Self-Funding
Competition

 

Table of Contents

 

  • Business Virtues
    • Discussion and Links
      • Antitrust and Competition
        • Sherman Act
        • Clayton Act
        • Robinson-Patman Act
      • Unfair Trade practices
        • Health Plans and Unfair Trade Practices
        • Self-Funding and Business Virtue
        • Bundled Vendor Services
        • Hospital Billing Practices
        • Special Purpose Audit
        • Unfair Competition
      • Insurers Under Investigation
      • Summary
  • Care Management
  • First Generation Cost Containment
    • Precert/Recert, Second Opinions, Utilization Review, Case Management, Demand Management, Triage, Wellness,
    • and Claims/Administrative audits.
  • Networks
  • Retail Medicine
  • Auditing of Medical Care
  • Summary
  • High-Tech (Internet) Role
    • Overview
    • Discussion
    • Summary

  • Marketing
    • Discussion
      • Expenses - Reduced
      • Service - improved
      • Fair Trade - Practiced
    • Maintaining Market Share
    • Summary

  • Political Implications
    • Need for Reform
    • Uninsured Problem
    • Growing Interest in Reform
    • National Health Reform Proposal
    • Political Realities
    • Summary

  • Risk Management
    • Introduction
    • Alternate Risk Transfer
      • Risk Retention Groups
      • Captive Insurer
    • Plan Amendments and Modifications
      • Menu of Changes
        • Risk Management Guide
        • Advance Medical Directive
        • Eligibility and Recordkeeping
    •  Risk-Pool-Related
    • Aggregate-Only Pool
    • Specific-Only Pool
    • Miscellaneous
      • MEWA (AHP)
      • VEBA
    • New Self-Funded Benefits
    • Long Term Disability
    • Death Benefits
    • Profiling
      • Plan-Related
        Covered Person-Related
      • Chronic v. Outlier
    • Benefit Modifications
    • Marketing
    • Database
    • Summary

  • Self-Funding Service Corporation
  • Introduction
  • Basic Concepts
  • Risk Management
  • Vendor-Provided Services
  • Administration
  • Legal
  • Marketing
  • Organization
  • Financing
  • Summary

  • Stop-Loss
  • Introduction
  • Discussion
  • Carrier
  • Suggested Changes
  • New Options
  • Distinctions
  • Miscellaneous
  • Summary
  • Vendor Services
  • Introduction
  • Terms and Definitions
  • Discussion
  • Overview
  • Accountant
  • Actuary
  • Attorney
  • Administrator
  • Miscellaneous
  • Producer
  • Provider
  • Health Care Reform (Blue Book)
  • Overview
  • In General
  • Purpose
  • Principles Followed
  • Introduction
  • Pricing and Practice Guidelines
  • In Brief
  • Discussion
  • Practical Applications
  • Health Care Classified
  • Providers of Care
  • Nature of Care
  • Settings of Care
  • Payers of Care
  • Pragmatic or Political Issues
  • Financing of Care
  • Legal Issues
  • Existing Statutory or Case Law
  • U.S Constitution Role
  • Impact on Needed Tort Reform
  • Administrative Considerations
  • Methodologies
  • Statistics and Studies
  • High-Tech Applications
  • Modeling and Related

Summary

Overview

This Web Site (www.selffundcompetition.com) has been established for two reasons:

  1. Make self-funding reasonably competitive as respects (a) price and service and fair business practices and (b) other private plans and also government-sponsored plans. This Web Site asserts that in several particular ways, self-funding has been significantly inconvenienced in a competitive way.

  2. Make self-funding useful and helpful in the solution of our national challenges with health care (uninsured, tax policy, unsustainable health costs, retiree coverage, e.g.). This Web Site asserts that any future health care reform should include self-funding as part of the solution because of the business virtues of self-funding.

This Web Site aggressively seeks these ends by serving as a reservoir of information and recommendations but is not proactive. It is equally affectionate towards all plan vendors and sponsors.

In striving for these goals, the following basic principles will be used as a guide:

  1. Self-funding should be honored because it conforms with the "better and cheaper mousetrap using fair trade practices" logic found in our commerce laws (and court decisions); also, self-funding should be a good citizen and accommodate to the needs of our federal and state governments.

