Leveling the Self-Funding Field

The article below, titled Leveling the self-funded field, written by Robert Bull, was originally published by Employee Benefit Adviser on July 18, 2017.

Technology is changing every aspect of the way businesses operate — and that includes health plan self-funding.

It used to be that self-funding was limited to only the largest companies that could afford the manpower to either administer their own plans or develop their own proprietary administrative software. Today, new data technologies are leveling the playing field, making it affordable for virtually all employers to self-fund.

For too long HR teams have shied away from self-funding due to the perceived administrative burden. But technology has removed this barrier, making it easier to track eligibility and generate billing information. What used to be a painstaking manual process has been automated, and HR teams at self-funded companies can now provide richer benefits at a lower price. A good healthcare plan goes miles in attracting and keeping quality employees — and ensuring that they’re productive by minimizing absenteeism due to a lack of care for either themselves or their family members.

self-funding'Here’s what to look for when shopping for a top-notch self-funding solution:

1. The ability to consolidate information and manage all healthcare-related data from a single system. Most employers deal with multiple service providers — stop loss, vision, pharmacy, dental, medical, wellness, and third-party administrators, just to name a few. But they should insist that all of the relevant data is consolidated onto one system. For one thing, it’s much simpler and less time consuming to administer and pay all of their providers from a single source. For another, it takes much less time and effort to master a single application — as opposed to having to learn the ins and outs of each provider’s software.

When the data from multiple vendors are integrated onto a single platform, the time-consuming process of having to reconcile across providers every month is eliminated. The plan’s administrator can instantly determine counts and claims. Likewise, multiple payment processes can be eliminated in favor of a single, consistent payment method.

Best of all, HR can take all this data, which reflects employee behavior and everything related to treatment, and use it for predictive modeling. With that level of insight, the employer can develop a plan that truly meets its — and its employees — needs.

2. Data transparency. For an employer to take on the added risk of self-funding, it needs to be able to closely examine its data and determine the underlying trends. Without pricing and transaction transparency, it is impossible to perform a meaningful cost analysis.

As opposed to fully-insured plans, where the data is the property of the insurance carrier, with a self-funded plan the employer owns the plan’s data. And once the employer can access its claims, demographic and pricing information, it can make accurate decisions about what is best for the company and its employees.

The data can also be used to influence employee behavior. By educating a workforce about those behaviors that are wasteful and ineffective, the employer can reap significant savings for itself and its employees. And by analyzing the response rate to different messages and campaigns, HR can then determine what incentives would be useful to obtain even greater compliance.

3. Real-time data access. It’s not enough to have healthcare plan data; it needs to be timely or its utility is diminished. The best way for employers to be proactive is for them to be able to see what is happening with claims and cash flow on a monthly, weekly or even a daily basis. At a minimum, the employer should review its data at least quarterly. And the larger the employer, the greater the number of employees and claims, the more frequently the data needs to be examined.

Three years ago, it would have taken three weeks to scrub a mid-size employer’s claims data. Now it can take just two hours.

4. Safeguards. Data is power. That’s why an employer wants to ensure that only authorized personnel have access to healthcare plan data and analytics. There are legal and privacy considerations as well. That’s why it’s crucial to have robust security that maintains an audit trail of who touches what data and when. In case of an error or a breach, the event can be traced back to the people involved at the moment where it occurred.

Self-funding will continue to be transformed by technology. Cloud-based software is making it possible for ever smaller employers to implement and administer self-funded plans. Embracing and utilizing these tools can lead to lower premiums, greater access to health care and reduced costs for employer and employee alike.

self-fundingCTA

Bill headed to Senate would provide ‘safety blanket’ for benefit plans

The article below was published on May 1, 2017 by the Employee Benefit Adviser, written by Brian Kalish.

Nearly half of all employees are covered by a self-insured group health plan. Many companies that offer these plans have separate stop-loss insurance policies to protect them against the risk of catastrophically high claims. Some states and the Obama administration have attempted to regulate stop-loss insurance; a move the Self-Insurance Institute of America says would render it unaffordable.

To provide more certainty in the marketplace, the SIIA — a Simpsonville, S.C.-based member-based association — worked to introduce the Self-Insurance Protection Act.

The bill on April 5 passed the House of Representatives in a 400 to 16 vote and is now expected to be introduced in the Senate in the next few weeks. EBA spoke with SIIA’s CEO, Mike Ferguson, to understand more about the legislation. What follows is an edited version of the conversation.

