Technology advancements change the landscape of business operations, including self-funding health plans capabilities.
Historically, large companies were the only employers able to afford to implement a self-funded plan. The reason self-funding was limited to large businesses was due to the required level of personnel involved to maintain the plan or the high cost of developing proprietary software to administer the program. Now, technology has made even the smallest of employers (varying by state) able to afford a self-funded health care strategy.
HR departments are used to shying away from the administrative burdens thought to be an inevitable complication of introducing a self-funded plan. Once a hurdle, technology has made it easier to track participant eligibility and make billing as seamless as a traditional fully insured plan would be.
Now that self-funding is being marketed to small and mid-sized employer groups, choosing the right program can be a tough decision for owners and HR personnel.
Here are components to look for in a self-funded program:
1. Online technology to bring it all together.
Technology capable of managing all health care-related information from a secure, online platform. Companies are not new in dealing with various vendors and insurance companies for different benefits, such as major medical, vision, retirement plans, and ancillary benefits. However, self-funded programs have a breakdown of vendors to consider that should not be overwhelming for HR to manage. The components of a self-funded plan bring in the stop-loss insurance carrier, the pharmacy benefit management (PBM) program, the claims management specialists (if tightly managing claims is not a part of the program, do not consider it), a third-party administrator (TPA), a wellness program (be wary of plans not implementing a meaningful wellness plan), and possibly dental and vision benefits. If these were not brought together in an online platform with user-friendly administrative capabilities, you might want to consider other options.
The reporting should be informative for HR and provide data on employee behavior that will be beneficial in predicting future claims and also ways to improve health and drive down costs. The data should be revealing enough that it creates a meaningful health care strategy, opposed to a conventional “option A, B, or C health insurance plan.”
2. Actual transparency of data and costs.
If a self-funded model being offered to a small or mid-sized company does not provide full transparency, it is not the way to go. Every penny should be able to be tracked, which enables employers to see where their costs are. If the expenses of the program are not broken apart and available in meaningful reports, the ability to track and have predictive trend management is impossible.
How can you control costs if you do not know what they are?
Well, that is what employers are used to with fully insured plans where the data is owned by the carrier, and premium increases come with little to no explanation.
Ask these two questions while keeping in mind CMS predicts the average annual increase for Medicare from 2013 to 2023 to be 3.4% (Source: Centers for Medicare & Medicaid Services https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html).
What have premium rate increases been over the past few years?
Where have my biggest claims been and what data do I have to show it?
3. Real-time data and information reporting.
At a minimum, a true review of claims data should be done on a quarterly basis with access to information on a weekly or even daily basis. The larger the company, the more data to review, therefore increasing the frequency of examination to control claims.
Three or four years ago, what would then take three weeks or a month to scrub can now be done by mid-sized employer groups in only a few hours.
4. HIPAA and ERISA compliance and data security.
The double-edged sword of technology is that data is flowing in and out of internet sources that a breach is now a higher vulnerability than in the past. Think about benefits from a legal standpoint and be sure only authorized personnel can access health care plan data and analytics. Privacy laws are very strict, and if an error or data breach were to occur, an audit trail should point to the precise minute and people involved when the event occurred.
Be sure the technology components and benefits administration is done so in a secure, compliant way to avoid critical data leaks.
Self-funding for small and mid-sized employer groups is no longer a challenge that leaves the expensive traditional model the only option. Find out what the big companies have been doing for years!