Monday, December 29, 2008

Massachusetts nears universal health insurance coverage

BOSTON—More than two years after Massachusetts passed groundbreaking legislation to move the state closer to universal health insurance coverage, the Bay State has achieved that milestone, according to a survey released last week.

Some 97.4% of Massachusetts residents now have health insurance, by far the highest coverage rate of any state.

In 2007, according to the U.S. Census Bureau, just under 95% of the state's residents had coverage.

State officials hailed the findings, which are based on a survey conducted between June and August by the Urban Institute, a Washington-based research organization.

"Massachusetts has succeeded in covering the uninsured at an amazing rate. Massachusetts now has both the lowest rate of (uninsured residents) in the country and a rate that is less than half of the next-lowest state….This is a remarkable achievement," Secretary of Health and Human Services Dr. JudyAnn Bigby said in a statement.

In 2007, Hawaii had the second-lowest uninsured rate with 7.5% of the population lacking health insurance, according to the Census Bureau.

Several provisions in Massachusetts' 2006 reform law have been key in increasing coverage, experts say, including state premium subsidies for the low-income uninsured, imposing financial penalties of more than $900 a year on those who are not covered under a health plan and a $295-per-employee assessment on employers who do not offer coverage.

Coverage tied to income

The report found that of those with health insurance coverage, 68% received coverage from employers, while 17% obtained coverage from public or other programs, while 15% of the insured population—chiefly those age 65 and older—had coverage through Medicare.

Even though Massachusetts subsidizes health insurance premium for eligible low-income uninsured residents, insurance coverage was directly related to income, according to the survey.

For example, 5.4% of residents with incomes less than 150% of the federal poverty were uninsured, while 5.1% of those with annual incomes between 150% and 299% of the federal poverty level were uninsured.

By contrast, just 1.9% of those with incomes between 300% and 499% of the federal poverty level were uninsured, while 0.3% of those with incomes at least 500% of the federal poverty level lacked coverage.

The survey is based on responses from 4,910 households in Massachusetts.

Medicare mandate raises liability worries

A government effort to ensure that Medicare does not pay expenses for which casualty insurers and self-insured employers are primarily responsible could hamper the settlement of liability claims, observers warn.

The government's effort, which includes a mandate to report information to Medicare, also could increase litigation, said Roy Franco, director for risk management strategies at Pleasanton, Calif.-based Safeway Inc.

And it comes as risk managers are likely to face more liability claims filed by Medicare beneficiaries because of an aging population. Medicare compliance issues affect 15% of Safeway's open liability claims, Mr. Franco said.

Mr. Franco also serves as steering committee co-chair for a recently formed Medicare Advocacy Recovery Coalition, which met last week with the Centers for Medicare & Medicaid Services.

The U.S. administrative agency is eager to help resolve some of the potential problems that policyholders, insurers, self-insureds, attorneys, third-party administrators and others in the liability industry could face as CMS implements the claims data reporting mandate that goes into effect on July 1, 2009, Mr. Franco said.

Precisely what payers will have to do to be in compliance still is under development, Mr. Franco said.

But legislation may become necessary and its makeup would depend on CMS' ability to address payer concerns, said Katie A. Fox, manager of a Medicare secondary payer compliance unit of Franklin, Tenn.-based MedInsights Inc.

MedInsights is a managed care subsidiary of GAB Robins North America Inc. Ms. Fox also is a steering committee co-chair for MARC, which has periodic meetings planned to provide CMS with input on the mandate.

The reporting mandate was contained in the Medicare, Medicaid and SCHIP Extension Act of 2007 that President Bush signed a year ago. Among other measures, it aims to help Medicare collect medical expense reimbursements.

The law is part of a congressional attempt to ensure the government saves money in cases where Medicare is supposed to be a secondary payer for its beneficiaries, after health plans, liability insurers and self-insured employers pay their primary share of claims.

Data that payers are to provide will enable Medicare to review all liability and workers compensation settlements, judgments and awards owed to Medicare beneficiaries.

The reporting mandate potentially poses several problems for settling liability claims, but many employers remain unaware of it, Mr. Franco said.

