How self-funded employers can mitigate significant losses

If you have a self-funded health plan, stop-loss insurance (also known as reinsurance) can help protect your organization from high-cost claims — certain forms of cancer, premature birth or kidney failure, for example — considered catastrophic to the plan.

What Is Stop-Loss Insurance?

Stop-loss is additional insurance purchased by employers that protects them from assuming 100% of the liability for claims losses.

The insurer’s liability begins where the employer’s liability stops – typically after a total dollar ceiling or aggregate cap is reached during a contract pe­riod. Another type of stop-loss insurance — specific stop-loss (or individual stop-loss) — protects the employer against a high claim from any single employee. Generally, all but the largest self-funded employers have both types of stop-loss insurance in some form.

How Much Does Stop-Loss Insurance Cost?

The cost of stop-loss insurance varies widely based on several different elements. Insurance companies use mathematical underwriting models to analyze historical claims data to project future coverage costs and estimate the value of coverage per employee per month, basing the premium on the number of participants, the age of participants and other factors.

Network savings performance is a key element that carriers use to calculate an employer’s stop–loss premium. The Alliance proactively reaches out to carriers to provide the most up-to-date network data, ensuring our 285+ employers receive the best rates possible.

The Importance of Primary Care and Preventative Health

The best defense against high-cost stop-loss insurance? It’s the same defense used against high-cost claims: preventative health.

Direct Primary Care is becoming a popular tool for employers due to its undeniable value in preventing com­mon, chronic diseases. By catching and preventing diseases like diabetes that can lead to kidney failure and oth­er highly expensive care before they manifest into high-cost claims, employers can make a real difference in their health plan costs — and most importantly — their employees’ well­being.

Additionally, Direct Primary Care creates a setting in which the primary physician acts as the patient’s “quarterback” and can guide employees to­wards better decisions and to in-network, high-value specialists when necessary.

An Employer’s High-Cost Claim Story

One of our members had a patient suffering from end-stage renal disease (kidney failure) and was placed on dai­ly dialysis after being referred to an out-of-network provider. The employer was spending $27,000 every week — the equivalent of $1.5 million per year — on that patient alone.

The Alliance was able to help out the employer by introducing them to a dialysis vendor that will save them 50% of the annual cost. Though that’s significantly less than what they paid in 2020, had the patient been directed to a provider within The Alliance network from the beginning, they would have paid less than $370,000 per year.

How Else Does The Alliance Help Employers Manage Claims?

Care navigation plays a fundamen­tal role in helping an employer guide a patient to an in-network, high-value provider from the get-go. Another tactic employers can use to catch and prevent high-cost claimants is requiring pre-authorization for certain tests and procedures.

Additionally, through Smarter­Health., The Alliance uses licensed tools to identify patients at risk of becoming a high-cost claimant and works with the employer, using em­ployee health guidance programs, to help them seek the lowest-cost, best-value care. We’re also creating a predictive modeling tool to pinpoint these types of patients and work with the employer to proactively manage their care and prevent the high-cost claim altogether.

Melina Kambitsi

Melina Kambitsi

Melina Kambitsi joined The Alliance in 2017 and leads the teams responsible for business development, client development and strategic marketing.

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