About Lawrence Thompson
With 40 years of success in the benefit industry, Mr. Thompson provides guidance and expertise for every engagement. His knowledge of administration, technology, compliance, plan design, reinsurance and the market make him a critical resource for our clients.
Mr. Thompson has worked for major insurance carriers, the Blues, TPA’s and technology companies. He is a nationally recognized speaker on healthcare, has served on several association Boards and frequently works on State & Federal healthcare regulation.
About Stephen Manzelli
With almost 30 years of experience in the benefit industry, Mr. Manzelli provides guidance for growth and market engagement. His knowledge of strategic engagement development and management, benefit plan building, employee engagement, technology, customer service, implementation and vendor selection make him an invaluable resource for customers and stakeholder partners.
Mr. Manzelli has worked for major insurance carriers, TPA’s and consulting firms. He is well known in the self-insurance industry with thousands of contacts. He specializes in building new relationships and has worked in various client capacities across the US.
About Inventavis
Inventavis services a wide range of customers through innovative, expert strategic guidance on a variety of business elements including new customer markets, programs, services and products for the Health plan vertical. Inventavis was founded by two executives with a combined success record of almost 70 years in the healthcare space, with an emphasis on insurance and self-funding via strategic engagements as well as strong management and effective leadership. Our customer segments include health systems, insurance carriers, technology vendors, Third Party Administrators, employer groups, Taft Hartley organizations, associations, healthcare investors and select brokers/consultants.
Medical Travel Today (MTT): With Association Health Plans developing, give us your perspectives on your involvement.
Lawrence Thompson (LT): My history with Association Health Plans goes back 22 years.
I was part of a team including George Pantos from Self Insurers Institute of America (SIIA) and many others who drafted the original association and health plan legislation in the late 1990’s.. Olivia Snowe was a sponsor of the legislation in the Senate. The bill passed in the House three times but failed in the Senate each time.
My most recent venture came when the Trump administration decided that they wanted to explore the Association Health Plan (AHP) concept again. SIIA got involved as they had significant history with the process.
At the time, I was chair of the SIIA government relations board. We provided information and worked with the GOP on how they might use AHPs in an effort to improve access for small businesses to have insurance.
We went through all the drafts and provided comment. The Executive Order was signed in October of last year and the DOL put out some initial proposed regulations. We commented on those regulations as an Association and I also did personally. The final regulations were put out this summer and we now have regulation that allows for AHPs to extend across the country.
MTT: What is Inventavis doing to serve AHPs?
LT: We launched our AHP practice Q3 2018 because we have been bombarded with people who are looking at forming an AHP, seeking to expand current programs and create new ones. Again, there is very broad interest.
Our consulting practice is totally focused on health plans, although we provide other services. This new practice specialty allows us to provide a whole variety of services to prospective health plans.
MTT: What types of groups are seeking services, are they located in any specific region, and do they represent any specific industry?
LT: A great deal of our practice for the last six months has been focused on what I call an AHP evaluation. The regulations are very specific and not all associations will qualify.
Probably 75 percent of all work thus far has been helping a wide variety of associations figure out whether it is a fit, whether they can financially afford to do it and whether they will comply with all of the federal regulations.
I estimate that six out of every ten will not qualify, so we are weeding out a tremendous amount of them.
MTT: What are the disqualifiers?
LT: I think the number one thing is that you need to be a bona fide Association.
That means an association has to provide membership services to their members that do not involve health insurance. That is turning out to be the first gate that you have to pass through.
There are a lot of brokers and others that have come to us with Associations that want to strictly provide health insurance and they will not qualify.
The second gate that seems to be disqualifying a lot of Associations is the financial requirement. This is an expensive process.
There are two ways to implement an AHP: Self-funded or fully insured. Under either arrangement, there is a great deal of compliance work that needs to be done.
There is a lot of structural work involved and there are going to be capital and surplus (solvency) requirements, depending upon the state in which you operate the association health plan.
We are finding that while there are a number of bona fide Associations, very few of them have the capital that’s necessary to form the health plan. We expect many of these will try to find a fully insured carrier to help them.
MTT: What industry seems to be most suited for this?
LT: Any industry that has a lot of small-businesses or proprietorships.
Overall, that’s a good fit because the regulations changed, allowing sole proprietors and business owners to be part of the health plans. Small groups are facing the highest health insurance increases in the nation, which is not surprising because it is also the category that carriers make significant profit.
Any industry that focuses on small businesses would be a good fit, but they still have to meet the other qualifications. We are looking at a number of them around the country.
The National Federation of Independent Businesses is, of course, the largest independent business organization. Some chambers of commerce in various states are looking at it, along with real estate agent associations, small business associations, and hospitality and construction-focused associations. I also think it is a good fit for medical providers and I think it is a good fit for restaurant owners.
MTT: What are the advantages of going to a self-funded model?
LT: The self-funded model gives the Association a great deal more of control over the plan. They can manage the cost of healthcare much more specifically than if they do a fully insured plan where that responsibility would lie with the insurance carrier.
There are carriers out there that are interested in the business, but they primarily offer cookie-cutter plans that are not very flexible.
On the self-insured basis, I know there are a lot of levers that the Association can pull – choosing the vendors that they want to work with, the administration, the stop-loss and negotiating contracts. If there’s geographic concentration, then they can do direct contracting with providers.
On the self-insured model there’s more flexibility in meeting ACA requirements vs. fully insured – requirements and mandates specifically.
MTT: What can you and your team provide to the Associations?
