Summit ReSources helped clients realize more than $30 million in savings for 2018.Read More
Healthcare reform will continue to require more responsibility from employers – especially small employers – which will, in turn, require more oversight by insurers. If employer groups are not properly enrolling, verifying eligibility, and reporting members, the health plan could find itself at risk with its reinsurer. The best way to avoid potential conflicts is to make sure your master contract is clear – and then to enforce it. In the midst of this constantly evolving marketplace, observing best practices becomes more important than ever. Health plans can encourage compliance by following these simple strategies:
- Know the employer’s eligibility requirements in regard to initial eligibility waiting period, eligible classes of employees, and the point at which an employee or dependent would no longer be eligible for coverage. Evaluate whether the Summary Plan Description clearly represents the employer’s eligibility rules and practices.
- Establish processes to verify the eligibility status of new enrollees with the employer group.
- Understand the processes in place at the employer group to identify any potential issues with obtaining current and updated eligibility data.
- Create strong plan language with regard to maintaining eligibility.
- Know what circumstance would cause an employee’s job-based coverage to end and COBRA to be an option to continue coverage with that employer group. Monitor those situations. If an employee elects to continue the group coverage via COBRA, establish a process for surveying COBRA continuees on a regular basis to ensure they continue to meet the COBRA rules for coverage. (Once an employee is no longer eligible for their job-based coverage, s/he has the option of signing up for COBRA or to enroll in other coverage, such as a marketplace plan.)
- Perform a yearly review to ensure covered dependents are still eligible and/or that there isn’t other coverage that could be primary. (Yearly audits are imperative due to a clause in the Affordable Care Act that states plans cannot retroactively terminate ineligible enrollees unless an intentional act of fraud occurred. An audit of dependents would present opportunity to clearly define what is considered an act of fraud as well as the eligibility requirements.)
- Identify triggers in claim activity and obtain leave of absence documentation from the Employer group. If the employee is on unpaid leave, typically s/he would not be eligible for continued coverage until they return to an active at work status. (An exception to this would be the Family Medical Leave Act. This is a federal law in which the employee has 12 weeks of protected unpaid leave. If the employer is covered by this law, the employee’s health benefits would not be affected and they would be protected from job loss during this period. Therefore, obtain this information from the employer and document when the FMLA period begins and ends.)
It is important to regularly review current processes and enforce consistent eligibility practices for the plan of benefits. A health plan could be impacted by eligibility exceptions and/or failure to monitor. Because this would indicate that the same rules would not be applied to all plan participants, either condition could be viewed as discrimination, thus affecting the plan’s ability to enforce the eligibility rules across all members.
Written by Claims Manager Kira Sturgis.
This special edition of Summit Perspectives provides an in-depth explanation of the new Summit Re partnership with Zurich American Insurance Company for catastrophic medical excess of loss business across all product lines.
Summit Re is pleased to announce that we have been appointed as a reinsurance intermediary manager (RIM) for Zurich American Insurance Company, effective July 1, 2015. With more than 100 years of experience in the US and strong industry ratings, the financial strength and stability Zurich brings to the table ranks the company among the industry’s leaders. In addition, Zurich management holds extensive expertise working with carriers and managing general underwriters and their strong relationships and service capabilities strategically complement our own. With Zurich, we’ve got more horsepower to get things done for our clients.
With a large “strike zone” in terms of openness to new ideas and concepts in the dramatically changing healthcare market, the Zurich underwriting model gives us expanded authority and then lets us do what we do best. The company also has a large team in strong support of deals utilizing front carriers and captive arrangements with reinsurance administration. This includes traditional reinsurance structures as well as alternative deal structures for those entities desiring to take significant risk themselves.
Another strong point of interest for Summit Re is that Zurich has many in-force clients in the healthcare space purchasing a variety of property and casualty coverages. These include medical malpractice, general and commercial liability, and directors and officers errors and omissions covers. Healthcare reform is fueling their growth, in many cases, and Zurich wanted to make sure they had an integrated product and service strategy for their client base. Zurich acknowledges our expertise, relationships and strong service capabilities and has appointed Summit Re as the exclusive MGU for their managed care excess product portfolio, while we correspondingly acknowledge their strong, complementary franchise.
Mark Troutman, President of Summit Re states, “We also were pleased by the strong rating and capital position of the Zurich franchise which is already a market leader.” Brian Fehlhaber, Vice President – Sales and Marketing, speaks to the impact on our clients, “It is our intent to work together with the client and Zurich to make the transition seamless and allow them to continue with the coverage and service that have worked so well for them historically.”
Julie Bobak, Senior Vice President – Zurich American, summed it up as follows, “Our relationship with Summit Re will allow us to provide healthcare customers with solutions geared to their needs.”
