40 November 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

Keynoter’s Talk Proves Memorable

When Dale Carnegie penned “How to Win Friends andInfluence

People” in 1937, the former traveling salesman noted two important facts: that everyone’s favorite subject is his or herself and the sweetness sound to someone is their name.

The message was conveyed by Ron White, a memory expert and sales trainer who gave the opening keynote address at SIIA’s 34th annual national conference in Phoenix, Ariz. He said names are easily forgotten because people aren’t focused enough to listen during an introduction.

Carnegie clearly was onto

something. While, who for two years held the record for memorizing a shuffled deck of card in only 1 minute and 27 seconds, said networking and building relationships are the key difference between simply earning a living and “making a fortune.”

White shared with attendees various techniques on processing information to improve business performance and also be more organized in their personal life. He has appeared on “Good Morning America,” “Fox and Friends,” “CBS Early Show” and the History Channel’s “Super Humans.”

At age 23, White was a telemarketer who one day tried to sell a chimney cleaning service to a prospective customer. The man on the other end of the telephone declined

his sales pitch, but mentioned that he needed to hire a memory salesman. White landed the job and it turned out to be a life-altering event. His new boss never asked him whether he could recall information, believing it can be taught to anyone.

White noted that the five keys to improving memory are:

1. Focus – Nutrition is critical to achieving this goal. Memory is improved by eating plenty of blueberries, spinach, walnuts, Omega-3 supplements and pumpkin seed oil, as well as drinking plenty of water.

2. File – One key to memorizing information is assigning the data to a special spot, such as a piece of furniture, which serves as the equivalent of a file in a cabinet.

from SIIA’s 34th Annual National Conference & Expo by Bruce Shutan

HighlightsHighlightsHighlightsHighlightsHighlightsHighlightsHighlightsfrom SIIA’s 34th Annual National Conference & Expo

HighlightsHighlightsHighlightsfrom SIIA’s 34th Annual National Conference & Expo

Highlights

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | November 2014 41

3. Picture – Visualizing a person’s name and equating it with another word that sounds similar or conjures up a related image is another way to retain the information. One such example is to think of jewelry in order to recall the name Julie or Peter Cottontail for a man named Pete who sports a beard (the latter was how White remembered the name of one particular SIIA attendee).

4. Glue – Action and emotion both serve as traction in helping individuals memorize information. White remembered seeing the Facebook profile of a girl from grade school he had a crush on, noting how dozens of minor details about her life easily resurfaced through his mind all those years later.

5. Review – Repetition, the most widely used technique, eventually will bear fruit – particularly if it’s used in conjunction with the four previous steps.

Referencing a deadly tour of duty in 2007 as a U.S. Navy reservist after 9/11, White ended his motivational talk by sharing a deeply personal project about using his memory techniques to recall all 2,200 of the U.S. service members killed in combat in Afghanistan and recreate their names on a wall that resembles the famous Vietnam Wall on the mall in Washington, D.C. He took the 50-foot-long dry-erase-board, which listed the dead in chronological order, to several U.S. cities to pay homage to his fallen comrades.

TPA Panel Reminded Customer is King

In a fiercely competitive TPA marketplace, it’s easy to focus on the low-hanging fruit associated with securing deep discounts on behalf of self-funded clients and maximizing profit wherever possible. But is it being

done at the expense of paying closer attention to data and outcomes, which in some cases could actually steer clients away from self-insurance?

It’s a fair question that was posed during a spirited panel discussion of senior executives from several leading TPAs who was passionate about putting the employer’s needs first. A panelist’s reaction even raised the prospect of larger peril, which is the industry risking tighter government regulation if it strays from this mission.

“We’re sitting in the heat of the battle right now on self-funding and see a lot of groups that come across our desk that shouldn’t be self-funded,” admitted Mark Stadler, EVP of Healthsmart, Inc., which considers itself the nation’s largest independent administrator of health plans for self-funded employers. “Self-funding is a concept and shouldn’t always be compared to fully funded plans. You need to help employers understand the upside and the downside, and we’ve had a few cases where we walked away from self-funding.

“We are the experts,” he continued, “and we need to guide employers properly, not get too caught up in what’s best for our business. A lot of legislatures are looking at this and will take punitive action if we don’t take this approach.”

