Speakers. P2: Introduction to Self Insured Group Health Plans. October 21, Moderator: Nancy Young, CSFS Vice President Sales INETICO, Inc.

Transcription

1 P2: Introduction to Self Insured Group Health Plans October 21, 2013 Nancy Young, CSFS Vice President Sales INETICO, Inc. Speakers Cindy Rottmann President/CEO Outsource Marketing Strategies, Inc. Amy Carlson Regional Sales Director Zurich North American Moderator: 1

2 Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the SIIA, its cosponsors, or its committees Agenda What it means to self insure Who self insures What is driving growth Why self insure now How to self insure - the mechanics Putting it all together Resources 2

3 What is Self Insurance? A Basic Definition Self insurance (or self funding) is an arrangement in which an employer assumes the risk of the health plan. Instead of paying premiums to an insurance company, the employer pays claims from its own funds/reserves. The Difference When self insured: Employer finances health care with its own assets Gains greater control over the benefits it offers Assumes predetermined financial risk When fully insured: Employer transfers all risk to the insurance company Carrier has control over the menu of employees' options & plan partners 3

4 ERISA: Employee Retirement Income Security Act Federal law governing employee welfare benefit plans Passed by congress in 1974 to help resolve litigation over benefits effectively and consistently Exempts certain health plans from state mandates Exempts certain health plans from state premium tax Percentage of Covered Workers in Partially or Completely Self Funded Plans, by Firm Size, % All Small Firms (3 199 Workers) All Large Firms (200 or more) 90% 83%* 82% 81% 83% 80% 70% 67%* 66% 66% 72% 73% 75% 78% 77% 77% 77% 60% 60% 50% 40% 30% 20% 10% 13% 15% 17% 13% 10% 10% 13% 13% 12% 12% 15% 16% 13% 15% 16% 0% * Estimate is statistically different from estimate for the previous year shown (p<.05). NOTE: Sixty one percent of covered workers are in a partially or completely self funded plan in Due to a change in the survey questionnaire, funding status was not asked of firms with conventional plans in Therefore, conventional plan funding status is not included in the averages in this exhibit for For definitions of Self Funded and Fully Insured plans, see the introduction to Section 10. SOURCE: Kaiser/HRET Survey of Employer Sponsored Health Benefits,

5 ACA Imposed Taxes & Fees Although both fully insured and self-insured (or partially selfinsured) plans will be hit with new PPACA fees and taxes, employers may find self-insuring gives them an edge: 2014 Self Insured Taxes & Fees 2014 Fully Insured Taxes & Fees Comparative Effectiveness Research $200 $200 Fees Reinsurance Assessment $6,300 $6,300 Health Insurance Industry Fee $01 $28,686 Total Taxes and Fees $6,500 $35,186 Savings $28,686 5

6 Fully Insured vs. Self Insured Fully Insured Plans: Premium exchanged for coverage State mandated benefits Pre-determined plan design options Limited reporting Vendors are usually controlled by the carrier Pooled risk Self Insured Plans: Pay as you go coverage Customized plan design Cash flow advantage/reserves Limitless reporting, actionable data Elimination of some taxes Reduced carrier admin/profit charges Vendor management/best in class partners Unbundled approach 6

7 Financial Considerations Fully insured carrier pays claims already incurred from insurance premium payments Self insuring first year creates claim lag allowing the employer to build reserves Use first year reserves to fund claims in the second year when claims flow consistently month over month Good year claims experience, employer retains the savings Self-insuring: Pay as you go! Who Should Self Insure Better than average claims experience Financially sound & stable cash flow Good demographics (stable, avg. age, gender mix, participation) Proactive & patriarchal attitude towards their benefits plan Want control, flexibility and more access to reporting Culture that supports wellness & disease management Desire a long term solution 7

8 Who Should Not Self Insure Start up/virgin groups Facing bankruptcy Potential acquisition Short term mentality quick fix Doesn t want to be involved only want to pay my bill attitude! Unstable cashflow/gov t funding issues Seasonal influx Subject to demographics changes or declining enrollment Low risk tolerance/risk adverse Self Insured Group Health Plans THE MECHANICS 8

