Health Plans: Self-Insured Employers Expect More

September 22, 2016
Mark A. Caron, CHCIO, FACHE / Chief Executive Officer, Geneia


By all accounts, the number of self-insured employers is increasing – and as health plans’ fully-insured business declines, the competition for administering those accounts also is on the rise. The savviest of health plans are offering enhanced reporting and transparency to recruit and retain these employers.

For decades, only large employers – typically those with more than 1,000 employees – were comfortable accepting the financial risk of their employees’ healthcare. Due to escalating medical costs and the desire to limit the effects of state-specific regulations and the Affordable Care Act, the practice has changed.  Companies with as few as 20 – 50 employees are now self-funding employee medical claims.

In fact, more than three in five American companies are self-insured, according to the Kaiser Family Foundation 2015 Employer Health Benefits Survey. As the number of employees increase, so too does employer interest in self-funding. Eight-two percent of workers in firms with 1,000 – 4,999 employees and 94 percent in companies with 5,000 or more employees were in self-funded plans in 2015.

Most self-funded employers use stop loss insurance to limit their exposure to high dollar claims.

The Kaiser survey found that the attachment point – the dollar amount where stop loss coverage starts to pay for most or all of the claim – is about $210,000 for companies with 3-199 workers and $340,000 for firms with 200 or more employees. That means that an employer with 20 employees could pay the first $210,000 of an employee medical claim from the company coffers. At the risk of SelfFundedInsuranceIconForBlogTextre-stating the obvious, $200,000 is quite a bit of money to most companies, especially small employers.

At the same time health plans are faced with increased competition for self-insured business, the shrewdest among them know the trend towards self-funding does not seem to have mitigated cost increases. Large employers, according to a survey by the National Business Group on Health, expect health benefit costs to increase by 6 percent in 2017. Most small and medium employers can expect even higher increases .

Employers are similarly challenged by ‘high-cost claimants,’ those employees with $50,000 or more in medical costs one year. A study by the American Health Policy Institute study confirmed what many already believed: healthcare costs are increasingly driven by a relatively small percentage of high-cost claimants.

Other findings include:

  • The average high-cost claimant costs $122,382 annually
  • High-cost claimants comprise 31 percent of total spending
  • High-cost claimants, on average, cost 29.3 times as much as other insured persons

The savviest health plans have begun using enhanced reporting and transparency like Geneia’s advanced analytics and insights platform to attract self-funded employers and help them address overall costs and mitigate the growing impact of high-cost claimants.

To give you a sense of the immediate power of Geneia’s platform, below are some of the actionable insights gleaned in just 20 minutes by a human resources manager at a self-insured employer:

  • Over $500,000 in out-of-network utilization prime for possible redirection to in-network services and/or network expansion opportunities
  • More than $39,000 in retail prescription refill costs that could be redirected to lower-cost, mail order channels
  • More than 10,000 employees with open care opportunities such as mammograms and colonoscopies – essential preventive services that stave-off critical high-cost conditions
  • 200+ employees with high-risk conditions that had not seen their primary care physician in the past 12 months for follow up and case management
  • More than 500 employees who are pre-diabetic
  • The per member per month cost for the PPO is $265 versus the benchmark of $337

These ready insights help employers identify opportunities to improve the cost and quality of employee health care, and enable them to work more collaboratively with their health plan and provider partners to achieve their health and wellness goals. Health plans that provide this kind of reporting and transparency tool to their employer customers empower them with actionable information and help solidify their role as a trusted partner.


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