Self-Funded vs. Fully Insured. Presented by SHERRILL MORGAN

Transcription

1 Self-Funded vs. Fully Insured Presented by SHERRILL MORGAN

2 Fully Insured BUCAH Fixed Cost Expected Cost Current Maximum Cost Premium = Max & Min Cost

3 Claim Lag Example The new provider or plan may give a reduction in premium for the first year of the plan because of the claim lag. This could mean an increase equal to one to two months of premium at renewal 30 to 60 days till claim is paid June 30th July 2nd Date of claim Date of claim Paid date of claim Old plans claim New plans claim July first Start date of new provider

4 Fully Insured Advantages/ Disadvantages Advantages: Fixed premium Pay bad experience next year Disadvantages: No Disclosure No Control For Profit

5 Self Funding ASO/TPA Fixed Cost: (admin, network) Expected Claim Cost: (Med. + Rx) Maximum Claim Cost: (Med. + Rx) Stop Loss Insurance: Specific & Aggregate (125% of Expected)

6 Claim Lag Example 30 to 60 days till claim is paid June 30th July 2nd Date of claim Date of claim Paid date of claim Old plans claim New plans claim July first Start date of new provider Lag equals claim reserve. Not paid to BUCAH and held in your account Establishing a reserve policy is crucial to maintaining a financially health plan IBNR rule of thumb is 3 months of claims

7 Why Self-fund? Eliminates profit margin to insurance company Flexibility; customization Realize benefit of good claims experience Exempt from some ACA provisions, including Health Insurance Provider Fee (2-4% annual tax on fully insured plans) Control

8 Individual & Aggregate Stop Loss Insurance Example of how a $127,000 claim would be handled: Employer pays the deductible amount: $25,000 If the individual stop loss deductible is $25,000 The insurance company pays the excess over the deductible amount: $102,000 The amount funded but not reimbursed ($25,000 in this example) will apply toward the annual aggregate deductible.

9 Fully Insured Timeline Jan Jan Jan Jan months Fully-insured Health Plan Contracts Incurred Claims 24 months Fully-insured Contract Paid Claims 12 Months Health Plan Next Contract Year Incurred Claims 24 months Next Contract Year Incurred Claims

10 Self-funded Timeline Jan Jan Jan Jan st 12 months Self-funded Health Plan Incurred Claims 12/12 Contract* Self-funded Incurred & Paid Claims Next 12 Months Health Plan Year Incurred Claims 24 months Next Contract Year Incurred & Paid Claims *TLO

11 Incurred and Paid Claims 30 to 60 days till claim is paid June 30th July 2nd Date of claim Date of claim Paid date of claim Old plans claim New plans claim July first Start date of new provider

12 Self-funding: Advantages Flexibility in Plan Design Self-funded plan not bound by state mandates Risk Management effectiveness through stop loss insurance Employer may choose the amount of risk to retain and the amount to be covered under stop loss protection. Under an insured arrangement, insurance company sets the pooling level. Protection from monthly swings can be controlled through a monthly aggregate.

13 Self-funding: Advantages Tax Savings No premium tax for the self-funded claim fund; thus, an immediate savings equal to the amount of premium tax is realized. (Average state tax is 2 percent) Assuming annual premium of $626,000 x 2% = $12,520 in potential savings to you! Retention Administration of the plan less expensive under a self-funded arrangement without sacrificing a reduction in services Also the option of choosing services à la carte

14 Self-funding: Disadvantages Risk Assumption Employer assumes risk between the normally anticipated claim level and Stop Loss Coverage level Asset Exposure Employer s assets are exposed to any liability created by legal action against the self-funded plan Fiduciary Responsibility Employer is responsible

15 Transparent Pricing Arrangements

16 Direct Contracting Direct contracting offers the hospital a direct contract with local employers and the opportunity to build a direct-to-employer strategy including: Targeted Population Health Expanded Occupational Health Stronger Relationship with Local Employer Market Decreased Reliance on Carrier as Intermediary The copay plans under the transparent pricing arrangements virtually solves collection problems for hospitals 15-20% deeper discount based on Medicare repricing over carrier discounting

17 Simple, Member- & Provider-Friendly Benefit Summary (Highlights) Medical Service Deductible Coinsurance Inpatient Hospital Reference Based Pricing NO Deductible NO Coinsurance $500 Copay Outpatient Surgery $250 Lab & X-ray $0 MRI or PET Scan Primary Care Doctor Visit $250 Copay $25 Copay Specialist Office Visit $50 Copay Preventative Care $0 Urgent Care Emergency Room $25 Copay $250 Copay

18 PBM Rx Pricing What is a PBM? Data transfer entity of what was purchased and paid for and is not the purchaser of drugs. They establish an arbitrary discount table for purchase of a drug by the plan ACI (Transparent Cost Plus Model) compared to AWP & MAC (Discounting Model from an Unknown Number)

19 Drug Data & Claim Cost Analysis This table provides a comparison of total claim charges for selected brand drugs for ABC Pharmacy and OwnRx from August 2016 to July 2017 Brand Drug Comparison ABC Pharmacy Total Claim Charges OwnRx ACI System Claim Charges Savings in Dollars Percentage Savings Humira $45, $40, $5, % Vyvanse $27, $25, $2, % Trulicity $20, $18, $1, % Nuvigil $17, $8, $9, % Dexilant $7, $7, $ % Pristiq $6, $6, $ % Fetzima $3, $2, $ % Suboxone $9, $8, $1, % Premarin $5, $5, $ % Prempro $4, $3, $ % Januvia $5, $6, $1, % Onglyza $3, $4, $ % $157, $138, $18, %

20 Generic Drug Comparison Drug Data & Claim Cost Analysis This table provides a comparison of total claim charges for selected generic drugs for ABC Pharmacy and OwnRx from August 2016 to July 2017 ABC Pharmacy Total Claim Charges OwnRx ACI System Claim Charges Savings in Dollars Percentage Savings Armodafinil $4, $ $3, % Esomeprazole Magnesium $8, $1, $7, % Pantoprazole Sodium $1, $ $1, % Omeprazole $1, $ $1, % Pristiq $6, $6, $ % Fetzima $3, $2, $ % Venlafaxine Hcl Er $1, $ $1, % Duloxetine Hcl $1, $ $ % Buprenorphine-Naloxone $1, $ $ % Rosuvastatin Calcium $3, $ $3, % Atorvastatin Calcium $1, $ $ % Losartan Potassium $1, $ $1, % $36, $13, $22, %

21 Pools: Self funded and Fully Insured Advantages Disadvantages Large pool example: The State of Tennessee Plan Small pool example: Municipal Schools of Shelby County

22 Benefits Advisor Assists client with strategic planning for benefits programs Development of plan design Placement of stop loss Evaluation of vendors, including TPA, ASO and Pharmacy Benefit Manager Assistance with health plan budget Compliance assistance with federal and state laws pertaining to health plans Health and Wellness Center evaluation Assistance with claims issues Fee vs Commission

23 Questions?