ITIJ Cost Containment Review 2018

June 2018

COST CONTAINMENT REVIEW IN THIS ISSUE: Red alert: catastrophic claim When the numbers go up, the experts respond

International Travel & Health Insurance Journal

Tales from the frontline Reference-based pricing reality

Into the hopper - Subrogation ABCs Identifying when costs can be recovered

cost containment REVIEW 2018

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contents Into the hopper Subrogation ABCs

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Identifying when costs can be recovered

Startups: innovation up, costs down?

6

Insurers react to new challenges

Tales from the frontline

IPMI costs 10

Reference-based pricing reality

Red alert: catastrophic claim

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When the numbers go up, the experts respond

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Rising medical expenses put pressure on insurers

Profile

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Sylvain Charpilienne Cost Containment Director and Head of Case Management for April International

Editorial comment

Editor-in-chief: Ian Cameron

Sarah Watson Editor, ITIJ

Editor: Sarah Watson Copy Editors: Lauren Haigh, Mandy Langfield, Stefan Mohamed & Christian Northwood Contributors: Tatum Anderson, David Kernek Design team: Katie Mitchell, Tommy Baker & Will McClelland

Innovation in the global travel insurance industry is happening apace, with startups transforming the way insurers are providing cover and back-end services. In this edition of the Cost Containment Review, we ask whether the cost of investing in new technology, operating platforms and product design is worth the outlay and running costs, and assess how innovative design and implementation can save insurers money in the longer term (p.6).

Controlling costs is, of course, the key focus across all the articles in this Review, and we analyse how this is best achieved in the IPMI industry in Generali Global Health Services’ article on p.22, and look at how catastrophic case management requires collaboration and timely actions to ensure optimum cost control on p.18.

One of the key issues around cost containment, especially with regards to medical bills, is what kind of control is achievable before an

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‘event’, and what can be achieved once a bill has been received. On this note, Canadian cost containment consultant Jason Davis looks at a couple of current legal cases in North America to give an insight into what might be considered reasonable payment metrics on out-of-network medical costs, and the current tide of thought around reference-based pricing.

And we have an analysis of how best to approach subrogation efforts by US-based law firm International Recoveries.

Getting to the heart of some of the key issues around cost containment through an exploration of his role at April International in France, we round off the Review with an interview with Sylvain Charpilienne, the company’s Cost Containment Director, on p.26.

I hope you enjoy this issue!

Advertising sales: Mike Forster, James Miller & Becky Payne

Contact: Editorial: +44 (0)117 922 6600 option 3 Advertising: +44 (0)117 922 6600 option 1 Email: mail@itij.com Web: www.itij.com

Published on behalf of: Voyageur Publishing & Events Ltd, Voyageur Buildings, 19 Lower Park Row, Bristol, BS1 5BN, UK The information contained in this publication has been published in good faith and every effort has been made to ensure its accuracy. Neither the publisher nor Voyageur Publishing & Events Ltd can accept any responsibility for any error or misinterpretation. All liability for loss, disappointment, negligence or other damage caused by reliance on the information contained in this publication, or in the event of bankruptcy or liquidation or cessation of the trade of any company, individual or firm mentioned is hereby excluded. The views expressed do not necessarily reflect those of the publisher.

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Copyright © Voyageur Publishing 2018.

Materials in this publication may not be reproduced in any form without permission INTERNATIONAL TRAVEL & HEALTH INSURANCE JOURNAL ISSN 2055-1215

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Startups and innovation labs are springing up at a rapid pace and making their mark on the global travel insurance industry, but how exactly are they affecting insurers, particularly when it comes to costs? Lauren Haigh spoke to industry experts to find out Recent years have witnessed the emergence of a growing number of startups and innovation labs and the expansion of insurtech. In the global travel insurance industry, these bodies are delivering digital technology and online services that are benefiting travellers, insurers and distributors alike. Technology has already transformed the way insurance policies are purchased, with websites that offer online and app-based services, and now digital innovations such as telehealth, artificial intelligence (AI) and data analytics are ushering in a new era of travel insurance.

Examples of benefits provided to travellers by technology are simple, real-time services that can be accessed anywhere, anytime – using a smartphone, for example, to purchase tailored coverage that matches an individual traveller’s needs, and early warning systems to alert travellers to hazardous events. In addition, innovations have provided the consumer with more autonomy, which has had a big impact on

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the industry as Jeff Rutledge, President and CEO of AIG Travel in the US, explains: “Advancements in technology have allowed consumers to take more control over their travel booking process, changing the entire purchasing behaviour across our industry.”

According to Rutledge, consumers are seeking a more customised experience and new technologies are meeting this need. “Consumers are demanding a personalised and integrated experience when it comes to booking travel insurance, and new technology, such as machine learning or AI, provides our industry with the tools to better respond and enhance the customer experience,” he explains. “Travellers can plan, build, compare, book, change, and even review distinct components of their trips with greater ease than ever before.”

Rutledge believes consumers are becoming more knowledgeable about travel insurance and assistance products and

There have been, and will continue to be, innovation ‘winners and losers’ as underwriters measure their impact on loss performance

that innovations are enabling travellers to access customised travel insurance plans that provide more options regarding the premium they pay. In addition, he says that thanks to the ability to customise travel insurance, plans are more able to suit specific needs. For example, insurers including AIG Travel have started using chatbots that are programmed to answer questions about insurance products, payment enquiries and purchase options.

“Through the success of this first step, we recognise the potential to provide travellers with the sort of personalised experience that hasn’t been possible until now,” he told ITIJ. It seems we are moving into a new chapter of personalisation where consumers want an experience and product that is customised for them and innovations are fulfilling this need.

For insurers and distributors of travel insurance, innovations are affording benefits that include a faster speed to market and app-based solutions. Startups and innovation labs are providing insurers with the ability to improve customer engagement, reduce administration and claims management costs thanks to digital processes and automated actions, and reduce claims losses due to the use of algorithms and data analysis. What is more, they seem to be enabling industry

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players to work together to achieve more.

“These diversified models have actually expanded our industry’s ability to embed our capabilities and products to partner platforms, ensuring a more integrated service offering for customers,” Rutledge says. He believes startups are encouraging the industry to be more collaborative, and breaking down introspective operations: “Historically, travel organisations have operated in silos, however the new landscape requires greater collaboration and partnership in order to identify solutions and innovations that can help improve customers’ experiences.”

A need to invest Insurers having access to and making use of new technologies and opportunities to partner with other providers will enable them to better serve customers and improve

their overall experience and, in turn, benefit the industry in terms of cost savings. “The more you can show a consumer the value of travel insurance, and make the buying process as simple as possible, the more likely they are to purchase, bringing a clear economic benefit to our industry,” Rutledge said. However, Hepstar, a South Africaheadquartered provider of specialised travel insurance merchandising services to online travel merchants, said cost savings may not be so clear cut: “The extent of cost savings may depend on an insurer’s willingness to adopt external technology and forego its legacy systems which come with additional overheads for maintaining them,” it said.

