1. The Participating Funding Arrangement (PFA)
High Deductible Reimbursement Models for Employers and Consumers

2. Where Claims Come From?

3. What is a Participating Funding Arrangement (PFA)?
The PFA Plan is a split-funded arrangement.
Includes fully-insured Medical Insurance Coverage and self-insured Cost-Sharing Coverage.
The PFA is designed to “trim the fat” off your traditional group health plan.
The PFA allows employers and employees to be shareholders in controlling their collective health care costs. This allows the group health plan the ability to create plan assets they otherwise would have forfeited to the insurance company.

4. What is a Participating Funding Arrangement (PFA)?
How A PFA Works
Step 1: Purchase A Low Cost Fully Insured Health Plan
Low Premium Cost
Problematic Out of Pocket Costs
Step 2: Buy Back Benefits Using PFA
Uses Premium Savings To Lower Problematic Out Of Pocket Costs
Combined PFA Split-Funding Arrangement
Lower Premium Cost
Lower Out of Pocket Costs

5. Participating Funding Arrangement (PFA) – Case Study
Step 1: Purchase a low cost fully insured health plan
Company Name
ABC Company (Current)
ABC Company (Low Cost Health Plan)
Carrier:
Tufts Health Plan
Blue Cross Blue Shield
Plan Design:
HMO $500 Deductible
PPO $2,000 w. 20% coinsurance
Deductible:
$500 / $1,000 Family
$2,000 / $4,000 Family
Copays:
$25
Coinsurance:
None
20%
RX Copays:
$15 / $30 / $50
Out-of- Pocket Maximums:
$5,450 / $10,900 Family

6. Participating Funding Arrangement (PFA) – Case Study
Step 2: Buy back benefits using the PFA
Company Name
ABC Company (Current)
ABC Company (Low Cost Health Plan + PFA Buy Back
Carrier:
Tufts Health Plan
Blue Cross Blue Shield
Plan Design:
HMO $500 Deductible
PPO $2,000 w. 20% coinsurance + PFA Buy Back
Deductible:
$500 / $1,000 Family
Copays:
$25
Coinsurance:
None
RX Copays:
$15 / $30 / $50
Out-of- Pocket Maximums:
$5,450 / $10,900 Family

7. Participating Funding Arrangement (PFA) – Case Study
Sold PFA Plan Design & Premium Costs – Combined Savings
Combined PFA Savings Analysis
PPO $2,000 w. 20% coinsurance Premium
$660,000.00
PFA Expected Premium (Claims + Administration)
$156,570.00
Combined Premium Costs
$816,570.00
Current Tufts Health Plan Premium
$880,000.00
PFA Savings
$63, (Under Current Premium)

8. Participating Funding Arrangement (PFA) – Case Study

9. Participating Funding Arrangement (PFA) – 4 Year Case Study – Premium Comparison (65 Subscribers)
Traditional vs. PFA
Estimated Annual Premium Savings: $95,430
Cumulative 4 Year Savings = $381,720
** Assumes both Traditional and PFA options received same dollar amount increase to premiums from insurance carrier.

10. Participating Funding Arrangement (PFA) – 4 Year Case Study – Surplus / Premium
2011
Premium Performance: $62,000 Decrease
Projected PFA Claims: $150,330
Actual Claims Paid: $89,700
Surplus of $60,630
2012
Premium Performance: $13,600 Increase
Projected PFA Claims: $124,800
Actual Claims Paid: $83,500
Surplus of $41,300
2013
Premium Performance: $12,000 Increase
Projected PFA Claims: $115,620
Actual Claims Paid: $75,800
Surplus of $39,820
2014
Premium Performance: $38,500 Increase
Projected PFA Claims: $90,000
Actual Claims Paid: $85,000
Surplus of $5,000
1st Year Savings = $122,630
2nd Year Savings = $27,700
3rd Year Savings = $27,820
4th Year Added Cost = $33,500**
** Group went through 4 renewal cycles before seeing an added cost to the plan.

