAs will be available for consideration:

HIPAA applies to the EBHRA as well – meaning that employers must have a privacy notice, privacy language in the plan document, privacy policies and procedures, business associate agreements, and a HIPAA risk assessment.

Is the EBHRA subject to the Section 105(h) nondiscrimination rules? Yes! Unlike an ICHRA that is designed to reimburse only IMC premiums, there is no exception from the Section 105(h) rules. Consequently, if an EBHRA offered to salaried employees has a higher benefit amount than the HRA benefit offered to hourly employees, the EBHRA could be considered to be discriminatory.

What expenses can be reimbursed by the EBHRA? The EBHRA may reimburse most Section 213(d) medical care expenses incurred by participants; however, it may not reimburse any insurance premiums except for COBRA (or other continuation coverage premiums) and premiums for plans that only provide medically related excepted benefits (e.g., dental or vision). IMC premiums, non-COBRA group coverage, and costs of Medicare Part A, B, C, or D would not be eligible expenses. STLDI coverage could, however, be reimbursed under an EBHRA.

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• An HRA integrated with group • •

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The two new HRAs will give employers, especially smaller to mid-size employers, much more flexibility with the health plan coverage that they make available to employees. For example, employers that desire to offer part-time employees health coverage but couldn’t otherwise afford to offer coverage may now be able to offer an ICHRA to such employees. The two new HRAs are only a few short months away from becoming reality, and the open enrollment period for IMC begins in November, so employers should start considerations of the two new HRAs now.


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OUTSIDE THE BELTWAY

outSIDE the Beltway WRITTEN BY JOANNE WOJCIK

T T

o support federal law and to shore up their eroding small group markets, numerous state legislatures have begun cracking down on the sale of medical stop-loss insurance to prevent many small employers from self-funding their health benefits. State lawmakers also are seeking enhanced reporting by medical stop-loss carriers as a means to gauge just how many small employers have begun self-insuring health benefits since the enactment of the Affordable Care Act. Although the ACA requires the Department of Labor to prepare annual reports on the self-funded group market, including plan type, number of participants, benefits offered, and funding arrangements, it only applies to employers with 100 or more employees. Because the federal Employee Retirement Income Security Act (ERISA) prohibits states from regulating self-funded benefit plans, some states have started taking a back-door approach to regulating self-insurance options for small employers by restricting the sale of medical stop-loss coverage, which most small employers purchase to protect against “shock” claims—high-dollar, but low-frequency claims such as a premature baby or organ transplant.

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OUTSIDE THE BELTWAY “Many smaller employers are looking for lower-cost alternatives or are dropping coverage entirely since they are not subject to the employer mandate in the ACA,” said Dan Ziebel, Director of Product Management at National General Insurance, a Milwaukee-based stop-loss carrier that operates nationwide. In 2016, ACA laws and regulations changed the definition of “small group” from 50 or fewer employees to 100 or fewer employees.

Other states blame the increasing prevalence of self-insured health benefits for their shrinking fully insured small group markets. In New Jersey, for instance, a bill was introduced to ban the sale of stop-loss insurance to groups with fewer than 50 eligible employees. Driving this legislation is the fact that the fully insured small group market has lost approximately 600,000 enrolled individuals over the last 18 years. It has the support of two of the state’s largest insurers, which stand to gain if small employers elect to buy coverage from them. However, the Self-Insurance Institute of America, Inc., has been warning state lawmakers that many of these smaller employers might simply drop healthcare coverage for their employees if they cannot self-insure. As SIIA members are aware, self-insured plans tend to cost employers less than fully insured plans because they are not subject to state-mandated benefits, which often drive up the cost of health insurance.

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Similar regulation pending in Maine has been put on hold while the Bureau of Insurance develops regulations that are likely to set higher specific and aggregate stop-loss attachment points and bar lasering—the practice of setting higher attachment points for individuals with high-cost medical conditions. Under current Maine law, the minimum specific attachment point for employers with fewer than 50 employees is $20,000, while the aggregate attachment point is 120% of expected claims. In Nevada, three iterations of small group stop-loss regulations have been proposed over the past two years. One proposed regulation would prohibit medical stop-loss carriers from issuing contracts to employer groups of 15 and under. Another would discontinue the current minimum attachment points for aggregate stop-loss of $4,000 per enrollee. SIIA sees the latter as a positive change because it increases small employers’ contract options, allowing them to purchase aggregate coverage at lower attachment points. The Nevada regulations also would require medical stop-loss insurers to report certain information such as the number of contracts in force in the state, specific and aggregate attachment points, and the number of employees each employer has—something that stop-loss carriers can’t do since they only know the number of individuals enrolled in coverage, not the total number of full- and part-time employees a company has. For example, they wouldn’t know whether some individuals have coverage via other sources, such as their spouse’s employer. SIIA has submitted comments to Nevada regulators and participated in a stakeholder work group, and additional updates are expected along with a new draft of the regulations.


OUTSIDE THE BELTWAY In New York, Gov. Andrew M. Cuomo’s proposed 2019-20 budget would have eliminated the grandfathering of stop-loss contracts in the 51-100 market. In 2015, the governor signed a five-year grandfathering extension through Jan. 1, 2024, with the understanding that the Legislature would pass a new law reducing the extension to two years. The bill changing five years to two years passed the Legislature earlier this year and is awaiting the governor’s signature. This new law would permit renewal of stop-loss contracts through Jan. 1, 2021, a reduction of three years compared to the current law. In some cases, state legislatures are operating under the assumption that self-insured benefits are bare-bones health plans that leave many covered individuals underinsured, or that employers offering such benefits can deny coverage to employees or their dependents who they perceive to be poor risks. “Some states think self-insured plans are simply stripped-down, minimum coverage plans, but that’s not true,” observed Steve Suter, chairman of SIIA’s Government Relations Committee and President & CEO of Healthcare Management Administrators, Inc., a third-party administrator based in Seattle. Meanwhile, proponents of the ban in New Jersey are telling lawmakers that self-insured plans are “junk coverage,” according to Adam Brackemyre, Vice President, State Government Relations, SIIA’s Washington-based state legislative lobbyist.

While self-insured plans have a great deal of flexibility in plan design, most offer a comprehensive suite of benefits including preventive care, Brackemyre noted. He said the ACA also prohibits self-funded employers from setting annual and lifetime dollar limits on coverage, and all plans must cover pre-existing conditions, although they can set a 90-day waiting period before coverage commences. Because of these and other misperceptions, state lawmakers need to be educated about self-insurance, said Suter, who has been recruiting SIIA members to help shape the feedback that Brackemyre provides to lawmakers on behalf of SIIA. He said that SIIA members should be concerned about these legislative and regulatory developments affecting the availability

OCTOBER 2019

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OUTSIDE THE BELTWAY of self-insurance in New Jersey, Maine, Nevada and New York even if it is outside of their markets because “states watch the actions being taken by other states and they frequently try to introduce similar legislation.” Armed with input from members of SIIA’s Government Relations Committee, Brackemyre has been educating members of the various state legislative committees considering these bills on how the availability of medical stop-loss insurance provides financial support for self-insured health benefits sponsored by small employers, many of which might not be able to afford to offer health benefits to their employers without this option. However, state legislatures also are receiving negative feedback from their insurance regulators since it has been the longstanding position of the National Association of Insurance Commissioners (NAIC) that small employers should not be permitted to self-insure because it would hurt the fully insured market, which is required to take all comers regardless of medical history since enactment of the ACA. In a 2015 White Paper titled “Stop Loss Insurance, Self-Funding and the ACA,” the NAIC asserts “if employers—particularly small employers, with younger, healthier employees—selffund…it will leave the older, sicker population to the fully insured, smaller group market.” “The truth is, after decades of self-insurance being made available to small employers, there’s never been any evidence of self-funding undermining the small group market in any state,” Brackemyre said. SIIA will continue to update members on this issue through the various digital platforms. Questions or comments are invited by Adam Brackemyre at (202) 595-0641 or by email at abrackemyre@siia.org.