ITIJ spoke to Hepstar about its thoughts on travel insurance transitioning into a ‘digital age’. It said that it is a positive phenomenon that has been a long time coming but, however, that legislation is hampering the transition: “A travel insurance digital makeover is long overdue as innovators challenge insurers on product design, claims processing and compensation methods,” it said. “However, this

More often than not, new technologies are built for and marketed to insurers, not to replace insurers movement is still somewhat obstructed by conservative legislation generally oblivious to technological advancements.” Another obstacle, according to Hepstar, comes in the form of insurers being unwilling to make use of existing innovations, favouring an autonomous approach. “There is a reluctance of insurers to adopt proprietary external technologies, instead attempting

to develop the technology themselves,” it said. Rutledge agrees, as travel insurance is, by nature, a slow-moving industry: “The digital age brings with it some challenges, especially due to the nature of our business, in that we haven’t evolved as quickly as other parts of the industry.”

Insurers and assistance providers stand to save costs in the long run, providing they are prepared to invest, however. “Some of the most apparent opportunities can be seen in the long-term savings derived from AI in the operations. This, of course, is predicated by a commitment to invest and deploy new and emerging technology solutions,” said Rutledge. He acknowledges, though, that there is an element of risk when it comes to insurers making use of, and investing in, innovation. “From a risk perspective, each innovation in product and technology delivery must be

measured on its own merit. There have been, and will continue to be, innovation ‘winners and losers’ as underwriters measure their impact on loss performance,” he said. According to Rutledge, the innovations that provide meaningful and scalable data quickly, along with the flexibility to rapidly adjust course if losses deteriorate beyond norms, have the best chance for success.

According to a survey from PwC from earlier this year, almost half of insurance companies think they will lose 20 per cent of their business to startups over the next five years. So, are insurers threatened? Not necessarily. Instead, they are investing in startups and innovations and setting up their own internal accelerators to develop new technology. Jason Davis of Jason C. Davis Consulting (JCDC) doesn’t see startups as competition for insurers and believes there is a lot to be gained from working together. “As I see it, most startups are not aiming at disrupting travel insurers at all but rather they see travel insurers as their targeted clients (and their consumers) in a B2B context. They are typically targeting something tied to consumer engagement/decision-making tools >> or a service that brings savings on

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the claim management spectrum,” he said. Similarly, Hepstar believes that new tech is there for insurers: “More often than not, new technologies are built for and marketed to insurers, not to replace insurers,” it said. “These technologies are usually built on the back of data analytics and geared for receiving and responding to contextual and behavioural data received through cross-platform integrations with travel distribution channels, allowing insurers to offer innovative products that meet niche channel and target market requirements.” It seems that if insurers are willing to focus on the potential benefits of startups and invest in innovation, then not only can cost savings be made, but additional revenue streams can be created.

Embracing change According to Hepstar, change is inevitable: “Innovators – tech-players and insurers alike – are challenging the travel insurance value proposition and forcing the envelope on product design. There is demand from the travel retail industry and market participants are starting to listen,” it said, “Law reform may be necessary in some markets to enable easier collaboration between insurers and tech-players due to the hurdles insurers often face when

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wanting to outsource certain functions.”

However, insurers potentially have a lot to lose if they refuse to keep up to speed with innovations: “Consumers today are very savvy and demanding and so travel insurers not keeping with the times will see their market share dwindle. Settlers will die, migrators will plod along, and pioneers can potentially see major success in enhancing the travel insurance space with clever and elegant digital solutions,” Davis said. According to Hepstar, insurers have no choice but to evolve if they wish to succeed: “Travel insurance is a significant contributor to travel ancillary revenues for travel retailers. Travel retail is continuously evolving and so are its customers, who demand more convenience, as well as products and services relevant to them.

Travel insurers must evolve to ensure they are able to protect this valuable source of customer,” it said.

Hepstar believes that a challenge facing insurers concerns bringing products to market. “There is a general gap between the insurers’ ability to price risks for innovative products and their technology’s ability to receive and process data from online travel retailers in real-time for purposes of pricing and offering these innovative products,” it said. It also said that although

new product innovations may be more expensive, customers will see the benefit in spending more in terms of what they receive. “Some customers may still elect to buy off-the-shelf, traditional products and receive ‘comprehensive’ benefits, but they should take note of conditions and exclusions that limit what appears to be comprehensive coverage on face value,” said Hepstar. “New product innovations offer new compensation models that speak to the shortfalls of traditional insurance products and their constricting T&Cs. However, customers can generally expect to pay more for these products, but not be unpleasantly surprised by fine print at claim stage.”

Ultimately, Davis believes that innovation in the industry equates to simplicity: “The winners are going to simplify everything from buying a policy, receiving care, to paying a claim. Given the complexities of managing a global medical network I don’t think we will see many revolutionary disruptive startups in true travel health insurance (though it is not impossible); it is more likely that we will see the evolution of the established major players adding technology innovations to their offerings trying to pull market share from each other,” he stated. “That said, we will certainly see startups distinguish themselves in a focused aspect of the claim management spectrum or on the distribution side with direct to consumer online sales (for example, a super aggregator), but again I believe that the travel insurance space (the act of underwriting travel risk and managing a global network of partners) itself will remain generally stable.” Although the medium may change, it seems that what is on offer will remain the same: “The core of our purpose is to be there for customers when things don’t go to plan on a trip, identify travel risks, and offer travellers the tools and tips they need to travel safely. There will always be a place for that service and product offering, despite the changing avenue by which consumers are choosing to purchase travel insurance,” Rutledge explains. Providing they are open to changing their medium, insurers have a lot to gain from embracing innovation. “I think that it is always best to be open to all innovative ideas, because market disruption often occurs from the unexpected,” Rutledge concluded. ■

travel insurers not keeping with the times will see their market share dwindle

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Jason C. Davis evidences an ongoing legal case to illustrate the current usage of – and a potential shift in the tide of thought surrounding – referencebased pricing plans as a cost containment model On the morning of 29 May 2014, 57-yearold Glenn Dennis did not feel well, complaining of chest pain. Despite his discomfort, he dutifully went to work at Carter Bank and Trust (Carter Bank) where he holds the position of Assistant VicePresident.1 Upon arrival, his co-workers knew something was wrong and so they persuaded him to go to Memorial Hospital of Martinsville (MHM) where he was soon admitted through the emergency room.

Forty-five minutes later, lying in a hospital bed, his wife by his side, apparently ‘crying … upset (and) agitated’ and surrounded by various beeping equipment, Glenn was handed paperwork to sign, like he would be at any hospital in the country, which

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he did.2 After being assessed, he received a cardiac catherisation (five stents), and two days later, he was discharged home with a bill for US$111,115.3 One would generally expect a normal end to this story: the health plan is billed, they pay their claim with a type of preferred provider organisation (PPO) ‘discount’, and the member would be billed for their out of pocket (OOP) responsibility (if applicable).

