Plan, Design & Strategize

How can trustees balance the benefits provided by their fund — and the cost of those health plans — with the ability of the participants to afford the coverage? Today's benefits environment demands a comprehensive approach to formulating health plan design strategies that leverage innovative approaches as well as the power of data analysis, modeling and benchmarking.

Innovative Plan Design Strategy and Analysis

Effective plan design is the key to providing high-quality, cost-effective health care to multiemployer benefit plan members. Segal has extensive experience in the design and redesign of all health benefit plans, including medical, dental, prescription drug, vision, behavioral health, short- and long-term disability, life, accidental death and dismemberment, and flexible benefits.

We use a number of strategies to enhance the health plans of our multiemployer clients. These include:

  • Participant cost sharing and contribution strategies
  • Multiple plan offerings/options
  • Targeted inner-tier networks
  • Specialty carve-out networks
  • Opt-out incentives
  • High-cost claimant-case management
  • Chronic illness utilization management
  • Exclusions and limitations
  • Eligibility rules (for active participant and retiree health coverage)
  • Coordination of benefit and subrogation protocols

Cost and Utilization Modeling

Cost is an important consideration when planning any change in benefit plan design, as plan redesigns can have a significant fiscal impact on a heath fund. Segal’s cost modeling experts and tools enable trustees to make informed decisions about their plans.

Segal can:

  • Evaluate the immediate financial effects of plan design modifications
  • Predict future utilization patterns and estimate changes in claims costs
  • Determine change or impact to member out-of-pocket expenses
  • Provide multi-year estimates of plan sponsor costs
  • Identify trends in the market and benchmark plan features to industry peers
  • Determine if plans meet minimum actuarial value statements imposed by the Affordable Care Act

We have extensive experience in assisting clients modeling both plan sponsor expenses and the member out-of-pocket cost of plan design or coverage changes. Our knowledge allows trustees to make decisions that maintain the long-term sustainability of their plans. Through our ongoing work on plan design, cost sharing, vendor negotiation and contract management, we help our clients understand the current and future costs of their benefit programs with the objective of best meeting the needs of participants and the overall management of the plan.

We also help trustees communicate plan changes to their participants. It is important for participants to understand how to best use their benefits.

Cost Modeling and Health Care Reform

Trustees must address both the challenge of spiraling health care costs and compliance with the Affordable Care Act (ACA), also known as Health Care Reform. The ACA is expected to change health care economics by reshaping the health insurance marketplace. Trustees need to consider both direct and indirect ACA implications on the benefits plan as well as participants. Segal can help trustees assess costs resulting from ACA compliance, including surcharges, excise tax, exchanges and subsidies. Segal can model where a fund is relative to the excise tax limits that will be imposed on the value of 2018 benefits with Segal’s proprietary Excise Tax calculator — and strategizing plan design modifications to mitigate the potential tax liability

Budgeting/Financials

Proper budgeting and financial monitoring is key to sustaining a multiemployer fund.

Segal is able to help trustees with the following services:

  • Projecting future claim expenses, premiums and premium equivalents
  • Developing required participant contribution and COBRA rates
  • Performing incurred-but-not-reported (IBNR) calculations required for self-funded plans
  • Analyzing the impact of proposed plan design changes on future expenses
  • Underwriting and funding methodology
  • Creating budget and renewal projections
  • Preparing annual health benefits reports
  • Determining pricing for flexible benefits
  • Conducting merger studies
  • Analyzing the development of health care purchasing coalitions
  • Reviewing domestic partner benefits/imputed income
  • Creating and/or updating financial reports including information on per member per month (PMPM) costs and plan cost drivers
  • Preparing a 92-06 SOP actuarial valuation report and assessing its implications for plan funding.

Reserves

In addition to establishing a cushion to fall back on during unfavorable financial periods, there are many good reasons to set aside reserves, including:

  • Reimbursement of claims that participants have incurred but not yet submitted to the plan
  • Unexpected claims fluctuations
  • Shortfalls of expected income
  • Management of cash flow
  • Potential future expenses based on the plan's eligibility provisions and/or design features
  • The plan's postretirement benefit obligation, if any
  • Changing demographics
  • External events, such as delinquencies by contributing employers or labor-management disputes

Segal can assist in reviewing the fund's reserve policy or developing a policy if one is desired. We can also evaluate the fund's current target reserve levels and evaluate whether the fund is at risk for insolvency.

