Shifting Focus When Self-Funding
Financial management of a self-funded health plan is very different than that of an insured plan. Unlike fixed insurance premiums, cost control “levers” for claims spend can only manage potential risk. Reducing risk is different from reducing cost. Unlike a fixed cost, risk management cannot be quantified for a meaningful cost comparison from prior years. Risk Management controls are like guard rails which prevent or reduce future risk. The variability of drug pricing and provider charges, as well as the volatility of high-cost claims, make it impossible to isolate, predict, and accurately account for a correlating result.