03.19.24 Featured Blog

How To Leverage Supplemental Stop-Loss for Better Renewal Outcomes

In the dynamic landscape of self-funded groups, the annual stop-loss renewal underwriting process is critical. The evaluation of current-year claims and ongoing risks sets the stage for negotiations.

Specialty medications are an important consideration during the stop-loss renewal process; they have the potential to influence both the rates and risk factors. Let’s unpack the impact of supplemental stop-loss insurance on regular stop-loss negotiations and shed some light on how this collaboration can turn the tide for self-funded employers.

Stop-loss renewal underwriting is an intricate dance of evaluating the past and forecasting the future.

The threat of one or more unexpected and potentially budget-busting specialty claims looms large, as ongoing claims for these high-cost medications can be extensive–we’re talking years of sustained financial impact. Underwriters, keen on assessing the risk, consider both the current large claims and the prospect of ongoing specialty claims for the next year. This dual consideration often leads to increased rates and the possibility of lasers (higher deductibles on ongoing claims).

However, a strategic move comes into play when a self-funded company can showcase the presence of specialty supplemental stop-loss, leading to discussions with the stop-loss carrier. This dialogue holds the potential to mitigate much of the carrier’s risk, resulting in lower rate increases and, in some cases, eliminating lasers altogether.

In the realm of stop-loss renewals, the spectrum is broad – from good to bad and, sometimes, downright ugly.

Good renewals, often in single digits, contrast sharply with bad ones that may reach caps of 40 or 50%, and in extreme cases, even 100% or more. When these less-than-ideal renewals are fueled by ongoing specialty claims, the introduction of supplemental stop-loss coverage to protect against the risk of unexpectedly high-cost specialty drugs becomes instrumental.

This supplemental coverage has the potential to subtract hundreds of thousands to millions of dollars off the stop-loss carrier’s burden, turning an ominous 100% renewal into a manageable 8-12%, providing much-needed relief for self-funded employers.

Beyond the numbers, the success of stop-loss negotiations hinges on understanding key factors, such as addressing high-dollar specialty risks and navigating the pre-existing limitation factors. While coverage may have limitations for pre-existing conditions, the effect diminishes over time. New hires or those with new diagnoses have no pre-existing limitations, offering a justification for the stop-loss carrier to lower rates.

Stop-loss carriers have shown openness to discussions and discounts in rates.

Each renewal is unique, influenced by the group’s risk profile and the relationship dynamics among clients, brokers, and stop-loss carriers. The ongoing discussions, often progressing through various phases, underscore the importance of a comprehensive understanding of supplemental coverage for optimal results.

Supplemental stop-loss insurance mitigates risk in several ways.

  • Minimizing coverage gaps and managing costs: While traditional stop-loss sets limits, supplemental stop-loss fills the gaps, offering additional coverage for high-cost claims and aiding in cost management.
  • Influencing negotiation dynamics: Predictable specialty coverage and expanded protection for specific conditions empower employers during negotiations, potentially leading to improved terms.
  • Addressing gaps in traditional coverage: Whether dealing with increased rates, added limits, or exclusions for high-cost, chronic conditions, supplemental stop-loss becomes a vital tool.

Mastering negotiations in the self-funded world requires a nuanced understanding of the intricate interplay between traditional and supplemental stop-loss insurance. As we navigate the complexities of underwriting, renewals, and ongoing discussions, the impact of supplemental stop-loss emerges as a beacon of financial resilience and negotiation empowerment for self-funded employers.

RxPharmacy Assurance is a supplemental stop-loss solution that goes beyond conventional coverage, incorporating high-touch clinical intervention programs that ensure appropriateness and eliminate waste, fortifying the protective shield against uncertainties. When compared to traditional coverage, RxPharmacy Assurance is a relatively low-cost solution for protecting and shielding plans.

Contact us today to get a full understanding of our supplemental stop-loss solution, how it works, and the benefits it can provide to self-funded employers of all sizes.