Category Archives: Investing and fiduciary requirements

Report Faults High Fees for Out-of-Network Care

By Published: January 31, 2013 The New York Times

Angel Gonzalez, 36, faced huge bills after emergency gallbladder surgery, despite having good insurance coverage. “I was on the hook for more than I made in a year.”

Though he was living on $18,000 a year as a graduate student, Mr.
Gonzalez had good insurance and the hospital, St. Charles in Port
Jefferson, N.Y., was in his network. But the surgeon who came in to
remove Mr. Gonzalez’s gallbladder that Sunday night was not.

He billed Mr. Gonzalez $30,000, and an assistant billed an additional
$30,000. Mr. Gonzalez’s policy covered out-of-network providers, but at a
rate it considered appropriate: $2,000. “I was on the hook for more
than I made in a year,” Mr. Gonzalez said.
A health insurance industry report
to be released on Friday highlights the exorbitant fees charged by some
doctors to out-of-network patients like Mr. Gonzalez. The report, by

America’s Health Insurance Plans, or AHIP, contrasts some of the highest

bills charged by non-network providers in 30 states with Medicare
rates for the same services. Some of the charges, the insurers assert,
are 30, 40 or nearly 100 times greater than Medicare rates.
Insurers hope to spotlight a vexing problem that they say the Affordable
Care Act does little to address. “When you’re out of network, it’s a
blank check,” said Karen Ignagni, president and chief executive of AHIP.
“The consumer is vulnerable to ‘anything goes.’ ”
“Unless we deal with cost, we won’t have affordability,” she added. “And
unless we have affordability, we won’t have people participating” under
the Affordable Care Act.
Among the fees on the report’s list are a $6,205 outpatient office visit
to a doctor in Massachusetts for which Medicare would have paid $152; a
$12,000 bill for examining a tissue specimen in New York for which
Medicare would have paid $128; and a $48,983 surgeon’s fee for a total hip replacement
in New Jersey that Medicare would have reimbursed at $1,543. Many of
the highest billers were in New York, Texas, Florida and New Jersey.
Elisabeth R. Benjamin, co-founder of the Health Care for All New York
coalition, who is often at odds with the insurance industry, said that
“is one area we totally agree on.” She continued, “Out-of-network
billing is just out of control.”
Even when out-of-network fees are compared with average commercial
insurance reimbursements, which are usually greater than Medicare, she
said, “It’s pretty outrageous.”
Doctors say the report is skewed because it focuses on a few dozen cases
of overcharging that are not representative of their billing. In
response to the insurers’ report, the American Medical Association noted
on Thursday that a recent analysis found that doctors’ services account
for just 16 percent of health care costs.
“There are outliers in every profession, in every business,” said Dr.
Andrew Y. Kleinman, a plastic surgeon who is vice president of the
Medical Society of the State of New York.
Dr. Kleinman also noted that insurers had effectively shifted the costs
of out-of-network care onto patients by changing reimbursement formulas.
Instead of the rates commercial insurers usually pay doctors, insurers
increasingly are basing their out-of-network payments on Medicare rates,
usually far lower.
A growing number of high-end, flexible health plans offer policies that
cover outside providers at, for example, 140 percent of Medicare.
“They’re selling you an insurance product you can’t use,” Dr. Kleinman
said. “You’re buying an insurance policy where the out-of-network
benefit is worthless.”
The industry’s own report suggests that using Medicare rates as a
benchmark will lead to patients’ picking up much more of the cost for
out-of-network care, whether they carefully select a specialist or, as
in the case of Mr. Gonzalez and many others, have no choice in the
Had Mr. Gonzalez been 65 or older, Medicare would have paid only $958
for the surgery. The average commercial price is $12,292, according to FAIR Health, an independent nonprofit group that tracks information on health care costs.
But Mr. Gonzalez’s health plan, United Healthcare, determined the fee
should be $1,273, of which the company paid $838. Mr. Gonzalez filed
appeals, which were rejected. He then contacted Community Health Advocates
at the Community Service Society of New York for help, and the group’s
caseworkers negotiated with the surgeon on his behalf.
After months of wrangling, the surgeon agreed to accept a significantly reduced payment: $340.
Consumer advocates and health insurance executives are calling for
greater transparency in health care pricing, including upfront
disclosure of prices of medical procedures and services.
“The health care industry can give you an estimate, just like any other
industry,” said Carrie H. Colla, an assistant professor at the Dartmouth
Institute for Health Policy and Clinical Practice, noting that the
Dartmouth-Hitchcock Medical Center has a patient price estimator online.
“It’s just not current practice right now,” Dr. Colla said. “Sometimes a
doctor won’t even know. The patient really has to push for it.”

Birth control benefits: The feds try again

By February 1, 2013 • Reprints
Federal agencies want to let more nonprofit employers get out of
paying for birth control benefits, but the workers would still receive
“first dollar” coverage for birth control.

“For-profit, secular employers” could not qualify for an exemption from the birth control benefits mandate.

