Pacific Maritime Association

C O N T R A C T O V E R V I E W 19 P A C I F I C M A R I T I M E A S S O C I A T I O N Fraud Prevention Saves More Than $100 Million Against this backdrop, and knowing that maintaining health benefits was a top ILWU priority, PMA crafted a negotiating strategy focused on reining in controllable costs without sacrificing worker benefits. Specifically, rampant waste, abuse and fraud on the part of out-of- network health care providers had been identified, and new adminis- trators had begun to crack down. The work of Zenith American Solutions – the nation's largest third-party administrator for large union health plans – and its fraud prevention partner, TC3 Health, has saved the plan more that $100 million since they began processing payments in January 2013. Yet some ILWU workers, under the mistaken impression that benefits had been cut, protested these administrative changes. As a result, the ILWU made repeated efforts to remove Zenith and TC3, including during the 2014-15 contract negotiations. PMA has maintained that it is essential to root out fraud, waste and abuse in the plan in order to protect the benefits of honest and hard-working participants. Over the years, unscrupulous providers have engaged in numerous bad practices. These practices have included: • Billing for services not rendered • Manufacturing medical records with identical details for multiple patients • Billing for similar procedures on multiple family members on the same day • Misclassifying prohibited surgeries (e.g., nose job, cosmetic surgery) as allowable ones (e.g., deviated septum or hernia repair) • Offering patients discounted or free medical care if they agreed to undergo medically unnecessary procedures Most medical providers participate in major insurance networks, which have cost-control safeguards to ensure that they follow recognized medical practices and billing proce- dures. But out-of-network providers can charge two to five times as much as in-network providers for the same procedure, and are subject to far less independent review. Due to the extremely generous nature of the ILWU-PMA health plan, numerous providers have taken advantage over the years. The essential efforts to control fraud, waste and abuse, primarily by out-of-network medical providers, continue. During negotiations, the ILWU agreed to limits on out-of- network surgery centers, which have been ripe for abuse, and agreed to retain Zenith and TC3, whose work is critical in rooting out fraudulent activity by providers. As of spring 2015, an ongoing federal investi- gation has resulted in convictions of two individuals and a guilty plea by another on charges related to defrauding the plan. Looking ahead, PMA is proud to continue to offer unparalleled benefits to its workforce – with employers paying the cost of pre- miums that are among the nation's most expensive – while continuing cost-controlling efforts to prevent fraudulent and abusive billing practices that would otherwise cost many millions of dollars. Out-of-network billings are ripe for waste and abuse: • Out-of-network physicians and clinics can charge 2 to 5 times as much as in-network providers for the same procedure. • Since 2013, thousands of claims worth more than $100 million have been suspended because of suspected fraud and abuse – and investigations continue. • A large number of suspected billings are from a small number of out-of-network providers in Southern California • Only 1% of all claims have been held for fraud/abuse review 19 P A C I F I C M A R I T I M E A S S O C I A T I O N SSA offloads a COSCO vessel at the Port of Long Beach.

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