What do multiemployer health and welfare plans look like nationwide?

Fund statistics for 705 plans across the country

For members and trustees of multiemployer Taft-Hartley health and welfare plans, the financial health of the fund is of the utmost importance. But up until recently there have been few, if any, national financial analyses by which stakeholders can measure the changing landscape of these plans.

Milliman has recently completed its inaugural analysis of the financial disclosures of 705 multiemployer Taft-Hartley health and welfare plans nationwide. The analysis is organized by plan size, from those plans with fewer than 500 covered members, to those exceeding 20,000 members. It includes an in-depth look at general plan statistics across the country, plan assets, average annual gain (or loss) of these plans, and per member statistics.

There are approximately 3 million members in the analyzed plans, of which 78% are active and 22% are retired. These plans had $33.8 billion in total income, $31.0 billion in total expenses, and $32.4 billion in total assets in 2016 (the most recent year for which financial disclosures are available). Looking at assets, 162 plans held assets that were less than six months of total expenses, while 140 plans held assets that were more than 24 months of total expenses. There were 221 plans that dipped into their net assets in 2016 (i.e., had a loss for the year), while 477 plans increased net assets (i.e., had a gain for the year), and seven plans that covered total expenses exactly for the year.

For more information, read this article by David Stoddard and Marcella Giorgou.

Newly diagnosed hepatitis C in the U.S. commercially insured population before and after the 2012 implementation of expanded screening guidelines

In the United States in 2014, more than 3 million individuals were estimated to have chronic hepatitis C virus (HCV) infection, including many undiagnosed individuals. In 2012, the Centers for Disease Control and Prevention expanded its HCV testing recommendations to target all adults born between 1945 and 1965, in addition to at-risk individuals. This has led to an increase in newly diagnosed patients. Few studies have explored the medical cost or clinical status of patients who are newly diagnosed with HCV. This research by Milliman consultants compares the demographics, comorbidities, and medical costs of patients who are newly diagnosed and those who were previously diagnosed with HCV infection.

How have individual market enrollment and Affordable Care Act subsidies data changed?

The Patient Protection and Affordable Care Act (ACA) introduced many changes to the individual health insurance market beginning in calendar year (CY) 2014, including new rating rules and federal financial assistance to purchase health insurance through the insurance marketplaces. It is important to understand the condition and stability of the individual health insurance market and how the ACA has affected its health insurance consumers.

To support this understanding, actuaries Paul Houchens, Jason Clarkson, and Zachary Fohl prepared Milliman’s second annual profile of the individual health insurance market for each state along with the District of Columbia (DC). The profile summarizes insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplaces, incorporating recently released data from the 2018 open enrollment period and early 2018 effectuated enrollment snapshot.

This information is vital for stakeholders for a number of reasons, including:

1. Future legislation or administrative actions. While the pace of new healthcare reform legislation will likely slow in 2018 with the upcoming mid-term elections, data from the individual marketplace can be useful in informing future policy decisions both at the federal and state level.

2. 1332 State Innovation Waiver (1332 Waiver). The information in our state profile reports can enable a state to better understand the funding and coverage requirements that must be adhered to under Section 1332 of the ACA.

3. Marketplace enrollment trends. One important measure of risk pool stability is enrollment.

4. Cost-sharing reduction (CSR) termination. From CY 2014 through the first nine months of CY 2017, insurers received direct federal payments for the cost of providing CSR variants. However, effective October 2017, CSR payments were terminated by the federal government.

To read the full article which summarizes 2018 individual market enrollment and ACA subsidies, click here.

ACA risk adjustment transfers will be on EDGE

In 2019, the Centers for Medicare and Medicaid Services (CMS) will begin partially calibrating the HHS-HCC commercial risk adjustment model using actual Patient Protection and Affordable Care Act (ACA) experience from the 2016 EDGE server data submissions. CMS has based the model solely on non-ACA data up to this point.

This article by Milliman’s Zach Davis, Phil Ellenberg, and Brian Sweatman contains four interactive exhibits that allow issuers to review coefficients from the 2019 model. They can also compare how the EDGE data incorporated into the 2019 model will affect risk scores, and the magnitude of the impact on an issuer’s risk adjustment transfer.

Improving pricing and increasing efficiencies

Multiemployer health and welfare funds face a difficult challenge—how do you maximize benefits provided to your members while operating under a collective bargaining arrangement where the contributions paid to the fund are generally predetermined? In other words, how do you get the biggest “bang for your buck”?

There are a few ways to maximize the dollars spent on benefits—including optimizing pricing terms from vendors and audits, and reducing administrative costs.

Creating a benefit program that operates efficiently traditionally depends on the size of the group. Many insurance carriers, third-party administrators (TPAs), and pharmacy benefit managers (PBMs) offer more favorable pricing to groups that are larger in size. TPAs may offer lower administrative services only (ASO) fees and PBMs may offer better administrative fees, discounts, and rebate guarantees. Larger groups may also be able to negotiate trend or maximum increase guarantees in their renewals.

