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DEPT HEAD 2019 04-16 BOULDER ADMIN SEL-FUNDED HEALTH INS OPTION Boulder Administration Self-funded Health Insurance Option Meeting April 16,2019 Present: Commissioners- Leonard Wortman, Bob Mullen and Cory Kirsch, Bruce Wagner, Wagner Insurance and Steve Haddon, County Attorney. A power point presentation regarding self-funded health insurance programs was provided by Wagner. Third party administrators provide all the functions that you associate with insurance companies. Claim processors' review all invoices, make sure each claims is "clean," and provides information on how much was paid out each month. Each insured will receive an EOB monthly. Once a claim amount is established, an actuary multiplies this by a factor to figure out what they think our claims might be, which is called the aggregate factor. The first year an employer is in a self-funded plan it is highly recommended that it is funded at one hundred percent of the attachment point. A stop loss policy will pay for claims once the employee has reached the maximum that the county pays per employee. ATTEST: j1v \K ''\," Bonnie Ramey Leonard Wortman, Chairman Clerk and Recorder Cory Kir ch, Commissioner Bob Mullen, Commissioner 1 t I r ; < t e r : i : —. 1r --, ir 11, : -* %, r j} ... �, "�€�.. gym- -' ,�� '"' � l . � � i ' ,,.@' If j .�¢ ,.. , i-� _ I ` ` r u I101 alMilliwitoka— Located in Boulder, Montana this Third Party Administration business was founded and is still operated by Bruce &Jackie Wagner. Boulder Administration Services, Inc. (Boulder Admin) was founded in 1998 as a part of Wagner Insurance Agency. The TPA business quickly surpassed Wagner Insurance Agency in size and Boulder Admin was incorporated as a stand alone business in 2002. Wagner Insurance Agency has since been dissolved. Boulder Admin is a nationwide TPA with clients located in eight states, and employees of these clients scattered throughout the US. Boulder Admin provides administration services for the following employee benefits: Self — Funded Medical: We can provide a complete package with Stop Loss or an Administrative Services Only proposal. Self— Funded Dental: We can administer a traditional plan design or a Direct Reimbursement plan design. All plans include COBRA administration Self— Funded Vision can be included with the Dental. We do not offer this as a stand alone product. Cafeteria Plans, Flex Plans, Section 125 Plans, whatever you want to call them, we have Plan Documents for Premium Only Plans and "Full" Cafeteria Plans are available. Administration is available for the "Full" Cafeteria Plans. COBRA: This is a complete COBRA service that includes all notices, tracking of time periods and collection of Premiums. When administering Self-Funded Medical plans Boulder Admin uses the following cost control strategies to meet the needs of the client: • Pre-certification—the pre-certification with Boulder Admin has more requirements and several areas of treatment that pre-certification is requested on than most plans. This approach gives more information on possible large claims and allows the use of Large Case Management in a timely manner. • Utilization Review—is used to identify fraud and abuse of the Plan's benefits • Large Case Management—this service provides additional help and information to the member and family as well as making sure the services that are needed are provided in a timely and cost efficient manner. • Disease Management—is used to address specific areas of concern that are specific to a group. These areas include Diabetes, Heart Conditions, Respiratory problems. • Wellness Programs—these can be introduced to encourage better, healthier life styles and integrated with the Medical Benefits to reduce claim costs. It is strongly urged to include biometric screenings in wellness programs to provide data for predictive modeling. • Predictive Modeling — can be used to forecast claims for the next 3 to 12 months. The accuracy of predictive modeling is directly related to the amount of data that is available for analysis. In most groups there are over 50% of the members that have no claims or claims of less than $500, using only claims history and Rx usage for analysis you have over half the members without data. Adding biometric screening greatly increases the amount of data and thus generates more accurate results. Support Services: • Boulder Admin works with a well-known PBMs to ensure the best value for your Rx. • ERISA Attorneys: o Jon Jablon, The Phia Group o Ashley Gillihan, Alston& Bird LLP • Innovative Care Management for precertification and Large Care Management Boulder Admin is a member of Society of Professional Benefit Administrators (SPBA) that is based in Washington, DC and very active in providing insight and information to the regulation writers. SPBA provides its members with up