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					                                      LEG REG REVIEW
                                   2004, Twenty-Second Issue

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional
lobbying and consultant firm based near the State Capitol. It contains news on the Legislative and
Regulatory scene in Pennsylvania that may be of use to insurance producers, companies, and interested
parties. It is a free Member Service if you are a member of the Pennsylvania Association of Health
Underwriters (PAHU) or the PA Surplus Lines Association (PSLA). Subscription information may be
obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217, Fax 717/728-1164 or E-mail to
xenobun@aol.com. Please email jtrout2792@aol.com supplying both your fax number and your
desired email address to convert your receipt of this publication by email. If you do not wish to
receive it, please let us know.

HEALTH INSURANCE FRAUD ROCKETS

The national Blue Cross Blue Shield Association chose National Fraud Awareness Week
July 11-17 as the time to issue a new report showing that BC BS plans lost $ 162 million
in lost revenues, up 66 percent from 2002’s $ 98 million. This translates into an
estimated $85 billion of U.S. health care spending. Some common types of fraud
according to a Reuter’s story on 7/13 occur when providers perform unnecessary medical
procedures or perform cosmetic surgeries disguised as medically necessary procedures.
The FBI has 500 agents devoted to health care fraud.

HEALTH QUALITY REPORT RELEASED

Issued July 14 by the Joint Commission on Accreditation of Healthcare Organizations
(JCAHO), was a report comparing performance reports from 16,000 accredited hospitals
and nursing homes. Areas of scrutiny include heart attacks, heart failure, pneumonia, and
pregnancy. Among other things, the report looks at misidentification of patients, drug
errors, and hospital-borne infections. The comparison, called Quality Check, is available
on-line from www.jcaho.org (key- quality check). A search on hospital cardiology
compared 89 PA hospitals.

Another July issuance from Pennsylvania’s counterpart to JCAHO is an analysis
performed by the PA Health Care Cost Containment Council (PHC4) on prescription
drug prices. It examines the cost-drivers behind Rx pricing and presents a number of
governmental and individual/employer strategies to curb some of the price increases.
Details: www.phc4.org.

CORRECTION ON July 20 HEARING
Leg Reg Review 04.21 listed an incorrect bill number as the subject of a House Insurance
Committee hearing July 20. The hearing is on a modified community rating bill House
Bill 2682 sponsored by Insurance Committee Chairman Nicholas Micozzie (R-Delaware)
and Rep. Pat Vance (R-Cumberland).

IMPORTANT: From July 17-24, do NOT use fax number 717/732-7255.
Instead please use 717/728-1164.


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HEARINGS, MEETINGS

The summer slowdown is beginning to take hold with a slight reduction in meetings and
hearings.
    The Independent Regulatory Review Commission (IRRC) met July 15 to consider
       two Insurance Department regulations. The first (#11-220) deals with regulation
       of health care providers. The second (#11-217) is a rule regarding annual audited
       insurer annual reports.
    On August 18, the House Labor Relations Committee will convene a hearing on
       Workers’ Compensation definition of occupational diseases (HB 675-O’Brien-
       Philadelphia).
    On September 14-15 the House Labor Relations Committee will hold two days of
       committee hearings in the Poconos on the WC System and the Unemployment
       Compensation System.

MARKET NOTES

     Weiss Ratings (www.weissratings.com) has issued dramatic profit numbers for
      both the P/C and L/A/H insurance industry. On both sides, the business has
      rebounded significantly since 2002. Life and Health fared well, posting a 311
      percent increase in profits from 2002 to 2003 ($ 30 billion versus $ 7.3 billion).
      Property Casualty insurers doubled profits from 2002 to 2003, $ 13.5 billion to
      $ 32.3 billion. HMO profits posted at $6.7 billion in the first nine months of 2003
      compared to $4.4 billion for the same period in ’03, an increase of 52 percent. The
      change also reversed two years of HMO losses.
    Companies with the greatest increases in capital and surpluses were:
   L/A/H                                            P/C
   1. Prudential                                    1. State Farm Mutual Auto
   2. Hartford Life & Accident                      2. Nat’l Indemnity Co.
   3. American General                              3. Allstate
   4. New York Life                                 4. Columbia Ins. Co.
   5. Metropolitan Life                             5. Liberty Mutual
    Chubb & Son has issued tips with which insurance producers can warn
      homeowners to take precautions in areas affected by hurricanes. The July 13
      release noted that forecasters predict a 71% chance of a major storm hitting the
      eastern seaboard in 2003. Details: www.chubbnews.com.

NATIONAL NOTES… Pennsylvanians will have important roles in both Democratic
and Republican conventions with Governor Rendell serving as a Democratic Convention
co-chair and GOP congresswoman Melissa Hart serving as Platform Committee
Chairman for the Republicans. Also, there were two recent tort reform votes in the U.S.
Senate. A cloture vote (to allow an issue to come to a vote) on S. 2290 establishing
liability limits on asbestos lawsuits received 50 votes but needed 60. Santorum was a yes.
Specter was not present for the vote. On S.2062, a measure to move many class-action
lawsuits to federal courts, Sen. Specter voted yes but Sen. Santorum did not vote.



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