This episode of The ShiftShapers Podcast is called “Finding The Right Stop-Loss Partner” and today, host and Chief Transformation Strategist David Saltzman is joined by Mehb Khoja, President of Medical Risk Managers, Inc. to discuss the topic from the perspectives of both employers and MGU’s.
Mehb explains the lag times experienced between incurring and paying claims, shares his insights on why it is not advisable to swing back and forth from fully-insured to self-insured, and defines what lasering is and its significance in this industry.
What You’ll Learn From this Episode:
- 01:56 Mehb’s position in the industry
- 08:41 Advisers chasing the lowest stop-loss cost
- 11:51 Lag times between incurring and paying claims
- 16:18 Advising clients and switching back to fully-insured
- 19:07 Lasering defined and predictions of growth
08:48 “I would, in any situation like this, advocate for a long-term partnership whether it’s with us or with another carrier, another MGU, simply because stop-loss claims are going to be volatile by nature and you’re looking to the stop-loss carrier or the MGU to help you with some volatility protection. And sometimes, the stop-loss carrier’s going to win, and sometimes the employer is going to win. And all in all, you want to make sure that you’re purchasing coverage at the right level and that you’re building a long-term partnership as you would with any other benefit carrier.”
12:03 “There’s really no downside in that very first year of self-insurance. The downside is in the subsequent year if you still have the same type of contract. So, for example, if ten employers select 12-12 coverage in the first year, and renews with a 12-12 coverage in the second year, there is a significant gap in coverage and that gap comes from claims that are incurred in the first year of self-funding but paid in the subsequent year.”
14:03 “When you’re thinking about large claims though, these are more complicated situations. This is somebody having gone to a surgical center or a hospital to have a catastrophic condition evaluated treatment on… so let’s take, for example, a transplant. And so, in that situation, the transplant claim, because of the size of the claim, it may go through various levels of scrutiny and review before the employer or the administrator is ultimately billed for the charges. And so, because of that, it is common to see lag time on larger claims be somewhere between 4 to 12 months.”
17:56 “Absolutely. I would say though, more importantly is, an employer shouldn’t be going back and forth between self-insured and fully-insured. I think if you’re of an appropriate size and you’re thinking about moving towards this direction of self-insured, you’re really going to evaluate the philosophical decision to go that way. And once you’ve made that decision that you want to be self-insured, you really don’t want to be hopping back and forth, back to fully-insured carriers.”
19:25 “Lasering is the ability for the stop-loss carrier to identify known claimants, known exposures, and to either exclude them from coverage or include them at a higher rate. And so, what does that mean? Let’s say the employer wants to select coverage at $100,000 per person per year. And during the medical underwriting and clinical underwriting process, it’s discovered that there’s an individual who is going to need a transplant next year. From the carrier’s perspective, that’s a claimant that’s already known and from their perspective, insurance coverage is to protect from the unknown.”
21:54 “I think the stop-loss industry is going to grow. It has been growing significantly. The current market is about $25 billion. And that’s up from about 10 to 12 billion just 6 years ago. And really, the driver of that has been the ACA and now what we’re starting to see is a lot of interest in self-funding from smaller employers who were previously fully-insured and those employers are going to need stop-loss coverage. So we’re going to see some organic growth coming from that market.”