A new report from the Health Performance Management Institute says employers should self-insure if they want to provide the most cost-effective health benefits to their employees.
To fully realize the potential savings in self-insurance, however, employers should actively measure the performance of their plans in meeting healthcare objectives and manage health risks within their employee population, according to the report "Governance, Risk and Compliance Management Strategies for Self-Insured Health Plans."
[See also: Report: Insurers, brokers are hindering healthcare cost reductions; New report from HPM Institute breaks down health reform's new grandfather clause]
"Many companies have to deal with insurance premiums that rise 9 (percent) to 10 percent a year," said George Pantos, executive director of the HPM Institute. "But firms that opt to self-insure (health benefits) can avoid the double-digit premium increases that plague conventional insurance – and regain control over their health benefits."
An active strategy for health performance management can help self-insured companies in three areas:
- Governance. This requires the active engagement of business units beyond human resources – strategic planners, financial and operations executives and the IT group.
- Risk. Self-insured firms must manage their own risk, so access to real-time data that is tied to the plan is imperative.
- Compliance. Although corporations have dedicated resources to compliance activities, an HPM system is automated and therefore can deliver those required reports as an ancillary function. In this way, organizations can generate the necessary documentation for auditors, regulators and others without devoting valuable resources to that single function.
"By putting the right people, processes and technology in place around each of those areas, companies can cut costs, reduce risk, improve governance and compliance, achieve strategic insight into potential risks and improve the health of their employees," said Stuart Hersch, president and CEO of Cantor LifeMarkets.
Todd C. Thompson, CTO for Lockheed Martin's financial services and human capital line of business, noted that to properly manage a self-insured program, employers need to have sophisticated internal processes that allow employers to achieve the aim of reducing costs while improving the healthcare outcomes of their employees.
"We have to develop procedures for actively monitoring the use of healthcare management resources and to establish guidelines (governance) on how frequently we assess the services that are being provided," he said. "And finally, we have to be prepared to adjust these strategies as we better understand the needs of our constituency. The bottom line is that the more proactively and responsibly these programs are governed and managed, the more effectively they can be targeted and executed to deliver value."