Reduce Costs

Wellness Strategies and Disease Management

One way plan sponsors can contain costs and better serve plan participants is by encouraging participants to take care of their own health. Through behavioral modification programs that reduce the prevalence and severity of illness in a population, members can enjoy a better quality of life, and the plan's claims cost liabilities may improve in the form of declining trend rates.

There is increasing evidence that wellness and disease management programs can improve patient health and reduce costs. For example, a recent study monitoring a community-based diabetes management program demonstrated an 18% reduction in per participant claims costs after 2 years and a 39% reduction after 5 years.

Segal can conduct an inventory of a plan's current wellness benefits and initiatives and develop a wellness action plan that can help trustees establish effective health management programs that support members and their dependents. These programs include:

  • Wellness and prevention programs
  • Chronic disease management
  • Catastrophic claims management
  • Patient education and self-help programs
  • Complementary care alternatives
  • Incentive programs
  • Segal’s “Wellness Results Dashboard” that plan sponsors can activate to monitor and track how wellness programs impact: plan costs, clinical markers and utilization results

Provider Network Analysis, Options and Contracting

Segal works with multiemployer funds to create health care networks that are cost effective and comprehensive. We have experience with a variety of networks, including:

  • Preferred provider (PPO) networks, both broad and limited scope
  • Health maintenance organization (HMO) programs in which primary care physicians (PCPs) are paid a capitation rate, hospitals a per case rate and specialty physicians a fixed schedule of fees
  • Point-of-service (POS) programs in which PCPs function as gatekeepers for all in- and out-of-network care
  • Specialty networks of behavioral health practitioners and facilities
  • Dental PPOs, in which dentists are paid according to a pre-determined fee schedule, or DEMOs, in which each patient selects a primary care dentist who then coordinates all dental care needed by the patient
  • PPO networks of vision providers that offer significantly discounted rates for examinations and a selection of frames, lenses and contacts at reduced prices

Our network analysis services include:

  • Investigating the current network to see if it is comprehensive for participants' current needs. This includes hospitals, physicians, skilled nursing facilities, home health, hospice, rehabilitation facilities, physical/occupational/speech therapists, chiropractors and durable medical equipment (DME).
  • Using data to guide participants to Centers of Excellence to improve treatment outcomes and promote patient safety. This includes all procedures prone to high rates of quality variability.
  • Investigating why participants are using non-PPO providers
  • Reviewing PPO savings reports
  • Implementing a tiered network concept to steer participants to more cost-effective providers and hospitals
  • Soliciting competitive bids for PPO network options to assure that the fund is receiving the most competitive rates and best access available
  • Helping clients select “Best in Class” provider networks based on discounts and the breadth and depth of specialty providers, as well as on best fit by region where high concentrations of participants reside

Claim Audits and Implementation Reviews

Since 1973, Segal has conducted scores of retrospective on-site claims reviews of multiemployer health funds administered internally or by third-party administrators.

Our consultants have extensive backgrounds in claims processing and operational reviews. This experience makes them uniquely qualified to evaluate established administrative procedures, suggest areas for improvement and ensure proper controls are in place for efficient plan administration.

Services

We tailor each audit project to the plan's specific concerns and objectives. We offer an array of services and tools relating to claims adjudication of all plan expenses (i.e., medical, dental, disability, vision, life insurance). They include:

  • Administrative Procedures Review of day-to-day operational processes and claim-control measures in place for efficient plan administration
  • Analysis of Claims Data to determine utilization trends and comparisons
  • Claims System Logic Testing of system capabilities, examiner edits and automated benefit calculations
  • Duplicate Claims Analysis to electronically identify potential overpayments that may have bypassed system edits
  • Electronic Eligibility Review to compare multiple data sets and identify discrepancies that impact claims processing and/or suggest administrative deficiencies
  • Implementation Audits before and after a change in vendors or plan design are critical for early detection of potential system errors
    • Post-Implementation Assessments of plan setup, adjudication procedures and automated system capabilities before going into production
    • Pre-Implementation Review to assess established procedures and system capabilities of a new administrator or examine a major benefit revision
  • Performance Validation to ensure correct operation of claims-adjudication procedures
  • Periodic Claims Reviews to meet fiduciary responsibilities, validate plan costs, validate member plan cost sharing features are properly applied, enforce or implement performance guarantees, address benefit concerns and increase participant satisfaction
    • Stratified Samples offer overall confidence in the processing accuracy for all claims
    • Targeted Samples validate areas of concern or claims identified through electronic queries
  • Specific Stop-Loss Coverage Analysis to confirm appropriate procedures are in place for prompt filing and accurate reimbursement