Glenn’s story, as you will see, takes a different turn, but here is a reminder of the normal PPO world as it is right now, for a normal family, in the US. Time for the Piper to pay Recently, a young Mississippi girl named Piper Waddell had an infection caused by her earring and it needed to be removed. She went to University of Mississippi Medical Center (UMMC) for the procedure and then went to her cheerleading practice. UMMC billed a whopping $8,799.87 (US Medicare would have paid $1,348.03). The Waddells (who are insured) received a Cigna discount of

$3,695.62, or 42 per cent off the total bill: Bold letters say ‘You saved $3,695.62’ on Piper’s father’s explanation of benefits from Cigna. Cigna negotiates discounts with providers, it says, ‘to help you save money’.

Interestingly, if the Waddells had had no insurance, the hospital would have offered an automatic 60-percent discount. The Waddells followed the system. They faithfully paid their health contributions, went to an ‘innetwork’ provider, and got a ‘discount’; but somehow, they were still on the hook for $2,971.91 for an earring removal for which they have to finance over 19 months. So much for ‘insurance’, ‘fair provider pricing’, and

RBP is gaining market share in the US, and even a few travel insurers are now applying these strategies for their US-based claims

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‘discounts’. Everyone seems to be doing fine except normal people like the Waddells.

To quote from The Resident – a primetime show based on Dr Marty Makary’s NY Times bestselling book Unaccountable that airs on Fox: “Medicine is not practised by saints. It’s business.”

Glenn’s ‘new’ health plan: RBP basics In contrast to the Waddells’ PPO plan, Glenn’s health benefits are part of a Reference-Based Pricing plan or RBP plan; and so, there is no PPO discount. I have been working with various RBP plans for five years and work with over 500 US employer groups and international payers, so allow me to provide a front-row look at this controversial cost containment model.

Here are the quick basics: • RBP payments are based on a fixed fee schedule (e.g. a reasonable per cent above the Medicare rate). The policy language is adjusted accordingly.

• There is no PPO agreement for payment, making balance billing possible.

• If benefits are clear and payment is reasonable; balance billing can be kept at a minimum but still needs to be managed.

• In this context, the payer has met its formal obligations under the plan but can elect to top up with a reasonable provider (this leads to settlements and sometimes to reasonable direct contracting on future claims).

• The provider’s choice is to work with the payer, or balance bill the consumer, which has some entanglements: Balance billing can be viewed as a public relations risk; consumers usually do not have the money to cover the balance of high charges; and healthcare charges are increasingly viewed as not indicative of market value of services (even by providers).

• In terms of financial results, RBP has 20-50 per cent higher savings than traditional PPO solutions (with lower management costs), with balance billing occurrence rates of less than two per cent on processed claims.

• Many RBP plans are removing or reducing out-of-pocket costs so that people like the Waddells are not pinched by surprise bills.

• RBP can be used as a full PPO replacement or as an option for selected claim types (e.g. OON).

• RBP is gaining market share in the US, and even a few travel insurers are now applying these strategies for their USbased claims.

1,000 employees and $4.5 billion in assets.

Usually, employers that ‘choose’ RBP plan designs have been ‘blue collar’ or smaller companies struggling to offer meaningful benefits (with affordable OOP) for their employees while competing in their own industry; in their context, RBP is not so much a choice as a necessity.

In fact, there is a new ambitious bill being put forward in California that captures this sentiment that something needs to change.

Assembly Bill 3087 is basically designed to set healthcare prices (somewhat like what happens in Maryland). The reason for this, once again, is what is being called an affordability crisis, and proponents know it won’t be easy.

“When they tell us it’s a big fight – you’re damn right it’s a big fight, but if we don’t have it, we’re going to be extinct anyway. Our households can’t afford it,” said Roxanne Sanchez, President of SEIU California (which represents 700,000 workers of which 150,000 are in the healthcare industry)4.

Interestingly, the founder of Carter Bank, Worth Harris Carter Jr, received the Heck Ford Award, which honours a lifetime achievement of leadership, commitment and dedication in promoting economic growth in Martinsville and Henry County.5 He passed away on 7 April 2017.

Perhaps it was this dedication to fair and sustainable market dealings that led Carter Bank to go down the RBP benefit design route. Carter Bank can be considered an

example of a ‘white-collar’ employer that can afford traditional PPO health benefits but is choosing to engage the healthcare industry towards achieving affordable care.

Sound familiar?

If this article was published before 30 January 2018, we could dismiss it as a blip on the screen; just a radical employer causing a ruckus in Virginia.

However, we now know that Amazon, Berkshire Hathaway and JP Morgan have made the landmark announcement that they are partnering to address healthcare costs. It seems like the US business community has had enough.

Back to our story: Carter Bank paid MHM $27,254 on a bill of $111,115 (or just below 25 per cent of the claim), which represented 150 per cent of the Medicare allowable, leaving a balance of $83,861.

it is a clear challenge to provider charges as the basis for the ‘reasonable value’ on OON emergency healthcare services

Round 1: your money or your life!

Despite all that has been said in various market reports about providers typically not balance billing, or that RBP payment disputes are somewhat >>

Glenn’s employer: Carter Bank Glenn’s employer, Carter Bank, is a single branch bank founded in 1974 with nearly

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‘easily’ managed, MHM actively pursued Glenn for a balance of $83,861, which would eventually result in Glenn Dennis vs Memorial Hospital of Martinsville & Henry County; arguably the first RBP balance billing case dealing with out of network emergency care to go the distance.

Glenn’s attorneys filed for a declaratory judgment to pay 25 per cent of the chargemaster rate because MHM reportedly reduces claims by 75 per cent if a patient has no insurance. Attorneys for MHM counterclaimed that the patient signed a binding contract upon admission to pay the chargemaster rates, and therefore had breached this contract with MHM. Glenn’s attorneys countered that because Glenn was clearly ill when he signed and was not shown the charge description master (CDM) rates, there had been no ‘assent’ or ‘meeting of the minds’. The judge agreed with this argument and famously stated: “‘Your money or your life’. Few of us would, like Jack Benny, pause and respond, ‘I’m thinking, I’m thinking’. Most of us would empty our wallets. Does that act of acquiescence demonstrate acceptance of an offer and create a contract?”

In the end, the judge determined that although the contract signed at admission was not enforceable, MHM was still due a reasonable payment for providing emergency out of network (OON) services.

As a refresher, under the Patient Protection and Affordable Care Act’s (PPACA) OON emergency-care patient protection guidelines (45 C.F.R. § 147.138(b)(3)(i)), the hospital cannot charge an OON patient more than the greater of (1) the median innetwork amount, (2) the amount the plan usually pays for out of network services, or (3) Medicare rates.

So, the judge looked at Medicare rates and commercial rates. MHM, like most hospitals, charges amounts above their costs to ensure operating margin and profit.

MHM specifically has a cost-to-charge ratio of 0.1679, meaning that for roughly every 17 cents of cost, MHM bills one dollar; or a mark-up ratio of 588 per cent.

The average reimbursement from all payers (public and commercial) is 24 per cent of charges.6 The judge was also presented with evidence that Anthem would have paid $23,389 for the services in dispute. In the end, because Glenn did not have a contract with MHM, the judge ruled that he owed 25 per cent of the chargemaster, which is the rate charged to the uninsured; so, Glenn (somewhat hilariously) would have to pay an additional $523.89 to settle MHM’s $83,861 dispute.

