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Summary from
Albers & Company’s
Accountability ExchangeTM:
“Managing
Risk, Not Just
Regulations”
September 24, 2013
Our presenters:
John Riherd,
Riherd Law Office, and
Albers’ Employee Benefits
Attorney
Paul Bogumill,
Principal, DataSmart
A recent 3-part series entitled ‘Special Report: Fall Insurance
Renewals’ on CFO.com highlights a diverging propertycasualty insurance market. For a variety of reasons,
businesses appear on the verge of getting decent pricing on
property risks . . . while casualty
insurance – particularly workers’
compensation coverage – is hiking
prices as much as 25 percent. Driven
by surging employee claims for
workplace injury and illness, and lawsuits asserting bodily
injury by third parties, soaring rates for workers’ comp are
prompting CFOs and risk managers to reenergize their efforts
to reduce claims.
The series states there are some things CFOs and CROs can do
to keep their casualty and workers’ comp prices level and their
coverage adequate, from playing the market to:
Our Advisors:
Brent Price | 253.596.0613
Brett Meade | 253.596.0600
Jeff Albers | 253.596.0601
Jon Montgomery | 253.596.0611
Matt Reiss | 253.596-0616
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
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making sure your company’s premises are safe and
relatively risk-free,
retaining as much risk as you can via deductibles,
training workers in proper safety measures, and
rigging workplaces with up-to-the-minute safety
engineering and machinery.
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
1
Just Like P&C Insurance, Employee Benefits Risk Can Be Managed Too –
Many employers fall into a hapless cycle of managing their employee benefits annually. You shop
carriers. You cut benefits. It’s still too expensive, so you shift more premium costs to employees.
The result? Costs still go up. You’re
disappointed. Your workforce is unhappy,
and resentful. Yet before you know it, it’s
time to start the cycle all over again.
Sound familiar? We all recognize it. We’ve
even named it—
The Relentless
Dissatisfaction Cycle
Is this where you are today?
Increasing costs
Limited options
Negative employee
perceptions
Which leads to…
Company efficiency stalls
Hopelessness ensues
Employees suspicious and
resentful
Which evolves to…
Increased cost-sharing
Everybody feels trapped
ER-EE relationships
breakdown
The Risk Management Spectrum –
Today’s C-Suite Team has the opportunity to
apply the same “risk management” mindset
to its employee benefits program. It’s about
educated predictability. Amazon routinely predicts the next book we should buy based on our
buying patterns. Similarly, iTunes helps us choose our next favorite music or movie. Google knows
more about most of us than we care to admit.
Future high claimants can be anticipated too. Every employer has employees who have catastrophic
claims potential – those employees who have not been to the doctor, never filed a claim or are
ignoring their provider’s advice. In the next twelve months they may be the next million dollar
claimant. If they are also a key employee or one with critical skills, your expense just doubled.
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
2
Health Care Reform:
Managing the
Regulations
The 2010 Affordable Care
Act introduced sweeping
changes to both the
insurance market and
healthcare delivery systems.
Don’t feel alone . . .
everyone is confused, even
those charged with
enforcing it.
Two main ACA provisions
were implemented in 2014:
1.
The individual mandate
kicks in, requiring most
everyone to have medical
insurance or pay a penalty.
2. Exchanges: A key
component, the health
marketplaces (which are
also called the exchange)
are scheduled to open
Jan.1, 2014. Most
Americans will be eligible
to enroll in the
marketplace, and many
will be eligible for
assistance paying the
premium. Each state will
have its own
marketplace. About onethird of the states will run
the marketplace
themselves and the federal
government will run the
marketplace on behalf of
the remaining two-thirds
of the states. Washington
will have a state-operated
marketplace: Washington
Healthplanfinder.
Navigators will help
individuals enroll
although they cannot
make recommendations;
only a broker may give
advice on plan selection.
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Delayed –
 Employer mandate
delayed until January 1, 2015 although the individual
mandate to have health care coverage remains in effect
starting January 1, 2014
 Defense Of Marriage Act (DOMA) decision impacts plans
offering coverage to same sex domestic partners; the DOMA
decision only affects same sex marriage; employers still
need to deal with benefits and tax issues if they choose to
offer coverage to domestic partners
 Exchange Notices intended to help educate employees
about the marketplace are not required to be distributed;
it’s up to you whether it still makes sense in your
organization
Various ACA provisions that have gone into effect over the
years, starting in 2010 through 2014, to date –
 No annual limits on “essential” benefits
 Minimum health benefits required (bronze level @ 60%)
 First dollar coverage for specific preventive services
including contraceptives
 Must cover emergency room services at in-network levels
regardless of provider
 OBGYN available without referral; Primary Care Physician
(PCP) can be a pediatrician
 No preexisting conditions, hence the mandate that everyone
have insurance
 Over the counter drugs cannot be reimbursed under an
FSA, HRA or HSA unless prescribed
 Wellness programs expanded and available as both
participation or outcomes based (reasonable alternatives
must be built in); incentives can be richer but keep in mind
that HIPAA, ADA, GINA and ERISA all apply
 Eligiblity waiting period maximum 90 calendar days –many
plans establishing the first of the month after 60 days
employment
 Must provide coverage for dependent children to age 26
(was 25 in Washington); expanded to include those married
or employed
 Claims appeal procedures redefined
 Coverage cannot be rescinded
 Employers issuing 250+ W-2s in a year must report
benefits cost
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
3
Self-Funding Produces Savings on Several Fronts:
Managing the Cost
Self-funding used to be considered viable only for the largest of employers. Today, even employers
<50 employees tread, albeit lightly, down the self-funding road.
