Self-Funding: More Than a Means to an End

self-fundingIn an effort to take control of their healthcare spend, more employers continue to move to self-funding. But as those who have used this funding mechanism for some time have learned, designing a self-funded health benefit plan is just the beginning. When a health plan is self-funded, the entire healthcare supply chain is unbundled, giving everyone a clear, unobstructed view of the healthcare spend. An experienced Third Party Administrator will help you identify exactly where your healthcare dollars are going. Providers can be evaluated. Opportunities to achieve quality outcomes and lower costs can be explored. Best of all, unlike fully-insured health plans that are carrier-based, employers who self-fund their health benefits have the flexibility to act.

Target Cost Transparency

According to the Centers for Medicare and Medicaid Services, healthcare costs have increased by more than 260% since 1999. One of the biggest problems is costs for the same service can vary drastically from one provider to the next, even when the providers are located in the same marketplace. One way to attack this problem is with Reference Based Pricing, which typically allows qualified self-funded health plans to pay for medical services based on a percentage of Medicare, rather than by applying a percentage discount to a facility’s billed charges. Using an accepted index such as Medicare has enabled a growing number of health plans to bring cost transparency and consistency to hospital billing, since Medicare sets prices for every procedure.

Communicate with Purpose

From mobile cost transparency tools to telemedicine, employers are doing more than ever to help plan members utilize their benefits. Engagement rates, however, often tell a disappointing story as many employees are reluctant to use these new features. Experience tells us that whether we’re talking about a published provider directory or an online member portal, most people are confused by healthcare coverage.

Whether your company decides to place colorful posters in gathering spots, hold employee meetings or distribute email newsletters, emphasizing the steps you’re taking to make healthcare more accessible and affordable is critical. In this time of full employment and intense competition, health benefits can play an extremely important role in attracting and retaining valued employees. Don’t miss this opportunity to enhance your company culture and improve your employees’ quality of life.

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Transitioning small employers to self-funding strategies

This article was published on September 4, 2018 on BenefitsPro, written by Cort Olsen.

Source: BenefitsPro

With premiums constantly on the rise for employers offering fully insured health plans, brokers are searching for ways to convince their small and mid-size clients that switching to self funding can cut costs on their top line items.

Switching to one of these plans means that the employer assumes more risk, with stop-loss insurance providing financial protection against catastrophic claims. They can also pay medical claims as incurred as they would other corporate expenses, or can deposit expected or maximum costs into an account each month.

There are many ways brokers are going about convincing their clients to make the leap, from educating them on the cost of the medical loss ratio, highlighting the financial pressure health care is placing on their business, or just making them feel as uncomfortable as possible by explaining their fully insured payment methods.

Bob Gearhart Jr., partner at benefits brokerage DCW Group in Boardman, Ohio, says explaining the MLR and how it guarantees fully insured premiums will rise is a great starting point when initiating the conversation.

“Benefits is one of the few areas the CFO has not optimized and they are feeling pressure from the CEO to drive earnings to the bottom line,” Gearhart says. “This organizational pressure coupled with health care in the headlines is slowly changing the buyer within the organization.”

Gearhart adds that leading HR professionals recognize this and proactively engage the C-suite in the buying decision.

Robson Baker, employee benefits and HR adviser for Clarus Benefits Group in Houston, Texas, says getting the C-suite and HR through the awareness phase of the conversation is the hardest part.

“The broker needs to educate and bring the pain points to the forefront of their minds,” Baker says. “Then it moves to consideration — which can be led by a strategic CFO and compassionate HR department.”

Framing health care cost as a financial decision allows the broker to approach the CFO first and then bring the self funding plan down to HR and out to the other employees. Continue reading

How many times has your company changed its health plan in the last 5 years?

EBSO Benefits, an independently owned Third Party Administrator, helps employer groups self-fund their health benefits, thereby giving their clients an opportunity to reduce administrative costs, increase plan flexibility and expand the services they offer to their employees.

More importantly, EBSO is leading the way in a new phase of employee healthcare by helping employer groups take control of their healthcare plan. And taking control means more than self-funding. It means really managing the plan, doing some heavy lifting and shaking things up when what was commonplace is no longer working.

