The cost of group health coverage continues to escalate. Both employers and employees are confronted with choices between higher coverage costs and reduced coverage. Other approaches such as wellness programs and consumer-driven health care options (health savings accounts and health reimbursement accounts) can help. Often overlooked is a cost control mechanism already included in your group health plan – the plan’s own reimbursement (or subrogation) provisions.
Your self-funded group health plan has “subrogation” provisions that allow the plan to recover amounts paid to a covered employee or dependent by a third party. An example would be payment by an insurance company for injuries suffered in an automobile accident. If your plan pays medical claims related to the accident, it has a right to share in any payment made by the insurance company to your plan participant. Any subrogation recovery like this saves your plan claims dollars.
Similar provisions apply to medical claims paid through the Medicare or Medicaid programs. If the accident victim’s medical bills are paid through either of those programs, it is likely that the claims will be reimbursed from any payment received from an auto insurer or other third party.
How are your plan’s subrogation claims currently handled? Chances are an insurance company or other third party administrator (“TPA”) that processes your plan’s claims charges a fixed fee to identify subrogation claims and to collect amounts due under your plan. Again, any such collection directly reduces the cost of providing benefits through a self-funded plan.
There is another approach to subrogation that can eliminate fixed fees paid for subrogation services and very well may result in increased subrogation recoveries. Instead of paying for subrogation services on a fee for service basis, consider engaging a contingent fee service provider. Contingent fee subrogation services cost your plan nothing unless there is a recovery. Combined with an immediate savings if the plan’s TPA cooperates by waiving its subrogation fees, this approach can save administrative costs now and increase subrogation recoveries later on. So, when the issue of group health cost control comes up, add contingent fee subrogation services to the short list of cost control measures that could help your plan operate more efficiently for both the sponsor and plan participants.