Once billed charges reach the stop loss threshold, all charges back to the first dollar are given only a token discount, negating the touted “steep” discounts PPO’s provide members.
A recent claim we reviewed illustrates a turbo-charged hospital bill. The patient incurred a hospital bill totaling $ 153,887 for removal of a kidney stone. (The Case of The $153,887 Kidney Stone).
Medicare would pay less than $10,000 on this claim. Since billed charges exceed the $100,000 stop loss threshold found in some managed care contracts, a typical PPO plan would end up paying significantly more than what Medicare allows.
Stop loss insurance reimbursement is almost always based on U&C. Since turbo-charged hospital bills are usual & customary, stop loss insurance assumes the risk of slightly discounted charge-master rates in lieu of the “deep” and “spectacular” discounts touted by status quo PPO third party intermediaries. (Hospitals Dismiss Significance Of Chargemaster Prices?)
The article below is a warning to plan sponsors. The good news is there are proven common sense solutions to mitigate risk (see comments following the article below).
Article Referred by Bruce Roffe, HHC Group
Catastrophic Claims on the Rise
The number of self-funded health plans reporting catastrophic claims continues to trend upward. 64% of self-insured health plans reported at least one claim in excess of $500,000 in 2019, up from 58% in 2018.
31% had at least one claim in excess of $1,000,000 over the two year period according to a recent survey of self-funded health plans.
Aggressive hospital billing and spiraling specialty pharmacy costs are two major reasons for the increases. Stop-loss coverage premium coverage varied significantly among companies with self-funded plans for a variety of reasons including the companys risk tolerance, employee demographics, variety of contracts and broker commissions.
The report offers a number of strategies for reducing companies stop-loss premiums.
SOLUTION: Move away from managed care contracts immediately. Pay Medicare allowable rates (plus a percentage if you’re in a jovial mood today).
Review your Rx listing and remove those drugs that cost more than $1,000 for a 30 day supply and engage an experienced Rx patient advocate to assist members in navigating patient assistance manufacturer programs.
If your plan covers Duexis, it is a clear indication of lack of proper risk management oversight. Duexis cost is approximately $28,000 per year. A substitution (ibuprofen & pepcid) can be obtained over-the-counter for about $120 per year. (I Don’t Care)
We have implemented these common sense strategies with good success. At Medicare allowable rates, it’s rare for claims to reach the kind of numbers you read about in the article above. We have had equal success on the Rx side of the equation – to date not one of our members in any of the groups we manage have been refused their Rx through various manufacturer programs (Mfg. cannot afford the bad publicity of turning down Rx assistance requests for high cost drugs).
RiskMangers.us is a specialty company in the benefits market that, while not an insurance company, works directly with health entities, medical providers, and businesses to identify and develop cost effective benefits packages, emphasizing transparency and fairness in direct reimbursement compensation methods.
The shared vision of RiskManagers.us and clients who retain our services is to establish and maintain a comprehensive employee health and welfare plan, identify cost areas that may be improved without cost shifting to any significant degree, and ensure a superior and sustained partnership with a claim administrator responsive to members needs on a level consistent with prudent business practices.
Plan costs, in all areas including fixed expenses and claims are open for review on a continuing basis. Cost effective plan administration and equitable benefit payment to providers are paramount to fulfilling our mutual fiduciary duties. As we proactively monitor and manage an entire benefit program we are open to any suggestions members may make or the dynamic health benefit market may warrant in order to accomplish these goals.
Duty of loyalty to our clients, transparency and accountability are essential to the foundation of our services. To that end, we expect our clients to realize a substantial savings based upon the services that we will deliver.
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