WORKING ORKING WIT WITH H INDEP INDEPEND ENDENT ENTS Benefit - - PowerPoint PPT Presentation
WORKING ORKING WIT WITH H INDEP INDEPEND ENDENT ENTS Benefit Advisors Network: July 10 th , 2019 TODAYS AGENDA WHY have this conversation? SIIAs research Employees are still feeling the pain BUCAAs Results
WORKING ORKING WIT WITH H INDEP INDEPEND ENDENT ENTS
Benefit Advisors Network: July 10th, 2019
TODAY’S AGENDA
WHY have this conversation?
INDEPENDENT
SE SELF INSURAN INSURANCE E INSTITUTE INSTITUTE OF OF AMERIC AMERICA
Why do emplo hy do employer ers s self self fund their healt fund their health h plans? plans?
care needs of its employees.
A A BIGG BIGGER ER BITE BITE
Middle-class families’ spending on health care has increased 25% since 2007. Other basic needs, such as clothing and food, have decreased.
Percent change in middle-income households' spending on basic needs (2007 to 2014)
Source: Brookings Institution analysis of Consumer Expenditure Survey, Labor Department | THE WALLSTREET JOURNAL
Food at home me Housi sing Total Hea ealth h Car Care Transpo sportation ion Total l Food Food aw ay y fr from ho m home me Clothing Clothing 24.80 .80%
.60%
.00%
.30%
6.40%
.60%
.40%
18.80 80%
The he “BUCAAs”
Health Insurance is dominated by five companies.
THE THE BUCAA UCAAs s ST STOCK OCK PRICE PRICE GR GROWTH WTH
SOURCE: Morningstar, FactSet, Financial Times. 2018. SOURCE: Anthem Q4 Earnings Report. 2019. SOURCE: United Healthcare Q4 Earnings Report. 2019. SOURCE: Cigna Q3 Earnings Report. 2019. Prorated for full year. SOURCE: Aetna Q4 Earnings Report. 2019. SOURCE: Humana Q4 Earnings Report. 2019.
Anthem Anthem (Blue Blue Cr Cros
United nited Healthcar ealthcare CI CIGNA Aetna Aetna Humana umana
10 10-Year S Stock Grow th Net et Inc Income
(De (Dec. . 2018)
566% 566% 961% 961% 857% 857% 766% 766% 1,049% 1,049% $5.4 $5.4 B $17.8 B $17.8 B $3. $3.6 6 B $2.0 $2.0 B $1.5 $1.5 B
BUY UY LIKE IKE A A FOR ORTUNE TUNE 500 98% 98% of employers with more than 1,00 1,000 employees self-fund using a traditional ERI ERISA SA plan. Large employers manage their health benefits spend to inflation levels, not medical trend which can be 3-4 times inflation. Best in class provider netw orks, carve-out PBMs, specialized centers of excellence, and population management tools are used to control costs. The captive enables the same results for middle market employers.
Risk Taking
Each employer will self-insure at least $10,000 of claims per member, per policy period. SAVINGS OPPORTUNITY
Risk Sharing
For claims between $10,000 and $500,000, employers POOL stop loss premiums and claims. UNDERWRITING DISTRIBUTION
Risk Shifting
For claims above $500,000 and 125%
HO HOW W CAP CAPTIV TIVE E FUN FUNDING DING WORKS ORKS
60% OF TOTAL
VARIABLE
Claims Account (employer establishes w ith TPA)
THREE THREE BUCK UCKET ETS WHERE WHERE DOES DOES THE THE HEAL HEALTH TH PLAN PLAN DOL DOLLAR AR GO GO?
15% OF TOTAL
FIXED
Admin Fees (TPA & Network) Commissions Stop Loss (> $500K) 25% OF TOTAL Pooled Stop Loss Premiums
VARIABLE
UN UNDERST DERSTANDI DING NG RISK RISK SHARING SHARING
ABC, Inc. $1.2M premium MNO Co. $1M premium EFG LLP $1.75M premium XYC Corp $1.65M premium 123 Corp $1.15M premium XYZ, Inc. $0.75M premium
$7.5MM premium* $6.3MM claims $1.2MM distribution
*$7.5 Million is used to fund ANY claims between $30,000 and $500,000 regardless of which plan sponsor incurs that claim.
Meet Meet the Ca the Captiv ptive e Emplo Employer er
“My insurance carrier doesn’t give me claims data. We have no visibility into where our money is going.”
Specific Deductible
$35,000
Variable Cost
At least 2 Members of the C-Suite engaged in the healthcare plan.
“Health benefits is one of my top 3
doing the same things.”
Employees
TPA: A Third Party Administrator handles the claims processing for an employer that self-insures its employees. The risk of loss remains with the employer, and not with the TPA. While some third-party administrators may operate as units of insurance companies, they are often independent. They are normally contracted by a health insurer or self-insuring companies to administer services, including claims administration, premium collection, enrollment and other administrative activities.