Where the rubber meets the road on advisory services is “who can do what the client needs done the best, and then you check off what’s the fairest price – not who can best sell client services,” observed Jerry Castelloe, VP of strategic relationships for CoreSource, Inc.

He said the ultimate customer is the plan participant, whose needs need to be addressed first and foremost. However, a big problem is that “transparency is the least transparent at the consumer level,” according to Castelloe. “You can give employees all sorts of information, but you have to teach them how to use it. Health care is the only retail industry that you don’t know what you’re buying until you use the service.” Making cost data available much sooner than the point of service is critical in this post-health care reform environment, he explained.

Stadler added that transparency, along with the population health model, are critical tools that the TPA industry will need to “work extra hard on” during the next few years on behalf of their employer clients to help improve employee engagement.

Castelloe described his thinking about the defined-contribution health care model as evolving from a defensive posture to offensive strategy, but that it remains

Keynote speaker Ron White

42 November 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

to be seen whether it will serve as the latest fad in health plan management or have staying power. “It’s a more intensive, consulting opportunity and you really have to have an astute intermediary, whether it’s a broker or consultant, to help see employer clients through the process,” he said.

Castelloe referenced a chat about on-site clinics, which he said employee benefit consultants and advisers increasingly want access to for a more aggressive approach to health plan management.

Tom Partlow, CEO of Employee Benefit Management Services, Inc., suggested a need for greater use of evidence-based guidelines – particularly for highly volatile categories of care. He also said reference-based pricing offers a great opportunity for TPAs to compete with the PPO and BUCA models, though he’s unsure whether it will be “a mega trend.”

Panelists Address Industry Pitfalls, ConcernsMindful of the price-sensitive stop-loss environment, brokers, TPAs and stop-loss

carriers often have to block and tackle their way across a landscape that’s littered with landmines. Beata A. Madey, senior VP of underwriting for HM Insurance Group, led an expert panel discussion that examined how they can avoid being the weakest link in their respective category.

The stop-loss business has been commoditized to a point where there’s a too much focus on the lowest possible cost over other critical issues, such as the stop-loss deductible and exclusionary wording in contracts, warned Steve Touché, president of Lovitt & Touché, one of the nation’s largest insurance brokerages.

“I’m surprised by the things that show up,” he said, referencing a $125,000 run-in limit on a $250,000 spend and recommending that self-insured employers carefully read the fine print in vendor contracts.

Matt Leming, VP/sales leader at Swiss Re Corporate Solutions, whose parent company is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer, said it’s important to request that stop-loss carriers make certain exceptions in contractual wording if it best serves the client.

Client education also is a critical concern. Darren Reynolds, CEO and president of Consociate-Dansig, a smaller independent TPA, believes there’s a need to guide

the small-group conversion market through all the nuances that come with self-funding or risk deeper government intervention. He said it’s also important to prequalify prospects in the small-group market so that there’s a long-term commitment to serving the client with proper contacts in place rather than providing short-term fixes to lower rate increases.

“The TPA needs to step up and share all the nuances concerning legal disputes and summary plan document issues in terms of their exposure,” he said.

Lovitt & Touché’s E&O policy prohibits doing business with anyone other than an A- carrier, firmly believing that size matters and it’s important to partner only with a trusted source. “We have tended to gravitate toward the top five to 10 direct writers in the insurance marketplace,” Touché reported, noting attempts to establish relationships with local, regional and national players within those carriers in hopes that all claims will be paid.

Reynolds agreed with his assessment about scale. “We’ve had quotes from MGUs that have had less premium volume than we had as a TPA and that’s scary,” he said, noting battles with carriers that did not like to pay claims.

Beware of bait-and-switch scenarios, cautioned Touché, noting how a 30% to 50% differential showed up between one carrier’s surprisingly low bid and a subsequent discussion at the negotiating table about underwriting claims. “It drives us crazy,” he said.

But there also are some bright spots and progress to report. Touché, for example, believes the Affordable Care Act (ACA) has elevated the relevance and value of brokers and TPAs in terms of their advisory capacity. He likened it to tax reform for CPAs in the 1980s, which as with the ACA, triggered concerns about their professional survival.

To the BUCA’s credit, Touché said they’re more forthcoming about

TPA Panel at the 34th Annual National Conference & Expo

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | November 2014 43

providing transparent information rather than having to obtain it through a third party. “The question is can you get the important information at the point of underwriting?” he asked.

