By Robin Flaherty, Founder and President of Benefit Link
robin@benefitlink.net
Whether your company's health plan is fully insured or or self-funded, your claims data is pivotal as it will ultimately determine your ability to guide the various ways you can control your overall healthcare spend. In other words, be in control or be controlled.
Before I go any further, I want to be clear that I am criticizing practices, not people. In my 24 years in the employee benefits industry, I have met hundreds of wonderful, very well-meaning people in every capacity of the supply chain—it's just that there's an acceptance that one line item on your income statement, and one of the largest, can't be managed. If you get nothing else from this chapter, consider that one simple rule of business: "If you pay, you should have a say" applies to healthcare, too.
If you currently do not have actionable claims data from your healthcare spend, the reasons can range from a simple not asking the right questions to a more complicated reason, such as your health carrier claims to own the claims data and is unwilling to share at a level that provides you with enough information so you can question their decisions in regards to managing your spend. To further complicate the claims administrator and the party with the financial risk, is typically deemed the primary "owner of claims data." As a covered entity under HIPAA, the insurer is restricted regarding the circumstances under which it can share claims information with the employers, and as a business with a profit motive, the insurer is often reluctant to share that data with the employer for other reasons. Nonetheless, ERISA places on the "Plan Administrator," which is typically the employer (or a group of employees designated by the employer), a fiduciary duty to oversee the insurer and ensure that its actions are prudent and take in the best interests of plan participants and fiduciaries (your employees). The Plan Administrator has an obligation to act as a safeguard to assure the plan assets are protected, used prudently, and delivered in the best interests of the plan member. There are compelling arguments that employers need to protect themselves and take a proactive approach to being a best-interest fiduciary of the assets that plan members are contributing (i.e., employee contributions for their share of premiums), but employers are finding it difficult to fulfill their obligation in the absence of access to claims data. Sure, employers believe they are doing their best to design the best-interest health plan, but without data, it's a guess.
Data is also a key element in the determination if self-funding is right for your company, and to provide you with a negotiating position at renewal. If you do not have access to your claims data, modern risk assessments use vast amounts of consumer data and can create a rich profile for your population to further assess if self-funding is right for your company.
You can't manage what you can't measure
The Affordable Care Act gave authority to the state to redefine small group as 1—100 employees and depending on the number of employees your company has, and the state where you business was incorporated, you may have restrictions on self-funding. For example, in New York it is prohibited to sell stop loss insurance in the small group (1-100 employee) market.
The remainder of this chapter focuses on large groups (100 + employees) that should have access to their claims data for the asking, as the larger the company, the more influence to be wielded at the healthcare claims data negotiating table (in a perfect world). Companies have more power than they realize, and tools exist today to empower you to make control of your total healthcare spend. It's cliché, but true: Knowledge is power, and you can't manage what you can't measure.
This post includes an excerpt from Chapter 14 from the book Life and Death Decision in the C-Suite. To purchase the full book, click here.