Segal can review your entire claims process:

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Prescription Drug Benefit Custom Solutions

Rapidly rising prescription drug costs are driving overall increases in the cost of health coverage. Segal can help multiemployer funds manage the cost of prescription drug coverage through a variety of services.

These include:

  • Determining effective long-term pharmacy benefit strategies
  • Evaluating and negotiating annual renewals from PBMs and Insurers
  • Reviewing utilization and cost data to discover ways that the plan can more effectively provide prescription drug coverage by making plan design changes
  • Providing input and advice regarding changes to the prescription program proposed by the PBM, including addition of drug management programs such as prior authorization, quantity limits and step therapy; changes to the formulary; or restrictions/expansions in the network
  • Reviewing the contract to evaluate whether the terms are competitive
  • Managing specialty pharmacy costs through utilization and cost reviews, data analysis, formulary management through tiered cost sharing, clinical management, monitoring high-risk participants and step therapies
  • Reviewing pharmacy benefit design (copays, coinsurance, etc.) to make sure your plan has the right levels of cost sharing and cost effective drug use incentives
  • Evaluating generic prescription utilization, generic dispensing rates and generic discounts in the current contract, and improving generic dispensing rates through aggressive plan redesign and pricing improvements
  • Implementing a tiered plan design using copays or coinsurance
  • Reviewing Average Wholesale Pricing (AWP) costs by checking the fund's contractual language on AWP reimbursement and renegotiating to address revised drug pricing
  • Analyzing clinical programs to determine the impact and potential advantage for both your fund and covered participants
  • Conducting PBM claim audits to validate financial terms are being achieved.

Vendor Bidding and Renewal Negotiations

Segal works to get the most from vendors for all the clients we represent. We make it our business to know a vendor's history, financial solvency and performance to date, and we bring that knowledge to the table on behalf of multiemployer benefit funds.

Our renewal and competitive bidding services include:

  • Creating custom requests for proposals (RFPs) and analyzing responses from insurance companies and the full array of managed care organizations: health maintenance organizations (HMOs), preferred provider organization (PPOs) and point-of-service (POS) plans
  • Aggressively negotiating vendor contracts so that you receive optimal, market-competitive contracts from them
  • Reviewing yearly increases in each line of coverage:
    • Medical
    • Dental
    • Prescription drugs
    • Vision
    • Life/AD&D (many of our clients are under-insured)
    • Stop loss
    • Short term disability/long term disability
    • Behavioral services  employee assistance programs, managed mental health review program utilization
    • Disease management, 24 hour nurse line, data mining
    • Long term care
    • Voluntary benefits

Funding Arrangements

Choosing between self-funding or insurance will impact a multiemployer benefit fund's finances, reserves and contribution requirements.

Some funds with significant levels of cash reserves can reduce costs by self-funding their health plans or assuming more risk. Before doing this, a plan must carefully consider the ramifications and protect itself against ordinary or catastrophic risks.

Segal can help trustees determine if self-insuring or other cost-saving funding arrangements are right for their fund. We can also help funds that are already self-insured evaluate whether self-insuring is still the best choice.

