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California Firm Offers Baltimore Area Employers a New Range of Options in Health Care

Posted on: Thursday, 22 September 2005, 21:01 CDT

A California company is bringing to Baltimore area employers what it calls a new range of options in health care.

Benu Inc., based in San Mateo, Calif., this week launched its product in the Maryland, Washington and Virginia region in an effort to allow employees to make the choices their employers often make for them.

The company works with insurance carriers CIGNA HealthCare and Kaiser Permanente to offer employees more options in their health care, and to allow employers to pay a flat compensation rate as opposed to the percentage rate ordinarily used.

Benu allows the two carriers to offer plans to each employer, letting employees choose which plan they would prefer. The company then balances the carrier's risk; if one company receives a higher load of the sicker, riskier members, Benu redistributes the premiums to that company to even out the playing field.

We're a neutral third party, said President and CEO Jeffrey Closs. That's the breakthrough. The carriers can't do that themselves. They need that neutral third party.

After operating in the state of Washington for three years and in Oregon for two - the firm carries 10,000 members in that region - Benu chose the Maryland region because of its strong presence of mid- sized employers, those with more than 75 employees, said Closs.

There's a uniquely large population of mid-sized employers here, he explained. It's a very vibrant and dynamic market.

But Maryland Insurance Commissioner Alfred W. Redmer Jr. said mid- sized employers in the state of Maryland already have such choices. Maryland's smaller employers are the ones who could use more options, he said. Two carriers, CareFirst BlueCross BlueShield and MAMSI/United Healthcare, dominate 94 percent of the market for small businesses, defined as having 50 or fewer employees.

Larger companies with deeper pockets always have been able to make more choices, Redmer said. Certainly, if you've got five lives, you get different choices than if you're at 75 lives, and then you get different choices than if you're at 7,500 lives, he said.

Employers of all sizes are looking to offer more health care choices to their workers, but often are put off by the extra work that entails, he added.

There are employers that don't want to offer choices even if choices are available, he said. They don't want to confuse anybody, to deal with any increased administrative burden that might be associated with that.

Benu is hoping that its timing - a few months before the traditional enrollment period of Jan. 1 - will result in a healthy amount of business in the near future. It now employs a regional general manager in its Alexandria, Va., regional headquarters and one salesperson in Baltimore. Two more sales professionals soon will be hired for Washington and Virginia.

Benu works with CIGNA and Kaiser Permanente to offer employers more options - including more low-cost options - through insurance brokers. It has been marketing to brokers in print ads in preparation for its local launch, and holding training sessions as well to familiarize them with the company.

Its strategy is threefold, Closs explained. First, it copes with adverse risk selection - a carrier's desire to keep down its number of risky or sick patients - by reallocating premiums to the carrier that enrolls the sickest population.

Next, its contribution strategy aims at keeping employer costs down by allowing the employer to pay that flat rate of contribution, and leaving it up to the employees to pay the difference if they would like a more expensive plan.

And thirdly, administration - frazzled human resources personnel don't look forward to offering employees a lot of health care options that then must be managed. But Benu handles that for the employer.

Closs said Benu's approach keeps costs down for employers by letting employees shoulder more of the burden if they choose more expensive plans. Under a percentage rate plan, if the employees pay a smaller percentage contribution than the employer, they are insulated from the impact of making higher cost choices.

Employees are happy to be making choices, employers are happy to keep costs down - and carriers are happy Benu is bringing them more business, said Closs.

Source: The Daily Record (Baltimore)

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