An alternative way to achieve better pricing terms is to join a labor coalition. Labor coalitions are set up as a group of welfare funds that contract with a particular provider or providers in exchange for more attractive pricing. The coalition operates as a collective with a board that makes recommendations, but each individual fund is still responsible for its own claims experience. The benefit is that vendors (generally, PBMs and stop-loss providers) will offer better pricing or lower administrative costs because they have exclusive contracts with the larger coalition, so each individual fund receives pricing based on a population much larger than its own.

In addition to administrative expenses that are paid to insurance carriers and TPAs, funds should review operating expenses. Administrative expenses are necessary so that a fund can provide benefits to its members, but dollars that are devoted to administration are dollars that are not being used to provide benefits to members. Therefore, it is in the fund’s and the members’ best interests to keep administrative expenses as low as possible, by reducing duplicative operations or by consolidating certain efforts.

You can also ensure that the dollars spent on claims are consistent with the intent of the plan with a claims audit and / or a dependent eligibility audit. A claims audit is generally performed by an outside vendor, who reviews a sample or a certain subset of self-insured claims that the fund’s TPA pays on behalf of the fund. Claims audits typically need to be written into the TPA contract. Dependent eligibility audits are also generally conducted by an outside firm that sends mailings to all members with dependents. Members must provide proof of eligibility (e.g., birth certificates, marriage certificates) for each of their dependents so that their dependents continue to be eligible for the plan. A dependent eligibility audit can remove spouses who are divorced or children who aged off of the plan, ensuring that the dollars spent on members and dependents are only for those who actually should be on the plan.

Finally, it is good practice to do market checks or requests for proposals (RFPs) on a regular basis. A market check is a pricing comparison and analysis to compare competitive pricing for substantially similar-sized customers and for substantially similar PBM services. The market check is measured on the basis of a total, aggregate comparison of the pricing terms offered by a single vendor to a single plan, and not on the basis of individual pricing components or best price points available from multiple vendors. Aggregate PBM pricing comparison includes the sum of the cost of medications, including dispensing fees and claims administrative fees, less rebates received by the plan. This type of analysis creates leverage in negotiations with current PBMs, as well as informing trustees when it may be time to renegotiate and / or consider a more competitive PBM contract. On the other hand, an RFP process asks for quotes from other providers (in addition to your current provider) and allows you to determine whether another carrier or service provider can provide a better or more cost-effective product. For prescription drugs, it is a good idea to do a market check on a regular basis, although PBM contracts often establish market check parameters that limit the ability of plans to perform this important benchmarking. It is also a good idea to perform an RFP once the contract is set to expire, allowing yourself enough time (at least three – six months) to implement a new carrier as smoothly as possible if you decide to switch after analyzing the RFP results. For other vendors, it is a good idea to do an RFP on a regular basis.

This article first appeared on LaborPress.org.

Milliman awards 16 Opportunity Scholarships in the program’s second year

Milliman is pleased to announce the recipients of this year’s Opportunity Scholarship program. This scholarship program, now in its second year, was created to assist students from ethnic groups and races that are under-represented in the fields of actuarial science, data science, computer science, economics, programming, mathematics, statistics, data analytics, or finance.

This year, the Opportunity Scholarship recipients include 16 students from colleges and universities across the United States, Australia, South Africa, and the United Kingdom who have demonstrated academic excellence and plan to pursue a career in actuarial science or related fields. Last year, which was the inaugural year of the scholarship, 12 scholarships were presented.

“Milliman is proud to assist students from diverse backgrounds in achieving their educational goals in fields like actuarial science, mathematics, computer science, and finance,” said Milliman Chief Executive Officer Steve White. “This year’s group of recipients comes from a wide array of backgrounds and has shown that they excel academically, with the drive and knowledge to succeed.”

Below is the list of this year’s Scholarship recipients:

1. Victor Asiwe, actuarial science, at University of Cape Town (South Africa)
2. Aleesha Chavez, computer science, at Northwest Nazarene University (Idaho)
3. Khethiwe Dlamini, actuarial science, at University of the Free State – Bloemfontein (South Africa)
4. Jordan Howell, actuarial science, at Kettering University (Michigan)
5. Jael Kerandi, finance, at University of Minnesota-Twin Cities
6. Rachael King, mathematics, at Macquarie University (Australia)
7. Adam Lathan, actuarial science and data analytics, at Drake University (Iowa)
8. Richard Machivenyika, actuarial science, at University of Cape Town
9. Mapule Madzena, computer science, at University of the Free State – Bloemfontein
10. Jennifer Mora-Amaya, actuarial science, at St. John’s University (New York)
11. Sonia Moreno, computer science, at Carleton College (Minnesota)
12. Sarah Peña, actuarial science, at UCLA
13. Bryce Santiago Badura, computer science, at University of Notre Dame (Indiana)
14. Ayomikun Vaughan, actuarial science, at Queen’s University of Belfast
15. Edwin Villavicencio, actuarial science, at North Central College (Illinois)
16. Mattie Zimmer, mathematics, at University of New Orleans

Five of this year’s recipients also received Opportunity Scholarships last year. Those repeat recipients are Khethiwe Dlamini, Jordan Howell, Sonia Moreno, Sarah Peña, and Ayomikun Vaughan.