Two Brands of Reform in Wisconsin

IN THIS ISSUE:


? Clarification

? Two Brands of Reform in Wisconsin

? Trib Reports on Answer to ?Tripple Whammy?

? Business Insurance Reports Consumer-Driven Gains


VENDOR CORNER


? USA Today Features Vivius

? Excellus Blue Cross Blue Shield Develops C-D Product

? Destiny Joint Ventures with The Guardian

? Destiny Joint Ventures with Tufts

? CareGain Inks Deal With AAHP

? BeneMax Combines HRA with Shared Deductible

? MSAs Finally Available in Maryland


EVENTS

? NAIC Hosts Chicago Conference


CLARIFICATION


I should have explained last week that to access the information from the Consumer Driven Conference in Las Vegas go to: http://www.cdhcc.com and then go to the ?program? which will open-up a detailed agenda. Most of the presentation descriptions will include the presenter?s name, which is a link to the speaker?s bio, and the number of the session, which in most cases is a link to the PPT slides. There is also a listing of the logos for the sponsors and exhibitors. These logos are also links to the company web site.



TWO BRANDS OF REFORM IN WISCONSIN


Writing in the Milwaukee Journal Sentinel, John Torinus, the CEO of Serigraph, Inc., describes ?two brands of reformers (who are) making strides in transforming employees from passive patients to active partners in their own medical treatment.? One brand is trying ?to root out poor outcomes and processes in medicine,? which are responsible for as much as 30 percent of all costs. Mr. Torinus describes two personal anecdotes, both of which were successful, but only one of which was systematically monitored for outcomes. ?How can you run an effective system of any kind without keeping rigorous track of outcomes?? he asks. The other ?brand? of reform involves getting ?the incentives and disincentives in the right place.? He quotes Fortis CEO Don Hamm as saying, ?Milwaukee employers have been passive,? but are starting to change. A higher deductible, for instance, ?changes buying habits tremendously,? and Fortis is already amending the benefits of its own employees to include a more consumer-driven approach, as are other local employers such as Rockwell, Menasha Corp., U.S. Bank, and Humana, according to the article.

SOURCE: http://www.jsonline.com/bym/News/apr03/131308.asp



TRIB REPORTS ON ANSWER TO ?TRIPLE WHAMMY?


The Chicago Tribune ran an article on consumer driven health care on April 14. Writer Ann Meyer notes that ?small businesses often face a triple whammy? in securing health coverage. They are too small to negotiate good rates, they don?t get good customer service, and ?they generally have fewer plans to choose from.? She forgets to mention that they have to endure a mountain of regulations from which larger firms are exempt. Consumer driven health care can help smaller firms cope with these problems, but so far they have been slower than their bigger counterparts to adopt them. She cites the owner of one small firm that bought Destiny?s product as saying, ?I think it?s imperative that the public understand what they?re paying for and how they as individuals can help control costs in the health market.? She adds that patients need to be willing to ?ask hard questions of their doctors about the necessity of procedures to get the best medical care and avoid mistakes.? Still, small employers are reluctant to make changes that ?could be disruptive to their workers.? Along with Destiny, the article mentions Aetna, Humana, and HealthMarket as offering products.

SOURCE: http://www.chicagotribune.com/business/chi-0304140001apr14,1,1410442.story




BUSINESS INSURANCE REPORTS CONSUMER-DRIVEN GAINS


Business Insurance reports that ?after more than a year?s experience,? employers are expanding their consumer driven offerings by moving from pilots to permanent programs, expanding the numbers of eligible employees, and encouraging more enrollment. The article by Michael Prince adds that, while data is still preliminary, reports from the field ?show that costs and utilization have dropped.? It cites experience from Lumenos which looked at the experience of ?eight employers that used its plan throughout 2002,? and found that ?costs for people using the plan came in between 60% and 90% of the projections made when the year started.? Only one employer exceeded the projected spending. The story also notes growing enrollment from employers entering their second plan year. Aon Corp had 1,500 employees opting for the plan, up from 1,200 last year. Medtronic has 3,200 enrolled, up from 2,400 last year. Textron started with a pilot covering 1,700 workers in 2002, and now has expanded to cover all 28,000 non-union workers in the U.S on a full replacement basis. A Watson Wyatt consultant remains skeptical, however, saying, ?It?s unproven in terms of controlling costs.? There is lingering concern about selection, but Medtronic?s experience finds that the consumer driven program attracted a higher than normal number of people with chronic conditions, and calls to the nurse hotline are triple for enrollees.

