LAKEWOOD, Colo., Aug. 3 /PRNewswire/ -- Each year, ineligible dependents consume as much as 6 percent of self-funded insurers' total annual health plan expenses, costing small and large companies millions of dollars. The impact forces many employers to take painful cost-cutting measures like reducing benefits, increasing employee contributions and tacking on co-pays—steps often met with considerable resistance among employees and their fully-eligible dependents.
In fact, a recent study conducted by Lockton Companies LLC found that more than 79 percent of self-funded employers in Colorado planned to pass some portion of the increase on to their employees through plan changes and premium share increases.
With health care costs expected to jump another 9 percent in 2011, according to the latest study by PricewaterhouseCoopers, senior executives have pressed human resources and benefits managers to take every possible action to reduce plan costs.
Amid these tremendous economic pressures, Dependent Eligibility Verification from ConSova, the leader in health care cost containment solutions, can help companies reduce plan costs by as much as 6 percent, essentially mitigating more than half of the expected cost increases.
"Executives are asking whether or not the company is really doing everything it can to cut plan expenses," said Michael Smith, CEO of ConSova. "Most are probably aware that they're covering a number of ineligibles, but they may not realize just how much this unnecessary coverage costs. With near double-digit cost increases on the horizon, there's never been a better time to reduce the burden of ineligible dependents to help guard against out-of-control health care costs."
Contain Costs Now with Dependent Eligibility Verification
Dependent Eligibility Verification by ConSova helps self-funded insurers reduce the cost of providing medical benefits and stem the rising tide of health care costs by identifying and removing ineligible dependents from the roster. In as little as six to eight weeks, employer-funded health care plans can begin to realize real cost savings without sacrificing benefits or burdening employees with additional out-of-pocket expenses.
According to Towers Watson, Inc. New York, employers' use of audits or eligibility and enrollment reviews in their health plans jumped 14 percent (from 55 up to 69 percent) between 2008 and 2010. "We've seen a significant increase in the demand for dependent verification over the past few years," Smith said. "Employers have begun to realize the tremendous savings audits and verification can deliver in a relatively short period of time, especially just before open enrollment."
Smith says there is a common misconception that identifying and validating eligibility is a long-term and cumbersome process. ConSova's efficient and comprehensive program can quickly and accurately identify and eliminate ineligible dependents in less than three months for near-immediate cost savings.
The Likely Suspects
In a typical Dependent Eligibility Verification audit, Smith says ConSova finds an average of 10-13 percent of covered dependents to be ineligible, and removing these generates an almost immediate cost savings of about 6 percent. Employees' former spouses typically represent 25-30 percent of ineligible dependents identified, and they represent roughly 52 percent of the overall savings generated by the audit.
"Dependent eligibility verification is one of the top three health care cost containment solutions that can help companies save real money right away. Our clients have saved over half a billion dollars through verification audits alone," Smith said. "After the initial audit, our Plan Asset Management services provide on-going dependent verification process that is critical to protecting the employer's health care investment and the initial audit investment so that new hires and those added to the plan require verification."
Alleviate Uncertainty over Health Care Reform
Employers are already adapting to changes with expanded coverage for overage children dependents and the elimination of lifetime limits.
Many had been concerned about employers' actually losing the right to rescind coverage of ineligible dependents, but the recent HHS Interim Final Rules update on the evolving Patient Bill of Rights allows rescissions in the case of fraud or intentional material misrepresentation (including omission) with 30 days written notice to the employee of the drop in coverage. While this does eliminate retroactive drops, it still affords employers the ability to drop ineligibles and reduce future plan costs.
Even with these measures in place, Smith says all the attention being paid to coverage adjustments still does not address the underlying problem of healthcare costs.
"Most of the talk about health care reform is focused on expanding coverage and not on reducing costs," Smith said. "Proactive employers can use eligibility verification audits to cut costs now without burdening employees. Most of our clients see an ROI greater than 1000 percent and, for self-funded employers, those savings go directly to the bottom line."
For more information about ConSova's Dependent Eligibility Verification services for self-funded insurers, go to www.ConSova.com.
Founded in 2003, ConSova is one of the first companies on the market to provide eligibility verification and health care cost-containment innovation for self-insured companies of 1,000 employees or more. Eligibility audits conducted by ConSova are comprehensive and subject every employee who covers a dependent to eligibility verification. Leveraging unparalleled expertise in human resources, benefits and health care planning, the company delivers average savings of more than 15 times ROI based on work with nearly 200 clients nationwide. Unlike others in their space, one hundred percent of ConSova's services are handled within the US. For more information, visit www.consova.com.