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BROKER/ADVISOR PERSPECTIVES

INSIGHTS FOR AND ABOUT BROKERS/ADVISORS ACTIVE IN THE SELF-INSURANCE MARKETPLACE

CREATE A BETTER MARKETING STRATEGY FOR YOUR HEALTHCARE BUSINESS

E

ver feel frustrated that people aren’t responding to your marketing and communication? You work hard to promote your company and its services, but instead of getting the enthusiastic response you were hoping for, you get crickets.

Written by Wendy Keneipp

It may be because you’re trying to appeal to a broad audience, and when you do that, you actually end up appealing to no one. It may sound counterintuitive, but a generic marketing strategy not only doesn’t appeal to a wide audience, it actually alienates a good part of your potential buyers, and specifically, your most important buyers. The Law of Diffusion of Innovation, a social science theory developed by E.M. Rogers in 1962, helps us understand why. The law helps explain how an idea or product gains initial traction with a small group of people, and then, over time, how it continues to grow, gaining momentum and spreading through a population or social system.

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However, the adoption doesn’t spread evenly through the population, and we can’t use the same tactics to appeal to everyone as they consider the new ideas/products. We must adjust our communication approach as we work through the spectrum of adoption. The needs of employers and the role of providers in the healthcare chain has changed considerably over the years, and as a result, value propositions have been changing as well. Because of all this change, you need to revisit how you’re marketing your services and make modifications to match new roles and value propositions that are appealing to today’s buyers. There are two key ideas about the law to understand and put it to effective use.

FIRST: KNOW THE KEY ELEMENTS PLAYING INTO THE ADOPTION PATTERN Innovators: You, as advisors and service providers, are the innovators. As you work to change your business model and expand your value proposition, you are creating an innovative scenario that requires reeducating employers on why, how, and what to buy from you. Adopters: Employers looking for a new approach to managing and financing group benefits are the adopters. Communication channels: The how and where of sharing your message. The more channels and the more targeted the channels, the greater chance of influencing the right audience. Time: Passage of time is required to spread the new message. The amount of effort and the number of mediums you put into place will strongly influence this element. Social systems: External and internal influencers help spread your new ideas. How well you understand and take advantage of your opportunities and connections to help propel your message determines how widely and quickly your message spreads.

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SECOND: KNOW THE STAGES OF THE ADOPTION CURVE The quick and seemingly easy answer is to look at the break-out of how the population falls into these categories and decide that targeting the Majority of the curve makes sense. But it’s completely wrong.

HERE’S WHY IT DOESN’T WORK TO TARGET THE MAJORITY The influence pattern of adoption starts from the left side of the curve and works to the right. Each group is dependent on the adoption of the previous group. Let’s break it down to see how this plays out. However, to understand the critically important influence the previous group has on adoption, I want to start from the end of the curve and work backwards to the beginning. Understanding this rolling influence helps you create a more effective communication strategy. Starting from the end, the far right of the curve:


The Laggards won’t adopt the idea until it has completely saturated the market and there is no other alternative. The Late Majority won’t adopt the new ways until the Early Majority has gone all in and it’s become mainstream. The Early Majority won’t touch the new idea until there has been a good amount of public talk about it along with proof that it’s worthwhile and/or effective.

The Early Adopters won’t jump on board until the Innovators have gotten excited about it.

So, we rely on the Innovators to lead the charge on the new ideas as a means to influencing everyone else along the chain. If you don’t get the attention of the Innovators, you’ll have a hard time getting the social proof that your new ideas and new ways of working are worth the time and money investment of the other groups.

That means you first need to appeal to the people who get excited about trying new things. The ones who get fired up and volunteer to be your guinea pig on a new idea should become your primary focus for testing new ideas and fleshing them out. Once they are on board and seeing success with these new ways, then the Early Adopter folks will give it serious consideration – they want some proof, but don’t need a lot. Adding case studies into your communications during this phase becomes an important element of gaining early trust through social proof. These are your two key groups to target in your initial marketing because they’re going to come on early in the change process and give you the motivation to keep going. If you can’t successfully appeal to these two groups, then you have no chance of appealing to the Majority.

TRANSITIONING THE MOMENTUM TO THE MAJORITY After gaining the trust of these first two early groups, then it’s time to capitalize on the momentum and put your communication and social systems to work spreading the message to the Early Majority. This is a critical step that needs significant time and attention because it’s the part of the chain where the whole thing can all fall apart. Companies have a hard time transitioning and extending their message to the Majority because these groups need more convincing and more proof than the previous. They don’t easily jump on board, which means your company must ramp up communication efforts to provide consistent education and ample social proof that it works. This new phase requires a significant increase in planning, precision, consistency, and just general hard work to transition from the Early Adopters to the Majority groups. It’s because of the difficulty in making this transition that new ideas and changes in a new model will gain early traction but then fizzle out. We’ve all seen companies gaining momentum only to seemingly abruptly fail, and we’re all left wondering what happened.

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OCTOBER 2019

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This shift to the Majority can also indicate the point of inflection at which some companies successfully transition their entire business to a new way of working and gain unbelievable momentum along the way. Early, easy success can gain some early traction, but it’s the hard work and consistency that separates the pack. Stop trying to appeal to the Majority with your new ideas and start appealing to the people who are looking to be on the cutting edge. The advisors and employers who are actively looking for a different solution to managing the healthcare spend are the ones you should have in your sights. Trying to convince people who aren’t ready will be a futile and frustrating effort. Focus on those who are ready and be very generous in offering education and example stories to help make the case.

Wendy Keneipp, partner at Q4intelligence, is a business strategy and marketing/sales coach, working with independent agencies to transform them from legacy sales organizations into modern, client-focused advisory firms. In an industry starved for effective marketing, Wendy delivers a clear advantage by helping agencies create their own results-oriented messages that connect with their buyers and develop marketing and sales systems to take advantage of the new ways buyers seek out answers.

Talk to them in a way that speaks to their desire to be seen as innovative and on the early edge of adoption in managing their benefits and their budgets. Or better yet, appeal to their desire to be seen as leaders in their companies and in their field. Show them what a new way of evaluating a group healthcare plan looks like and let them see themselves as the heroes in the HR strategy and financing picture. That will gain the attention of the people who will help take your business from being just one of many similar options to being an industry-leading provider and feared competitor.

Wendy Keneipp

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THE TOWER OF BABEL – TALKING HEADS TALKING PAST EACH OTHER

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s the 2020 Presidential Election draws closer, the topic of healthcare continues to dominate the airwaves. Be it media or debate, this is one of the (if not the) issues about which everyone is talking; but pay close attention and you’ll notice they aren’t all speaking the same language.

ACCESS VS. CARE VS. INSURANCE One word everyone can agree upon is “affordability.” The issue, however, is that depending upon whom you ask, what it is that ought to be “affordable” differs. Some people throw the term “access” around, while others seek affordable “care,” whilst still others focus (candidly) on affordable insurance.

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Interestingly, for many, the term they use (access versus healthcare) matters little, as – once their position is better defined – a shrewd listener will note that the goal is ultimately the same; make insurance cheaper. They seem to believe that insurance is healthcare, and cheaper insurance is thereby cheaper healthcare. Further, they believe that the only “cost” of healthcare, incurred by an insured person is their premium, co-pay, coinsurance, and deductible.

This, then, is one misconception that continues to dominate political, regulatory, and economic discourse; that by attacking the cost of insurance for the general populace (i.e. premiums/ contributions, co-pays, coinsurance, and deductibles), you somehow fix the problem of limited access and/or the high cost of healthcare.

HEALTH INSURANCE IS NOT HEALTHCARE I’ve written in the past, and continue to argue today, that health insurance is not healthcare. Health insurance is one means by which the risk of payment for healthcare is shifted from the consumer of healthcare to a third-party payer. Changing who pays for healthcare doesn’t (on its own) address how much the

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healthcare costs. For instance, before you argue that Congress should establish a funding mechanism to support the “cost of caring” for those with significant medical needs, ask first what it means to pay for care. Are you referring to the cost of insurance, or the cost of the “actual” health care for which insurance pays?