One example EBSO is proud to reference is that of a Midwest-based food processor that has not only stabilized costs for its 700+ employee group but seen the cost of its self-funded health plan drop by approximately 8 percent over the past 4 years. There’s no magic involved – taking ownership of the plan and managing it each and every day has made the difference. New steps have also been taken over time, like adding on-site clinics and contracting directly with high value providers for certain procedures.

While change came slowly at first, the pace quickened once everyone bought into the reality that the status quo was no longer acceptable.

As their TPA, we partnered with the employer to lead the way. Actively managing the plan and navigating care demonstrated to members that the days of simply pulling out an ID card and paying a co-pay were over.

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As shown, navigating care in a self-funded environment can achieve high quality, affordable healthcare over time. Employees value the many resources available to them, such as an online benefits portal, mobile apps and day-to-day support. They also learn to share in the responsibility.

If moving from carrier to carrier isn’t working out well for your company, it’s time you discovered the freedom, flexibility and control that self-funding with an independent TPA can offer. Contact EBSO and learn more today.

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New Jersey Aids Stop-Loss

supreme-courtIn a recent legislative update from SIIA, it was noted that the New Jersey Department of Banking and Insurance (DOBI) approved regulations lowering minimum stop-loss attachment points for large groups of 51 lives and above, effective in late August.

This move allows the large group individual attachment points to be $20,000 per individual, reduced from $25,000 and sets the minimum aggregate attachment point at 110% of expected claims, down from 125%. These changes broaden the levels of stop-loss or excess risk coverage available to self-funded health plans and brings New Jersey’s definition in line with the NAIC Stop Loss Insurance Model Act.

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Self-Funding Keeps Growing

With time running out on an opportunity for Congress to repeal and replace the Affordable Care Act and open enrollment season approaching, thousands of small and mid-sized businesses are likely bracing for another round of premium increases. A growing number of employers, however, will choose to avoid the uncertainty plaguing traditional group insurance markets by moving to a self-funded health plan – an option that provides an opportunity for savings and far more plan design flexibility.

Healthcare benefits continue to be perhaps the biggest obstacle facing small and mid-sized businesses. The Self Insurance Institute of America reports that between 2011 and 2016, the average annual deductible for employer-sponsored plans increased by 49% and the percentage of firms with fewer than 200 employees still providing health benefits fell from 68% in 2010 to 55% in 2016.

Self-funding on the other hand, has proven to be a far more responsible alternative for employers, enabling thousands to not only use their health benefit plan to attract and retain high quality employees, but to do so at an affordable cost. While self-funding has long been a staple for the nation’s largest employers, nearly a third of companies with 200 or more employees now offer at least one self-funded option.

Everyone Benefits from Flexibility

There are many reasons for the growth of self-funding, with flexibility and access to valuable claims data high on the list. Since self-funded plans are governed by ERISA, they avoid many of the costly mandates governing fully insured plans. To manage risk, stop loss coverage is obtained to cover claims that exceed anticipated levels. If claims are below anticipated levels, the plan retains the savings that would have been paid to an insurance carrier in the form of non-refundable premiums. Benefits can be customized to meet the unique needs of the group. When an independent TPA is engaged to administer the plan, claims data can be analyzed to identify chronic conditions and other key cost drivers. Services such as telemedicine and mobile transparency tools can be added to make physician access more convenient and more affordable. From plan design to data analysis, everyone benefits from the flexibility that a self-funded plan can provide. It’s the biggest reason why more small and mid-sized companies continue to move to self-funding with help from an independent TPA.

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Stop Loss Legislation

stop-lossIn New York, industry efforts to support self-funding for smaller groups have led to legislation extending the grandfathering of existing stop-loss policies for groups of 51 to 100 for an additional year, through January 1, 2019.

Other legislation impacting access to stop-loss insurance products by smaller groups has taken effect in Minnesota and is slated to become effective in New Mexico on July 1st. Attachment points are still being discussed in New Mexico and it appears that new opportunities for smaller groups may emerge in Minnesota as well. Since our last newsletter, legislation prohibiting small group stop-loss failed to advance beyond committee debate in the State of Maine.

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EBSO Benefits Develops Enterprise-Wide Solution with Enquiron Partnership

EBSO, Inc., a third party administrator with corporate headquarters in Milwaukee and St. Paul has expanded their partnership with Enquiron to provide Enquiron’s solutions to all of their self-funded clients. This expansion allows EBSO to deliver value to more clients and further assure that their clients are kept well informed regarding changing employer laws and regulations, placing EBSO’s expertise far above their competitors in the TPA marketplace.