Not necessarily. Just ask Reynolds, who noted “that from our perspective at the time of underwriting, there’s a very reluctant acceptance that the BUCAs are going to submit information, and we have to find a way to work with that.” His TPA emphasizes customer service as a key differentiator when competing with his state’s leading BUCA.

The panelists also addressed captive arrangements. About 20 to 30 years ago, Touché remembered how critical it was for reinsurers to evaluate an employer’s financials when self-insurance was being considered because of the potential for cash-flow fluctuations. But he said the only time in five years that he has seen reinsurers ask for this data was when a captive was being considered. The caveat is managing expectations about being able

“to afford a bad month” when entering into any such contracts, he added.

Roundtables Mull Ways to Promote SIGs

The issues surrounding self-insured groups (SIGs) are so expansive that three roundtable discussions were scheduled not only to educate as many SIIA members as possible, but also develop strategies to promote these groups and their business partners.

David G. Johnson, an attorney and managing partner with Self Insured Solutions, LLC, sought the input of fellow industry practitioners in hopes of helping key decision-makers at the administrative level better understand SIGs. The consensus was to provide enough basic and sophisticated knowledge to avoid any unintentional consequences of state legislation that would undermine these arrangements.

Among the major takeaways: Profile SIG failures so that the industry learns

what not to do (perhaps in the form of a SIIA white paper that also extols the virtues of SIGs), as well as institute trustee training and a national SIG manager accreditation program. Some of the most noteworthy observations, including paraphrasing and direct quotes, were:

•Every time a SIG goes down, it becomes fuel for a fire that intensifies the insurance industry’s arguments against this business model.

• “The problem for us is how do we maintain the financial position that keeps our regulator happy, while at the same time offering our members affordable rates?”

•A troubling trend has swept across Illinois, Oregon and New York that makes it more difficult for SIGs to operate with rules that tighten standards, force groups to build a surplus or face assessments.

•There were 27 workers’ comp insurance company bankruptcies

44 November 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

Q8211_LM_Helmsman_Common_D_7.875_x_10.5_mg.indd

Client: Liberty MutualDescription: New HelmsmanPublication: The Self InsurerScale: 1:1Print Scale: None

Live: 7” x 9.625”Frame: N/ATrim: 7.875” x 10.5”Bleed: 8.75” x 11.125”Gutter in Spread: N/A

Art Director: GatesStudio Op: ShaidaniUsername: Kelsea AshworthProjectManager: O’NeilProduction: NeilsonFile Status: MechanicalArt Status: ApprovedResolution: 300 dpi

Job Colors: CMYK

Ink Name: Cyan Magenta Yellow Black

Font Family:Arial, Helvetica LT Std

Q8211 3-27-2014 10:57 AM Page 1

Q8211_helmsman background_Mg_resample.tif (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Q8211_helmsman background_Mg_resample.tif), Q7803_42-19739830_Mg.tif (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Q7803_42-19739830_Mg.tif), Q7803_sb10065285bl-001_5_Mg.tif (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Q7803_sb10065285bl-001_5_Mg.tif), Q8211_brxbxp39634_Mg.tif (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Q8211_brxbxp39634_Mg.tif), Q8211_LM_Schultz_Austin_3791+3793_LARGE_Mg.tif (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Q8211_LM_Schultz_Austin_3791+3793_LARGE_Mg.tif), Helmsman_logo_black&blue_CMYK_vert.eps (Users:kelsea.ashworth:Desktop:Q8211_LM_Helmsman_Common_D_7.875_x_10:Links:Helmsman_logo_black&blue_CMYK_vert.eps)

SPECIAL INSTRUCTIONS:The Self Insurer - 4/1

Thankfully, catastrophic and complex claims don’t happen often. But when they do, they can result in signifi cant losses for your business and signifi cant injury to your valued employees. A compassionate claim professional with the right resources and experience can make all the difference in bringing about a positive outcome for you and your injured worker. To learn more, ask your broker or visit helmsmantpa.com.

WE CAN HELP YOU LOWER YOUR COSTS,

EVEN FOR YOUR MOST COMPLEX CLAIMS.

© 2

013

Hel

msm

an M

anag

emen

t Ser

vice

s LL

C.