Some might argue, however, that when a “new” payer is designated, (be it insurance, a self-funded plan, or the government), if they are large enough and possess enough clout, they can strongarm the provider into accepting lower prices for care – thereby reducing the actual cost of care. Thus, while making insurance more affordable doesn’t in and of itself reduce the cost of care, by providing more lives (and this negotiation power) to the payer, those payers in turn are provided with more “power” to force providers into accepting lower prices. Indeed, a single-payer would hold all the cards, and thus name their own price.

In a vacuum it makes sense, and if we were purchasing potatoes or tires it may work (in a truly free-market environment), however, in healthcare some features apply that are unique to this industry.

A NON-MARKET MARKET In any other market, a vendor of goods or services can set any price for those goods or services. Supply, demand, and competition will then force the vendor to increase or reduce their price or fail. This allows the “free market” to naturally set prices at a level both the seller and buyer can live with.


In healthcare, however, providers leverage things like technology, reputation, rankings, and sponsorships to compete for “customers” (a/k/a patients), rather than the price. Providers compete for these other things; if and when price is a matter over which there is competition between vendors (providers), it’s a competition to see who can charge the most. Indeed, one of the big pushbacks against transparent pricing in healthcare is that some providers will see that other providers “get away” with charging higher prices for the same services … and will increase their rates to match. Imagine if that same argument applied to every other industry; that the cost of bananas couldn’t be transparent, because grocers will compete to raise prices faster than the competition. Welcome to a world

where the consumer has no skin in the game, and no price-based incentive to pick the lower cost options exists.

In healthcare, where patients don’t know, or (they think) pay the price of healthcare (at the time the care is consumed), and the consumer doesn’t appreciate the impact of higher healthcare prices on insurance costs, providers are able to freely raise prices without the negative repercussions vendors in other industries would immediately suffer.

Additionally, even if patients know the price, if they (at least in their mind) don’t think they are the ones paying the price, then higher prices will – at best – not dissuade them from consuming care, and – at worst – will steer them away from reasonably priced care to higher cost providers, thanks to an (inaccurate) assumption that higher price equates to higher quality.

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In healthcare, however, rarely can we say there is truly a meeting of the minds. It is rare indeed to see a provider (the vendor) and patient (the consumer) agree upon a price prior to the provision of services.

QUANTUM MERUIT At the same time, contract law states that a customer who agrees to pay a certain price for a service or product has entered into a contract with the vendor. This preemptive agreement between the customer and vendor, regarding what will be paid, and what will be received by the customer, is titled a “meeting of the minds.” If the customer later fails to pay the amount to which they’d previously agreed, this would be deemed a breach of contract. Even if objectively, one could argue the agreed upon price is excessive, assuming the customer had the requisite capacity to enter into such a deal, the contract is binding.

If, however, someone receives a good or service but there was no meeting of the minds (agreement about what would be provided, and a specific price for said goods or services), the customer will be forced to pay an objectively reasonable price – determined by an objective third party, using objective pricing parameters – and NOT whatever price the vendor chooses to collect.

This concept, called Quantum Meruit, ensures vendors are adequately compensated based upon objectively reasonable parameters, and customers are not unjustly enriched (don’t “get something for nothing”) but also aren’t forced to pay a price they never agreed to (and which is excessive by all reasonable, objective measurements).

Yet, despite this, Quantum Meruit – applicable to other commercial exchanges – has no place in healthcare, and rather, the provider is allowed to balance bill the patient whatever amount it wants – usually the amount that exists between the provider’s “charge master” price, and what it already received from the applicable carrier or benefit plan.

Note that the only prohibition on this billing practice is the prior existence of a contract between a payer and the provider, by whose terms the provider agrees to accept the payer’s payment as payment in full. This agreement, many argue, is the greatest value a network offers.

Given that the law protects a provider’s right to charge whatever they wish – with no limits based in reasonableness, meeting of the minds, or Quantum Meruit – and limited only by pre-negotiated contracts, payers generally negotiate from a weak position.

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As such, simply ensuring everyone has insurance will not drastically reduce the cost of healthcare itself. Further, people – whether they are insured or not – will pay the cost when healthcare is too expensive. Be it balance bills for the uninsured, or rising premiums and deductibles for the insured – the money needs to come from somewhere. Compounding the issue further is that fact that Americans generally suffer from a lack of long-term vision. We are, as a society, driven by a need for instant gratification. People use credit cards to buy things now, that they can’t afford later. People purchase homes and take out mortgages now, that they can’t afford later. Likewise, people obtain healthcare now that they can’t afford later.

Make no mistake; even those with insurance pay the cost later, in the form of higher premiums, co-pays, deductibles, and co-insurance. Therein lies the rub – people are quick to target out of pocket expenses at the time care is received, and the cost of insurance in general, but they do so without asking why insurance is expensive or addressing that root cause.

Until people understand that – with or without insurance – patients will ultimately be responsible for the actual cost of care, then the issue will not be resolved. In other words, focusing on the rising out of pocket expenses, such as premiums, co-pays, and deductibles – without also focusing on why these expenses are increasing – addresses a symptom without diagnosing the disease.

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WHAT DOES THIS MEAN FOR US? Many candidates and their supporters are proponents of the so-called “Medicare for All” plan, yet even many who support those candidates are beginning to hesitate, worrying that under Medicare payment rates (forced down providers’ throats by a single payer monopoly), some hospitals struggling to stay open might close. Here, then, we see the opposite issue – ushered in when a monopoly is in place. A single payer with too much power can force opposition into accepting unduly low, unfair rates.

Is there a happy medium? Some have argued that a so-called “public option” may be one such “middle ground,” but this idea cannot live in harmony with private benefits for long … resulting in the demise of private plans, and eventual monopoly that is a single payer, and which (as already discussed) most agree needs to be avoided.

Consider as “Exhibit A” the State of Washington. Washington is set to become the first state to enter the private health insurance market with a so-called “public option,” at rates supporters say will be 10% cheaper than comparable private insurance. Almost as if the lawmakers read my article above (before I even wrote it), they claim these savings will be achieved thanks to a cap on rates paid to providers.

Without going into too much detail regarding the pricing model (spoiler alert – it’s a percentage of Medicare), if this public option is indeed available to all residents, and if they can “force” providers to accept these payments as payment in full (thereby preventing balance billing), why would anyone sign up for a private plan? If, then, all private plan members are steered by sheer common sense to this public option, private plans will cease to exist and – in this way – a single payer emerges from the exchange.

It was this threat that caused a public option to be removed from the proposed PPACA legislation, but now it’s back, at the State level as well as in proposals presented by Democratic candidates for the Presidency.

In the end, unless private plans and providers can achieve a meeting of the minds … and make healthcare affordable long term … this may be the future sooner than we think. Ron E. Peck has been a member of The Phia Group’s team since 2006. As an ERISA attorney with The Phia Group, Ron has been an innovative force in the drafting of improved benefit plan provisions, handled complex subrogation and third party recovery disputes, healthcare direct contracting and spearheaded efforts to combat the steadily increasing costs of healthcare. Attorney Peck obtained his Juris Doctorate from Rutgers University School of Law and earned his Bachelor of Science degree in Policy Analysis and Management from Cornell University. Attorney Peck now serves as The Phia Group’s Executive Vice President and General Counsel, and is also a dedicated member of SIIA’s Government Relations Committee.


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* MyHealthGuide. (2019, March). Stop-loss Premium Ranking. MyHealthGuide Newsletter. Retrieved from myhealthguide.com. Stop Loss coverage provided by Anthem Life Insurance Company. In New York, coverage provided by Anthem Life and Disability Insurance Company. 114827MUBENASL 12/18


Written by Joanne Wojcik

ADDITION OF THIRDPARTY BUSINESS CONVERTS CAPTIVES INTO PROFITCENTERS

A A

n increasing number of companies that own captive insurers are looking to third-party business as a way to turn their alternative risk-financing programs into profit centers. While most captives are formed primarily to self-insure the risks of their parent companies, selling insurance to unrelated third parties can provide an additional source of revenue to help finance risk management initiatives or to enhance solvency should adverse loss experience occur. Selling product warranty coverages, tenant contents insurance to consumers can have the added benefit of boosting customer relations, while offering voluntary benefits to employees that are reinsured by the company’s captive can enhance morale.

