Post on 15-Aug-2020
Howard Blackburn, Jr., MA, SPHR
Kentucky Hospital Association Survey What would you like to see in health insurance plan
What would you be willing to pay monthly for this coverage
$76.45 Actual cost of described coverage $4800 per person per month
Medicare – 685,900 (17% of population) Uninsured 2007 - 562,000 (13.4% of population) 2009 - 680,000 (15.9% of population) 2010 - 640,000 (14.9% of population)
Practicing Physicians – 15,517 Hospitals – 131 More than 50 of Kentucky’s 120 counties and almost 100 pockets within counties are deemed to be short on health professionals by the federal government
26 % of physicians don’t see Medicare and Medicaid patients
36% of physicians are now longer accepting new patients
Of the physicians least likely to see new patients, 45% are family practitioners
Jackson Healthcare Survey
We pay our doctors, hospitals, and other medical providers in ways that reward doing more, rather than being efficient
We are growing older, sicker, and fatter We want new drugs, technologies, services, and procedures We get tax breaks on buying health insurance and the cost to
patients seeking care is often low We don’t have enough information to make decisions on
which medical care is best for us Our hospitals and other providers are increasingly gaining
market share and are better able to demand higher prices We have supply and demand problems, and legal issues that
complicate efforts to slow spending
Kaiser Health News
Open Enrollment Period is October 15 – December 7 for 2013 coverage
During Open Enrollment you can: Switch from Medicare Parts A and B to Medicare
Advantage Plan Switch from a Medicare Advantage Plan back to
Medicare Part A and B Switch from one Medicare Advantage Plan to
another Medicare Advantage Plan Make Changes in your Medicare Prescription Drug
plan
New Medicare Services for 2013 Alcohol misuse counseling Cardiovascular disease counseling Depression screening Obesity screening and counseling Sexually transmitted infections screening and
counseling When you reach the ‘donut hole’ in Medicare Part D
prescription drug plan you only have to pay 47.5% for covered brand name drugs and 79% for generic drugs until you reach the end of the coverage gap
www.ehealthinsurance.com
Governor Beshear issued an executive order to establish a Kentucky health benefit exchange, making Kentucky the 16th state to announce an exchange
Meetings have been held with Cabinet for Health and Family Services Officials and insurers, consumers, employers, and advocates to solicit input on developing the exchanges
States must provide details on how the exchanges will operate by November 16, 2012
Carrie Banahan – Executive Director, Kentucky Health Benefit Exchange
Seven Insurance Companies will participate in the Exchange
Kentucky will operate the Exchange and Small Business Health Option Program (SHOP) as one entity
2014 State-based American Health Benefit
Exchanges and Small Business Health Options Program (SHOP) Exchanges are created
Kentucky will maintain the Small Employer Definition as less than 50
Individuals and small businesses with up to 100 employees can purchase qualified coverage through these government or non-profit run organizations
The Exchange must: Provide employers with a monthly bill Identify Employer Contributions for
employees Total amount to be paid to insurer Collect premium from employer/make
payment to insurer Maintain records/books for premium
aggregation
Eligibility Standards for SHOP Must be Small Employer, less than 50
employees Elect to offer, to all FT Employees coverage in
a QHP through the SHOP Principal business address is in the SHOP
service area, or the employer offers coverage through the SHOP serving the employees primary worksite
Employees are eligible to enroll in SHOP if the employee receives an offer of coverage from the employer
Open Enrollment, October 1, 2013 through March 31, 2014
One year rate guarantee Web Site www.healthbenfitexchange.ky.gov Kentucky may expand the SHOP to large
group employers in 2017 Once eligible, employer remains eligible
regardless of number of employees
2014 Exchange Eligibility: Household income must be between 100%
and 400% of federal poverty level Can’t have access to an affordable employer
sponsored health plan Can’t be eligible for Medicaid or Medicare
Ambulatory Care Emergency Services Hospital Stays Laboratory Services Maternity and Newborn Care Mental Health, Substance Abuse Pediatric Care Prescription Drugs Prevention, Wellness, and Chronic-Disease
Management Rehabilitative and Habilitative Services
Essential Benefits Package is based on what is included in the Exchange’s Benchmark Plan
Anthem’s PPO Plan has been chosen as the “Benchmark” for Kentucky’s Exchange
The PPO Plan does not offer the minimum requirements for pediatric vision and dental
Kentucky Department of Insurance has recommended that the benefits in the Kentucky Children’s Health Insurance Program (KCHIP) be substituted
What is self-funding? Why self-fund? Comparing the costs Advantages and disadvantages of self-funding What are self-funded employers purchasing? Savings – How do I impact claims?
