The Meaning of "Self-Insured"
Carroll Andrew Morse
This is a recurring issue with school committees and town/city councils across the state; Matt Bower of the Warwick Beacon reports that the Warwick City Council has formally expressed its support for a General Assembly bill that would prevent specific health-insurers from being named in teacher contracts…
Members of the Warwick Teachers Union are not pleased with the School Committee’s approval last Tuesday of a resolution in support of two bills (Bill 7776 and Bill 7108) that would prevent teachers’ unions from naming a specific health care provider in their contracts.
The resolution, sponsored by Paul Cannistra, follows similar resolutions passed by school committees in Westerly, East Greenwich and North Kingstown.
Cannistra said the bills concern cost savings to taxpayers while restoring some management rights to school committees and administration.
Now, I'm not sure "provider" is the right word for Bower to have used in his opening paragraph. According to Committeeman Cannistra, quoted later in the article, the City of Warwick is "self-insured". That means that Warwick employees don't send premiums to an insurance company. Instead, they pay into a fund maintained by the city of Warwick and the city hires an insurance company to administer the fund. The distinction is important, I believe, because participants in a self-insured plan are not limited to an administering company's HMO/PPO network created for direct customers. It is the self-insuring body, not their hired administrators, who sets the terms of coverage.
However, in the Beacon article, there is disagreement on this point. Warwick Teacher Michele Landrie says that participants in a self-insured plan administered by, say, United Healthcare, are limited to United's network…
“Doctors don’t participate with United,” she said. “You’re limiting my health care options by switching. You’re taking away the protection we have to ensure a health care provider.”
Committeeman Cannistra disagrees…
“There’s no reason to be limited; with being self-insured we can dictate our coverage,” Cannistra said after the meeting.
This is a pretty straightforward question of fact, so let's put it to bed. Who's right about who sets the terms of a self-insured plan?
Self-insured plans set their own rules. I'd have to see one of the plans, but one would assume, if it's UHC, that 'in-network' is covered with just a co-pay at the time of visit and any 'out-of-network' is covered as a percentage of the "Usual and Customary" charge for that particular service.
If the plan covers 100% of U&C for an office visit and a 15 minute office visit's U&C is $85 and your doctor charges $100 then you're on the hook for the $15 that the plan doesn't cover. Incentive: find a new doctor - IF the $15 savings is more important to you than the relationship with that doctor.
I've seen people bitch about gold-plated 100% coverage plans before so none of this surprises me at all.
Like most people in the private sector, I pay for part of my insurance which is United. The truth is most private companies can't afford to offer full Blue Cross to their employees. I had no problem finding a doctor that accepted United; my PCP is 3 miles from home. When my husband recently broke his hand, he got referred to a specialist with no problem. These people need a reality check!
Carriers do have their own networks, and self-funded entities who contract with a carrier to administer their self-funded health plans are "limited" to that network. (I place "limited" in quotes, as in Rhode Island both Blue Cross and United have very similar networks).
While employers are limited to that carrier's network, they can still choose to reimburse out-of-network providers at whatever level they want, as they are paying the claims. Whatever is left - if at all - is up to the employee to pay the balance. And since there is little difference between networks, the reality is that this wouldn't happen often.
The notion that United or Blue Cross doesn't have doctors is silly, and the public unions are way off base. The flexibility of being self-funded allows the employers to mitigate most network differences. And since it is the employer's health plan, there is no change in benefits. Also, most health plans offer an out-of-network benefit, which is typically 80% coverage of "reasonable and customary" charges.
The other advantage of being self-funded means that the employer does not have to pay state-mandated benefits, which nobody talks about but should....... Rhode Island requires fertility treatment to be covered (read, multiple pre-mature births and hundreds of thousands of dollars in medical claims), along with smoking cessation, etc. While most public sector employers would find it hard not to mirror state-mandated benefits, they can offer pretty much whatever health plan they negotiate.
Cities and Towns should avoid all this nonsense with the Entitlement minded Unions by doing one of the following:
1) Pay the Union a flat fee of $10,000 per head. Let the Union go contract and administer any damn Plan they want, or alternatively,
2) Pay the Union hacks directly a $10,000 flat fee to which they can apply to any healthcare they want.
Let the Union Hacks bear some responsibility and cost, then we'll see how much they whine. Cities & Towns should just simply get out of the Healthcare business, particularly since the Unions seem to be such experts in the area.
