Risk & Business Magazine CEO/CFO Business Today Magazine Fall 2017 | Page 29

HEALTHCARE CONSORTIUMS Group purchasing of administrative services, network access fees, pharmacy benefit manager fees and stop-loss insurance has allowed us to keep these expenses at approximately one-third of those seen in a traditional fully insured arrangement. Involvement of key decision makers within each member organization is critical. Membership meetings are held on at least a quarterly basis and participation is near 100 percent. These meetings allow for an open sharing of ideas between organizations. An ongoing review of both successes and failures helps to define future initiatives for the member organizations within the consortium. Continuing education is a must as this is a concept, not a product. to protect the member organizations’ account balances from the effect of large claims. Varying levels of internal pool deductibles are available. Obviously, larger organizations are able to accept more per- claimant risk and, therefore, may want an internal pool deductible of $100,000 or more; smaller entities may participate at deductible levels as low as $35,000. Traditional stop loss is in place at a high deductible level to protect the integrity of the internal pool. TRANSPARENCY There cannot be any secrets or surprises! This is the member organizations’ consortium, and they need and deserve the appropriate data to make good business decisions. All member organizations receive detailed monthly reports which show all income an d disbursements from their respective balances. STABILITY AND PREDICTABILITY Cash flow stability and predictability is of the utmost importance to public entities. This is accomplished by the use of level funding factors. In good years, excess funding stays within each member’s allocated balance account. If the account balance grows beyond the amount required by the consortium’s funding guidelines (IBNR plus a claims fluctuation surplus), the member organization may apply for a funding moratorium. In bad years, a supplemental increase to the funding factor allows the group to replenish the deficit but still maintain a level funding approach. INNOVATION Properly managed group purchasing can help provide the most cost-effective acquisition of administration, network discounting, pharmacy pricing and the like, but it cannot in itself reduce the number and severity of claims. A well-run consortium allows members to share best practices in the areas of wellness, disease management and consumer engagement. We have spent a tremendous amount of time and effort in these areas, and the results have been exciting. The use of an internal pool which operates at a significantly higher tolerable-loss ratio than traditional stop loss helps Public entities that enter into a well- designed and properly funded consortium, and groups that understand this is a long- term arrangement to control both their costs and all of the plan design features and components, can better gain control of their otherwise out-of-control plan costs. A careful review of the options available, a checklist to be sure many of the features we listed here are included and references from employers participating in the consortium should be part of your due diligence decision-making process. + Kent Miller has 33+ years of experience in employee benefits, including individual health, life, group benefits and consortium developments, Kent is the owner and a consultant of Miller-Lewis. Kent currently sits on the board of Lancaster- Fairfield Chamber of Commerce, is a member of Professional Insurance Agents of Ohio (PIA), and is an active member of the Columbus Association of Health Underwriters. He has also helped develop a member association plan for the Lancaster-Fairfield Chamber of Commerce, formed South Central Ohio Insurance Consortium (SCOIC) in 1996 (a 17 entity public employer consortium in Ohio covering approximately 3400 employee lives). Kent is very active in the ongoing service and continuity of care as he sits on many insurance committees and is involved in Labor/Management negotiation of entities across the Midwest. Kent is married to Judy (Reed) and enjoys golf, travel, entertaining and gardening. 740-654-4055 [email protected] 29