SOURCE: http://www.businessinsurance.com/cgi-bin/article.pl?articleId=12556&a=a&bt=consumer-driven


USA TODAY FEATURES VIVIUS


Vivius is also in the news, being featured in an article in USA Today. Writer Julie Appleby reports that enrollment is getting more complicated as workers are presented with a menu of options. She mentions Highmark Blue Cross Blue Shield, which offers up to 50 combinations of benefit design, and First Health that offers some 13 million members a ?base-level medical plan with an option of purchasing a rider for additional benefits and lower out-of-pocket costs.? But she focuses on the Vivius experience where each family member can create its own network of physicians and cost-sharing provisions. The owner of a company in Spokane reported, ?My people said they like being able to make the choices.? His rate increase was scheduled to be 23% in 2003, but with the Vivius program, that increase was held to between 9% and 14%. A consultant with Towers Perrin summarizes, ?One-size-fits-all has not helped us contain costs. Employers are realizing the consumer has to have a role in this.?

SOURCE: http://www.usatoday.com/usatonline/20030414/5066459s.htm


EXCELLUS BLUE CROSS BLUE SHIELD DEVELOPS C-D PRODUCT


Writing in the Press & Sun Bulletin (Binghamton, NY), Lucy Atkins asks if consumers can shop for the best deal for ?big-ticket items such as cars and mortgages? why not encourage the same approach to health insurance?? She says the local Blue Cross Blue Shield plan, Excellus, is doing just that by offering a consumer driven product. So far, no employers have bought the product, and are ?waiting to see the results from elsewhere.? The past president of the local medical society, Dr. James Hayes, says, ?This is a completely different paradigm in health care delivery. We?ve been lulled into this sense that health care is free?? But he warns that Americans may not be ready to take on the responsibility.

SOURCE: www.pressconnects.com


DESTINY JOINT VENTURES WITH THE GUARDIAN


Much has been made this week of the new joint ventures Destiny and its parent company Discovery in South Africa have entered into. A news release announces an agreement with The Guardian to offer the Destiny product in select markets throughout the United States and to employers of all sizes. It should prove a powerful alliance, since Destiny?s product has been on the market long enough to have all the bugs worked out, and The Guardian?s distribution network is one of the country?s strongest with some 2,700 agents. The Guardian gets the advantage of saving the time and money of developing a brand-new product, and Destiny will be able to immediately get beyond its base in Illinois and Wisconsin. The initial target market will be The Guardian?s existing customer base, according to press reports.

SOURCE: Contact Eileen Rochford at 312-953-3305 or eileenrochford@hotmail.com or contact Henry Dummett of World Markets Analysis for his April 7 write-up at henry.dummett@wmrc.com



DESTINY JOINT VENTURES WITH TUFTS


Destiny?s other joint venture is with Tufts Health Plan. The Massachusetts press has been hopping with this news, though it?s a little harder to envision how these two companies will fit together, since the idea of deductibles is alien to Tufts clients. In an article in the Boston Globe, a spokesman for Tufts says, ?They are trying to avoid some of the pitfalls and risks for employees,? such as the prospect that ?employees can get stuck with hundreds of dollars of out-of-pocket expenses?? It goes on to say the program ?will offer cash or discounts on premiums or copayments to people who participate in fitness programs or do other things to improve their health,? and, ?Tufts also is developing a list of medical services employees require and can?t avoid that would be exempt from the deductible and covered immediately by insurance, such as having a baby or taking medication for a chronic disease.? Methinks Tufts is trying to have it both ways ? lowering costs without exposing enrollees to any added responsibility. Sounds like HMO thinking to me.

