Self-Funding: What’s Claims Data Got to Do With It?

best practices for benefits administration

Self-Funded Healthcare Data is Necessary for Accurate Plan Creation

Small employers typically pay around 8% to 18% more than their larger counterparts for the same health insurance plans, according to the National Conference of State Legislatures (NCSL). 

Employers have reacted by moving to a self-funded model for benefits to mitigate some of these costs. As a result, accurate claims data is becoming increasingly more important in making a plan that supports employees and also keeps costs manageable.

Accurate, timely benefits claims data is possible with TPA Stream

We’re focused on reducing the friction of benefit information that limits choice and adds costs. Since 2014, TPA Stream’s claims harvesting technology has helped brokers and TPAs provide more customized, profitable recommendations to their clients by providing accurate, real-time healthcare claim data for any size group – including those under 100 participants, and streamlining it for groups of all sizes.  

Employers need to manage costs

The National Business Group on Health (NBGH) reports that healthcare costs have topped $15,375 per employee last year, and to expect an additional 5% rise this next year. This 5% increase applies to employers that adopt cost management strategies; those that do not make cost management adjustments can expect an increase of 6%. 

Rising costs are even more daunting when we examine the growth in high-cost categories with claims over $1M+. According to the most recent data from Sun Life, from 2016 to 2019, 24% of employers had at least one member with claims over $1 million. To support the health needs of their group, one of the most important decisions an employer has to make is how much stop-loss coverage they’d like to elect. But, without data from Claims Harvesting, fully-insured companies (particularly small and medium-sized businesses) are left in the dark about utilization data, making it next to impossible to obtain an accurate stop-loss quote for their unique member makeup. 

But employers with fewer than 100 employees do not benefit from a direct carrier feed like larger employers. Detailed claims data for has been next to impossible to obtain. How are small employers, who are already bearing a disproportionate share of health insurance costs expected to cope? 

Read More: What can employers do to lower health insurance costs? 

Historically, the data’s been imperfect

If an employer is considering going self-funded, typically the employer could work with their broker to obtain past claims reports. The insurer probably will not provide the specific claims data to analyze, but instead could offer reports or require individual health questionnaires (IHQs) that often take 20-30 minutes for employees to complete (and often employees have a disincentive to complete them honestly for fear of their costs rising or employers learning their medical conditions). 

Using TPA Stream’s Claims Harvesting technology, however, the participants provide consent for their claims to be harvested, opening up the opportunity for employers of all sizes and brokers to craft a specific healthcare package that meets the needs of their unique population and controls costs. For the participant, the enrollment process is easier and more accurate, and we’ve proven that this increases their satisfaction with their benefits overall. 

Claims data will be increasingly more valuable to the benefits forecasting process

Brokers working with small and medium-sized businesses can help their clients transition to a self-funded plan by implementing Claims Harvesting. In less than 30 days, the broker will have a full picture of medical claims for any population. The process is simple: Employees enroll to provide their claims data. We harvest the claims. The EOBs are securely housed in a HIPAA-compliant database. The data is exportable for further analysis, allowing unprecedented accuracy with plan creation and stop-loss quotes. 

Read More: Healthcare claims data is becoming an expectation, and is possible

We’ve seen this from our broker clients: using this approach they’ve been able to offer high-value consultative services using this data. Employers want technology that allows teams to make important decisions about the health plan of the company. 

What’s next

Accurate plan creation for clients of all sizes is within your reach. We’d love to show you how.

Request a demo here.

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