Commercial Products

There are two types of commercial insurance products: fully-insured and self-insured (or ERISA). Learn about each product’s implications for HCT and advantages and disadvantages below. This information will help you understand the difference between the two types of insurance and questions to ask to ensure you receive appropriate reimbursement.

Always find out which type of insurance product your patient has as this will impact coverage, network, and other requirements for HCT. 

Fully Insured: Group or Individual

Fully insured plans can be purchased by an employer (group) or an individual. These plans have a defined benefit set and must provide coverage as indicated by any mandates of the state in which the plan was filed. In the fully insured plans, the insurance company takes the financial risk for members enrolled in these plans.

Individuals and small groups (less than 50 employees) can purchase fully insured coverage on the Marketplace. Many different types of fully insured plans can be purchased from the payer directly, or on the Marketplace, such as a Health Maintenance Organization (HMO), preferred provider organization (PPO), Point of Service (POS) plans, etc. The Marketplace plans may have special considerations, limited coverage for parts of HCT process, as well as high cost sharing (co-pays, co-insurance, and deductibles). 

Implications for HCT

  • Many HCT indications covered
    Most traditional fully insured plans (non-Marketplace) cover many indications for HCT and are continuing to expand the list based on the evidence as well as to be competitive with other payers.
  • Potential for smaller networks in the Marketplace
    In any health plan, members must use specific provider networks contracted by their payer and dictated by their specific plan, which can sometimes limit access. In particular with Marketplace plans, networks may be smaller than other products for various reasons. The result of the smaller networks is that there may not be a transplant center within every network, and Marketplace products do not provide coverage for out of network care.
  • Affordability concerns
    The insurance market is continuing to experience an increasing number of cost sharing plans which have higher deductibles, co-pays, and other out of pocket expenses. These can create financial hardship for HCT recipients who often have significant and ongoing medical expenses. Premiums for all plans also continue to rise.

Advantages

  • The commercial insurance company assumes financial risk.
  • The larger pool of people in the plan helps keep rates lower (less impact with a few large medical expenses).
  • Predictable premiums.
  • The best HCT coverage comes from employer based, non-exchange plans.

Disadvantages

  • "Off-the-shelf" choices and service; unable to customize for employers.
  • Often only pay for indications which are clearly stated in their published medical policy.
  • Must include coverage specified by state mandates, which can drive up the cost of premiums.
  • Must pay premium tax, which drives up cost for plan members.
  • There is no upside for an employer if medical costs are well contained. The profits go to insurer, not employer.
  • Employers may not have access to their own employee’s claims data, making it difficult to analyze trends and understand where high costs are coming from.

Self-Insured or ERISA

Self-insured or ERISA products are created for companies who pool money and create a benefit set for their employees. The company itself assumes the financial risk for the medical costs of their employees. Self-insured plans are exempt from state laws, including reserve requirements, mandated benefits, premium taxes and some consumer protections, which allows them to keep premiums and other costs low for employees.

Many unions are self-insured. In some cases, several individual unions pool their money together when creating their self-insured plans; these are called Taft Hartley plans. For example, several teachers' unions may come together to create their own self-insured plan which includes a larger pool of people to decrease risk, and keep premiums low.

Prior to the ACA, self-insured plans had different appeal levels and requirements than fully insured plans. Requirements set forth in the ACA have changed that, and now many self-insured plans must follow the post-ACA appeals standard process.

Do not make assumptions about coverage or the appeals process for self-insured patients. No two plans are identical. 

Implications for HCT

  • Variation in coverage and benefits
    Since employers can choose what to cover in their benefit plan, these plans may not cover the same indications or transplant expenses as fully insured plans (for example: search, travel, lodging etc. costs may have limitations, or no coverage).
  • Potential coverage caps
    Self-insured plans may cap coverage or only cover portions of the HCT process (i.e. some plans may cap travel and lodging costs at $10,000).

Advantages

  • The employer controls what benefits are offered. The third party administrator (TPA) company administering the plan has no say or control over what is in the benefits offered.
  • Less money is spent on administrative costs, more money goes directly to pay medical claims.
  • Employers can contract directly with providers or health systems and negotiate competitive rates. For example, an employer may require all of their employees to go to a certain center for care.
  • Ability to customize plan offerings (for example: select preferred vendors for care management).
  • Ability to create dedicated customer service and set service guarantees with vendors.
  • Ability for employer to innovate coverage offerings, such as offering telemedicine for free to avoid emergency room visits.

Disadvantages

  • The employer is at risk for financial expenses of their employees. If the plan experiences high cost care, the premiums will increase for all employees to cover the high costs. Sometimes this can mean very high premiums, or a quick rise in premium costs.
  • An ACA excise tax on certain plans, which will go into effect in 2022, will make self-insured plans more expensive to run, as they will be taxed if they offer coverage above the government's allowed amount.
  • Financial reserves are needed to start the program. The company must have enough money in reserve to make sure they can cover the cost of the care utilized by the employees.
  • Requires a long-term commitment. Setting up self-insurance isn't an easy task and takes several years to get running smoothly.