Project 1: Recommend plan options, design features, payroll contributes

[Selina]

Discussions on the first bullet for project 1

[hun...@net.elmhurst.edu]

I am just starting on EOM. How are you calculating Big Company's annual benefit costs from the spreadsheet provided (since we need to reduce this by 7%)? Based on one of the example spreadsheets in the module readings, the net employer cost is the employer-paid portion of the annual premium times the enrollment number. However in the EOM spreadsheet only the monthly employee portion of the premium is given. The total premium is not given and neither is the employer potion of the premium, so how are we supposed to calculate the employer portion of the premium? I did see from the KFF survey that on average the employee contribution of the total premium is 18%, so are we just supposed to assume that the monthly employee contribution that is given is 18% of the total monthly premium and that the employer pays the rest and those values*12*enrollment will be the employee annual benefit cost?

[Selina]

I just assumed that BIG would be covering all medical costs not covered by the member. So the premium would be exactly equal to the costs, which I get is a bit off. I subtracted annual employee contributions from the total costs and based savings off that number. My % employee contribution was less than 18% in most cases, which makes sense because I'm not including underwriting, admin, things like that.

[Allison]

When you say the total costs... do you just mean the total incurred claims? And if so - then how did you determine the total costs for the alternative designs?

[Selina]

Yes, I used the manual claim rates. So if I switched plans and the manual claim rate reduced by 2% then I reduced costs by that much. That's the only way I could think of to do it.

[softball08]

That is what they did in one of the exercise in the slides as well. 

What did you guys do for the CDHP option? 

Since PPO to CDHP and EPO to CDHP have differently relatives did you blend the two together? 

[Selina]

I mentioned but did not recommend a CDHP option since they stated they wanted to keep the same benefits if possible. If I did recommend I would have decided an expected portion of members from PPO and EPO to move to CDHP and used the manual claims rates to adjust.

[Allison]

So in addition to changing plans - we will likely need to change employee contributions to get the 7% reduction right? I've been messing with this awhile and couldn't get enough of a cost reduction without increasing ee contributions a decent amount.

[Selina]

Under alternative recommendations I put in some measures to reduce ER visits (i.e. higher copays). I then estimated what percent reduction in ER trips I would get and assumed those would instead be urgent care visits. Then subtracted the difference from my costs. You could also do something similar with imaging.

[Allison]

Oh duh... the alternative methods could contribute to the 7% reduction. Thank you!

[DZHOU]

how do we use age/gender factor? what does the factor mean?

[dhack...@gmail.com]

On Monday, June 24, 2019 at 5:09:34 PM UTC-4, DZ wrote:

how do we use age/gender factor? what does the factor mean?

I am not sure how to incorporate this in the analysis as well.  I also wasn't sure how to incorporate the book of business network discount and utilization data by carrier as we don't know what location is using what carrier?

[DZ]

The third paragraph at background says "Their plans are currently self-insured nationally with ATNAS Health", so i assume all locations are using ATNAS. In first bullet point I suggest no need to change insurance carrier because average in-network provider discount at ATNAS is higher than NHP and average utilization are the same, so changing insurance carrier bring no more benefits. In third bullet point I just mentioned we could consider changing insurance carrier in Seattle area to NHP since Seattle has more PPO user with high costs and utilization and NHP's number is better in Seattle. But I didn't do any calculation with it. 

Let me know if this doesn't make sense.

[Bryce]

Thanks...not sure how I missed that.

[hrog...@gmail.com]

I used age/gender factor to adjust the manual rates for each location

[langfor...@gmail.com]

I'm confused about how to apply the 7% trend. I initially assumed that we should decrease the total employer contribution by 7%. 

For example (using made up numbers), if the current employer contribution is $100 and the employee contributions are $25, the employer responsibility is $75. I initially was trying to get the total employer responsibility to be <= $70.09 ($100/1.07), as this seems to be how the problem is worded in the project outline (i.e., "...reduce current benefit costs by 7%."). However, I realized this didn't make much sense and that it would be more intuitive to first trend the incurred claims by 7%, then make my changes such that the employer responsibility remains flat. In other words, my initial formula for the next year would be $107 - $25 = $82. So I would be making changes to the benefit plans, employee contributions, etc. to reduce the $82 back down to $75. What are everyone else's thoughts on this?

