Risk Managementthe key to self-funding your health plan
While most of the health plans J.P. Farley manages are referred to as “self-funded”, they really are partially self-funded, meaning that the employer assumes the amount of risk it can afford and then buys stop loss insurance to cover those claims that exceed anticipated levels. Actuarial calculations are provided to determine the anticipated claims and appropriate levels of funding. Obtaining stop loss insurance is a risk management strategy because it helps the plan transfer the unpredictable risk to another entity – the stop loss insurance carrier.
In a partially self-funded arrangement, the plan sponsor (employer) is reimbursed for claims in excess of a predetermined amount. The employer pays a premium for this coverage and is therefore able to budget for the expense.
Managing Costs to Minimize Claims
Even though health plans will always incur claims that are unexpected, there is substantial evidence to show that many of the events that are reimbursable by a health care benefit plan are both controllable and preventable. Data analysis can help health plans prevent further large claims by encouraging changes in behavior.
Utilization management can help control overall claim costs by reducing the number of unnecessary episodes of care and helping plan participants get the care they need in the most efficient, yet medically appropriate setting. Helping plan members use hospital emergency rooms only for true emergencies is one example.
If we can change behavior by exposing plan participants to equally effective, but alternative treatment choices, costs can be controlled. Programs such as disease management, education and patient empowerment can result in plan design changes that will impact behavior.
J.P. Farley provides effective Claims & Utilization Management Programs to help control costs.
Data Analysis Can Prevent Costly ClaimsPrograms such as health risk assessments can help obtain data that often reveals risk of future illness.
As an example, a height/weight ratio is often a very good indicator of a person’s general state of health. As the level of obesity increases, a person’s health will typically decrease. Weight loss programs can be implemented to increase a population’s well-being and prevent future costly claims that may result from chronic diseases such as diabetes or hypertension. When chronic diseases are treated properly and supplemented with education and appropriate monitoring, the claim costs associated with those diseases can be reduced.
Data analysis can help identify many of the health care risks that exist within your covered group. Self-funding offers the flexibility to modify your plan design and implement strategies that can modify behavior to help manage or eliminate that risk.