to the minute information on new regulations and insight on the workings inside the Beltway that allows us to stay on top of the latest developments in the ever changing world of healthcare reform. Personalized Service is a driving principle for Boulder Admin. Each group is assigned to a specific claim processor, so they get to know the group, the members and the specific plan benefits of that group. When a member calls in with a question on a claim the phone is answered by a live person and then the call is directed to the claim processor for that group and the person that processed the claim in question. All questions are thoroughly answered. Contact us at 877-406-3699 or visit our webpage at www.boulderadmin.com Email: bruce@boulderadmin.com or jackie@boulderadmin.com Specific Claims and Aggregate Claims Example Specific Deductible $20,000 Attachment Point(Maximum Aggregate Claims) $130,000 $25,000 $23,000 Specific $20,000 $20,000 $20,000 $20,000 $16,000 $15,000 $13,000 $10,000 $8,0 00 $7,000 $5,000 Claimant 1 2 3 4 5 6 7 8 9 1 0 11 Employer has paid a total of$126,000 Employer pays a total of$130,000 Employer Pays Specific Policy Pays Aggregate Policy Pays Specific Claims and Aggregate Claims Example Specific Deductible $20,000 Attachment Point(Maximum Aggregate Claims) $130,000 $25,000 $23,000 Specific $20,000 $20,000 $20,000 $20,000 $16,000 $15,000 $13,000 $10,000 $7,000 $5,000 Claimant 1 2 3 4 5 6 7 8 9 Employer has paid a total of$126,000 Employer Pays Specific Policy Pays 4/16/2019 The Basics of Self Funded Medical Plans Presented by: Bruce Wagner Boulder Administration Services 1 If Funded Medical Plans - benefits for the employees can be very ,similar or exactly the same as fully insured plans. e differences that we are talking about is the way the payment of claims is funded. We are going to examine the funding aspect of the benefit plans, not the benefits that the employees receive. 2 I Funded Medical Plans -re are two types of insurance policies that are used with these types of plans: The Aggregate is the risk the employer takes on the entire group. Specific Stop Loss is the amount of risk that the employer takes on any one individual that is covered by the plan. 3 1 4/16/2019 Aggregate Stop Loss •: •+ate Stop Loss is the insurance that pays ter a predetermined limit is reached. This predetermined limit is referred to as the Aggregate Deductible or the Attachment Point, The Aggregate Deductible or the Attachment Point is generally set by actuarially determining the expected claims of the group. 4 _Aggregate Stop Loss the expected claims amount is Stablished the actuary multiplies this by a 'factor to establish the attachment point. This factor is generally 125%. The underwriters can use the demographics of a group or past history to determine the expected claims. 5 Attachment Point - attachment point is broken down to monthly amounts and then broken down 'by the tiers to determine the amount each tier must contribute to fund for the maximum liability. These amounts for each tier are call the aggregate factors. 6 2 4/16/2019 Attachment Point is a minimum attachment point and *;n actual attachment point. The minimum attachment point is determined by the first month's enrollment times the factors, times 12 months. 7 Employees Agg Factor Total 20 $100 $ 2,000 15 $200 $ 3,000 c EC 5 $175 $ 875 EF 30 $400 $12,000 Total Monthly Attachment $17,875 Times 12 months x12 Minimum Attachment Point $214,500 8 Attachment Point not necessary to fund to 100% of the $;attachment point. -they it is fully funded or not the employer is still responsible for the claims liability. The first year an employer is in a self funded plan it is highly recommended that it is funded at 100% of the attachment point. 9 3 • 4/16/2019 aggregate Accommodation 4 e amount of claims exceeds the :Attachment point any time during the year the Stop Loss carrier can advance the money on the excess claims if there is a Aggregate Accommodation rider in place. There is usually a charge for this rider. 10 pecific Stop Loss 'fic Stop Loss is the amount of risk that the employer takes on any one individual a`that is covered by the plan. You can think of this as a deductible that the plan has to meet before the Stop Loss insurance starts paying the claims 11 Specific Advancement e a person exceeds this amount a claim $filed with the Stop Loss carrier. The Stop Loss carrier reviews the claims that the TPA has processed and sends the money to pay the claim. 12 4 4/16/2019 Pkesponstbieditss 13 ent jleispon- Pr . 14 she Periods of Contracts e are different time periods of contracts :available such as 12/12, 15/12, 12/15, etc. What do they mean? -The first number represents the time period in - which the claim was incurred in to be covered by the stop loss policy. -The second number represents the time period the claim must be paid in to be covered by the stop loss policy. 