  2. The changes suggested herein were carefully considered so as to be fair; simple; non-disruptive; least costly; most logical; effective; all-inclusive; up-to-date; non-abrasive; legal; practical; high-tech; etc.

  3. This Web Site is biased in favor of both (a) TPA-administered self-funded and (b) employer-sponsored health plans; otherwise, this Web Site is totally independent of any special interests.

In brief, self-funding must be (a) the best and the least expensive, holding the high ground of business virtues; (b) most accommodating to social, economic and political realities and (c) a survivor as a funding option.

The subject matter is divided into the following:

  • Business Virtues
  • Care Management
  • High-Tech (Internet) Role
  • Marketing Issues
  • Political Implications
  • Risk Management Issues
  • Self-Funding Service Corporation
  • Stop-Loss
  • Vendor Services
  • Health Care Reform (Blue Book).

Business Virtues

This Sub-Site asserts that our trade and commerce laws and clarifying court decisions obligate us to "build the better and cheaper mousetrap in a fair (or virtuous) manner". This Web Site purposes to meet this obligation. Recent major insurer (and related) investigations suggest that some of the competitors to self-funding do not subscribe to this trade and commerce obligation.

Care Management

All of the first generation cost containment program (precert/recert, second opinions, utilization review, medical audits, demand management, triage, wellness, e.g.) may be either (a) plan sponsor-provided or (b) arranged through the Self-funding Service Corporation (Corporation). The (b) option will result in better stop-loss terms.

By pooling the stop-loss with one flagship carrier, and managed by the corporation, the corporation-arranged network terms should be dramatically improved on both terms and discounts.

The Corporation will arrange for a family of provider networks (stratified by geography, specialty, non-acute v. chronic care, e.g.) where a medical audit firm screens for provider mispractice, underpractice or overpractice. That is, when the user pays the network its maintenance fees, the user demands both a (a) sticker-price and (b) sticker medical protocol and not just (a) the sticker-price, which is the more common industry practice.

The Corporation should be proactive in establishing outlets for retail medicine.

High-Tech (Internet) Role

The two stated goals of this Web Site will be best achieved using the multiple high-tech tools available to it. These include, but are not limited, to the following:

  1. Corporation-maintained database
  2. Multiple Web Sites; some with embedded computer programs, for analytic, profiling and computational purposes
  3.  Internet for transmission, transparency and accessibility advantages
  4. Automated administration and risk-pool management.

Of particular significance is the Corporation-maintained database. Because of its critical mass, it contributes in several important ways:

  • Buying-power when networks are contracted
  • Statistical-advantages for profiling and other purposes
  • The valuable database available to self-funders en masse in helping to solve our national healthcare problems.

Marketing

The marketing of the self-funded plan should be significantly improved because (a) service is improved and (b) costs are reduced. The means to accomplish these two ends are fair and virtuous. These include, but are not limited to:

  • Risk management techniques
  • Expanded and more disciplined cost containment programs
  • Redefined and modified vendor responsibilities
  • Adoption of work-product concept
  • Modified and improved role of stop-loss
  • Pooling and its valuable resultant database
  • Self-Funding Service Corporation
  • New candidates benefits for self-funded (LTD, death, employee-pay-all)
  • Near-total reliance on high tech (Internet and Web Sites).

Improved service will be measured primarily by (a) survivability and vitality of self-funding as a funding options and (b) dearth of litigation and/or consumer-type complaints resulting from the funding methodology.

Political Implications

The stated goals of this Web Site are to (a) make self-funding more competitive and (b) contribute significantly to the solution of some or all of our present health care financing crises. Multiple tools are available to the self-funder and are to be actively promoted. Ideally, self-funding can be successful in achieving these goals. However, if governmental intervention is deemed essential, self-funding with some of the suggestions made herein, would be a worthy funding vehicle by which the governments might more effectively achieve their political ends. Self-funding, historically, was adopted so as to be helpful in solving problems and will continue in this role even should the government become another party to the noble process of self-funding.

