Does Your Health Plan Meet the Needs of ASO Employers?
Most employers choose to self-fund health benefits for their employees. In 2023, for example, 65 percent of covered workers were in a self-funded or administrative services only (ASO) health plan, up from 52 percent 20 years ago. At large firms, the number climbed to 83 percent last year.
Why Employers Choose Self-Funded Health Plans
There are many reasons why employers prefer ASO plans, including:
- Cost Impactability: With annual premiums for employer-sponsored, family health coverage reaching nearly $24,000 in 2023, employers are more motivated than ever to control costs. Near real-time visibility into claims and utilization trends means ASO employers have access to levers to control costs, even in the short-term. They also possess a deeper understanding of trends and have a greater ability to predict costs and potential impacts.
- Administrative Expense: Self-funded plans are exempt from the 2-3 percent state premium tax that fully insured plans pay. Administrative costs are thought to be 3 to 5 percent lower than a fully insured plan, which range from 15 to 20 percent, according to the International Foundation of Employee Benefit Plans(IFEBP).
- Flexibility: Self-funded plans can be more flexible than fully insured plans due, in part, to less regulation.
- Customization: ASO employers can tailor a plan to meet healthcare needs and reduce overall claims expenses for their workforce. This allows them to contract with providers or provider networks that are best able to meet the healthcare needs of their employees. In the case of multi-state employers, they also have the ability to use the same health plan for all employees across jurisdictions.
- Claims Transparency and Plan Data: Self-funded employers have access to claims data, enabling them to analyze utilization, identify cost drivers and areas of improvement, and use tailored cost-savings measures such as diabetes, musculoskeletal, and weight management programs.
What ASO Employers Want from Health Plans
ASO employers look to the health plans they contract to deliver on cost impactability, administrative expense, flexibility, customization, and claims transparency and plan data the reasons they choose to self-fund health benefits. In our experience, ASO billing often falls short. Many plans continue to use spreadsheets and other manual processes and even more do most of their ASO billing off their platform.
Instead, ASO employers are seeking:
- Consolidated Billing: Customers want simple, transparent, and consolidated invoicing experiences across the full set of benefits and services. In other words, they expect healthcare invoicing to be comparable to their retail experiences.
Cost: Employers want better control over costs and results. They expect timely and accurate calculation, tracking, and reconciliation to meet regulatory and audit requirements. Health plans with better alignment of systems and processes are able to reduce the IT and administrative costs associated with generating and managing the billing process. For example, ASO employers are interested in stop loss functionality to determine when their group has reached or is nearing their maximum limit.
The savviest employer groups want to understand high costs, patterns in care, and health and wellness opportunities across their entire population. In short, when an employer has two or more health plans, there is a need to consolidate the analytics. They are looking to modern billing solutions to aid in this process.
- Growth: Increasingly, ASO customers want more extensive and personalized employee options to better compete. For many, this means substituting point solutions for traditional ‘off the shelf’ products and using innovative pricing models. In turn, to improve customer satisfaction, retain employers, and attract new ones, health plans must efficiently manage complex billing processes, future changes and buy up programs all in one solution. The ability to configure quickly and administer complex and evolving benefit designs is pivotal. Self-funded businesses can, and often do, change their benefits based on prior year healthcare spend, projected spend, and employee needs for the coming year.
- Continuity: ASO account complexity has resulted in plans creating manual solutions and semi-automated processes, increasing business continuity risk. Automation reduces and limits this risk.
To meet the needs and growing expectations of ASO employers, health plans are turning to NASCO for its MembersEdge solution. In the words of a Blue Plan Vice President of Claims, Enrollment and Program Management,
MembersEdge has allowed us to significantly reduce the cost of our ASO billing function, as well as new healthcare products in the market.”
For one plan, MembersEdge led to a 25 percent decrease in costs associated with ASO billing and a 16 percent improvement in efficiencies.
To learn more about MembersEdge, visit: https://www.nasco.com/enrollment/.
