Teachers Health Trust CEO confirms trust could go under ‘at some point’ without revenue increase
LAS VEGAS — The Teachers Health Trust may not be going “belly-up” in 60-90 days, but if it doesn’t get a premium increase from the Clark County School District, it will “at some point” run out of revenue, says CEO Peter Alpert.
“Can I tell you when, exactly?” asks Alpert. “No. There’s lots of moving parts in this business. If we don’t receive [premium increases], will we be faced with some tough decisions? Yes.”
In a wide-ranging interview with Nevada Journal, Alpert discussed the trust’s financial health as well as its relationship with the Clark County Education Association, whose members were told in a Jan. 28 meeting that the trust was on the verge of going “belly-up” and was “hemorrhaging” funds.
“We’ve always enjoyed an excellent relationship with the union,” Alpert said, insisting, however, “We are not run by the union. They negotiate our funds and nominate members for our board, but we are an independent entity.”
According to CCEA sources, however, all members of the board governing the health trust are appointees of the union president, currently Ruben Murillo.
All are also members of the CCEA’s top governing authority, the Association Representative Council, which, under CCEA bylaws, is to “exercise final authority in all matters of the Association.”
Most are also longtime union activists and delegates to both the Nevada State Education Association (NSEA) Delegate Assembly and the National Education Association (NEA) Representative Assembly.
Alpert refused to offer any ideas as to why union members were given such a dire forecast of the trust’s future on Jan. 28. Instead, he re-emphasized the trust’s stability.
“In 90 days, we’ll be here,” he said.
Calls to the CCEA seeking comment went unreturned.
Alpert confirmed that as of Jan. 1, 2013, THT had lost approximately $750,000, an amount he considered “almost a breakeven point” compared to previous months.
“I’m not denying we have cash-flow problems,” Alpert said, “but there’s a lot of fluctuation in this industry. In December, for example, we didn’t have as many claims come in, so we didn’t have to pay as much out, so our losses are much smaller.”
Alpert said the trust’s most recent financial data would be published later this month, but he declined to provide Nevada Journal with the latest month-to-month financial statements, saying they were for “internal use” and needed board approval before being finalized.
In response to earlier reports by Nevada Journal and the Las Vegas Review-Journal about the trust’s status, Alpert published a “fact sheet” on THT’s website that defended the organization’s finances.
The sheet included several numbers that Alpert said were “never disclosed in recent articles.” One was the trust’s current investment account, or reserve fund, which he said was valued, as of Feb. 4, at $27.7 million.
The trust’s total assets, he said, are now between $32 million and $33 million — a slight decrease from the $33.1 million in assets listed in the trust’s June 2012 audit.
Regarding long-term funding, Alpert emphasized the importance of the hoped-for premium increase, saying the trust had taken numerous steps to save money.
“We haven’t cut benefits. What we’ve done is renegotiated vendor contracts and switched to CVS Caremark as our prescription drug provider,” Alpert said. “We also had some staff members retire and we haven’t replaced their positions.
“This is a revenue problem,” Alpert added, “and our main source of revenue is the premium payments, and [teachers’ premium costs] haven’t kept up with the claims costs we’re paying.”
THT’s line of credit also raised questions among union members. The trust took out a $5 million line of credit in November 2011, and $4 million was used up as of the June 2012 audit.
“We have a revolving line of credit, and right now its balance is zero,” Alpert said.
“What happens is hospitals give us 30 business days to pay claims, and we’ll borrow money at the end of the month. We’ve always paid our claims on time, our loans on time — we find ways to make our payments.”
Nevada Journal’s earlier report included an interview with Edward Goldman, an associate superintendent with CCSD, who said THT placed severe geographical restrictions on teachers’ coverage. Alpert dismissed this statement, saying teachers can get coverage anywhere in the country, but the payment methods may be different.
“You can go anywhere in the country and find a doctor, but you’ve got to fill out the right paperwork with us,” Alpert said. “There are some instances where we can only pay so much, but we’re willing to work with [teachers] and see where they need help.”
The first item in a recent THT letter to local providers — asking them to not refer trust participants out of the Southern Nevada network — appeared to confirm the THT restrictions:
Please abide by your contract and protect your participants’ pocket book by only referring Trust participants to other in-network providers. Examples of services which have been referred out-of-network include anesthesia, lab, hospitalists, durable medical equipment, and genetic testing, as well as other services. Participants then find themselves in unnecessary financial strain appealing such claims as a result of these referrals. A better scenario for the participant, provider and the Trust is to refer the participant in-network and avoid the unnecessary time and expense that out-of-network referrals incur. (Emphasis added.)
The letter goes on to tell providers that, in cases where in fact the required medical services are clearly not available locally, trust participants will need a second opinion and all his or her medical records faxed to the trust’s case-management department, which “meets every week to discuss the potential referral cases.”
Alpert also defended his pay, which according to public records is over $500,000. Alpert previously told KNPR that he was paid for three jobs: as the trust’s CEO, as a licensed attorney who handled most of the trust’s internal legal work, and as its chief subrogation lawyer.
When the subject of his pay came up again in Nevada Journal’s interview, Alpert shrugged it off.
“People say I make too much money, but I can’t control what they say,” Alpert said.
Alpert says he’s “reasonably optimistic” the district will eventually agree to premium increases, but he could not cite an expected timeframe.
“This [medical] industry is complicated, and there are a lot of variables,” Alpert said.
“[CCSD is] aware of our situation. In the past, [CCSD and THT have] gotten things done, so I’d hope we can work something out.”
Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit http://nevadajournal.com/ and http://npri.org/.