Data Mining and Analysis

Data mining gives multiemployer plan trustees valuable insight into plan costs and usage to improve decision making and financial analysis. Using data mining, trustees can determine the root causes of cost increases, which allows for targeted and effective intervention to manage future health care expenses.

Segal's data mining services include:

  • Exploring emerging population health risk factors that impact utilization
  • Utilization reporting of claims by plan type, type of service, place of service and by disease
  • Tracking treatment compliance rates of participants with chronic diseases and preventive testing compliance of all participants
  • Uncovering potential fraud and abusive provider practices
  • Exploring the use of integrated medical management services and data-mining tools to identify patient risk, provide disease management education and offer provider quality data and best treatment protocols
  • Working with trustees to set specific program goals and objectives that can be measured and monitored
  • Developing a multi-year action plan to implement objectives and metrics for monitoring progress toward achieving set goals
  • Working with vendors to develop needed activity and metrics reports to measure program participation activity
  • Working with vendors to make sure appropriate outputs/reports are being produced
  • Validating plan performance and contract terms are being met

Benchmarking

Benchmarking is the process of identifying, understanding and comparing best practices across organizations. It is a powerful tool for an organization seeking to align benefit programs to the goals and strategies of the organization.

A competitive analysis of benefit programs serves as an important method to identify sources for program improvement, such as cost efficiency, recruitment and retention of participants. A benchmark assessment provides a unique and invaluable understanding of how benefit programs compare among competing funds. Furthermore, a rapidly evolving industry makes it important for plan sponsors to understand not only the current benefit plans in place at key industry and geographic competitors, but also the future direction of the benefit initiatives competitors may undertake.

Retiree Health and VEBAs

Providing health benefits for retirees presents multiemployer funds with many challenges. Segal can help trustees find solutions that work for both the fund and retirees.

Segal works with a variety of multiemployer plans that offer Medicare and non-Medicare retiree coverage, including prescription drug, dental, vision and life insurance benefits.

Services we provide include:

  • Creating a modern retiree health strategy
  • Evaluating alternatives such as retiree self-pay policies, pre-funding retiree health benefits, health reimbursement accounts (HRAs) and other cost-saving measures
  • Implementing a Medicare Advantage Fee-For-Service Arrangement or a Private Fee-For-Service alternative
  • Evaluating Defined Contribution Retiree Health platforms with or without private retiree health exchange adoption
  • Performing a Medicare Part "D" actuarial attestation and review for creditable coverage
  • Negotiating with carriers regarding the rates and contractual arrangements for all offerings
  • Designing a plan for retiree prescription drug coverage
  • Assessing the fund's Retiree Drug Subsidy (RDS) savings to see whether the subsidy income meets expectations
  • Evaluating replacing RDS and self-funded prescription drug coverage with a Medicare Part D Prescription Drug Plan (PDP)
  • Preparing applications and assisting with administration of Employer Group Direct-Contract prescription drug plans
  • Conducting SOP 92-6 Valuations Results and Financial Experience and Budget Projections (FEPBs)

VEBAs

A voluntary employees' beneficiary association (VEBA) is one option for multiemployer plans that are looking for a new way to handle the rising costs and obligations of retiree health benefits, especially when these benefits are collectively bargained or the company is in bankruptcy.

What is a VEBA?

A VEBA is a trust that is established to provide tax-free retiree health benefits to current and/or future retirees. Characteristics of a VEBA include:

  • Assets are held in trust to provide qualifying health benefits (i.e., medical, dental, prescription drugs, health insurance premiums, Medicare supplemental premiums), and cannot be reverted to the employer or used for any other purpose
  • Run by a board of trustees, who determine the policies of the trust and manage the investment of funds
  • Can be defined-benefit and/or defined-contribution type plans
  • Contributions to the trust can come from an employer, a debtor or successor company, or after-tax retiree contributions
  • Allow tax-exempt investment earnings on plan assets
  • Funding limitations do not apply if the trust meets collective bargaining standards

How can Segal help?

