Daily Insurance Report, Walt Bernard Podgurski,  Editor,  440-773-1108, 
Subscribe Here for Complimentary Subscription

Editorial Mission Statement: The goal of this publication is to provide readers a broad selection of what is being written about the insurance industry and related issues. Some articles have a “tilt” towards a particular perspective one way or another. Inclusion in this newsletter is not an endorsement of any views or content; but report the various and differing views appearing in media.
  Wednesday, 04/18/18

Buying Binge For UnitedHealth's Optum Is Only Just Beginning
Bruce Japsen , CONTRIBUTOR / Forbes
UnitedHealth’s strategy to meld the provision of medical care from its Optum unit with UnitedHealthcare brand insurance products is being copied somewhat by rivals including Aetna and Humana. Aetna is working it way through a $69 billion sale to CVS Health, which owns 9,700 drugstores and about 1,100 health clinics while Humana is buying up more doctor practices, rebranding them under the CONVIVA name and has reportedly been in talks with retail giant Walmart about expanding their relationship. Meanwhile, health insurers like Anthem and Centene are buying up regional doctor practices and related outpatient centers that treat a lot of Medicare patients.
But rivals have a long way to go to catch Optum as it works to establish the medical care provider’s brand in major markets across the U.S.
“OptumCare has grown from a single medical practice serving 350,000 people and one payer to an emerging national ambulatory care delivery platform, focused on high value care and exceptional consumer satisfaction, serving more than 80 payers and 15 million individuals,” Optum CEO Larry Renfro told analysts Tuesday on UnitedHealth’s first quarter earnings call.

Life / Health / Employee Benefits

Reference-based pricing: Is it right for you?
By Robert Townsend / ebn (Employee Benefit News)
Reference-based pricing has emerged as one way for self-insured employers to control costs. But the measure is not without controversy.
So what’s the appeal? There are typically large discrepancies between what providers charge for care and what is ultimately paid by the insurance carrier. This difference, or “discount,” is what insurance carriers promote as the savings they provide to employer groups through their provider negotiations. The issue is that even after the promised discount, the paid amount is often significantly greater than what Medicare pays. Some for-profit health systems charge up to 10 times what Medicare pays.
In a reference-based pricing model, the employer sets a maximum amount that they’ll pay for a claim. While there are variations of the payment system, most reference priced vendors reimburse claims based on what Medicare pays plus a specific percentage. This helps plan sponsors cut costs by capping what the plan covers for some medical procedures where fees can vary widely.

As voluntary benefits become 'must haves,' employers focus on education
Riia O'Donnell / HRDIVE
As voluntary benefits become "must haves" in the war to attract and retain talent, employers are increasingly offering perks that focus on education. From professional development to student loan repayment, companies are positioning themselves as partners when it comes to the education of employees and their families.
Experts are seeing “an increasing trend where employers are investing more time and resources in professional development for their employees," says Jeff Fallick, Managing Principal at OneDigital. That’s smart business, he says. Employee development is also an opportunity for employers to forward their brand and unify the company, in some respects.
“When employers say their employees are their number one asset, then you have to invest in that asset,” Fallick says. Investing in employees also usually prompts them to remain with the company longer — meaning an employer is creating value for the long term.

In Cincinnati, Portman Joins Kroger in Announcing New Employee Benefits Because of Tax Reform
Announcement Another Part of Portman’s Results for the Middle-Class Tax Reform Tour
CINCINNATI, OH – As part of his Results for the Middle-Class Tax Reform Tour, U.S. Senator Rob Portman (R-OH) this morning joined Kroger CEO Rodney McMullen and Kroger employees as the company announced how it would use a portion of its $400 million in annual tax reform savings to benefit its workers. At the event, the company announced $3,500 per year and up to $21,000 total in tuition assistance for each Kroger employee as part of its “Feed Your Future” program to encourage lifelong learning and help them build a better future. The company also announced an increased match to its 401(k) savings program, ensuring Kroger employees help save for their retirement, and additional investments in its “Helping Hands” program that provides financial support to workers in need. The company previously announced its plans to accelerate the hiring of 11,000 new workers as a result of the Tax Cuts & Jobs Act as well.