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Moreover, if more than 50% of the insurance underwritten by the captive is unrelated third-party business, the captive may qualify for insurance company tax treatment, enabling the parent to deduct on its federal income taxes premiums paid to the captive to insure its own risks, while the captive may deduct the loss reserves established to pay company claims. Salt Lake City, Utah-based Extra Space Storage formed its Bermuda-based captive, ESM Re., in 2006 with the objective of using it to offer insurance to its self-storage tenants. The company requires its customers to insure the content of their storage units, but even though they can purchase this insurance from multiple sources, more than half of Extra Space Storage’s customers now purchase coverage from ESM Re. Customers pay premiums to Raleigh, North Carolina-based IAT Insurance Group, which serves as ESM Re’s fronting company and is licensed to sell insurance in all 50 states plus Puerto Rico, and Extra Space Storage’s captive reinsures the tenant insurance program. “We believed we could provide better coverage and service to our customers if we worked with an insurance fronting company to create a program,” said Mark Marshall, Extra Space Storage’s Director of Risk Management. “When we started, the coverage was basically the same as a homeowner’s policy. It covered many of the same perils including fire, falling water, burglary, windstorm. As we went forward, we began to see other perils that other insurers weren’t offering, so we added flood coverage for all locations and earthquake coverage for people in California. We also added pest coverage at policy limits, which nobody had offered before. Other insurers might have provided small limits, maybe $250. Our pest coverage covers anything from termites to ants and rodents. Also, there’s no deductible on our product, which others require. This coverage can work hand-in-

hand with homeowners and cover the homeowner’s deductible,” explained Marshall. “A big reason we formed the company was that we wanted to provide a great customer experience. We have a TPA that manages claims—ACM—and we work closely with them, asking them to find coverage rather than looking for reasons to deny coverage,” Marshall said. In addition to offering more robust coverage than most other insurers catering to the self-storage industry IAT’s premiums are competitive, according to Marshall. With over half of the business reinsured by ESM Re., the captive also provides Extra Space’s general liability and EPLi coverage, as well as covering the deductibles for its work comp program. Extra Space also receives a dividend from the captive, so the captive contributes to the profitability of Extra Space Storage, helping to finance the growth of the company, which operates in 40 states and Puerto Rico, Marshall said. Jason Flaxbeard, Executive Managing Director at Beecher Carlson in Denver, has been working with Marshall and several other U.S. businesses on turning their captive insurance programs into profit-centers. “We try to help our clients drive profit by selling insurance related to their primary business. For example, a selfstorage company may sell storage rental coverage, or a ski resort might sell ski pass insurance that reimburses purchasers if they cannot use their annual ski pass for any reason, such as an injury. It’s a product that’s ancillary and it drives customer satisfaction or

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potential profit,” said Flaxbeard. “They want to control their relationship with their customers and, if handled correctly, it can be profitable for the captive owner.” Other types of businesses that can profit and improve customer relations by using their captives to provide insurance to their customers include auto dealers and manufacturers and wireless carriers, Flaxbeard suggested. “If you buy a particular brand of car, the car company will want you to buy the associated warranty because both you and the company will want to have access to genuine manufacturer parts,” he said. “Think about cell phone coverage. You buy a phone and what you’re actually buying is the service. The captive comes in if there’s a possibility of you losing that phone or dropping it and breaking it. On an individual contract, you pay a monthly fee and if something happens you get your data back and a new phone,” Flaxbeard said. In most cases, fronting insurers are involved with the captive reinsuring the risk, he said. Larger captive owners generally reinsure 100% of the risk, less fronting fees, while smaller captive owners might take a quota share plus a fee, he added. The number of captive insurance companies taking on third-party business is growing a double-digit rate, according to a June 2019 Captive Landscape Report published by global insurance broker Marsh. In 2018, 22% of Marsh-managed captives globally with a value of $18.7 billion in premium were writing some form of third-party coverage. Common third-party coverages being sold by captives included extended warranties, auto liability, theft, travel accident and independent contractor/customer risk vendor policies, Marsh found. Coverage or non-employed contractors, vendors,

independent contractors and customer risk showed the greatest growth, surging 138% over the last five years and generating more than $162 million in net premiums in 2018, according to the report. “This is all about enhancing the customer experience,” said Michael Serricchio, Managing Director at Marsh Captive Solutions in Norwalk, Connecticut. “It could be a big retailer offering life insurance to its customers, a utility offering home warranty or device protection insurance, or an employer offering professional liability coverage to gig workers. We’re also seeing payroll and financial services firms offering low-limit cyber insurance to small businesses.” New technologies, including mobile applications and blockchain, also are making it easier for captive owners to offer insurance to third parties including customers and suppliers, according to Jose Heftye, a Managing Director in

Mind over risk That’s how we properly assess risk – enabling our clients to focus on their businesses. We provide innovative stop loss solutions to protect selffunded employers from potentially catastrophic losses and flexible captive solutions that range from fronting and reinsurance arrangements to our turnkey stop loss program. We offer specialized solutions for specialty markets, including Taft Hartley and multiemployer organizations. We also offer fully insured organ transplant coverage to self-funded plans. Our clients have been benefiting from our expertise for over 40 years. To be prepared for what tomorrow brings, contact us for all your medical stop loss and organ transplant insurance needs.

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Would you navigate uncharted waters without a compass?

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

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Marsh’s Global Risk & Digital division responsible for sales of Bluestream™, Marsh’s cloud-based digital broker platform for the affinity market.

“Bluestream is the front end of the product the captive is offering. It is set up so the end user can get a quote and enroll in the program with the tap of a button. It’s platform agnostic, so it could be on a mobile phone or on a computer,” Heftye explained. The application, which is being offered as an enhancement to the services Marsh provides to its captive management clients,

“We have some clients using it to sell personal lines coverages to their customers from their captives.” also can be used to report losses, he said.

Property managers have begun using their captives to provide renter’s insurance to tenants, both to protect their personal property as well as to protect landlords in case of a tenant’s negligence, according to Jeff Kurz, Managing Director, Captive Insurance Sales and Consulting, North America, at Artex Risk Solutions in Rolling Meadows, Illinois. “The industry started requiring renters to buy renter’s policies about 10 or 12 years ago as an industry standard. But what if a tenant doesn’t have coverage and there’s a loss? We created a program in which the tenant signs a waiver of their insurance

requirement in exchange for a nominal monthly fee. This money goes into the captive to fund any losses caused by the tenant,” Kurz explained. Some companies are using their captives to offer voluntary benefits to their employees as another way to introduce third-party business and diversify the captive’s risk portfolio. In such cases, employees typically pay 100% of the premiums through payroll deduction to a fronting carrier which, in turn, cedes a portion of the coverage to the captive. Some common coverages offered include critical illness, hospital indemnity, accident, legal insurance and pet insurance. However, companies that offer voluntary benefits via their captives should be aware that some of these coverages, such as those related to medical, life and disability benefits, could be subject to the Employee Retirement Income Security Act, thereby requiring U.S. Labor Department approval for them to be insured by a captive, according to Karin Landry, Managing Director at Boston-based Spring Consulting. In most cases, companies that offer voluntary benefits via their captives do so to provide them at a lower cost than employees might pay from another vendor, Landry said. “Let’s say the target loss ratio for critical illness is 40% or 50%. By using a captive, employers can offer the voluntary coverage a more competitive price and save employees money. But, depending on how they set it up, it may or may not be subject to ERISA,” she said, advising employers to seek expert advice

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before pursing this option. On the other hand, an employer may profit by selling non-ERISA benefits such as auto or homeowner’s insurance, cell phone coverage or identity theft protection since such lines of coverage have low risk and loss ratios, according to other voluntary benefits experts. Premiums average between $10 and $30 per month, while claims do not exceed a few thousand dollars.

the captive writes, according to Charles “Chaz” Lavelle, a partner at Bingham, Greenebaum, Doll LLP in Louisville, Kentucky. “There is no statute or regulation, but there is a revenue ruling that puts the bright line tests at 10% or under and over 50%. So if you have 10% or less unrelated business, you never qualify, but if you have more than 50%, then you do qualify, assuming everything else is ‘plain vanilla’,” Lavelle said. Under Revenue Rulings 2002-89 and 2002-90, the IRS established safe harbors for when premiums paid to captives are deductible: If the captive gets at least 50% of its premiums from unrelated third-party insureds and/or if the captive has at least 12 “brother-sister” insured entities, each having between 5% and 15% of the total risk.

