Self-Insured Trash

Have you ever tried to tell a trailer full of truck drivers at 6:00 a.m. that you're taking more money from their paychecks because their health insurance keeps going up? I'd have to say, I'm lucky I got out alive. I think back and wonder how I ended up working at a landfill, a real dump. It's 800 acres worth of noisy rock-blasting, mining, roaring dump trucks and portable toilets in a variety of colors. It's heavy industry at its finest, a real fantasyland, and my biggest part in all this glory is our health insurance.

Our health plan renewals kept coming in around 30 percent each year. I knew we couldn't keep absorbing costs or whittling down benefits. With the help of our broker, Yvonne Waterman at The Hays Companies, we wrestled with the carrier and obtained claims data versus premiums paid for the prior three years. Guess what? Turned out that our claims weren't all that bad, and the carrier was making a hefty profit - to the tune of a million dollars. That's when we switched over to self-insuring. Since then, our increases have ranged from zero in some years, up to 20 percent in others.

There are basically two routes you can take when self-insuring. The first route is "TPA Avenue." A third-party administrator can assist you in custom building your plan—everything from types of prescriptions covered to provider networks. Or you can buy your own software and become your own TPA, administering claims in-house. TPA’s offer many options, but do require more management on your part.

The second route is "Carrier Crossing." Many health insurance carriers offer "administrative services only" arrangements, which eases stress by offering bundled packages that include a variety of services with little effort on your part. This approach can be attractive, but it might be difficult to get the data you want or need, and you may fee! like you have little control over your health plan.

No matter which route you take, there are some areas of caution:

Flexibility - You certainly will have plenty with a self-insured plan, even deciding which benefits to cover and exclude. However, your senior management needs to be flexible, too, especially in the area of cash. You may incur large claims that will require you to ask for more funding. If your company culture doesn't embrace risk or long-term goals, this flexibility will cause you nothing but grief.

Pharmacy Benefit Management - Are your pharmacy claims being managed? Are you receiving pharmacy rebates? Are the rebates on a per script basis or soft dollars iri administrative fees? Does the PBM handle the mail-order prescriptions, and, if so, do they repackage the drugs and re-price them? Don't be afraid to demand answers. After all, it is your health plan. It's amazing what you might discover.

Provider Networks and Discounting- Deep discounts are the key. Make sure you get a thorough explanation of the discounting program. When are the hospital contracts up for renewal? Are the discounts heaviest in your high population areas? Pay particular attention to out-of-network claims. You may discover you're paying 100 percent on emergency admission claims. Trust me, this is no picnic.

Transparency- Do you really know how your broker or insurance agent is getting paid? Be sure to ask for annual stewardship reports that outline income being collected. Brokers and agents are important business partners—and, as partners, they have a responsibility to keep you informed.

Disease Management and Wellness - It all comes down to the people in your health plan. If you don't have a healthy bunch, then disease management programs can help. Be sure your carrier or TPA has a handle on your chronic cases, as well as wellness incentives to keep your healthier members on track. Is an online program going to work for a bunch of truck drivers? Consider your work force and the mode .of communication to be sure it will work.

I'm certainly not an expert in the big game of health care. But with rising costs, I am learning everything I can. After all, I have a responsibility to protect our health care at this dusty, dirty landfill, and, for me, self-insuring is the answer.