Self-funded Plan of a Hospital

[waid10]

I am a bit of newbie in the health insurance world and would appreciate any thoughts anyone may have.

Hospital is switching from a fully insured health plan to a self-funded plan. In the past, non-hospital owned entities (various physician groups, emergency room group, free clinic, etc.) participated in the fully insured plan by paying the COBRA premium (I am not sure if this was really permissible). With the change to a self-funded plan, can those non-hospital owned groups continue to participate? If so, do you just continue to pay the COBRA premium? Or bill them for actual claims paid for those groups? What if one of the non-hospital groups has a large amount of claims and it exceeds the COBRA premiums - does the hospital have to eat the excess?

I am primarily concerned with the funding issues right now. We have counsel looking into the Stark/inurement issues.

[J Simmons]

With the change to a self-funded plan, can those non-hospital owned groups continue to participate?

You will likely lose ERISA preemption of state insurance regulation because it will be a multiple employer welfare arrangement (MEWA) if the non-hospital owned groups are allowed to participate. This means you might have to go through the process of registering the MEWA with the state insurance department as though it is a 'health insurer'.

If so, do you just continue to pay the COBRA premium? Or bill them for actual claims paid for those groups? What if one of the non-hospital groups has a large amount of claims and it exceeds the COBRA premiums - does the hospital have to eat the excess?

That would depend on what the documents signed by those other groups with the MEWA provide for them to pay. The COBRA continuants themselves could not be charged more than 102% of the cost of coverage.

I am primarily concerned with the funding issues right now. We have counsel looking into the Stark/inurement issues.

You also need experienced counsel looking into the self-funding and MEWA issues, and the agreements between the MEWA and each group.