Updates.(Brief Article)

New group health plan aims to increase enrollee choice MINNEAPOLIS -- A Minneapolis-based health care system is launching a new plan that will allow employees to choose their own physicians and pay providers a monthly fee with pretax dollars contributed by employers. Under the program, established by Vivius Inc., an employer would fund employees' health care spending accounts. Funds would be withdrawn from the accounts to pay a monthly fee to physicians who are selected by the enrollees. Enrollees would know ahead of time the monthly fees charged by physicians.The eligible physicians have signed a participation agreement with Vivius. Vivius customers also may purchase a wrap-around insurance policy to cover services that physicians they select can't provide or for out-of-town emergencies. Otherwise, such expenses would come out of the enrollee's pocket. Each month, Vivius will transfer funds electronically from the health care spending account to pay providers selected by employees, as well as to pay the premium for the wrap-around policy. That feature is different from other insurance programs, says Dr. Lee Newcomer, who formerly was a senior vp with managed health care giant UnitedHealth Group and now is chief medical officer for Vivius. "The monthly prepayments to health care providers come directly from the customers' health care spending accounts. . .with no middleman or insurance company involved," Dr. Newcomer said. Vivius intends to use Minneapolis and the metropolitan Kansas City area as test markets starting this fall. CS First Boston forms captive HAMILTON, Bermuda -- Credit Suisse First Boston has formed a captive in Bermuda to address the investment bank's business risks and to partner with reinsurers on risks in emerging markets. CSFB's captive, Boston Re, will underwrite risks associated with such transactions as loans and security offerings from businesses and sovereign borrowers, ceding some of the risk to reinsurers. "This is akin to the sharing of risk with other providers of capital," said Jeremy Bennett, Singapore-based global head of emerging market structuring for Credit Suisse First Boston. "We take a lot of it ourselves and hold a lot of it ourselves, but leverage is the key." Mr. Bennett said the move is another step in the convergence between banking and insurance. "It's basically designed to give some top insurers access to the CSFB infrastructure," he said. "We're not really setting the company up to be a stand-alone competitor with other insurers." "We have been working with the direct insurance market for some time, and that has been very productive for us. And we intend to continue with that area of business," added Alex Dubitsky, a Credit Suisse First Boston vp responsible for emerging markets structured insurance products, who is based in London. The risks transferred to the captive "could be what are traditionally called political and credit risk," Mr. Dubitsky said. Willis Management (Bermuda) Ltd. is managing Boston Re. Bermuda has become a popular domicile for vehicles intended to tap the capital markets. In the past few years, Goldman Sachs & Co. set up Arrow Reinsurance Co. Ltd., and Lehman Brothers formed Lehman Re Ltd. as special-purpose reinsurers. CSFB sees Boston Re as a more-typical captive that will provide an opportunity to leverage the expertise of its people, its business relationships around the world and its infrastructure. Mr. Bennett said the reinsurers with which CSFB will look to partner through its captive "are those looking for high risk/returns. . .who are looking for some of the more-creative areas of risk transfer." Boston Re will be involved in deals where CSFB is an investor, rather than simply as an underwriter passing debt instruments through to investors in the capital markets, Mr. Bennett said. And with risks from those deals ceded to reinsurers on a pro rata basis, CSFB's interests will be aligned with those of its reinsurance partners because they will have the same risk profile on the deals. CSFB expects to structure at least $2 billion in treaty reinsurance capacity through the captive this year. "We have already built a substantial book of business," Mr. Dubitsky said. "The opportunities that we have that come across our desk every day for deals around the world are huge," Mr. Bennett said. "This is going to be a big business for us." ACE CEO rebuts `tax loophole' NEW YORK -- U.S. insurers lobbying to close the alleged Bermuda "tax loophole" are supporting their argument with erroneous figures, says the chief executive officer of ACE Ltd. Brian Duperreault, chairman and CEO of ACE, acknowledged that U.S. insurers are claiming they are unfairly disadvantaged because they have to pay a 35% tax rate on investment income, whereas Bermuda companies that reinsure their U.S. affiliates pay no income tax. Once tax-sheltered investments such as corporate bonds are taken into consideration, however, the U.S. insurers have an effective tax rate of about 19%, according to Mr. Duperreault. Mr. Duperreault made his comments in New York last week at the annual International Insurance Day luncheon, which was sponsored by the International Insurance Council. It is ironic, he said, that U.S. units of ACE have become far more profitable under its ownership and have a higher effective tax rate than any of the insurers backing the bill. Also, the $7 billion figure that has sometimes been quoted as the potential loss to the U.S. Treasury if the entire U.S. property/casualty industry moved offshore is wrong, Mr. Duperreault said. Last year, the U.S. P/C industry paid $5 billion in taxes. In addition, the notion that the entire U.S. insurance industry would move offshore is "fanciful and utterly ridiculous," he said. A handful of U.S. insurers are lobbying for passage of H.R. 4192, which was introduced last month to increase taxes on companies that reinsure U.S. business with Bermuda-based affiliates (BI, April 10). The four principal supporters are Chubb Corp., the Hartford Financial Services Group Inc., Liberty Mutual Insurance Co. and Kemper Insurance Cos. Dingell defends patient rights WASHINGTON -- Enactment of managed care reform legislation that includes granting participants the right to sue health plans that improperly deny treatment will not cause a flood of lawsuits, says the co-sponsor of a patients rights bill that passed the U.S. House of Representatives. The right-to-sue provision in the House bill is modeled on similar provisions in state law, said Rep. John Dingell, D-Mich., during an address last week at the International Foundation of Employee Benefit Plans' Washington Legislative Update. Rep. Dingell joined Rep. Charlie Norwood, R-Ga., in drafting the Consensus Managed Care Improvement Act, which passed the chamber by an overwhelming majority last year (BI, Oct. 11, 1999). House-Senate negotiators are struggling to forge a compromise patient bill of rights package out of the Norwood-Dingell bill and a much narrower measure that won Senate approval last summer. Among other things, the Senate bill would not grant any new right to sue. Rep. Dingell said fewer than 10 lawsuits alleging improper denial of treatment have been filed in Texas since that state passed its patients bill of rights act. "There has been a great deal of misinformation spread" about the House bill, said Rep. Dingell. He specifically denied critics' charges that the House bill would open employers to new liability for the acts of health care plans they sponsor. Rep. Dingell declined, however, to predict that Congress would pass a patient's bill of rights this year, though he said that he hoped "very much" that a good bill could be passed. The chairman of the House-Senate conference committee dealing with the competing health care reform measures warned those attending the IFEBP meeting that time was running out. "The closer we get to the conventions and the elections, the less probable it is" that a suitable bill will be passed, said Sen. Don Nickles, R-Okla. Sen. Nickles, an outspoken critic of expanded health care liability, also said that while he wanted to get "a good bill of rights" passed, he believes "no bill is better than a bad bill." Settlement review enacted ANNAPOLIS, Md. -- Maryland Gov. Parris Glendening last week signed into law legislation to protect recipients of structured settlements by requiring court authorization of any agreement in which a recipient sells his or her right to future multiyear payouts in return for a lump-sum payout. Supporters of the measure point out that structured settlement recipients are typically injury victims who are likely to need the financial security of smaller multiple payments over several years, rather than one lump sum. The Maryland Legislature unanimously approved H.B. 357, which garnered widespread support from legal and disability advocates. The advocates say the measure will protect Maryland residents from unscrupulous financial services companies that may try to take advantage of recipients' desire for immediate cash, often providing significantly less than the face value of the original settlements. Maryland is now the 13th state to enact such consumer protections, according to the Washington-based National Structured Settlements Trade Assn. The other states are California, Connecticut, Georgia, Illinois, Kentucky, Maine, Minnesota, Missouri, North Carolina, Pennsylvania, Virginia and West Virginia. In addition, similar legislation is "moving rapidly" in the Ohio and Tennessee legislatures, according to the association. Alamo to appeal jury verdict MIAMI -- Alamo Rent A Car Inc. will appeal a $5.2 million award a Florida jury says it must pay for not warning a Dutch tourist about a bad neighborhood. The Florida state court jury granted the award to the spouse of a woman who was killed in 1996 in Liberty City, a Miami neighborhood. The woman was murdered when her husband stopped to ask directions.

