By Rob Butler, Founder & CEO of Maestro Health
Self-funding is nothing new. In fact, it has been around for decades. Until now, third party administrators (TPAs) have proven their value through fast and accurate claims administration, custom plan designs, and cost management tools. However, when traditional self-funding services are combined with today’s leading technology, this intersection creates unprecedented opportunities for both brokers and employers.
Self-funding has been growing in popularity as a result of its many benefits, including the fact that ERISA exempts self-funded plans from state insurance laws, including reserve requirements, mandated benefits, premium taxes, and consumer protection regulations. In a December 2015 third-party research study by Maestro Health, over 80 percent of brokers agreed that their firm was increasingly advising clients about self-funded health plans.
Likewise, much-needed technological advances have been sweeping the entire health care industry. Private exchanges, online enrollment and a wave of benefits administration and other HR automation like PPACA compliance have dominated the space in recent years. “Automated PPACA reporting is the most important feature when looking at technology solutions. This is where they bring the most value and will continue to in coming years,” said a broker participant surveyed in the 2015 study.
At the same time, over 50 percent of HR professionals say their spending on new technology grew from 2014 to 2015 according to a survey by Human Capital Media Advisory Group.
The reason for the proliferation of self-funding and innovations in technology is no mystery: Health care costs continue to skyrocket for employers while PPACA has created a heavy reporting and compliance burden. As expected, employers are seeking modern solutions for their modern headaches. When searching for a “new age” medical TPA, what should employers and brokers look for?
1. Start with the basics. If a TPA can’t process claims accurately and efficiently, leverage years of experience in custom plan design, or provide quality service and support, then even the best technology means next to nothing. These traditional TPA services must come with proven excellence.
2. Seek innovative leaders. Once a TPA shows that they can handle traditional services, then look at what they’ve done to keep up with today’s dynamic employer needs. Do they offer online enrollment solutions, dashboards for HR administrators, or advanced data analytics and reporting? These examples of advanced technology will provide enhanced value to employers in the form of personalization of plan designs, more cost control measures and better experiences for both employees and HR administrators.
3. “Right-size” your TPA. Essentially, there are three types of TPAs. On one end of the spectrum, "monster" TPAs lack capabilities to truly customize solution and often have difficulty offering personalized service. On the other end of the spectrum, "mom and pop" TPAs lack the latest technology, ability to scale, and capacity to evolve with a business. The ideal sweet spot is in the middle, with a “tech-meets-service” TPA who combines flexibility with customization and integrated technology.
4. Go beyond enrollment. A self-funded technology platform should go beyond an attractive front-end interface and simple enrollment experience to contain resources that empower all parties (broker, employer and employee) to simplify, personalize and optimize their benefits experience throughout the other 364 days of the year as well.
5. Integrated health and wellness. A TPA that can offer comprehensive health and wellness programs on top of claims administration will be able to take analytics to the next level. This provides for a more holistic view of each member’s well-being, allowing for quicker identification of at-risk employees. What automated process is in place for flagging at-risk members? This ability to take measures that are personalized to each employee’s health history will lead to healthier populations and lower costs.
6. A self-funded private exchange. With the right partner and strategy, self-funded employers can gain the value of a private exchange without having to move to a fully insured model. This integration will drive heightened employer control, cost savings, hyper-personalization, deeper data insights and optimized employee and HR experiences. "The self-funded private exchange offers flexibility," said Jeff Yaniga, chief revenue officer for Maestro Health. "Specifically, it is a fully-insured solution with a self-funded element, offering the ability to add services that don't traditionally show up in a fully-insured model, such as personalized plan design and dedicated service teams."
While self-funded insurance and modern technology trends are not particularly groundbreaking in and of themselves, their intersection presents unique opportunities to thrive in the modern world of healthcare for both employers and forward-looking brokers alike.