10. CAPTIVATE ONLOOKERS
AGENDA
1. Group Captives – What, Why, How, Who
2. The Market Climate
3. Berkley’s Group Captive Program
4. Financial Scenarios
5. Other Considerations
11. WHAT IS A CAPTIVE?
A Captive is a medium for taking risk.
It can be formed by
a single company Or multiple companies
Single Parent Captive Group Captive
12. WHAT IS A GROUP CAPTIVE?
A Group Captive can be made up of companies
in the same industry or different:
Same industry Different industries, sizes,
or regions
Closed membership Open membership
(Homogeneous) (Heterogeneous)
13. WHY DO GROUP CAPTIVES EXIST?
Group Captives exist to give employers:
Control
Lower overhead/inefficiency from insurance carriers
Long-term stability
Capacity
Data transparency
Collaboration/best practices
14. WHAT IS BERKLEY’S GROUP CAPTIVE?
Group stop-loss captives combine three strategies:
EmCap
Self-funded
health plan
Group
captive
structure
Collaborative
health risk
management
15. Today, nearly all large companies self-fund their health plans
13% 15% 17%
13%
10% 10%
13% 13% 12% 12%
15% 16%
13% 15% 16%
60%
67%* 66% 66%
72% 73% 75%
78% 77% 77% 77%
83%* 82% 81% 83%
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Large Firms (200+ workers)
Small Firms (1-199 workers)
Notes: For 2000, the large firm estimate is statistically different from the estimate for the previous year shown (p<.05). In 2006, funding status was not asked of firms with
conventional plans, due to a change in the survey questionnaire. Therefore, conventional plan funding status is not included in the averages in this exhibit for 2006.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013, www.kff.org.
WHO SELF-FUNDS?
16. PROS OF SELF-FUNDING
Traditional Advantages
• Risk is limited with stop-loss reinsurance
• Cash flow advantages;
no pre-funding of claims with advantage
to employer in favorable claims years
• Data transparency (detailed utilization
data) allows employers to identify issues
and promote healthier cultures
• Multi-state plan design; benefit flexibility;
ease of administration
• Lower fixed costs
• No premium tax
• No insurance company profits
• Lower long-term cost
Additional Advantages Under ACA
• Not required to provide coverage with minimum
essential benefits
• Not required to participate in
a risk-adjustment system
• Not subject to provisions,
such as Medical Loss Ratio requirements and
premium increases
17. Challenge: How do you create the large employer advantage for small
and midsize companies?
• Self-funding provides benefits typically enjoyed only by large
companies:
o Control
o Transparency
• Group Captives can provide stability by spreading risk across its
members
• Health risk management can lower short- and long-term cost
trends:
o Opportunity to control costs
WHY DON’T MORE EMPLOYERS SELF-FUND?
19. GROUP CAPTIVES MITIGATE VOLATILITY
ANNUAL CLAIMS
Low
High
PROBABILITY
LowHigh
Shift expected due to law of large numbers
Self-Funded Health Plan moving into a Group Captive
21. GROUP STOP-LOSS CAPTIVE
Group Captives bring it all together by allowing small
employers to act like large employers:
1. Traditional advantages of self-funding
2. Additional advantages with ACA
3. Best practices for health risk management
4. Collaborative financial strength
5. Greater scale for predictability
6. Buy less Stop Loss insurance (higher deductible)
22. Target employers for a Group Stop Loss Captive:
50-1,000 employees eligible for health benefits
Forward-thinking management team
Good communication with employees on health care costs
Willing to implement robust health/wellness programs
Financially stable and willing to take on a portion
of the risk for their health plan
WHO SHOULD CONSIDER A CAPTIVE?
23. RISK LAYERS: CLAIMS EXPOSURE/COSTS
Retain. Share. Transfer.
Group Captive Layer
Premium + Non-Premium Funding (collateral)
Employer
1
(SFR)
Employer
2
(SFR)
Employer
3
(SFR)
Employer
4
(SFR)
Employer
5
(SFR)
Berkley Retained Layer
Retained Excess + Captive Aggregate Coverage + Fixed Costs
No risk sharing
Employers pay
for claims up to
Stop Loss
(Individual or
Aggregate
claims)
Employer Layer
Risk shared
among members
in captive
Risk assumed by
Stop Loss insurer
>$250k individual
and captive max
24. Retain. Share. Transfer.
FREQUENCY OF
CLAIMS
PERINDIVIDUAL
BERKLEY LIFE & HEALTH
Individual
$25,000
per
Individual
MEMBER RETENTION
Aggregate
110%-125%
of expected claims
STOP LOSS POLICY STRUCTURE
25. Risk Layer Funding
Retain. Share. Transfer.