Stop-Loss Insurance

Self-insured funds can protect themselves against large claims or fluctuations in claims by purchasing stop-loss insurance, which secures insurer reimbursement for expenses above specific or aggregate limits. Segal can help trustees with:

  • Evaluating whether stop-loss insurance is the right option for the fund
  • Determining the level of stop-loss insurance and claims reporting contract basis that is appropriate
  • Evaluating whether the fund needs specific or aggregate insurance, or both
  • Deciding whether to include prescription benefits in the policy
  • Developing an RFP and preparing documentation
  • Negotiating policy provisions with the insurer
  • Addressing coverage gaps
  • Monitoring stop-loss market conditions to take advantage of increased competition
  • Negotiating renewals
  • Settling claims disputes

To learn more about stop-loss insurance:

Leveraging New Health Technology

Segal utilizes technology and analytical tools to measure, monitor and predict the costs of health and welfare benefit programs. Segal has developed a number of pricing tools to help clients assess impact. We customize our technical resources for your specific needs, ensuring that we provide the high level of quality consulting that our clients expect. Segal is on the cutting edge of health care industry trends and relevant legislation, and we update and revise our tools and technology as needed to provide maximum value to our clients. 

Alternative Provider Reimbursement Arrangements

Segal can help contain health costs through diligent management of provider reimbursement. As experienced consultants to plan sponsors in the areas of health insurance, managed care arrangements and third party administration, we begin by identifying networks with strong overall provider discounts, efficient administrative systems and robust ancillary program services. From there, we can help reduce or contain costs by managing and negotiating vendor contract terms more aggressively. In Segal’s experience, it is possible to challenge a provider’s proposed premium renewal after performing independent renewal projections using different methods and assumptions. Frequently, these alternative projections uncover carrier mistakes or non-competitive terms that the carrier will reconsider.

Segal can help:

  • Closely review vendor contracts and subject them to competitive bids periodically to reduce program costs and/or upgrade services. Segal often finds a wide discrepancy in the fees charged to plan sponsors from the same vendor offering a similar scope of services.
  • Reconsider any fees that may be based on a percentage of savings. Such fee structures can be problematic because billed charges can be inflated and are difficult to validate. These arrangements typically increase fees each year at rates significantly higher than general inflation (e.g., as measured by the Consumer Price Index or CPI), arguably a better benchmark for anticipating administrative cost increases. If a percentage-of-savings structure is the only available option, “savings” need to be clearly defined in the vendor contract and a validation process should be established.
  • Evaluate capitation and bundled payment provider reimbursement arrangements

On-site and Near-site Health and Wellness Clinics

Faced with the need for continued improvement in productivity and hampered by the tight budgets of the economic downturn, plan sponsors are taking a fresh look at implementing on-site and near-site medical clinics for participants and their dependents. The cost for implementing and operating these clinics has dropped, and clinics can now be set up on a smaller scale than in the past and require lower capital investment.

This renewed interest is also driven by a number of internal and external factors:

  • Participants face time pressure from busy work-life demands causing them to be less willing or able to leave the worksite to seek healthcare
  • Community based providers are often busy and hurried and cannot provide the attention to ongoing health issues that are not currently acute
  • Network based providers often are not able to customize their services to the specific needs of plan sponsors
  • Chronic diseases are increasingly prevalent among an aging workforce and conditions such as high blood pressure, diabetes, arthritis, depression and high cholesterol require ongoing monitoring and attention to stay under control
  • Participant populations demonstrate an increasing prevalence of serious health risk factors including obesity, stress, lack of exercise and smoking that could benefit from more positive and continuous attention

Adding on-site health clinics can serve several objectives for plan sponsors who want to take greater control of preventative care services, screenings and other primary care services. Segal can help in many facets of your pursuit of an on-site or near-site clinic, including:

  • Assessing the feasibility, clarifying objectives and assessing the cost/benefits of implementing the clinic
  • Determining the most appropriate strategy and model
  • Defining the scope, services to be included and staffing requirements
  • Selecting a clinic manager
  • Communicating the benefits of the clinic to participants
  • Monitoring the performance and impact of the clinics

Wellness Strategies and Disease Management

One way public sector entities can contain costs and better serve employees is by encouraging employees to take care of their own health. Through behavioral modification programs that reduce the prevalence and severity of illness in a population, employees can enjoy a better quality of life, and the plan's claims cost liabilities may improve in the form of declining trend rates.

There is increasing evidence that wellness and disease management programs can improve patient health and reduce costs. For example, a recent study monitoring a community-based diabetes management program demonstrated an 18% reduction in per participant claims costs after 2 years and a 39% reduction after 5 years.

