jamie bishop vice president, employee benefits …...cadillac tax –is it large claimants coming?...
TRANSCRIPT
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The 7 Health Plan Metrics Every Company Should KnowUnderstanding Your Health Plan Cost
Jamie Bishop
Vice President, Employee Benefits
Cottingham & Butler
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Today’s AgendaFor companies managing Employee retention &
recruiting is at an all time fever pitch. Leveraging the
health plan has been one approach and today we will
look at seven different plan metrics to help you analyze
your benefit plan.
The 7 Health Plan Metrics are designed to assist with
the following:
1) Benchmarking – How does your plan compare?
2) Diagnose – Get to the root of any inefficiencies/cost
drivers?
3) Design - A strategic plan of Appropriate cost containment
strategies?
Lets get started
Jamie Bishop, GBAVice President, Employee Benefits
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Is This Your Current Benefits Program?
RISING COSTS
Specialty
prescriptions
HSA, FSA
& HRA’s
TREND
Employer
ACA
reporting
Large claimantsCadillac tax –is it
coming?
Network discounts
Competitive
Plan Design
Preventative
coverage at
100%
Wellness program
requirements
PCORI fees
Spousal coverage
Aging population
Waiting period
restrictions
Approved clinical
trialsStaying competitive
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A High Level Benefit Overview – 3 C’s
ACA
Human Resources
DOL
ADA
FLSA
HIPAA
COBRA
FMLA
COVERAGE
X
CONSUMPTION
X
COST SHARE
Enrollment
HRIS
Payroll Feeds
On-Line Systems
Open Enrollment
Employee Communications
ACA Reporting
Costs Creating
EfficienciesCompliance
C CC
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Coverage
Consumption
Cost Sharing
Metric What it tells you
How many people are
on your health plan?
Participation Rate Whether you may be covering too many
employees relative to benchmark averages
Dependent Ratio Whether you may be covering too many
dependents
Metric What it tells you
What is the employer
share of costs?
ER Plan Cost Share
Percentage
The percentage that employees are paying
for deductibles, OOP max, Copays and
Coinsurance
ER Contribution
Percentage
The percentage of total plan costs that are
paid for by the employer
Metric What it tells you
What is the average
spend per person?
Average claims per
member
The total amount of money spent on claims by
an average member without regard to plan
design and contributions (absolute cost of
benefits)
Demographic Index The impact of demographics on average costs
Admin Cost Percentage View of the overall administrative costs
7 Metrics: A Framework for Analyzing your Benefit Plan
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Metric #1: Participation Rate
Participation Rate = # of employees covered
# of benefit eligible employees
INSIGHT: Will show if current program is over or under
incenting employees to join plan
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Participation Rate • Company A is providing benefits
to 90% of eligible employees
• Company A is covering a
significantly higher percentage
of employees than the
benchmark
• High participation is often driven
by generous benefit programs
compared to competition and
workforce demographics
• Lower than average
participation is often driven by
high contributions and a less
generous benefit program *C&B Proprietary Book of Business
90%
75.1%
75%
80%
85%
90%
95%
Company A Benchmark
Impact to Move to Benchmark – $(55,942)
Metric #1: Participation Rate
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A Sample of Key Levers for Participation:
1. Review of eligibility processes and eligibility language
•Create longer waiting periods (limited with ACA)
•Review termination provisions
2. Adjust Employee Contributions
3. Manage you Member Population
Metric #1: Participation Rate
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Dependent Ratio:
= Total number of plan participants
Total number of covered employees
INSIGHT:
Will show if you are covering more or less dependents per employee than benchmark
Metric #2: Dependent Ratio
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Metric #2: Dependent Ratio • For each covered employee, Company A is covering 1.28 dependents.
• This is above benchmark averages of 1.78 dependents per employee.
• High dependent ratios can be driven by ineligible dependents, low family contributions, and demographics of your workforce.
• Low dependent ratios are often driven by eligibility provisions, high family contributions, and demographics of your workforce.
*C&B Proprietary Book of Business
2.28
1.78
2
2.1
2.2
2.3
2.4
Company A Benchmark
Dependent Ratio
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A Sample of Key Levers for Managing the Dependent Ratio:
1. For Eligible Participants
• Adjust contributions
• Review spousal surcharge or carve out
2. What about Ineligible Participants
• Conduct a thorough dependent eligibility audit (between 3-9%
ineligible)
• Create tighter eligibility paperwork requirements at time of
enrollment
Metric #2: Dependent Ratio
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Average Claims Cost Per Member:
= Total allowed claims before cost sharing
Total number of covered members
INSIGHT:
Will provide data on how your members consumption of healthcare compares to
the national average utilization patterns in medical and prescription drugs.
