By CYRIL TUOHY, managing editor of Risk & Insurance®
BOSTON---Changes to the nation's healthcare system are going to create a bonanza of opportunity for third-party administrators (TPAs) and brokers, and now is the time for risk managers to demand transparency about who is getting paid how much, according to a long-time insurance expert.
"My message to the risk manager is that you have to understand conflicts that your brokers have because you have 30 million people coming on," said Curtis Smith, executive vice president of Medcor.
Medcor, based in McHenry, Ill., provides on-site health clinics for large companies and U.S. government agencies and helps control costs associated with workers' comp, general liability and healthcare.
Buyers can't afford to be shy about asking their brokers and their third-party administrators about where their revenues are coming from and "understanding where the conflicts are," he added.
Health insurance reform signed into law by President Obama earlier this year is going to increase the pool of covered lives by about 30 million people.
Businesses large and small will bear the burden of paying for most healthcare extended to this sliver of the market that previously had no coverage at all, either through an increase in health premiums or higher taxes to pay to support programs for the uninsured.
"Taking steps to save even a few percent each year will either go to the bottom line or serve as a way to offset new costs that pending legislation may force onto businesses," said Smith.
He advised risk managers not to be shy about using their expertise and experience to find better coverage, pricing and options, and making sure the incentives for brokers and third-party administrators are aligned with those of the risk manager.
Smith, speaking in an interview on April 25, hours before the official opening of the annual convention of the Risk and Insurance Management Society Inc. in Boston, also suggested that risk managers demand that brokers and TPAs offer more than one solution and multiple insurance quotes.
Insurance buyers should consider putting their insurance program out to bid every three years to stay current with other offers in the marketplace, Smith also said.
Moving to self-insurance and higher deductibles are also an option.
"Higher deductibles and copays give employees more share of the costs, which can incentivize them to pay closer attention to the services they use," he said.
Most of all, said Smith, the changes in healthcare system provide a new opportunity for senior human resources and risk executives to talk to each other.
Often siloed within their organizations, the HR and the risk functions don't often communicate with each other. If they did, they might find that they might be able to trim a number of overlapping programs that are running in parallel within their corporations, said Smith.
Wellness programs often fall under the HR function and corporate safety programs often fall under the risk management. If both sides get together, they would likely find some overlap, said Smith, and thus an easy way to cut costs.
April 26, 2010
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