Risk Management

This Web Site objects vigorously to the practice, all too common, that a plan sponsor might be an assumer of the risk without being a manager and controller of the risk. To help the plan sponsor (and the multiple plan vendors) be proactive risk managers, an extensive menu of options is offered for deliberation. Broadly speaking, the options include the following:

  • New paradigms and platforms such as alternate risk transfer, new pooling arrangements, e.g.
  • Plethora of plan-related modifications, as respects both benefits and their administration (CDHC, e.g.)
  • New risk-sharing arrangements which involve stop-loss, plan redesign, e.g.
  • New benefit candidates for self-funding (e.g., LTD and death benefits).

Self-Funding Service Corporation

A not-for-profit organization (Self-Funding Service Corporation or Corporation) should be established and governed by a sitting board and an advisory board. The corporation should be characterized as follows:

  1. The Corporation should be as representative of the numerous interested parties to self-funding as possible.

  2. The Corporation should be a honeycomb of worker bees (but independent contractors) devoted exclusively to those tasks not done by existing vendors (or done as well). Such skills found therein (by staff or subcontractors) include, e.g.:
    • Professional (actuarial, accounting, law, medicine, e.g.)
    • Information technology
    • Risk management
    • Other (international issues, e.g.).
    It is expected that an organization formed as a trust would be nearly as effective as one formed as a not-for-profit corporation.

  3. The Corporation should be low profile avoiding such activities as lobbying of any type, publishing, meetings, seminars, etc. It rather should concentrate on creating; research; web site based administration; developing systems, programs and products, etc.

The obvious reason for the Corporation to exist is its ability to efficiently and quickly bring systems, plans, ideas, programs, etc., on-line to help self-funding (primarily) and the parties connected therewith (secondarily). Less obvious is the strengthening and unifying effect of the old concept of strength through numbers and competition.

Stop-Loss

This Web Site asserts that because of its dominant and critical role in the survivability of self-funding, stop-loss has the greatest privilege, obligation and opportunity to contribute thereto. All of the tools, programs and systems discussed in the other Sub-Sites (business virtues, care management; high tech (internet) applications; marketing; medical/provider practices; risk management; vendor services, e.g.) impact in some significant manner on stop-loss. A few, but not all of the proposed stop-loss changes are as follows:

  1. Stop-loss should be arranged by the Corporation using a single flagship carrier and then on a pooled basis only. That is, the claims experience of all the participating plans are pooled and (a) premiums for aggregate are both experience-rated and retrospective and (b) premiums for specific are neither. Flagship carrier should reinsure on a quota-share basis with the other industry carriers in some equitable manner.

  2. Stop-loss is arranged through the Corporation using multiple MGUs; pooled experience of all participating plans as respects the stop-loss risks is managed by a risk-pool manager, which manager is under contract with the Corporation.

  3. The risk-pool manager in every way will use such tools as (a) risk management, (b) high-tech systems, (c) all manner of cost containment programs, and (d) other devices as may be needful and appropriate to manage the pool prudently.

  4.  The Carrier will have at times access to the relevant data of each subscribing plan; the monitoring, claims processing, reporting and renewal adjustments will be done on the various Web Sites established and maintained by the Corporation.

  5. Certain suggested stop-loss changes should be considered; the wisdom of commissionless stop-loss should be considered.

Vendor Services

Consistent with the obligation to "build the better and cheaper mousetrap in a fair manner," it is the assertion of this Web Site that all services to the self-funded health plan (by vendors and providers alike) should, to the extent possible or practical, be offered on a work-product basis. This enhances competition by full and fair price disclosure and comparison (transparency advantage) and still results in compensation which are both fair and reduced.

Health Care Reform (Blue Book)

It is the assertion of this Web Site that there must be developed national standards (Blue Book) using the latest computational Internet technologies to both assess the proprietary and quantify the economic value of the (a) multiplicity of health care services given to the (b) multiplicity of care-receivers by a (c) multiplicity of providers in a (d) multiplicity of care settings that are financed by a (e) multiplicity of payers and governed by a (f) multiplicity of laws and customs.

Only with these objective measures, established and publicly available, will the country be able to accomplish these goals.

  1. Create a national health care economic model that will provide such meaningful statistics as are needed to monitor and/or modify financing/benefits, etc.
  2. Make consumer directed health care practical.
  3. Help correct or reform our tort system.
  4. Achieve the commerce clause purpose pf the "better and cheaper mousetrap fairly made".
  5. Serve as a useful reservoir of facts/data that will be useful to all parties involved with health care.
  6. Facilitate needed health care reform.