The report is a compelling comparative analysis between a PPO proposal and a Cost Plus Insurance proposal, an evaluation of a non-traditional approach to health care financing and a traditional managed care proposal worth reading.
The City of Lewisville, with the assistance of insurance experts, evaluated group health insurance proposals received during a competitive Request for Proposal process several years ago. The city’s evaluation results have been published and is now in the public domain. The report is a compelling comparative analysis between a PPO proposal and a Cost Plus Insurance proposal, an evaluation of a non-traditional approach to health care financing and a traditional managed care proposal.
The analysis is an interesting study worth reading.
Conclusions one may draw regarding this study are three fold: (1). Cost plus or Medicare benchmark reimbursement methodologies save claim dollars over traditional managed care contracts – in this case 14%, (2) Cost plus fees to administer, defend, re-price, indemnify can negate, to a large degree, claim dollar savings and (3). Stop loss insurance may not be as competitive as warranted through cost plus/medicare benchmarking reimbursement methods.
In this particular instance, projected fees of over $500,000 for this 676 life case to provide plan audits, claim re-pricing, patient advocacy and legal indemnification wipes out much of claim dollar savings of 14% as indicated in the city’s report. These projected fees do not include the cost of administering claims. (See Cost Plus Audit / Legal Indemnification Fees Getting You Down? – http://blog.riskmanagers.us/?p=11250)
With the projected savings of 14% in claims under the Cost Plus/Medicare platform one would believe that stop loss underwriters would properly credit the reduced risk. But in this case, stop loss included a $350,000 laser through the Cost Plus proposal while the stop loss proposal for the PPO plan had no laser at all.
The report, one could conclude, illustrates overall plan costs would be less expensive under the PPO proposal.
Editor’s Note: Fees charged by some Cost Plus Insurance plan administrators can be significant. Fortunately, increasing competition in the Cost Plus / Medicare Reference Based Pricing market is having a positive impact on fees to be charged. The fee range can make a difference in selection of a plan administrator.. http://blog.riskmanagers.us/?p=12807)
You may find the insurance report here: https://dl.dropboxusercontent.com/u/107357829/Backup%20-%20August%205%2C%202013.pdf (scroll down 11 pages to view report).