So, I have questions, but you know feel free to expand where you want to, you know, and
then if there's stuff that we didn't cover, I thought we were going to talk about what's
going on.
Yeah.
And then one last thing, I'm just going to make sure we can keep the cord on, yeah,
hidden.
Yep.
I'm going to tuck it behind the pillow, is that right?
Perfect.
And look at me, I didn't wear stripes, you know, I move.
And do you want me to repeat the question or like, will your questions be, or they'll
be like, you'll probably have some like, talk over something when you cut things together
or whatever, you voice over, yeah.
So, any way that we can like, not have you have to think about 8 million things while
you're trying to answer.
Actually try to answer a question, uh-huh.
So, what I'm going to do is start with the basics, so that I don't forget it.
So.
That sounds good.
Start with, what is a self-funded health plan?
A self-funded health plan is when the employer pays for the healthcare costs instead of paying
premiums to an insurance company that is paying the claims.
And what is a third party administrator?
What happens when an employer wants to self-fund is that they don't generally have expertise
in administering insurance or healthcare claims processing.
So, they hire an insurance company to act as that administrator, to be the third party
administrator.
For consumers, the employees who are getting the healthcare access, this can be very confusing
because it looks like they have insurance because a third party administrator is processing
the claims, but they actually have self-funded care.
And you did say that the third party administrator is an insurance company, but this plan is
not health insurance.
Can you help us understand that?
Correct.
And it is very confusing.
So I will do my best to try to make sense of this.
And this is what we do with the Center for Patient Partnerships is really help consumers
understand why they're having trouble accessing care and help them access that care.
So an insurance company is acting in an administrative capacity when there being a third party administrator.
They are processing claims using money that the employer is still holding.
They are not processing those claims using their own money that they've collected in
premiums.
Now, oftentimes the contract that they're using to make that decision can look the same,
whether it's an insurance product or it's a self-funded product, but they are paying
using employer dollars, not the insurance company dollars.
I don't know if that helped.
So part of what I think helped me understand it the best when we spoke ahead of time was
this difference between who is both taking in the profit, but also who is taking on the
risk?
Can you break that down?
Absolutely.
So the reason that many employers purchase insurance for their employees through an insurance
company is the insurance company is holding all the risk.
The insurance company is looking at actuarial tables is determining how much money they
need to charge that employer to cover all the claims for that group of employees.
And if they're wrong, they're the ones who are going to make less profits or lose money.
The reason that self-funded plans came about is that employers realized they were paying
a fixed amount to the insurance company, and then it was the insurance company that
while holding the risk could make the profit.
And so employers realized, hey, if we hold all that money ourselves and only pay a certain
percentage in claims, we're keeping that profit.
We're not giving that profit away to an insurance company.
And in order for the employer to hold that risk, they're buying some stop loss insurance.
So they are buying a little bit of insurance in case they're wrong about the risk.
But they're maximizing their ability to keep that profit.
Is this not considered insurance because of how it's formatted, or is it not considered
insurance because of how it's regulated?
So the reason that as a health advocate, I care about this and I have concerns about
self-funded plans is that a self-funded plan is not insurance.
And being insurance is what triggers state regulation.
So from a consumer perspective lens, if it is insurance, then in Wisconsin, for example,
the Office of Commissioner of Insurance is regulating all companies selling insurance.
And there are rules those companies need to follow in terms of mandatory benefits they
need to cover in terms of internal insurance appeal opportunities, in terms of oversight
for grievances.
So you have to be doing business under the state in good faith.
When a plan is self-funded and therefore not insurance, it is regulated only by the federal
government under ERISA.
And so there is some protections, but it's not the same as if it's an insurance product
where it's regulated both by the state government and the federal government.
So there's less protections for consumers.
In some cases, it's called self-insurance, and patients still get a card that can have
united health on it, Blue Cross on it.
That is even more confusing.
So even though they have a card, even though in some cases people refer to it as self-insured,
it is still not insurance.
