Anderson Thornton consultants contracts with a group of clinics and hospitals who form a Clinically Integrated Network (CIN). An employer contracts with a Third Party Administrator (TPA) to administer their health plan. The TPA performs the functions you would expect an insurance carrier to provide, like paying claims, collecting premiums, and providing customer service. The CIN is installed as the preferred local network, sometimes in tandem with a larger national network for care outside the service area of the CIN. The employer’s plan is crafted to provide an incentive for employees to use the CIN. Employees and their families get excellent patient-centered care and, as claims are managed, the claim fund retains a surplus. At the end of the year, the CIN receives a portion of this surplus as payment for a job well done. Upon renewal, the group will likely receive a flat renewal or maybe even a rate reduction.
The plan is created so that if claims for any specific member exceed a predetermined threshold, then the employer’s liability for that claim stops and a reinsurance carrier pays the overage. If the claims for the whole group exceed the claim fund (meaning that claims management didn’t create a surplus), then reinsurance covers the difference.