Round 2: here we go a-Glenn!

The initial ruling was appealed, and the Virginia Supreme Court disagreed with

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For cases like these, RBP can be a highly effective way of reducing US travel emergency claim costs the lower court’s ruling because like a few courts before it, it ruled that the contract was in fact binding. Basically, the court ruled that Glenn knew he was sick so he ‘assented’ or agreed to receive the care he knew he needed; the fact that there was uneven bargaining power or that he was not shown the CDM (which he requested afterwards) does not change the ‘fact’ that Glenn’s signature was the ‘manifestation of mutual assent’.7 The case is now sent back to the Circuit Court to consider Glenn’s affirmative defenses, which may include unconscionability, capacity, duress, ACA patient protections, and other contract defenses. If Glenn can win on any one of these arguments, it could result in a determination of quantum meruit (i.e. the reasonable amount owed in the absence of a legal contract), and it is likely that the trial court would come to the same conclusion it had previously, namely, 25 per cent of the bill, or apply a similar calculation of payment due based on PPACA patient protections (as outlined above). It does seem that this judge is not a fan of hospital charges or what happened to Glenn.

So what?

Why does this case matter? Because it is a clear challenge to provider charges as the basis for the ‘reasonable value’ on OON emergency healthcare services. If Glenn wins it would go a long way to

cement reasonable payment metrics on OON emergency claims, which could have relevance for the international travel insurance community that often has members signing ‘contracts’ in an emergency setting that are later used to compel high payments from their insurers. I have a ‘classic’ claim right now for $52K for an emergency laparoscopic appendectomy; and that is only for the OON surgeon’s fee (hospital was innetwork). For cases like these, RBP can be a highly effective way of reducing US travel emergency claim costs. That said, RBP is not a good fit for certain scenarios, claims, or providers and could have dire consequences if not executed properly.

Make sure you seek out an expert partner to ensure that everything, from your policy wording, claim selection and claim benchmarking/repricing to your patient advocacy and balance billing support, are managed appropriately.

To wrap-up, even if Glenn loses this case (which is entirely possible) it still means that a hospital is very publicly suing and C potentially bankrupting a patient by requiring him to pay nearly four times M more than anyone else. How much of that does the provider community really Y want to do in this market? It seems clearCM to me that the public as a whole, and large businesses, will no longer stand idlyMY while healthcare costs, as Warren Buffett CY says, ‘act as a hungry tapeworm on the American economy’. ■ CMY K This article does not purport on any level to offer legal advice or guidance on claim coverage in any situation.

References 1. Paul Collins, Judge rules against hospital in dispute, Martinsville Bulletin, April 26, 2016, www.martinsvillebulletin.com/news/judge-rules-against-hospital-in-bill-dispute/ article_eccb8ca4-0c22-11e6-872f-5350a72fa433.html 2. Peter Vieth, Challenge to ‘balance billing’ hits hospital, Virginia Medical Law Report, May 27, 2016 https://valawyersweekly.com/vamedicallaw/2016/05/27/ challenge-to-balance-billing-hits-hospital/ 3. To further humanize the case, Glenn’s first name is used throughout the article 4. Melanie Mason, An ambitious California bill would put the state in charge of controlling prices in the commercial healthcare market, Los Angeles Time, April 9th, 2018, http://www.latimes.com/politics/la-pol-ca-california-healthcare-pricecontrol-bill-20180409-story.html 5. Worth Harris Carter Jr., Obituary, Martinsville Bulletin, April 9th 2017 http:// www.martinsvillebulletin.com/obituaries/carter-jr-worth-harris/article_2c963b710671-5c84-b56b-9c1fb4579703.html 6. These numbers are derived from the American Hospital Directory (AHD). MHM reports financial information to the Centers for Medicare and Medicaid Services (“CMS”). This publicly available information is signed and attested by MHM to be accurate and in accordance with generally accepted accounting principles. This data is collected and can be accessed in AHD. Average reimbursement is calculated by dividing total net revenues (after “discount”) by total gross revenues.

7. PHC-Martinsville, Inc d/b/a Memorial Hospital of Martinsville and Henry County v. Glenn Michael Dennis, upon an appeal from a judgement rendered by the Circuit Court of Henry County, September 14, 2017 http://www.courts.state.va.us/ courts/scv/orders_unpublished/161019.pdf

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Subrogation may sometimes seem like an arduous process for little return, but in the hands of the right experts, you stand with nothing to lose and everything to gain. Larry Levin shares his insights on how best to go about subrogating a claim Subrogation allows an insurer to succeed to the rights and liabilities of its insured against a third party to recover from them payments the insurer has made because that third party injured the insured. While only a small percentage of claims present subrogation opportunities, and only a small number of those yield recoveries, an effective subrogation programme functions like a hopper into which information about paid claims is fed and recovered claims dollars emerge at the other end. The greater the number of claims put into the hopper the greater the returns; the greater the returns, the better the bottom line.

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With two decades of experience handling subrogation claims for the travel insurance industry behind us, we are frequently asked how to identify claims with subrogation potential and how to decide which of those to pursue. There’s no formula to follow.

The important thing is to get claims into the hopper: subrogation efforts produce recoveries. To that end, we offer this brief overview of some of the factors that may affect your subrogation efforts.

Identification Subrogation begins with identifying claims in which there may be third-party responsibility for the need to pay benefits.

Traumatic injuries such as a gash or slash, a burn, a fracture or soft tissue strain require some level of external force that suggests that someone other than the

insured may be responsible for the claim.

Hospital codes can help identify such injuries, but are neither universally used nor all encompassing. Mishaps that signal possible third-party involvement including road traffic accidents, assaults, fires and falls are commonly identified when a claim is reported. Repeat hospitalisations or complications that ensue from the original medical issue or procedure may indicate medical malpractice; an adverse reaction to medication may be attributable to physician or pharmacy error. Certain illnesses themselves raise the possibility of third-party accountability.

The fact that the individual who caused the harm may not be identifiable or have insurance doesn’t necessarily rule out thirdparty accountability. The bar that served the drunken patron whose car struck the

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insured or the hotel whose security failed to deter an intruder may be liable for the harm that followed (theft claims can also present an opportunity to subrogate).

Information Likely, third-party involvement does not equate to third-party responsibility. Once a claim is identified as having subrogation potential, information is needed to identify where, when and how the occurrence happened, whether a third party may have responsibility for it, and whether it appears that subrogation would be cost effective.

At this stage, the primary sources of information are the insured, reports and records available from outside sources, and documents generated in the course of handling the claim. The further away in time from the underlying occurrence

the effort to gather information begins, the greater the likelihood that evidence will be lost, memories fade, witnesses disappear and motivation dissipates.

This means that the optimal opportunity to obtain information is also when the priority is to provide help for an injured insured, necessitating co-ordination between assistance, claim management and subrogation operations.

