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Performance Health Overview 1
Performance Health Overview
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,PPACA Consequences
State of the Group Health Market
Diminishing Competition
Medical Loss Ratio Realities
Obstacles to Accessing Care
Carrier-Direct Future
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Compounding Cost-shifting from Public to Private sector
10 / 65 /10 Rule
Increased poverty levels = increased Medicaid enrollment
Results in a greater cost shift to a declining base
Currently, the combination of Medicare, Medicaid and Uninsured represent 65-75% of the total Paid Claims. The projected minimum increase of the total Medicare beneficiaries during the next 10 years is 20%.
Medical Loss Ratio
No motive to “win” business through competitive pricing
Shifting profit centers away from Underwriting Profit to Retention, Prescription, Wellness, Disease Management, etc.
PPACA: Upward Pressure on Insurance Premiums
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Shrinking PCP population coupled with increased insured patient base
Higher operating costs and lower average reimbursements accelerating provider early retirement
Less Physician interaction – more “Mid Level”
Community-level facilities closing or being acquired
Increased health system patient steerage
Decreasing Access to Care
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Nationally, 3 Left Standing:
25 years ago, 60+ insurers and 15-20 per market
10 years ago, 5-8 insurers in most markets
Today, effectively 3 Traditional Carriers Nationally
Few, Regionals Remain
Continued Capital Requirements will further erode Regionals
Provider Owned Plans have done nothing to lower costs5
Diminishing Carrier Competition
Carriers want to go Direct:
Brokers drive prices down through competition
Commissions, overrides, education and entertaining
ACA provided the vehicle for a historical desire
Carrier Driven features:
Plan design
Funding configuration
Administration / service support
Resources
Downward Pressure on Broker/Carrier Relationship
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80-85% Carrier MLR Requirements – carrier retains pooled deficits and refunds surpluses
Result is forced conservative underwriting positioning
Theoretically, carrier profit should be contained within the 15-20% retention
Carriers lack motivation to control costs as retention proportionality rises with claims costs
Obama Administration compromise allowed for profiting on Rx, Medical Mgmt, Network, Wellness, etc.
Medical Loss Ratio (MLR): Unintended Consequences
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Employers have to save themselves
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Alternate-funded plans provide the foundation for employers to reassert their control
Insurance carriers are reacting quickly by providing small group self-funded options but those products are designed with many of the same features that only benefit the Carrier.
Common characteristics: may require multi-year contracts, immature reinsurance contacts, insurance carrier off-the-shelf plan designs, insurance carrier profit-centered resources, carrier based customer service, etc.
A New Direction with Reconfigured Approach
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Local Employers will see Blue Cross, Aetna and United Healthcare as larger than our reinsurance partner, Underwriting Management Experts (eg UME)
Other Brokers would feel the same about competing products with other Reinsurers, such as Companion, HCC, HM Life or certain Trust Products
Reality is that UME is larger in the “Level Funded” space than all of those other entities. UME’s Level Funded solutions represent over $300 million health plans expenses and over $130 million in reinsurance premiums alone
No “Johnny Come Lately,” the leadership of UME began pioneering the Level Funded concept 20 years ago
Perception is not always Reality
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Why Choose Max Advantage or Max Funded?
Alternate-funded plan with:
Flexibility of partially self-funding
Cost stability of Fully Insured
Employer pays a fixed monthly amount ( Level Funded ) that is used to fund fixed administrative costs, stop-loss premium and claims.
Written on a 12/18, 12/21 or 12/24 contract using A+ rated insurance carriers.
With Performance Health, the Employer retains 100% of excess claims fund (difference between aggregate attachment point and actual paid claims).11
The Max Advantage and Max Funded solution allows an easy, worry-free transition to alternate-funding.
Flexible & Customizable
Reduces PPACA taxes and State premium taxes
A+ Rated Insurance Carriers: Gerber & US Fire
Benefits of Alternate Funding
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Maximum Costs Defined
Fixed Monthly Payments
Lower Administrative Costs
Cash Refund Potential
Access to Claims Data
Online Claims & Service Portal
Make fixed monthly payments, based on maximum annual liability, into a claims fund established in your name.
Feel Like You’re Fully Insured!
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Payments for administration of the plan and any claims expenses are made from the claims fund.
Any surplus remains in the fund. Any shortfall is covered by the stop-loss carrier.
Keep 100% of surpluses from unused funds after the end of the contract period.
The monthly payment is split:
Part is used to pay the fixed costs
Admin/Service fees
Stop loss insurance premiums
Part is used to fund expected claims
Up to the employer’s monthly Max
Stop-loss protects the plan from any one excess claim over the individual limit
Unused claim funds are returned to the employer
A. Unused claim funds are retained by employerB. The cost of a Monthly Max Funding plan is the sum of the
following:1. Actual claims paid during the contract year2. Stop loss premiums3. Administrative expenses
Fully Insured
100% Non-Refundable
Premium
Administration Expenses
Stop Loss Premiums
Actual Claims
Potential Savings
Monthly Max Funding
Bucket A
Bucket B
Bucket C
How Performance Health Alternate Funding Works
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Claim Funding Example…
• The claim funding limit for the first two
months of the contract year is $80,000*
• If claims paid total $90,000, then
• the stop loss carrier will fund $10,000
*Amount due varies with plan enrollment by month.
Monthly Cap Funding
Potential Savings
Actual Claims
Stop Loss Premiums
Administration Expenses
Bucket A
Bucket B
Bucket C
How Performance Health Alternate Funding Works
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Claim Funding Example…
• If the claim funding limit for the first three months is $120,000*, and
• if paid claims total $110,000, then
• $10,000 will be held by the stop loss carrier for future claims
• *Amount due varies with plan enrollment by month.
Monthly Max Funding
Potential Savings
Actual Claims
Stop Loss Premiums
Administration Expenses
Bucket A
Bucket B
Bucket C
How Performance Health Alternate Funding Works
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Claim Funding Example…
The employer’s annual claims funding limit is $480,000.
If claims paid are less than $480,000, then the employer will receive any unused balance.
If claims exceeded the $480,000, the stop loss insurer pays all claims over this amount.
Monthly Max Funding
Potential Savings
Actual Claims
Stop Loss Premiums
Administration Expenses
Bucket A
Bucket B
Bucket C
How Performance Health Alternate Funding Works
Flexible plan designs and ability to ‘create’ your own unique plan
Reduction in PPACA and state premium taxes
Summary
Avoid state mandates
Ability to medically underwrite risk
Choose best in class service providers
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Administrative Solutions
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Independent and Mature reinsurance contracts
Transparent and Component based fixed fee pricing
Prescription Drug pricing based on acquisition costs – no spread revenue
Custom plan designs
Impactful Health and Wellness management services
Dedicated and Accessible client service team
The Performance Health Model – A Client Driven Model
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We Get What You Need
One Partner, Multiple Benefits
Benefit administration
PPO networks
Narrow Networks
Care management
Population management
PBM
Telemedicine
Quality & Cost Transparency Tools
Reinsurance solutions
Flexible Design
Build and customize plans and networks to steer:
Physician group network usage
Services to network partners
High Quality & Low Cost Providers
Lowest Net Cost Rx
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Cost Containment
Capitated based fees
Proprietary PPO networks, nationwide network partnerships, non-network negotiations
Incentives with achievement based rewards
Agile Response to Trends
Risk management eliminating exposure to claims outside the contract
Data Management
Fully-integrated data warehouse
Reporting with value-driven, actionable information
Recommendations from experts with over 20 years experience
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We Get What You Need
Thank you for your time!
questions or comments?
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