The addition of third-party business to a captive may, in some cases, enable its insured to deduct from its federal taxable income the premiums paid to the captive. The captive may also be able to deduct the loss reserves that are established to pay claims. But that depends on how much unrelated third-party business

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Written by Karrie Hyatt

CAPTIVES AND CREDIT RATINGS, TO RATE OR NOT TO RATE?

F F

or financial companies and traditional insurers, a solid financial strength rating from a nationally recognized statistical rating organization (NRSRO) is imperative to do business. However, for captives—from single parent to group, from large to small— there isn’t the same incentive to get a credit rating. That doesn’t mean that there aren’t good reasons and great benefits to credit ratings for captives.

THE PROS AND CONS General benefits of a credit rating for all types of financial companies are to show that the company is financially stable, to help facilitate raising capital, to provide transparency, and to help benchmark a company against similar companies. There are other benefits that are exclusive to captives, such as promoting group cap-

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tives to prospective members or helping support a parent company’s operations. A captive’s good credit rating can also help to improve relations with third-party service providers by helping to secure reinsurance or fronting arrangements. This can be a huge cost saving tool as it makes the reinsurer or fronting carrier more comfortable with the financial status of the captive. Extended benefits for rated captives include satisfying regulatory concerns, enhancing the overall profile of captives, or lowering the cost of the captive’s own insurance. According to Joseph Petrelli, president of ratings agency, Demotech, “To the extent that captives are covering the liabilities of the principals, a good credit rating might not be as important to them as it is to independent third-party insureds. However, a good credit rating might: lower the cost of corporate D&O and E&O; help attract independent board members; assuage the concerns of third-party vendors; help secure umbrella insurance coverage; and assuage the concerns of regulators.”

need be rated unless the rating adds value to the insurer’s business model,” said Petrelli.

According to Bukow, “Very small captives that have a very specific purpose and are tightly held would most likely not find value in a rating. If there is no cost savings, regulatory or board need, and the captive is fulfilling its plan then there is no reason to spend the time or money.”

CAPTIVES AND TRANSPARENCY As captives are privately held, beholden only to their parent companies and policyholders, having a good credit rating is not necessarily required to run a good business. A credit rating gives a captive more transparency in their business operations. In a way, it is relying on a third-party credit rating agency as a de facto regulator and can help put a captive in good stead with non-domiciliary and federal regulators. Captives are only required to financially report to their states of domicile and a financial strength rating from a third-party can help to mitigate outside concerns.

As privately held companies, many captives can find the idea of the transparency that comes with credit ratings concerning. The idea of transparency can make them shy away from seeking a credit rating. While transparency lends credibility to a captive and can bolster its reputation, not all captives want to put their business out in the public domain.

For Tina Bukow, managing director of business development with Kroll Bond Rating Agency (KBRA), “What external benefits are there to a well-rated captive? For one, well-rated captives help to raise the bar for the domicile they are in. Think about it, the more rated captives a domicile has the better that domicile may be perceived, which in turn can help the domicile grow. Also, captives have certainly made their mark in the industry and continuing to promote financial stability via ratings can only enhance their position in the overall market.”

While these benefits can definitely help a captive, a rating is not always the best thing for the company. “No company

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Recognizing this issue, KBRA can help captives get rated without wide exposure. According to Bukow, “KBRA recognizes that captives should be able to reap some of the reward of having a financial strength rating without the public scrutiny that comes along with a published rating and allows them to share an unpublished rating with certain confidential partners—internal Board, regulators, reinsurers, and fronts and/or to fulfil certain contractual requirements.”

THE TIME AND THE EXPENSE A long-held misconception about credit ratings is that the process is time consuming and expensive. Not so, according to Petrelli. “Demotech’s review and analysis process is neither expensive nor time consuming. As we have long tenured, experienced, credentialed, insurance professionals as analysts, we are able to review and assign Preliminary Financial Stability Ratings using information that the captive manager has readily available.”

It is important to research credit ratings and the agencies that provide them, which includes talking to the agencies to get direct information about pricing. The pricing among credit ratings agencies varies widely, so it is worth it to put in the time to examine not only the different cost structures, but how each agency approaches rating captives.

“As for the time aspect, what is important is education and managing expectations,” said Bukow. “It is paramount to the success of the process that the captive has a clear road map of what is expected: data requirements, dialogue, and company meeting expectations (presentations, attendees, etc.). If the company is well prepared and

organized the process should be smooth and beneficial.”

There is also a misconception that new captives shouldn’t seek out financial strength ratings, at least for the first few years of their existence. The thinking is, they wouldn’t be able to meet the criteria needed to secure a good rating. For some of the more established rating agencies this may be true.

However, Demotech and KBRA both have processes in which they can rate a start-up company. “KBRA understands and embraces start-ups (it’s not that long ago that we too were a start-up, which gives us perspective that others may not have),” said Bukow.

“For example, we understand that maintaining large amounts of stagnant capital on its balance sheet for several years is not optimal for a captive. Also, our credit ratings are forward looking, allowing for greater emphasis on the business plan and management. Our approach allows for greater weight on the experience of the team leading the captive.”

According to Demotech’s website, they too want to help new captives establish themselves with solid financial strength ratings, “The historical operating results of a relatively new captive insurance company may not be representative of its prospective financial stability.” The company uses an evaluation process that applies enterprise risk management principles and practices in their evaluation of newer captives.

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THE CREDIT RATERS Having a good financial strength rating can, “Prove to your constituents and potential business partners that you are financially secure and serious about your business. Particularly if the rating is from a SEC recognized NRSRO, respected and relied upon by investors in the capital markets and follows an investment grade rating scale. Investors and reinsurers understand the rigor that NRSROs are held to and rely on ratings from agencies with a stellar capital market reputation,” said Bukow.

There are a number of agencies that provide financial strength credit ratings. The big three in the international financial markets are Moody’s, Standard & Poor’s, and the Fitch Group—all with storied histories. A.M. Best is among the most well-known rating agencies for insurance, getting its start in the sector more than a century ago. Two more recent agencies that have made a name for themselves in the insurance sector are Demotech and KBRA.

Demotech, has specialized in evaluating the financial stability of regional and specialty insurers and brings over thirty years of experience to the table. They have a unique process for evaluating captives that was developed in 1989 and it was the first ratings agency to review and rate independent specialty companies. According to Petrelli, this allows Demotech, “In some instances, we have the capability to eliminate fronting requirements, to assist the owners of the captive secure nonrecourse loans, and to qualify for savings on their professional liability, D&O, and ICPA (insurance company professional liability).”

Each of the latter three companies have different methodologies for assessing the financial strength of captives. A.M. Best’s analysis of captives, according to their website, “Offers valuable insight into a captive’s organization, its management, governance, and track record. The interactive rating process serves as a roadmap for practicing sound risk management and effective business strategy.” Captives are rated under the methodologies for alternative risk transfer vehicles. The rating focuses on enterprise risk management principles that assess the risk management framework and profile of the captive relative to the parent company’s business operations.

KBRA is a recent addition to the list of credit rating agencies, having been founded in 2010. The company takes a holistic approach to ratings, choosing not to rely on a proprietary capital model, allowing them “To rate a captive (or any insurance company for that matter) based on its own unique characteristics and not on an industry standard driven by a model,” said Bukow.

