Self-Funded Employers: You’ve Got Your Data, Now What?

By: DJ Denton , VP, Operations Integration

The shift towards self-funding presents employers with a unique opportunity to gain control over their healthcare spending. With this model comes the power of data—a treasure trove of insights waiting to be leveraged. But once you have this HIPAA-compliant, deidentified data, the question arises: "You've got your data, now what?" Keep reading to learn how employers can leverage their data to make informed decisions, ensuring their benefit plans are both effective and sustainable.

What Does Good Reporting Look Like?

Good reporting should simplify the complex world of data analytics, allowing employers or brokers who likely don’t have a background in the field to understand the key performance indicators of their benefit plan. This means receiving reports in a timely manner, ideally within ten days after the month's close, and starting with the crucial financial performance metrics. Employers should easily be able to discern their year-to-date administrative, policy premium, medical and pharmacy claim costs, and how these figures stack against budgeted expectations.

For Level-Funded Policies:

• Cost Comparison to Premiums: Reports should clearly illustrate how your total costs stack up against the pre-set monthly premiums. This clarity ensures employers can quickly gauge whether their healthcare spending is on track or needs adjustment.
• Refund Expectations: The provided data should seamlessly convey potential refund opportunities at the policy term's conclusion, offering transparency and aiding in financial forecasting.

For Traditional Stop-Loss Policies:

• Individual Cost Thresholds: Reporting must pinpoint whether individual claim costs are nearing levels that trigger specific stop-loss reimbursements. This early warning system is crucial for anticipating financial impacts.
• Group-Level Cost Analysis: It’s essential that reports unambiguously compare total group costs to aggregate stop-loss coverage. Understanding this relationship helps determine the likelihood of receiving stop-loss reimbursements during or at the end of the policy term, facilitating more accurate financial planning and risk assessment.

Beyond financial reporting, understanding the operational performance of your plan is key. Monthly reports should verify that the number of employees covered matches payroll reporting, ensuring accuracy in eligibility and coverage. Reports should also provide insight into claims volume and the speed of claims processing can highlight efficiencies or areas for improvement in plan administration. Diligent oversight of the administrator’s claim adjudication and provider payment process helps avoid putting members into unnecessary balance billing situations.

Evaluating a Report: The Role of a Good Self-Funding Partner

Navigating through these reports can be streamlined with the help of a skilled self-funding partner. Such partners prioritize employer and broker time by highlighting critical measures before diving into specific plan performance details. A good self-funding partner will hold third-party administrators (TPAs) and vendors accountable for the accuracy and timeliness of their reporting, resolving any issues on the employer's behalf. They will also ensure the stop-loss carrier is in constant sync with the plan's performance, facilitating a smooth operation of the benefit plan.

Leveraging Data for Plan Optimization

Once you have data in your hands, your self-funding partner should help you analyze it—providing clear insights into plan performance, identifying areas of concern and opportunity. This could range from scrutinizing high-cost medical cases for payment integrity to comparing medical or pharmacy costs against industry benchmarks. A good self-funding partner will also explore avenues like educational outreach for members about cost-effective service sites and ensuring specialty pharmacy costs are minimized through assistance programs. This comprehensive analysis helps in crafting strategies to mitigate costs and enhance plan efficiency.

Implementing Safeguards to Protect Your Plan

Safeguarding your plan starts with partnering with administrators and vendors aligned with your mission and goals. This includes leveraging technology for member engagement, providing 24/7 access to benefit and claim data and supporting members with healthcare navigators. Additionally, efforts to reduce medical debt through financial assistance programs and medical bill negotiation play a crucial role in protecting the plan and its beneficiaries.

The Impact of Plan Data in Light of the J&J Lawsuit

The precedent set by the J&J lawsuit underscores the importance of plan data transparency and its role in driving healthcare cost efficiency. As employers are the fiduciaries of their employees' healthcare costs, rigorous and frequent analysis of medical plan performance is critical. This level of scrutiny and the efforts to improve plan performance based on the insights garnered from reporting demonstrate an employer's commitment to advocating on behalf of their staff.

Making the shift toward self-funding offers employers a strategic opportunity to redefine their approach to employee benefits. By embracing the power of data and the insights it provides, employers can ensure their benefit plans are not only effective and financially sustainable but also aligned with the well-being of their workforce. The key to a successful self-funded plan lies in understanding and leveraging good reporting practices, evaluating these insights with the expertise of a knowledgeable partner and implementing strategic actions to optimize plan performance.