The plaintiff's attorney argued that Alamo ignored police recommendations that the rental car company advise its customers to be careful in the Liberty City area. A spokeswoman for Fort Lauderdale, Fla.-based Alamo pointed out that the driver was lost and that a warning would not have prevented him from driving into the area. She said the company had complied with state laws to remove distinguishing marks from its rental cars so that they would not become targets for criminals. "The implications of it are enormous," the spokeswoman said of the award, citing the possibilities of redlining neighborhoods and expanded liability for all companies in the travel industry. @@Volume: 34 @@Publication number: 20 @@Word Count: 1687 words

Updates.(Brief Article)

New group health plan aims to increase enrollee choice MINNEAPOLIS -- A Minneapolis-based health care system is launching a new plan that will allow employees to choose their own physicians and pay providers a monthly fee with pretax dollars contributed by employers. Under the program, established by Vivius Inc., an employer would fund employees' health care spending accounts. Funds would be withdrawn from the accounts to pay a monthly fee to physicians who are selected by the enrollees. Enrollees would know ahead of time the monthly fees charged by physicians.The eligible physicians have signed a participation agreement with Vivius. Vivius customers also may purchase a wrap-around insurance policy to cover services that physicians they select can't provide or for out-of-town emergencies. Otherwise, such expenses would come out of the enrollee's pocket. Each month, Vivius will transfer funds electronically from the health care spending account to pay providers selected by employees, as well as to pay the premium for the wrap-around policy. That feature is different from other insurance programs, says Dr. Lee Newcomer, who formerly was a senior vp with managed health care giant UnitedHealth Group and now is chief medical officer for Vivius. "The monthly prepayments to health care providers come directly from the customers' health care spending accounts. . .with no middleman or insurance company involved," Dr. Newcomer said. Vivius intends to use Minneapolis and the metropolitan Kansas City area as test markets starting this fall. CS First Boston forms captive HAMILTON, Bermuda -- …