For captives, this means that KBRA’s “Methodology takes into consideration the nuances that captive insurance companies need to employ based on their reason for existence and relationship with the parent or group. This approach allows a captive to be viewed more accurately and takes into consideration the reasons it exists, allowing for more precise analysis and a more accurate outcome.”

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

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Stop Loss that does more than stop loss Looking for an insurance carrier that does more than identify trends? At Voya Employee Benefits, we take the next step, providing in-depth insights into what’s driving costs. Our proprietary data and analytics tools reveal the solutions that help your self-funded clients manage risk better—and protect assets over time.

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1 Ranking of top stop loss providers in the United States based on yearly premium as of 06/09/2018 by MyHealthGuide Newsletter: News for the Self-Funded Community, and does not include managed health care providers.

Stop Loss Insurance is underwritten by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state. ©2019 Voya Services Company. All rights reserved. 881423 205914 - 07012019


NEWS

NEWS FROM SIIA MEMBERS

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.

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NEWS DIAMOND MEMBERS TOKIO MARINE HCC – STOP LOSS GROUP ANNOUNCES LEADERSHIP PROMOTIONS With the announcement of Jay Ritchie being promoted to President of TMHCC – Stop Loss Group, TMHCC is pleased to announce the following promotions and changes in responsibilities that will help better serve the company in pursuit of its continued success. Promotions are effective August 1, 2019. In Beata Madey’s new role as Executive Vice President, she will retain oversight of regional operations but will also assume greater responsibilities with our claims department to help navigate producer relations as we grow our Claims Customer Representative (CCR) roles within the organization. Beata brings over 30 years of industry experience to the table. Prior to her new role, Beata served as a Senior Vice President and was involved in strategic planning with direct responsibility for underwriting, marketing and administrative functions. Mike Lee will assume the role of Senior Vice President of Accident and Health. Mike originally joined TMHCC in November of 2003 as a Regional Executive Vice President and has more than 37 years of experience in the insurance industry with various positions in underwriting and marketing. In addition to continuing to run the Northeast region, Mike will now have responsibility for all of TMHCC’s regional operations.

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Pam McGovern joins the senior management team as our Growth Officer. This newly created role in our Corporate Marketing Department will focus on assisting underwriting and marketing efforts across all regions as we continue to expand our stop loss and organ transplant product lines. Pam’s career in the insurance industry spans more than 24 years, including her prior role as Vice President of Marketing in the Northwest region. Robby Kerr has assumed a Senior Vice President role. Robby will continue to lead our Organ Transplant product line with added responsibilities of corporate oversight for our LifeTrac division. Robby’s career spans over 20 years and includes working as an Atlanta based third party administrator and as an Executive Vice President and Chief Marketing Officer. With over 40 years expertise in providing innovative stop loss solutions, TMHCC has developed exceptional products, unparalleled resources and value-added services that set it apart in the industry. TMHCC offers flexible captive solutions, fully insured organ transplant coverage to self-funded plans. TMHCC covers over 3,000 self-funded employers and union plans for medical stop loss and another 1,000 groups with organ transplant insurance. In an effort to combat high costs, TMHCC’s LifeTrac network provides solutions that focus on highcost, low-frequency medical events.


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We’ve got your back. Four words that you want to hear when seeking to self-fund employee medical benefits, particularly when facing the potential costs and risks associated with a self-funded benefit plan. At Swiss Re Corporate Solutions, our integrative National Employer Captive program brings our brokers, payers and their clients extra peace of mind through protection against catastrophic claims. Designed for groups with 50-400 enrolled employees, this captive program allows a small or medium size employer to participate as a member of a risk bearing entity with like-minded employers, providing both peer support and long-term financial stability. Most importantly, captive members get to jointly control their own risk and spend only the money they use. We’re smarter together. corporatesolutions.swissre.com/eslcaptives Insurance products underwritten by Westport Insurance Corporations and North American Specialty Insurance Company. Š Swiss Re 2019. All rights reserved.


NEWS About Tokio Marine HCC – Stop Loss Group Tokio Marine HCC – Stop Loss Group is the marketing name used to describe the medical stop loss and organ transplant-related insurance operations of Tokio Marine HCC through its wholly owned subsidiary HCC Life Insurance Company (HCC Life). HCC Life is a leading provider of medical stop-loss insurance through brokers, consultants and third party administrators. The Company has financial strength ratings of “AA- (Very Strong)” from S&P Global Ratings, “A++ (Superior)” from A.M. Best, and “AA- (Very Strong)” from Fitch Ratings. HCC Life is backed by the financial strength of its parent company, HCC Insurance Holdings, Inc. Visit tmhcc.com/life.

THE PHIA GROUP LAUNCHES NEWEST SERVICE: PATIENT DEFENDER The Phia Group is pleased to announce the launch of its newest service offering, Patient Defender. Patient Defender finally plugs the gap that has existed across the industry in relation to reference-based pricing programs and balance billing concerns. With Patient Defender, a small PEPM rate ensures that a trusted law firm is placed on retainer, ready and willing to assist the patient when balance-billing occurs. Health plans, TPAs, and brokers can now contain costs while knowing that patients have a legal advocate standing by. Adam Russo, The Phia Group’s Chief Executive Officer, summarized his excitement

“The industry has been asking for a solution like this for some time. Every time I speak about reference-based pricing at a conference, hands go up and people shout, ‘what about balance-billing?’ Patient Defender is the answer to that question.” this way,

Patient Defender is available now! For more information please contact Tim Callender or Garrick Hunt directly at tcallender@phiagroup.com (781-535-5631) and ghunt@ phiagroup.com (781-535-5644). About The Phia Group The Phia Group, LLC is an experienced provider of health care cost containment techniques offering comprehensive consulting services, legal expertise, plan document drafting, subrogation and overpayment recovery, claim negotiation, and plan defense designed to control costs and protect plan assets. Visit www.PhiaGroup. com.

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BERKLEY ACCIDENT AND HEALTH INTRODUCES ASO QUICKPAY, A NEW SERVICE TO STRENGTHEN STOP LOSS CLAIM EXPERIENCE Berkley Accident and Health, a Berkley Company®, has introduced ASO QuickPay, a new service that can help improve the cash flow associated with high-dollar medical claims. With ASO QuickPay, an employer with a self-funded health plan can unbundle its Stop Loss coverage from its Administrative Services Only (ASO) provider and enjoy rapid Stop Loss reimbursements. ASO QuickPay speeds up the reimbursement process by enabling employers to request a Stop Loss reimbursement as soon as an eligible high-dollar claim is paid. High-dollar medical claims are on the rise, making services like ASO QuickPay more important than ever. An analysis of Berkley Accident and Health’s Stop Loss block data from 2013-2017 shows that the frequency of claims over $1 million has grown by more than 250%. “Berkley Accident and Health is committed to creating a seamless claims experience for our customers from start to finish,” said Lee Davidson, Sr. Vice President, Stop Loss. “Clients have grown accustomed to fast service and easier transactions. That’s why we’re focused on being easy to do business with streamlined experiences, like ASO QuickPay and electronic claim reimbursement.”


NEWS “ASO QuickPay also helps members of our EmCap group captive programs who use ASO providers,” said Jim Hoitt, Sr. Vice President, Captives. “Our products are designed to protect the financial health of our customers’ self-funded plans. The ability to do this quickly and accurately with ASO QuickPay is a winwin for us and our clients.” AASO QuickPay strengthens Berkley Accident and Health’s customer experience with these benefits:

• Instant availability. Every new and in-force policyholder has ASO QuickPay, with no election form, no policy change, and no paperwork required to add it.

• No blackout periods. QuickPay can be requested during the entire policy period.

• Convenient documentation. Requesting QuickPay is easy with our streamlined form and documentation requirements. We can reimburse eligible large claims as soon as they’re paid, so there are no bottlenecks. Once the ASO monthly reporting is received, we’ll complete the standard adjudication and any final payment adjustments. For more information, please visit BerkleyAH.com.

• No additional cost. QuickPay is available at no additional cost to all Stop Loss policyholders and EmCap program members who use ASO providers.

From operating rooms to board rooms,

QBE is there.

