Utilizing strategic cost containment measures, benefits brokers become health care advisors, which requires a greater commitment to service, a broader set of responsibilities and a stronger value proposition. (Photo: Shutterstock)
As the cost of health care continues to drive up fully insured plan premiums, more employers are turning to self-funded group health plans. Whether an employer has two employees or 2,000, more are abandoning traditional fully insured group plans for some form of self- or level-funded health plan.
Every employer considering a move to self-funding should ask these two vital questions:
|How do we accurately project our ultimate cost for a self-funded plan?
For large groups who can obtain credible claim data from their current carrier, a projection of self-funded plan costs can be estimated based on this historical data. For small employers who are not able to obtain credible claim data, a projection of plan costs can be determined through underwriting, using medical questionnaires.
Join Daniel for his BenefitsPRO Broker Expo virtual session, "Health care risk financing in the post-COVID-19 era" Wednesday, August 19 at 3 PM.
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What tools are available to help manage and control the cost of our self-funded plan?
Multiple cost control tools are typically included with the plan or can be added based on the employer's needs and discretion.
Key features that are standard for most self-funded plans are:
1. Customized plan designs and coverage options 2. Detailed claims reporting 3. Potentially lower costs and reduced cash flows for traditional self-funded plans, or refunds from unused claim dollars if the plan is level-funded.
Some of the cost-control options to be considered by the employer are:
1. Reference-based pricing 2. Direct primary care 3. Bundled pricing 4. Care management strategies
When implemented correctly, we have seen these cost-control measures collectively reduce plan costs by as much as 40 percent.
Transitioning from a fully insured group plan to a self-funded or level-funded plan usually imposes a shift on the employer's culture, putting an emphasis on education and communication from the broker, starting with the leadership and carrying on to the employees.
The leadership team should be educated on the management of the new self-funded plan, while the employees receive a slightly different message that focuses on how to navigate the plan's cost-containment features and ultimately become confident health care consumers.
Employee benefits brokers who move their clients to a self-funded or level-funded model are no longer considered brokers. Utilizing strategic cost containment measures, they become health care advisors, which requires a greater commitment to service, a broader set of responsibilities and a stronger value proposition. It should also open the door for higher fee-based compensation.
Our session at the BenefitsPRO Broker Expo will address these issues and more. Actual self-funded plan scenarios will be presented, along with the impact of various cost control strategies utilized with self-funded and level-funded plans.
Daniel R. Meylan is senior vice president of broker relations at Payer Compass.
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