9 Self Insuring Preferred Provider Organization/ Medicare Plus Prescription Benefit Manager Consultant/Broker TPA Medical Management Preventive & Wellness Reinsurance Carrier Stop Loss Broker Consultants Needs analysis, feasibility study RFP process/recommendation Selecting TPA and service partners Relationship manager Track results/risk management Stay in tune with markets 9

10 TPA A third party administrator (TPA) is a licensed external professional firm that pays claims and provides administrative services for self insured benefits plans. TPA Services Turnkey customized programs to fit needs & budget Claims and eligibility administration Administrative staff delivering support to your members Broker support teams 10

11 Reporting Analyzing plan performance Cost Trend Analysis Census & Costs by Spend Type High Cost Claims Analysis Cost Trends Lifestyle-related Claims Cost Sharing Shifts Provider Network Performance Prescription Drug Cost and Utilization Patterns Member Cost Sharing Coordination of Benefits Future Savings Opportunities Stop Loss Carrier Interface Stop loss insurance coordination Stop loss tracking and monitoring Early large claim notification Identify opportunities to negotiate payments with providers Audit claims 11

12 Plan Document Services The Health Plan operating documents Plan document is filed as a legal document Details who and what the Plan will cover Functions as everyone s guide to manage the plan & must be agreed upon in advance Claims paid differently than noted may not be covered by the stop loss carrier plus can lead to discrimination issues Well written, comprehensive plan document protects the employer Self Insured Group Health Plans MANAGING CLAIMS EXPOSURE 12

13 Preferred Provider Organizations Discount structure - choices - Local, National, BUCA Access by geographic location Strong relationship with providers TPA integration Reliable reporting Recognition by stop loss carriers Medicare Plus Uses Medicare as the basis for claims repricing Usually allows more than Medicare Evens the playing field by identifying price for services rendered 13

14 Prescription Benefit Manager Pricing structure that benefits the employer - discounts, rebates, transparency Plan design customization that promotes generics TPA integration - Detailed reporting Utilization management process - Identify significant conditions for interface with medical management teams Claims Management Reducing health care costs - Discounts/PPO Networks PBMs, etc. - Plan Design UM, CM, DM, Wellness Prevent the large claim before it occurs - Keep the healthy people healthy - Help at risk members change habits - Educate members with conditions to access treatment and medications 14

15 Medical Management Utilization Management - Evaluates each member s treatment plans - Ensures appropriateness of care - Avoids preventable high cost procedures and hospitalizations - Provides ongoing review while inpatient - Discharge planning coordinated with member, physician, hospital staff and planning for less intense treatment setting or home - Early identification of large claims stop loss Large Case Management Maternity/Neonate Oncology Psychiatric/Substance Abuse Rehabilitation Transplant Monitoring, management, negotiation with vendors & providers, education & support 15

16 Large Case Management Episodic care Help member understand what to expect during their course of treatment Provides tools to members to manage their conditions more effectively Minimize complications Medication oversight Wellness Tools to identify and impact unknown or pre-chronic conditions Educate members on lifestyle choices Stress, weight, tobacco, nutrition, exercise Wellness coaching to maintain or improve health status Reduce the risk of future disease Health risk assessment tools Biometric tools Data Analytics 16

17 Disease Management Disease Management - Chronic conditions - asthma, diabetes, high blood pressure, high cholesterol, chronic pain, coronary artery disease, congestive heart failure Coaching reduces future expenses by minimizing complications Sets incremental goals/targets to improve health Motivate and elevate confidence Educate on warning signs, symptoms and what to do if they occur Risk Factors for Every 100 Employees/Members 25 have cardiovascular disease 12 are asthmatic 6 are diabetic 26 have high blood pressure 30 have high cholesterol 38 are overweight 21 smoke 31 use alcohol excessively 20 don t wear seatbelts 24 don t exercise 44 suffer from stress Source: Department of Health and Human Services 17

18 Health Status Measures Well Low Risk Moderate Risk High Risk Complex Risk Added Bonus Average worker s compensation claim cost impacted Productive employees, happier, more effective, better customer service 18

19 Self Insured Group Health Plans Rent-a-Plan vs. Plan Ownership Bundled vs. Unbundled Fully Insured Overview Apartment Complex (Rent-A-Plan) No employer risk Predictable premiums Limited plan designs State mandates Premium tax No cash flow advantage No benefits for lower than expected claims Limited reporting available No accountability/performance standards 19

