Self-funded health plans can be a lot to handle for an employer with a lot of employees. Businesses need the expertise of professionals who can look at each and every employee’s health plan use to discover, recover, and remove the waste, abuse, and fraud in their specific plans, and recover 1-3% of paid claims. Health Decisions, Inc. is a leader in healthcare cost reduction. They conduct auditing which covers data mining, enrollment audits, and claims audits, as well as routine performance monitoring for a fixed price.

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Streamlining And Reducing Costs Of Self-Funded Health Plans with Si Nahra

We’re in the healthcare sector with Health Decisions Inc. and joining us is Si Nahra. They specialize in reducing healthcare costs for large companies and we’re excited to have him here. Si, how are you?

Very well. Thank you for the opportunity.

The healthcare cost reduction realm is somewhat complex, and you specialize in self-funded health plans. I’m going to have you give a brief explanation of that and also give us some background on your company, Health Decisions.

We started Health Decisions in 1986 and our purpose has not changed since then. We work with employers that choose to self-fund their health benefit. We allow them to fully exercise the legal responsibilities they have as plan fiduciaries by helping them find the waste, abuse, and fraud that’s specific to their health plan. We do that by putting existing data that they have every right to use to find that waste, abuse, and fraud and help them develop strategies for either getting it back or getting rid of it.

What exactly is self-funding and how common is it?

Self-funding is very common as you move up in employer size. Historically, below 100 employees was mostly insured where you simply pay a monthly premium for the employees you’re covering and the risk is on the insurer to use that money to pay the claims and make a profit if they can. The insured arrangement, the insurer is at risk. In a self-funded arrangement, the employer themselves or a trust that they set up is legally liable for those claims. They aren’t an insurance company, but they do have responsibilities like an insurance company to make sure that the benefit plan claims are paid appropriately. In a way, that can be understood by what the federal law calls a prudent person. Self-funding, you’re starting to see it go into the smaller groups as well. Above a hundred, most employers choose to self-fund. Those that don’t, pay more. Self-funding is simply cheaper than insuring once you get up into those number of employees.

When we see the term self-funded, we assume that means that they’re doing everything themselves. You said there are still insurance companies involved, correct?

Even though the employer and the plan that they set up to cover their employees’ health benefits is now legally responsible and at risk for covering the health expense; virtually all of them (there are a few employers here and there that self-administer these plans) but most hire what’s called a third-party administrator. That third-party administrator could be Blue Cross Blue Shield. It could be United, could be Aetna, but they are simply helping the plan process. What used to be called paperwork is now electronic transmissions from the providers that are taking care of your employees. They send those claims electronically to a payer and the payer processes them, but sends the bill back to the employer and says, “Here’s what we processed. Here’s how much you owe.” In that chain of events, from a person needing to get care to the provider providing it, then billing it, then the third-party administrator administering it, a lot happens. Just people being people, humans being humans. Waste occurs, errors, mistakes, typos, all kinds of things. Now that it’s all computerized, it stays there forever until someone comes in to take a look.

Automation has also led to more abuse because providers can send in large numbers of claims electronically. You’ve seen a lot more aggressive billing from providers and an allowance for that aggressiveness from many of the payers nationally. There’s more abuse. Some of it crosses the line into fraud where they know what they’re doing, and they’re doing it with illegal intent, but that’s pretty rare. There’s a growing amount of waste and abuse that we help our clients find. If it is fraud, we help them identify that and pursue that through legal channels. The other waste and abuse that we find are all things that our self-funded fiduciary, the employer, can take action on and see results in six to twelve months. So they can get rid of that waste, abuse, and fraud in whole or in part in six to twelve months.

Doesn’t a company have an in-house auditor or a CPA that may or may not be looking into these things?

OW 003 | Self-funded Healthcare

Self-funded Healthcare: What used to be called paperwork is now electronic transmissions from the providers.

CPAs do a very important function. We’re not CPAs at Health Decisions, we are claim auditors. The CPA reconciles the billing that they got from the payer, let’s say Blue Cross, to the checks that the company wrote back to Blue Cross. Behind that invoice from Blue Cross are tens and hundreds of thousands of transactions for enrollment changes, mostly claims sent by providers. The Health Decisions software examines every one of those hundreds of thousands of transactions against a series of criteria that over the 32 years we’ve been in business, we know detect waste, abuse, and the potential for fraud. We look at every single one of those hundreds of thousands in some plans into the millions of transactions that no CPA would. That’s not their job.

How about these large service providers? They’re insurance companies, but they stepped in when the company doesn’t want to self-administer like Blue Cross Blue Shield and United. Don’t they have a self-auditing process in place to catch these errors?

