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Phia Group Media


Stop Loss and My Infinite Sadness

By: Ron Peck, Esq.

I am a firm believer in self funding.  I believe that, when done well and properly, no other type of health plan can compare to a self funded plan.  I also believe that most well formed self funded plans need stop loss insurance.  That’s why it makes me so sad to see infighting between self funded plans and their stop loss carriers.  They are on the same side; they should be allies!  Yet, too often I see a plan pay claims in accordance with one set of rules, and then stop loss re-prices the plan’s submission for reimbursement using a different set of rules.  Sometimes this is based on differing verbiage in the plan document versus the stop loss policy.  Sometimes this is based on differing interpretations of the same verbiage.  Sometimes there is no real basis for the conflict at all.  Too often it feels like the carrier is trying to deliver a heavy handed form of tough love: “If you won’t take action to contain costs, I’m going to do it for you.  It hurts me worse than it hurts you; you’ll thank me later.”  Other times it feels like a short term maneuver to cut costs, even if it means losing business long term.  Indeed, when I describe some of the positions some stop loss carriers take when dealing harshly with their plan clients, the reaction is that those carriers are being foolish – and they will certainly lose their clients… and yet… they do continue to write new business and are maintaining a client base.  This tells us that, by offering a very low rate, they attract clients.  This also tells me that those clients (and their broker/advisors) aren’t investigating the carrier’s track record.  This, in turn, makes me just as sad as the fighting.  Why?  It breaks my heart that those stop loss carriers who go above and beyond to work with their plan clients, find ways to reimburse, and collaborate with us all are not receiving the due credit they deserve.  In fact, sometimes the “premium” they charge for their white glove service ends up knocking them out of the running when they are up against a bargain basement carrier.  Trust me – the savings on premium will never equal the loss you suffer the first time a carrier denies your claim for reimbursement because they “say” you overpaid.

The moral of the story is this – First, don’t pick a carrier based solely on the premium.  You get what you pay for.  Second, review the stop loss policy, network contract, administrative service agreement, employer handbook, and plan document side-by-side-by-side.  Identify areas where they require the same entity or entities to do different things; things that can’t coexist.  Third, talk through conflicts and potential conflicts BEFORE there is a claim, and agree how they will be handled if they occur.  Fourth, carriers should incentivize plans to engage in cost saving procedures before claims are incurred – not punish them for failing to do so after the fact.  Both plans and carriers need to recognize that while it may be easier to beg forgiveness rather than ask permission, it rarely works out well for anyone.