No matter where you do business, you can trust QBE to deliver flexible solutions for self-funded and alternative risk structures. As an integrated specialist insurer, QBE applies deep technical expertise to deliver future-ready products, customized underwriting solutions and superior service — all backed by a strong balance sheet and well-diversified portfolio. Turn to QBE for the certainty you need to manage your business across the globe and discover what’s possible, wherever you are.

Learn more about QBE at qbe.com/us

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QBE and the links logo are registered service marks of QBE Insurance Group Limited. © 2019 QBE Holdings, Inc. 182724 (7-19)

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NEWS 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 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. Visit BerkleyAH.com.

GOLD MEMBERS ECHO OPENS NEW HEADQUARTERS TO SUPPORT GROWING TEAM AND BUSINESS Westlake, OH -- ECHO Health, Inc. is pleased to announce they have relocated to a new facility, located at 810 Sharon Drive in Westlake, OH. The move was prompted by their expansive growth over the past several years as a leading payment processor for the Insurance and TPA marketplace. ECHO’s explosive growth has been driven by innovation and the need for Insurers and TPAs to obtain efficiency and compliance in managing claim disbursements. ECHO has maintained double-digit annual growth for the last 8 years and has been recognized as one of the fastest growing companies in Cleveland by Crain’s Business multiple years in a row.

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NEWS Their new 11,000 sq. ft. facility provides ample room for their continued growth and success. The modern, workspace was designed with employees in mind, seeking to create an environment that fosters collaboration, creativity and growth. “Our focus is centered on supporting our employees so that we can best service our customers. We needed to upgrade our surroundings in order to facilitate a collaborative environment to maintain our continued growth. We are very proud of our new home”, says founder and CEO Bill Davis. About ECHO Health, Inc. ECHO Health, Inc. is a leading provider of electronic healthcare payment solutions, efficiently connecting payers, vendors, providers and plan members. ECHO’s patented, ERISA, HIPAA and CORE compliant solution addresses the four-payment hurdles payers face: connection, compliance, efficiency and ease of use. ECHO has grown steadily since its founding in 1997, now processing 120+million claims and over $30 billion in payments annually. Visit www. echohealthinc.com.

HEALTH PLANS, INC. (HPI), TAPS SELF-FUNDING EXPERT HOLLY WEISKE AS VP OF NATIONAL CLIENT MANAGEMENT Westborough, MA – Leaping off a successful year of national growth, HPI has named Holly Weiske as vice president of national client management.

Holly will oversee client services and development outside of New England to ensure a seamless, satisfying employer and member experience across the country. She has spent over 25 years in the self-funded health plan industry and has dedicated her career to helping clients care for their membership while creating benefit portfolios that truly meet company objectives and culture.

We’re very excited to welcome Holly to the HPI team. The addition of Holly is the latest in a long line of initiatives to strengthen our commitment to serving the self-funding needs of the national market,” said Deb “

Hodges, president and CEO of HPI. “

Holly’s experience and dedication to transforming how health plans are delivered reflects that of HPI and will help us build innovative programs across the country.” Weiske most recently served as the vice president of client management at Cypress Benefit Administrators, for which

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NEWS responsibilities included the oversight of the sales service and support teams and development of client implementation and strategic initiatives for in-force clients. Prior to that, she held clientfacing benefit management positions at a large brokerage firm and national insurance carrier, focusing on selffunded plan management. “I have a unique opportunity to integrate HPI’s longstanding success and reputation with my desire to help revolutionize health care,” said Weiske. “I am so excited to guide HPI’s national expansion while continuing to develop and strengthen our relationships throughout the country.” About HPI HPI is one of the largest administrators of employee health benefit plans and population health management services in the country. Founded in 1981, we share our expertise, innovation and proven, cost-saving solutions with partially self-funded employers to solve their unique health and benefit challenges. It is our flexible approach, entrepreneurial spirit and commitment to quality, technology, and service that enable us to deliver premium value to our customers. Contact Su Doyle, Director of Strategic Marketing at sdoyle@ healthplansinc.com and visit www. HealthPlansInc.com.

We’ve got a novel solution to improving health care benefits: Build plans that actually benefit the employers and employees who use them. At Homestead, we believe that’s the right way to go. Which means building plans with no network restrictions. No referrals. No hoops to jump through. Just plans built around the needs of our self-funded employer clients and their employees. Plus, on average, a Homestead Smart Health Plan saves as much as 30% on the total cost of healthcare without cost shifting to employees. All of which we think makes benefits…well, beneficial. Our proprietary, platform-agnostic Claim Watcher system is a powerful reference-based pricing tool for auditing and repricing that can either stand alone or work as part of a comprehensive benefits plan. And our Stop Loss services protect companies against catastrophic claims. Whether you are a TPA or a broker, a Homestead Smart Health Plan gives you a strong alternative to present to your clients that puts them at the center of the benefits equation. And that’s a real solution to improving health care benefits. Homestead Smart Health Plans. Better Health For All…together.

HomesteadPlans.com | 844 -307-3788

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NEWS SILVER MEMBERS GILSBAR ANNOUNCES INNOVATIVE NEW PARTNERSHIP WITH REGENEXX TO REDUCE ELECTIVE ORTHOPEDIC SURGICAL SPEND COVINGTON, LA -- A new partnership between Gilsbar, one of the nation's largest privately held health and benefits management organizations, and Regenexx, a worldclass interventional orthopedic clinic network, offers employer groups as well as the Gilsbar employees access to a new healthcare benefit that is a less invasive and less costly solution for orthopedic conditions which significantly reduces the high cost of musculoskeletal care in a healthcare plan. As customers choose to adopt the appropriate plan document language, Gilsbar's self-funded clients will have access to the Regenexx procedures which effectively intervene on 70% of orthopedic injuries and conditions where surgery was previously the only solution.* This interventional approach enables employers to save up to 70% on their orthopedic costs while providing best-in-class surgery alternatives with Regenexx's proprietary orthobiologic procedures. Employers who partner with Regenexx not only report a remarkable drop in employees' need for orthopedic surgery, they also show less absenteeism.

"After a thorough review of the Regenexx Corporate Program, we added it as an option for our employees and our clients. Our clients now have access to add this cost-savings strategy and Best-In-Class care – a true WIN/WIN for all involved," says Doug Layman, President of Gilsbar Health & Life. The Regenexx Corporate program perfectly aligns with Gilsbar's commitment as a health & benefits administrator who heightens productivity, improves outcomes, and betters their clients' bottom lines. "The Regenexx Corporate Program has quickly become an essential part of our partners healthcare plan as we help employers improve their musculoskeletal care model and strategically decrease the number of avoidable orthopedic surgeries occurring year after year. We look forward to partnering with Gilsbar and their clients to offer them this solution that employees choose over surgery a majority of the time when given the choice," says Jason Hellickson, CEO Regenexx. Watch a quick introduction to Regenexx: https://www.youtube. com/watch?v=6lehuGFZP3Q&t=9s

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NEWS agents including blood platelets and bone marrow concentrate to repair damaged bone, muscle, cartilage, tendons, and ligaments. We believe in educating patients, offering options, and encouraging people to take an active role in their own treatment. Call 888-547-6667 and visit www. Regenexx.com.

VIRTUAL BENEFITS ADMINISTRATOR ANNOUNCES RELEASE OF ENHANCED ANALYTIC REPORTING SOFTWARE

*This applies only to elective orthopedic surgery without fracture related care and acute care trauma. About Gilsbar, LLC Established in 1959, Gilsbar, LLC® is one of the largest privately-held insurance services organizations in the country. Recognized as a catalyst for creating healthy businesses, Gilsbar, LLC® offers self-funded and fully-insured benefit plan management services, along with Wellness, Advocacy, and overall Population Health Management. Gilsbar, LLC's integrated delivery model improves the health and wellbeing of its members, resulting in significant health plan savings for its clients.

