Employers and brokers can occasionally get complacent with their renewals and accept whatever rate increases handed down to them, particularly if they view the increase as “not that significant.” However, those annual renewals that are deemed to be rather insignificant over time can amount to a devastating financial effect, by way of the Rule Of 72.
Here are five areas to consider when reviewing your partially self-funded plan at renewal.
Data. Are you getting sufficient data to analyze and understand why your claims are going up? It’s one thing to get data, but is it converted into good information which allows you to make well-informed, intelligent decisions? This could be everything from plan design alternatives, to network decisions, to pharmacy costs, to disease management and specialty programs. Having a high quality data analytics program allows you to do just that.
Stop Loss. Where are you getting your stop loss quotes from? From your administrator? From your broker? If you are receiving them from your claims administrator, chances are you’re seeing a very narrow view of stop loss alternatives. In fact, if your claims administrator is an insurance company you are seeing a very narrow view utilizing their re-insurer. Third party administrators can also present a few alternatives but chances are they are with their “preferred” carriers – meaning that they receive a commission override from them.
Administration. When was the last time that you investigated alternative claims administrators? Improved technology and specialized services are changing this platform every day. Some administrators keep doing the same things day in and day out, while other ones seek to improve their offerings and services. I can certainly attest that there are Best In Class claims administrators, and then there is everyone else.
Pharmacy Benefit Managers (PBM). This is an area that should be examined regularly. The entire pharmacy benefit management arena changes all the time. What you may think was a good deal in the past may be completely uncompetitive today. PBM’s have always been finding ways to make money at the expense of employers, but there also PBM’s that are innovative and actually work for employers to save the money. The best way to determine which PBM is best for you, is to have them reprice your pharmacy claims and give you an estimate or guarantee of your rebates.
PPO Networks and Reference Based Pricing (RBP). If you have read my articles and blogs in the past you know that PPOs are just not getting it done for employers and employees. There purported discounts on ever-increasing provider pricing is all meaningless. It’s the proverbial “discount off of what.” In other words, they can purported to have a big discount but if providers continue to increase their prices and rates, the discounts are diluted. RBP pricing is based upon giving those providers a fair profit on top of their reported cost of the government, or Medicare, whichever is greater. It doesn’t matter if the providers raise their prices or rates – there still paid based upon cost or Medicare. The best way to determine how much money has been left on the table is to have your medical claims are repriced based upon these metrics. It’s an easy, quantifiable exercise so that you can decide whether or not it’s compelling enough to consider.
With a vast majority of renewals occurring on January 1 every year, now is the time to examine each of these areas so that you are well prepared should you choose to make some changes. If you would like to learn more about these you can reach me at [email protected] or call me at 970 – 349 – 7707.
Stay well and be safe.