What is this about?
Employer health benefit costs are headed up again. Estimates range from 6% to 9% or higher annual increases for 2020 renewals. For larger organizations a health plan claims analysis of their employee wellness program is certainly desirable. Yet few wellness professionals know much about how to request a valid health plan claims analysis. In this edition of Connections, we provide a sample health plan claims analysis request. You can use this document to help prepare your own request. This sample request applies primarily to employers with several thousand employees that are concentrated in a few health plans and have a clear definition that separates “participants” from “non-participants.”
Why is this important?
This Solution Set document is designed to provide a template for your health plan claims request. It is important because it establishes the technical parameters for the effort and helps contain the analysis to those issues that are relevant. A critical issue in health plan claims analysis is how very large or catastrophic claims costs are handled. This issue confounds most of the peer review articles that have been published in the field and creates non-random bias which unfairly prejudices these analyses. It is not fair to expect a garden variety employee wellness program to have a significant effect on the rare and very large catastrophic claims of employees and family members. The important econometric assumption recommended here is the use of the conventional attachment points associated with individual stop-loss reinsurance as a way of more fairly adjudicating what claims expense should be included in the analysis. This becomes even more important when considering the highly skewed distribution of typical employer claims patterns. The analysis needs to be conducted in a reasonable business-based manner in order to appropriately guide business decision-makers.
What can you do with this document?
- First, look the document over to get a sense of how it positions the key technical issues of the health plan claims analysis.
- Next, decide if the proposed position on those technical issues is appropriate for the analytical expectations of your senior managers. (Note: This is where the use of a survey of senior managers such as the one included under Solution Set #1 – Quick Senior Management Survey on Wellness becomes critical.)
- Then, determine which of these technical issues needs to be modified for use in your request and then adapt it to the specifics of your own health plan situation.
- Also remember that the sub-populations to be studied (“Participants” and “Non-Participants” should each have a minimum size of 1,000 individuals to assure actuarial credibility of any analytic results. Some actuarial techniques can be used with smaller populations but are limited.
- When you have received the raw data from your health plan, go ahead and do the summary analysis of savings and costs and make the comparison with the total direct cost of your employee wellness program to derive ROI (Return-on-Investment).
- Don’t forget to conduct an analysis that answers the question of whether any other variable or factor could have accounted for the observed change in expected health plan claims cost between participants and non-participants. If no other alternative explanation is identified, then it is reasonable to propose that the attribution of the observed change is likely due to the effects of your employee wellness program. It is also advisable to look for any intermediate results (i.e., participation, risk prevalence changes, screening results, morbidity changes, etc.) to help establish attribution and to help document the “cause and effect” relationship of your wellness program to employee health plan cost.
In summary, this sample request for a health plan claims analysis can be used to examine the effects of an employee wellness program on an employee’s health plan claims cost experience and is critical in establishing the primary economic effects of the program on a particular workforce.