Commentary

New Millennial Changes

Introduction

There are eleven categories of New Millennial changes to self-funded health plans. Each of these changes has some effect, direct or indirect, on claim reserves.

Category One. CostPlus (Provider Reimbursement)

CostPlus is the operational name given in this E-Text to the New Millennial provider reimbursement protocol which eliminates the Old Millennial networking arrangements and replaces them with a better and fairer provider reimbursement protocol. The term connotes the unrestricted (universal) or total access to provider care. CostPlus is made part of the health plan document of each health plan and may be referred to as either CostPlus or MedicarePlus.

Category Two. Risk and Actuarial Work-Products

Risk and actuarial work-products include the following:

Group A (a) Claim reserves, (b) claims fluctuation and stop-loss risk evaluation, (c) actuarial equivalence of plan benefits and (d) funding and COBRA rates.

Group B. (a) Medicare Part D certification and attestation, (b) experience monitoring, (c) discrimination testing and (d) state certifications.

All of these work-products may be delivered using one of these three methods: (a) traditional (actuary performs all functions), (b) New Millennial (actuary performs the computations but the (i) consulting and (ii) the data-handling may be performed by others) and (c) the work-product is created and treated as any other system-prepared report.

Category Three. Medical Underwriting

The procedure is Web-based and uses a computer model and consists of two parts: (a) information gathering and *b( decision-making. The multiple source data that may be used by the computer consist of (a) individual medical histories, (b) Medical Information Bureau data base, (c) data of the Prescription Drug Managers.

Consider an underwriting health index is a percent of the standard, to be, say 15% which is assigned to covered person X; This index indicates that based upon to totality of submitted data, the health rating or X is 115% where the expected index is 100%.

This New Millennial tool may be very useful in the risk management of health plans and goes a great way in meeting the letter and spirit of the Enterprise Risk Management mandates. The tool is also very useful in the acquisition and management of stop-loss coverage.

Category Four. Provider Practice Protocol

In view of the dramatic challenges to the health care (a) providers and (b) plan sponsors which pose a threat to employer-sponsored health plans, it seems reasonable and appropriate that the plan sponsor, motivated by its (a) ERISA fiduciary obligations, (b) trade and commerce considerations and (c) Enterprise Risk Management (Sarbanes-Oxley) might ponder this question: Is it timeful that the involved parties attempt to offer some solution to this problem?

This E-Text asserts that the response to this question is Yes; also, that the plan sponsor might wish to consider the following: (a) make available to each adult covered person a model physician-patient legally-binding practice protocol agreement which may be agreed to as a voluntary matter between them and (b) where there is an executed agreement, the plan will give such covered person a plan-related economic advantage (more favorable deductible, e.g.).

Category Five. Stop Loss Coverage

New Millennial stop-loss changes are discussed in three groupings: (a) Modest Effort Required, (b) Some Effort Required and (c) Considerable Effort Required.

Some Effort Required. A menu of such changes would include the following: (a) Regroup the block of plans so as to achieve maximum buying power and administrative advantages; (b) stop-loss covering multiple TPAs should be considered and (c) arrange for such stop-loss block to be experienced-rated.

Some Offort Required. Provide the TPA with limited underwriting authority particularly in the initial risk attachment process. This authority includes medical underwriting.

Considerable Effort Required. The TPA should obtain the stop-loss through a captive insurer. Such Captive would likely serve a consortium of TPAs.

Category Six. Administrative Changes

A listing of such administrative changes in outline form follows. In the Additional Reading Section which follows, a detailed narrative of each change is provided.

Category Seven. Marketing and Promotion

In brief, this Category does not remove the traditional broker interface but rather permits the plan Sponsor and the broker to use high-tech methodology to attach and manage the risk in a more efficiently.

Category Eight. Computer Technology

New millennial computer technology changes are proving most helpful to health plans in (a) computations, (b) transmittal and (c) storage. New locations of the computer include (a) a website accessible by a username and password or (b) a remote special-purpose website accessible via a satellite connection (cloud computing, e.i.). In support of these changes are the following (a) much-enlarged databases, (b) new statistical and mathematical tools and (c) advancements with robotics.

Category Nine. Economies of Size and Format

The basics of this Category involve the (a) application of as many cost-effective, user-friendly, efficient and anti-fraud/abuse modifications (b) as are practical to self-funded health plans.

Category Ten. New Organizations

The list of new millennial organizations includes the (a) Captive Insurer, (b) Professional Employer Organizations.

Category Eleven. Enterprise Risk Management (ERM)

The failure and disgrace of several major corporations of ignoring the basic principles and practices of risk management resulted in Congress enacting the Sarbanes-Oxley Act. This law gave birth to a new risk and actuarial sub-practice commonly referred to as ERM.