TP TPA: A: THI THIRD RD PAR ARTY TY ADM ADMINIS INISTRATOR OR
CARRI CARRIER ER OWNED WNED (SUBSID (SUBSIDIA IARY) ) vs.
INDEPENDEN ENT T TP TPA A
Carrier Ow ned
Utilization)
Independent
PBM: PBM: PHARMA PHARMACY BENEFIT BENEFIT MAN MANAGER GER
PBM : Pharmacy Benefit Manager is a third-party administrator of prescription drug programs. They primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. As of 2016, PBMs managed pharmacy benefits for 266 million Americans. Three major PBMs (Express Scripts, CVS Health, and OptumRx) comprise almost 80% of the market and cover 180 million enrollees. In 2017, the largest PBMs had higher revenue than the largest pharmaceutical manufacturers, indicating their increasingly large role in healthcare in the United States.
PBMs PBMs TOD ODAY
As my colleague would say… “Follow the Money” “CVS creates new health-care giant as $69 billion merger with Aetna officially
UnitedHealthcare names Optum exec McMahon as CEO UnitedHealth Group is switching up the roles of its top executives. The Minnetonka, Minn.-based insurer said that Dirk McMahon, the current president and chief operating officer of fast-growing business unit Optum, will become CEO of UnitedHealthcare, the company's insurance arm.
CARRI CARRIER ER OWNED WNED (SUBSID (SUBSIDIA IARY) ) vs.
INDEPENDEN ENT T PBM PBM
Carrier Ow ned
Independent
NETW NETWORK ORKS
Network: The facilities, providers, and suppliers your health insurer or plan has contracted with to provide health care services. National: Blues, United, Cigna, Aetna, Anthem, Humana, and Kaiser Regional Systems: Sanford, Molina, Medical Mutual, Intermountain, Sutter, MVP, Harvard Pilgrim, UPMC, Advent, Centura, etc…
AL ALTE TERN RNATIV IVE E OPTIONS OPTIONS
Five alternative tactics to the common reliance on the BUCAAs Networks: Direct contracting, Centers of Excellence (COEs), On-Site Clinics, Direct Primary Care, Reference Base Pricing 1) Direct Contracting: Self-insured employer partners with a healthcare system to reimburse providers for services
2) Centers of Excellence: Focus on specific areas of medicine and care delivery (e.g., bariatric, cancer, transplant, or spine surgery) and provide a high volume of services for those select procedures. Typically, COEs are selected because they deliver the best outcomes, often at a lower cost than competing facilities. Set price with a warranty.
AL ALTE TERN RNATIV IVE E OPTIONS OPTIONS
3) On-Site Clinics: Offer both Primary and Occupational Health Care . On-site primary care facilities allows the Employer control over referrals for often-costly surgical, lab, imaging, and other services available on any schedule necessary to match Employer’s operations.
4) Direct Primary Care: Plan member pays a monthly flat membership fee. No fee-for-service payments with unrestrictive access to their primary healthcare
AL ALTE TERN RNATIV IVE E OPTIONS OPTIONS 5) RBP: Reference Based Pricing refers to pricing outside of those set by traditional insurance carriers or rented networks. Provider reimbursement is based on a percentage of what Medicare would typically pay the provider which often ranges from 110 to 200 percent of Medicare reimbursement. Depending on the healthcare marketplace, traditional network pricing is 300+ percent of Medicare. Two adjudication models: Pre-Negotiate with Health System, No Negotiation Some health systems refuse to admit RBP clients: eg. Cleveland Clinic Foundation Member’s exposure to balance billing and fiduciary responsibility are common objections Sample Vendors: ELAP, HST, Six Degrees, Claim Doc, AMPS
Data Analytics & Annual Pool Meeting Attendance Plan Reviewed for Customized Cost and Risk Management Opportunities Rx Formulary Review & Revision Network Strategy Review (RBP, DPC) Evaluate Work Comp / Medical Synergy Opportunities Data Analytics & Annual Pool Meeting Attendance Plan Reviewed for Customized Cost and Risk Management Opportunities Incentive Based Plan Design Centers of Excellence / Specialty Networks Independent TPA with Cost Saving Plan Document Language PBM Carve-out Current Plan Design Concierge / Telemedicine Biometric Screening & Wellbeing Incentive for Employee
HIG HIGH H PE PERF RFORMAN ORMANCE CE CAPTIV CAPTIVE E HEAL HEALTH TH PLAN PLAN
YEAR ONE: The Foundation YEAR TWO: The Four Walls YEAR THREE: The Roof
Meet Roundstone
Founded in 2003 Our mission is to create and manage turnkey insurance solutions which are transparent, flexible and cost-effective, delivered in partnership with
Total healthcare spend covered
$600,000,000+
Number of private and public captives Average distribution to captive participants
Number of lives covered
Number of employers
Approved in all 50 50 states.
cities states
CONTACT ROUNDSTONE
440.617.0333 RoundstoneInsurance.com info@ roundstoneinsurance.com