IG: OPM Needs Contingency Plan for Long-Term Care Insurance
By Erich Wagner / GOvernment Executive
In 2015, OPM decided not to renew its contract with John Hancock Life and Health Insurance Co. after the company determined it needed to hike premiums to fully fund the FLTCIP, an insurance plan federal workers can opt into to defray the costs of chronic medical conditions and disabilities. But at the end of the bid process, John Hancock was the only bidder to administer the program, and it received a new seven-year contract.
In August 2015, John Hancock rolled out premium increases for new enrollees, which varied wildly depending on a participant’s age and choice of plan. And premiums for existing participants increased by an average of 83 percent in November 2016, after John Hancock was granted a new contract.
The OPM Office of the Inspector General said it found the agency followed all federal regulations during its year-long bidding process. But it concluded that in the intervening years since FLTCIP was founded in 2000, the market for long-term care insurance has all but evaporated.
“In 2000, there were 125 insurers in the long-term care insurance marketplace,” auditors wrote. “By 2014, there were only 12 insurers that were issuing at least 2,500 individual policies and only five insurers sold group policies.”
Additionally, only one firm still offers a group plan in the mold of FLTCIP. John Hancock discontinued the sale of new group policies in 2010, and it shuttered new individual long-term care plan sales in 2016. Instead, many insurance companies now offer a hybrid product that provides long-term care insurance along with either life insurance or an annuity.

10 latest healthcare industry lawsuits, settlements
Written by Ayla Ellison / Becker's Hospital Review
1. West Virginia hospital sues for $169k in care provided to inmate
2. Banner Health will pay $18M to settle false claims allegations
3. Tenet defeats class-action lawsuit alleging overpayments: 8 things to know
4. Former surgeon accused of raking in $860k by illegally reviewing patient files
5. Mississippi Supreme Court orders Medicaid to pay $2M to hospitals after skimping reimbursements
6. Former Georgia hospital CEO, physicians indicted in pain med scheme
7. Aetna whistle-blower accuses CVS of 'spread pricing' in federal lawsuit
8. Former medical assistant at Children's Pediatric Clinic + 7 others arrested for prescription fraud
9. Former Texas hospital nurse charged with murder of patient
10. New Jersey joins Democratic states in legal fight against anti-ACA lawsuit

Other Insurance News

Insurance Agency Mergers and Acquisitions in Q1 Hit Fourth-Highest Total, OPTIS Partners Reports
CHICAGO—April 17, 2018—There were 142 announced insurance agency mergers and acquisitions during the first quarter of the year, according to OPTIS Partners’ M&A database. It was the fourth-highest quarterly total, trailing only Q1-2017, Q2-2017 and Q4-2017.
The data covers U.S. and Canadian agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and those selling only employee benefits.
There were 186 deals reported in the first quarter of 2017, including the 24 Alera Group closed on January 1.
“The reduction in deal count from Q1-2017 is not really indicative of a decline in overall M&A activity,” said Timothy J. Cunningham, managing director of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. “Buyers remain very aggressive on valuations, and sellers continue to come out of the woodwork.”
Tax reform hasn’t had an obvious impact on activity.
The OPTIS Partners report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
Acrisure led all buyers with 28 transactions, followed by Hub International Limited (13), AssuredPartners (10), Alera Group (8), Broadstreet Partners (7) and Arthur J. Gallagher (6).
PE/hybrid buyers were the lead buyer segment, completing more than 60 percent of the total transactions
Sellers by type were P&C agencies (83 announced transactions), P&C/benefits brokers (18 deals), employee benefits agencies (33 sales) and all others (8 transactions)
“We know not all transactions are publicized, so the actual number of agency sales certainly exceeded the 142 reported,” said Daniel P. Menzer, CPA, partner with OPTIS Partners. “However, because our database tracks a consistent pool of the most active acquirers, it’s a fairly accurate barometer of activity.”
The full report can be read at http://optisins.com/wp/2018/04/q1-2018-ma-report
OPTIS Partners was ranked in the top 5 most active agent-broker M&A advisory firms for 2014 - 2017 by SNL Financial.

Contact Us
Walt Bernard Podgurski - - Editor