Health Plan Financial Information Request
Following is a list of information that should be requested from the plan administrator in order to analyze the health care plan and determine possible cost containment approaches:
- Complete description of health plans offered (Summary Plan Description for each health plan in which bargaining unit members have the option of enrolling and a copy of each of the contracts between the employer and health plan).
- Complete description of ancillary benefits offered (dental, vision, etc.).
- Enrollment in each plan showing the number of employees with family and single coverage (or any other family breakdown that is used).
- Last year, current year, and projected monthly premium rates.
- Employer contribution to each plan and method of determination (percentage of cost, flat dollar).
- Financing information on each plan (such as type of insurance arrangement or self-insured, retention charges, administrative costs, and reserves).
- Experience statements.
- Information on any cost containment efforts to date and any identified savings.
- Utilization data on each health plan (may not be available for HMOs):
Inpatient:
Number of admissions, days, total payments; payments by hospital and type of admission (surgical vs. non-surgical), utilization by diagnostic category.
Outpatient:
Total payments, total visits, utilization by type of service (surgical vs. non-surgical), utilization by diagnostic category.
Professional:
Total payments, utilization by type of service (surgical vs. non-surgical and inpatient vs. out-patient vs. office).
Supplemental Services:
Total payments, number of claims (examples - x-ray and lab, home health care, durable medical equipment, private duty nursing).
Prescription:
Number of prescriptions filled, professional filing charge, cost containment efforts, claims audits.
Dental Plan:
Total costs, utilization data, audits (if any).
Optical Plan:
Total costs, cost per service (exam vs. materials), cost containment efforts, claims audits. - Employer practice for continuing coverage to retirees.
- Copies of consultant’s reports, if any.
- Employer proposals, if any.
Data Analysis
The review of utilization data will permit comparisons of past experience of the covered group with area or national norms for similar demographic groups. Insurance carriers or third party administrators (TPAs) usually have the technological ability to make such comparisons. The carrier or TPA could also suggest appropriate cost containment measures and estimates of the cost of administering cost containment programs and projected savings.
Among the critical factors of hospital data are the following: average length of stay, comparisons of lengths of stay and charges among various hospitals providing services in the past year, and average costs for admissions by diagnosis and deviations from those averages.
Review of professional charges and surgical cases will show not only comparative information for charges, but also will reveal the procedures and illnesses of greater frequency among the covered group. If, for example, care for high blood pressure related diseases is very high, the committee may decide to implement a program for early detection. This program may lead to earlier diagnosis and treatment which may eventually reduce the number of critical cases, and may even save lives. Another example is a high incidence of care for nervous and mental disorder treatment. A decision may be made to design a special program for individuals seeking this type of treatment. The program might be a special part of a pre-admission review program that would assist employees and their covered dependents in locating specialized care facilities, rather than inpatient care in an acute hospital. A review of the prescription drugs utilized may lead to implementation of a mail order drug program if it is found that a major plan expenditure has been for maintenance drugs.
Financing Information
Among the questions to ask are whether the plan is insured or self-insured, how administration fees are determined, and whether there has there been a conscious effort to negotiate a reduction in administrative charges over the last several years. Also ask about the level of plan reserves and work to determine whether the amount is appropriate. A review of this type of financial information will help to determine whether there might be an alternative funding arrangement that would save money for the plan.
Access to Providers
In addition to financial information, you will want to be sure that plans with network providers offer reasonable access to quality health care. If a sufficient number of network providers are not available in each geographical area, plan members will have no choice but to obtain medical care out-of-network. Care obtained outside of the network can increase costs tremendously. Almost all large HMOs and PPOs have the technological ability to perform any "geo-access" studies. These studies determine the proximity of providers to member’s homes and workplaces by comparing zip codes of providers with employee zip codes. When attempting to contain health care costs in a managed care plan with a network of providers, a copy of a geo-access study should be requested. This information will help to determine whether plan members have the ability to obtain care through the lower cost network providers.
Department of Research and Collective Bargaining Services
10/21/99