There is more to collegiate athletic insurance than meets the eye. While securing the lowest annual premium is important, it is also critical that you know where your money is going and what is 'behind' the numbers. Asking the following questions can help your level of understand so you can be sure you are in a good spot.
What discount networks and methods are you using to reduce paid claims?
If a student-athlete is injured and does not have sufficient primary insurance, your institution may be left holding the majority of the treatment bill. Your secondary insurance is designed to cover these charges, but the goal is to control claims as much as possible. A good insurance partner will work to reduce the total billed amount and to obtain discounts/savings on the back-end, which will minimize the long-term cost to your institution, as well as be mindful of the fragile relationships you have with local providers.
This goal can be accomplished by utilizing "national medical discounting networks." Companies such as Global Excel Management, Multiplan, First Health, PHX, OccuNet and Global Claim Resources operate by charging a percentage of the discounted amount on any given bill. Upon receipt of a claim, your secondary insurance company or claims payer will send it to their preferred network to run through their discount agreements. The claims payer will then send the discounted amount to the provider as payment. In most cases the claims payer will have several networks to choose from and will access the best possible discount for that particular claim.
Alternatively, some strategic claims payers will bypass the "discounting networks" (and their fees) by reaching out to the providers directly. Think about it, if you send 80% of your athletes to the same hospital, it makes sense to reach out to that facility directly and establish a set discount percentage or a flat fee, for specific services. Most providers are happy to do this as they appreciate the business that you send their way and are likely to be supporters of your institution. Strategic claims payers will typically initiate these discounts free of charge as they also have a vested interest in keeping your claims totals down.
Are there discount network fees associate with our savings?
The discounting of medical bills is a profitable business. There are many companies that a claims payer will access in order to find the deepest discount on a specific type of claim. These companies are typically paid a percentage of the incurred savings. Example: If the discounting company took a medical bill for a $30,000 surgery, and was able to reduce it down to $10,000, your secondary insurance carrier would pay the $10,000 PLUS a percentage (20% is common) of the savings. As a result, your secondary insurance claim would reflect a $14,000 payment ($10,000 for the surgery plus a $4,000 discount fee). Even though this fee may seem high, you are paying $16,000 LESS than what you would have paid without utilizing any "discount networks." Further, if the discounting company is not able to obtain a discount on a given claim, no fee is charged. However, most claims payers will query several discounting companies until they find one that can obtain a favorable savings.
How much have you saved us this year? Last year? Total?
A competent partner will be able to readily produce reports that summarize realized savings at any point in time. The reporting capabilities of your insurance claims payer can be a great benefit to you. Many institutions will use the savings data as leverage to negotiate support from local medical providers - this can be in the form of direct fiscal support or increased service discounts. Ultimately, these savings will lead to reduced claims and, most likely, lower insurance premiums in the future. The savings (either as a percentage of the total bill or as a fixed dollar amount) can vary widely depending on the region as well as the relationship between local hospitals and universities. However, a good insurance partner will help identify all possible savings and will readily produce reports that demonstrate the success of the program.
Do we have the right plan design or would we benefit from moving to a partially self-insured plan?
Secondary athletic insurance programs can be categorized into one of three categories: Fully Insured, Aggregate Deductible, and Completely Self-Insured.
A "Fully Insured" athletic insurance plan has been the industry standard for many years. The plan has an upfront premium that is paid annually. The insurance carrier then pays all claims that arise throughout the year, even if the total amount of claims exceeds the paid premium. This type of plan may have a specific (per injury) deductible, but most have a zero deductible. The secondary insurance will kick in after the primary insurance has paid its share, and may even cover an individual’s primary insurance deductible, copay and/or coinsurance. These plans offer the highest level of budget-ability as you incur a simple annual premium and know exactly what your out-of-pocket expense will be for that specific year.
On the other end of the spectrum is complete "self-insurance." This means that an institution does not buy any insurance protection and will pay for all medical costs out of pocket. In addition to the HUGE amount of risk that accompanies this type of plan, there is also extreme volatility. You could have a great year with very few claims and come out ahead. But then, you may have a challenging year with many large, uninsured, surgeries and be faced with a substantial amount of bills. Additionally, unless your self-insured program is tied to a university health system, it will be difficult to obtain network discounts on your own. Many institutions that self-insure will utilize a third party administrator to handle paperwork and gain access to available discounts offered through the claims payer. This can be done for an additional flat fee or as a percentage of the claims total, which will correlate to the amount of work involved.
A plan that blends elements of the two referenced above is the "Aggregate Deductible Plan," sometimes known as a "Self-Insured Retention (SIR)" plan. This plan has gained tremendous popularity over the years and is a great option for institutions that have fluctuating claims totals. With this plan an "aggregate deductible" (or ceiling) is set. This represents the maximum amount that you would self-insure before the insurance company steps in and pays 100% of claims. Simply put, your institution would pay for every claim out of pocket (with the help of a third party administrator) until the total claims (aggregate) meets the set "aggregate deductible," also known as the "attachment point." Once the attachment point has been met, the insurance carrier will commence paying all claims for the remainder of the policy. With regards to the upfront cost of this plan design, the insurance carrier still has some risk (your institution exceeding the attachment point) and therefore has to charge a small premium for that risk. The premium plus administrative fees (associated with having a TPA manage the plan and pay claims) are considered the hard/fixed costs of an "aggregate deductible plan." There are two main benefits of this type of plan. First, because the "attachment point" and fixed costs are known in advance, the athletic department can easily budget for athletic insurance. And second, other than the expense of the hard costs, if you have a great year with very few claims (as was the case in 2019-20 following the COVID-19 cancellations), YOU reap the rewards. This differs from a fully insured model where the insurance carrier benefits - no premium is refunded - in the event of a good claims year.
How many athletic insurance quotes will you provide us to review each year?
If you are working with an insurance broker (like Dissinger Reed), you should be seeing quotes from multiple insurance carriers, on an annual basis. The specific carriers may change from year to year, but it is reasonable to expect and receive up to 12 unique options from your broker annually. This will allow you and your staff to truly evaluate what the marketplace deems as a reasonable and responsible annual premium, given your lost history and plan design, for your program. Instead of focusing solely on premium, it is important to evaluate (with broker expertise) the level of service that you will receive from the proposed claims payer, the network/discounts they can attain, and the long-term stability of the partnership.
If your current partner is only showing you one renewal option, from your existing carrier, you need to reach out to us and ensure that you are being presented all available options and paying a reasonable premium. While loyalty is extremely important to us as well, when reviewing any insurance option(s), we encourage you to be mindful of the fiscal savings opportunities, the program risk and most importantly, the care and well-being of your student-athletes.