Police reports contain important factual information, and in many US jurisdictions identify insurance for drivers and vehicle owners. Claim forms, case management notes and medical reports may contain information about causation. The subrogation and choice of law provisions in the insurance policy can be determinative of critical threshold issues. Car rental agreements will show if there is additional

The greater the number of claims put into the hopper the greater the returns; the greater the returns, the better the bottom line insurance for medical bills. Inherently dangerous activities like sky-diving and skiing often require the insured to sign an agreement absolving the operator of responsibility; motorcycle and scooter rental agreements also routinely contain exculpatory provisions. Obtaining a copy might well obviate what would otherwise be an exercise in futility. Billing records aren’t necessary at this stage: if >>

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a claim is pursued, an itemised statement of benefits paid is often sufficient.

When the insured has been injured as the result of a fall, the exact location and a description of what caused the accident are essential. If an insured doesn’t know what caused the fall, there’s no way to prove that someone else is responsible for it. The condition should be documented photographically as soon after the accident as it can be arranged. If the insured doesn’t know what happened, see if a witness can explain the occurrence and document the scene.

When the question is one of product failure – where and how a fire started; what caused the rental car tire to blow – preservation of physical evidence is essential to prove what went wrong and to be able to rule out other possible causes reasonably suggested by the evidence. Such evidence is rarely in the control of the insured, and since other than evidentiary ones pertaining to spoliation, rules for saving evidence are virtually non-existent; a request to preserve evidence should be directed to the potentially adverse party at the first opportunity.

Having said all this, if the insured has an attorney, counsel has a professional obligation to obtain and preserve evidence and assess the case, which can avoid duplication of effort. Prompt notification of your interest and proof of payment is essential; what hasn’t been paid isn’t recoverable. If there is no attorney, make certain that the insured understands that he/she may be entitled to compensation for personal injuries and/or other damages, and be prepared to assist in finding reliable counsel. An insured with a financial incentive in an action is often essential to the recovery process. A liability carrier isn’t likely to settle a subrogation claim without resolving the personal injury claim. In some jurisdictions, a subrogation claim cannot be pursued absent a concomitant claim for personal injuries. An insurer can be of invaluable importance in making the insured aware that there is a case worth pursuing and assisting in both finding reliable counsel and developing the case.

Assessment While the guiding determinant of the recovery process, weaving through it like a ribbon of DNA, is the amount of the claim, there are circumstances in which even a small claim may be worth pursuing.

The fact that some small claims can be handled cost-effectively, and large ones can become black holes of investment, underscores the fundamental precept of law that every case is decided on its own facts – and the importance of flexibility in adapting to those facts.

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Where evidence and information suggest that a claim has recovery potential and counsel is or should be involved, the next consideration is whether representation is, or can be, on a contingent fee basis.

Contingent fee representation encourages speedy resolution of a claim. It is permitted throughout the US, Canada and many other countries including much of Western Europe and Australia. With contingent fee representation, counsel has a financial incentive to maximise the recovery for the injured insured in a timely manner; and, throughout the US and in some other countries, assumes responsibility for costs if there is no recovery. This has the salutary effect of refining the selection process of cases to be put into suit and discourages running up expenses in those that are. Hourly lawyers, conversely,

Knowledge and flexibility are essential components of a successful subrogation programme

are paid based on time spent regardless of result, which is antithetical to speedy resolution of the claim, and costs are the client’s responsibility regardless of outcome.

Countries that preclude contingent fee representation often provide for reimbursement of certain expenditures and counsel fees if there is a positive resolution of the claim from the plaintiff/subrogee’s perspective. But an adverse outcome may require reimbursement of at least some of the costs of defence.

Where an accident happens can affect the decision, if not the ability, to pursue subrogation in other ways. Some US states preclude medical lien subrogation altogether or under certain circumstances. The Made Whole Doctrine may prevent or limit a recovery. People in different countries have widely divergent views about pain and suffering depending on cultural and life experience. The standard of living can affect the concept of meaningful compensation.

Recoverable damages may be capped or limited. Some countries may require a non-citizen civil litigant to post a bond; in some, the insurer’s representative has to testify at trial to prove a subrogation claim.

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Some countries prohibit suit or discourage suit against government-owned entities and businesses operated by people who are in or have ties to the government. There are countries in which civil unrest and/ or political instability present barriers to pursuing compensation and some in which the economy is in such a shambles, or the judicial system so ineffective, that litigation is impossible. The legal system can be an impediment in parts of some countries but not in others. In many countries, lawsuits can drag on for years.

Where the claim originates can impact upon the opportunity to subrogate in another critical way. The testimony of the insured, attending physicians, and, sometimes, other forensic specialists is essential to prove liability and damages.

The more expensive it is to pursue compensation, the more arduous for the insured personally, and the more problematic the likelihood of a worthwhile outcome, the less likely it is that the insured will want to proceed. It seldom makes economic sense for an insurer to take responsibility for the costs of proving both liability and damages.

With contingent fee representation, counsel has a financial incentive to maximise the recovery for the injured insured in a timely manner Recoveries Evaluating a claim for the purpose of subrogation is an experience-based assessment of the evidence, factual and legal issues, and the time, effort and cost that are likely to be needed to obtain a recovery measured against the likelihood of achieving it.

While the first avenue of recovery is direct negotiation with the third party’s insurer, once counsel is involved for the insured, direct negotiation with the carrier is rarely possible and counsel controls the progress of the case. Plaintiffs’ attorneys have a fiduciary responsibility to maximise their clients’ recoveries and can be dismissive of subrogation claims, treating them as little more than an itch that has to be scratched.

They may assess the value of the personal injury claim so highly that when it comes time to allocate settlement proceeds, they will argue that the subrogation claim is not recoverable or worth very little. Therefore, it is important to be aware of issues that impact on the value of the insured’s personal injury claim.

Conclusion Of course, it isn’t possible to account for or address every concern, scenario, nuance and piece of information that might affect outcomes. The subrogation process becomes more complex as claims proceed through the hopper because, however paradoxical it may sound, there are increasingly fewer rules without exceptions. Knowledge and flexibility are essential components of a successful subrogation programme. Consider this an opening, then, to the conversation you will have with the subrogation professional handling your recovery efforts, whether down the hall or in another country. ■

AUTHOR Larry Levin is cofounder and Director of International Recoveries, LLC. He began the practice of law in 1977 and has specialised in subrogation since 1982.

An accomplished speaker, he is the author of a New York Times best-selling non-fiction book Oogy: The Dog Only a Family Could Love.

