In the first part of this two-part blog, I recommended a number of important items to keep in mind as you select a stop loss carrier. Additionally, here are a few other things you will want to look for, or ask about, when selecting a stop loss carrier. While this is not an exhaustive list, these are some of the most frequent items I have seen that cause issues or gaps in coverage.
Does the stop loss carrier “mirror” its policy to your employee benefit plan document? I like to think of this whole plan mirroring approach as kind of hand in glove. The relationship between the employee benefit plan document and the stop loss policy should be a complement to one another.
Your employee benefit plan document and your stop loss policy are two separate documents containing many different provisions and terms. Without plan mirroring, stop loss carriers will audit to their stop loss contracts, which can, and do, result in gaps in coverage. Make sure you work with a carrier who will provide plan mirroring.
Medical Necessity Determinations
Although a stop loss carrier can follow plan language, some do, and will, question determinations made by the plan for medical necessity. Stop loss carriers differ on their level of scrutiny in this area. The reality is the medical field is not always black and white on how to treat a patient. It is important to understand the carrier’s position and also the medical guidelines used by your administrative services only (ASO) carrier or third-party administrator (TPA) in making medical determinations.
Recognition of Network Requirements
With your employee benefit plan, you are most likely using a preferred provider organization (PPO) network where provider claims are subject to payment based on an agreed schedule. The agreement you have to access this network predicates what the plan will pay the provider for their services.
A stop loss carrier who is not party to this agreement may question the payment methodology, or feel it can do better on certain claims. They rely on cost containment vendors to review claims and determine what they might feel would be “reasonable” payments. If this is the case, you, as an employer, may be left with a gap in coverage as you are required under your employee benefit plan to reimburse the provider at the contracted rate, but your stop loss carrier may not reimburse you to that level.
It is important to know your stop loss carrier’s position on this type of situation.
Find out what the carrier’s commitment is to paying claims. Many carriers have standards that can vary greatly by carrier. With stop loss, you are typically dealing with large dollar amounts and from a cash flow perspective, you want to know what your carrier’s policy is regarding claims payment.
Will the carrier allow for “advanced funding?” If so, the claim is first adjudicated and processed, but not paid until the stop loss carrier has reimbursed the portion over the stop loss deductible. This, in turn, minimizes the disruption to your cash flow. Many, but not all, carriers offer advanced funding and some will charge an additional fee.
You will want to check with your broker or administrator on the carriers you are considering and what their specific requirements are for advanced funding.
Reasonable and Customary (R&C)
R&C is also known as usual and customary (U&C). As noted earlier, most employee benefit plans take advantage of PPO networks, where provider claims are subject to payment based on an agreed schedule. Outside of claims through a PPO, most plans limit claims payments or reimbursements to R&C charges. This describes the amount an ASO carrier or TPA decides to use as the starting point in the payment for a service.
In each case, it is important to ensure that the employee benefit plan’s definition agrees with the stop loss policy, or that the stop loss policy will follow the provisions of the employee benefit plan.
Secondary Network Access Fees
Typically, a TPA or ASO carrier will provide access to a “secondary” or specialty-type network, such as a transplant-only network. The advantage is that the employee benefit plan and member gain access to discounts, or additional discounts above and beyond that of the primary network offering.
In these cases, there is typically an access fee usually set as a percentage of the savings achieved that is the responsibility of the employee benefit plan. These fees are NOT always reimbursable by the stop loss carrier, or the stop loss carrier may put a limit on the amount reimbursed.
Check with your broker or administrator on whether stop loss carriers you are considering will reimburse you for these types of fees.
While these six considerations are not a comprehensive list, they will certainly set you on the right path for discussions with your broker, or administrator, on selecting a stop loss carrier that not only meets your needs, but also provides the protection necessary for your employee benefit plan and company.
By Steven Goethel, Originally Published By United Benefit Advisors