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I just read an article about the most annoying workplace buzzwords and phrases. It's not surprising that the popular quote "It Is What It Is" was near the top of the list of annoying phrases. The phrase is intended to imply that whatever the situation is, there's nothing anyone can do about it.
Often times, we see employers respond to their health insurance renewal with that same annoying phrase. Many employers feel powerless to achieve reasonable health renewals, but it doesn't have to be that way. Here are 3 important tips to defy the status quo on your next health plan renewal:
1. Know what you are entitled to. As of January 1, 2008, Texas House Bill 2015 requires insurers to disclose health claims data including paid claims, premiums, and high claimant information. Prior to HB 2015, employers were not able to access their group's paid claims data. Instead, if insurers released reports at all, they would provide what are called "incurred" claim reports with a "proprietary" multiplication formula applied to paid claims to make them appear higher than they actually are. Because of the "proprietary" nature of the formula, it was anyone's guess as to what the true loss ratios for an employer really were. The "incurred" formula was designed by insurance companies for the benefit of insurance companies to help justify a higher premium renewal offer by making an employer's claims look worse than they really are on a "paid" basis. Here's the catch...you have to know how and when you can ask for the HB 2015 data. If you don't know, it is likely that you will continue to get the same inflated claims data you've been receiving for years.
2. Don't assume your top claimant information is true. Here's a real situation with a fictitious insurance company name...
The Glad I Met Ya Insurance Company issued a 28% medical renewal increase to an employer allegedly substantiated by a large claimant likely have continuing large claims into the next plan year. The large claimant listed on the report accompanying the 28% renewal reflected claims in the prior year in excess of $75,000 for a diagnosis of a serious heart condition and a prognosis of "ongoing," leading the employer to believe that they may be deserving of the double-digit renewal offer from Glad I Met Ya. (NOTE: Because of HIPAA, large claim reports do not provide names of claimants which might help an employer determine the legitimacy of the claims information being reported.) However, upon further investigation and inquiry, the claimant in question was identified as a person who had deceased 10 months earlier. How can that be? Well, it turns out that claim reports generated by insurance companies don't limit their reporting to claims on the currently covered population. They pull information on anyone covered in the reporting period, even if they are no longer on the plan. The prognosis report of "ongoing" was simply a speculative prognosis based on diagnosis, not based on whether or not the claimant is even still covered on the plan. Here's the catch...if you don't know who your top claimants are, how are you going to be in a position to refute a false report when you see one?
3. Trend is a farce. Ask any insurance company or benefits expert what "trend" is within the health insurance industry and you'll likely hear a number around 10-12 percent, meaning that employers should expect to settle on a 10-12% increase in health plan premiums this year. Then, the news is delivered that your renewal came in at 9% and you feel fortunate to have beat the norms. You may decide to accept the 9% increase without even knowing how profitable you were to your insurance company. Here's the catch..."trend," or "premium inflation" as it sometimes called, is not a valid predictor of an acceptable renewal offer. "Trend" was made up by insurance companies for the benefit of insurance companies to help substantiate higher renewal offers and psychologically convince you that the offer may be reasonable.
Helpful tip: Ask any insurance expert, "What is trend?" If they answer with anything other than "Trend is a farce," then you may be sitting across the table from someone who is well-meaning but predisposed by insurance company rhetoric to believe that a double-digit renewal is reasonable.
Business Challenge: Most businesses do not grow by double digits each year. That means accepting "trend" increases takes away from your company's bottom line profitability each and every year.
To learn more, contact Brinson Benefits.
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