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Skyrocketing medical costs mean that travel and health insurers are increasingly exposed to catastrophic claims from their members. Mandy Langfield investigates how such claims costs are being managed PartnerRe Health recently reviewed its data on catastrophic claims, analysing claims trends between 2007 and 2012, and found there was an increase of more than 350 per cent (35 per cent per year) in the frequency of claims above US$1 million in the Commercial sector, with the average claim remaining relatively constant at approximately $1.4 million. Even more telling, however, was an analysis of about 60 Medicare and Medicaid claims above $1 million, in the same time period. Over those five years, there was a 250-per-cent increase in the frequency of these large claims, or about 20 per cent per year. Most of this increase occurred around 2009-10, according to PartnerRe data, while at the same time, the average claim started to increase about six per cent per year to $14 million in 2012. “This means the total cost of Medicare and Medicaid large claims above $1 million has increased about 28

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per cent per year,” concluded PartnerRe. The top drivers of increasing costs haven’t changed much over the years – regular readers of ITIJ and our Reviews will be familiar with the below list compiled by PartnerRe Health: • Higher treatment costs, reflecting the cost of investment of technology and pharmaceuticals • Fee-for-service payment model • Inefficient use of healthcare systems • Higher incidence of chronic conditions • Provider consolidation • Billing errors When taking into account the nature of the travel insurance business, there are additional factors that have influenced the increase in medical claims costs for insurers, as Medical Director of Turkish company Marm Assistance Dr Handan Umu pointed out: “The profile of today’s travellers differs sharply from that of their predecessors: demographically, tourists are older – 23 per cent are aged 55 or above, according to OECD data; and geographically the holidays sought are often far off the beaten track and focus on a theme like adventure, or risky ‘dark tourism’, from hiking to

hunting or even photographing conflict zones at the borders.” Naturally, with older travellers, medical cases may be more complex, especially if there are underlying or known pre-existing medical conditions to deal with, pushing up the length of stay in hospital and, thus, costs yet further.

What constitutes a ‘catastrophic’ claim will vary for any given company, however. James Walker, Head of International Network for

thorough case management to ensure the control of catastrophic claims costs is vital CEGA, said that while for his company any claim over £100,000 is considered catastrophic, this is subjective – a £25,000 claim could be catastrophic for a small insurer. Whatever an insurer’s parameters in this regard, thorough case management to ensure the control of catastrophic claims costs is vital.

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Where to start?

Although the ideal for any insurer is that their client should be directed to an innetwork hospital, where agreements about treatment costs and plans are already in place, this isn’t always possible. Acting quickly – and being proactive – once notification has been received that an insured has been admitted to hospital, however, is key. Dr Umu told ITIJ: “On a typical day at our alarm centre, our dispatcher team may receive a notification about a patient with ‘multiple-trauma’ in the south side of Turkey … this [could be] a more complicated case beyond the limits of ‘normal’, which has its very own code to inform our 24/7/365 available medical advisors – even there is no request for medical follow-up.”

New Frontier Group (NFG) provides cost containment services in the US on behalf of insurers around the world, and Randy Condie, Chief Operating Officer, told ITIJ that in most cases, their clients notify them within 24 hours of a catastrophic event occurring – ‘this is critical’, he said, to enable NFG to determine the potential actions that follow. This includes confirming coverage, admission, diagnosis and the responsible payer. A case manager is assigned to the case, and medical records obtained for the patient. If necessary, a Large Charge Warning is given to the insurer. “Daily contact with the facility case manager/primary care physician to obtain updates and medical records for the insurer’s medical director’s review is then undertaken,” said Condie.

Prompt communication with the treating facility is also the approach taken by UKbased assistance, travel risk and claims

management provider CEGA, according to James Walker. He told ITIJ: “Our medical team will establish contact with a treating hospital immediately, to work out the most appropriate course of action for the patient collaboratively. The team will ensure that the right, appropriate treatment is given and will manage the case closely.”

For companies offering bespoke cost containment services to clients, it depends on the kind of agreement that exists between the two parties as to when the cost containment service provider is brought onto the case, but according to John Spears of Global Excel Management (GEM): “The bottom line is that the earlier we’re involved, the more effective we can be at managing these catastrophic cases, all the while providing a better customer journey.

This also gives us the ability to avoid costs during the incident rather than just containing costs on the back end.”

What follows next, Walker said, is equally vital: “As soon as we know that a claim is likely to become catastrophic, we’ll establish if it’s in the best interests of the patient for us to discuss discounts with the billing hospital straightaway (even if some discounts are already in place), or to let treatment continue first with a payment guarantee and negotiate afterwards. It may even be best for the patient to be repatriated for further care or recovery.” CEGA also uses its in-house travel department to use their established relationships with airlines and hotel groups to book flights and accommodation (including provision for family members) at discounted rates. “And,” said Walker, “we’ll use pre-quoted air ambulance and emergency transport services. At the same

time, we’ll benchmark costs and draw on the local knowledge of partners overseas to ensure that costs are commensurate with treatment.” He went on to say: “A presence ‘on the ground’ abroad is often an important part of catastrophic claims cost containment. We use partners with real-time local knowledge to visit hospitals, meet providers and validate costs overseas.

In the US, we work with a number of specialists whose in-depth experience of the medical sector, coupled with our own in-house experts, gives us optimum control of the billing process and cost management.”

The use of inhouse experts is an approach also in use at New Frontier Group, explained Condie: “Depending on the diagnosis, criticality of the patient’s status and care plan and advise as recommended by insurer medical staff, we involve our Medical Advisory Board members to evaluate the medical records based upon their area of expertise – for example, trauma/orthopaedic, emergent care, oncology – to assess care plan alternatives, if possible. At that time, they review the treatment plan and follow it carefully in order to share their findings and make recommendations based on the necessary details.”

John Spears of GEM emphasised the importance of accurate and timely >> information, adding that a number

a number of different resources have to be triggered if a catastrophic case is to be managed effectively

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of different resources have to be triggered if a catastrophic case is to be managed effectively: “What is very important are the regular medical updates, evaluations and actually being involved in the medical management of the case. After the fact, and only on the back end, it’s about having a number of review, repricing or negotiating options in place.”

Great communication is key to a successful cost containment plan, as is using evidence to support your case. Once a treatment plan has been agreed, with evidence-based medicine at its core, then evacuation has to be the next consideration, noted Dr Umu, who agreed that local knowledge can be invaluable when it comes to getting a second medical opinion to agree the optimum plan for getting the patient to their home country. “We focus on the complete treatment process of the patient with daily medical follow-ups and interim cost breakdowns ensuring the fine balance of the claim until the patient is safely discharged,” said Dr Umu. Maximum collaboration, said Walker, is absolutely essential when it comes to containing the costs of catastrophic claims, ‘involving not just our in-house cost containment, claims handling and medical teams, but also our overseas agents, travel specialists and (if inflated or fabricated costs are suspected) our fraud investigation unit’.

He explained: “Our bill auditing processes identify cost or treatment discrepancies, while medical bills from countries that regularly produce high-cost claims will always be flagged. Among the latter are bills from the US (where medical care is expensive) and from areas with a history of inflating costs or exaggerating treatment.

If the cost of a medical claim is high, we will first validate the bill and then negotiate hard to secure a special discount, even if we already have discounts set up with the hospital. This is where our established global relationships are so valuable.”

Collaboration between different members of the team was also a feature of medical case management noted by GEM’s Senior Medical Director Dr Ferial Ladak, who

told ITIJ: “Global Excel has twice-weekly rounds meetings in order to ensure that a multidisciplinary 360-degree assessment is made of every inpatient case. These discussions are invaluable to make sure all aspects of the claim are joined up. After the fact, we would use our Complex Claims Unit for detailed scrutiny of catastrophic cases. This in-house unit specialises in high-dollar, complex cases and evaluates the appropriateness of care, procedures, and length of stay.”