One potential problem for payers stems from a requirement that anyone paying a general liability claim must report the activity to Medicare if the claimant is a Medicare beneficiary.

Verifying that a liability claimant also is a Medicare beneficiary would require obtaining their Social Security number, Mr. Franco said.

Managing liability claims already can be an adversarial undertaking, Mr. Franco added. Asking for a Social Security number could cause additional friction that would undermine an established risk management practice of settling some claims quickly and amicably before attorneys are called.

"For the claims examiner to ask as (one of) their first questions, `what is your Social Security number?' tends to, unfortunately, push the claim in a direction we don't necessarily want to push at that time," Mr. Franco said.

One hope is that CMS will provide a work-around or help payers collect Social Security numbers, birth dates and other necessary information from Medicare beneficiaries, said Marcia Nigro, assistant vp and complex claim consultant in Philadelphia for Sedgwick Claims Management Services Inc.

"Elderly people are told by many organizations, `You never give your Social Security number out,"' Ms. Nigro said. "It's going to be hard to crack that nut. That is one of the major issues we are all going to have."

Sedgwick also is a MARC participant.

Another concern is that Medicare does not recognize state laws apportioning liability among claimants and defendants who share fault, Ms. Fox said.

Medicare wants 100% reimbursement from claims payers regardless of contributory negligence laws in some states, Ms. Fox said, and one MARC goal is to encourage Medicare to follow states' contributory negligence laws.

While group health and workers comp payers must report information under the new Medicare mandate, doing so for general liability claims is likely to present additional complications, several sources said.

Under group health plans and workers comp systems, payers typically pay a claim immediately, before Medicare pays. But because general liability claims regularly require determining fault, which can be a time-consuming process, Medicare is more likely to pay first and then require reimbursement, sources said.

Yet Medicare cannot provide payers with a final dollar amount they are responsible for until all necessary medical treatment has been provided. That could leave payers that want to settle a claim quickly not knowing how much they may have to reimburse to Medicare, Mr. Franco said.

Additionally, to cover its medical payouts, Medicare could require reimbursements totaling the entire amount an insurer or self-insurer would otherwise provide to a beneficiary.

Mr. Franco said that could mean claimants would not receive money because it all would go to pay Medicare instead. Those claimants would be less likely to settle and, instead, pursue litigation in hopes of obtaining dollars for themselves, he said.

"Ultimately, it could be a significant cost driver," Ms. Fox said.

Apart from claims-settlement issues, self-insured employers should assure all of their contracted third-party administrators are positioned to provide Medicare with required information, said Darrell Brown, workers comp practice lead for Sedgwick in Long Beach, Calif.

"Employers are concerned because the penalty for failure to report is $1,000 per day per claim," Mr. Brown said. "You have to get the reporting piece of it right because the penalties are pretty steep."

So far, though, the government has focused more on smoothing the reporting mandate's implementation than on penalizing payers, Mr. Franco said. But if the process is proving complex for sophisticated payers, beneficiaries are even more likely to be caught in the middle, he added.

FM Global to expand research campus, increase workforce

WEST GLOCESTER, R.I.—Factory Mutual Insurance Co., which does business as FM Global, has announced a $38 million expansion of its 1,600-acre research campus in West Glocester, R.I.

FM Global says the enhancements of the facility will ensure that it can keep pace with its clients' loss prevention needs, particularly with the growing impact of globalization and increased supply chain risks.

FM Global said the expansion will see the company increasing its workforce at the research campus by 7% over the current 108.

Research at the current research campus replicates warehouse-size fires, dust explosions and virtually every type of natural disaster, according to FM Global. Research at the site helps FM Global customers better protect their facilities from property risks and related business disruptions.

Construction on the existing research campus began in 2001 and cost $85 million. The expansion will add capabilities for studying the effects of such natural hazards as wind, flood and earthquakes, as well as what FM Global says will be the world's largest fire-testing laboratory. The expanded facility will also include a new 4,500 square foot multimedia center.

The insurer says the improvements will provide higher quality research and testing, enabling it to better serve businesses looking to deal with evolving exposures.

