Health & Welfare Benefits

Effective plan design is the key to providing high quality, cost-effective health care to multi-employer benefit plan members as well as public sector and private sector employees. Segal has extensive experience in the design and redesign of all health benefit plans, including medical, dental, prescription drug, vision, short- and long-term disability, life, accidental death and dismemberment and flexible benefits.

Segal has developed multiple strategies for designing plan rules such as rules of eligibility and waiting period, coordination of benefits, and participant cost sharing. We model the cost impact before a plan is changed (e.g. from a 100% reimbursement to 20% coinsurance), so we can predict with accuracy how much the change will save a fund or plan.

We use a number of strategies to enhance the health plans of our multi-employer, public sector and private sector clients. These include:

• Participant cost sharing and contribution strategies
• Multiple plan offerings/options
• Opt-out incentives
• High-cost claim management
• Exclusions and limitations
• Eligibility rules (for active participant and retiree health coverage)
• Plan design review

Proper budgeting and financial monitoring is key to sustaining a health and welfare plan.

For multi-employer funds:

Segal is able to help trustees with the following services:

• Preparing a financial experience and benefit projections (FEBP) report, including a review of three-year income and expense projections
• Projecting claims
• Performing incurred-but-not-reported (IBNR) calculations required for self-funded plans
• Analyzing the impact of proposed plan design changes
• Underwriting and funding methodology
• Creating budget and renewal projections
• Preparing annual health benefits reports
• Determining pricing for flexible benefits
• Conducting merger studies
• Analyzing the development of health care purchasing coalitions
• Reviewing domestic partner benefits/imputed income
• Creating and/or updating financial reports including information on per member per month (PMPM) costs and plan cost drivers

Reserves

In addition to establishing a cushion to fall back on during unfavorable financial periods, there are many good reasons to set aside reserves, including:

• Reimbursement of claims that participants have incurred but not yet submitted to the plan
• Unexpected claims fluctuations
• Shortfalls of expected income
• Management of cash flow
• Potential future expenses based on the plan's eligibility provisions and/or design features
• The plan's postretirement benefit obligation, if any
• Changing demographics
• External events, such as delinquencies by contributing employers or labor-management disputes

Segal can assist in reviewing the fund's reserve policy or developing a policy if one is desired. We can also evaluate the fund's current target reserve levels and evaluate whether the fund is at risk for insolvency.

For public sector and private sector plan sponsors:

Our consultants are able to help plan sponsors with the following services:

• Projecting claims
• Performing incurred-but-not-reported (IBNR) calculations required for self-funded plans
• Analyzing the impact of proposed plan design changes
• Underwriting and funding methodology
• Creating budget and renewal projections
• Preparing annual health benefits reports
• Determining pricing for flexible benefits
• Conducting merger studies
• Creating and/or updating financial reports including information on per member per month (PMPM) costs and plan cost drivers
• Preparing a financial experience and benefit projections (FEBP) report, including a review of three-year income and expense projections

Since 1973, Segal has conducted scores of retrospective on-site claims audits of health plans.

As prior claims examiners, our auditors have extensive background in claims processing and auditing. This experience makes them uniquely qualified to evaluate established administrative procedures, suggest areas for improvement and ensure proper controls are in place for efficient plan administration.

Each audit project is tailored to the plan's specific concerns and objectives. We offer a multitude of services relating to claims adjudication of all plan expenses (i.e., medical, dental, disability, vision, life insurance). They include:

• Administrative Procedures Review of day-to-day operational processes and claim-control measures in place for efficient plan administration
• Claims System Logic Testing of system capabilities, examiner edits and automated benefit calculations
• Electronic Eligibility Review comparing multiple data sets
• Duplicate Claims Analysis to electronically identify potential overpayments that may have bypassed system edits
• Pre-Implementation Review to assess established procedures and system capabilities of a new administrator or examine a major benefit revision
• Stratified and/or Targeted Sample Audits to manually review the accuracy of sampled payments to plan provisions and industry best practices
• Performance Validation to ensure correct operation of claims-adjudication procedures

Eligibility Audits

Estimates suggest that eligibility errors are prevalent in health plans. In fact, eligibility audits are reported to produce 10 - 15% reductions in the number of eligible dependents. To protect against financial losses, it is imperative for group health plans to use eligibility safeguards and perform audits.

Segal can conduct eligibility audits to identify:

• Overage children and ex-spouses who no longer meet dependent definitions
• Administrative procedures that fail to recognize and determine full-time student status and/or coordination of benefits
• Late termination notices to claims staff and the lack of procedures for reviewing ineligible claim payments

You should consider an audit if your plan:

• Does not require positive enrollment
• Recently changed administrative service providers
• Does not receive and validate monthly adds/deletions from its administrator

Strategies and recommendations for eligibility audits vary based on group size and benefit philosophy. Segal can help plan sponsors establish appropriate controls to ensure that benefits are only paid for eligible employees and dependents.

