A Challenge for Self-Funded Group Health Insurance

Managing a Difficult Plan Renewal

After a complex claims year, plan renewals can be a challenge. The client represented in this case study is a manufacturing company located in Southern Virginia with 365 employees. A regional third party administrator (TPA) processes the client’s claims. Their plan renewal date was July 1, 2015. The client has specific reinsurance on the plan with a deductible level at $125,000, covering both the medical and prescription plans. The client experienced a difficult claims year and the incumbent reinsurance carrier declined to renew, so RCM&D’s experienced consultants used a comprehensive approach to find a solution.

A Unique Challenge

The 2014-2015 plan year for this client proved to be challenging because they had a significant increase in catastrophic claim costs. The claims paid over the specific stop loss point totaled approximately $483,000 in the prior year, but rose to $895,000 in the 2014-2015 plan year, an increase of 85 percent. When the incumbent reinsurance carrier declined to renew, RCM&D marketed the client to new carriers. The received proposals included sizable lasering that created additional liability to the client in excess of $1.5 million. The client’s TPA provided limited reporting on the large claimants, which presented a considerable challenge in negotiating these proposals and resulted in the reinsurance carriers issuing very conservative proposals with high lasers on seven claimants.

A Comprehensive Approach

RCM&D’s consultants are highly skilled in financial management of self-funded plans and have unique experience with analytics performed by TPAs. Leveraging this distinctive skill set, our experts were able to identify the necessary information that would allow the reinsurance carriers to reconsider their proposed lasers. Our team requested multiple reports in order to analyze the proposals. We supplemented the analysis by communicating directly with the TPA’s Director of the Case Management Division, who was knowledgeable about the claimants’ diagnoses, the stages of their illnesses, their overall prognoses and potential long-term costs.

A Tailored Solution

RCM&D was able to successfully negotiate a reasonable renewal using our in-depth experience and knowledge of reinsurance, self-funded financial management and third party administrators. By requesting additional information, performing an in-depth analysis and collaborating with key personnel, we were able to have four out of seven lasers removed from the proposal, and the remaining three lasers were reduced. The client’s financial liability was reduced from $1.5 million to $375,000.