Segal has experience with over 25 retiree health VEBA clients — some of which have been around for more than 25 years. This significant, in-depth experience in the creation, design, implementation, communication and administration of VEBAs is unparalleled. Our consultants are available to assist you and your attorneys in addressing the following aspects of a VEBA:

  • Establishing plan administration
  • Determining plan design
  • Determining funding options
  • Developing policies and procedures
  • Selecting, retaining and managing service providers
  • Investment consulting (provided by Segal Rogerscasey, our SEC-registered investment consulting affiliate)
  • Preparing documentation and participant communications
  • Preparing filings and disclosures
  • Obtaining fiduciary liability insurance

Contact us today if you are considering a VEBA to maintain benefits for your participants.

Learn more

Consumer-Driven Health Plans

A consumer-driven health plan (CDHP) invites participants to become more involved in health care decisions and more aware of the true cost of care. An increasing number of health plan sponsors are turning to CDHPs in hopes of controlling costs.

The implementation of a CDHP involves a significant effort on the part of the plan sponsor, and should not be done without considering the changes it would require from participants in terms of utilizing their coverage. In addition, deciding on the proper plan design, whether it be a Health Reimbursement Account (HRA)-based plan or an HSA option coupled with a High Deductible Health Plan (HDHP), and understanding the administrative and compliance challenges associated with each can be both confusing and challenging.

Segal can help you determine the best way to introduce health care consumerism to your plan participants. This may involve implementing a CDHP, modifying your current plan designs to increase participant cost awareness, launching a communications campaign for conscious decision-making, or some combination of these methods.

Health care consumerism is not simply a plan design; it is a campaign dedicated to making participants better-educated consumers of care. Segal can create the right strategy for your fund, using such services as:

  • A CDHP feasibility study to assess the readiness of your fund for new plans
  • Underwriting/plan design modeling to understand the value and costs associated with a CDHP and the impact one may have on your overall health benefit costs
  • Designing a CDHP strategy and establishing long-and short-term goals to ensure success
  • Selecting vendors
  • Assessing your communications strategy. Even more than with traditional health plans, crafting the right messages and ensuring that participants understand what is expected from them are critical to success.
  • Creating communications to help participants make informed decisions regarding:
    • What member support tools will be made available
    • Which health plan they pick
    • Which treatment option they choose
    • Which doctor they choose
    • What lifestyle choices they make
  • Compliance guidance and review to ensure your plan is in compliance with the rules that apply to CDHPs

Participant Contribution Strategies

In our experience, participant contributions are one of the most visible and sensitive issues forming participant perceptions of health plans. Working with our clients we carefully evaluate participant contributions. We assist plan sponsors with outlining their participant contribution strategy by:

  • Using benchmarking data
  • Considering plan sponsor benefit plan objectives, future trends and participant satisfaction concerns
  • Reviewing financial impact for both the plan sponsor and the participants.

The strategy a fund develops and uses will send messages to participants that the plan sponsor will want to ensure are consistent with its strategic plan. Segal can help develop new strategies and, if the new strategy is significantly different from the current approach, we can work with plans to evaluate a “phase-in” process for its implementation.

We can also integrate the participant contribution review and cost sharing analysis with a client’s communication strategy to help plan sponsors communicate the benefit offering to participants, emphasize the portion of the total benefits bill that the plan sponsor is actually paying and encourage the right participant behaviors and selection results.

Value-Based Benefit Design (VBD) Strategies

Value-based plan design customizes plan design and management based on proven medical interventions, high-value therapies and efficacy, rather than providing a one-size-fits-all solution to coverage. These plans encourage treatments with evidence of clinical benefit and lowers financial and behavioral barriers to effective treatment. The plans also encourage participants to adopt healthy behaviors and help employers better manage plan costs.

Examples of value-based plan design include:

  • Investing in wellness programs that are likely to have higher engagement rates and a meaningful impact on improving member health status
  • Broadening coverage for proven high-value, low-cost treatment options (e.g., generic drugs before brand-name, clinics before emergency rooms)
  • Targeted Utilization Review protocols for expensive therapeutic options and services that have little proven value or the greatest potential for abuse
  • Patient-Centered Medical Home, which fosters a relationship between primary care physician and patient, increases quality and consistency of care, and lowers costs
  • Lowering member copayments on lower-cost retail clinics, telemedicine and on-site clinics
  • Accountable Care Organizations, which are collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients

Segal works with trustees and plan sponsors to develop, customize and implement value-based initiatives  as well as communicate the changes to participants. We take into account the demographics of the members and dependents, plan experience, budget constraints and the trustees’ benefits philosophy and goals.