Correct.
And it takes advocates and patients sometimes quite a bit of time to parse out and figure
out that it is not insurance.
And the reason that the patient has that card that says the insurance company name
on it is that is the insurance company that is acting as that third party administrator.
And so at the beginning, it might not seem like a problem, but what happens is if there
are claims being denied, the protections that that consumer has are reduced in self-funded
plans.
So they might be able to do one internal appeal, but they won't, for example, qualify
for an external appeal.
And as a consumer protection health advocacy center, we want patients to have as many appeal
rights, as many protection opportunities as possible.
And what's good about an external appeal is that the person making that decision is
an independent third party.
It's not the insurance company or the third party administrator deciding about a claim
with which they're either paying for on behalf of themselves or the employer.
And internal appeal versus external appeal.
An internal appeal would be a claim is denied by your employer slash the third party administrator.
So your only option is to go to those exact people who turned you down and say, we think
this was wrong.
Actually, under the contract, right, under the care contract you've provided me, you
should have covered that medication.
And here's why.
Here's why it was medically necessary.
Or here's why in the contract it should have been covered.
And you are right.
It is the person who told you it wasn't covered who is then hopefully saying, oh, we were
wrong.
You're right.
It's not a third party.
It's not an independent review of that denial.
Maybe let's not say third party because then it's confusing.
Right.
So internal appeal means who is reviewing it?
It is being reviewed by that TPA, that third party administrator or the insurance company
if it's an insured product.
Okay.
Do you want to ask the question just with like for self-funded, do you want to say if it's
a self-funded plan, an internal appeal means what?
The third party administrator is reviewing the denial that they made on behalf of the
employer.
And even though the third party administrator is processing these claims and the internal
appeal, the employer, because they are paying, can't they change their mind?
Can't they do whatever they want to do?
Theoretically, but you'd have some issues of fairness, right?
So if I'm the employer, if I'm the human resources department for the employer, I can't say,
well, in this case, for this one employee, I'll say yes, right, that I would need to
say, oh my gosh, we made a mistake here or the third party administrator has made a decision
that's against what we intended, right?
That's not what we meant by this plan that we have.
And of course, they could do that.
The concern I have as a health advocate is that a large motivation for having a self-funded
plan is to save money, and the place that the money is saved is in paying out less claims.
That is, you know, if you look at all the different expenses, that is a variable cost.
That is not one of the fixed costs, such as the administrative fee being paid to the
third party administrator or the stop loss insurance, right?
The room for profit is paying out less of your employee's claims.
So someone with a self-funded plan has far less options in terms of a claim being denied
and then having recourse.
Correct.
How is that different under actual health insurance?
So because health insurance is regulated by states, after you've exhausted an internal
appeal, you can also then file an external appeal, and that is an independent review
organization is looking at that.
And theoretically, that entity doesn't benefit from upholding that denial, right?
There's no money on the table that they could potentially be saving because of that.
The other thing that consumers have for insurance products is the ability to make a formal grievance
or complaint to the state regulator.
And therefore, under those circumstances, the state's required to look at the business
practices for the insurance company or, and in that case, if there's bad faith or some
right action that's not appropriate, they can issue them corrective action.
So you've got both the individual on my claim, I'm doing an external appeal, and also I can
file a formal grievance, you know, over their behavior.
If self-funded plans are federally regulated, is there not federal recourse to challenge claims?
There is the same federal recourse that also exists for insurance products, but in our
experience, it's not the same level of rigor or sort of the feedback loop.
The Kaiser article you sent me said something about, because of ERISA, some people would
have to go to the Department of Labor.
Correct.
So ERISA writes, so the federal entity, the federal department is the Department of Labor
that's regulating self-funded plans, because if you think about it, because it's the employer
who's paying the claims, it's about employee-employer relationships.
So it's regulated by the Department of Labor.
All of this is, as we've said, a very confusing thing.