A wise investment There are a number of steps and processes to follow in the management of a complex medical case, and in carrying out this work, inevitably, a medical assistance or cost containment company is going to incur some costs of their own. It’s up to the insurer, therefore, to decide whether or not the investment in this service is worth it.

When partnering with a cost containment service provider, Randy Condie of New Frontier Group had the following advice for insurers with high-cost claims in the US: “Identify an organisation that is proactive, responsive and operates 24/7/365, is familiar with the US healthcare system and employs staff that are trained in identifying and managing catastrophic cases.”

Dr Umu believes that insurers need to understand the value that dedicated cost containers bring to the industry and invest wisely: “Although the individual steps like scouting and evacuation seem to be

Case study – CEGA When we received an $800,000 claim from a hospital in Central America with a history of cost-inflation, we soon had a cost containment strategy in place. Knowing that the patient was not well enough to be moved to alternative care (we had no involvement in his original admission) and not wanting to disrupt his treatment, we would offer the hospital a payment guarantee and negotiate costs once treatment was complete. Meanwhile, we ensured that our senior in-house doctors managed his case scrupulously: ensuring that he was given exactly the right treatment.

Once the patient had recovered, we asked the hospital to do an internal audit and received a small bill reduction.

Our medical team recognised that all treatment had been necessary, but that costs were still very inflated: a fact confirmed by our local partner ‘in country’ and our own understanding of local medical costs. Negotiations then began in earnest, via phone, WhatsApp, email and more: ultimately achieving an overall discount of 36 per cent.

Fiona Fequet, Global Excel Management, Financial Review Officer – Catastrophic Claims Unit Whether you provide the assistance yourself, or outsource it to a third party, an insurer needs to make sure that: • The member journey and the financial considerations are not mutually exclusive. Early intervention can help to provide the right care and the right time in the right place and at the right cost.

• Your staff know the trigger diagnoses for catastrophic illnesses and use a trigger diagnosis list which may include items like dialysis and specialty drugs.

• You are aware of claims/providers that are susceptible to fraud, waste and abuse.

• Reviewing high-dollar complex claims is essential and it must be done from the financial, legal and medical points of view.

• Actionable intelligence from your claims experience flows back into your policy design and wording.

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‘costly’ per item, our client realised a saving up to 27 per cent compared with similar claims cost estimations by restructuring the claim progress by means of total case management process. This was achieved by using a combination of different skill sets in harmony – close medical follow-ups, second opinion, evacuation abilities, contracted discounts, tight cost containment procedures; built by local know-how about the market and a carefully assessed facility network, empowered with good communication skills.”

Walker of CEGA concluded that it is a mixture of skills and steps that make cost containment achievable for CEGA, no matter what the amount of the claim: “Our cost containment strategies are flexible, but we take broadly the same approach to every medical claim: high or low. We always establish (among other factors) if charges are appropriate and commensurate with treatment received, that every stage of treatment was needed, and that there are no billing errors. Post-treatment audits, claimant questionnaires and assessments from our medical team are often part of this. We also monitor medical facilities, especially those producing an unusually high volume of claims.” ■

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As the international private medical insurance market continues to expand, the need for insurers to contain costs has never been greater, argues Amrit Bineypal Premium inflation is an almost inevitable annual occurrence. Many of the causes are outside the influence of insurers, but some can be controlled, at least to a degree.

This article outlines five strategies for containing costs, and shows how they can benefit carriers, their customers and their insured members.

Starting at the beginning Cost containment is not simply about saving money on one individual claim. The key is to take a holistic approach, beginning with product design and continuing through the management of claims and subsequent payment of invoices. It must include a feedback loop in which the service and product teams identify areas of concern and weaknesses that put the product at risk.

The first step is to have clear and concise wording in policies. Grey areas invite disputes and add cost, while clear wording helps manage the member’s expectations

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and enhance the member experience. I have seen many policies in which a missing key word or phrase changed the nature of cover provided. For example, a policy that does not include the phrase ‘kidney transplant and related services are not covered’, can result in large and unexpected claims for the insurer.

Sharing the cost of treatment A second step is to shift responsibility for part of a claim to insured members.

Excesses, co-pay arrangements and coinsurance are all designed to share the burden of claims and reduce the cost burden of processing minor claims.

Members also are more careful about the services they use and claim when they contribute to the cost themselves.

Many people who purchase private medical insurance choose to ‘self-insure’ for smaller claims, only drawing on their insurance policy for more serious conditions. By agreeing to higher deductibles or excesses they pay lower premiums but still are able to access high- quality medical care when they really need it.

While these shared liability mechanisms are used regularly for individual and small

group business, the competitive nature of larger group policies means they are often omitted, especially outside the United States.

Tackling fraud The Global Health Care Anti-Fraud Network (GHCAN) has estimated that fraud and mistakes in healthcare cost around US$260 billion (£200 billion) a year, around six per cent of global healthcare spending. Recognising and eliminating fraudulent claims activity is a constant challenge for the global insurance industry. Having experienced claims examiners and geographically focused teams to catch similar activity and patterns across the same region can be beneficial.

A simple technique is listening to the member on the phone. For example, if the member is being evasive, the examiner can dig more deeply into the claim. The

Cost containment is not simply about saving money on one individual claim

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Warning signs of fraud • Abnormal emotional state of the member making contact.

• Claims don’t match typical patterns seen for type of claim, geography, provider or diagnosis.

• Invoices are incorrect or incomplete, not in expected language, not in the local currency, altered suspiciously, or contain misspelled words or incorrect medical terminology.

• No trace of medical facility online.

• Length of stay or treatment inconsistent with diagnosis.

• Treatment not appropriate for age, gender or diagnosis.

• Same treatment, provider and/or date of service for multiple family members.

• Medical records unavailable.

• Documents inconsistent with the known regional and/or provider standard.

• Multiple members within an insured group exhaust their benefits at one provider.

straightforward act of letting people talk can lead to their telling you more than they intended.

Fee sharing methods Three typical cost-sharing mechanisms put some of the cost onus on the member, in addition to the insurer: • Co-pay* – insured members must pay a fixed dollar amount each time they benefit from a particular treatment; for example, insured members must pay $10 for each GP consultation. The co-payment amount is not capped and does not count towards any out-of-pocket maximum.

• Deductible – insured members must pay a specified amount before the insurance company pays an eligible claim. The deductible, also referred to as the excess, is usually capped at a specific amount.

• Co-insurance* – insured members must pay a percentage of the cost. A coinsurance arrangement may be limited; members might pay 20 per cent of the medical bill until they reach that limit, for example, at which point the insurer will meet 100 per cent of the fees. Co-insurance is common for frequently used health services.

All three mechanisms can exist together, but generally co-pays exist in isolation, whilst deductibles and co-insurance often exist in combination. *in some jurisdictions co-pay is synonymous with co-insurance in which case the concept of cost/visit does not exist.

Managing wellness across an insured population Anything insurers can do to keep their members fit and healthy will lead to fewer claims. Insurers have developed wellness apps, provide healthy eating and exercise advice, and offer health risk assessments designed to catch health issues before they develop into serious problems.