Segal can conduct an inventory of your current wellness benefits and initiatives and develop a wellness action plan that can help you establish effective health management programs that support employees and their dependents. These programs include:

  • Wellness and prevention programs
  • Chronic disease management
  • Catastrophic claims management
  • Patient education and self-help programs
  • Complementary care alternatives
  • Incentive programs
  • Applying Segal’s new “Wellness Results Dashboard” that plan sponsors can activate to monitor and track how wellness programs impact plan costs, clinical markers and utilization results

Provider Network Analysis, Options and Contracting

Segal works with public sector entities to create health care networks that are cost effective and comprehensive. We have experience with a variety of networks, including:

  • Preferred provider (PPO) networks with broad and limited scope
  • Health maintenance organization (HMO) programs in which primary care physicians (PCPs) are paid a capitation rate, hospitals a per case rate and specialty physicians a fixed schedule of fees
  • Point-of-service (POS) programs in which PCPs function as gatekeepers for all in- and out-of-network care
  • Specialty networks of behavioral health practitioners and facilities
  • Dental PPOs, in which dentists are paid according to a pre-determined fee schedule, or DEMOs, in which each patient selects a primary care dentist who then coordinates all dental care needed by the patient
  • PPO networks of vision providers that offer significantly discounted rates for examinations and a selection of frames, lenses and contacts at reduced prices

Our network analysis services include:

  • Investigating your current network to see if it is comprehensive enough for your employees' current needs. This includes hospitals, physicians, skilled nursing facilities, home health, hospice, rehabilitation facilities, physical/occupational/speech therapists, chiropractors and durable medical equipment (DME)
  • Using data to guide employees to Centers of Excellence to improve treatment outcomes and promote patient safety. This includes all procedures prone to high rates of quality variability
  • Investigating why employees are using non-PPO providers
  • Reviewing PPO savings reports
  • Implementing a tiered network concept to steer employees to more cost-effective providers and hospitals
  • Soliciting competitive bids for PPO network options to assure that you are receiving the most competitive rates and best access available
  • Helping clients select “Best in Class” provider networks based on discounts and breadth and depth of specialty providers, as well as best fit by region where a high concentration of employees reside

Claim Audits and Implementation Reviews

Since 1973, Segal has conducted scores of retrospective on-site claims reviews of public sector health plans administered internally or by third-party administrators.

Our consultants have extensive backgrounds in claims processing and operational reviews. This experience makes them uniquely qualified to evaluate established administrative procedures, suggest areas for improvement and ensure proper controls are in place for efficient plan administration.

Services

We tailor each audit project to the plan's specific concerns and objectives. We offer an array of services and tools relating to claims adjudication of all plan expenses (i.e., medical, dental, disability, vision, life insurance). They include:

  • Administrative Procedures Review of day-to-day operational processes and claim-control measures in place for efficient plan administration
  • Analysis of Claims Data to determine utilization trends and comparisons
  • Claims System Logic Testing of system capabilities, examiner edits and automated benefit calculations
  • Duplicate Claims Analysis to electronically identify potential overpayments that may have bypassed system edits
  • Electronic Eligibility Review to compare multiple data sets and identify discrepancies that impact claims processing and/or suggest administrative deficiencies
  • Implementation Audits before and after a change in vendors or plan design are critical for early detection of potential system errors
    • Post-Implementation Assessments of plan setup, adjudication procedures and automated system capabilities before going into production
    • Pre-Implementation Review to assess established procedures and system capabilities of a new administrator or examine a major benefit revision
  • Performance Validation to ensure correct operation of claims-adjudication procedures
  • Periodic Claims Reviews to meet fiduciary responsibilities, validate plan costs, validate member plan cost-sharing features are properly applied, enforce or implement performance guarantees, address benefit concerns and increase participant satisfaction
    • Stratified Samples offer overall confidence in the processing accuracy for all claims
    • Targeted Samples validate areas of concern or claims identified through electronic queries
  • Specific Stop-Loss Coverage Analysis to confirm appropriate procedures are in place for prompt filing and accurate reimbursement

Segal can review your entire claims process:

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Prescription Drug Benefit Custom Solutions

Rapidly rising prescription drug costs are driving overall increases in the cost of health coverage. Segal can help you manage the cost of prescription drug coverage through a variety of services.

