California Health Care

by John Hansen

Elizabeth Abbott, from the Office of the Patient Advocate (OPA), spoke to the CA health insurance agents on Tuesday, May 17 at the CAHU Capitol Summit. She has a history of advocating for California health care consumers.

Abbott has directed the OPA for a little over a year. Before that, she was appointed as one of the 16 national consumer representatives to advise the National Association of Insurance Commissioners (NAIC) counseling them on the implementation of the Affordable Care Act (ACA). She also advised on insurance market reforms and other consumer issues related to California health care.

Abbott worked for Health Access California (HCA), the consumer coalition working for access to quality and affordable California health care for all. Also, she worked for the Center for Medicare and Medicaid Services (CMS) as a regional administrator for the west including California, Hawaii, Nevada and more.

Abbott declared to a room full of CA health insurance agents, “I aske...

by John Hansen

The Office of the Patient Advocate (OPA) is a research organization that serves the 16.7 million consumers of health care in California. They research California health plans along with 207 network providers. They also receive and report on complaints related to the quality of health care in California.

SB 1135, legislation written by California State Senator Monning determined that the OPA would publish complaint data related to health care quality. The mission of the OPA has changed from being a consumer assistance organization to public reporting, so this seemed to fit. Now the OPA not only reports data they have gathered regarding California health plans and network providers, but they are also compiling and reporting consumer complaints.

Currently there is no national set of definitions for complaints related to quality health care. Elizabeth Abbott, director of the OPA, feels that this would be helpful to make complaint data more understandable to consumers.

Based on...

by John Hansen

Blue Shield of California has Sutter in their network. Anthem does not. Regarding Stanford, Anthem offers coverage through the hospital but not the medical group. Blue Shield has both.

In Santa Barbara, the Cottage Hospital and Sansum networks are with Anthem Blue Cross, but Blue Shield does not have them. Blue Shield has questioned, “Is it worth adding a network when you’d have to increase your rates in that region by 10% to do so?”

Both Anthem Blue Cross and Blue Shield of California offer Obamacare California health plans through Covered California, the state exchange. In the Health Insurance Marketplace in 2016, the top selling medical policies were the Covered California Blue Shield plans. However, in 2014 and 2015, Anthem Blue Cross Covered California plans were #1 sellers on the Covered California Exchange.

With these two health insurance California competitors, their premiums tend to be very comparable. Depending on your region, the cheapest California health p...

by John Hansen

At the California Association of Health Underwriters (CAHU) Capitol Summit 2016, speakers considered the issue of whether or not health insurance agents can charge fees. President Michael Lujan argued, “There may be legal remedies to charge feels while we wait for commissions to come back to normal.”

In the face of dropping commissions since the implementation of the Affordable Care Act (ACA), California health insurance agents have considered charging fees to their clients. However, there is question as to whether or not this is legal.

At the CAHU Capitol Summit, Don Cooper, health insurance agent and President of Triflex corporation, Jon Tomashoff, Senior Staff Counsel at the California Department of Insurance, and Stephen L. Young, lawyer and Senior Vice President and General Counsel for Independent Insurance Agents and Brokers of California, spoke to this issue.

Many health insurance agents in the room were in awe of the quiet presence of Jon Tomashoff, who authored...

by John Hansen

Steve Young, at the CAHU Capitol Summit 2016 addressed the issue of whether or not health agents can charge fees. He began with a discussion regarding the legal differences between the designations “broker” and “agent” relationship.

In the health insurance industry, often these terms are used interchangeably. However, the law makes a huge distinction between broker and agent relationships. And, there are different liabilities depending on whether an individual is relating to a client as a health agent or as a broker.

The concept of “agency” affiliations goes all the way back to feudal England. “If I am his agent, I can only take actions he commands, and he is liable for the wrongs I do,” said Young.

In 1980, the 80-6 Bulletin was written to clarify the differences between agent and broker relationships. According to the bulletin, if someone is a health agent, he/she may not charge fees unless he/she has the authority of the insurance company to charge fees.