EBA: What is the background on this bill?

Mike Ferguson: Shortly after the passage of the Affordable Care Act, there were policymakers within the Obama administration that became concerned that the growth of the self-funded market was coming at the expense of the public exchanges. The analysis was that the self-funding market is growing and the employers in the self-funding market are scooping up the good risks — their employees — and leaving the bad risks to go into the exchanges, which would create structural problems for the exchanges.

They further believed that the self-funded market was growing artificially, characterizing their analysis, facilitated by stop-loss insurance with relatively low attachment points. They believed that many of these self-funding plans were trying to look for an escape hatch out of the ACA requirements.

Really, these were fully-insured arrangements and they should be treated and defined as such for purposes of the ACA. There was discussion within the administration and a formal request for information was issued by HHS and DOL, which asked very pointed questions about self-funded insurance and stop-loss insurance. It was clear from the line of questioning that regulators were looking to try to show that employers were moving in this direction as a way to game the system and get out of the ACA mandates.

Subsequent to that, we learned there was discussion within the Obama administration on, ‘What do we do about this and how [do we] get our arms around these self-funded plans,’ because theACA did not provide any particular recourse.

EBA: How did the talk on Capitol Hill progress?

Ferguson: The discussion that we become aware of was, ‘What if we just take an aggressive definition of what insurance is and bring those employers back in as regulated entities as fully-insured employers or health insurance issuers?’

That was the internal discussions that were going on within agencies. A couple of years ago, in recognition of this, we said how do we address this because once you have a regulatory process commence, it is very difficult to push back on that. What we did, we worked with friends on the Hill to get legislation introduced, which would head off a regulatory interpretation of the definition of health insurance and health insurance coverage to specifically exclude self-insured plans with stop-loss insurance. This was in anticipation of potential regulatory action.

The previous version of that bill, like most pieces of legislation, ultimately did not move. This year, it has. And to put it in context, given the changes in the presidential administration, that threat is not at our doorstep anymore. But, our view is administrations can change in as early as four years. We don’t know who will be in the White House in three years and 10 months, so let’s go ahead and make sure that we get this done so that a future administration that might be unfriendly to self-insurance, does not have that avenue to disrupt the marketplace.

EBA: What does the legislation mean for employee benefit brokers?

Ferguson: It provides more certainty in the marketplace that stop-loss insurance will be available to self-funded plans. It does not change the current landscape of the self-funded marketplace. It is a safety blanket.

For employers that go to self-insurance, it is designed to be a long-term risk management strategy. Self-insurance is not designed for when an employer received a high quote on their health renewal premium and says, ‘OK, I’m going to pop over and be self-insured this year, but then switch to fully-insured two years down the road.’ That is not what employers should be looking at.

They should be looking at if they want to take a proactive long-term strategic risk to managing their healthcare risks, self-insurance can provide that option. But, it is most effective when it is an option that is deployed over multiple years. This legislation is a safety blanket for those advisers working with employers, because it takes one variable out of the regulatory environment going forward. It makes it almost impossible for anything at the federal level to disrupt their ability to self-insure to the extent that they have to access stop-loss insurance.

EBA: What is the bill’s future?

Ferguson: As a general matter, it is always tough to get anything through the Senate. That being said, since we had such a large vote margin out of the House, the Senate does, in many cases, look at that as a consideration on how it wants to move things.

Given that, we are cautiously optimistic. Cleary, we have full expectations that President Trump would sign the legislation to the extent that it is voted out of the Senate. The Senate is tricky to get anything done, even small rifle shot bills, like ours.

We have a lot of friends in the Senate. We expect the companion bill will have several prominent co-sponsors when it is announced and given that there was minimal Democratic opposition in the House, we hope that will translate to a similar dynamic in the Senate.

State of Self-Funding State Benefit Plans

The article below is from International Foundation of Employee Benefit Plans, written by Teri Dougherty

Governor Scott Walker recently proposed self-funding Wisconsin’s $1.5 billion health insurance program for 250,000 state and local government workers and their dependents. For now, it is a proposal that is being heavily debated in the Wisconsin State Legislatures Joint Finance Committee. If self-insurance contracts are approved by May 1, 2017, a new self-funding arrangement could go into effect January 1, 2018.

ifebp

Image Source: www.ifebp.org

To self-fund or fully insure is mostly a question of who will take on the financial risk of paying claims for covered benefits. Here’s a closer look at the many considerations involved, using Wisconsin as an example.