These include:

  • Determine effective, long-term Pharmacy Benefit Strategies
  • Evaluating and negotiating annual renewals from PBMs and Insurers
  • Reviewing utilization and cost data to discover ways that you can more effectively provide prescription drug coverage by making plan design changes
  • Providing input and advice regarding changes to the prescription program proposed by your PBM, including addition of drug management programs such as prior authorization, quantity limits and step therapy; changes to the formulary; or restrictions/expansions in the network
  • Reviewing your contract to evaluate whether the terms are competitive
  • Managing specialty pharmacy costs through utilization and cost reviews, data analysis, formulary management through tiered cost sharing, clinical management, monitoring high-risk participants and step therapies
  • Reviewing your benefit design (copays, coinsurance, etc.) to make sure your plan has the right levels of cost sharing and cost effective drug use incentives
  • Evaluating generic prescription utilization, generic dispensing rates and generic discounts in your current contract, and improving generic dispensing rates through aggressive plan redesign and pricing improvements
  • Implementing a tiered plan design using copays or coinsurance
  • Reviewing Average Wholesale Pricing (AWP) costs by checking your plan's contractual language on AWP reimbursement and renegotiating to address revised drug pricing
  • Evaluating carve-out if a prescription drug benefit is carved in
  • Analyzing clinical programs to determine the impact and potential advantage for both your plan and your employees
  • Conduct PBM claim audits to validate financial terms are being achieved

Vendor Bidding and Renewal Negotiations

Competitive Bidding

Segal conducts hundreds of competitive procurements every year to help our public sector clients select vendors for all types of benefit programs. Each of these bid processes involves surveying the available plans in the market place, ensuring the services offered by each plan highlights staff experience and best-in-class procedures and policies, as well as evaluates the relevance of performance standards and guarantees; analyzing the cost of plans; and negotiating with carriers to obtain the best rates available for our clients.

Segal is available to assist public sector entities through the entire procurement process as needed, including:

  • Identifying key evaluation points and developing evaluation documents for use by the appropriate parties
  • Developing a proposed plan design that takes into account current "best practices" among other key jurisdictions and other employers
  • Preparing a detailed set of technical questions and financial elements for the request for proposal (RFP)
  • Identifying vendors that should be included in the list of potential benefit providers as part of the bid solicitation process
  • Preparing for and conducting the pre-bid conference for each procurement process, as well as serving as a technical resource at the pre-bid meeting and helping to interpret the nature of each question from vendors and prepare answers
  • Meeting with the selection committee to discuss issues related to the evaluation of the bid and to prepare them for the likely range of responses they may see on key criteria
  • Reviewing and evaluating the technical and financial proposals
  • Reviewing program administrators' service agreements and proposals, and determining administrators' ability to deliver quality service
  • Conducting interviews of the finalist carriers
  • Assisting in any final negotiations regarding services to be provided, including analysis of Best and Final Offers
  • Preparing and presenting any required reports to the various legislative and administrative bodies that oversee the procurement process
  • Reviewing contracts and other documents required to implement the changes to the benefit program
  • Monitoring the vendor's progress toward implementation

Renewals

Segal has an experienced staff of analysts who review renewals. Our reviews include a verification of source numbers and an in-depth underwriting analysis that evaluates the level of charges for trend inflation, retention, pooling and any applicable margins.

As part of our annual work on health and benefit plan renewals, we provide a summary of how your plans compare to others in the market and the prevailing trends and best practices in the industry. Segal develops and utilizes cost models for benefit programs that allow us to test the likely impact of industry trends in plan design. Once we have analyzed the current and projected costs of the existing program, we can provide close estimates of proposed changes.

Funding Arrangements

Some public sector entities with significant levels of cash reserves can reduce costs by self-funding their health plans or assuming more risk. But before doing this, you must carefully consider the ramifications and protect the plan against ordinary or catastrophic risks.

