As a team of benefits strategists, we work hard every day to make sure we’re exceeding client expectations and providing the most innovative and value-generating plan designs and advisory services.
July 20, 2021
Here in the racing capital of the world, we are keen to ensure our cars are tuned up and running at their peak performance level. This often involves using data available from the car itself to ensure we can target improvements and achieve the best outcomes.
Over the past several years, many public sector employers who provide their healthcare benefits through Multiple Employer Welfare Arrangement (MEWA) trusts have asked Apex Benefits to evaluate the health of their benefits plan. Employers participate in trusts to manage their risks and aggregate their buying power. Unlike the auto mechanics tuning-up our cars for peak performance, we found ourselves and these employers blocked from accessing the very data necessary to make improvements. We also found contractual limitations on how an employer may exit a trust and the impact of exiting on their contribution to the trust’s reserves.
Why is this?
Let’s start with the lack of data transparency.
The trust attorneys and benefit consultants who established these trusts (currently representing approximately 47 cities & towns and 130 public school systems) included language in the trust agreements that prevents or significantly limits individual employers from accessing their own claims data on a routine basis. We don’t know why, but we certainly know the impact.
Without consistent monthly access to all medical and pharmacy claims data for its members, an employer cannot utilize the data to inform disease and care management programs necessary to improve the health of its covered members. And, without the ability to intervene and improve health, the employer simply cannot manage the growing cost of claims and the risk this represents.
At Apex, our Kinetiq Health team of clinical experts routinely works with employers, their insurance and other providers, and covered members based on the insights derived from claims data. Through our interventions, these employers have averaged a 0% claims cost increase over the past three years. Unfortunately, employers participating in many MEWA trusts are effectively blocked from achieving these outcomes — whether they work with Apex or not — simply because they are being blocked from accessing their own data.
Additionally, the inability to access claims data limits the employer’s ability to fulfill their fiduciary responsibility of ensuring the fiscal interests of the health plan and all contributing members are being met. Without access to claims data, the employer cannot periodically evaluate whether there are more fiscally prudent options available within the healthcare marketplace — eliminating employers from harnessing the power of the market to drive efficiencies and lower costs.
Apex believes this lack of transparency is wrong. Employers providing healthcare benefits should have direct and consistent access to their claims data. They must be able to use the data to identify care gaps and interventions necessary to improve employee health and lessen claims costs. Finally, they must have the opportunity to fulfill their fiduciary responsibility by using this data on a periodic basis to evaluate their trust within the competitive benefits marketplace.
So, if there is a lack of transparency, why don’t employers simply exit a trust?
Many trusts are structured like the Eagles’ “Hotel California” (once you enter you can never leave). ”Never” is a strong word. A recent study by Apex of many of Indiana’s school benefit trusts found that an individual school employer can leave the trust as long as they provide anywhere from 13 to 24 months advance notice and are willing to forfeit their contributions to the trust’s reserves. A time span of 13 to 24 months is better than “never,” but it can seem like an eternity if the trust is not performing to meet an individual employer’s needs.
Employers purchasing insurance on the open market are typically able to secure a firm benefits proposal from insurers no more than 90 to 120 days ahead of their plan’s annual start date. If a trust member must give 13 to 24 months exit notice, this requires them to exit without the ability to confirm coverage through an alternative provider.
Self-funded employers operating outside a trust often build reserves beyond their incurred but not reimbursed (IBNR) claims and a reasonable safety net for unforeseen claims costs. These employers, however, can change insurance providers and not jeopardize their reserve funds. MEWA trust members are often in a position where changing providers — specifically meaning exiting the trust — requires them to forfeit their prorated portion of the trust’s reserves. Particularly for public entities like schools, these are public funds intended for the care of employees and forfeiting them is almost unthinkable.
If a trust is performing well, its members will choose to remain of their own accord. If the trust is not performing well and, as a fiduciary, the employer determines better alternatives exist outside the trust, they should be able to leave under reasonable conditions. Extreme exit timelines and forfeiture of reserves causes many employers to hesitate to take this risk and thus they remain perpetually in a trust that is not fully serving their needs.
Apex advocates that reasonable exit provisions should be included in MEWA trust agreements. Notice timelines of 1 to 4 months and prorated access to reserves after accounting for IBNR would be appropriate for most trust agreements.
Here at Apex Benefits we believe in the value of MEWA trusts and have developed and worked with multiple successful trusts. We fully support the use of trusts to lessen risk and improve purchasing power for employers. We also advocate that employers must receive consistent routine access to their claims data.
We work with trust administrators, trustees and their members to ensure the long-term success of each MEWA, ensuring employers and their employees receive high-quality benefits at market-competitive rates. If you would like to learn how we can help your trust, please contact us.