“By including the Enquiron suite in our standard service offering, EBSO is able to extend the peace of mind we bring to our broker partners and clients,” said Bruce Flunker, President of EBSO Inc. “Gone are the days of responding to a client with the words: ‘you’ll have to check with your benefits attorney.'”

Each EBSO client now has unlimited access to Enquiron’s award-winning HR, employment and ERISA law content, tools, and guidance, including articles, training courses, guides, forms and more. Clients’ access to employment law and ERISA attorneys saves both time and significant amounts of money each year.

“We are excited that EBSO and Enquiron have expanded our partnership,” said Brian Hansen, Vice President of Business Development at Enquiron. “We are committed to listening to our partners and crafting a product suite that will deliver practical value to their clients and position them well against their competition.”

About EBSO Inc.

EBSO, Inc. is a third party administrator.  With corporate headquarters in Milwaukee and St. Paul, EBSO has grown to become a leader in the TPA industry. Today EBSO has offices throughout the United States including Arizona, Minnesota, Iowa, Kentucky, New Mexico, Ohio and Wisconsin. EBSO’s philosophy is to seek out the best resources, the timeliest information and the most innovative technology and use it to provide customers with cost-effective solutions in a way that is personal, fast, direct and honest.

About Enquiron®

Enquiron, www.enquiron.com, headquartered in Boston, Massachusetts, provides consultative business solutions to employers in all 50 states, across various industries, sectors and sizes. Since 1996, Enquiron has revolutionized the way that services impacting HR, Employment Law, Health Care, Retirement, Cyber and more are delivered to and utilized by employers. Enquiron has locations across the United States and is a trusted partner to organizations who need specific answers to specific questions.

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Responding to Growing Demand for Transparency

Experts agree that a lack of true price transparency has contributed significantly to the inefficiency in healthcare. Several websites compare the costs for certain procedures at varying hospitals, but it’s still very difficult, if not impossible, to make an informed choice when preparing for a non-emergency procedure. As a result, most people still go to doctors participating in a covered network and follow physician referrals when a specialist is required. In most cases, these choices are made without any knowledge of the cost.

Powerful Mobile Technology

Today, leading TPAs are providing self-funded health plan members with a variety of very powerful mobile transparency tools. One new mobile app enables members to identify fair pricing for more than 200 common procedures, including surgeries, imaging and diagnostic testing. By linking a rewards program, the app awards financial incentives when high quality, competitively priced providers are selected over those with lesser ratings.

Another software maker that describes a third of healthcare procedures as “shoppable”, has introduced a mobile app that enables plan members to search for physicians by procedure, location and price. This tool even goes beyond facts and figures to provide detailed descriptions of the procedure being searched. When members need further assistance, care navigators are available to provide online support via a live chat option.

Expert Administration Still Matters

While a totally open pricing system may never be possible in a business as complex as healthcare, TPAs are making self-funded health plans more transparent all the time. Strategies such as Reference Based Pricing and Concierge Health Advocacy are having a tremendous impact on cost and employee engagement. And while insurance carriers typically withhold claims data from fully insured groups, TPAs are experts at helping their clients put valuable claims data to work to identify cost drivers and manage chronic conditions in ways that help the plan avoid catastrophic claims in the future.

As the transition from volume to value-based healthcare continues, more responsibility will land in the hands of plan members. Smart employers know that a well-designed health plan can foster positive change and lower costs only if members understand their benefits. As long as self-funded plans, highly personal service and creative ideas are allowed to flourish, the number of engaged consumers capable of making economically wise healthcare decisions will continue to grow.

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Encourage Cost Savings by Sharing

medical-moneyA recent article in The Self-Insurer magazine described a very simple, straightforward approach to combating the rising cost of healthcare. It featured an approach a law firm is using to encourage and incentivize employees to utilize more cost-efficient healthcare providers.

The firm provides its members with the data needed to compare costs for various procedures, then shares the savings that accrue to their self-funded health plan when a more cost-efficient provider is selected. In some cases, members have received checks for hundreds and even thousands of dollars. Everyone wins according to the CEO and in the process, members learn that shopping for healthcare can be the responsible and rewarding thing to do.

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