Privacy under Partially self-funded plans

[Guest AnnetteH]

I have just joined a company that has used a self-funded health plan, with $15,000 individual and a higher aggregate stop loss limit, for several years. The fixed monthly premium to the administrator, who is the stop loss insurer, have risen dramatically in the last few years, to the point where I think any savings they might have over a regular health plan no longer exist. It is a small company, with less than 75 employees.

What really makes me uncomfortable about continuing with this type of plan is that the HR mgr takes the monthly reports and keeps a log of the dollars paid out for each employee and family member. If they were just monitoring how many people were approaching stop loss or something like that, it would not bother me too much. But, if an individual suddenly spikes up to $2,000 paid claims a month, the mgr and CEO use whatever subterfuge they can to find out what the claims are for. They claim honorable intentions, and I have no reason to not believe them, but it makes me very uncomfortable. To my knowledge, no one has ever been fired for health reasons, but the appearance alone bothers me. Am I worrying needlessly?

[mroberts]

Annette:

I'm relatively sure that your HR manager and CEO are not looking at these numbers for possible termination. Even if they were, an employee would be able to continue coverage for up to 18 months with the claims experience still hitting the company's own experience.

In a situation where an employer is self-insured at less than 75 employees, any big claim probably gives these two an ulcer. As previously mentioned, for a group your size, your best bet is to think about going fully-insured.

Thanks,

Matt

[jeanine]

Read the new HIPAA Privacy Regs. I think you are correct to be at least a little concerned about this. I'm not sure from your post--who does the actual claims administration?

[mroberts]

Good point Jeanine! I forgot to mention on that part about finding out what the claims are for. Due to hungry, hungry HIPAA, I would not recommend having the employer find out too much about any claims. It's one thing to just monitor a claims paid report or even a general report indicating what kinds of claims have been covered. It's totally another thing to find out specifically what kind of claims any one person is dealing with. This could stick in the back of an employer's mind when it comes to decision making in the future and if an employee were to ever find out about this......

[Jbentz]

You can look in the HIPAA regs under 164.504 for the information regarding plan sponsors and what they can and cannot do in regards to Protected Health Information (PHI). You can contact me off-line if you need help finding the regs on-line.

Keep in mind that the regs are a huge piece of legisation and it is a "work in progress". The date for compliancy is 4/2003, so things they are doing now might have to change, but it might not be illegal.

Also, check with the state laws, they too, can have a say in this. I do encourage you that if you are uncomfortable with the information that is being shared, do your research. You will be much more in-tune with the information they will be giving you about HIPAA in the future and you will be a better consumer.

Good luck!

[Guest AnnetteH]

Jeanine, The plan is administered by Great West. They also insure the stop loss, as well as administer our 401k. Great WEst sends us a report monthly with the claims paid for each individual.

The HR director has even been directed to call Great West and find out what kind of medication employees are taking. Of course, they have not given them the answer. The reason for this was to see if a generic was available. We are up against renewal and Great West refuses to require a generic when generic is available. The company pays all premiums, employees do not contribute anything.

Our increase for this year is 33%, last year was 18% I believe. The year 2001 is the first year that anyone has reached the point where Great West takes over the cost of the claims. There have been 2 individuals, one which should not re-occur and one which is terminal cancer. The CEO doesn't understand the large increase since our claim record has been good with the exception of these 2.

The dollars and cents are one thing, but I am concerned about medical privacy for the employees. I do not think they want to discriminate, but knowledge has a way of influencing future decisions. I am still on Cobra on my previous job, because I really don't care to have my medical claims a topic at the next meeting. I am an accountant by profession, although I worked with the HR dept a lot at my last job. This is the first time I have had HR reporting to me.

I would like to find a way to sway the CEO toward a full indemnity plan before we fall afoul of HIPAA. As long as it looks like there is a potential to save money with this over an indemnity plan, it looks like they want to take the gamble.

[jeanine]

I'm going to give this a stab, so be forewarned that my interpretation is not necessarily correct. First, let's lose the "partially self-funded" definition. The plan self-funds and buys stop-loss. The stop-loss is a way of protecting the employer's assets, it is not for a provision of benefits. Even though GW functions as both the TPA and the stop-loss carrier, it has two distinct relationships with the employer. Under HIPAA (when fully implemented) the TPA relationship is subject to different regulation than the stop-loss arrangement because the stop-loss is not a "health plan." All HIPAA says about stop-loss is that a plan may only provide aggregate or de-identified info to a stop-loss carrier during the bidding process (placing stop-loss with a carrier). Once a carrier has been awarded the bid, you can provide detailed info such as that which is being provided. Also under HIPAA (when implemented), the "plan" must amend its documents and establish a process where it can relay protected health info to the "plan sponsor" (the employer), a part of this process being a firewall between the plan and the plan sponsor. I know this is very confusing. You may want to look to GW to see if they are providing any guidance to their clients.

[Linda]

Jeanine -- 164.504(f) lists the requirements for a group health plan to disclose identifiable health information to an employer. It sounds like you think we should apply this rule to the transmission of information from the TPA to the employer. Is that your interpretation?