SOURCE: Contact Bridget Perry at Tufts Health Plan at 781-466-9424.



CAREGAIN INKS DEAL WITH AAHP


CareGain has also entered into an interesting partnership, this one with the American Association of Health Plans (AAHP), the trade association for the managed care industry. The association is offering the CareGain platform to its member companies ?under a unique preferred pricing arrangement,? according to a company release. CareGain?s core product is a ?HealthcareIRA? that is personally owned by the employee and portable. The company had a trial run with three employers in 2002 on a total replacement basis and saw a 26% saving in cost. The company also offers decision support tools, claims adjudication, and enrollment and eligibility functions.

SOURCE: for more information contact Russell LaMontagne of CareGain at 212-255-5340 or go to http://www.caregain.com



BENEMAX ? COMBINES HRA WITH SHARED DEDUCTIBLE


Massachusetts-based Benemax provides an example of one employer that faced a 20% rate hike for its 43 employees this year and switched to an HRA provided by Benemax and reduced costs by 10 percent. The underlying insurance package is a Blue Cross Blue Shield plan with a $3,000 medical deductible and $250 for prescription drugs. The employer then sets up a $500 HRA for single workers, $1,000 for two-person families, and $1,500 for three or more. Here?s the twist ? once the HRA funds are used, the employee is responsible for only another $250, after which the employer pays for expenses until the deductible is reached. Benemax says it has grown by 35 percent in each of the last three years.

SOURCE: Contact Lisa Jacobson at 617-497-0193, or ljacobson@kogspr.com




MSAs FINALLY AVAILABLE IN MARYLAND


For all the hoopla around the new consumer driven offerings, plain old Medical Savings Accounts remain some of the best deals around, especially for small employers. It?s true that the federal restrictions make them difficult to explain, and the limitations have kept most of the potential vendors away from them. And many insurers are far too conservative in pricing the underlying insurance coverage. (Actuaries tend to rate-up high deductible plans when there is an MSA attached for fear that people will not see the MSA funds as their own money). Despite all these obstacles, there are MSA programs out there that are extremely attractive.


Maryland, for instance, is one of the most highly regulated states in the country. The Maryland Health Care Commission is all over the backs of small employers, requiring all carriers to offer a ?Comprehensive Standard Health Benefits Plan,? with the possibility of buying additional benefits to ?enrich? the standard plan. Some time ago it allowed MSAs to be sold but added so many bells and whistles that no one offered them. But today there is one carrier, Fidelity Insurance Group, founded in 1999 that is offering MSAs to small employers in Maryland at a very attractive price. For instance, in the Baltimore area the average PPO premium for an individual and spouse is $537/mo, for indemnity coverage it is $1,068, and for an HMO it is $667. But Fidelity?s MSA is $336/mo, for an annual premium saving of $2,412 over the PPO, $8,784 over the indemnity, and $3,972 over the HMO. Fidelity also markets the lowest cost PPO in the state, and its enrollment has soared from 21,600 in 1999 to 48,500 in 2002.

SOURCE: for rates and product information, go to http://mdinsurance.state.md.us/documents/smallgroupguide1-03.pdf

For information about Fidelity, go to http://www.fidelityig.com




NAIC HOSTS CHICAGO CONFERENCE


The National Association of Insurance Commissioners (NAIC) is holding a conference on Insurance Regulation and Cost Containment in Chicago on May 6, 2003. It is cosponsored by the ?Reforming States Group,? an RWJ-funded organization that pushed for the disastrous small group reforms that have destroyed the market throughout the country. The program seems pretty tilted to RWJ-funded interests, including both Paul Ginsberg and Len Nichols of the Center for Studying Health Systems Change on the program. Mark Pauly will be there to provide some balance. It will be interesting to see how this conference spins the current market. Don?t be surprised if the conference concludes that the problem in the market is that the states didn?t do enough ?reform,? not that they did way too much. Registration costs $195.

SOURCE: http://www.naic.org — go to the Calendar of Meetings section.




