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18 Hartford Business Journal • December 4, 2017 • www.HartfordBusiness.com EDITOR'S TAKE Lawmakers must respond 'carefully' to insurer-hospital contract disputes T he phrase "consumer protection" isn't always thought of as a double entendre, but in the political and business worlds it often carries a double meaning. To some, particularly those on the political left, consumer protections are necessary safe- guards that prevent individuals who purchase a product or service from being harmed or taken advantage of. To others, typically conservatives, consumer protections are often seen as government regulations that make it more costly to do business. The power struggle over the Obama-era Consumer Financial Protection Bureau, in which President Trump appointed his ultra conservative budget director Mick Mulvaney — who previously called the CFPB a "sick, sad joke" — to wrestle away control of the agency from acting director Leandra English, underscores the divergent world views of some consumer safeguards. The debate over government's role in instituting consumer protections will likely come into sharp focus next year in Connecti- cut, as lawmakers respond to the recent contract dispute between health insurer Anthem and Hartford HealthCare, which left tens of thousands of patients temporarily paying higher costs for medical care as the two sides were unable to come to an agreement nearly seven weeks after their old deal expired. Lawmakers rightfully held a public hearing on the topic last week, soliciting feedback from both organizations' executives as well as consumer advocates and the state's insurance com- missioner, to try to determine how best to respond to the issue. Legislators will need to tread carefully as there are no easy answers. It's clear that some new consumer protections must be adopted to prevent health insurance customers from losing access to care providers in the middle of their policy contracts, or at least give them more time to seek alternative care when such contract disputes arise. But an overreaction by the legislature could also increase the costs of health care in a state already burdened with some of the nation's highest medical expenses. This is not a new issue in Connecticut. Democrats for years have tried to respond to the increasingly acrimonious contract negotiations between insurers and care providers, which have resulted from various factors including pressures to restrain healthcare costs, changing payment models and industry consolidation that has significantly diminished competition and, at least in some cases, led to higher prices. Senate Majority Leader Martin Looney (D-New Haven), for example, previously proposed legislation that would have required insurers and hospital systems to go to mediation and/ or binding arbitration when they can't reach an agreement. He's promised to revive that legislation next year. Another potential remedy is requiring individual hospitals within a healthcare network to negotiate contracts with insurers rather than allowing system-wide contracts, thus reducing the bargaining power of large hospital systems. For now, those steps seem to be an overreaction because there is no clear evidence to show how such government interventions would impact the costs of health care. Do we really want a judge or some other independent arbiter determining how to price medical services in the state? Health insurers often get a bad rap, but they have an incentive to negotiate lower reim- bursement rates with hospitals and other care providers, which ultimately helps control the costs of health care. Diminishing their negotiating power could have negative affects. This political debate must not simply be seen through a consumer-protection lens. There are larger forces at play that could impact access to and the costs of health care as well as care quality. One common-sense measure is to require insurers and care providers to abide by a "cooling-off" period if they can't come to a contract agreement. A 2015 proposal, for example, would have required both sides to abide by a terminated contract for at least 60 days, before patients are forced to pay out-of-network costs for services. New York and New Jersey have a similar requirement. Giving patients, especially those with chronic conditions, more time to find alternative treatment arrangements seems like a fair first step. Beyond that, lawmakers need more data and analysis before government intervenes in negotiations between private parties. STRATEGIC MANAGEMENT Ways to protect yourself from investment fraud By Bob Ainsworth I have inside information that XYZ stock is about to double. You don't want to lose out on this opportunity but I need an answer right away. This investment will double in 90 days, 120 at the latest. You've invested $1,000 and done great — now it's time for the kill, invest $25,000. Think of how proud your family will be when you take command of the finances and make tens of thousands in profits. Investment fraud comes in as many shapes and sizes as shoes, and con artists will try all of them until they find one that fits you and robs you of your hard-earned money. Bernie Madoff used an affinity scam by focusing on fellow Jews and then perpetrated a Ponzi scheme where he used new investor money to pay extraordi- nary investment gains to the earlier investors. He also effectively bribed the investment advisors who funneled their client's money to him by paying them a larger-than-normal finder's fee. Those bribes allowed Bernie to get away with limiting the due diligence the finan- cial advisors should have performed and to insist that his name be kept out of any marketing materials. He was the Babe Ruth of investment fraud criminals. Investment scams aren't always on the grand scale of Madoff's $30 billion fraud. Sometimes criminals are brazen in publi- cizing their activity. Two men were charged by the U.S. Securities and Exchange Com- mission recently with creating a hedge fund in the U.S. that would al- low investment in a Canadian hedge fund. They actively solicited inves- tors and 50 people believed their story and gave them $15 million. They used the money for per- sonal spending and to pay off investors in two other hedge funds they had created. Fake accounting is another way to steal money. A registered Massachusetts broker dealer had the authority from his clients to buy and sell stocks for their accounts. He would buy blocks of stocks and then allocate the gains or losses to himself or his clients. You can guess what happened: He took the gains and his clients took the losses. He took $1.3 million. Now that you want to keep your money in a mattress, there are ways to protect yourself. There are websites that offer great tips: FINRA.org (The Financial Industry Regula- tory Authority), FBI.gov, the Securities and Exchange Commission has the website Investor. There are also basic tips that have gen- eral approval. They include: 1. Avoid unsolicited investment schemes. They are looking for suckers. 2. If it sounds too good to be true, it is. For some perspective, stocks generally over the long term earn 8 percent, bonds 4 per- cent and money market 2 percent. Returns that exceed these averages may hint at fraud. 3. No returns are guaranteed. Returns are a way of being paid for taking a risk. A guarantee means no risk. The only guar- anteed security is by the U.S. government. 4. Invest right now or you'll miss out. That is a pressure tactic. A good invest- ment can be made any time. 5. Check out credentials. Call your secretary of the state's office, the SEC or accreditation organizations. Go to FINRA BrokerCheck to get information on bro- kers and investment advisors. 6. Invest because I am like you, trust me. As President Reagan said, trust but verify. 7. Discuss your decision before invest- ing. Verbalizing an opportunity to a family member or another investment profes- sional or your CPA is a good way to test the legitimacy of the idea. 8. Ignore social pressure. An investment needs to be right for you, not for some crowd of people. Stay away from free seminars or pitches that rely on crowd thinking. 9. Use the inter- net. Search for the name of the invest- ment offeror. 10. Watch for the "go for the big kill" tac- tic. You make a profit on a small amount, now invest your entire savings and make a fortune. 11. Believe your gut. At the end, your gut instincts are a good warning sign. If it feels bad, it probably is. Bob Ainsworth is a CPA and former CFO of New England Business Media, the owner of the Hartford Business Journal. He is the author of a crime-thriller book, "A Fraud of the Ponzi Kind." Bob Ainsworth Greg Bordonaro Editor An investment needs to be right for you, not for some crowd of people. Stay away from free seminars or pitches that rely on crowd thinking. Opinion & Commentary