On Wednesday, May 22, 2019 at 11:00:10 PM UTC-5, Selina wrote:

[Chris]

You're applying the trend to the total plan cost to BIG. And you want to update the plan design and payroll contributions to achieve that savings.

So if the net claims cost is $100, you want to design a plan such that the net claims cost would have been $93. 

You can do that by changing deductibles, contributions, adding a CDHP with lower expected claims cost, etc...

Slides 212-224 of the module have a bunch of Benefits workbooks that are basically this exercise. Also slide 215 has the KFF Health Benefits survey that will be helpful in determining how competitive the plan design is compared to other companies.

[Sarah]

Thanks Chris. I think I know what the project description was trying to get at (i.e., lower "incurred claims - EE contributions = net cost" by 7%), but it doesn't make sense. Health care cost trend would only increase incurred claims. It would have no impact on EE contributions. 

	Current Year	Next Year No Action	Suggested Changes	Next Year
Incurred	$       100.0	$       107.0	$         100.0	$     107.00
EE Contribution	$         25.0	$         25.0	$           29.9	$         29.9
Net Employer	$         75.0	$         82.0	$           70.1	$       77.09

So in my example (illustrated above), with incurred claims of $100 and EE contributions of $25 (net cost of $75), the next year would have incurred claims of $107 and $25 in EE contributions (net cost of $82) if no action was taken by BIG Company. This net cost to the employer in this case increases by 9.3%, which is much greater than the 7% by which they are asking us to reduce the net cost. This can be further illustrated in an extreme example of reducing the $75 net cost by 7% (to $70.1) by only increasing EE contributions to $29.9. Then next year, incurred claims would be expected to increase to $107 and EE contributions would remain at the recommended $29.01, for a net employer cost of $77.09, which is a net employer cost increase of 2.8% (not flat).

In summary, I think I get what the project is asking for, I just do not agree with the methodology. I wanted to check to see if people were simply trying to reduce the $75 by 7% or were they trying to take into consideration how health care trend actually works. It sounds like the former, which is what I'll stick to.

[Sarah]

For the CDHP option, how are people interpreting the account funding and manual rates? For example, for CDHP 1, the manual claim rate is $575 and the account funding is $250. My thought is that the total employer responsibility (account funding and incurred claims after member cost sharing) is $575. So the $575 is broken into $250 for predefined account funding plus $325 of claims after member cost sharing. Thoughts?

On Wednesday, May 22, 2019 at 11:00:10 PM UTC-5, Selina wrote:

[chocman...@gmail.com]

BIG is self-funded.  That means there is no monthly premium.  Incurred claims are charged to the group, and the group pays (at least at my company).  Since employee contributions are given, the balance would be the employer's responsibility.

On Thursday, May 23, 2019 at 12:09:43 PM UTC-5, Selina wrote:

[ovellm...@gmail.com]

I know BIG is self-funded but how do you calculate how much the employees paid through deductibles/copay/etc. ?I’m going to back this amount out from the total incurred claims to see how much BIG is on the hook for.

[scot...@gmail.com]

I was planning on sticking with the plan options shown, did anyone vary cost sharing from the provided plans? Would you just make up savings (except ER)? Just a bit unsure how you can suggest alternate "plan design features" without more data

[Ali]

I did so by multplying the age/gender factors by the adjusted manual claims rates for each location but something isn't looking right since the overall claims are increasing... anyone else having this problem?

[jojom...@gmail.com]

Hi, not sure if this has already been replied, but anyone has any idea on how to calculate the saving paid by employee through deductible, copay or coinsurance? Also, since total incurred claim is more than the utilisation of ER, Urgent Care and Imaging I’m the experience data, does it mean it has more claim other than ER,UC and Imaging?

[Mike M]

I am going with this approach (no monthly premium for ER) as I feel like it was also used in prior posts in this conversation, and because it makes sense since there is no mention of stop loss. 

 But I have a hard time wrapping my head around it.  If the ER is responsible for the total incurred costs less EE premium contributions, and we just increase the EE premium contributions, how is that increase to EE considered savings to the ER since ER apparently doesn't pay premium? Isn't the ER (BIG) still just going to pay the same expected claims costs? This question is really for the non-Seattle markets as I am trying to not introduce another plan which is how I am interpreting this statement "keep their benefits simple by offering the same benefit options through a single health insurance carrier to all employees".