The agencies — the Internal Revenue Service (IRS), an arm of the
U.S. Treasury Department; the Employee Benefits Security Administration
(EBSA), an arm of the U.S. Labor Department; and the U.S. Department of
Health and Human Services (HHS) — have described their latest approach
to the mandate in a new batch of proposed rules, “Coverage of Certain Preventive Services Under the Affordable Care Act” (CMS-9968-P) (RIN 00938-AR42).

“Religious accommodations in related areas of federal law, such as
the exemption for religious organizations under Title VII of the Civil
Rights Act of 1964, are available to nonprofit religious organizations
but not to for-profit secular organizations,” officials at the agencies
said in the preamble to the proposed regulations. “Accordingly, the
departments believe it would be appropriate to define eligible organization to include nonprofit religious organizations, but not to include for-profit secular organizations.”

The agencies are simplifying a definition of “religious employer”
that was included in an earlier final rule. Originally, a fully exempt
employer included houses of worship and religious convocations.
Those religious employers had to have the purpose of “inculcating
religious values,” primarily employ people sharing its tenets, primarily
serve people who share its religion, and be a nonprofit employer.

In the latest version, the agencies would change the definition to
refer to nonprofit employers that simply meet the IRS definition of a
religious employer.

The agencies hope the change will “ensure that an otherwise exempt
employer plan is not disqualified because the employer’s purposes extend
beyond the inculcation of religious values or because the employer
serves or hires people of different religious faiths,” officials said.

“The departments agree that the exemption should not exclude group
health plans of religious entities that would qualify for the exemption
but for the fact that, for example, they provide charitable social
services to persons of different religious faiths or employ persons of
different religious faiths when running a parochial school,” officials

The definition that the agencies are proposing would eliminate the need to ask about an employer’s purposes or the religious beliefs of its employees or the people the employer serves, officials said.

The agencies also would define a second category of nonprofit
employers — “eligible organizations,” such as schools and hospitals
organized under religious auspices. When those employers offer health
plans, the insurer or administrator of the plan, not the employer
sponsor, would provide and pay for birth control benefits, officials

The workers in the plans of nonprofit “eligible organization”
employers would still get the same kinds of other birth control benefits
that workers in most other plans get, officials said.

The agencies developed the draft regulations in an effort to implement preventive services coverage requirements in the Patient Protection and Affordable Care Act of 2010 (PPACA).

The draft regulations are set to appear in the Federal Register
Wednesday. Comments would be due 60 days after the official publication

Weekly Economic Update February 4, 2013


In January, the jobless rate ticked up to 7.9%. The Labor Department countered that with some good news: 127,000 more workers were hired across November and December than previously thought. Last month, 157,000 new jobs were created.1

According to the Commerce Department, personal spending rose
0.2% in December while personal incomes rose 2.6% (thanks in part to dividends
being issued ahead of the fiscal cliff). The savings rate hit 6.5%, a 43-month
high; after-tax incomes improved 2.8%. Elsewhere, while the Conference Board’s
January consumer confidence survey plunged 8.1 points to a 14-month low of
58.6, the University of Michigan’s final January consumer sentiment poll
improved 0.9 points to 73.8.2,3


The economy contracted 0.1% in the past quarter, according to the initial estimate
of the Bureau of Labor Statistics. Analysts termed it an anomaly, with reduced defense
spending a big factor. The Institute for Supply Management’s January PMI showed
an impressive gain of 2.9% to 53.1. November’s Case-Shiller Home Price Index
revealed an overall 5.5% year-over-year improvement; the National Association
of Realtors reported a 4.3% decline in pending home sales in December.1,4,5

DOW ENDS WEEK AT 14,009.79
Friday’s close was within 200 points of the index’s 2007 peak. The Dow gained 0.82% last
week, while the NASDAQ advanced 0.93% (to 3,179.10) and the S&P 500 gained 0.68%
(to 1,513.17).6,7,8,9
THIS WEEK: Monday, data on December factory orders arrives plus earnings reports from Anadarko, Hartford
Financial, Clorox, Gannett, Humana, and Yum! Brands. Tuesday brings January’s
ISM service sector PMI and earnings results from Aflac, Allergan, Expedia,
Kellogg, Panera, Sirius XM, Estee Lauder, Toyota, Chipotle, Walt Disney and
Zynga. Wednesday offers earnings from Time Warner,
Akamai, Allstate, Cummins, CVS, Fifth Street, Green Mountain, Ralph Lauren, Marathon
Oil, News Corp., Prudential Financial, Tesoro, Visa, GlaxoSmithKline and Yelp. Thursday
brings the latest initial claims figures and results from Cigna, Coca-Cola,
Coinstar, Monster, Hasbro, Activision Blizzard, LinkedIn, Philip Morris,
Scripps Networks and Sprint Nextel. Friday, AOL announces Q4 results.



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the services of a competent professional.



