What 10 “Plays” Will Drive Your Self-Funded Health Plan To Superior Performance?
?As a self-funded employer, you have a fiduciary duty to your employees and their families to act in their best interest in the management and oversight of your organization’s health plan.? Add to that the complexity of running a $10 million, $50 million, or even $100 million “healthcare business” across 20,000+ providers within the confines of your core business operations, and you get a sense of the daunting task faced by senior leaders in benefits.? To make the task even more challenging, the recent Consolidated Appropriations Act of 2021 (CAA) has ratcheted up the fiduciary duties to put them on a par with retirement plans.? While your TPA and broker are eager to help you fulfill the legislative requirements, they may not be considered an “independent” source should you ever face ERISA litigation from a disgruntled employee.? To help in this regard, we outline below 10 healthcare “best practices” that we see employed by industry thought leaders and innovators among America’s best run health plans:
1. Create a Compelling Future Vision
?It all starts with a compelling vision of your future, and that vision will be unique to your organization.? Below are a few questions to get you started:
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2.????? Adopt Benchmarking / Key Performance Indicators (KPI)
Now that you have created a compelling vision for your health plan, what are the metrics & benchmarks to measure your progress toward that success?? Peter Drucker, one of the most respected and influential business leaders of the 20th century, delivered the famous adage “You can’t manage what you can’t measure”.? For those Benefits / Total Rewards leader willing and able to adopt peer benchmarking and Key Performance Indicators (KPI), quantum leaps in performance are possible.? The goal is not necessarily to become the lowest cost employer or even drive the highest level of member engagement, but rather to integrate healthcare best practices to deliver that optimal mix of health benefit programs that reflect your benefits philosophy towards members, recognize your organization’s inherent cost constraints, is consistent with your corporate culture and delivers continuing metrics to share with your executive leadership as to the efficacy, cost efficiency and member impact of your employer sponsored health plan programs.?
One of the best independent sources of information to help shape and operate your healthcare operations efficiently and effectively are your Benefits / Total Rewards peers at similar-sized organizations.? Like you, they are tasked with overseeing substantial medical expenditures, and have likely developed innovative methods to ensure its effective operation.? Organizations sharing your same payer and/or in overlapping geographies makes for stronger “apples to apples” comparisons of administration costs, relative medical and pharmacy costs per employee, handling of high dollar claimants, preferred business partners and working relationship with local health systems.? That said, networking partners outside those boundaries of size, payer and industry are more likely to foster quantum leaps in performance, so we recommend that you do both.? This networking can be achieved via employer coalitions, healthcare conferences, trade groups and introductions from your benefits advisors, internal business partners or your payer / PBM. ?
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3. Implement Real-Time Data Analytics
Armed with a compelling vision for your organization’s health plan and equipped with the key performance indicators needed to measure your progress, it’s time to capture timely, accurate and comprehensive healthcare data.? Expect pushback from your healthcare payer partner, as this data will create legal, regulatory and accountability risks for them as business results become more fully transparent.? Per an Employee Benefits News survey, less than 10% of self-insured employers have seen their own healthcare claims data in-house.? Imagine how difficult it is to run a complex multi-million-dollar healthcare supply chain with NO visibility to the results of your day-to-day operations. ?And in those few cases where data is retained internally, the data may not contain adequate granular detail or have critical fields masked by your carrier.? We suggest that real-time data feeds (ideally, daily or weekly) be implemented at a claim line level containing ALL relevant clinical and financial fields.? Timely access to data will drive knowledgeable, evidence-based decisions to improve the quality of care and rein in escalating costs.? If you are having any issues accessing this data, this may help:
4. Initiate A Weekly Funding Call
Many of you may have already developed an “early warning system” of high-dollar healthcare claims that are expected to be reimbursed, as these large disbursements have far-reaching consequences on your corporate budgets and stop loss insurance.? A “weekly funding call” formalizes this approach and puts your payer (carrier / TPA / PBM) on notice that any claim exceeding a certain dollar materiality threshold (i.e., $50,000) must be put on hold for review by you as the employer and/or your designee prior to reimbursement.? These primarily represent inpatient claims, but could be an expensive outpatient claim, a specialty drug infusion, or even a high dollar ambulance / emergency room visit.? Prior to payment is the primary inflection point in the claims payment process where the self-funded employer has both the authority and negotiating leverage to act.? This weekly funding call effectively shifts the administrative burden of claim verification back where it belongs (to the payer and/or health system submitting the bill).? Another benefit is that it creates a timely, recurring accountability touchpoint with your payer.? Click here to learn more:
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5. Conduct Independent Audits
The previous “weekly funding call” is an excellent precursor to your audit process, as it educates and informs the employer as to the internal controls / payment integrity processes that are built into your current legacy healthcare claim processing platform.? Just as important in the process is to verify that your payer is capturing sufficient granular data to support strong internal controls, and which internal controls are executed on a prepayment versus post payment basis.? We suggest as a logical next step to engage knowledgeable partners to conduct truly independent audits of your health plan.? Audits can include high-dollar claim audits, clinical / nurse coder reviews, eligibility audits covering employees, spouses and dependents, contract errors, medical coding, duplicate payments, age / gender conflicts, subrogation, and a lot more.? DO NOT accept the boilerplate language in your ASO agreement that reads something like this:? You can audit once a year, you can only look at 200 claims, the sample must be statistical, your audit must be completed in 5 days and even if every claim you review is deemed incorrect, you can’t extrapolate results to the population to recover funds wrongly disbursed.? We see this as a form of “gag clause” to limit the effectiveness of your efforts to monitor health plan performance.? Click here to learn about the troubling errors we routinely encounter in our bill verification efforts:
