Frank Crystal Utilizes Creativity and Creates Employee Benefits Plan that Avoids Projected Annual Increases

Situation: A hospital client recently ended its affiliation with a large hospital system that had a complex and generous benefit program. As part of the separation agreement, our client was contractually obliged to offer at least one of the plans at no cost to employees. 

Concerns:

• A projected increase of 18-20% in benefit spend because of the no-cost employee option.
• Developing a strategy to lower this projected increase despite the contractual obligation.

What FCC Did: Frank Crystal simplified the program by designing two self insured plans, one of which was the no-cost option. While both plans carried high deductibles, the “free” plan had the higher of the two. Frank Crystal also introduced an HRA (Heath Reimbursement Arrangement) but only into the “pay” plan option. HRAs are health care accounts entirely funded by employers, which employees draw from to reimburse their uncovered medical expenses such as deductibles, co-pays and even insurance premiums. HRA contributions are tax deductible to the employer and tax-free to participating employees.

Frank Crystal launched a communications program to explain and compare the free and pay-plan options. Employees began to see the economic advantage of the HRA plan, which could accumulate in value and reduce their out-of-pocket medical expenses, even after factoring in the cost of contributing to the premium.  

Results: Enrollment shifted toward the HRA plan and away from the “free” option. By the end of the 3^rd quarter, the financial results became evident—a zero percent increase instead of the projeted 18-20%.

Reducing a Justified Renewal Increase by 70%

Situation: A new education client was expecting a 41% rate increase for its employee benefits. The increase appeared to be justified in light of the client’s claims experience. To determine the best course of action, Frank Crystal conducted a thorough study comparing the client’s plan design, premium cost, employee contributions, and demographics with regional and national norms for comparable organizations within and outside its industry.

Concerns:Through this research, Frank Crystal identified:

• A connection between higher-than-average age and income statistics with larger claims, which was a material factor in the large premium increase.
• An excessive use of out-of-network providers and services, which also contributed to increased plan costs.

What FCC Did: Based on these findings, Frank Crystal presented a multi-level strategic plan, the highlights of which included:

• Reformulation of the contribution schedule, so that the increased cost to  employees would be consistent with industry and regional norms.
• Identification of a new plan administrator whose size, accessibility, and participating providers were more favorable to the employee population and would help increase network participation.
• Recalculation and renegotiation of the renewal to reflect the appropriate risk levels.
• Launched a wide-ranging communications campaign to educate employees about the plan changes and to increase in-network utilization.

Results:With the above changes in place, Frank Crystal was able to reduce the cost of the projected renewal increase from 41% to 12%, a 70% decrease.

Frank Crystal's Consulting Medical Director Saves a Plan Member from a $35,000 Out-of-Pocket Medical Bill

Situation: A client presented Frank Crystal with a claims issue whereby an employee plan member was faced with a $35,000 out-of-pocket expense for a non-emergency medical procedure. The costs were related to a non-participating provider who performed both a primary and secondary medical procedure. However, the provider billed both procedures as primary. The insurer correctly paid the secondary procedure at 50% of the billed amount, with the provider charging the difference to the plan member.

Concerns:

• The plan member was faced with a $35,000 out-of-pocket would have to absorb a devastating out-of-pocket expense.
• First and second level appeals to the insurer were unsuccessful.
• The client believed the member would need guidance in escalating the case to the New York State Department of Insurance. 

What FCC Did: After the client asked for Frank Crystal’s assistance, the appeal claim was reviewed by our consulting Medical Director, whose responsibilities include assisting  with complex claim resolution issues. Before advising the member on how to handle the New York State external appeal, the Medical Director asked for permission to speak to the treating physician directly about the procedure and how it was billed. His belief was that a peer-to-peer discussion would help in negotiating the out-of-pocket costs owed to the provider.

Results: After a 30-minute discussion, the treating physician agreed to reduce the balance due to $5,000. This amount equaled the allowed charges under the out-of-network component of the member’s medical plan, effectively reducing the plan member’s out-of-pocket expense to zero.