If I were someone looking for a job, is this something that I could have any input over?
If I am looking for a job or starting a new job, do I have kind of any ability to make
informed decisions, or do I kind of have to take what I can get?
I think it depends.
So I think it depends on what kind of job you're looking for and what kind of employers
you might be able to work for.
So, for example, large employers, over 90% of very large firms, self-fund.
And if we're talking about a self-funded situation, there's not a choice then of, right, you're
in the pool.
You are paying a premium, and that money's going into this big savings account that's
being used.
Might you be able to voice to your employer that you're concerned that there's no choice?
Might you be able to provide feedback to your employer in a collective way with other employees
that you want them to use a different third-party administrator, or you really think that you
really believe they should cover this benefit, right?
Sure.
Do I think that would be impactful?
I would like to hope so.
We are seeing a tremendous amount of consolidation just generally, right?
So I think many employees, unless you're working for a large firm that isn't self-funded, that
has a lot of choice of insurance products, many, unfortunately, many employees, whether
you're choosing between a small company or a large company, and a self-insured or, you
know, self-funded or fully-insured products, there's less and less choice.
Finally, on the self-insured part, our self-insured plans subject to regulations or requirements
that are under the Affordable Care Act.
Yes, some.
And this is where, you know, the good news is that the Affordable Care Act was federal
regulation, and so therefore, they were able to, in some ways, do more around self-funding
funded plans than insurance, because insurance is primarily regulated by the states, right?
But it's not, you know, we'd have to get into the weeds of specifics, right?
What kind of a protection are we talking about, right?
What kind of a plan or a benefit are we concerned about?
Does that mean they went through with, you know, a list and they're like, the Affordable
Care Act will preserve these things, but not these things?
Or does it just get way too complicated to...
I mean, I feel like it gets way too complicated because it's like, if they could, they did,
but then there was also negotiation, right?
So one of the ways that I think about this is it was a monumental thing to have the Affordable
Care Act pass, monumental, right?
Sometimes over, you know, decades, right, to have, I mean, we went from reform in the
60s when we got Medicaid and Medicare, right?
And then multiple failed attempts by, you know, the Clinton administration, right?
And like, so 2010, we get federal legislation around health insurance and health care and
preventive care, right?
So for that to happen involved a tremendous number of, right, give and take and agreements.
And so when you read through the provisions, it's like, in this case, it doesn't apply
to grandfather, you know, grandfather plans in this case, right?
I mean, it looks like something that was built by, you know, a group desperately trying
to get something passed, which is why like self-funded plans are something that's used
for like religious organizations.
So one of the benefits from an employer perspective, from the, you know, the payer of the claims
is if you're self-funding, you don't have to follow the rules of insurance, including
covering mandated benefits.
So for example, in Wisconsin, there is a list, a legislative list, right?
In our statutes, all the things that insurance companies that do business in Wisconsin have
to cover.
And so there may be things on that list that a religious organization would prefer not
to cover.
And so if they sell fun, then they don't have to cover those things.
So I guess, is there anything else on self-funded plans that you want to go over before going
specifically into a cumulative maximizer?
Is there anything that like you've been thinking about since I've been asking these questions?
I could see when you're doing your B-roll that I don't 100% agree with this chart, but
like that I found this like incredibly helpful to just have people understand the why companies
would choose self-funded, right?
I mean, it literally says right here, direct savings opportunity, right?
Like on the self-funded side, right?
They're basically saying like the majority of your costs, right?
You pay your for administration, which is to pay your third party administration, third
party administrator.
You pay for your stop loss, extra insurance, and then look at all your paying and claims.
If you pay even 10% less of the claims, right, if you deny 10% of the claims, right, that's
money in your pocket, right?
And this is where you can see when you talked about religious organizations that when it's
a fully insured product, there's cost to having to cover those required benefits, right?
So part of what can, we could just argue that literally a self-funded plan can save money
by not covering the required benefits, right?
There's your 10% right there.