We all know how important it is to stay current with preventive screenings and wellness visits to ensure our personal good health. But “wellness checks” for your health plan administration are also critical to the financial well being of your plan. After all, you want to be confident that your claims administrator is paying claims correctly and in compliance with your contract and benefit plan designs so there are no big surprises down the road.
Yet I’m always surprised when I talk with a benefits manager who has worked for a company for 5 to 10 years, and they can’t recall ever conducting an audit of their claims administrators. A claims audit is an important wellness check that should be conducted every year, and it should be a priority for every plan sponsor who wants to reduce wasteful spending caused by administrative errors and fraud and abuse.
Most administrative contracts put restrictions on the time period of claims that can be audited and limit how far back they will pursue recoveries for errors. The longer a plan sponsor waits to conduct an audit, the more dollars they forfeit from a recovery perspective. More importantly, failing to regularly conduct audits allows continued wasteful leakages from plan funds because errors are not identified and corrected soon enough.
As the old business adage goes, you can’t manage it if you don’t measure it. So add an annual health plan claims audit to your calendar of wellness checks. I know from my experience that this is the only way you can be confident you’re maximizing the financial performance of your healthcare benefit.
The Wall Street Journal reported on May 28 that national health plans are offering small employers (as few as 10 members) self-insurance. The purpose of this new option is to help small businesses avoid new requirements under the Affordable Care Act, such as richer benefits and pricing rules.
This seems to me to be risky and undesirable for several reasons:
1. Small business will have significant financial risk even with stop-loss insurance to limit the effect of a catastrophic claim. The insurance premiums for a low stop-loss limit will be high, while a higher stop-loss limit could easily result in payments that force a small business to lay-off employees or worse yet, close.
2. The WSJ reports that states, such as California and Rhode Island, are seeking to enact new rules to limit stop-loss insurance. Other states already prohibit insurers from offering stop-loss insurance to small groups. You can expect more states will curb this tactic.
3. Small employers who chose to self-insure will necessarily opt out of state exchanges. This erodes the intent behind the ACA and its state exchanges of creating a large, diverse insurance pool and spreading risk. Those remaining in the state exchanges will likely be higher risk and more expensive, resulting in higher premiums.
4. While the national health plans are claiming that they are just being responsive to their customers, they are taking advantage of a loophole, likely temporary, which flies in the face of the ACA’s name, “Affordable Care.” Those insurers should be ashamed for acting against a plan to provide health insurance for the 54 million Americans who have no or inadequate health insurance.
What does this mean for large employers?
1. This supports many of our clients’ decision to stay in the health benefits game (“play” rather than “pay”) for the same reasons that small businesses are considering the option of self-insurance.
2. Employers who self-insure retain options to control costs and encourage desirable behaviors that improve health status.
3. Employers who self-insure can continue to influence overall performance and productivity. Employers recognize that their other means of managing population health risk, such as wellness and chronic condition management programs, become less meaningful and more disjointed without the financial risk and control.
Vice-President of Client Services