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DJIA +6.91 +10.17 +1.99 +7.40
NASDAQ +5.29 +11.62 +6.35 +14.07
+6.10 +14.28 +1.69 +7.68
10 YR
-0.55% -0.28% 1.31% 2.34%

Sources:,,, – 2/1/126,7,8,10,11,12

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

Sandy Update 5: A Lending Milestone as Congress Adds Recovery Funds

by James Rivera, SBA Officia

Ninety days after Hurricane Sandy struck the Northeast, the U.S. Small Business Administration crossed  the $1 billion threshold of approved loans to more than 16,800 homeowners, renters and businesses. This makes Hurricane Sandy, in terms of SBA disaster lending, the third largest natural disaster in U.S. history, behind Hurricanes Katrina/Rita/Wilma ($10.8 billion), and the Northridge Earthquake ($4 billion).

To put this massive storm and the
coordinated federal recovery effort into context, the SBA has approved
more loans for more money to Hurricane Sandy victims than what we
approved for all disasters in fiscal year 2012 (Oct. 1, 2011 to Sept.
30, 2012).  In FY2012, the SBA approved 15,000 disaster loans for a
total of $689 million.

The sheer size and scope of this
disaster created an increased need for more assistance.  This week
Congress passed an aid package that will provide SBA with an additional
$520 million to support up to $5 billion in low-interest disaster loans.

The bill also provides:

  • $249 million to cover to the administrative costs of making the loans;
  • $20 million to support SBA’s resource
    partners (SCORE, SBDCs, Women’s Business Development Centers) as they
    help business owners rebuild;
  • And $10 million to cover salaries and overhead expenses associated with the agency’s recovery efforts.
    We continue to process loan
    applications.  Together with FEMA, we have extended the disaster loan
    application deadlines for three states where we have seen the highest
    demand. The new deadline for Connecticut is Feb. 12; New York’s deadline
    is now Feb. 27, and March 1 is the deadline for New Jersey.

Here are the other deadlines:
Virginia–Feb. 5; Rhode Island–Feb. 13; Maryland–Feb. 12 (Somerset
County), March 4 (Worcester County); and Puerto Rico–March 11.

If you have a disaster loan
application, complete and send it back to as us soon as possible. Don’t
wait on your insurance payout. Your policy may not cover all the
replacement, repair and rebuilding costs—and the SBA disaster loan can
offset the difference.   In addition, the SBA will use any insurance
proceeds to reduce the loan amount.

You can apply online using the Electronic Loan Application.
If you think you need help filling out the application, or have
questions about what documents are required to complete the process,
call SBA’s Disaster Customer Service Center at 800-659-2955. Those with a
speech disability or hearing loss may call 800-462-7585. You can also
email the center at  Visit SBA’s Hurricane Sandy website for more information.

What Happens to Bond Funds When Rates Go Up?

This is from one of my favorite sources- The Oblivious Investor – Reeve
Posted: 23 Jan 2013 05:00 AM PST

One recurring theme in emails from readers is that people are worried about
what will happen to their bond funds when interest rates rise.

As we’ve discussed before, there is an inverse relationship between
bond prices and interest rates. When interest rates rise, bond prices
fall. And if you own a bond fund, the price of your fund will fall by the average duration of the fund, multiplied by the magnitude of the rise in interest rates.

But in the real world, there’s a little bit more going on than in the contrived hypothetical examples. In real life:

  • Interest rates don’t increase all at once, then stay put. Instead, rate changes occur over a period of time.
  • Meanwhile, you’re earning interest on the bonds, which helps to offset any price declines, and
  • Your reinvested fund dividends will be buying bonds that have higher yields.

So while we can calculate a very good approximation for how far a
fund will fall when rates increase by Y% on a given day, that doesn’t
necessarily reflect how the bond fund will perform if interest rates
increase by Y% over a period of several months or years.

Take, for example, Vanguard’s Intermediate-Term Treasury Fund. It has
an average duration of 5.2 years and an average maturity of 5.5 years.
From 6/13/2003 to 3/28/2005, yields on 5-year Treasuries rose 2.4% from
2.08% to 4.48%. If that decline had happened all at once, the value of
the fund would have fallen by somewhere in the ballpark of 12.5%(2.4%
rate increase, times 5.2 average duration).

But, because the rise in rates occurred over a period of 21 months, here’s what actually happened (chart courtesy of Morningstar):

It’s hard to see the scale of the y-axis (click the image to see it in
full-size), but the decline was much less than 12%. Over the period, a
$10,000 initial investment fell to $9,885 (a decline of just 1.15%). At
the worst point (the end of July 2003), the value was $9,454 (a decline
of 5.46%).

There are two important takeaways here.

First, if interest rates rise very suddenly, a bond fund could
indeed experience a sharp decline (depending on its duration). However,
if interest rates rise very gradually over a period of a few years, the
fund’s performance is likely to be simply flat — or just slightly
negative or positive.

Second, if you hold the fund long enough (specifically, for a period
of time longer than the fund’s duration), a rise in rates works out to
your advantage because your reinvested dividends will be buying
higher-yielding bonds. (And if you’re in the accumulation stage such
that you’re regularly putting more money into the fund, your break-even
point will come even sooner.)

In other words, an increasing rate scenario isn’t necessarily a
catastrophe for bond investors. It depends how quickly rates rise, how
far they rise, what the duration of your holdings is, and how long you
will be holding them.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck