Volume 1, Number 29, July 19, 2004
Combining the emotional stress of an illness or injury with confusing or incorrect medical billing can lead to frustration. The seemingly endless paperwork can leave you feeling powerless.
The Affordable Healthcare for Floridians Act, effective July 1, promises to renew consumers’ sense of control. Among the many measures included in the act, it authorizes the creation of Health Savings Accounts (HSAs). Put into place by President Bush in December 2003, HSAs provide an innovative way for consumers to take control of their medical care costs.
But each of us can begin making a difference today to help improve Florida’s health care system, by carefully checking hospital and other health provider bills for mistakes, errors and excess charges. Doing so not only will stem out-of-pocket expenses, but also will help prevent the draining of our healthcare system’s precious resources.
In this issue of eViews you will find tips for taking control of your health care costs. The passage of legislation containing HSA provisions represents only the first step for lowering health care costs in Florida. As Florida’s Chief Financial Officer, I will continue to work with legislators to ensure health insurance programs, such as HSAs, are available. But it is up to each of us to make a real difference.
-- Tom Gallagher
CFO GALLAGHER OFFERS CONSUMER TIPS TO HELP CONTROL HEALTH CARE COSTS
TALLAHASSEE—Navigating through medical bills can be a daunting task, and watching costs pile up is frustrating. But Florida’s Chief Financial Officer Tom Gallagher said consumers have more control than they may think.
“Many factors contribute to rising health care costs, ” Gallagher said. “One that each of us can have a hand in controlling is billing errors. One keystroke error can cost hundreds of dollars.”
Learning to decipher health care provider bills can be a formidable undertaking, but one approach consumers can take is to look for areas where overcharges and errors most commonly occur. Gallagher urges Floridians to follow these tips:
· Keep a log of all medical visits and include a description of treatment rendered and medications prescribed. This will help you to verify dates and better coordinate care among physicians.
· Track and review all Explanations of Benefits (EOBs) that you receive from your insurance carrier to ensure services billed were provided.
· Check for duplicate billing to make sure you haven't been charged twice for the same service, supplies or medications.
· For hospital bills, ensure admission and discharge dates are listed accurately. If you were in a semi-private room, make sure you're not being charged for a private room. Make sure you are not billed for cancelled procedures. Verify operating-room time and review prescriptions. If your doctors prescribed a generic drug, make sure you’re not billed for a brand-name drug.
Gallagher served as co-chairman of the Governor’s Task Force on Access to Affordable Health Insurance, which made many of the recommendations included in the Affordable Healthcare for Floridians Act, which became effective July 1. The law will provide increased access to healthcare insurance by creating a more stable and competitive market, raise the quality of care and patient safety and improve transparency by giving consumers the information they need to make the best healthcare choices. Among the new options are health savings accounts (HSAs), which operate like Individual Retirement Accounts, allowing people to save their own money in a tax-free account for use on health care costs.
“We have heard from so many hardworking individuals and small employers who are struggling to obtain, and even maintain, health insurance, because of rising costs," Gallagher said. “Each of us can help greatly by exercising our power to control our own costs. If we all do our part, the collateral effect will be lower health care costs and lower insurance premiums for all Floridians.”
STATE FIRE MARSHAL’S OFFICE, FLASH PROVIDE 300 FREE SMOKE ALARMS TO LYNN HAVEN
Florida’s Chief Financial Officer and State Fire Marshal Tom Gallagher joined with Leslie Chapman-Henderson, president of the Federal Alliance for Safe Homes-FLASH, Inc., on Thursday to deliver 300 smoke alarms to the Lynn Haven Fire Department. The giveaway is part of an ongoing, collaborative effort to provide free smoke alarms to residents in at-risk communities.
Since the program began in 2002, more than 10,000 alarms have been distributed to Florida households.
“At least half of all fire-related deaths can be prevented by a smoke alarm,” Gallagher said. “Our goal is to make sure every Florida home has one of these life-saving devices.”
FLASH, a coalition of government agencies, professional associations and private industry with a common goal to reduce the impacts of natural and manmade disasters, purchases the alarms using corporate grants and donations, and is supported by the Florida Fire & Emergency Services Foundation. Local fire departments work with the State Fire Marshal to perform safety inspections and smoke alarm installations.
In November 2002, a 4-year-old Pensacola boy was saved when his mother was alerted to a house fire 10 days after installation of the free alarm.
“This program has already saved lives, and we are confident that it can again,” said Alliance President Leslie Chapman-Henderson. “We are extremely grateful for our partners, CFO and State Fire Marshal Gallagher and the Florida Fire & Emergency Services Foundation for making the giveaway program possible.”
For more information on fire prevention and home safety, visit FLASH online at www.flash.org or the State Fire Marshal’s Office at www.MyFloridaCFO.com/SFM.
WORKERS’ COMPENSATION CARRIERS, SELF-INSURED PLANS FINED MORE THAN $875,000 FOR VIOLATIONS
The Florida Department of Financial Services has fined 31 providers of workers’ compensation coverage a total of more than $875,000 for failing to fully comply with Florida law in administering workers’ compensation benefits to injured workers, according to Chief Financial Officer Tom Gallagher. The fines are the result of audits completed during the fiscal year 2003-04.
“Floridians deserve a healthy workers’ compensation system,” Gallagher said. “For businesses paying into the system, employees deserve to receive the full benefits afforded them under Florida law. Insurance companies that don’t comply with the law will be held accountable.”
Insurance companies and self-insured plans are judged under statutory standards related to:
Florida law requires carriers to promptly pay injured workers and medical providers in 95 percent of total cases in order to avoid penalties.
Promoting a sound workers’ compensation system is a top priority of CFO Gallagher. Gallagher recently lowered annual assessments paid by carriers and self-insured plans to fund the administration of the workers’ compensation system. Revenues derived from the assessment cover expenses for the Division of Workers’ Compensation, the Office of Judges of Compensation Claims, a portion of the Agency for Health Care Administration, a portion of the Department of Education, and a portion of the Bureau of Workers’ Compensation Fraud. Over the last two years, Gallagher has reduced the annual assessment from 2 percent to 0.75 percent.
Linked is a list of the 31 carriers fined during fiscal year 2003-04.
Also linked is a detailed list of the providers fined during the most recent quarter of this year, based on the department’s audits. Included are the fines assessed to each carrier or self-insured plan and their rate of compliance with Florida requirements.
SO YOU THOUGHT INSURANCE WAS BORING? POLITICAL RISK INSURANCE
More than 160 years ago, British merchants made a gigantic fortune selling opium to the Chinese. The Chinese government tried to put a stop to the trade. In 1839, it burned 2.5 million pounds of English opium in Canton harbor. The British government reacted by declaring war on China. By 1842, it had so badly defeated China that not only did China have to accept the British opium—it was forced to let Great Britain have free run of its ports--so-called “extraterritoriality rights.”
Nations generally no longer resort to warfare when their commerce is disrupted. Instead, the insurance industry has come up with a solution, which is usually called political risk insurance. “Political risk” comes in a variety of shapes and sizes, and the number of solutions is matched only by the types of problems that can occur.
In 1991, a large manufacturer of cardboard boxes in Western Europe received an incredibly large order from a foreign buyer. The buyer insisted on extraordinary credit terms, which the company was reluctant to accept, but the volume of the order was so large it was hard to resist. The buyer was a trade organization in the Soviet Union. Six months later, the Soviet Union no longer existed, and neither did the trade organization that ordered the boxes. The manufacturer was left with a gigantic hole in its annual statement. But fortunately for the company, it had purchased insolvency risk insurance, which pays for any credit losses over 10 percent of what is expected in the course of normal business.
You don’t have to operate overseas to need this kind of insurance. For example, there were several companies, mostly suppliers of clothing or housewares, who relied primarily or totally on sales through Kmart. When Kmart declared insolvency, these companies were faced with bankruptcy themselves – except for the fortunate ones that insured against it. However, it is primarily companies operating in developing countries that need this type of insurance.
Currency issues are a major source of problems. Some governments put restrictions on how much of the hard currency reserves in their national banks can be paid to foreign creditors. “Hard currency reserves” are held in a country’s banks in dollars, euros, pounds or other easily convertible currency. A customer in Kenya may owe an American company $1 million for services, but the Kenyan government may only allow the local customer to exchange $20,000 a month into U.S. dollars. The American company will show an outstanding account receivable on its books for years, as well as lost investment income, unless it has credit risk insurance.