Providing seamless access to wellness services can make a difference to whether a member ultimately needs medical treatment, which will influence an insurer’s bottom line. For example, IPMI companies can offer Employee Assistance Programmes (EAP) and online GP services, which offer convenient and cost-effective healthcare options. GGH frequently sets up doctorand-nurse teams in the offices of corporate customers to carry out health tests and provide health and wellness advice. We also work with clients to better understand the claims patterns of their employee populations and develop preventative strategies to tackle specific issues. >>

clear wording helps manage the member’s expectations

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Often this comes down to the basics, such as losing weight, eating healthy, cutting alcohol and stress, and more exercise.

But sometimes we go further and target a specific sub-group with a more proactive treatment initiative.

Medical networks and pre-authorisation Healthcare network contracts and prior authorisation for certain procedures are key elements of any insurer’s cost containment toolbox. IPMI companies can negotiate access to healthcare contracts, from a simple percentage off to set reimbursement or package pricing for specific procedures.

If a provider is not in-network, the IPMI company’s in-house team can pre-negotiate with a provider on a case-by-case basis.

One of the keys to success in prenegotiations is having access to sufficient funds, making prompt payments to the provider possible.

Pre-authorising treatment enables insurers to ensure that a recommended treatment plan is both medically necessary and appropriate for the member but can require empathy towards a member’s emotional circumstances. If a child broke a leg and needed surgery, the parents would want immediate treatment, but an insurer would still need to check the details and pre-authorise the doctor’s recommendation

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Medical and premium inflation remains a constant challenge in the IPMI industry for surgery to ensure the treatment plan and costs were appropriate.

Experience enables us to understand where a policy pre-authorisation requirement may not be necessary. For example, we have seen polices with a need to preauthorise physical therapy sessions, but the cost of review from a medical perspective does not outweigh the benefit. The result has been an open dialogue with both the medical and technical underwriting teams to amend the benefit. Now physical therapy sessions are typically limited to a specific number per year or to a dollar amount. This practice improves the member experience, as there is no need to contact us for pre-authorisation, yet it helps insurers cap administration and usage costs.

Cost containment in conclusion Medical and premium inflation remains a constant challenge in the IPMI industry.

While many of the contributing factors are

beyond the industry’s control, the sector does have an obligation to contain costs and maintain annual premium increases at appropriate levels. Offering clear and precise products and wordings, sharing the cost of treatment, tackling fraud, offering wellness programmes and cutting back on pre-authorisations are five key elements insurers are using to manage their overall costs more effectively. That’s good news for the insurance company, its customers and its insured members. ■

AUTHOR Amrit Bineypal is VicePresident, Global Operations at Generali Global Health Services in Canada, responsible for customer service, case management, claims, network and the operational development teams.

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PROFILE Sylvain Charpilienne Cost Containment Director and Head of Case Management for April International How long have you worked in the health insurance industry, and how did you progress to your current position as Cost Containment Director and Head of Case Management for April International?

I have been working in the international health insurance industry since 1992, starting on the service side as an assistance co-ordinator for World Access, a company now part of the Allianz realm. I later joined European Benefits Administrators, now part of MSH, to work in all aspects of international medical claims administration.

In 2003, I created my own TPA named Medical Administrators International (MAI). MAI handled international medical claims for Allianz, Cigna, Aetna, AIG, Metlife, Swiss Life and other insurance companies. The multicurrency capacity of the software we developed also led to important collaborations with brokers such as Gras Savoye. As a native online platform, we provided each stakeholder with real-time pertinent data. Our multilingual claims portal was also notably used in Japanese to serve Japanese expatriates working in France.

In 2013, after selling MAI to Group Molitor, I joined April International Expat as Project Director, before taking on the position of Director of International Services, overseeing 80 staff. In 2015, I relinquished this position to become Head of Case Management and create (within the International Services department) a special unit whose mission is to steer patients to accredited medical providers and facilities practising reasonable and customary costs.

Strategically located around the globe, my colleagues who are members of this unit help patients understand their choices, make informed decisions, and participate in keeping premiums at a competitive level.

Can you talk us through what your role entails on a day-to-day basis?

I review all high-dollar planned treatment cases before patients are hospitalised. My role is to ensure we consider all appropriate alternatives while ensuring the patient benefits from a high level of medical care.

My role being global, I review cases that occur all around the world, hence allowing me to have a good understanding of all

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medical systems and local dynamics.

How have approaches to cost containment evolved over the course of your career?

Over the years, our particular approach has shifted towards establishing a balance in our relationships with medical providers.

In cases of planned treatments, our aim has been to move from a situation whereby patients would select their medical provider and we would simply issue a letter of guarantee regardless of cost or quality, to a new approach whereby we systematically analyse the exact situation and, whenever pertinent, propose to the patient an alternate provider or solution that may involve travelling to another location or country.

We also commonly resort to second medical opinions, which benefit both the patient and the insurer. Many extremely expensive surgeries, which in the end proved to be medically unnecessary, have been entirely avoided by simply organising second and third medical opinions in the patient’s home or host country.

The significant results we have seen have led us to rely less on contractual negotiation (with medical providers) and more on being able to identify and propose alternate solutions to our clients.

How is April International leveraging new technology to contain costs?

April produces tools to serve its cost containment/case management strategy.

Our 30-year experience and international presence has resulted in the acquisition of abundant quality data. April is now at the forefront of new technology and is developing new tools to help our clients navigate through complex medical systems anywhere in the world. Our teams are very dedicated to this approach and our processes reflect our dedication.

The world is both more connected than ever and, in many ways, more perilous.

How have these turbulent times affected the provision of health insurance for expatriates, in your view?

Expatriates and their employers know they need coverage adapted to their

locations and activities, and they now have more choice than ever before; but our observation is that providing insurance is no longer enough, and the level of expectation has significantly risen.

Expatriates now live, move, and conduct business while being connected to the world and react according to events occurring in their countries of interest.

The expectation is that we, members of the IPMI industry, produce and provide services that are adapted to each one’s personal situation, approach to risk, and general way of life.

In a world changing every day, expatriates expect us to reach an increasingly high degree of flexibility, knowledge, and pertinence. The way they use their plan must be our key driver. Providing pertinent real-time information and advice on which medical providers to use is no longer optional; it is vital.

What do you enjoy most about your role?

As we all belong to an international community, the part I enjoy most about my work is that it allows me to speak every day with individuals all around the world, from different cultures, speaking different languages, may they be colleagues, partners, insurers, clients, medical providers, agents, and so on. It is an endless source of satisfaction to be able to communicate with people on a global basis regardless of their origins, religions, languages, around a common theme.

In a world changing every day, expatriates expect us to reach an increasingly high degree of flexibility, knowledge, and pertinence

If you could do any other job in the world, what would it be and why?

I would truly enjoy working for a charity whose mission I believe in.

What are you most proud of – both personally and professionally?

I am very proud of having created MAI (personally), and am most proud of our patient steering results at April International. ■

S

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| 27 International Travel & Health Insurance Journal

cost containment REVIEW 2018

True health risk management starts with proactive assistance before sending your patient to the ER

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HEALTHCARE RISK MANAGEMENT SOLUTIONS 28 |

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International Travel & Health Insurance Journal