LT: We are consultants, and we offer several options for Associations. We can provide turnkey comprehensive solutions or al la carte options on specific AHP issues.
We offer three different engagement options to Associations.
First, we can work with them on an hourly basis plus expenses.
Second is on a project basis, where we would give them an overall project cost to complete a defined initiative.
The third would be a retainer for a period of time.
We are very flexible, and we have plans working on all three levels.
MTT: How long does it typically take to move from the inquiry phase to getting up and running?
LT: If you already have a bona fide Association and are trying build a program from scratch, I would say a minimum of a year.
The exception to that is if all you want to do is have a fully insured program. In that case, you might be able to do it faster because you might find an insurance carrier that already filed plans in your target state.
MTT: When you look at providers for these different groups, do you look strictly at hospitals?
LT: It depends on the Association’s desire and it depends on their membership and geographic dispersion.
Generally, on the self-funded side we would recommend looking at a mix of direct contracting with providers and networks. If the networks are large enough, we can negotiate rates. Or a carrier network could be utilized.
If there’s geographic concentration, we can reach out directly to providers, hospitals or health systems and contract directly with them.
MTT: Would you ever consider recommending a provider that was not domiciled in the US?
LT: Absolutely.
I think that with a self-funded AHP there are significant savings that can be derived by offering medical care in locations outside of the US.
Obviously, we do that very, very carefully because of liabilities for the Association.
I don’t think that most Associations that we are dealing with would request it, but I think that some would look at it as an option.
MTT: Is this for the typical medical or surgical care, or are you looking at prescription medications and pharmaceuticals as well?
LT: We are looking at pharmaceuticals as well.
When we work with Associations we implement a complete turn-key solution, helping them to develop the actual plans.
We can get some actuarial evaluation done, find the right stop-loss and reinsurance arrangements and the network contracts. Then, the PBM and prescription drugs and, of course, all the vendor selections.
MTT: How do you evaluate these different providers?
LT: When it comes to vendors, Inventavis has spent over a year looking at the two divisions of a company – the consulting side and then our innovation side.
On the innovation side, we spend a lot of time looking at the most innovative, effective and efficient vendors in the self-funded business. We carefully evaluate and make recommendations.
We look at a lot of the emerging technologies and the new services that are now available. This is part of our expertise.
We have a panel of consultants that spend a lot of time searching and qualifying vendors to make certain that they meet quality benchmarks and are worthy of our endorsement in a specific area.
On another level, some associations have vendors that they want us to look at that aren’t part of an elite group and we will perform an evaluation on their behalf. This can involve assessing a TPA or cost management company. We will do whatever they need for us to do.
MTT: What is your goal in terms of the number of lives that you anticipate you would interact with in the next year?
LT: That’s a very difficult question to answer because every Association is a different size.
On the large side, we have groups that have a million members. We also have some associations that have 6,000 – 7,000 members.
At this stage, it is too early to pinpoint how many of them will launch health plans. I think they’re all in different stages of evaluation right now, but we hope to launch both small and large plans.
MTT: What is the size of your organization?
LT: We have a small footprint, but we utilize several “of-counsel” experts. They are six of us in the organization and then we have another six we access.
For example, we have of-counsel arrangements with a several leading ERISA attorneys who work with Inventavis and provide legal services.
We have the same arrangement on the actuarial side and on some of our more operational pieces.
We have some very, very senior folks that have their own practices but contract with us.
MTT: When you said there was a group that was very large, could that be a group as big as an employer like Walmart?
LT: Yes. There are some very big Associations out there.
That doesn’t mean that all of their members would sign up in the AHP. But the larger ones are more likely to move forward simply because the capital/surplus requirements in some of these states are very high.
You’ve got to have an Association that has enough cash to do that. That’s a big stumbling block.
MTT: Do you see the regulatory environment changing in a way that would hurt your model?
LT: No, I don’t think so. We never had any Associations ask what happens if the administration changes. This regulation was accomplished through an Executive Order.
Could it be undone?
Number one, it would be very difficult. Number two, even if it were going to be undone I don’t think there is anyone in a new administration that would shut down an existing health plan.
At some point, they may limit the regulations going forward. We believe that the class exemption, which was not included in the original regulation, is going to come back to the forefront in the future and will have to be addressed. It is very controversial.
MTT: Can you explain?
LT: Sure. The class action would require that the states could only require fiscal solvency for association health plan but could not have any other requirements or limitations on the health plans within their states. And could not prohibit them operating in their state.
This would allow for more multi-state or larger Associations and it would prohibit the states from trying to apply deeper regulations.
34 states have MEWA regulations and they are varied. Some states just ban MEWAs, so if the class exemption were to get passed and made part of the regulation, it would really open the market place.
We think that with the pressure on pricing and premiums, and the current administration’s focus is on trying to get small businesses some relief, will drive further review of the class exemption.
MTT: How about the insurance industry itself? Are there any Associations on the horizon?
LT: It’s strange — insurance professionals don’t really have an outlet. However, there are some rumblings that insurance associations are thinking about it and trying to decide whether it would be worthwhile to do. I don’t expect we will see any insurance AHP’s soon.
MTT: What about SIIA?
LT: I don’t know but it is very interesting thought. You’ll have to ask them.
MTT: What about international business?
LT: We are focused on helping businesses. The other piece to this is that there are so many associations that are not just US-based, so we have a decent international practice.
We just finished creating a new insurance company in the Caribbean which was a three-year project. We are promoting it and the program will be domestic to start but will eventually be in six Caribbean countries.