A country’s currency may face a sudden devaluation. To illustrate, in 1997, Thailand’s currency dropped by 54 percent practically overnight, and all at once, many Thai customers did not have enough money to pay for services they had already contracted in U.S. dollars. If the U.S. companies had credit risk insurance, they would be protected.
Many times, American companies deal directly with foreign governments, rather than with foreign companies. These situations create their own sort of difficulties because governments have much greater discretionary powers than companies. A government can unilaterally decide to terminate a contract, default on payment, cancel export or import licenses, increase shipping charges or import duties, or take any number of other undesirable actions for which an American supplier would have no recourse. Sometimes a government (or maybe a rebel army) will confiscate a company’s entire operation. Contract repudiation insurance would cover any and all of these contingencies in dealing with governments.
One example of this sort of problem occurred in Somalia, when the government nationalized the oil industry in 1975. The Somali government confiscated the equipment and products of the oil companies operating in the country, did their own unilateral assessment of what they thought it was all worth, paid the companies whatever they assessed--in Somali currency--and then refused to let the companies take the money out of the country. The funds sat in Somali banks, then the Somali government charged the foreign companies income tax on the investment income generated by the funds – even though the Somali currency kept dropping in value to the dollar and the funds in the banks were actually getting smaller in U.S. dollars.
Policies can be purchased for individual contracts or for all operations within a specific time frame, usually up to 20 years. A handful of companies operate in this market, most notably AIG and Lloyd’s of London. However, it is interesting to note that perhaps the biggest entity selling political risk insurance is the U.S. government, through the government-owned Overseas Private Investment Corporation, or OPIC (not to be confused with OPEC).
Surprised? You shouldn’t be. Foreign countries, particularly developing countries, get a lot of foreign aid from the United States. These foreign countries often use this foreign aid to purchase products and services from overseas, particularly from American companies, and of course the U.S. government is interested in encouraging them to do just that. In fact, aid program contracts between the American government and foreign governments usually stipulate that American suppliers or local subsidiaries of U.S. companies will be given priority.
What’s more, the American government wants to encourage U.S. companies to operate overseas. In order to get American companies to take the risk, Uncle Sam is willing to back them with government-sponsored insurance. Logical, isn’t it? The next time you complain about how much foreign aid the United States gives away, think about all this.
So you thought insurance was boring?
MONEY LENDER CHARGED WITH FRAUD AND LOAN SHARKING
The owner of a local money lending business has been charged with multiple counts of fraud following a joint investigation involving the Florida Office of Financial Regulation, the Hillsborough County Sheriff's Office, the Department of Highway Safety and Motor Vehicles and the Department of Revenue.
Investigators say John R. Hershey, 54, owner of Easy Credit, Inc., 7440 E. Hillsborough Ave. in Tampa, allegedly operated unlicensed money lending businesses providing various financial services including money transmitting, title lending and auto financing. In addition to operating without a license, Hershey allegedly charged excessive interest rates and fees. According to investigators, more than 500 Florida consumers seeking title loans were charged interest and fees totaling 110%-276%.
According to Don Saxon, Director of the Office of Financial Regulation, consumers should conduct business only with licensed or registered businesses.
“There are plenty of licensed consumer loan businesses around that consumers can use that are in compliance with Florida law, without having to resort to paying the financial penalties that companies such as Easy Credit, Inc., demand,” Saxon said. “This is also a great example of investigative news reporting and multiple state agencies working together to better protect consumers.”
Investigators opened their investigation after seeing a Tampa Bay Channel 28 ABC Action News report on Easy Credit, Inc.
Hershey was charged with scheme to defraud, 87 counts of motor vehicle title fraud, 52 counts of criminal usury/loan sharking, and multiple counts for conducting various financial transactions without a license. Hershey turned himself into Hillsborough authorities late last week. He was booked into the Orient Road Jail and released on $25,000 bond. If convicted, Hershey faces up to 15 years in prison.
Florida Department of Financial Services