If the above paradigm were to be static, BBCG's position would likely have stayed the same --- but it clearly is not. TPA's are narrowing the claims cost differential via investment and innovation while in recent years the national ASO carriers have shown only nominal incremental advancement. Lack of substantive change in morbidity statistics objectively supports this conclusion. That lack of innovation could be the result of a correlation between today's public ownership of the national ASO companies and a relative lack of available high-risk capital resulting from investor earnings per share expectations. The early, and high-risk, managed care developments of the 1980's were frequently done by mutual insurance companies with less investor oversight. A "dry hole", although something to be avoided by management, had less consequence among the mutuals and they drove the first and second generation health care cost containment reforms (i.e., BBCG considers the present era as fourth generation).  In addition to narrowing the claims differential, TPA's are maintaining a significant admin cost advantage, although it may be diminishing as new programs bring the need to pass along additional costs. Lastly, TPA's still must cede relative lack of integration and discount bargaining strength. Even there, the TPA's willing to make substantial investment to become a VMO are gaining ground quickly in the area of seamless integration. The best TPA's may well have wrested the short-term and mid-term total cost advantage from the ASO carriers.

The discussion of the claim cost paradigm shift between ASO carriers and TPA's is much too broad for extensive treatment here. Please see BBCG's "VMO's Force the Paradigm Shift" for details regarding the impact of the emergence of the Virtual Managed Care Organization.  

Key requirements of the paradigm shift suggested by a leading TPA-based health care company are below. Although the list may appear on the surface to mirror existing ASO carrier initiatives, there are, in fact, many substantive differences, both in process and the manner in which employees interact with them.

1. employee behavior modification
2. promotion of healthier lifestyles
   • smoking cessation
   • weight control
   • free risk element screenings
   • plan deductible credits for program participation
3. long-term commitment on the part of plan sponsors
4. administrator scale required for technology, capital, processes and quantitative tracking
5. highly effective and on-going education programs
6. prospective identification of risk factors via predictive modeling
7. non-threatening intervention following identification
8. a caring and intimate employee service experience to enhance employee buy-in (critical element)
9. prevention or redirection of intense services to lowest intensity/modality
10. broadest possible use of disease management protocols (i.e., 40 diseases versus more traditional 4-5 high claim dollar diseases)

Key programs associated with above:

1. Personal wellness consultant for every plan
2. Customized wellness programs per plan
3. Quantified ROI ("return on investment") for each wellness initiative
4. Free voluntary on-site health assessments for:
   • blood chemistry
   • blood pressure
   • cholesterol screening
   • body mass index calculation
   • general health risk assessment
   • coronary risk analysis
5. Personalized health assessment report back to every participant in the on-site health assessment program
6. Follow-up invitation for personal 24x7 health coaching (voluntary and non-threatening nature critical element)
7. Financial (or other) incentives for:
   • on-line health assessments
   • timely physical, dental and vision exams
   • attainment of fitness goals
   • purchase of smoking cessation products (patch, gum, etc.)
8. Loadable debit card provided to employees which can have balance periodically credited by plan sponsor as employees accomplish certain desired behaviors

Some supporting thoughts:

1. The 80/20 claims rule will continue (i.e., 80% of claims incurred by sickest 20%, or less, of the plan's participants).
2. ASO carriers have not proven long-term cost controls with existing programs.
3. High-touch programs are likely to be more effective than anonymous 1-800 service center approaches.
4. Approximately 90% of all claim dollars result from diseases that are lifestyle related and therefore are theoretically preventable.
5. The "loose affiliation of vendors" TPA model is being replaced by a Virtual Managed Care Organization ("VMO") model with greater seamless integration of sophisticated services.
6. It is suggested that the average ROI on preventative initiatives is 6:1.
7. One major procedure avoided or directed to a less intense modality can cause the ROI to far exceed the 6:1 average.

All the above being said, not all TPA techniques are created equal. The results are often hard to measure prospectively. BBCG encourages you to be discriminating when making these choices. VMO's are still pretty much in the development stage and there will be major differences from one to another. Often the best measure is how professional stop-loss carrier underwriters value the innovations for a given entity.

Please email us at selfinsured@bocabenefits.com if we can assist with your self-insured plan.