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Path to improved health benefits attainable through funding model

Officials: Return to self-funding paves way for evidenced-based plan design

Establishing a health benefits program that will help build a culture of wellness begins with the university's return to self-funding its group medical plans, officials say. Yet employees who have been around for a while may remember that health plans were self-funded from 1989 to 1997, and that didn't end well.

So what's different this time around?

"Reading reports on that failure led me to a conclusion that the plans were mismanaged," said E. Jill Pollock, senior associate vice president and chief human resources officer. "Audit reports showed that neither university staff nor the plan oversight committee had the necessary expertise in health care management or sufficient financial reporting systems in place to properly monitor eligibility or utilization data."

One thing different today is the university's approach. Through its partnership with the University of Colorado Hospital and University Physicians Inc., the university has access to a team of world-renowned experts on health care policy and design, evidenced-based medical practices and research-based wellness and prevention initiatives.

The implementation of sophisticated human resource and financial software systems, rigorous business process checks and balances, and a single benefits administration organization all are factors positioning the university to successfully manage the self-funded plans and track usage.

The university has contracted with Mercer Consulting, a national total compensation consulting firm, to analyze the potential for a return to self-funding, and the firm's "Study of Self Funding University Health Plans, Mercer - August 2008" notes many positives. Self-funding will create the opportunity to earn interest on reserves and create cost savings for employees over the long term. Close to 95 percent of employers the size of CU (private and public sectors) self-fund their health care plans. Continued uncertainty and rising costs in the private health care market make this a great time for the university to self-fund, officials say.

Self-funding also provides a greater level of control over plan design and access to utilization data, enabling the development of plans specifically tailored to the university community and based on best practice.

Tom Denberg, M.D., associate professor in the department of internal medicine and director of the Center for Health Promotion, is a consultant to the health plan renewal team. He said the university is taking the right steps.

"Evidence-based care means the highest quality care at an acceptable cost, which translates into the best value for our health plan enrollees," Denberg said.

The university is in the process of determining rates and plan designs for the 2010-11 plan year. More information about benefits and open enrollment will appear in future issues of the Faculty and Staff Newsletter and at the open enrollment Web site, www.cu.edu/PBS/openenrollment.

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