PowerPoint PresentationHealth Systems
December 2002
Self Funding:
Benefits & Costs
Presentation Outline
California Case Study: Large Employer switches to Self Funding
Third Party Administrator (TPA) Services and Features
Delivering As Promised Since 1968 . . .
Self Funding:
Benefits & Costs
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Delivering As Promised Since 1968 . . .
Benefits of Self Funding
Self Funded Benefit Plans as Recruiting and Retention Tool
Re-Take Control of Benefits & Design
No State Mandates
Benefits of Self Funding
No State Taxes
Integrated Administration
UM, Specialty & Disease Management
TPA Strategic Business Partner
Benefits of Self Funding
On-line access to plan information
Vendor Billing and Disbursements
Swap out networks as needed
Delivering As Promised Since 1968 . . .
Benefits of Self Funding
Integrated FSA and Consumer Driven Plans
Plan Administration Customized for Employer & Employee
Employees have on-line access to eligibility, benefits, claims information
Customer Service Centers dedicated to a few clients
Delivering As Promised Since 1968 . . .
California Case Study
The following slides are based on the recent experience of a California employer that switched from an HMO product offering in 2002 to a Self-Funded Program for 2003.
Large Employer (1,600 EEs)
Historically Relied upon HMO benefits for its employees
Made Strategic Decision to move from HMO in 2002 to Self Funded in 2003
Delivering As Promised Since 1968 . . .
California Case Study
PPO premiums (and underlying costs) increased at a lower rate
Relative parity now exists between HMO costs and PPO network rates
Delivering As Promised Since 1968 . . .
California Premium Trends
25.00
Sheet3
Premiums
1997
1998
1999
2000
2001
2002
2003
HMO
108
115
121
136
152
175
208
PPO
130
136
142
150
168
188
211
20%
18%
17%
11%
11%
8%
1%
Sheet3
HMO
PPO
California Case Study
Employees Demanding More Options, Less Restrictive Benefits
Self Funding provides unlimited benefit options from single platform:
PPO and EPO network choices
Low, Medium High Benefit Levels
Delivering As Promised Since 1968 . . .
California Case Study
Employer Financially Stable
Strong Cash Flow
Reinsurance available
Delivering As Promised Since 1968 . . .
California Case Study
2003 claims costs projected using 15% trend factor
Plan Administration & Profit 23.5%
Medical Group Administration estimated at 15% of total MD expenses
PBM Administration cost as reported at 15% of Rx costs
Delivering As Promised Since 1968 . . .
HMO Product
25.00
Sheet3
California Case Study
Self Insured / PPO Cost Structure
2003 claims costs projected using 15% trend factor plus estimated 15% rate differential for PPO vs. HMO rates
TPA administration at 3% of total costs
PPO Network fee at 3% (higher cost than most PPO networks; offset by deeper provider discounts)
Actual quotes for stop loss reinsurance
Delivering As Promised Since 1968 . . .
Self Funded
Sheet1
25.00
Sheet3
California Case Study
Employer promotes new Health Plans as Benefits to Employees
Broad Access, plus EPO network option
Multi-tier benefit options
New Business Strategy to Analyze Costs and Adjust Networks or Benefits as needed
Delivering As Promised Since 1968 . . .
Third Party Administrator
Services and Features
TPAs have maximum flexibility to design and modify benefits for each Employer Plan
In-house UM program customized for client needs, reports, etc.
TPA Model Promotes “Best in Class” Approach
Select among multiple PPO networks
Negotiate and Select best PBM program
Market Stop Loss annually
Third Party Administrator
Services and Features
Client Specific Claims/Customer Service Teams
TPAs are focused on a smaller number of medium to large size employers with customized service teams
Internet Access / Member services
Eligibility status, Claims, Benefit Summaries
UM & Prior Authorization rules
Third Party Administrator
Services and Features
Automatic rollover for medical claims
Consolidated Vendor Billing and Premium Disbursements – Outsource service for Employers
Real time Eligibility and Benefit Updates for both Medical and PBM
COBRA and HIPAA Administration
Delivering As Promised Since 1968 . . .
Electronic interfaces with service partners
PPO Networks
Third Party Administrator
Services and Features
Anytime, Anywhere Access
Health Systems
Delivering As Promised Since 1968 . . .
Copyright Delta Health Systems 2002
Thank you for attending this presentation for MCOL’s Web Summit
For further inquiries, please contact Dan.rhodes@delapro.com
100
140
180
220
1997199819992000200120022003
HMO
PPO
0
100
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300
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