Ed Tyburski , Senior Vice President – Zurich American, added, “We are very enthusiastic about the opportunity to work with one of the premier companies in the catastrophic medical excess market, one which has a demonstrated track record of profitable growth over its fifteen-year history.”
The Summit Re reputation of putting together dynamic solutions that accomplish each client’s specific goals for management healthcare risk will become even stronger. With Zurich on our team, we have more resources to embrace innovative deal structures that will move our clients forward. From full reinsurance to fronting and captive arrangements that allow clients to retain varying amounts of risk, the Summit Re – Zurich team offers a complete spectrum of product and service capabilities.
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com. In North America, Zurich is a leading commercial property-casualty insurance provider serving the global corporate, large corporate, middle market, specialties and programs sectors through the individual member companies of Zurich in North America, including Zurich American Insurance Company. Life insurance and disability coverage issued in the United States in all states except New York is issued by Zurich American Life Insurance Company, an Illinois domestic life insurance company. In New York, life insurance and disability coverage is issued by Zurich American Life Insurance Company of New York, a New York domestic life insurance company. For more information about the products and services it offers and people Zurich employs around the world go to www.zurichna.com. 2012 marked Zurich's 100 year anniversary of insuring America and the success of its customers, shareholders and employees.
Financial strength ratings (as of September 30, 2014): A.M. Best > A+/Stable
Standard & Poor's > AA-/Stable
Recognition and awards:
Zurich named “Best Insurance Company” (Captive LIVE USA Conference, October 2014)
2014 Innovation Award: “What if?” Zurich Risk Grading™ Application (Business Insurance, March 2014)
Zurich winner of the AGC Community Award (Associated General Contractors of America, Annual Conference, March 2014)
2014 Innovation Showcase: “Zurich Risk Room” and “My Zurich Portal” (Best’s Review magazine, January 2014)
Zurich “Best Political Risk Insurer,” “Best Global Supply Chain/Trade Disruption Insurer,” “Best Property Insurer,” “Best D&O Insurer,” “Best Employment Practices Liability Insurer,” “Best Crime/Fidelity Insurer” and “Best General Liability Insurer” (Global Finance Magazine, October 2013)
Zurich’s Trade Credit and Political Risk group named “Best Private Insurer in Trade,” “Best Trade Insurer in North America,” “Best Trade Insurer in Asia Pacific” and “Best Trade Insurer in Latin America” (Trade Finance, June 2013)
2013 Innovation Award: Zurich Risk Room Mobile Application (Business Insurance, March 2013)
2013 “Innovation in Fronting” Award: UK Captive Services Awards (Captive Review, February 2013)
Zurich named “Best Fronter of the Year” (Captive LIVE USA Conference, September 2012)
Zurich’s Trade Credit and Political Risk group named “Best Private Insurer,” “Best Trade Insurer in Asia Pacific” and “Best Trade Insurer in North America” (Trade Finance, August 2012)
Zurich named “2011 Insurer of the Year” (Daimler Financial Services AG, August 2012)
Innovation Award for Zurich Multinational Insurance Application (Zurich MIA) (Business Insurance, March 2012)
Deeply discounted transplant access fees are available through our new Platinum Rewards program, an enhanced OptumHealth Care Solutions (formerly United Resource Networks) program. This program is available only to Summit Re’s clients. Under our previous program, you received a 5% discount on network access fees, an additional 5% discount if you agreed only to use OptumHealth’s networks, and up to 10% based on Summit Re’s total volume of business with OptumHealth. The third discount was calculated retrospectively.
These three potential discounts are now bundled into one substantial discount. The program is easier to use and easier to understand. You will be able to realize the total savings we've negotiated “up front” through reduced access fees.
The savings from the Platinum Rewards program can be significant, as shown in the chart. Based on our historical case mix, the Platinum Rewards program represents an effective 27% discount off standard OptumHealth fees.
To be eligible for Platinum Rewards, you must agree only to use the OptumHealth networks for your transplants, although you can still “carve out” facilities with which you have your own contracts.
The new program is effective on January 1, 2008. You will need to execute a new Payer Access Agreement, selecting either the fees for the Platinum Rewards program or the standard access fees.
Platinum Rewards Frequently Asked Questions
Which of the OptumHealth programs will be subject to the reduced fees?
The reduced fees apply to the Transplant Resource Services’ Centers of Excellence program and the Transplant Access Program for business that is reinsured through Summit Re. All other OptumHealth program fees remain unchanged.
Do the reduced fees apply to both adult and pediatric transplants?
Yes, the reduced fees apply to adult and pediatric transplants.
How will the Platinum Rewards program affect the OptumHealth transplant facility contracts and services?
The new program has the same facility contracts and services contained under the current OptumHealth programs.
Will I be able to “carve out” a specific facility from the OptumHealth contract and use my own contract at that OptumHealth facility?