6. Evaluate Payer / PBM Contract
There are likely terms embedded in your current payer contract today that adversely affect your ability to exercise your fiduciary duties to your employees and their families under your current health plan.? We see ambiguities relative to who “owns” the organization’s claim data, restrictions on performing a comprehensive and effective audit, undisclosed payer revenue sources that are impossible to measure or track, performance guarantees that are not independently vetted, undisclosed administrative fees that are nearly impossible to monitor and an overall lack of financial alignment between you and the company administering your plan.? And don’t forget to remove the “no gag” clauses from your confusing 80-page ASO agreement, as required under the new CAA legislation.? Here’s a resource to help:
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7. Foster Health Literacy / Member Advocacy
Most of us are not confident consumers of healthcare goods and services, and gladly defer to our caregiver, health system or payer as to what care is appropriate and where to seek treatment. We may be reluctant to ask about relative costs, the preferred medical setting, inherent risks / side effects or alternative treatment options, even though some choices may be far better suited to us based upon evidence of cost, quality, or comparative outcomes. Educating members pays strong dividends when they understand the relative quality and value of their healthcare choices and can be driven proactively via Benefits newsletters and “lunch and learns”.? Below are two of my favorite resources for educating yourself and your members:
Education needs to be supplemented by member advocacy / outreach programs that can influence vulnerable members to make better decisions for themselves and their families.? As an example, we recently identified a vulnerable member (22-year-old female dependent) who had 32 ER visits, 15 inpatient admissions, 8 psychiatric encounters and 3 residential substance abuse admissions within a year.? This is in addition to out-of-pocket costs for the family of $12,847.? This member is suffering medically and financially, as is her entire family.? Sadly, we see little to no meaningful intervention within our current healthcare ecosystem to assist these members UNLESS the employer decides to step in.? We believe a key role as a compassionate employer is to advocate for members medically and financially to ensure these interventions occur.
8. Integrate Transparency / Employee Shopping Tools
We currently have better information to pick out a nice restaurant for dinner versus locating a skilled surgeon to treat us for a life-threatening disease.? That is an incredibly scary proposition. Here’s several other concerns:
Faced with these challenges, you quickly learn that knowledge and cost visibility are critical skills in preserving both your health and financial wellness.? Solutions are available to help your people navigate the complex healthcare ecosystem, locate convenient, high-quality providers for routine diagnostic procedures and identify highly skilled “centers of excellence” for those conditions where there may be only a few providers in the country that are truly experts in its treatment.? Find a solution partner(s) that enables you and your members to identify “top notch care at a fair price”.?
9. Network With Providers / Health Systems
Health systems / physician practices are business partners in the communities in which your organization operates and you in return are key customers for their valuable medical goods and services.? Rather than relegate managing that customer / vendor relationship solely to a carrier that cares only about their “overall book of business”, this is an opportunity for the employer to exert influence over the services and relative costs of care being delivered to its members.? Realize that the carriers serve primarily as an administrative intermediary extracting 10-20% of the total healthcare pie primarily via undisclosed fees earned by pushing paper around, little of which improves the quality of care delivered to your plan members.?
Health systems / physician practices are increasingly frustrated by the bureaucracy, “bullying” and often arbitrary claim payment practices of large carriers and would much rather work directly with employers as their true customers.? By ensuring that claims are paid reliably and timely, providers can nearly always offer better pricing directly to employers.? Think about the cash price for medical treatment, which is lower than the negotiated carrier rates 57% of the time (Source:? Health Affairs study published in early 2023). ?When companies exert their considerable influence on providers, they may be able to extract favorable discounts on common treatments such as medical imaging, surgical care bundles, lab testing, etc., or avail members of preferential treatment such as same-day appointments or convenient telehealth.? The rapid growth of direct primary care is another example of tight relationships that can be forged with your healthcare partners.? Don’t be afraid to flex your financial muscle to save money, gain better service for your members and/or increase the quality of care.
10. Embrace Specialty Programs (Pharmacy / Surgical Care Bundles / Medical Imaging / Direct Contracting & More)
Every health plan faces unique challenges dependent upon your industry, the size of your member population, geographic footprint, demographics of your population, corporate culture, level of funding and so much more.? Engage a knowledgeable partner to perform a comprehensive and independent assessment of your health plan’s performance, as there are numerous levers at your disposal to programmatically deliver “high quality care at a fair price”.? Your performance assessment will likely identify gaps between your healthcare vision and current practice and suggest targeted programs that address your organization’s unique set of pain points.? These programs may include the following:
This summarizes our top 10 "plays" for superior performance.? It is always a “work in process”, as every day innovative Benefits / Total Rewards leaders like yourselves develop enhanced strategies to ensure that their employees and their families are receiving top-notch care at a fair price.? We welcome your suggestions & insights to add to or replace our “top ten”, so please feel free to post your thoughts as to those “best practices” that we missed.? We look forward to hearing from you!
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Founder at Hero Health Plans
1 年Jim Arnold, CPA, CMA, CFE that is a very informative and timely article for fiduciaries- as well as anyone in the health insurance community. Resources DO exist to help employers and their brokers improve this mess- they just need to be proactive and get started. Thank you Jim!
Partnering with innovative health benefit advisors and self-funded employers | Delivering DIRECT relationships with high-quality doctors | High-Quality Care, Transparent Prices, Significant Savings
1 年Great advice Jim!
Well shared ??One of the best independent sources of information to help shape and operate your healthcare operations efficiently and effectively are your Benefits / Total Rewards peers at similar-sized organizations.