11. Participating Funding Arrangement (PFA) – 4 Year Case Study – Surplus Performance (65 Subscribers)

12. PFA 4 Year Surplus / Premium Performance Performance
Participating Funding Arrangement (PFA) – 4 Year Case Study – Surplus / Premium (65 Subscribers)
PFA 4 Year Surplus / Premium Performance Performance
Total Premium Increases
$2,100
Total Surplus Accrued
$146,750
Net PFA Performance
$144,650 (Surplus /Plan Asset)
Est. Cumulative Premium Savings
$381,720
Est. Net Savings
$528,470
Net Increase
0.4%
Average Annual Increase
0.1%

13. Participating Funding Arrangement (PFA) – 4 Year Case Study – Surplus / Premium (65 Subscribers)
Case Study Highlights:
5 years with no benefit change
4 years with no carrier or benefit change
5 years with a 0.4% increase to their payroll rates/contribution
Created a $144,650 plan asset they otherwise would have given to the insurance companies
OVER A HALF MILLION DOLLAR OF ESTIMATED SAVINGS!

14. 3 “ROI” Based Reimbursement Strategies Employers Can Implement NOW To Reduce Health Care Costs
Reimbursement Specialists, Inc.
A Comprehensive Benefit Administrators Company

15. 3 Healthcare Consumer Types
Healthy – Low Risk
Transitional – Moderate Risk
Chronic – High Risk

16. Where Claims Come From

17. One Size Doesn’t Fit ALL
There is no silver bullet to controlling health care costs.
You need multiple strategies and tools working in synergy with the traditional health insurance AND medical delivery system.
You need to impact all 3 consumer types in order to effect costs in a meaningful way.

18. 3 Impact Strategies for Cost Containment through RSI
800MD – Telemedicine Program
(Consumer Impact: All 3 Consumer Types)
World Care 2nd Opinion Program
(Consumer Impact: Chronic – Highest Cost)
Shields Simply Save
(Consumer Impact: Transitional and Chronic)

19. 800MD - Telemedicine
70% of Office Visits can be handled via Telemedicine
According to the US Census Bureau the average working-aged adult has 3.9 visits per year.
According to the Agency for Healthcare Research and Quality, an average visit to a doctor’s office costs $199 and an outpatient hospital visit is $1,275.
Weighted average cost = $240 Per Visit.
Average cost of Telemedicine = $38 Consult Fee AND is not run through traditional insurance.

20. 800MD Cost Containment Goal: Change the Delivery System
3 years for full implementation with employees.
Impact 1 out of every 5 office visits.
Employer Pays the full $38 Charge for 800MD Consult Fee (Optional and Flexible)
Sample Company: (200 Employees with 400 Members)
- Total Annual Premium = $2,000,000
400 x 3.9 visits = 1560 visits per year
1560 / 5 = 312 visits
312 visits x $240 = $74,880
312 visit x $38 = -$11,856
Total Estimated Savings = $63,024
**Savings is the equivalent to removing a high claimant off of your “Large Loss Report” or 3.2% of total Premium

21. World Care 2nd Opinion Get it right the first time.
15% of the time diagnosis changes.
70% of the time treatment modified.
Eliminates the waste on high cost treatments.
8 working day average turnaround time.

22. World Care 2nd Opinion Cost Containment
Member wanted to know risk in other breast,
treatment options, and timing of appropriate surgery

23. Shields Simply Save Average saving of $1,400 per scan vs. hospital
10% of population will need an MRI this year
20 Convenient MA Locations and growing
Customizable tool kit to help employees change the conversation with their doctors
Cost comparison tools / saving calculator

24. Shields Simply Save Cost Containment
Goal: Change the Delivery System
3 years for full implementation with employees.
50% of MRIs and PET Scans done through Shields MRI
Employer Pays $50 Incentive for use of Shields MRI (Optional and Flexible)
Sample Company: (200 Employees with 400 Members)
- Total Annual Premium = $2,000,000
400 x (5% MRI + 5% PET) = 40 Scans per year
40 Scans x $1,400 Savings = $56,000
40 Scans x $50 Incentive = - $2,000
Total Estimated Savings = $54,000
**Savings is the equivalent to removing another high claimant off of your “Large Loss Report” or another 2.7% of total Premium

25. Benefits of Adopting Multiple Strategies
Goal: Adopt All 3 Strategies
3 years for full implementation with employees.
Sample Company: (200 Employees with 400 Members)
Total Annual Premium = $2,000,000
800MD Savings Annual = $63,000
World Care Saving Example = $41,000
Shields Savings = $54,000
Total Estimated Savings = $158,000
**Savings is the equivalent to removing 3 high claimant off of your “Large Loss Report” or another 7.5% of total Premium

26. Questions ?

27. Comprehensive Benefit Administrators
Thank You!
Michael McKenna
President and CEO
Comprehensive Benefit Administrators
93 Longwater Circle
Norwell, Ma 02061
Toll Free: (877) ext. 207
Fax: (774)