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | November 2014 45

in California as a result of escalating costs across the state, which continues to tighten its legislative and regulatory grip on self-insurance. And whenever legislation is rushed through as it has been in California, there are unintended consequences.

•There are just three excess carriers – a frightening proposition to have a market so critical to the success of self-insurance shrink that small.

• Is joint and several liability still a viable solution for SIGs?

•The federal government hires hackers to better understand and ultimately stop hacking, so why not attempt to do the same at the regulatory level, which would help preserve the self-insurance model?

•One related suggestion was to establish national standards of conduct for brokers, administrators and members of boards of directors with

meaningful consequences for violations. “California is not far away from having a set of standards,” someone noted, hastening to add that he didn’t see a need to pursue this action as long as there’s already good self-regulation in place across the marketplace. “If you’re going to have the state regulate you, be careful what you wish for.”

•Why not offer better incentives to adequately compensate people for time they devote to various governing boards in order to attract a higher quality of decision-makers who have the power to make or break SIGs, among other innovative industry solutions?

•The best argument in favor of SIGs is without that option they’d be seeking assistance from state funds, which would prove far more costly to the community.

SIIA Steps Up Legal Defense StrategyA panelist of industry leaders gave special reports from the front lines explaining

how SIIA is stepping up its legal strategy to defend self-insurance, which is under increasing fire at both the state and federal level from legislators, regulators and other policy-makers.

Mike Ferguson, SIIA’s president and CEO, noted in a keynote address that it’s no longer enough just to have federal lobbyists involved – though he referenced an expansion of those efforts to include two new industry insiders. One specializes in state legislation and regulation, while the other handles growing scrutiny of stop-loss insurance, which he described as “a tier-one issue for us that affect many of our members.”

His point was that a major focus of SIIA’s political strategy now includes pairing its members with their local representatives in the U.S. House and Senate ads part

46 November 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

of a grassroots campaign. “Don’t be afraid” to approach them, he suggested. “These

people work for you, and you know more about the subject matter than they do.”

Horace Garfield, chairman of SIIA’s Government Relations Committee, agreed

that the best approach is to have SIIA members talk with their elected officials. His

remarks were echoed by Bob Tierney, chairman of SIIA’s PAC Board of Trustees,

who suggested that SIIA members to become involved by making contributions

and attending or hosting fundraisers for people running for office, as well as

hosting a golf outing. There are various categories of contributions, including a

President’s Club and Executive Club level. He reported that about $40,000 in SIIA

contributions were made to various U.S. representatives and senators.

Ferguson also briefly spoke about the Self-Insurance Defense Organization,

which was formed to leverage the involvement of bigger business groups, such as

the U.S. Chamber of Commerce, which has about $15 million in PAC funds. SIIA

hopes that partnering with those who have greater influence on Capitol Hill will

strengthen its quest to extol the value of self-insurance.

One high-profile battle has been brewing in Michigan, which changed the way

it raises funds for Medicaid. The Health Insurance Claims Assessment Act of 2011

imposed a 1% tax on all health care services performed in the state on behalf of

Michigan residents beginning January 1, 2012 to finance state health care initiatives. It

also has sparked a fierce legal battle to exempt self-insured group health plans from

the tax on ERISA pre-emption grounds. SIIA plans to appeal to the U.S. Supreme

Court its loss in an appellate court on the Michigan assessment.

John Eggertsen, an attorney with Eggertsen Consulting, P.C., has taken the lead

in SIIA’s challenge of this assessment on self-funded plans, which account for at

least half the revenue that’s generated.

He said district courts nationwide

increasingly are adopting a narrow view

of ERISA pre-emption to justify similar

attempts to tax health care services.

“It’s really a bad precedent,” he said,

noting that it extends to pension plans

as well as Taft-Hartley funds.

Another major concern Eggertsen

addressed is that self-funding and

ERISA pre-emption are seen in political

and regulatory circles as running

contrary to the goal of uniformity

in the nation’s risk pool under the

Affordable Care Act. On the positive

side, however, he noted that the ACA

has helped self-funding trickle down

market to small and midsize employers

– a trend is driven by exemptions from

assessments and restrictions on fully

insured arrangements.