Metric #3: Average Claims Per Member
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Metric #3: Average Claims Per Member
Demographically Adjusted Medical Allowed Claims per Member
• Company A’s annual cost per member for medical and Rx is greater than the benchmark.
• Individuals in Company A are consuming more care (either in quantity and/or price) than benchmark averages.
*C&B Proprietary Book of Business
$7,156$6,073
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Company A Benchmark
$1,400 $1,252
$0
$200
$400
$600
$800
$1,000
Company A Benchmark
Demographically Adjusted Rx Allowed Claims per Member
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A Sample of Key Levers for Reducing Claims per Member
1. Detailed review of Claims Utilization Data:
a) Inpatient – length of stay, costs of stay
b) Emergency Room,
c) Urgent Care
d) Imaging
2. Prescription Drug Claims Review
3. Large Claims Analysis
4. Telemedicine
Metric #3: Average Claims Per Member
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Demographic Index:
= The weighted average expected cost index based on participant age and
gender (where 1 is the average)
INSIGHT: The impact of your organizations’ demographics on average costs and
also used to adjust metrics for apples to apples benchmark comparison.
Metric #4: Demographic Index
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Metric #4: Demographic Index
• Weighted average expected cost index based on participant age and gender (1 is average).
• Company A’s demographics are 28% above benchmark. We would expect this company’s costs to be 28% above average based solely on their demographics.
*C&B Proprietary Actuarial Index Calculator
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Summary of Key Levers for Altering Your Demographic Index:
There is very little that you can do to adjust the demographics and in Trucking we are seeing an older demographic.
Understanding the demographics of your group and creating benefit plans to best fit is important.
Metric #4: Demographic Index
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Administrative Cost Percentage:
= Total fixed costs
Total plan costs
INSIGHT: The fixed costs as a percentage associated with the plan
Metric #5: Administrative Cost Percentage
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1. Effectively Purchasing Stop Loss
• Decision to purchase or not purchase certain stop-loss coverages
• Purchasing the proper contract level to include run-in and/or run-out
2. Effectively Purchasing Partner Services
• Third Party Administration or Administrative Services Only contracts
• Pharmacy Benefit Management Services and Outcomes
3. Reviewing Options for Prescription Rebates
Metric #5: Administrative Cost Percentage
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Employer Plan Cost Sharing Percentage:
= Total Allowed Claim Costs - (amount employees pay for deductibles, coinsurance & copays)
Total claim cost
INSIGHT: Shows the split between what the plan pays versus what the employees pay
through deductibles, coinsurance, and copays when medical services are
purchased. This percentage gauges how rich of a plan design you have.
Metric #6: Employer Plan Cost Sharing
Percentage
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Metric #6: Employer Plan Cost Sharing Percentage
Employer Plan Cost Share Percentage• On average, Company A is
paying a higher share for medical bills than benchmark.
• This is driven by plan design parameters which create the percentage of medical and prescription claims that employees have.
• Plan Cost share is conceptually the same % as a plan’s actuarial value, thus it is a grade of plan value.
*C&B Proprietary Book of Business
86%
73%
80%
81%
82%
83%
84%
85%
86%
87%
Company A Benchmark
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Metric #6 – Employer Cost Sharing
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Employer Contribution %:
= (Total plan costs – employee contributions )
Total plan costs
INSIGHT: Shows the percentage of total plan costs that are paid for by the
employer.
Metric #7: Employer Contribution Percentage
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Metric #7: Employer Contribution Percentage
• On average, Company A is paying a higher share of plan costs than benchmark.
• This is driven by employee premium rates and suggests that Company A’s employee premiums are too low in relation to the benefit plans that are offered.
• Low EE contributions drive participation, which in turn drives costs and risk for self-funded employers.
Benchmark Source: C&B All Trucking Benchmark
77%
62.4%
70%
72%
74%
76%
78%
Company A Benchmark
Employer Contribution Percentage
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A Sample of Key Levers for modifying Employer Contribution
1. Ensure premiums are at benchmark levels within each covered class
2. Manage to a set Employer/Employee split
3. If you offer more than one plan option:
a) Determine how you are contributing as to not create adverse selection.
b) Be sure to continue to manage enrollment by plan and adjust as needed
Metric #7: Employer Contribution Percentage
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Coverage: 1) Plan Participation2) Dependent Ratio
Consumption:3) Cost per Member
4) Demographic Index5) Admin Cost
Cost Sharing:6) Plan Cost Share %
7) Contribution Share %
We have shared with you the background, information, calculations, benchmarks and levers for the 7 Health Plan Metrics.
We hope they assist you in preparing: • Action-oriented recommendations
• Quantified savings – depending on the level of data you receive
• Longer-term trend strategic initiatives
• Integrated model of savings
7 Metrics Health Plan Benchmarking – In Conclusion
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Thank you
Jamie Bishop
Work: 563-587-5394
Mobile: 563-564-2130