15 5 4/16/2019 =e Periods of Coverages atisa 15/122 -This policy will look back 3 months from the plan start date and ahead 12 months from the :y plan start date, 3 + 12 = 15, for incurred claims. —And will cover paid claims for the 12 months of the plan year, 16 .. "`Xtrne Periods of Coverages about a 12/15? -This plan would cover claims incurred from the plan start date and paid within 15 months from the plan start date.This basically gives a 3 month"run out"period for paying claims at the end of the plan year. 17 „Time Periods of Contracts 18 6 4/16/2019 Administration of the Plan I'd Party Administrators, or TPAs provide ,:many, if not all, of the functions of benefit ;..coverage that you normally associate with s ` the insurance company in a fully insured plan. 19 ,,-Administration of the Plan 'As generally provide the following: . —the stop loss carrier —network access —the Prescription Benefit Manager(PBM)for the Prescription Drug Card —Utilization and Revievi services —COBRA Administration —HIPAA Administration 20 Administration of the Plan nd probably the most important function: Adjudication of Claims 21 7 4/16/2019 Administration of Claims e fully insured plans where the surance company processes the claims, ou the insurance company that carries the stop loss does not process any claims (it there is a claim that exceeds the Specific Deductible or the attachment point they will audit the claims processed by the TPA). 22 Admnistration of Claims TPAs can access networks for discounts, self funded plans can be PPO plans. 'As produce the checks to pay the providers —These checks are sent directly to the provider —The checks are drawn on the funds set aside for this purpose(the employer is responsible for making sure that there are adequate funds available in this account) 23 Ufnding of The Plan a price is given on a fully insured plan t`is one amount for each tier of coverage, such as: —Employee $300 —Employee&Spouse $600 —Employee&Children $525 —Family 5800 This covers all the cost of the plan to the employer. 24 8 4/16/2019 - ding of The Plan a self funded plan the costs are more - ransparent, even though they will --probably total about the same amount as a fully insured plan First you have the Fixed Costs Then you have the Claims Funding 25 �.r _Find°Costs -i ed Costs, these include: -The insurance premium for the Specific Stop Loss —The insurance premium for the Aggregate Stop Loss —The Administration Costs These are the costs that are incurred even if there is never a claim filed. 26 .Cairns Funding s Funding is the portion that is set aside to pay the claims that are the employer's responsibility. ` These funds are held in an account that is controlled by the employer —Remaining part of the employer's assets until used to pay claims —Funds that remain after all of the employer's liabilities are paid remain the Employer's assets. 27 9 ,Xlititrolling The Cash Flow ple: -The first year The Plan's total liability is $500,000 and this is the amount funded to. -The Plan's actual costs for the year are $450,000. Leaving assets of 550,000 in the account. —The second year there is a 10% increase in the total liability to 5550,000. 28 ntrolling The Cash Flow employer may wish to keep the funding at the same level and continue to fund for the$500,000 and use the assets remaining from the previous year to cover the additional $50,000 of liability instead of increasing the rates by 10%. Or the employer may increase the funding rates by 10% and build more assets. 29 'trolling The Cash Flow important point here is: t is the employer's choice on how they want to fund the plan and control the cash flow. 30 10 4/16/2019 40-Funded Versus Fully Insured —Fully insured plans have the risk of spending more money than is necessary. Self-Funded plans have the risk of spending all the amount of the maximum liability. —Self-Funded plans have no more risk than the maximum liability, regardless of that dreaded S1,000,000 claim. 31 `Funded Versus Fully Insured Ibility Fully Insured plans allow an employer to select from the options and riders available. - -Self-Funded Plans allow the employer to basically write there own plan design. Within legal limits Plans can be designed with the employees needs in mind. 32 Self-Funded Versus Fully Insured h Flow Fully Insured plans have a set premium every month that is sent to the insurance company. Self-Funded plans have a set premium for the fixed costs Set aside the recommended amount into their own account Claims funds remain the employer's until such time that they are expended for claims payment If the employer funds to the maximum liability each month the cash flow can be predictable. 33 11 4/16/2019 -Funded Versus Fully Insured ch employers should have a self-funded Flan? Y ' The employer that wants to become a risk manager instead of a premium shopper. 34 12