Self-funding isn’t an all-or-nothing option. According to the National Conference of State Legislatures (NCSL), 46 of the 50 states self-fund at least one health benefit plan. Because Wisconsin currently self-funds three benefit plans, Wisconsin is considered a self-funding state by NCSL. Currently less than 30 states completely self-fund their health insurance programs.

Why self-fund some benefits and not others?

The state of Wisconsin is currently self-funding, or assuming the risk for their pharmacy, vision and wellness benefits. At the same time, the state pays health insurance premiums to 17 health maintenance organizations (HMOs) for fully insured medical coverage. A third option is to partially self-fund, in which the state/employer complements its self-funded program by purchasing stop-loss insurance.  Stop-loss insurance provides financial protection only if self-funded claims exceed a specified dollar amount within a specified period.

John C. Garner, in his book Self-Funding Health Benefit Plans, describes how state-sponsored self-funded plans may be structured:

  • Creation. Before a public employee plan may be self-funded, either enabling legislation or an opinion of the states attorney general is usually required.
  • Plan choice. Most state plans are multiple option plans, whereby employees are offered more than one health plan.
  • Participation. Most state plans permit other government entities within the state to become participating members, such as:
    • Independent state agencies
    • Counties
    • Cities, towns and municipalities
    • Principalities
    • Public universities
    • Water districts
  • The plans are usually funded as a general asset plan. Since public employers are tax-exempt, no trust is needed. Stop-loss agreements are typical with these plans.
  • Governance. Self-funded plans are usually managed as soundly as the political environment will permit. A board or committee that includes employee representatives typically governs the plan. With substantial employee representation, the need for a claims buffer may be greater for a public plan than for a private plan.
  • Administration of state plans (e.g., claims, consulting, risk management, utilization review, disease management and prescription drug cards) is generally provided by outside vendors—just like most other self-funded single employer plans.
  • Regulation. Public employee plans are not subject to ERISA, hence they do not have to meet federal reporting and disclosure requirements. Since they do not have ERISA preemption, the plans must meet any applicable state rules and regulations.

The Wisconsin debate involves multiple considerations, including how the elimination of multiple fully insured health plans options may affect the market and worker choice. The Legislature’s Joint Finance Committee is expected to consider the self-funding issue in April or May, 2017.  Will there be a shift in Wisconsin to self-insurance for the state workers’ health plan? How might that shift impact the state’s next budget, health care market and economy? The International Foundation, residing in the great state of Wisconsin, will stay tuned.

self-funding-video

Small Groups Can Combat Rising Healthcare Premiums with Level Funding

The rising cost of employee healthcare has more small employer groups choosing level funding over their traditional fully-insured health plans. What are the advantages of this option for your small business?

Cost Control and Opportunity for Savings

dg25plusimage3

Level funding is a form of partial self-funding that enables the employer to budget for monthly expenses while enjoying the financial advantages that larger organizations have enjoyed for years. With level funding, the employer pays a set amount each month to cover fixed costs as well as anticipated claim costs. Stop loss insurance funds claims that exceed the employers funding limit. If claims are below the funding limit, the surplus remains in the employer’s claim fund.

Other Advantages of Level Funding Include:

  • Easy to Operate
  • High Performance PPO Networks
  • Expert Administration
  • And More…

Level Funding with DG/25+

dgb-minutemanDiversified Group’s DG/25+ is a level funded health plan that offers flexibility and cost control for employers in Massachusetts and New Hampshire. This plan operates very much like a fully-insured health plan. Employers of 25 or more can establish a monthly health plan budge, while still enjoying the economic advantages of self-funding.

minutemancta

Self-Funded Healthcare – A Great Option for 2017

Diversified Group believes that self-funded plans are the most cost effective and transparent health insurance option for most companies. Not only have we been administering self-insured health plans for 50 years, we have a self-funded medical plan for our organization. As a third party administrator (TPA), we provide comprehensive and cost effective solutions that help employers control their healthcare costs.

The article below discusses the reasons why large companies, as well as an increasing number of small- and mid-sized companies, have switched or are considering a switch to a self-funded healthcare plan. The article also highlights the advantages of partnering with an independent TPA, such as Diversified Group. We design, manage and administer customized benefit plans that employers and their plan members can feel good about. As a Diversified client, you will receive the data and guidance to control plan expenses and create the opportunity for savings. Plan members have financial protection, quality benefits and information they can understand. If you’re looking to gain more financial control over your group health plan, read below and contact us to find out how we can help get you started!