BERKLEY LIFE & HEALTH
Individual
$25,000 per
Individual
MEMBER RETENTION
Aggregate
110%-125%
of expected claims
FREQUENCY OF
CLAIMS
PERINDIVIDUAL
EXPENSES
Individual
$25,000
per
Individual
MEMBER RETENTION
(SFR)
Aggregate
110%-125%
of expected claims
Berkley Life & Health retained excess,
expenses, TPA
Up to $250k
individual
Premium
funding
Non-
premium
funding
(collateral)
GROUP CAPTIVE
26. LARGE CLAIM EXAMPLE
Employer has a $600,000 claim from a premature birth:
BERKLEY LIFE AND HEALTH
Stop Loss policy reimburses
$575,000 to the employer
GROUP CAPTIVE reimburses
Berkley for $225,000
EMPLOYER funds first $25,000
through its self-funded retention
27. Sample EmCap Layers vs. Average
Results
Self-Funded
Retention
70%
Captive Layer
25%
Collateral 5%
Expenses 15%
COSTS, RESULTS, AND FINANCIAL SCENARIOS
29. EmCap Layers
Self-
Funded
Retention
70%
Captive
Layer
25%
Collateral
5%
Expenses
15%
Berkley EmCap
programs are averaging
10-15% BELOW SFR
Berkley EmCap programs
are averaging 7-9% CAPTIVE
LAYER SURPLUS in 2012
Surplus at Captive Layer =
No collateral draw
Past EmCap results are not a predictor of future results. Past performance does not guarantee
future results. Current performance may be lower or higher than the performance data shown.
COSTS, RESULTS, AND FINANCIAL SCENARIOS
30. Sample Results:
200 Lives, Fully Insured, $25K Specific EmCap Proposal
* Past EmCap results are not a predictor of future results. Past performance does not guarantee future
results. Current performance may be lower or higher than the performance data shown.
**All unused funds are returned to the member.
Sample Account EmCap Proposal 2012 Avg Results*
Expenses $375,000 FIXED $375,000
Self-Funded Retention $1,750,000 85% $1,487,500
Group Captive Retention** $625,000 91% $568,750
Collateral $125,000 0% $0
Total Cost $2,431,250
vs. Insured Premium $2,500,000
EmCap Total Savings $68,750
Potential savings opportunity, plus data, stability, and transparency
COSTS, RESULTS, AND FINANCIAL SCENARIOS
31. CAPTIVATE ONLOOKERS
SUMMARY
Member organizations take control of their costs
Cumulative effect of retention = Long-Term Plan
1. Retain positive variability
2. Spread negative variability
Increased risk tolerance with experience/data
Surplus potential = collateral carryover
32. CAPTIVATE ONLOOKERS
SUMMARY
"Pay Yourself" leveraged trend
Harness group purchasing power
1. TPA/Admin Fees
2. Network Contracts
3. Pharmacy Benefit Manager contracts (PBM)
4. Health risk management services
33. GEAR UP YOUR NETWORK
Scott Austin
Senior VP, Aurora Health Care
Matt Shumlas
Director, Anthem BCBS
34. ACCESS TO QUALITY CARE
• Aspirus
• Aurora Health Care
• Bay Area Medical Center
• Belin Health
• Children’s Hospital of Wisconsin
• FortHealthCare
• Gundersen Health System
• Meriter
• ProHealth Care
• Sauk Prairie Healthcare
• ThedaCare
• University of Wisconsin Hospitals,
Clinics & American Family
Children’s Hospital
• Watertown Regional Medical
Center
Covering 45 counties &
80% of Wisconsin’s population
Providers that consistently score in
top quadrant measuring quality & cost
Convenience when
traveling
National & International
Coverage with Blue Cross
and Blue Shield provider
network at in-network rates
and benefit levels.
