Commentary: As we head into the heart of renewal season, that old fear of receiving a “surprise” from your broker or carrier is likely sneaking into the back of your mind. Well, living in fear is no way to live or work, and it sure isn’t very efficient. Fortunately, there’s a better way – it’s a matter of performing a checkup on your benefits plan to make sure it’s as healthy as it can be.
Just as when you visit a doctor, a medical benefit plan checkup is a chance to identify significant issues, and also to ensure that you’re operating in peak condition. It’s a chance to track how your claims are running and, equally as important, determine if there are any indicators of how your claims will run in the next quarter.
You can use claim trends information and employee feedback to determine a renewal strategy early, and to develop a renewal projection prior to renewal. When you’ve done this you have the ability to plan in advance and execute at renewal time, eliminating much of the last minute scramble.
Also see: “Should you consider an employee benefits captive?.”
But this isn’t just about renewals. It’s also about plan design. By drawing information from employees about how they’re using benefits, you can determine if utilization is reflective of what you see or what you want to see.
When you perform this checkup on a regular basis, you’re looking for patterns in the data that create a story of what has happened to date, and then determining what may happen in the future based on those patterns. Specifically, you’re looking at two factors: how employees use their benefits as well as how your money is being spent. This information is then compared to national and industry trends.
As an example, you might discover that your employee population has a high rate of diabetes compared to other similar employers. Knowing this, you’ll be able to forecast how your insurance company may react. Another scenario is that you may already know that your employees have a high incidence of diabetes but it is not reflected in your claims data; this means that employees are not going to the doctor. Either way, your plan design needs to include strategies for ensuring that employees are taking care of their health.
Once you have this information, you can consider various scenarios; you may have an employee that is filling an extremely expensive prescription; if a second employee suddenly needs to go on the same medication, the employer could get hit hard by a premium increase. Creating awareness of these types of situations allows you to mitigate your risk.
Makes sense, right? So, why don’t more employers do this? Some employers are simply unaware of what is available to them in terms of data (if you aren’t sure, ask your broker or carrier). Other times, employers will know they have the data, but don't know what to do with it. And then there’s the very real problem of this requiring a significant effort to get started; you need to roll up your sleeves and dig in.
When people talk about big data, this is what they’re referring to – collecting the information available to you from multiple sources, synthesizing the information into an understandable format, and then conducting analysis on what the information means so that action can be taken. The smartest organizations spend time and energy on activating big data so that they can learn and improve – done well, it’s a continual feedback loop that helps you to provide the best benefits for your employee population at the best price.
Employers that fail to perform this checkup and analyze their performance are to a certain extent guessing at what works, like a baseball team that refuses to embrace advanced analytics. The data is there for your use so that you can better plan for the future.
Sure, it might work out just fine if you don’t perform these regular checkups, but wouldn’t you rather embrace a smarter approach?
Travis Turner is an expert in the mid-sized employer market, fully insured and self-insured funding arrangements and various lines of health and welfare coverage to provide optimal employee benefit solutions. He is vice president of account management for Corporate Synergies.
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