Innovative Plan Design Strategy and Analysis

Effective plan design is the key to providing high-quality, cost-effective health care to your employees. Segal has extensive experience in the design and redesign of all health benefit plans, including medical, dental, prescription drug, vision, behavioral health, short- and long-term disability, life, accidental death and dismemberment, and flexible benefits.

We use a number of strategies to enhance the health plans of our public sector clients. These include:

  • Participant cost sharing and contribution strategies
  • Multiple plan offerings/options
  • Targeted inner-tier networks
  • Specialty carve-out networks
  • Opt-out incentives
  • High-cost claimant-case management
  • Chronic illness utilization management
  • Exclusions and limitations
  • Eligibility rules (for active participant and retiree health coverage)
  • Coordination of benefit and subrogation protocols

Cost and Utilization Modeling

Cost is an important consideration when planning any change in benefit plan design, as plan redesigns can have a significant fiscal impact on an entity. Segal’s cost modeling experts and tools enable plan sponsors to make informed decisions about their plans.

Segal can:

  • Evaluate the immediate financial effects of plan design modifications
  • Predict future utilization patterns and estimate changes in claims costs
  • Determine change or impact to member out-of-pocket expenses
  • Provide multi-year estimates of plan sponsor costs
  • Identify trends in the market and benchmark plan features to industry peers
  • Determine if plans meet minimum actuarial value standards imposed by the Affordable Care Act

We have extensive experience in assisting clients modeling both plan sponsor expenses and the member out-of-pocket cost of plan design or coverage changes. Our knowledge allows plan sponsors to make decisions that maintain the long-term sustainability of their plans. Through our ongoing work on plan design, cost sharing, vendor negotiation and contract management, we help our clients understand the current and future costs of their benefit programs with the objective of best meeting the needs participants and the overall management of the plan.

We also help plan sponsors communicate plan changes to their participants. It is important for participants to understand how to best use their benefits.

Cost Modeling and Health Care Reform

Plan sponsors must address both the challenge of spiraling health care costs and compliance with the Affordable Care Act (ACA), also known as Health Care Reform. The ACA is expected to change health care economics by reshaping the health insurance marketplace. Plan sponsors need to consider both direct and indirect ACA implications on the benefits plan as well as participants. Segal can help plan sponsors assess costs resulting from ACA compliance, including surcharges, excise tax, exchanges and subsidies. Segal can help model where a plan is relative to the excise tax limits that will be imposed on the value of 2018 benefits with Segal’s proprietary Excise Tax calculator  and strategize plan design modifications to mitigate the potential tax liability.

Budgeting/Financials

Proper budgeting and financial monitoring is key to sustaining a health and welfare plan.

Segal is able to help public sector entities with the following services:

  • Future claim expenses, premiums and premium equivalents
  • Developing required contribution and COBRA rates
  • Performing incurred-but-not-reported (IBNR) calculations required for self-funded plans
  • Analyzing the impact of proposed plan design changes
  • Underwriting and funding methodology
  • Creating budget and renewal projections
  • Preparing annual health benefits reports
  • Determining pricing for flexible benefits
  • Conducting merger studies
  • Analyzing the development of health care purchasing coalitions
  • Reviewing domestic partner benefits/imputed income
  • Creating and/or updating financial reports including information on per member per month (PMPM) costs and plan cost drivers
  • Preparing a 92-06 SOP actuarial valuation report and assessing its implications for plan funding

Data Mining and Analysis

Data mining gives public sector plan sponsors valuable insight into plan costs and usage to improve decision making and financial analysis. Using data mining, plan sponsors can determine the root causes of cost increases, which allows for targeted and effective intervention to manage future health care expenses.