Segal can help you determine if self-insuring or other cost-saving funding arrangements are right for your organization. We can also help plans that are already self-insured evaluate whether self-insuring is still the best choice.

Stop-Loss Insurance

Self-insured entities can protect themselves against large claims or fluctuations in claims by purchasing stop-loss insurance, which secures insurer reimbursement for expenses above specific or aggregate limits. Segal can help employers with:

  • Determining the level of stop-loss insurance and claims reporting contract basis that is appropriate
  • Evaluating whether the plan needs specific or aggregate insurance, or both
  • Deciding whether to include prescription benefits in the policy
  • Developing an RFP and preparing documentation
  • Negotiating policy provisions with the insurer
  • Addressing coverage gaps
  • Monitoring stop-loss market conditions to take advantage of increased competition
  • Negotiating renewals
  • Settling claims disputes

To learn more about stop-loss insurance:

Leveraging New Health Technology

Segal utilizes technology and analytical tools to measure, monitor and predict the costs of health and welfare benefit programs. Segal has developed a number of pricing tools to help clients assess impact. We customize our technical resources for your specific needs, ensuring that we provide the high level of quality consulting that our clients expect. Segal is on the cutting edge of health care industry trends and relevant legislation, and we update and revise our tools and technology as needed to provide maximum value to our clients.

Alternative Provider Reimbursement Arrangements

Segal can help contain health costs through diligent management of provider reimbursement. As experienced consultants to plan sponsors in the areas of health insurance, managed care arrangements and third party administration, we begin by identifying networks with strong overall provider discounts, efficient administrative systems and robust ancillary program services. From there, we can help reduce or contain costs by managing and negotiating vendor contract terms more aggressively. In Segal’s experience, it is possible to challenge a provider’s proposed premium renewal after performing independent renewal projections using different methods and assumptions. Frequently, these alternative projections uncover carrier mistakes or non-competitive terms that the carrier will reconsider. 

Segal can help:

  • Closely review vendor contracts and subject them to competitive bids periodically to reduce program costs and/or upgrade services. Segal often finds a wide discrepancy in the fees charged to employers from the same vendor offering a similar scope of services.
  • Reconsider any fees that may be based on a percentage of savings. Such fee structures can be problematic because billed charges can be inflated and are difficult to validate. These arrangements typically increase fees each year at rates significantly higher than general inflation (e.g., as measured by the Consumer Price Index or CPI), arguably a better benchmark for anticipating administrative cost increases. If a percentage-of-savings structure is the only available option, “savings” need to be clearly defined in the vendor contract and a validation process should be established.
  • Evaluate capitation and bundled payment provider reimbursement arrangements

On-site and Near-site Health and Wellness Clinics

Faced with the need for continued improvement in productivity and hampered by the tight budgets of the economic downturn, employers are taking a fresh look at implementing on-site and near-site medical clinics for employees and their dependents. The cost for implementing and operating these clinics have dropped, and clinics can now be set up on a smaller scale than in the past and require lower capital investments. 

This renewed interest is also driven by a number of internal and external factors:

  • Employees face time pressure from busy work-life demands, causing them to be less willing or able to leave the worksite to seek healthcare
  • Community based providers are often busy and hurried and cannot provide the attention to ongoing health issues that are not currently acute
  • Network based providers often are not able to customize their services to the specific needs of employers
  • Chronic diseases are increasingly prevalent among an aging workforce and conditions such as high blood pressure, diabetes, arthritis, depression and high cholesterol require ongoing monitoring and attention to stay under control
  • Employee populations demonstrate an increasing prevalence of serious health risk factors including obesity, stress, lack of exercise, and smoking that could benefit from more positive and continuous attention

Adding on-site health clinics can serve several objectives for plan sponsors, who want to take greater control of preventative care services, screenings and other primary care services. Segal can help in many facets of your pursuit of an on-site or near-site clinic, including:

  • Assessing the feasibility, clarifying objectives and assessing the cost/benefits of implementing the clinic
  • Determining the most appropriate strategy and model
  • Defining the scope, services to be included and staffing requirements
  • Selecting a clinic manager
  • Communicating the benefits of the clinic to employees
  • Monitoring the performance and impact of the clinics