Garfield referenced two troubling

pieces of legislation, one of which

involves an effort by the District of

' safe t

Call Us Today 1-866-265-1719 or Visit www.dccinc-us.com

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | November 2014 47

Columbia to ban stop-loss insurance for self-insured plans to protect the local health insurance exchange. “If we don’t fight this precedent there, other states are going to start adopting the exact same thing, and we’re going to have a lot more fights down the road,” he warned. There’s also a proposal in New York that would limit stop-loss coverage to groups of more than 100 lives by 2016.

Another development Garfield reported on is that the National Association of Insurance Commissioners is working on a white paper about the role of stop-loss insurance in the marketplace that SIIA has weighed in on, along with about seven other organizations.

Stop-Loss Captives Under the Microscope

Realizing that regulatory considerations for stop-loss captive programs have created a climate that has become inhospitable to such arrangements, a panel of experts convened to address a host of hot topics from prohibited transactions and stop-loss insurance restrictions to securities issues and domicile licensure requirements.

The U.S. Treasury Dept. invited public comments on how stop-loss insurance fits into the Affordable Care Act (ACA), seeking clarity on how it differs from traditional insurance coverage, according to Mike Ferguson, SIIA’s president and CEO. A request for information was sought from three federal agencies in 2012, signifying an interest in regulating stop-loss insurance. “Since that time, there has been a lot of conversation about this,” he said.

SIIA insiders have learned that these agencies want to limit the abilities of stop-loss insurance with lower attachment points, which would deem carriers a health insurance issuer and categorize self-insured plans as fully

insured arrangements for the purpose of the ACA. SIIA also was “tipped off ” that a member of Congress approached the Congressional Budget Office to further examine this issue.

In anticipation of these developments, SIIA has introduced legislation to clarify the definition and purpose of stop-loss insurance in hopes of avoiding another restrictive lawyer of regulation that would undermine self-insurance.

Tess Ferrera, a partner with Schiff Hardin, said a provision of the ACA makes it more difficult for smaller employers such as association plans, MEWAs and those managed by professional employer organizations to operate because of the push to disaggregate these groups.

“There’s a lot of concern out there among the regulators that because of the health care reform act there will be efforts to band small employers so that they have more purchasing power to buy stop-loss coverage,” she said, citing groups of fewer than 25 lives as a red flag.

One panelist who was on the hot seat to some extent was David F. Provost, deputy commissioner of captive insurance for the Vermont Department of Financial Regulation, who admitted to needing more education on this topic.

Regulators will take note if they determine that a plan was structured in a way to simply avoid taxes, he said. In contrast, Provost cited a Texas Credit Union plan featured in another educational workshop as a model program. To wit: Similar employers of similar sizes forming a group plan with a captive and insurance layer on top of it with a board of governors “is exactly what we want to see,” he said.

His public policy concerns involve plans that operate in a vacuum with so much separation between the employee benefit and captive and stop-loss sides of the equation that the former isn’t even aware of the ladder’s

existence – not realizing they’re even participating in a captive. From a more strategic standpoint, Provost said fellow regulators worry about employer-provided coverage undermining the goals of health care reform as a whole and self-insurance shrinking the fully insured market.

Ferguson asked Provost if he thought setting lower attachment points on stop-loss insurance was a fair criterion, to which he replied: “When you’re looking at smaller employers with a lower attachment point that are getting into stop loss, we have to pay closer attention” because of concerns about the captive’s solvency, admitting that there’s also political pressure from other states to closely examine this issue. Otherwise, he said it changes the complexion of such coverage in the small-group market.

Since stop-loss coverage isn’t considered an employee benefit, there aren’t the same worries that arise within the context of ERISA, according to Ferrera. There are no ERISA concerns as long as the stop-loss coverage is not a plan asset. But as soon as employee money flows into a captive, “you’re in trouble,” she cautioned.

TPAs must painstakingly track employee money that’s being collected and segregate it into a trust fund to pay claims, Ferrera said, adding that the inevitable employee trust fund audit is an unavoidable, yet necessary cost of doing business.

The DOL’s Advisory Opinion from 1992 established “a nice framework” for adding clarity to ERISA coverage, she said, also referencing a key Ninth Circuit District Court ruling on a TPA crossing the line and becoming a plan fiduciary. n

Bruce Shutan is a Los Angeles freelance

writer who has closely covered the

employee benefits industry for more

than 25 years.