Segal's data mining services include:

  • Exploring emerging population health risk factors that impact utilization
  • Utilization reporting of claims by plan type, type of service, place of service and by disease
  • Tracking treatment compliance rates of members with chronic diseases and preventive testing compliance of all employees
  • Exploring the use of integrated medical management services and data-mining tools to identify patient risk, provide disease management education and offer provider quality data and best treatment protocols
  • Uncovering potential fraud and abusive provider practices
  • Working with you to set specific program goals and objectives that can be measured and monitored
  • Developing a multi-year action plan to implement objectives and metrics for monitoring progress toward achieving set goals
  • Working with vendors to develop needed activity and metrics reports to measure program participation activity
  • Working with vendors to make sure appropriate outputs/reports are being produced
  • Validating the plan’s performance and contract terms are being met

Benchmarking

Benchmarking is the process of identifying, understanding and comparing best practices across organizations. It is a powerful tool for an organization seeking to align benefit programs to the goals and strategies of the organization.

A competitive analysis of benefit programs serves as an important method to identify sources for program improvement, such as cost efficiency, recruitment and retention of employees. A benchmark assessment provides a unique and invaluable understanding of how benefit programs compare among competing organizations. Furthermore, a rapidly evolving industry makes it important for employers to understand not only the current benefit plans in place at key industry and geographic competitors, but also the future direction of the benefit initiatives competitors may undertake.

Retiree Health and VEBAs

Providing health benefits for retirees presents public sector employers with many challenges. Segal can help you find solutions that work for both your organization and retirees.

Segal works with a variety of public sector employers that offer Medicare and non-Medicare retiree coverage, including prescription drug, dental, vision and life insurance benefits. Services we provide include:

  • Creating a modern Retiree Health strategy
  • Evaluating alternatives such as retiree self-pay policies, pre-funding retiree health benefits, health reimbursement accounts (HRAs) and other cost-saving measures
  • Implementing a Medicare Advantage Fee-For-Service Arrangement or a Private Fee-For-Service alternative
  • Evaluating Defined Contribution Retiree Health platforms with our without private retiree health exchange adoption
  • Performing a Medicare Part "D" actuarial attestation and review for creditable coverage
  • Negotiating with carriers regarding the rates and contractual arrangements for all offerings
  • Designing a plan for retiree prescription drug coverage
  • Assessing the plan's Retiree Drug Subsidy (RDS) savings to see whether the subsidy income meets expectations
  • Evaluating replacing RDS and self-funded prescription drug coverage with a Medicare Part D Prescription Drug Plan (PDP)
  • Preparing applications and assisting with administration of Employer Group Direct-Contract prescription drug plans
  • Conducting SOP 92-6 Valuations Results and Financial Experience and Budget Projections (FEPBs)

VEBAs

A voluntary employees' beneficiary association (VEBA) is one option for organizations that are looking for a new way to handle the rising costs and obligations of retiree health benefits, especially when these benefits are collectively bargained or the company is in bankruptcy.

What is a VEBA?

A VEBA is a trust that is established to provide tax-free retiree health benefits to current and/or future retirees. Characteristics of a VEBA include:

  • Assets are held in trust to provide qualifying health benefits (i.e., medical, dental, prescription drugs, health insurance premiums, Medicare supplemental premiums), and cannot be reverted to the employer or used for any other purpose
  • Run by a board of trustees, who determine the policies of the trust and manage the investment of funds
  • Can be defined-benefit and/or defined-contribution type plans
  • Contributions to the trust can come from an employer, a debtor or successor company, or after-tax retiree contributions
  • Allow tax-exempt investment earnings on plan assets
  • Funding limitations do not apply if the trust meets collective bargaining standards

How can Segal help?

Segal has experience with over 25 retiree health VEBA clients — some of which have been around for more than 25 years. This significant, in-depth experience in the creation, design, implementation, communication and administration of VEBAs is unparalleled. Our consultants are available to assist you and your attorneys in addressing the following aspects of a VEBA:

  • Establishing plan administration
  • Determining plan design
  • Determining funding options
  • Developing policies and procedures
  • Selecting, retaining and managing service providers
  • Investment consulting (provided by Segal Rogerscasey, our SEC-registered investment consulting affiliate)
  • Preparing documentation and participant communications
  • Preparing filings and disclosures
  • Obtaining fiduciary liability insurance

Learn more

Consumer-Driven Health Plans

A consumer-driven health plan (CDHP) invites participants to become more involved in health care decisions and more aware of the true cost of care. An increasing number of health plan sponsors are turning to CDHPs in hopes of controlling costs.

