The Affordable Care Act (ACA), also known as “ObamaCare” is rapidly and profoundly changing the American healthcare landscape. In addition to expanding coverage to millions of people, the law imposes a new host of regulations and taxes on businesses.
Many of these requirements, such as the ban on pre-existing condition denials and the ban on annual caps, apply to both self-funded and traditional health insurance. But many requirements only apply to fully insured health coverage. Many companies that offer traditional health plans are considering self-funding in order to gain better control of their health benefit program and avoid these taxes and regulations.
According to the Henry J. Kaiser Family Foundation, 63% of covered workers are in a self-funded plan, up from 49% in 2000 and 54% in 2005.1 With new ACA regulations taking effect in 2016, industry experts anticipate this shift will only accelerate in the next few years. Additionally, as global competition continues to apply pressure on businesses, companies will be forced to look for cost savings in any place they can. As one broker puts it,
The bottom line is that employers are looking everywhere to control costs. For an employer offering a fully-insured plan, a prime opportunity to decrease costs may be found by considering self-funding… By self-funding, employers can achieve savings of 8% to 10% by avoiding certain taxes and carrier fees. Add to that lower claims costs based on pre-ACA underwriting (which is more accurate), and the market is ripe for a big wave of self-funding.2
This shift will radically change the business models of third party administrators (TPAs) and administrative services only organizations (ASOs). TPAs and ASOs will need to be more competitive than ever before. They will need to offer innovative, value-added services beyond the standard claims management suite of products. Corporate wellness programs, new network products, and claim review are examples of value-added products and services that the market demands from their TPAs.
Modern Healthcare recently posted a helpful article on this topic. The article quotes Jonathan Edelheit, president of Employer Healthcare & Benefits Congress, as saying, “Self-funded employers are demanding getting better value from their plans.” The article addresses the value of claim review in particular:
Insurers that will win the most business in the ASO space are those that offer services demonstrating unique, long-term value, Edelheit said. One such service is hospital bill auditing, which is when an insurer verifies that every procedure or code is correct. Employers can save 10% to 15% on their hospital expenses if their third-party administrator conducts these deep reviews, Edelheit said.3
It is no longer enough to rely solely on code edit software to catch billing errors and omissions. Plan administrators need to identify claims that may bypass standard edits but which should nevertheless be denied. Engaging a claim review firm such as Nokomis Health makes a plan administrator more competitive, enhances their value proposition, and typically saves the plan sponsor 10 to 15 percent (or more) of claim costs.
It is apparent that companies are willing to forego loyalty to a plan administrator if a competitor offers a better product. The same article in Modern Healthcare describes how the Teacher Retirement System of Texas shifted the administration of its healthcare benefits program from Blue Cross and Blue Shield of Texas to Aetna. The plan had been with BCBS for 12 years but “TRS officials determined that Aetna offered the best overall value for its teachers.” For this customer, and likely for many others, vendor loyalty can shift quickly to a better, more competitive product.
The ASOs and TPAs that will thrive in the next decade are those that can quickly identify and embrace the trends and position themselves to provide the best value to plan sponsors. Claim review is a vital value-added service and arguably the most critical that an administrator can provide to its customers.
As members of SIIA, we look forward to attending the upcoming Self-Insured Health Plan Executive Forum on March 21st and listening to how other expert speakers might address the current issues that face the health care industry. We will be there to meet with current and potential clients and enjoy all of the exciting content SIIA provides for all of its constituents.
Nokomis Health is a leading national provider of claim review services. We generate sustained claim savings for payors through the use of our proprietary ClaimWiseTM review engine along with our highly experienced certified coders, analysts, and clinicians. To learn more about how Nokomis Health can enhance your services and to inquire about a complimentary claims analysis, contact us here.