General Self-Funding Advantages:
 Lower administrative costs – the overhead of a Third Party Administrator (TPA) is typically
15-20% less than an insurance carrier.
 Governed by Federal versus State laws, therefore State mandates are optional – up to each
employer to decide, item by item
 No State premium taxes
 Flexibility with reinsurance carriers; Washington State has a favorable attachment point,
the level of claims when the reinsurance kicks in
 Reserves work for the employer not the insurer
 Multi-State employers can offer the same plan to all employees – simplification, as State
mandates need not apply
Added advantages offered by ACA
 No ACA insurance fee (2-4%)
 Avoid community rating bands of 3:1 ratio or worse
 Avoid essential health benefits parameters; employer’s choice to offer more or less
 Avoid minimum loss ratio of 85% claims payout, and the burdensome outcome of refunding
premiums to employees if standard not met
It’s real dollars; you do the math –
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
4
DataSmart Analytics:
Managing the Risk by Managing the Data
Run your health plan like you run your business. Comprehensive healthcare data analytics
allows employers to shift from simply “collecting information” to “compiling and analyzing data.”
Properly written self-funded plans ensure your organization owns the data. Comprehensive data
analytics tools provide the educated predictability.
Traditional Disease Management Weaknesses
Your current carrier or TPA typically takes a guess about the future claims by looking back at past
claims. On top of that, on average they only look at 40% of your population since most of your
enrollees have never had any claims or their claims are so insignificant or varied they are
inconclusive. If Walmart only scanned 40% of their sales, could they manage their inventory?
In this example below, 14 of the highest claimants were not even identified as their health risk
was unknown to themselves and the plan based on traditional disease management protocols.
There’s little or no data to recognize that these individuals are about to experience a catastrophic
health episode.
Wellness Program Results Less
Impactful when Stand Alone
Wellness programs may help manage care
and potentially improve participants’ quality
of life, but don’t necessarily save money.
Unfortunately the health care system is
astute. When ER rooms became a target
and patients began moving to after hour
clinics, costs were increased so revenue
remained stable by shifting profit margins.
When prescriptions move to generic status,
new even more expensive drugs are
introduced. Better? Perhaps. Not
necessarily.
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Results from a Four-State Bank’s participation-based Wellness
Program. Green indicates the percent of time their wellness
program identified these risks.
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
5
Improving the Odds of Predictability
The DataSmart team discovered that by adding vision data they could predict more; a lot more.
Using findings from a vision exam, vision doctors
were able to predict these chronic conditions without
any other indicators or medical tests, often to the
surprise of the unknowing patient.
Using sophisticated algorithms from organizations
like Johns Hopkins, Towers Watson and Milliman –
much like the tools Walmart uses to identify where to
put its next store – DataSmart’s analysts discovered
even higher predictability when they included a more sophisticated biometric panel and a personal
health risk assessment. In fact biometrics and health risk assessment information – things like
height and weight, blood pressure, specific labs available without Doctor’s orders – can prove to be
a more valuable predictor than past medical claims data While age is indeed the single most
important indicator of risk, a combination of other factors can also produce significant probability
of high risk.
INPUTS
DATA HITS
R2 (Predictability)
40%
28%
Vision
+20%
+16%
Biometric & HRA
+30%
+31%
90%
75%
Medical and Rx
Total
In this case study, DataSmart’s analysts were able to identify future high claimants before their life
changing health conditions occurred. Those employees were shielded. Company productivity was
secure. Claims were averted. The Health Plan’s annual increase has gone flat. It is a win for all.
Benchmarking Helps –
What’s normal? Every organization will have some claims, so you don’t want to spend time fixing
what is normal. Do your employees have abnormally high risk factors? Are spouses driving claims
cost? Perhaps with ACA you should send them to the Exchange? But you don’t know until you can
look at the data.
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
6
DataSmart Reports are Actionable
A Clinical Compliance Report identifies where to spend your time and money managing your
enrollees’ risks.
