Why premiums have increased

These premiums rose 15 percent in three years. One reason for the dramatic price hike was a marked increase in catastrophic claims. Brokers began to see client claims in excess of $10 million, and those costs were borne largely by stop-loss insurers. From 2009 to 2016, the number of multimillion-dollar claimants increased 68 percent, according to one study. The increase was mainly due to specialty pharmacy, transplants, cancer treatments, neonatal care and advances in medical technology.

The second, third and fourth reasons for rising stop-loss premiums stem from the Affordable Care Act (ACA). The ACA removed annual and lifetime maximums. Before the ACA, many health care providers capped their charges at $1 million, knowing that reimbursement of higher charges would prove difficult. With unlimited maximums, providers began charging north of $1 million more often. Brokers saw a 25 percent increase in such charges to self-insured clients from 2012 to 2015.

The ACA also removed pre-existing condition exclusions. Additionally, it authorized coverage of clinical trials. In sum, the ACA exposed stop-loss carriers to greater risk, so they priced this risk into policies.

Much like Henry Ford's man down the hall, many brokers are bringing novel approaches that save clients millions of dollars. They're mining the evolving health care marketplace for big ideas that help clients cut claim costs, mitigate catastrophic claims and offset rising stop-loss premiums.

Contracting for value-based surgery benefits

One of the biggest ideas advocated by a small but growing base of brokers is value-based surgery benefits. Surgeries represent the largest component of U.S. health care spending, at approximately $500 billion, or 40 percent, of hospital and physician dollars. Surgical complications, which rise at an alarming rate, can drive up the cost of care by 93 percent. Additionally, as much as 30 percent of surgical procedures can be medically unnecessary, further increasing the cost of health care for employers and employees alike. 

Our country's fee-for-service (FFS) model drives high surgery costs by encouraging and rewarding the volume of medical services, regardless of questionable efficacy, necessity or appropriateness. FFS drives volume by basing payments on quantity, not quality or outcomes. Even in instances of preventable treatment errors, providers may still receive additional payments.  

In sharp contrast, value-based surgery benefits give patients the option of bundle-priced scheduled surgeries at centers of excellence. Offered alongside the plan sponsor's managed care plan, this solution is available from specialized benefit management firms. The firms coordinate with the self-insureds' PPO plans to manage eligibility appropriately. 

Introducing the solution to the client 

Brokers generally begin with the solution's benefits when introducing their self-funded clients to the idea: On average, plan sponsors save 30 percent to 50 percent when employees schedule surgeries through the value-based surgery solution, instead of through the employers' managed care plans. After monthly access fees and employee incentives, plan sponsors enjoy a positive ROI averaging 4:1.*

Just as importantly, workers benefit from the highest-quality care and better outcomes. Additionally, administration is greatly simplified. The employee receives no explanation of benefits (i.e., an EOB) for the episode of care, no separate bills and no balance bills. The plan sponsor pays a single, pre-negotiated case rate. 

In a nutshell, savvy brokers are introducing an immediate, defensible savings strategy — a surgery benefits solution that provides the right care at the right time in the right setting, at a lower cost to their clients and at little or no out-of-pocket cost to employees. 

Explaining how it works 

Brokers explain the value-based surgery benefits this way: 

Several benefit firms offer the solution, but the best identify top-quality hospitals and surgical centers — by practice, procedure and specific physician group — based on nationally recognized, independent health care quality rankings.⁹ The benefits firm negotiates with these high-performing surgical teams for episode-of-care case rates for planned surgical procedures that can include orthopedic, spine, women's health, bariatric, cardiac, neurological and general surgical procedures. The various charges for each surgery are bundled into a single price that is much less than that paid through PPO plans. 

The benefits firm brings the negotiated case rates to self-funded employers. Brokers can help their clients contract for the solution and implement plan design incentives for eligible employees to use the voluntary program. Incentives typically include waiving deductibles and coinsurance and, where travel is necessary, covering travel, meals and incidentals for the member and a companion.  

The benefits firm's care coordinators assist plan members throughout the experience, with decision support, case review, surgery scheduling, travel arrangements and post-op follow-up. This concierge service eliminates much of the stress associated with planned surgeries. 

Positioning solution as a win-win-win 

In sum, brokers can position value-based surgery benefits as a win-win-win for employees, employer clients and providers. At centers of excellence, employees undergo high-quality surgeries with few postoperative complications. Self-funded employers pay less for surgeries and rein in additional costs associated with readmissions, ER visits, disability, loss of productivity, absenteeism and presenteeism. Lastly, providers are paid upfront — avoiding bad debt altogether — and fill beds with this additional patient stream.  

By facilitating contracts for value-based surgery benefits, brokers help their self-insured clients control a high-cost category of claims and offset rising stop-loss premiums.

Bringing six other big ideas to clients

Here are six other big ideas brokers are bringing to their self-funded clients to offset stop-loss premium hikes:

1. Optimized plan design

Brokers are helping clients bolster their health plans. They're tweaking designs to incentivize favorable body mass index, low blood pressure, smoking cessation and lifestyle choices that support those employees who have chronic illnesses and help healthy workers remain so. Brokers guide employers in revisiting coverage limits, restructuring home staff versus overseas staff, resetting stop-loss levels and reassessing how much to keep in reserves.

2. Reference-based reimbursement

With reference-based reimbursement (RBR), the broker helps the plan sponsor determine how much the plan will pay for common procedures such as MRIs. Plan members see participating providers who've agreed to these reimbursement rates or pay the difference if they choose treatment by other providers. The RBR usually is based on the Medicare allowance plus an additional 20 percent to 80 percent. In comparison, PPO discounted prices are 250 percent or more of the Medicare allowance.

3. Telemedicine

Brokers are bringing telemedicine options to their self-insured clients. Telemedicine enables plan members to seek treatment over the phone or through video consults. It can reduce visits to high-dollar emergency rooms, as well as urgent care treatment centers. Telemedicine also treats workers faster by reducing travel and office visits, taking a bite out of absenteeism and presenteeism rates.

4. Monthly eligibility management

Brokers are bringing technology or simply another set of eyes to monitoring eligibility. Employers generally are diligent about auditing their initial monthly bills following open enrollment, but too often, they're negligent about nettlesome eligibility files later in the year. EDI feeds can fail; termed employees may go unreported. The right resources help ensure plans don't pay medical claims for terminated employees or incorrect eligibility files.

5. Bill auditing services

Studies estimate the rate of medical billing errors is 30 percent to 80 percent and even higher. That's alarming. So brokers are introducing their self-insured clients to bill auditing services, which charge a percentage of amounts saved. These services catch errors such as double-charges (i.e., a charge that appears twice on a bill) and unbundled charges that should be billed as a single bundled charge at a lower cost.

6. Data mining software and services

Brokers suggest data mining software and services that can shed light on what's driving plan costs and pinpoint opportunities for improvement. For one plan sponsor, data mining revealed that workers with diabetes generated 13 percent of claim costs. It further showed that clinical compliance by these employees fell below Healthcare Effectiveness Data and Information Set standards (HEDIS) benchmarks. Data mining also documented that subsequent changes by the employer reduced its health care cost trend from 10.4 percent to 5.4 percent.

In conclusion

It's been said that "a person who walks in another's tracks leaves no footprints." Brokers can and do make their own very positive footprint by reimagining employer health benefits and bringing these seven solutions to help their self-funded clients offset rising stop-loss premiums.

*Average percentage savings by plan sponsors on BridgeHealth bundled surgical case rates versus negotiated in-network surgery costs through clients' managed care plans.