NAMIC to partner in study of P/C policy systems

INDIANAPOLIS—The National Assn. of Mutual Insurance Cos. will partner with management consulting, advisory and research firm Insurance Technology Group Inc. on a comprehensive survey of the business drivers influencing property/casualty insurers' policy administration practices and processing.

The survey will shape the business context for a policy administration study Toronto-based ITG is conducting with the sponsorship of Industry Focus and the support of O'Brien Communications Group L.L.C.

The partnership with Indianapolis-based NAMIC will include a telephone survey beginning this month of NAMIC members investigating insurers' business strategies and their experiences with policy administration practices and solutions.

the partnership will also include a webcast reporting initial results, and a survey of summary results.

The ultimate policy administration study will be an in-depth collection of information on vendors and their solutions. The study will begin in January, with results to be published and available in the second quarter of 2009.

In a statement, Bart Anderson, NAMIC's senior vp of member services and communications, said the survey "will help NAMIC better serve its members by providing valuable information for aligning business and IT strategies."

Mass. ups penalties for lack of health cover

BOSTON—Massachusetts residents who are not covered under a health insurance plan in 2009 face higher financial penalties under newly proposed rules.

The maximum penalty next year for those with incomes exceeding 300% of the federal poverty level will be $89 for each month an individual does not have coverage, or $1,068 for a full year of noncompliance, according to the guidelines proposed by the Massachusetts Department of Revenue.

In 2008, the penalty for noncompliance was $76 a month, up to a maximum of $912 a year. Penalties for those with income of up to 300% of the federal poverty level would remain the same as in 2008. Penalties, though, do not apply for whose income is less than 150% of the federal poverty level, as such individuals are eligible for free health insurance coverage with premiums completely subsidized by the state.

In addition, individuals can obtain an exemption from the penalty if they can prove that affordable health insurance coverage is not available. In 2007, though, only 1.9% of tax filers—roughly 76,000 adults—were uninsured and deemed by state regulators as unable to afford health insurance and exempt from the penalty, which then was only $219.

Monday, December 22, 2008

XL downgrade hurts business with other insurers

HAMILTON, Bermuda—XL Capital Ltd.'s financial troubles are causing some insurers to rethink their underwriting relationships with the Bermuda-based insurance company.

Market sources say some insurers are reacting to the recent financial-strength rating downgrade to A from A+ of XL's core companies by Standard & Poor's Corp. by refusing to participate in coverage programs that include XL on long-tail exposures.

Allianz Global Corporate & Specialty confirmed that it has made such a move. A spokesman for the Munich, Germany-based insurer said in an e-mail that the S&P downgrade of XL's financial-strength rating "reflects the belief that XL's prospective competitive position and resulting underwriting performance have diminished because of perceived franchise issues stemming from a number of material earnings and capital charges over the past several years and a belief that renewal activity will be below historical norms."

Allianz remains confident that XL can meet its obligations regarding short-tail business, the spokesman said. "However, we can no longer front long-tail business for XL. This is not a negative move against XL but rather a result of the recent downgrade because it affects our own risk exposure."

XL's downgrade means the insurer's rating "no longer meets Allianz Group criteria for long-term business," the spokesman said.

Meanwhile, A.M. Best Co. recently decided to leave unchanged the A financial strength rating it has assigned to XL's core operating companies.

A spokeswoman for XL could not be reached to comment on the move by Allianz.

Pollution exclusion used to deny fire death claims

HOUSTON—Commercial specialty insurer Great American Insurance Co. is claiming that a pollution exclusion in its policy exempts it from owing damages to families of three people killed in a 2007 Houston office building fire.

Great American argues that its policy, which contains limits of $25 million, includes an "absolute pollution exclusion" that prohibits payout on a loss that arises from or is related to smoke, soot and fumes. Great American is asking the U.S. District Court in Houston to rule that the deaths caused by those elements not be covered by the policy.

A hearing on the matter will be held in February.

According to court documents, Cincinnati-based Great American provided the excess liability policy for defendant Boxer Property Management Corp. in excess of the primary liability policy issued to the property company by Lexington Insurance Co. Several underlying lawsuits for wrongful death, personal injury and property damage were filed against Houston-based Boxer Property Management, causing the company's excess liability coverage with Great American to be triggered.