Jackson,
Doesn't your description imply that a self-insured plan could decide to pay out-of-network doctors 100% of the in-network reimbursement rate?
(Though, as I think out loud about this, "100%" might not cover the total cost of a visit or procedure, since an oon-doc probably hasn't agreed to charge the insurance company's preferred rate.
Which as I think out loud about this more, could be introducing another kind of quandary, with patients saying, 'I want to go to the doctor I prefer' AND 'I want the insurance companies to beat my preferred doctor's rates down as low as possible').
Am I close?
Andrew gets a gold star.
That's always been the rub. Whether it's called U&C or R&C, it's almost always less than what the doctor would LIKE to get for that procedure.
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Self-insured plans set their own rules. I'd have to see one of the plans, but one would assume, if it's UHC, that 'in-network' is covered with just a co-pay at the time of visit and any 'out-of-network' is covered as a percentage of the "Usual and Customary" charge for that particular service.
If the plan covers 100% of U&C for an office visit and a 15 minute office visit's U&C is $85 and your doctor charges $100 then you're on the hook for the $15 that the plan doesn't cover. Incentive: find a new doctor - IF the $15 savings is more important to you than the relationship with that doctor.
I've seen people bitch about gold-plated 100% coverage plans before so none of this surprises me at all.
Posted by: Greg at May 22, 2008 11:49 AMLike most people in the private sector, I pay for part of my insurance which is United. The truth is most private companies can't afford to offer full Blue Cross to their employees. I had no problem finding a doctor that accepted United; my PCP is 3 miles from home. When my husband recently broke his hand, he got referred to a specialist with no problem. These people need a reality check!
Posted by: Siva at May 22, 2008 1:16 PMCarriers do have their own networks, and self-funded entities who contract with a carrier to administer their self-funded health plans are "limited" to that network. (I place "limited" in quotes, as in Rhode Island both Blue Cross and United have very similar networks).
While employers are limited to that carrier's network, they can still choose to reimburse out-of-network providers at whatever level they want, as they are paying the claims. Whatever is left - if at all - is up to the employee to pay the balance. And since there is little difference between networks, the reality is that this wouldn't happen often.
The notion that United or Blue Cross doesn't have doctors is silly, and the public unions are way off base. The flexibility of being self-funded allows the employers to mitigate most network differences. And since it is the employer's health plan, there is no change in benefits. Also, most health plans offer an out-of-network benefit, which is typically 80% coverage of "reasonable and customary" charges.
The other advantage of being self-funded means that the employer does not have to pay state-mandated benefits, which nobody talks about but should....... Rhode Island requires fertility treatment to be covered (read, multiple pre-mature births and hundreds of thousands of dollars in medical claims), along with smoking cessation, etc. While most public sector employers would find it hard not to mirror state-mandated benefits, they can offer pretty much whatever health plan they negotiate.
Posted by: Jackson at May 22, 2008 5:55 PMCities and Towns should avoid all this nonsense with the Entitlement minded Unions by doing one of the following:
1) Pay the Union a flat fee of $10,000 per head. Let the Union go contract and administer any damn Plan they want, or alternatively,
2) Pay the Union hacks directly a $10,000 flat fee to which they can apply to any healthcare they want.
Let the Union Hacks bear some responsibility and cost, then we'll see how much they whine. Cities & Towns should just simply get out of the Healthcare business, particularly since the Unions seem to be such experts in the area.
Posted by: George Elbow at May 22, 2008 8:28 PMJackson,
Doesn't your description imply that a self-insured plan could decide to pay out-of-network doctors 100% of the in-network reimbursement rate?
(Though, as I think out loud about this, "100%" might not cover the total cost of a visit or procedure, since an oon-doc probably hasn't agreed to charge the insurance company's preferred rate.
Which as I think out loud about this more, could be introducing another kind of quandary, with patients saying, 'I want to go to the doctor I prefer' AND 'I want the insurance companies to beat my preferred doctor's rates down as low as possible').
Am I close?
Posted by: Andrew at May 23, 2008 9:58 AMAndrew gets a gold star.
That's always been the rub. Whether it's called U&C or R&C, it's almost always less than what the doctor would LIKE to get for that procedure.
Posted by: Greg at May 23, 2008 11:00 AM