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About the author

IN THIS ISSUE:


? Clarification

? Two Brands of Reform in Wisconsin

? Trib Reports on Answer to ?Tripple Whammy?

? Business Insurance Reports Consumer-Driven Gains


VENDOR CORNER


? USA Today Features Vivius

? Excellus Blue Cross Blue Shield Develops C-D Product

? Destiny Joint Ventures with The Guardian

? Destiny Joint Ventures with Tufts

? CareGain Inks Deal With AAHP

? BeneMax Combines HRA with Shared Deductible

? MSAs Finally Available in Maryland


EVENTS

? NAIC Hosts Chicago Conference


CLARIFICATION


I should have explained last week that to access the information from the Consumer Driven Conference in Las Vegas go to: http://www.cdhcc.com and then go to the ?program? which will open-up a detailed agenda. Most of the presentation descriptions will include the presenter?s name, which is a link to the speaker?s bio, and the number of the session, which in most cases is a link to the PPT slides. There is also a listing of the logos for the sponsors and exhibitors. These logos are also links to the company web site.



TWO BRANDS OF REFORM IN WISCONSIN


Writing in the Milwaukee Journal Sentinel, John Torinus, the CEO of Serigraph, Inc., describes ?two brands of reformers (who are) making strides in transforming employees from passive patients to active partners in their own medical treatment.? One brand is trying ?to root out poor outcomes and processes in medicine,? which are responsible for as much as 30 percent of all costs. Mr. Torinus describes two personal anecdotes, both of which were successful, but only one of which was systematically monitored for outcomes. ?How can you run an effective system of any kind without keeping rigorous track of outcomes?? he asks. The other ?brand? of reform involves getting ?the incentives and disincentives in the right place.? He quotes Fortis CEO Don Hamm as saying, ?Milwaukee employers have been passive,? but are starting to change. A higher deductible, for instance, ?changes buying habits tremendously,? and Fortis is already amending the benefits of its own employees to include a more consumer-driven approach, as are other local employers such as Rockwell, Menasha Corp., U.S. Bank, and Humana, according to the article.

SOURCE: http://www.jsonline.com/bym/News/apr03/131308.asp



TRIB REPORTS ON ANSWER TO ?TRIPLE WHAMMY?


The Chicago Tribune ran an article on consumer driven health care on April 14. Writer Ann Meyer notes that ?small businesses often face a triple whammy? in securing health coverage. They are too small to negotiate good rates, they don?t get good customer service, and ?they generally have fewer plans to choose from.? She forgets to mention that they have to endure a mountain of regulations from which larger firms are exempt. Consumer driven health care can help smaller firms cope with these problems, but so far they have been slower than their bigger counterparts to adopt them. She cites the owner of one small firm that bought Destiny?s product as saying, ?I think it?s imperative that the public understand what they?re paying for and how they as individuals can help control costs in the health market.? She adds that patients need to be willing to ?ask hard questions of their doctors about the necessity of procedures to get the best medical care and avoid mistakes.? Still, small employers are reluctant to make changes that ?could be disruptive to their workers.? Along with Destiny, the article mentions Aetna, Humana, and HealthMarket as offering products.

SOURCE: http://www.chicagotribune.com/business/chi-0304140001apr14,1,1410442.story




BUSINESS INSURANCE REPORTS CONSUMER-DRIVEN GAINS


Business Insurance reports that ?after more than a year?s experience,? employers are expanding their consumer driven offerings by moving from pilots to permanent programs, expanding the numbers of eligible employees, and encouraging more enrollment. The article by Michael Prince adds that, while data is still preliminary, reports from the field ?show that costs and utilization have dropped.? It cites experience from Lumenos which looked at the experience of ?eight employers that used its plan throughout 2002,? and found that ?costs for people using the plan came in between 60% and 90% of the projections made when the year started.? Only one employer exceeded the projected spending. The story also notes growing enrollment from employers entering their second plan year. Aon Corp had 1,500 employees opting for the plan, up from 1,200 last year. Medtronic has 3,200 enrolled, up from 2,400 last year. Textron started with a pilot covering 1,700 workers in 2002, and now has expanded to cover all 28,000 non-union workers in the U.S on a full replacement basis. A Watson Wyatt consultant remains skeptical, however, saying, ?It?s unproven in terms of controlling costs.? There is lingering concern about selection, but Medtronic?s experience finds that the consumer driven program attracted a higher than normal number of people with chronic conditions, and calls to the nurse hotline are triple for enrollees.