A spokeswoman for Great American said that its policy "stands on its own merit" but would not elaborate further, saying the matter was still in litigation.

The case, Great American Insurance Co. vs. Boxer Property Management Corp., stems from a March 28, 2007, fire at a commercial building located in the North Loop in Houston. The fire was caused by Misty Ann Weaver, a nurse, who set fire to some paperwork that she had not completed and feared she might lose her job over.

Ms. Weaver pleaded guilty to three counts of felony murder and one count of first-degree arson and was sentenced to 25 years in prison on Oct. 27, 2008.

Health plans ease access to essential treatments: Study

More health plans are reducing barriers to essential treatments in response to employers' requests, according to the 2008 findings of the National Business Coalition on Health's eValue8 tool, which coalition members use to assess the quality of health plans as part of the request for proposal process.

For example, for patients with diabetes, 27% of health plans currently waive copayments, and 33% reduce copayments, for essential drugs and equipment such as blood glucose monitors. For patients with asthma, 19% of health plans waive copays for essential drugs, and 32% reduce them.

For patients with hypertension, 20% of health plans waive copays for drugs and equipment, and 28% reduce copays for such treatments. In the area of wellness and health promotion, 43% of health plans waive copayments for preventive health care visits.

Although employers are asking health plans to provide more detailed quality information to plan members so they can make better-educated decisions regarding provider selection and treatments, only 47% display such quality information, and only 16% enable plan members to search for physicians based on quality, the eValue8 RFP tool found.

And while employers are demanding that health plans adopt electronic medical records to improve information flow, patient safety and reduce gaps in care, so far only 25% of health plans indicate in their provider directories whether the physicians use electronic health records, according to eValue8.

The 2008 eValue8 findings also showed health plans need to do more to ensure plan members are receiving preventive treatment such as cancer screenings. For example, only 57% of health plans remind members about colorectal cancer screening, and only 53% of health plans tell members when their colorectal screening is overdue. Moreover, only 40% of the plans report to physicians if their patients have received colorectal cancer screenings.

For more information on the eValue8 tool and its findings

Secured loan

Secured loan
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may satisfy the debt against the borrower rather than just the borrower's collateral.

There are two purposes for a loan secured by debt. In the first purpose, by extending the loan through securing the debt, the creditor is relieved of most of the financial risks involved because it allows the creditor to take the property in the event that the debt is not properly repaid. In exchange, this permits the second purpose where the debtors may receive loans on more favorable terms than that available for unsecured debt, or to be extended credit under circumstances when credit under terms of unsecured debt would not be extended at all. The creditor may offer a loan with attractive interest rates and repayment periods for the secured debt.

United States Law of Debt Secured by Property
In the case of real estate, the most common form of secured debt is the lien. Liens may either be voluntarily created, as with a mortgage, or involuntarily created, such as a mechanics lien. A mortgage may only be created with the express consent of the title owner, without regard to other facts of the situation. In contrast, the primary condition required to create a mechanics lien is that real estate is somehow improved through the work or materials provided by the person filing a mechanics lien. Although the rules are complex, consent of the title owner to the mechanics lien itself is not required.

In the case of personal property, the most common procedure for securing the debt is described through the Uniform Commercial Code or UCC. This statute provides a system of forms and public filing of documents by which the creditor's interest in the property is made known.

In the event that the underlying debt is not properly paid, the creditor may decide to foreclose the interest in order to take the property. Generally, the law that allows the secured debt to be made also provides a procedure whereby the property will be sold at public auction, or through some other means of sale. The law commonly also provides a right of redemption, whereby a debtor may arrange for late payment of the debt but keep the property.

How to create secured debt
Debt can become secured by a contractual agreement, statutory lien, or judgment lien. Contractual agreements can be secured by either a Purchase Money Security Interest (PMSI) loan, where the creditor takes a security interest in the items purchased (i.e. vehicle, furniture, electronics); or, a Non-Purchase Money Security Interest (NPMSI) loan, where the creditor takes a security interest in items that the debtor already owns.