0.94
0.96
0.98
1
1.02
1.04
1.06
1.08
1.16
1.14
1.12
1.10
1.08
1.06
1.04
1.02
1.00
0.98
0.96
0.94
0.92
0.90
0.88
0.86
0.84
MoreQualityAchievements
Greater Efficiency
High Quality Low
Efficiency
High Quality
High Efficiency
Low Quality Low
Efficiency
Low Quality High
Efficiency
Using WHIO 10
35. GEAR UP YOUR NETWORK
SUMMARY – ANTHEM/AURORA
Builds on a trusted relationship
Evolution of pre-existing programs
Strong track record of:
• Better patient experience
• Higher employee engagement
• Health system efficiency
• Clinical quality (superior in the market)
36. Bruce Weiss, MD, MPH
VP, Health Care Strategies, UHC
GEAR UP YOUR NETWORK
Geoff Schick
Executive Director, Business Health Care Group
37. UHC & BHCG: PARTNERSHIP MISSION
UnitedHealthcare and BHCG seek a health care market where providers
compete to meet patient needs by delivering quality care at the best
cost. Patients are empowered and held accountable for their health
outcomes and improved purchasing decisions through the use of
resources and supported by plan design.
Optimal
Health Care
Market
Place
37
38. UNITEDHEALTH PREMIUM PHYSICIAN
DESIGNATION
•Longest running physician designation program (2005)
• National, evidence-based & specialty society standards
• Evaluate doctors on more than 75 conditions and 300 measures
• Physicians who fail to meet quality not eligible for cost efficiency
• Quality evaluations nationally consistent
• Accounts for more than 80% of all medical costs*
Proprietary Information of UnitedHealth Group. Do not
distribute or reproduce without express permission of
UnitedHealth Group.
38
*Data as of First Quarter 2015
TIER
1
39. GEAR UP YOUR NETWORK
SUMMARY – UHC & BHCG
Balanced Approach
High Performance Network Strategy
It takes a village
40. GEAR UP YOUR NETWORK
Kurt Janavitz
CEO, Integrated Health Network
41. WHAT IS IHN?
IHN is a broad-choice network of major
Wisconsin health systems working together
to deliver great health care.
• Eight Owner Members
• 53 hospitals
• 8,400+ providers
• 1,180 clinical locations
• 100+ Associate network members
IHN’s goal is to be a trusted health care management partner to employers
and their employees.
42. DIFFERENCE OF BEING PROVIDER-LED
Local, provider driven
care coordination
Opportunity to leverage
risk sharing mechanisms
Onsite offerings
integrated with care
delivery system
Ability to prioritize
patient access
Better incentive to be
your long-term, trusted
health care advisor
Effectively coordinate
care, even when patients
seek care across different
health systems
Collaboration allows
learnings to be leveraged
across Members
43. GEAR UP YOUR NETWORK
SUMMARY - IHN
Broad choice, integrated network offering
Model that supports sustainable, long-term savings
High quality, best-in-class coordinated care delivery
Bundled solutions or a la carte
Enhanced provider/patient relationships
Editor's Notes
To help people make more informed choices about their health care, UnitedHealthcare created the UnitedHealth Premium program. The Premium program evaluates and recognizes doctors who meet standards for quality and cost efficiency.
The quality standards are based on evidence-based medicine standards and national industry guidelines. The cost efficiency criteria are based on local market benchmarks for the efficient use of resources in providing care. Launched in 2005, UnitedHealth Premium is the longest running quality and cost efficiency designation program.
As of January 2015, the program will be available in 160 markets and 42 states. It evaluates doctors in 27 specialties, which account for over 80% of total medical spend. Specialties include family practice, pediatrics, internal medicine, cardiology, orthopedics, ENT, gastroenterology and OB-GYN, to name a few.
The Premium program is available to members at no cost. The designations are available online and are also integrated into our customer service and clinical experiences like NurseLine and Care 24.
Members in health plans that offer tiered benefits may pay lower co-pays and co-insurance amounts for services provided by UnitedHealth Premium Tier 1 physicians. These physicians have received the Premium designation for:
Quality & Cost Efficiency or
Cost Efficiency & Not Enough Data to Assess Quality
Members should review their plan documents for more details.