Commentary

Experience Monitoring of Self-Funded Health Plans


Self-Funding Actuarial Services, Inc., (SFAS) through its Web-Site, www.awpse.com, offers a new service that incorporates numerous features of interest and value to the self-funded health plan sponsor and its vendors/practitioners.


Such new service is in two parts: (a) monitoring and (b) managing. The need to combine these two functions was inspired by Peter Drucker who wrote that “You can’t manage what you can’t measure”. For our purposes, monitor is a better word than measure.


A more detailed description of this new service is at www.awpse.com/experiencemonitoring.


Monitoring


The monitoring part is a risk/actuarial work-product, delivered as an email to a designated receiver. The Eligible User (and data-manager) may be the plan sponsor, TPA, practitioner or SFAS. The work-product is the property of the Engager who may accept such either signed or unsigned.


The features that make this work-product new and different are:


One. It (a) is very inexpensive (in the $50-100 minimum range) , (b) may be user-prepared, (c) is user-friendly and (d) meets the highest technical and professional standards.


Two. New features of value include the monitoring of (i) both claims and fixed costs, (ii) claim reserves, (iii) expected stop-loss recoveries (both specific and aggregate) and (iv) lasered and aggregating specifics. Also, where more than one projecting method is available, both are shown.


Managing


The managing part involves the appraisal of the results of the Experience Monitoring Work-Product. There are seven categories of managing options:


Category One. Menu of Plan Amendments

Several examples might be (a) elimination of double-coverage, (b) attained age funding and (c) more stringent behavioral/wellness requirements.


Category Two. Plan Administration Changes

Three examples might be (a) aggressive and comprehensive anti-fraud and compliance audits; (b) Plan Sponsor dominance in the risk/underwriting function using either (i) its own models or (ii) models provided by professional vendors and (c) web-based and automated administration.


Category Three. Changes Involving the Physician

The plan Sponsor, as a fiduciary obligation, might recommend, but not require, that each covered person have a patient-physician treatment/care Protocol Agreement which agreement would be favorable to the (a) patient, (b) physician and (c) Plan. The Plan might offer an inducement to the covered person to execute such Agreement. For a sample of such Agreement, see www.awpse.com/protocolagreement.


Category Four. Human Resource Related Changes

While there are many candidate changes the most significant involves contingent employees. The Plan Sponsor may adopt either (a) leased employees (independent contractors) or (b) shared or co-employees (provided through a PEO) to gain plan-related advantages.


Category Five. Administration Cost Reduction Changes

The change in this Category of greatest interest is the use of the self-funded plan being issued and administered by a trust whereby all of the services are common services (paperwork, records, stop-loss, claims, etc.). Significant cost savings will result. Such arrangement is an aggregation of single-employer plans which share everything except the claims experience; it is not a MEWA. See

www.awpse.com/employersponsoredhealthplantrust.


Category Six. Stop-Loss-Related Changes

Changes of the greatest interest would include: (a) increased employer involvement the underwriting process, (b) stop-loss being issued to a collective-type trust rather than to the participating employer, (c) corridor percent being a risk option (aggregate at 115%, e.g.) and (d) stop-loss being experience-rated (potential for dividends).


Category Seven. Provider Reimbursement Changes

To the extent possible, the plan will be drafted so as pay all providers at the uniform rate of 1 + x% of what Medicare pays.

Other rules may be imposed such as the plan offsets for medical errors, e.g.