H...

by John Hansen

At the CAHU Capitol Summit 2016, Don Cooper, President of Triflex, argued, “The best way to pay agents is PMPM.” PMPM payments refer to commissions paid to health insurance agents “Per Member Per Month”.

In the Per Member Per Month (PMPM) payment model for broker compensation, an agent is paid a certain dollar amount for each enrolled member per month. A California health plan might pay $20 per member per month. So, if an agent enrolled 5 members, the commission would be $100/month.

Cooper argued that PMPM compensation is better because “then you’re not incentivized to sell Cadillac plans because you get the same commission no matter what you sell.” He makes a good argument.

Percentage commission insurance agents deal with a conflict of interest. If the agent pushes richer California health benefits, he/she might get a bigger commission.

The agent should only be thinking about what health plan is in the best interest of the consumer. However, for percentage c...

by John Hansen

Jon Tomashoff, Senior Staff Counsel for the California Department of Insurance, spoke to the issue of California agents charging fees for the sale of health care products. He spoke in a panel discussion at the CAHU Capitol Summit 2016 alongside a lawyer and an insurance agent (Don Cooper, President of Triflex). The lawyer, Steve Young, held up a copy of the California Insurance Code and said (while referring to Tomashoff), “He wrote the book.”

In the panel discussion, Tomashoff held back while the agent and lawyer went first. Not surprising, the health insurance agent was the most optimistic about the possibility of charging fees for health care products. Steve Young explained the legal history of the designations “broker” and “agent” relationship.

Young argued that agents could charge fees for selling health care products if the services rendered were above and beyond the typical services of an agent. Cooper seemed to think that agents typically go above and b...

by John Hansen

Health Net medical insurance coverage includes both HMO and PPO products. According to the Health Net Health Plan, their HMO plans are more popular in Southern California, while their PPO products are more popular in Northern California.

For HMO, the Health Net Health Plan (now owned by Centene since the recent merger) offers a full network as well as skinny network products. In Southern California, consumers often choose the skinny networks, which offer lower premiums.

In Northern California, Health Net medical insurance coverage includes the broadest networks. According to Health Net reps, their networks in the northern areas of California are comparable to Anthem Blue Cross and Blue Shield of California.

Prices tend to be based on network, with the skinniest networks offering the cheapest plans. The Health Net Insurance Company offers their most robust networks off exchange. So Health Net Covered California Plans will tend to have smaller networks.

Health Net reps argue...

by John Hansen

The Centene-Health Net Merger is the first of three major health care mergers in California to occur this year. The Aetna-Humana and Anthem-Cigna mergers are still facing regulatory review.

Centene purchased the Health Net Insurance Company and stock shares were divided. According to Fierce Health Payer, “Health Net shareholders received 0.622 shares of Centene common stock and $28.25 in cash for each share at closing, making the total transaction value about $6 billion, including the assumption of debt, according to the announcement.” Also, Health Net Insurance Plan’s CEO (Jay Gellert) and CFO (James Woys) remained on as advisers to Centene’s CEO, Michael Neidorf.

Dave Jones, California Commissioner from the Department of Insurance, in a speech on May 17, assured Californians that he was keeping a close eye on these mergers.

Jones was concerned because the research suggests that mergers, like that of Centene and the Health Net Insurance Company, usually do not en...

by John Hansen

CAHU research suggests that based on the amount of expertise required and the amount of work to service consumers, California insurance agents should get paid 8-10% of insurance premiums for health care enrollments they place. 

Health insurance brokers acquire clients who want to apply for coverage, enroll customers in health care products, explain benefits and networks, and offer service. According to CAHU, 72% of the time California health insurance agents spend a lot of time with a client.

CAHU President Lujan said, “Personally, I believe 8-10% would be fair and reasonable.” He said that CAHU has not taken a stance that they would suggest an exact percentage. However, in their research based on the amount of work California insurance agents do related to health care enrollment, the researchers decided that 8-10% would be about right based on the expertise required and the amount of work that California agents do.

At the Capitol Summit 2016 on May 17, one California...