Recommendations can range from introducing benefit offerings like a stronger wellness program to
redefining eligibility to communications about where and how to access the most efficient care. Do
you need more high risk case management? With ACA, and its increased incentive options, would
a stronger wellness program help? What’s a meaningful incentive to your employees?
In an attempt to reduce the
Here’s an illustrative example of one client’s early findings via their
spend
on their retirement plan,
DataSmart analytics –
one
employer
had changed its
a) Implement wellness/vision programs with robust screening
retirement plan vesting
results data aggregation
schedule. The change
b) Improve Rx data quality; review available alternatives to
inadvertently rewarded
current PBM program
employees for staying on
c) Implement “Emerging Risk Identification” reporting; review
longer, as they aged in place.
current high risk Members and Members with frequent ER
Their health care claims
utilization for Case Management
exploded. Like a water balloon,
attempting to control costs in
d) Consider implementing Mental Health and Cardiovascular
one arena may inadvertently
DM/Wellness Programs
have
a costly impact in another.
e) Review current premiums structure to overcome Spouse
enrollment’s adverse selection
f) Review current emergency room benefit to prevent unnecessary utilization
g) Consider Medicare Advantage program to covered Members 65+
Managing Risks, Not Just Costs
You don’t know your most costly risks, until you have good data that
allows you to paint an accurate and complete picture of all your
benefits costs, with benchmarks and trending.
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
7
Where the currency of success is proven wisdom
The Accountability Exchange™ is an ongoing, collaborative
exchange between Business Owners and Key Executives.
Facilitated by Albers & Company, the exchange provides access to
ideas, resources, world-class expertise and proven wisdom; we call
this “the currency of success”. It is one of the many ways in which
we hold ourselves accountable for helping you distinguish your
company in the employee market.
A partial list of participants in
Albers’ Accountability Exchange™
AHBL
AIM Physical Therapy
All West Select Sires
Apex Engineering, PLLC
Apple Physical Therapy
Artbeads/Stores in Motion
Ashley House
Bargreen Ellingson
BCRA
Belco Forest Products
Binford Metals
BPCI Construction
Bremerton Housing Authority
The Business Examiner
Business Interiors NW
Catholic Community Services of Western WA
CFM Consolidated, Inc.
Charles Wright Academy
City of Lakewood
City of Tacoma
Cole Screenprint
Columbia Bank
Commencement Bay Development
Community HealthCare
Danner Corporation
Davies Pearson, P.C.
Dobler Management Company
Eisenhower & Carlson
Embassy Management LLC
Emerald Queen Casino
Evergreen Fire and Security
Farrelli’s Woodfire Pizza
Federal Way School District
Fircrest Golf Club
The Geneva Foundation
GENSCO
Gordon Thomas Honeywell
Greater Lakes Mental Healthcare
HopeSparks
Immedia
Interstate Distributor Company
Jesse Engineering Company
Johnson, Stone & Pagano
Kitsap Bank & Mortgage
Korsmo Construction
Korum Automotive Group
LeMay-America’s Care Museum
Lindquist Dental Clinic for Children
Marine View Ventures
Martha & Mary
Mason County Fire District #2
MC Delivery
Albers & Company | www.alberscompany.com
253.272.2711 | 888.8ALBERS
Medosweet Farms
Member Access Pacific
Metropolitan Park District of Tacoma
Momentum Partners
Moss Adams
Mountain Construction
Multi-Service Center
Northwest Cascade
Northwest Partitions
Our Community Credit Union
Pacific Alaska Freightways
Pacific Integrated Handling
Pacific Lutheran University
Pacific Overhead Door
Patriot Fire Protection
PCS Structural Solutions
Peninsula Truck Lines
Potelco
Poulsbo RV
Precision Machine Works
Rainier Connect
Ram International
Rickabaugh Pentecost Development
Round Table Pizza
Salal Credit Union
SeaTac Packaging
Selden’s Home Furnishings
Setina Manufacturing
SGS Distribution
Shuttle Express
Simpson Investment Company
SiteCrafting
Sitts & Hill Engineers, Inc.
Smith Fire Systems
Sound Credit Union
Sound Options, Inc.
Sprague Pest Solutions
Star Moving Systems
Steilacoom School District
Stellar Industrial Supply, Inc.
STI Fleet Services
Tacoma Community College
Tacoma Community House
Tacoma Housing Authority
Tacoma Goodwill Industries
Tacoma Lutheran Retirement Community
T. E. Walrath Trucking
Ted Brown Music
Thrift Books
Topia Technology
Town & Country Markets
Toy Investments, Inc. dba Toysmith
TrueBlue
Trusteed Plans Service Corporation
TwinStar Credit Union
Verity Credit Union
Washington Architectural Hardware
Westmark Products
Whitfield’s United
Wilmar Corporation
YMCA of Pierce and Kitsap Counties
Managing Risk, Not Just Regulations
Albers & Company’s The Accountability Exchange | September 24,2013
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