The article below is from Employee Benefit News, titled “Why self-funded healthcare is a great option for 2017,” by Paul Johnson.

Small- and mid-sized companies using traditional major medical plans are at a competitive disadvantage: either they are paying more in loaded costs than competitors that use smarter healthcare options, or they are finding it more difficult to hire employees because their competitors offer better plans.

With the new year and a new healthcare landscape, HR executives and benefits directors are now reconsidering their options, taking a much harder look at out how they can stop struggling to offer competitive benefits, and actually use their healthcare plans to recruit and retain the best talent, which will ultimately boost employee morale and profitability.

self-funding-grows

Source: Kaiser Family Foundation/HRET, from www.benefitnews.com

Annual premiums for employer-sponsored family health coverage reached $18,142, with workers paying $5,277 toward their plan in 2016, according to the Kaiser Family Foundation.

While companies still shoulder the lion’s share, worker contributions increased about 80% over the last 10 years; this cost doesn’t even include the employee’s co-pay or deductible.

To balance the scales and create a competitive advantage, more companies are turning to healthcare plans based on a self-funding model that offer more flexibility, customization and cost-savings while still improving the quality of care. Self-funded plans have been almost universal among large employers for quite some time, yet only in recent years have more HR departments at small- and mid-sized companies started to realize the benefits. Continue reading

Manage Enrollment and Eligibility with Our New, BenefitReady® Technology

New BenefitReady® Technology Available for Diversified Group Clients

Navigating the ever-changing world of employee health benefits just got easier. BenefitReady® for Diversified Group clients is a comprehensive online benefits administration tool that offers an affordable, one-stop enrollment solution for your plan and its members, while keeping your self-funded health plan in compliance.

What Can BenefitReady® with Diversified Do for You?

Reduce Administrative Costs
This new solution can help reduce the workload of your HR department and lower administrative costs. Using BenefitReady®, HR personnel can review individual employee details, elections, dependents and beneficiaries and add new hires and terminations all in one place.

Offer Online Benefit Information to Employees
Employees can conduct open enrollment, new hire enrollment and life event updates online, while seeing only the plans, rates and information for which they are eligible. They can also update their profile, dependent, and beneficiary information, view and print election summaries, total benefits compensation statements and more.

Improve Filing and Documentation Accuracy

Improve accuracy in filings and documentation for Stop Loss carriers by allowing Diversified to review transactions and answer client enrollment questions.

Easily Ensure HIPPA Compliance
BenefitReady® offers a direct connect to vendors making eligibility management and benefit deductions easy, often a lower costs than outsourcing to a payroll vendor. This also helps consolidate submissions and eases HIPPA Compliant EDI data file transfers to and from carriers and payroll services.

Your Questions Answered

While our technology from BenefitReady® enables self-funded health plans to accurately facilitate a number of enrollment and eligibility functions, Diversified Group’s self-funding experts will be with you every step of the way with support and consulting services.

dbg-benefitreadyblog

An Employer with a Plan

employer-planHealthcare costs continue to rise at an alarming rate and we all need to be Defining our Health Strategy. We thought it would be helpful to share what we do here at Diversified in regard to our strategy as an employer that has a self- funded medical plan. We like to say at Diversified that we practice what we preach, or that when our team comes out to see you to review your plan we are speaking from experience. Below is the Diversified plan and what we do to control costs:

Appropriate Stop Loss Level and Coverage (family or individual) – At Diversified we are unique; we offer a family stop loss that limits the plan exposure on families that are enrolled on our plan.

Aggregate Coverage (optional) – Aggregate coverage is optional but can help cap risk on the volume of claims.

Fully Insured Organ Transplant Carve Out – This policy mitigates risk for transplants by carving them out and fully insuring those catastrophic claims.

Pharmasense – Our specialty bio-tech program that aggressively manages all aspects of specialty pharmacy claims from pre-cert, to acquiring the medications, and continued case management.

Medical Management – Case managers work directly with our plan participants to manage risk while working directly with their healthcare providers.

Worksite Wellness – Our employee contributions are tied to participation and outcomes.

Disease Management Program – We offer Nurse Navigators that assist our plan participants in managing 27 chronic conditions.

Culture of Health – Good health is part of our organization. We are constantly working to keep wellness and physical fitness as an integral part of cost control management.

Telemedicine – We offer 24/7/365 access to a doctor via phone, online and mobile app. Continue reading