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Self Funding - The employer pays claims and administrative costs directly instead of through premiums to an insurance company or HMO.
Fully Insured Funding - Renting Insurance carrier assumes claims risk Claims costs do not fluctuate based on actual claims
incurred by plan members Fixed premiums include reserves, fixed costs, claims, and
administrative fees Partial Self-Funding - Owning Employer shares in claims risk Claims costs based on actual claims incurred by plan
members
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Premiums
Inflow
Outflow Premium Taxes Commissions Carrier Reserves Admin. & Overhead Profits Claims
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Deposits
Inflow
Outflow
Specific Premium Aggregate Premium Premium Taxes Commissions UM fees Admin. Expenses PPO Fees Claims
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Who should consider self-funding?
Employers who: Want greater control over costs and design Understand Risk vs. Reward Want to plan for long term Are tired of the consistent premium increases Want to develop a sustainable health Plan
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Generally speaking, self-funding is less expensive over time
Reduced premium taxes
Reduced profit charges
Pro-active Reporting and Consultation
Flexibility and Customization
Greater employee satisfaction through high touch, personal service
Why Self-Fund?
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Increased ability to impact claims (Medical Management and Wellness)
More control over cash flow
Greater opportunity to educate employees
Result? – Claims are generally at or lower than expected 3 out of 4 years
Advantages to Self-Funding
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Overcoming the Disadvantages of Self-funding
More responsibility for benefit design Two sources of expert help
- Your Broker - Your Benefit Administrator
Claims payment administrator should be a large, national healthcare
provider with local support Administer health plans nationwide Have medical professionals and subject matter experts on staff Provides expert claims management and has solid financial
resources and products
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Overcoming the Disadvantages of Self-funding
Tiered Networks Top Tier- Lower Coinsurance Lower Tier – Higher Coinsurance
Wellness Programs Disease Management Programs Case Management Programs Clinics vs Emergency Rooms Nurse Lines Smart Phone Applications
Cost transparency Best Possible Provider for the Service Elective Services Group decides criteria for certain procedures Group defines the benefit i.e. Hip replacement $30,000 maximum
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Overcoming the Disadvantages of Self-funding
ER Utilization is Cultural Example: Families who have 3 or more ER Visits are contacted and
steered to Clinics
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Overcoming the Disadvantages of Self-funding
Plan Design Wellness Programs Disease Management Case Management Incentives for Enrollments Incorporating ACO’s into Plan Design
Decreases In-Patient Days and ER Visits
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What is Self-Funding? Reinsurance Protection
Specific Deductible – Protects against large individual catastrophic claims
Rule of thumb
3% – 5% of annual claims
Example Employer with 200 employees ($8,500) $1,700,000 x 3% - 5% Deductible should be in the $50,000 - $85,000 range
More risk = lower fixed costs
What is Self-Funding? Reinsurance Protection
Excess Loss Insurer Pays
Employer Pays
Specific Deductible
John Tom Sally
Specific Excess Loss Coverage
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What is Self-Funding? Reinsurance Protection
Aggregate Coverage – Protects against a large number of overall claims (claims incurred under the specific deductible)
Aggregate Attachment Point Is:
Expected claim costs + Risk corridor of 25% = Maximum claims liability
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What is Self-Funding? Reinsurance Protection
Excess Loss Pays
Expected Claims
25% Risk Corridor
Maxim
um
Claim
s Liability
Aggregate Excess Loss Coverage
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Savings – How do I impact claims?