20 ASO/Carrier Programs Condo Living Partial ownership Play by their rules Limited customization Bundled services Limited reporting hide behind HIPAA! Fox watching the chicken house Carrier best interest & profits Replace the entire plan - disruption Self-insured w/ TPA & Partners Custom House Plan Ownership Gives the employer control, flexibility & choice Innovative value based benefit plans Custom designs including Wellness & Disease Management (ROI) Limited state mandates ERISA preemption (2,271 State Mandates) Detailed actionable data analytics/risk management reporting Manage what matters Best practices partners Accountability Savings opportunities Plan Assets Long term solution Get off the fully insured rollercoaster 20

21 Employer Protection STOP LOSS INSURANCE Stop Loss Basic Tenet Employer assumes responsibility for predictable Stop loss policy assumes the responsibility for unpredictable 21

22 Stop Loss Coverage Determine risk tolerance level Purchase stop loss coverage to cap risk exposure for claims over a predetermined amount Stop Loss Insurance Two Main Policies Two Levels of Protection Specific Stoploss Insurance Aggregate Stoploss Insurance 22

23 Stop Loss Delivery/Distribution Commercial Carriers Independent MGU Marketing General Agent Specific Stop Loss Protection Specific Stop Loss provides protection from catastrophic medical claims offering comprehensive and immediate protection for large claims on a single individual. Specific Deductible Depending on the Employer s risk tolerance, a pre-determined maximum for an individual s eligible paid claims which have exceeded a certain dollar amount for during the plan year. Individual Specific Deductible amounts are available at $10,000 to $500,

24 Specific Stop Loss Aggregate Stop Loss Aggregate stop loss insurance protects the employer against the accumulation of total claims for the group as whole exceeding a stated level Employer s risk of loss ends when the annual aggregate deductible (attachment point) is met Designed to protect against adverse risk. 24

25 Aggregate Stop Loss Underwriting considerations Demographics of group Geographical location Claims experience Plan design (historical & proposed) PPO discounts Aggregate Stop Loss Expected Claims X Trend X Margin = Attachment Point Attachment Point is the maximum exposure for the Employer First year Self-funded groups generally reach 65% to 75% of their attachment point 25

26 Stop Loss Contracts Stop Loss Contract options: - Incurred & Paid -12/12, 15/12, 24/12, 12/15 & 12/18 etc. Run-in and run-out Terminal liability Lasering individual known risk Contract due diligence Not all contracts are the same! 12/12 Immature January 1 December 31 Paid & Incurred (12/12): Charges incurred & paid during the policy period 15/12 Run-In Stop Loss Contract Types October 1 December 31 15/12: Charges incurred up to 3 mos. prior & during the policy period & paid during the policy period 24/12 Run-In January 1 (prior year) December 31 24/12: Charges incurred up to 12 mos. prior & during the policy period & paid during the policy period 26

27 Stop Loss Contract Types 12/15 Run-Out January 1 March 31 12/15: Charges incurred during the policy year & paid during and up to 3 mos. after the end of the policy period 12/18 Run-Out January 1 June 30 12/18: Charges incurred during the policy year & paid during and up to 6 mos. after the end of the policy period Renewal Select the right contract to prevent Employer exposure to liability Employer Protection Specific stop loss individual losses Aggregate stop loss group losses Specific advancement immediate reimbursement Monthly aggregate accommodation high utilization protection Terminal liability & run-out protection No laser renewals & rate caps - budgeting Many other features available 27

28 Stop Loss Conclusion Together the Specific & Aggregate provides two types of protection to stabilize the claims experience from year to year, cap the risk & protect the Employer from excess losses that could financially impact the company. 28

29 Putting it all together TOTAL COST Putting it all together 29

30 Fixed Costs - Administration Fixed Costs Stop Loss 30

31 Funding Wrap it Up! Bundled vs. unbundled approach Plan ownership Key partnerships needed New solutions continuously emerging/changing technology Smart & sophisticated options Self insuring maximizes efficiency & outcomes 31

32 Self Insuring Common Myths - Fact or Fiction Glossary of terms/samples CSFS program online SIIA Resources Client facing marketing brochures Articles & reports Educational events throughout the year Membership book contains TPAs Consultants Brokers Stop loss carriers Medical management partners 32

33 Questions? Thank You! 33