Gilsbar, LLC® has been honored by Inc. magazine for its sustained growth, Modern Healthcare and Business Insurance magazines as a Best Place to Work, and WELCOA and the American Heart Association for its proven wellness methodology. For more information, visit www.Gilsbar.com. About Regenexx Regenexx is a nationwide network of physicians who practice Interventional Orthopedics, a new specialty that focuses on using the most advanced regenerative protocols available as an alternative to many orthopedic surgeries. Regenexx has published roughly half of the research world-wide on the use of orthobioligics for treating orthopedic injuries, and our patented treatment lab-processing and treatment protocols allow us to achieve unmatched results. Our procedures use your body's natural healing

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Germantown, WI -- Virtual Benefits Administrator, a leading-edge software design company revolutionizing the insurance industry, introduces the official launch of their analytic reporting software, VBAnalytics. VBAnalytics is a robust, cloud-based platform powered by Microsoft Power BI which provides limitless options for generating analytic based reports. The platform features four Stories comprised of both reports and dynamic visuals with views into claims utilization, operations and administrative efficiencies and census data. Embedded with Esri data, and supported by speech technology, VBAnalytics gives payers enhanced visibility into a populations behavior and overall spend. With real-time interactive dashboards, users gain insight into geographic and social economics, trends and more.

• Quickly and easily identify trends and population level economic information that leverages government census data


NEWS • Prebuilt analytics stories which highlight meaningful information like claims utilization, risk indicators, operational efficiency and more

• View Plan, Provider and Member scoring indicators that drive deep analysis of performance against normative peer data “We’re proud to release our latest product, VBAnalytics, furthering our efforts to deliver the future of benefits administration to our clients,” says Mike Clayton, CEO of VBA. “VBAnalytics easily generates utilization reports like top claims by volume, diagnosis, triangle reports and more. Your capabilities are truly limitless with VBAnalytics.” To schedule a demo and learn more about VBAnalytics, contact Jessica

Luacaw, Vice President of Enterprise Solutions at 262.374.6021 or jluacaw@vbasoftware.com. About Virtual Benefits Administrators (VBA) VBA is a leading healthcare software organization providing real-time, cloud-based claims management and engagement platforms for the payer market. The VBAGateway portfolio is comprised of 4 distinct engagement portals delivering a better user experience with flexible configuration, the ability to deliver instant updates, real-time information and notifications. VBASoftware, is a real-time, end-to-end business solution configurable for all lines of business including medical, dental, behavioral health, ancillary and more. Customers activate only the services they need, without additional expense. Visit vbasoftware.com.

6 DEGREES HEALTH WELCOMES INDUSTRY EXPERTS DONALD LEE AND ALBERTA BERHANNAN 6 Degrees Health is proud to add Donald Lee and Alberta Berhannan to our experienced team. They come with over 40 years of combined industry experience allowing us to provide impactful resources to our clients.

At Meritain Health, we are your Advocates for Healthier Living! We strive to help our members lead healthy, productive lives. That's why we offer tools and services to promote long-lasting health and well-being. For more information, visit www.meritain.com

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NEWS With the addition of Alberta’s auditing experience and Donald’s leadership, 6 Degrees Health is able to provide cohesive, defensible cost containment solutions, including Clinical Audit Review, UCR, Negotiation, OON Support and Medicare Multiple Repricing.

Alberta Berhannan, RN BS MBA CRC - Director of Clinical Audits

Donald Lee, Vice President of Strategy & Underwriting

As an appeals and denials auditor she is well versed in InterQual criteria, Milliman Guidelines and various appeal and reconsideration procedures. Alberta brings exceptional experience, knowledge and skills to the 6 Degrees Health team.

Donald started his healthcare career nearly two decades ago in the underwriting and actuarial field. Donald is an expert in healthcare risk financing and alternative risk strategies. His underwriting, actuarial and broker experience will take our understanding and integration with the risk financing market to the next level. He holds a degree in Mathematics, with an emphasis on Statistics and Computer Science.

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Alberta is bringing over 20 years of varied clinical, administrative and compliance nursing and audit experience to her position with 6 Degrees Health. She has more than 15 years of experience in utilization management to include retrospective clinical claim review, Medicare, Medicaid, commercial HCC risk adjustment review, denials/appeals management, compliance auditing, coding and clinical DRG validation review and much more.

To learn more about how 6 Degrees Heath can support you, contact Heath Potter at heathpotter@6degreeshealth.com or (971) 762-1406. About 6 Degrees Health 6 Degrees Health is a group of experienced healthcare professionals that believes it takes a network of industry relationships to deliver optimal health plan solutions. 6 Degrees Health is built to bring equity and fairness back into the healthcare reimbursement equation. Our cost containment efforts utilize MediVI technology, which supports our solutions with objective, transparent and defensible data. Solutions include everything from provider market analyses, reasonable value claim reports, claim negotiations, and referenced based repricing. Visit www.6degreeshealth.com.


SIIA 2019 BOARD of directors & committee chair ROSTER

CHAIRMAN OF THE BOARD*

DIRECTORS

COMMITTEE CHAIRS

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

Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem

PRESIDENT/CEO

Mary Catherine Person President HealthSCOPE Benefits, Inc. Little Rock, AR

CAPTIVE INSURANCE COMMITTEE John R. Capasso, CPA, CGMA, PFS President & CEO Captive Planning Associates, LLC Medford, NJ

CHAIRMAN ELECT*

Kevin Seelman Senior Vice President Lockton Dunning Benefit CompanyDallas, TX

Mike Ferguson SIIA Simpsonville, SC

David Wilson President Windsor Strategy Partners, LLC Princeton, NJ

TREASURER AND CORPORATE SECRETARY* Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA *Also serves as Director

SIEF BOARD OF DIRECTORS Nigel Wallbank Chairman Heidi Leenay President Freda Bacon Director

Jeffrey K. Simpson Partner Womble Bond Dickinson (US) LLP Wilmington, DE Robert Tierney President StarLine East Falmouth, MA Peter Robinson Managing Principal Integro Re San Francisco, CA

GOVERNMENT RELATIONS COMMITTEE Steven B. Suter President & CEO Healthcare Management Admtrs., Inc. Bellevue, WA CHAIR, INTERNATIONAL COMMITTEE Liz D. Mariner Ford Senior Vice President Re-Solutions, a Risk Strategies Company Minneapolis, MN CHAIR, SIIA FUTURE LEADERS COMMITTEE Craig Clemente Chief Operating Officer Specialty Care Management Lahaska, PA CHAIR, TPA BEST PRACTICES TASK FORCE Ron Dewsnup President Allegiance Benefit Plan ManagementMissoula, MT CHAIR, WORKERS’ COMP COMMITTEE Mike Zucco Business Development ATA Comp Fund Montgomery, AL

Les Boughner Director Alex Giordano Director

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SIIA new members OCTOBER 2019

REGULAR CORPORATE MEMBERS David Slepak Executive Vice President Business Development Healthcare Akos Phoenix, AZ

Justin Curtis National Vendor Program Solutions Manager Alliant Employee Benefits Seattle, WA

Paul Policella Regional Vice PresidentNortheast Ameritas Life Insurance Corporation East Granby, CT

Melissa Saturnino COO Apta Health Englewood, CO

Jari Greenbaum Marketing Centivo New York, NY

Zach Payer COO Community Health Chicago, IL Dave Meyer Guarantee Trust Life Insurance Company Glenview, IL

John Kelly President & CEO Hanover Stone Partners University Park, FL

Jennifer Darnall Deputy Executive Director Kairos Health Arizona Phoenix, AZ

Dan Feruck Chief Revenue Officer ProgenyHealth Plymouth Meeting, PA

SILVER CORPORATE MEMBER Terri Raimondi Vice President, Business Development Benefit Management, LLC Great Bend, KS Jorge Arzate CEO Makina HR, LLC Austin, TX

EMPLOYER CORPORATE MEMBER Irma Mondragon Executive Assistant L.A. Firemen’s Relief Association Los Angeles, CA

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 Jason Beck Founder and President Tricore Capital, LLC Little Rock, AR

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

Byars at sbyars@sipconline.net for advertising information.

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Self Insurer October 2019  

Self Insurer October 2019