SOURCE: http://www.businessinsurance.com/cgi-bin/article.pl?articleId=12556&a=a&bt=consumer-driven


USA TODAY FEATURES VIVIUS


Vivius is also in the news, being featured in an article in USA Today. Writer Julie Appleby reports that enrollment is getting more complicated as workers are presented with a menu of options. She mentions Highmark Blue Cross Blue Shield, which offers up to 50 combinations of benefit design, and First Health that offers some 13 million members a ?base-level medical plan with an option of purchasing a rider for additional benefits and lower out-of-pocket costs.? But she focuses on the Vivius experience where each family member can create its own network of physicians and cost-sharing provisions. The owner of a company in Spokane reported, ?My people said they like being able to make the choices.? His rate increase was scheduled to be 23% in 2003, but with the Vivius program, that increase was held to between 9% and 14%. A consultant with Towers Perrin summarizes, ?One-size-fits-all has not helped us contain costs. Employers are realizing the consumer has to have a role in this.?

SOURCE: http://www.usatoday.com/usatonline/20030414/5066459s.htm


EXCELLUS BLUE CROSS BLUE SHIELD DEVELOPS C-D PRODUCT


Writing in the Press & Sun Bulletin (Binghamton, NY), Lucy Atkins asks if consumers can shop for the best deal for ?big-ticket items such as cars and mortgages? why not encourage the same approach to health insurance?? She says the local Blue Cross Blue Shield plan, Excellus, is doing just that by offering a consumer driven product. So far, no employers have bought the product, and are ?waiting to see the results from elsewhere.? The past president of the local medical society, Dr. James Hayes, says, ?This is a completely different paradigm in health care delivery. We?ve been lulled into this sense that health care is free?? But he warns that Americans may not be ready to take on the responsibility.

SOURCE: www.pressconnects.com


DESTINY JOINT VENTURES WITH THE GUARDIAN


Much has been made this week of the new joint ventures Destiny and its parent company Discovery in South Africa have entered into. A news release announces an agreement with The Guardian to offer the Destiny product in select markets throughout the United States and to employers of all sizes. It should prove a powerful alliance, since Destiny?s product has been on the market long enough to have all the bugs worked out, and The Guardian?s distribution network is one of the country?s strongest with some 2,700 agents. The Guardian gets the advantage of saving the time and money of developing a brand-new product, and Destiny will be able to immediately get beyond its base in Illinois and Wisconsin. The initial target market will be The Guardian?s existing customer base, according to press reports.

SOURCE: Contact Eileen Rochford at 312-953-3305 or eileenrochford@hotmail.com or contact Henry Dummett of World Markets Analysis for his April 7 write-up at henry.dummett@wmrc.com



DESTINY JOINT VENTURES WITH TUFTS


Destiny?s other joint venture is with Tufts Health Plan. The Massachusetts press has been hopping with this news, though it?s a little harder to envision how these two companies will fit together, since the idea of deductibles is alien to Tufts clients. In an article in the Boston Globe, a spokesman for Tufts says, ?They are trying to avoid some of the pitfalls and risks for employees,? such as the prospect that ?employees can get stuck with hundreds of dollars of out-of-pocket expenses?? It goes on to say the program ?will offer cash or discounts on premiums or copayments to people who participate in fitness programs or do other things to improve their health,? and, ?Tufts also is developing a list of medical services employees require and can?t avoid that would be exempt from the deductible and covered immediately by insurance, such as having a baby or taking medication for a chronic disease.? Methinks Tufts is trying to have it both ways ? lowering costs without exposing enrollees to any added responsibility. Sounds like HMO thinking to me.