Plan data analysis can give multi-employer plan trustees and sponsors of public sector and private sector health plans a valuable insight into plan costs and usage to improve decision making and financial analysis. Plan data analysis can determine the root causes of cost increases, which allows for targeted and effective intervention to manage future health care expenses.

Segal's plan data analysis services include:

• Utilization reporting of claims in a plan or fund
• Exploring emerging trends on utilization
• Working with trustees or plan sponsors to set specific program goals and objectives that can be measured and monitored
• Developing an action plan to implement objectives and metrics for monitoring progress toward achieving set goals
• Working with vendors to make sure appropriate outputs/reports are being produced

One way plan sponsors can contain costs and better serve plan participants is by encouraging participants to take care of their own health. Through behavioral programs that reduce the prevalence and severity of illness in a population, members can enjoy a better quality of life, and the plan's claims costs will decline.

Segal can conduct an inventory of a plan's current wellness benefits and initiatives and develop a wellness action plan that can help trustees establish effective health management programs that support members and their dependents. These programs include:

• Wellness and prevention programs
• Chronic disease management
• Catastrophic claims management
• Patient education and self-help programs
• Complementary care alternatives
• Incentive programs

Segal offers a range of compliance services and publications to help multi-employer fund trustees and sponsors of public sector and private sector plans ensure they are in compliance with any policies and/or related contracts.

This includes:

• Reviewing documents, policies and administrative processes to ensure that the fund is in compliance with Trust Agreements
• Reviewing claims and appeals policies, and discussing any complaints from participants
• Reviewing plan design for compliance issues

Rapidly rising prescription drug costs are driving overall increases in the cost of health coverage. Segal can help multi-employer funds as well as public sector and private sector plans manage the cost of prescription drug coverage through a variety of services, including:

• Evaluating and negotiating annual renewals
• Reviewing utilization and cost data to discover ways that the plan can more effectively provide prescription drug coverage by making plan design changes
• Reviewing the contract to evaluate whether the terms are competitive
• Reviewing prescription copays and/or coinsurance and targeting copays to encourage individual health management
• Evaluating generic prescription drug utilization.
• Implementing a tiered plan design using copays or coinsurance

Segal works to get the most from vendors for all the clients we represent. We make it our business to know a vendor's history, financial solvency and performance-to-date, and we bring that knowledge to the table on behalf of our clients.

Our renewal and competitive bidding services include:

• Creating custom requests for proposals (RFPs) and analyzing responses from insurance companies
• Aggressively negotiating vendor contracts so that you receive optimal, market-competitive contracts from them
• Reviewing yearly increases in each line of coverage:
  • Medical
  • Dental
  • Prescription drugs
  • Vision
  • Life/AD&D
  • Stop loss pooling
  • STD/LTD
  • Behavioral services — EAP, managed mental health review program utilization
  • Voluntary benefits

Choosing between self-funding or insurance will impact a plan sponsor's finances, reserves and contribution requirements.

Some plans with significant levels of cash reserves can reduce costs by self-funding their health plans or assuming more risk. However, before doing this, a plan must carefully consider the ramifications and protect itself against ordinary or catastrophic risks.

Segal can help trustees and other plan sponsors determine if self-insuring or other cost-saving funding arrangements are right for their fund or plan. We can also help funds that are already self-insured evaluate whether self-insuring is still the best choice.

Stop-Loss Insurance

Self-insured funds and plans can protect themselves against large claims or fluctuations in claims by purchasing stop-loss insurance, which sets a limit on how much the fund or plan will have to pay for individual or aggregate claims. Segal can help trustees and plan sponsors with:

• Evaluating whether stop-loss insurance is the right option for the fund or plan
• Determining the level of stop-loss insurance and claims reporting contract basis that is appropriate
• Evaluating whether the fund or plan needs specific or aggregate insurance, or both
• Deciding whether to include prescription benefits in the stop loss arrangement
• Negotiating policy provisions with the insurer
• Addressing coverage gaps
• Negotiating renewals
• Settling claims disputes

Providing health benefits for retirees presents health plan sponsors with many challenges. Segal can help find solutions that work for both the plan sponsor – whether it is a multi-employer fund, a public sector entity or a private sector organization – and the retirees.

Services we provide include:

• Negotiating with carriers regarding the rates and contractual arrangements for all offerings
• Creating a retiree health strategic plan
• Providing advice with respect to retiree health benefits plan design
• Obtaining input and providing advice on retiree cost sharing
• Calculating retiree health benefits reserves if applicable