Capitation—New Direction in Managed Care
HMO Reinsurance, Provider Stop-Loss/Provider Excess Loss Coverage & ACO Stop-Loss Coverage.
As Jane Dubose and Sheri Sellmeyer wrote in Managed Care Grows Up
“The healthcare system found new ways to merge, acquire and partner with one another in 2014. No one expects that trend to diminish. Hospitals acquired one another, and hospitals bought physician groups. Physician groups merged, and managed care plans bought one another.
“What’s driving the activity? The hunt for insured patients and the need for scale to survive…”
Managed care is experiencing large growth due to new legislation on healthcare and greater understanding of the needs of customers/clients. As a result we see more and more health plans transferring risk through capitation to providers. As this becomes more and more common, Providers need to become familiar with this specialty type of insurance. It is important that when you as a provider are entering capitation as a form of payment that you get with a broker who is very experienced with this type of insurance.
This coverage is all about claims; how they are identified, reported and ultimately paid.
It is in this key area of performance that the broker you select must stand above all other brokers in this coverage. It is about claims recovery. It doesn’t matter that the account received a great rate if the claims aren’t paid. There are two cost areas in the insurance plan. One is the rate that is paid, and the other is the loss of revenue through poor claims recovery. Poor claims recovery can be due to:
- Poor plan design.
- Unusually restrictive claims practices of the insurer.
- Lack of knowledge of the insured in submitting claims.
- Poor response time from the carrier for various reasons.
- No one representing your interests to ensure a smooth claims process.
All of the above can be eliminated if you are working with a broker who specializes in this and knows how to negotiate on your behalf to get the coverage that will benefit your organization and then continue to work with you through out the year to ensure your claims are paid on time.
Your stop loss broker should not recommend managed care stop loss programs based on “rules of thumb.” It must be based on long-term growth and profitability; not a quick fix. Coverage should be specifically tailored to your needs.
This is done by:
- A thorough assessment of risks or financial responsiblity of the Insured.
- Development of insurance policy language that responds to the needs of the Insured.
- Marketing the insurance submission to insurers.
- Ensuring that the insurer issues the coverage according to the agreements reached during the proposal and negotiation process.
- Arranging an installation meeting with the client at the initiation of the insurance period to go over the terms and conditions of the coverage binder to thoroughly clarify the contractual obligations for reporting and claims submission.
- Assisting with reporting and claims processes so that they may be handled efficiently.
- Review of insurance policy wording.
- Following-up with the insurer for endorsement and changes as necessary.
- Answering questions as to coverage, benefits and policy terms.
This type of insurance requires an understanding of the language, experience and reputation with insurers, ability to negotiate on your behalf to ensure that the policy will cover your risk. But that is only the beginning. Once the correct policy and language are in place it is crucial that your staff and administrators understand how to benefit from this insurance. This is where the service of your broker becomes so important.
There are several other additional services your broker should supply that will help you manage capitation for your economic protection and growth. We at McPhee & Associates are the leading managed care specialty brokers and have been working with hospitals, health plans, medical groups and HMOs for over 30 years.
We are here to help. If you are interested in more information about Provider Stop-Loss/Provider Excess Loss coverage or HMO Reinsurance or for a competitve quote on your existing policy call me at (818) 541-7900 or fill out our questionnaire
Executive Vice President
McPhee & Associates, INC.