When transitioning to a self-funded health plan, one critical aspect to understand is claims administration—the process of handling employee healthcare claims. Unlike fully insured plans, where the insurance carrier takes responsibility for claims, self-funded plans shift that responsibility to the employer. Here’s a breakdown of how claims are processed and managed in a self-funded model:
1. Submission of Claims
When an employee receives healthcare services, the provider submits a claim to the third-party administrator (TPA) or a claims processor partnered with the self-funded plan. The TPA acts as the operational backbone, ensuring the claim gets routed correctly for processing.
2. Adjudication Process
The TPA reviews the claim to ensure compliance with the plan's rules and eligibility criteria. This step involves:
Verification: Ensuring the service is covered under the plan.
Cost Review: Applying negotiated provider network discounts to the claim.
Error Checks: Identifying coding errors or duplicate claims.
3. Payment of Claims
Once approved, the employer’s designated fund (usually held in a claims account) is used to pay the healthcare provider. Stop-loss insurance kicks in if the claim exceeds a specific threshold, protecting the employer from catastrophic costs.
4. Reporting and Insights
Employers receive detailed reporting on claim trends and spending, enabling them to adjust plan designs, negotiate provider contracts, or implement wellness initiatives to manage costs effectively.
Why This Matters
Understanding the claims process is essential for employers considering self-funding. By actively managing claims, employers gain greater control over healthcare expenses and can design benefits tailored to their workforce. Partnering with a knowledgeable TPA ensures smooth administration, allowing employers to focus on their bottom line while providing quality care to employees.
Curious about self-funded health plans? Reach out to learn more about how claims management can help your business save money and improve benefits.
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