You will still have the capability of carving out a facility or facilities from the OptumHealth agreement. Those facilities should be listed on Exhibit C of the Payer Access Agreement.
What happens if I want to use another transplant network in addition to OptumHealth?
You may use another network in addition to OptumHealth. However, if you do so, you will not be eligible for the reduced fees available through the Platinum Rewards program. You will pay OptumHealth’s standard access fees.
What do I need to do to initiate the new program?
If you are currently accessing OptumHealth through Summit Re, you will need to sign a new Payer Access Agreement. New Payer Access Agreements will be mailed to Summit Re clients. Be sure to indicate if you intend to use the OptumHealth network only or if you will use another network in addition to OptumHealth’s network.
Will I still receive this year’s discount based on Summit Re’s total volume of business with OptumHealth?
You will still be eligible for the discount for 2007 based on Summit Re’s total volume of business with OptumHealth, provided you are a Summit Re client at the time the refund is paid. OptumHealth has committed to paying this refund within 60 days after the end of the calendar year.
Swiss Re has received regulatory approval to merge Westport Insurance Corporation into Employers Reinsurance Corporation. The merger is an example of Swiss Re’s focus on smart capital management, delivering greater efficiency and reducing operating costs. Reinsurance agreements issued after January 1, 2008 will bear the Westport name. There will be no changes in coverage as a result of the merger. If you have any questions, please contact Summit Re at 260-469-3000.
This article is part of a series of case studies—real stories of how managed care companies increased profits by using Summit Re’s resources to increase sales, decrease expenses, and manage claims. This case study addresses one of the latest developments in managed care—post-payment administration and claim recovery. Imagine the impact on your bottom line if you recovered 2 to 3 percent of claims, after all current internal processes were completed.
This service is available through Summit Re’s arrangement with Health Decisions, Inc., one of the most comprehensive and sophisticated post-payment administrators in the country. Independent benchmarking analyses have confirmed that its approach sets new standards for the use of data produced by claim payment, enrollment, and related systems. Through its services, you have access to postpayment support equivalent to that available to the largest payers— without development costs or lead time.
Potential recovery areas
The focus for recoveries occurs in the following areas:
- Other liable parties not correctly reported by enrollees for benefit coordination
- Medicare-as-primary payer (ESRD, retirees, disabled) to offset any Medicare-as secondary-payer demands
- Enrollment discrepancies, such as ineligible and terminated members, family status changes, etc.
- Provider billing errors, such as inappropriate service codes, unbundling, duplicate payments, discount avoidance, fee inflation, double billing, etc.
- “Not a covered benefit” enforcement at the procedure code level
- Judicial judgments, such as divorces, workers compensation, and subrogation
Existing data are combined with new data and converted to Microsoft® compatible files. This new data set has many applications, including supporting internal client management, maximizing claim recovery returns and processing efficiency, and supporting new client service offerings.
Claim Recovery Service
Identifies claims that should have been paid by others and pursues collection from other payers, such as Medicare or insurers, and providers.
Enrollment Support Service
Handles all the details of special (non-routine) employee/enrollee communications to compile, compare and reconcile internal and external data files across multiple payers.
Use of Health Decisions, Inc.’s proprietary software on internal network systems.
Data Support Services
A full range of technical support permits translation of any documented file structure into Microsoft® compatible files for HIPAA compliant data analysis, reporting and warehousing.
Flexible payment arrangements
Health Decisions, Inc. can be compensated on a contingency basis, keeping 33% of recovered claim amounts. Health Decisions, Inc. is also willing to enter into a multiyear, fixed-fee software lease covering its Paperless Claim Recovery software suite and all related support services.
Client “A” used post-payment findings to pursue claim recovery and returned $15 per member per year to its bottom line.
Client “B” used post-payment findings as a continuous-quality improvement management tool to monitor internal performance improvements.
Client “C” used post-payment findings to pinpoint “problem” providers and to support provider contracting negotiations.
Health Decisions, Inc.
Health Decisions, Inc. is an established, reputable and successful post-payment administration and claim recovery vendor. In one yearalone, they processed almost two billion dollars of paid claims. In the area of claim recovery, nobody addresses more recovery areas (40+ review areas), offers a lower recovery threshold (all claims over $10) or recovers a greater amount of money per client (2-3 percent of claims).
This article is part of a series of case studies—real stories of how managed care companies increased profits by using Summit Re’s resources to increase sales, decrease expenses, and manage claims. Summit Re works with London Life Reinsurance Company to provide reinsurance transactions that achieve risk-based capital (RBC) relief for qualified prospects.
There are several potential benefits resulting from such reinsurance transactions:
- Proper capital and surplus management can improve debt and claim paying ratings.
- Reducing required capital requirements increases business line return on equity.
- Dividend capacity can be improved for entities with holding company structures.
- Individual plan or product line loss ratios can be stabilized for external understanding.
- New business can be more competitively priced.
