A study shows that claimants who accumulate $50,000 or more in annual benefit costs represent nearly a third of total spending as it relates to employers’ health plans. What can be done to help contain these high costs? Third party administrator (TPA) MedBen explains how two key tactics – claims management and wellness-focused early detection – are effective ways to control costs with self-funded plans.
For more information or to contact MedBen, visit www.medben.com or call (740) 522-8425.
TPA Controls High Claimant Costs through Claims Management, Early Detection
High cost claimants are among the leading contributors to health care spending, topping even medical inflation, pharmaceuticals and specific diseases. A study from the American Health Policy Institute and Leavitt Partners found that claimants who cost $50,000 or more in a year are the top cost driver for 43% of large employers, and comprise 31% of total spending among employers’ health plans. On average, a high-cost claimant costs an employer about $122,000 annually.
Recognizing that plan members sometimes require high-priced treatment, third party administrators (TPAs) often have multiple means to keep claim costs in check with self-funded plans. The first step is to make sure the plan isn’t paying for services it shouldn’t be. With large claims, there is higher risk of paying for something that is not medically necessary or inappropriate. A self-funded plan has the latitude to manage its clients’ health plan claims costs by customizing the review of particular types of claims. A skilled TPA can flag claims requiring clinical review by using dedicated surveillance software that triggers the specialized medical review of claims before payment is made to the health care provider.
MedBen has found that using a panel of over 125 board-certified medical specialists is key to the claims management approach. Reviewing claims flagged for potential clinical questions or problems, they work with the provider to reach a proper resolution – all before the plan pays the provider, so employers don’t have to recoup expenses later. Using this method of claim review, MedBen saves an average of 26.5% on all clinically reviewed claims and saves its clients an average of $13.61 per covered employee per month. That’s money the health plan can use to provide other benefits to its employees.
Plan design also directly affects claims costs. Too often, if an employer wants to reduce the costs of its health insurance coverage, the only way to do so is by reducing the benefits offered to employees. Not so with self-funding. TPAs can help self-funded health plan sponsors design benefit packages that reduce costs while still providing high levels of coverage.
Take, for instance, one MedBen client that asked how it could reverse its increasing claims costs. MedBen analyzed the plan’s past claims and found that a disproportionate number of members chose costlier metropolitan hospitals over nearby regional facilities. A simple modification to plan design created an incentive for employees to seek treatment closer to home – at facilities with the same high-quality care, offered at less cost to the member and the plan. In just 12 months, this MedBen client saw its health plan costs drop 12%.
And because TPAs monitor and analyze each self-funded plan’s claims data all year long, they can detect population health trends and offer solutions before those trends become problems. Self-funded plan sponsors who receive ongoing analyses of their employees’ health trends have the opportunity to implement changes based on that data – and when they do, they experience drastic reductions in the cost of coverage.
Going hand-in-hand with controlling costs is early detection of chronic conditions. MedBen and other TPAs are having success by establishing wellness-focused intervention programs. These programs offer things like customized education and nurse coaching to help plan members who are at greater risk of developing conditions that could prove physically and financially costly in the long-run. On average, MedBen clients that don’t implement such changes see a per employee health care cost of $13,733 per year – while those that do put these programs in place see an average cost of $3, 411 per year. While all health plans may not experience such a drastic savings each year, these changes significantly reduce a health plan’s overall costs.
These statistics prove that customized health plan modifications not only affect the health plan’s bottom line, but positively affect the lives of those covered by the plan, as well.