The Stop-Loss Insurance Carrier Perspective

Transcription

1 The Stop-Loss Insurance Carrier Perspective PANELISTS Tom Costello Vice President, Benefits Division Symetra Carolyn M. Coleman Regional Sales VP HM Insurance Group Mike Remeika Senior Vice President HCC Life Insurance Company Dan Wolak President Ullico ACA Impact On Self Funded Plans: The Need For Stop Loss Insurance Lifetime Coverage Maximums: 2010: Unlimited Annual coverage Maximums: : Phase out Period 2014: Unlimited Impact on Health Plans: Requires additional cost for large claims. Cost to change Plan Maximum from $1 Million to Unlimited is $50-$100/year/member cost!

2 ACA Impact On Self Funded Plans: Response from Taft-Hartley Market 10% 5% % of Taft-Hartley Plans Purchasing Stop Loss Based on Year of Initial Purchase 15% Before ACA 2011 to Source: Based on Ullico s marketplace estimates 70% None Value of Stop Loss Insurance Rising cost of health care # of Claims/Year per 10,000 Members > $500,000 > $1M Average Claim Charge for Claims Excess of $1 Million $1,750,000 $1,500,000 $1,250,000 $1,000,000 $750,000 $500, Based on industry information and Ullico s data sources

3 Stop Loss Underwriting What Makes Taft-Hartley Unique? Factors that drive rates Various Quality of PPOs and TPAs Group Demographics are older Richer benefit plans- Less consumerism Larger plans with higher deductibles Coverage for Early Retirees Hour Bank vs Actively at Work Marketplace Value ASSIST WITH CONTROLLING PLAN COST Stop Loss carriers have access to many resources Multiple national transplant networks as opposed to being tied to one network Network contracts vary between the many transplant networks Not all transplant facilities are contracted with every transplant network Access to vendors with specific specialties in areas of medical expertise Neonate specialists Orthopedic surgeons Oncology specialists

4 Marketplace Value ASSIST WITH CONTROLLING PLAN COST Greater ability to reduce vendor fees based on volume of business Vendors charge on average 25% of savings for their services Stop Loss carriers will generate large volumes of business with these vendors giving them the ability to negotiate vendor fees at 17-18% of savings Ability to negotiate direct contracts with providers Many large hospitals refuse to negotiate in-network contracts with PPO networks Stop Loss carriers have been successful negotiating direct contracts with these facilities Marketplace Value Example ASSIST WITH CONTROLLING PLAN COST A Taft-Hartley account in California had a claimant in need of a liver transplant The claimant had the option of receiving the transplant at either UCLA or Mayo Clinic and decided on Mayo Clinic as the provider of choice The network for the group was not contracted with Mayo Clinic so the transplant would be out-of-network The administrator for the group was aware of the value of stop loss and contacted their carrier for assistance The stop loss carrier had a direct contract with Mayo and the cost of the transplant at Mayo was estimated to be about $250,000 less than if he had gone to UCLA

5 Marketplace Value ASSIST WITH CONTROLLING PLAN COST Stop Loss carriers can provide a second look to what an administrator determines Administrators will refer claims to stop loss carriers when billed charges appear to be excess. Provider billed $308, for outpatient back injections Administrator had access to a wrap network with a 20% discount which would result in Plan payment of $246, so they referred the claim to the stop loss carrier Stop Loss carrier referred the claim to a Specialist who is a practicing Orthopedic Surgeon. Result with a final claim with provider sign-off of $14,842 Key Considerations When Purchasing Stop Loss Insurance

6 Smart Choices for Self-Funding and Stop Loss Insurance It s a balancing act for Employers Making the decision to move from Fully Insured to Self-Funded Clearly understanding the risks, rewards and responsibilities Finding the right medical plan carrier to gain more control of their plan Selecting the Stop Loss carrier with the performance, policy, protection and price to protect their bottom line Characteristics of Successful Self- Funded Employers Stable claims experience Helping to better predict plan liabilities A steady population Providing validity to past experience Financial stability Demonstrating ability to pay claims directly Willingness to take on risk Shows a clear understanding that claims will be funded directly by employer Selecting a carrier or TPA with self-funding expertise Understands the importance of having an experienced carrier to manage the plan Willingness to purchase Stop Loss insurance Realizes the value in protecting against large or catastrophic claims

7 Key considerations when choosing a Stop Loss carrier Direct Writer A Stop Loss carrier with in-house decision-making responsibilities to avoid additional administration Financially Sound A well capitalized carrier with excellent ratings from A.M. Best over a long period Stable A carrier with a long demonstrated market history of success, significant tenure and experienced leadership Accurate Greater than 95% technical and financial accuracy in processing/paying claims with limited delays, denials and litigations Contains costs Proven results and strong vendor relationships Key considerations when choosing a Stop Loss carrier Solid Contract A clearly articulated contract with limited exclusions that closely mirrors the underlying plan Flexible Plans Options A wide range of riders and options to match an employer s specific risk needs ACA Expertise A knowledgeable partner with deep understanding of health care reform legislation and obligations Ability to write over multiple payors A carrier that can provide seamless coverage protecting across plan variations

8 Risk retention Questions to ask your stop loss carrier Who actually holds risk on the paper? How many reinsurers are involved, and at what level? Where are these reinsurers located? Multiple reinsurers could mean delays in reimbursements since all parties may have to agree the claim is eligible before payment is processed. Contracts Questions to ask your stop loss carrier Has a contract evaluation been completed? Are there any conflicts between the stop loss contract and the employer s plan document? At a minimum the definition and exclusion sections of each contract should be evaluated. This is a critical issue at the time of reimbursement. A stop loss carrier could deny a claim that is eligible under the plan but not eligible under the stop loss contract.

9 Stop loss policy and plan document alignment When reviewing proposals from multiple carriers: Compare definitions and exclusions Identify potential gaps in coverage Communicate and document any issues in writing Request that the carrier provide an Administrative Agreement to remove or modify any contested wording from the policy Claims paying abilities Questions to ask your stop loss carrier: What is their average turnaround time for reimbursements? Every stop loss carrier should have this statistic on hand. Where is the claims paying facility? Do they accept the underlying BUCA or TPA standard reporting as satisfactory proof of loss?

10 Renewal underwriting Questions to ask your stop loss carrier Do they laser on renewals? Do they subscribe to a pooled approach; or do they price each group based on its own experience? Do they guarantee they will offer a renewal? Do they offer rate caps on renewals? Inconsistent renewal underwriting could leave the employer with tremendous levels of non-insured risk.