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Stop loss health insurers warming up to wellness

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As more and more middle-market employers turn to self-funding their benefits as part of their cost-containment strategy, some stop-loss insurers are lending a helping hand with incentives to adopt medical management programs.

Many stop-loss underwriters providing excess coverage will consider effective wellness and disease management programs in calculating premiums for specific stop-loss coverage, which pays claims of an individual plan member that pierce a certain deductible threshold, or aggregate stop-loss coverage, which pays when total actual claims exceed 125% of total expected claims.

But few stop-loss insurers have gone as far as New York-based Chartis Inc. did when it announced last month that it formally endorsed the MedEncentive L.L.C. program, a patented web-based health care cost containment system that rewards both doctors and patients for adhering to evidence-based care and healthy behaviors.

Chartis is offering premium discounts and lower aggregate attachment points to employers that adopt the program.

“We're trying to find ways to support programs employers are implementing that will help control the cost of health care for their employee and dependent populations,” said Chip Studer, vp of sales at Chartis Corporate Benefits in Philadelphia. “The level of discounts varies based on the size of the group, size of the specific deductible and other underwriting variables.”

The lowest specific deductible available from Chartis is $25,000, and the standard aggregate attachment point is 125% of expected claims.

However, “we will consider offering contracts at 120% of expected claims if this product is involved,” Mr. Studer said. “Theoretically, the employers should see lower costs under their aggregate policies as a result of implementing MedEncentive's information therapy program since the following year's claims are based on the prior year's activity. So it will impact future actual costs as well as future liabilities under the aggregate contract.”

The Chartis offering, which uses annual contracts, is being marketed to self-insured employers with 100 or more employees.

Although MedEncentive has been piloting its program (see story) for the past six years with self-funded employers that purchase stop-loss coverage from other insurers, Chartis was the first stop-loss underwriter to formally recognize the value of the MedEncentive program through across-the-board pricing credits on its stop-loss product, said Jeff Greene, CEO and founder of Oklahoma City-based MedEncentive.

Other stop-loss insurers recognize the value of wellness and medical management through premium discounts and, at times, lower aggregate attachment points, but such consideration generally is provided on a case-by-case basis as part of the medical underwriting process, both brokers and stop-loss insurers say.

“Most (managing general underwriters) and direct-writing carriers have the ability to apply case-specific underwriting credits to the stop-loss premium rates, as well as the aggregate attachment point/expected claims based on the actual or projected impact of a benefit modification, such as a change in benefit design, addition of a wellness program or implementation of a new product or service,” said Robert Melillo, national vp of risk financing solutions at USI Insurance Services L.L.C. in Meriden, Conn.

Ken Olson, division president of The Horton Group Inc., a middle-market insurance broker based in Orland Park, Ill., said he often has been able to persuade stop-loss underwriters to shave up to 5% off of a specific stop-loss premium “if I can tell a good story that demonstrates the impact of wellness and disease management on a particular employer's claims experience.”

However, most stop-loss insurers “will not promote it because there's little proof of true savings to the catastrophic layer, and the benefits to the aggregate show up in their actual claims experience. But some will still shave a few points off of the aggregate attachment point,” Mr. Melillo said.

“If a group is new to us and they have a well-established wellness program, generally you will see the results as part of the underwriting process,” acknowledged Karin James, Windsor, Conn.-based assistant vp of stop loss and strategic operations at Wellesley Hills, Mass.-based Sun Life Financial Inc., the U.S. business group of Toronto-based Sun Life Assurance Co. of Canada. “We will take that into consideration in both the aggregate attachment point and the specific premium rate.”

Sun Life also provides data analytics to the third-party administrators that administer self-funded employers' claims to identify plan members who may be getting close to reaching the specific deductible so the TPA can intervene with medical management programs, Ms. James said.

More recently, Sun Life began offering its stop-loss customers access to Philadelphia-based CIGNA Corp.'s national preferred provider network, considered one of the most robust with its 660,000 health care professionals and 5,100 hospitals nationwide. It is believed that the network will help keep costs in check for self-funded employers that purchase stop-loss coverage from Sun Life, Ms. James said.

“One of the key things in containing health care costs is a strong PPO network, which CIGNA has. In addition, CIGNA has cost-containment programs around their network. It's a very holistic approach to providing and managing health care services,” Ms. James said.

“There's a lot of innovation going on in the marketplace, and a lot of different stop-loss carriers are looking for unique ways to manage claims,” observed Michael W. Sullivan, president and chief operating officer of HM Insurance Group, the stop-loss subsidiary of Highmark Inc. based in Pittsburgh.

Although HM Insurance has not endorsed any specific wellness or disease management programs, Mr. Sullivan said the insurer will evaluate cost-containment programs that self-funded employers are implementing as part of the underwriting process and, in some cases, will discount premiums based on individual track records.

In addition, “we have some tertiary care vendors that we bring forward to help manage larger claims,” he said.

“If the financial models show a clear impact to cost trends, then Chartis (and other stop-loss carriers) should be applauded for passing that reduction along to the groups that embrace the initiative,” said Chris Hogan, president of Benefit Commerce Group, a Scottsdale, Ariz., based health benefit consultant. “We talk a lot about how a member needs to be "engaged.' Shouldn't a stop-loss carrier be as well?”