They do and one of the things we look for is how well is that functioning. The payers, while they do a professional job, they have to choose between serving the providers that are billing them and the employers. What’s happened is that they are pretty much favoring the providers. That’s where the providers are taking advantage of that and have become more aggressive in their billing. The payers are not legally responsible for the plan. Even if it’s United or Cigna or Aetna or the Blues or any TPA you want to name, all of them say the same thing, that the employer is responsible for the funding and running of this self-funded health plan. We just work for them. In that capacity, their audits are to look to see if there’s things in their process, but the other areas, enrollments, they don’t look at it all and provider billing, which is another area where you look at very closely. They give providers passes on a lot of things. This is an alarm we’re trying to sound. This area of very aggressive provider billing has gotten much worse.

We have the virtue of 32 years of history. When we first started doing these reviews, most of the waste and abuse was in the area called coordination of benefits where there was another plan with a family or Medicare. There was another plan involved. That still exists, but it’s much smaller now. We’re seeing a lot more error around enrollment maintenance and provider billing. The patterns that you see of: where is the waste and abuse and the potential for fraud, those patterns change over time. We’ve had the experience of dealing with a lot of those over the years, so we can look for a broad range of things, but the one area where we’re seeing the fastest growth is in very aggressive provider billing. They are hiring these folks called Revenue Cycle Managers that push as much of the claim volume as they can and nobody’s on the other side pushing back. That’s where we help the employers that want to manage their self-funded plan liability.

We’ve talked a lot about waste, abuse, and fraud. Can you give us some quick examples of what a client might expect for overall cost reduction and maybe a success story or two?

We’ll find even in a very well-run plan, about 3% to 5% of waste and abuse and within that, the potential for fraud. Each of these is typically in three areas. Enrollment. If it’s the first time you’re looking at a plan, most of the waste is going to be an enrollment error that you’re going to find. We find about 4% to 12% of people enrolled in a plan are no longer eligible. If you go back and ask them, “Can you confirm that you’re still eligible for this plan?” That amount of excess that we pull out of the plan, that’s just pure waste.

In the abuse area, we are seeing the payers are doing a very professional job, but they are allowing the providers to bill pretty much as they want, to the point where you need to have somebody that’s advocating the employer or the plan’s point of view in that economic exchange. The success stories we’ve had are ones where you can recover some of the money initially, but you need to think of this as a couple of years process. You find it, then you recover what you can, and then you monitor what’s left. It’s that oversight — that knowing that they’re going to be watched — that alters the payer and the provider behavior and also helps you keep up-to-date on your enrollment. You find between 3% and 5% of excess costs in these plans, which for plans with hundreds of employees, it’s a lot of money.

I want to make sure we have your contact information and people can contact you to get an estimate before the project starts.

We have fixed-fee pricing. We make it known up front what it’s going to cost. No surprises.

We appreciate Si Nahra being with us. The phone number there at the office is 734-451-2230, Health Decisions, Inc. is the company. The website is We appreciate you being here today and we want people to reach out to you to get more information.

Thank you. I appreciate it.

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About Si Nahra

OW 003 | Self-funded HealthcareDr. Nahra, President and Co-founder of Health Decisions, Inc., is a respected advisor to employers, insurers, health maintenance organizations, self-funding administrators, and Blue Cross Blue Shield plans.

His professional experience in the US health care system began in the early 1970s.  It spans work for three states and the federal government where he worked as a program review and audit specialist.  Within the private sector Dr. Nahra worked with non-profit health systems and business coalitions as a director of research and policy analysis.

Since 1985 with the founding of Health Decisions, Inc., he has worked in the group health market where he has delivered hundreds of successful health plan audits.  Under his leadership, Health Decisions has led the market in auditing innovations.  The Company was one of the earliest adopters of 100% claim audits using data mining technologies.  It set precedents for the inclusion of recovery collections as a part of a modern claim audit.  Health Decisions introduced enrollment auditing to its clients 15 years before its more general adoption as a fundamental part of benefits auditing.  The firm develops new audit modules each year.  Health Decision’s software suites continue to set new audit performance standards.

Dr. Nahra has authored numerous pieces on various aspects of health care auditing that will also be featured on his blog “Si’s Library.”  Most recently, he authored the chapter on Health Benefits Auditing in the book “Cost Recovery: Turning Your Accounts Payable Department into a Profit Center” by Richard B. Lanza, CPA, CFE, PMP.

Si hosts regular monthly webinars covering various topics related to auditing group health expenses.  He has spoken at numerous conferences and is frequently invited to host training and background sessions for health care advisory, brokerage and consulting organizations. Dr. Nahra has a bachelor’s degree from Colby College and a Ph.D. in political science from Michigan State University.