The implementation of a CDHP involves a significant effort on the part of the plan sponsor, and should not be done without considering the changes it would require from employees in terms of utilizing their coverage. In addition, deciding on the proper plan design, whether it be a Health Reimbursement Account (HRA)-based plan or an HSA option coupled with a High Deductible Health Plan (HDHP), and understanding the administrative and compliance challenges associated with each can be both confusing and challenging.

Segal can help you determine the best way to introduce health care consumerism to your plan participants. This may involve implementing a CDHP, modifying your current plan designs to increase participant cost awareness, launching a communications campaign for conscious decision making, or some combination of these methods.

Health care consumerism is not simply a plan design; it is a campaign dedicated to making participants better educated consumers of care. Segal can create the right strategy for your organization, using such services as:

  • A CDHP feasibility study to assess the readiness of your organization for new plans
  • Underwriting/plan design modeling to understand the value and costs associated with a CDHP and the impact one may have on your overall health benefit costs
  • Designing a CDH strategy and establishing long-and short-term goals to ensure success
  • Selecting vendors
  • Assessing your communications strategy. Even more than with traditional health plans, crafting the right messages and ensuring that participants understand what is expected from them are critical to success.
  • Creating communications to help employees make informed decisions regarding:
    • What member support tools will be made available
    • Which health plan they pick
    • Which treatment option they choose
    • Which doctor they choose
    • What lifestyle choices they make
  • Compliance guidance and review to ensure your plan is in compliance with the rules that apply to CDHPs

Employee Contribution Strategies

In our experience, employee contributions are one of the most visible and sensitive issues forming employee perceptions of health plans. Working with our clients we carefully evaluate employee contributions. We assist plan sponsors with outlining their employee contribution cost sharing strategy by:

  • Using benchmarking data
  • Considering plan sponsor benefit plan objectives, future trends and employee satisfaction concerns
  • Reviewing financial impact for both the plan sponsor and the employees, including affordability testing

The strategy an organization develops and uses will send messages to participants that the plan sponsor will want to ensure are consistent with its strategic plan. Segal can help develop new strategies and, if the new strategy is significantly different from the current approach, we can work with plans to evaluate a “phase-in” process for its implementation.

We can also integrate the employee contribution review and cost sharing analysis with a client’s communication strategy to help plan sponsors communicate the benefit offering to employees, emphasize the portion of the total benefits bill that the plan sponsor is actually paying and encourage the right employee behaviors and selection results.

Value-Based Benefit Design (VBD) Strategies

Segal has extensive experience designing and evaluating value-based benefit plan designs and we have worked with a number of clients to help develop custom value-based designs in order to help them achieve their health benefit goals. Introducing a nuanced benefit design that tailors cost-sharing for both high-value and low-value services helps to ensure clients are getting the most value for their health care dollar. By identifying and promoting the utilization of strategies and services which have been found to be both clinically and cost effective, our clients have realized significant improvements in the overall wellness of their members.

Our client support regarding value-based benefit plan designs includes thorough analyses of clinical impact, member disruption, financial effect (including rebates) and contracting considerations. Our experience ranges from detailed analyses and recommendations, to broader analyses involving the implementation of new plan design features or specific category exclusions.

Value-based plan design customizes plan design and management based on proven medical interventions, high-value therapies and efficacy, rather than providing a one-size-fits-all solution to coverage. These plans encourage treatments with evidence of clinical benefit and lowers financial and behavioral barriers to effective treatment. The plans also encourage participants to adopt healthy behaviors and help employers better manage plan costs. Examples of value-based plan design include:

  • Investing in wellness programs that are likely to have higher engagement rates and a meaningful impact on improving member health status
  • Broadening coverage for proven high-value, low-cost treatment options (e.g., generic drugs before brand-name, clinics before emergency rooms)
  • Targeted Utilization Review protocols for expensive therapeutic options and services that have little proven value or the greatest potential for abuse
  • Patient-Centered Medical Home, which fosters a relationship between primary care physician and patient, increases quality and consistency of care, and lowers costs
  • Lowering member copayments on lower-cost retail clinics, telemedicine and on-site clinics
  • Accountable Care Organizations, which are collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients

Segal works with plan sponsors to develop, customize and implement value-based initiatives  as well as communicate the changes to participants. We take into account the demographics of the members and dependents, plan experience, budget constraints and the plan sponsor’s benefits philosophy and goals.