HJLR May/Jun 2019

Health Insurance Hustle A Need for Regulation Despite the important function of brokers as middlemen, there’s been scant examina- tion of their role in the marketplace. Don Reiman, head of a Boise, Idaho, bro- ker agency and a financial planner, said the federal government should require health benefit brokers to adhere to the same reg- ulation he sees in the finance arena. The Employee Retirement Income SecurityAct, better known as ERISA, requires retirement plan advisers to disclose to employers all compensation that’s related to their plans, exposing potential conflicts. The Department of Labor requires certain employers that provide health benefits to file documents every year about their plans, including payments to brokers. The depart- ment posts the information on its website. But the data is notoriously messy. After a 2012 report found 23 percent of the forms contained errors, there was a proposal to revamp the data collection in 2016. It is unclear if that work was done, but Pro- Publica tried to analyze the data and found it incomplete or inaccurate. The data short- comings mean employers have no real abil- ity to compare payments to brokers. About five years ago, Contorno, one of the leaders in the Rosetta movement, was blithely happy with the status quo: He had his favored insurers and could usually find traditional plans that appeared to fit his cli- ents’ needs. Today, he regrets his role in driving up employers’health costs. One of his LinkedIn posts compares the industry’s acceptance of control by insurance companies to Stock- holm Syndrome, the feelings of trust a hos- tage would have toward a captor. Contorno began advising Palmer Johnson in 2016. When he took over, the company had a self-funded plan and its claims were reviewed by an administrator owned by its broker, Iowa-based Cottingham & Butler. Contorno brought in an independent claims administrator who closely scrutinized the claims and provided detailed cost informa- tion. The switch led to significant savings, said Parsons, the company owner. “It opened our eyes to what a good claims review pro- cess can mean to us,” he said. Brad Plummer, senior vice president for employee benefits for Cottingham & But- ler, acknowledged “things didn’t go swim- mingly” with the claims company. But overall his company provided valuable ser- vice to Palmer Johnson, he said. Contorno also provided resources to help Palmer Johnson employees find high-qual- ity, low-cost providers, and the company waived any out-of-pocket expense as an incentive to get employees to see thosemed- ical providers. If a patient needed an out-of- network procedure, the price was negotiated up front to avoid massive surprise bills to the plan or the patient. The company also contracted with a vendor for drug cover- age that does not use the secret rebates and hidden pricing schemes that are common in the industry. Palmer Johnson’s yearly health care costs per employee dropped by more than 25 percent, from about $11,252 in 2015 to $8,288 in 2018. That’s lower than they’d been in 2011, Contorno said. “Now that my compensation is fully tied to meeting the clients’ goals, that is my sole objective,” he said. “Your broker works for whoever is cutting them the check.” n ProPublica data fellow Sophie Chou con- tributed to this story. “Palmer Johnson’s yearly health care costs per employee dropped by more than 25 percent, from about $11,252 in 2015 to $8,288 in 2018.” 25% “The Employee Retirement Income Security Act, better known as ERISA, requires retirement plan advisers to disclose to employers all compensation that’s related to their plans, exposing potential conflicts.”