Milliman has extensive experience helping providers manage risk through stop loss coverage. Self-funded employers have purchased stop loss coverage for many years. In today’s environment, more and more providers are finding they also need to consider stop loss coverage.

As there is a shift from fee-for-service reimbursements to value-based contracts, the insurance risk is passed on to providers—and providers are responsible for meeting costs targets. There is the potential for significant lost revenue if cost targets aren’t met. Providers may not be able to effectively manage and avoid costs from high risk members, and circumstances outside a provider’s control may drive total costs higher than anticipated.

Milliman can advise your company on which coverage best suits your needs:

• Specific stop loss. Mitigates/removes risk of extremely large claims on individual people.
• Aggregate stop loss. Mitigates risk of overall costs being higher than expected. Typically requires the provider to accept a significant corridor of risk.
• Aggregating specific stop loss, a blend of both specific and aggregate stop loss. Guards against multiple large claims or an excessive number of moderate claims.

Stop loss may be helpful in meeting risk requirements in those states that require actuarial certifications for providers taking risk. In addition, the Centers for Medicare and Medicaid Services may require providers with Medicare Advantage risk contracts to obtain stop loss coverage.

Providers need to be realistic about and understand the variance of outcomes, and Milliman has tools to help providers gain this understanding. Pricing may vary widely year to year or carrier to carrier and is heavily dependent on underwriting judgment. Comparing rates may not always be easy. Milliman has a pricing tool, ExPrT, which can assist in price comparisons.