Claims are biggest expense
Administration and other expenses
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Flexible spending accounts
Health savings accounts
Health reimbursement arrangements
Wellness programs
Total Health (Population) Management
Data mining
Disease Management
Web Tools
24x7 Nurse Line
What are self-funded employers purchasing?
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For the Fully-Insured Employer: ◦ Comprehensive Services – it’s all in ◦ Local Service, but access to National Subject Matter Expertise ◦ Strategic advice – help me plan for what’s next ◦ Financial expertise – eliminate surprises ◦ Day-to-day support for questions ◦ Tools that help me manage my plans ◦ Market Leverage – need the 800 lb gorilla on our side ◦ Commission stream to pay for services
For the Self-Insured Employer: ◦ Long-term strategist - can actually help to improve overall health
status of employees and dependents ◦ Pay-as-you-go services – only use and pay for what you need ◦ Specialist advice – Pharmacists, Clinicians, Wellness and Disability
experts, etc. ◦ No day-to-day handholding - Brokers have a staff for that ◦ Analytics, analytics, analytics – able to project trend, analyze
efficiency of care, challenge vendor reporting and recommendations
◦ Credibility with the C-Suite – can take the heat and change perceptions where needed
◦ Best and “Next” Practice solutions – not just what everybody is doing, but what everybody will be doing
◦ Big Name National Clients – tested in the big leagues ◦ Able to unbundle vendor services – can help to carve out Rx,
Wellness, Disease Management, etc.
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State-of-the-Art Brokerage • Program Analysis • General Benchmarking • Marketing on Request • Underwriting Expertise • Day-to-Day Account
Management • Extension of HR • Employee Support • Communication Resources • Local Market Leverage • Compliance and Transparency
Support
Innovative Consulting • Strategic Planning • Specific peer group
Benchmarking • Maintains RFI vendor
database • Pharmacists • Actuarial Teams • Clinicians • Health, Wellness, and
Productivity Expertise • Industry Focus and
Leverage • Coalition Purchasing • Global Benefits • Exchange Expertise
Strategy & Design Strategic Annual Planning Benchmarking Plan design alternatives Funding analysis Health Care Reform plan
Communication Enrollment
announcement Enrollment guide Enrollment reminder Open enrollment
support
Financial/Actuarial Claims monitoring Pricing and projections Contribution modeling Design modeling Funding and underwriting
analysis
Plan Management Employee advocacy and
Issue resolution Vendor performance
management Issue resolution Performance
measurement
Compliance Compliance dashboard Technical screening of
DOL and IRS regulations 5500 completion Discrimination rules and
testing overview
Core Services Market Bidding
On-line RFPs/renewals Pharmacy purchasing
Group Discount Analysis Vendor negotiations
Supplemental Services Communication Essentials:
Content and Format Employee surveys
Claims audit Eligibility audit Data warehouse
Clinical assessment Health risk profiling Benefit administration
What to expect from your health care broker/consultant
Key Attributes What to look for Impact
Premium / Health Care Spend Volume
Bigger is better Better terms and conditions Access to new carrier innovations and pilot programs Ability to get immediate attention around service issues
Client Base Clients like me Leading edge ideas and best practices with other clients just like you Tap into the health care reform solutions developed for scores of other clients
Local and National Presence
Everywhere you are Local knowledge of health care markets and account management support and service National bench strength to bring the strongest team members to the specific problem
Scalable Expertise, Strategies and Tools
Innovative, proprietary benchmarking tools and technology require significant investment
Innovative tools and resources developed for leading edge clients brought to all
Overrides: many brokers continue to accept override or contingent commission payments from insurance carriers. Lawsuits by many states in the prior decade brought issue to light for larger brokers.
Commissions can be managed as a “service funding” mechanism. Commission levels can be adjusted annually up or down based on service requirements.
Benchmarking data is either not theirs or is out of date. Ask for the date the data was collected and list of participant organizations.