GUAA Risk Review

GUAA Risk Review, Fall 2002

Medical Committee Review

By Jim Wilmot
Blue Cross Blue Shield of Illinois

The Medical Committee presented many topical sessions at the recent GUAA conference. We welcome all new members and extend our sincere appreciation to all who attended the sessions we sponsored. The sessions that are the most positive result from is an interactive session where participants express their honest and frank opinions and share them with their peers. These are the sessions that continually draw the participants . to the next GUAA conference because of the forthright approach of the facilitators and the participants.

HIPAA Privacy

Christina Nyquist, Director, Office of Policy and Representation, Blue Cross Blue Shield Association Washington DC Office, presented a current status of HIPAA Privacy guidelines and, OFAC (Office of Foreign Accounts Concerns).

HIPAA Compliance is set for April 2003. The key issues are consent guidelines, business associates, and marketing guidelines. These guidelines could cause events of the past to see major changes, including the possibility of a pharmacist requiring written consent before filling an Rx, elimination of the ability to register for a surgical procedure via telephone because of the required consent signatures, and even the possibilities of the elimination of weekly professional sports teams physical status reports, such as Brett Favre has a groin injury or Brian Urlacher has a shoulder injury.

HHS estimates that the cost for HIPAA Privacy will be $17.6 million, while the Industry estimates exceed $43 million.

Option/Slice Sales

Joanne Buckley, of Trigon Blue Cross Blue Shield, discussed option sales in our current environment. Health carriers are increasingly asked to offer their product as an option alongside those of other carriers. Option sales, or sometimes known as slice sales, exist when the group's benefit structure includes products from more than one carrier. Changes in the key components of health coverage (external environment, group decision making, third party participation, competition, members, products/networks, underwriting process, sales process) have facilitated the introduction of the option sale concept. An understanding of these changes is helpful when formulating an option sale strategy. Development of an option sale strategy should also include the determination of how option sales affect the pricing variables, identification of the key risk issues involved with option sales, execution of group and competition discovery to improve predictability, and modification of normal pricing tools to address and minimize the additional risk assumed with options sales. The option sale strategy should be consistent with the corporate goals and marketing plan.

Journey Through a Large Case Proposal

David Love, of Love Financial Group, and John Fenney and Alison Rothrock of the Guardian led an interactive panel discussion on data needs and usage in the medical insurance field from the perspective of a broker and the sales and underwriting area of a carrier. From the broker perspective, David identified several responsibilities/expectations of the broker:

Communicate the reason the group wants to bid

Understand the various carriers' needs

Identify the decision maker at the group (i.e., CFO, HR VP, CEO, etc.) and changes in the decision maker in the last 5 years

Obtain utilization data even if detailed claims experience isn't available.

From a carrier perspective, carriers need a risk questionnaire, rate history, and benefit history even if experience is not available. The data that is provided to varies from carrier to carrier based on size of group. Some carriers do not receive data on 40% of their quotes.The discussion then focused on the reasons that data isn't available from a prospect. The main reasons presented were that the group recently merged or was spun off; is pooled rated; or offers multiple carriers with limited enrollment with each carrier and therefore is manually rated.

Let's Talk Shop - Large Group

Committee member Patrice Hammond, Pacific Life, facilitated a well-attended session with a variety of topics that were discussed. Questions such as "To what size groups do the various carriers in attendance apply individual health evidence underwriting," and "What are the minimum required employer contributions and participation" generated a multitude of responses. One attendee expressed concerns with issuing new business documents after a group's coverage had already been approved. They wanted to know if other carriers experienced this and if so, how do you resolve the problems associated with this? Underwriting approaches on renewal business in the area of stop loss were another topic of discussion.

Let's Talk Shop- Small Group

Committee co-chair Jim Wilmot of Blue Cross Blue Shield of Illinois led a small but spirited group of attendees concerned with Small Group processing and the federal and state legislation affecting the business.

A major area of interest was the use of eligibility audits at renewal. Some companies do 100% auditing at renewal, and most do a random audit or a percentage of the monthly renewals.There was unanimity about the effectiveness of the audits, with their ability to identify employees covered under the plan who would not qualify based on eligibility guidelines. The audits also identify groups who do not currently qualify for coverage. Most companies enforce participation guidelines at renewal and will cancel groups if they fall below guidelines, after providing the employer an opportunity to enroll more employees.

Another topic of interest to all was the processing and eligibility verification of newly formed businesses. It is difficult to secure proper documentation shortly after the business has been started, and some companies wait until a quarterly wage/tax report can be secured. Others approve the case subject to a valid wage/tax after the first quarter following the start up date of the business.

Also discussed were the level of detail provided to sales/marketing/or brokers at renewal, especially in light of HIPAA privacy guidelines, offering coverage to PEO's (a few carriers do on a limited, strict basis), processing time of a new business case, and deadline for receipt of a new business case (most are the effective date).

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