SOURCE: Contact Bridget Perry at Tufts Health Plan at 781-466-9424.



CAREGAIN INKS DEAL WITH AAHP


CareGain has also entered into an interesting partnership, this one with the American Association of Health Plans (AAHP), the trade association for the managed care industry. The association is offering the CareGain platform to its member companies ?under a unique preferred pricing arrangement,? according to a company release. CareGain?s core product is a ?HealthcareIRA? that is personally owned by the employee and portable. The company had a trial run with three employers in 2002 on a total replacement basis and saw a 26% saving in cost. The company also offers decision support tools, claims adjudication, and enrollment and eligibility functions.

SOURCE: for more information contact Russell LaMontagne of CareGain at 212-255-5340 or go to http://www.caregain.com



BENEMAX ? COMBINES HRA WITH SHARED DEDUCTIBLE


Massachusetts-based Benemax provides an example of one employer that faced a 20% rate hike for its 43 employees this year and switched to an HRA provided by Benemax and reduced costs by 10 percent. The underlying insurance package is a Blue Cross Blue Shield plan with a $3,000 medical deductible and $250 for prescription drugs. The employer then sets up a $500 HRA for single workers, $1,000 for two-person families, and $1,500 for three or more. Here?s the twist ? once the HRA funds are used, the employee is responsible for only another $250, after which the employer pays for expenses until the deductible is reached. Benemax says it has grown by 35 percent in each of the last three years.

SOURCE: Contact Lisa Jacobson at 617-497-0193, or ljacobson@kogspr.com




MSAs FINALLY AVAILABLE IN MARYLAND


For all the hoopla around the new consumer driven offerings, plain old Medical Savings Accounts remain some of the best deals around, especially for small employers. It?s true that the federal restrictions make them difficult to explain, and the limitations have kept most of the potential vendors away from them. And many insurers are far too conservative in pricing the underlying insurance coverage. (Actuaries tend to rate-up high deductible plans when there is an MSA attached for fear that people will not see the MSA funds as their own money). Despite all these obstacles, there are MSA programs out there that are extremely attractive.


Maryland, for instance, is one of the most highly regulated states in the country. The Maryland Health Care Commission is all over the backs of small employers, requiring all carriers to offer a ?Comprehensive Standard Health Benefits Plan,? with the possibility of buying additional benefits to ?enrich? the standard plan. Some time ago it allowed MSAs to be sold but added so many bells and whistles that no one offered them. But today there is one carrier, Fidelity Insurance Group, founded in 1999 that is offering MSAs to small employers in Maryland at a very attractive price. For instance, in the Baltimore area the average PPO premium for an individual and spouse is $537/mo, for indemnity coverage it is $1,068, and for an HMO it is $667. But Fidelity?s MSA is $336/mo, for an annual premium saving of $2,412 over the PPO, $8,784 over the indemnity, and $3,972 over the HMO. Fidelity also markets the lowest cost PPO in the state, and its enrollment has soared from 21,600 in 1999 to 48,500 in 2002.

SOURCE: for rates and product information, go to http://mdinsurance.state.md.us/documents/smallgroupguide1-03.pdf

For information about Fidelity, go to http://www.fidelityig.com




NAIC HOSTS CHICAGO CONFERENCE


The National Association of Insurance Commissioners (NAIC) is holding a conference on Insurance Regulation and Cost Containment in Chicago on May 6, 2003. It is cosponsored by the ?Reforming States Group,? an RWJ-funded organization that pushed for the disastrous small group reforms that have destroyed the market throughout the country. The program seems pretty tilted to RWJ-funded interests, including both Paul Ginsberg and Len Nichols of the Center for Studying Health Systems Change on the program. Mark Pauly will be there to provide some balance. It will be interesting to see how this conference spins the current market. Don?t be surprised if the conference concludes that the problem in the market is that the states didn?t do enough ?reform,? not that they did way too much. Registration costs $195.

SOURCE: http://www.naic.org — go to the Calendar of Meetings section.




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About the author