These programs can be developed for single-site organizations as well as regional and national chains. They can be designed easily for entities that have affiliated domestic or offshore companies. However, they also can work with a nonowned, protected-cell approach. All programs are structured to meet applicable risk-transfer regulations. Solutions are customized to meet each company’s specific objectives and requirements.
Here’s an example of one of our clients' capital management programs developed through its relationship with Summit Re:
ABC Health Plan is a regional health plan. Its business is ceded to London Life via a 100% quota share above the HMO’s retention level. London Life, in turn, retrocedes the business on the same terms to a captive affiliate of ABC Health Plan. The transaction is designed to meet all regulatory requirements for full risk transfer and credit for reinsurance. In addition, the transaction has been disclosed to the insurance department of the state of domicile of ABC Health Plan.
Regulators often prefer or require independent professional reinsurers as the conduits for such transactions to minimize the potential for improper related-party transactions. The state insurance department in this case relied on the financial strength of the licensed and authorized professional reinsurer to fulfill its reinsurance obligations to ABC Health Plan. ABC Health Plan’s holding company is free to establish appropriate GAAP reserves and equity consistent with sound actuarial principles and subject to the reserve and capital requirements of the domicile of the captive.
Health RBC Relief Structure in Brief
The typical structure is modified coinsurance or coinsurance with funds withheld to minimize asset transfer. The only cash flow is your payment of the risk fee.
Reserves are held in asset trust by the reinsured.
There is parental guaranty on the retrocession treaty, if retrocession is used.
All profits, net of risk fee, are returned to you through an experience refund.
There is monthly accounting.
The health risk-based capital relief structure has the following risk reducing features:
- Expense allowances set about equal to “marginal” expenses.
- Losses to reinsurer are carried in loss carryforward and repaid through future profits. Ceding company must repay any losses if it terminates agreement early.
- Loss to reinsurer usually limited by stop loss (typically 10% of premium).
- Reinsurer can terminate agreement with minimum notice (usually 3 months).
- Allows ceding company to release RBC requirement on business ceded.
- Designed to pass required level of risk to reinsurer to meet risk transfer regulations.
- Minimizes the cost of reinsurance to the ceding company (1% of premium or less).
This article is part of a series of case studies—real stories of how managed care companies increased profits by using Summit Re’s resources to increase sales, decrease expenses, and manage claims. “I confess through my own fault, in my thoughts and in my words, in what I have done, and what I have failed to do.” Although these words are part of the Confiteor, a Catholic prayer in which persons saying the prayer confess their sins, it could be the start of a discussion of errors and omissions (E&O) and directors and officers (D&O) coverages.
Errors and Omissions
E&O insurance policies cover things a company does, things a company does not do, or things that simply do not turn out as a customer or other third party expected.
E&O for a managed care plan covers you for the vicarious liability assumed for the business processes that are part of a health care delivery system, such as credentialing, UR, and claims. An IPA can be sued for malpractice, since patients, through the IPA’s advertising, may assume that their physicians are under the IPA’s control and the IPA is liable for their actions. Another emerging area is security and privacy liability, including health care history and personal information.
Directors and Officers
D&O coverage is designed to protect the officers and directors of a company for liability associated with business decisions and certain employment practices. Liability can arise from decisions regarding merger and acquisition disputes, failure to perform fiduciary duties (such as signing contracts that harm the value of the company’s stock), actions that violate anti-trust regulations, and business interference, to give a few examples. Liability can also arise from employment practices, such as discrimination, harassment, or wrongful termination.
D&O insurance policies provide protection for a company’s directors and officers whose personal financial assets can be put at risk in the event of a lawsuit regarding their decisions. It’s difficult enough to lose company financial resources because of inadequate or inappropriate insurance coverage; imagine how it would be if your own personal assets were at risk as well.
There are no standard E&O and D&O policies. Each insurer drafts its own policy forms and some fail to provide coverage in key areas for health plan exposures. A recent study showed that over 50% of directors and officers requested changes in their insurance coverage when they learned what was NOT covered under their current program.
Premiums are a function of the case size, liability and retention and can range from $10,000 to $100,000. Coverage, not price, is key because potential liabilities are so large.
Free coverage analysis
A free analysis of your current coverage is available to see if it’s possible to access better coverage at better rates. To give health plans access to better E&O and D&O policies, Summit Re has an arrangement with a national firm that specializes in property and casualty insurance products specifically designed for the health care industry.
We’ve offered this analysis of E&O and D&O coverage to several clients and they have appreciated the additional options presented as a result. We can do the same for you. To get started, please send us a copy of your current E&O and D&O policies. Typical insurer markets that provide these types of coverage include Lexington, Darwin Professional, Lloyd's of London and OneBeacon. Our program manager has access to all of these markets. We are happy to disclose all commissions and service fee arrangements.