Compliance
Strategies
June 2015
1
Firm Example #1
• Firm Profile
– Large Firm (30+ EB Producers and Account Managers)
– Clear organizational structure and strong support for EB from firm’s leadership
– Leading producers taking a very active role in compliance issues (especially the
ACA)
• Compliance Strategies
– Hired a J.D. fresh out of law school to be compliance coordinator and SME
• This particular individual did not have any prior insurance or employee
benefits compliance experience but was a very fast learner
– EB leader tried to position himself as a very visible expert on the ACA to the
general public
• Public speaking engagements, quoted in press, etc.
– Organization expected principal consultants to be “deep” in compliance
knowledge
Firm Example #1
Positives
Challenges
Clients may view J.D. on staff as a positive
even though they cannot provide legal
advice.
Even inexperienced J.D.s are a significant
cost investment.
Having an internal staff person dedicated to
compliance allowed for participation in
finalist meetings, RFP responses etc.
J.D. with very little industry or subject
experience will take a while to add actual
SME value to staff.
Visibility of the organization’s Principal
created opportunities for firm.
I heard “through the grapevine” that some
principals felt it was hard to get out from
“under his shadow”.
I felt like the knowledge level of some of
their staff (producers and account
managers) was above average.
It is hard for producers whose success is
based principally on new business
generation to invest significant time
required to understand this stuff.
Firm Example #2
• Firm Profile
– Medium Large Firm (20-30) EB Producers and Account Managers
– Producers reported through different path that account managers & service staff
• Compliance Strategies
– Assigned an existing account manager as the internal “compliance specialist”
• Expected her to be an SME
• Reduced her book of business
– Contracted with an outside vendor to provide additional compliance support to
staff
– Procurers/Consultants took very different approaches to their role regarding
compliance
• Some positioned themselves as the expert
• Other relied heavily on account management and compliance lead
Firm Example #2
Positives
Challenges
Having an internal staff person dedicated to
compliance allowed for participation in
finalist meetings, client calls, etc.
Staff person ended up feeling like they had
two jobs that were each close to full time.
Staff person was vary good administratively
and really controlled compliance related
communications, creation and use of tools,
RFP responses, etc.
This particular staff person was not as
“deep” of an SME as vendor so there was
some “sorting out” that needed to be done
regarding who the staff should lean on.
Outside vendor handled many of the staff
questions allowing staff person to focus on
other priorities.
Neutral Observations
• Producers who relied on staff and vendor for compliance support could focus on sales
but producers who spent more time as consultants were measured by same sales goals.
Firm Example #3
• Firm Profile
– Small Firm (<10 Producers and Account Managers)
– Firm leadership all had commercial and P&C background
• Compliance Strategies
– Contracted with an outside vendor to provide additional compliance support to
staff – each account manager and producer on their own regarding compliance
support for their block of business
– Internal staff person focused on communication (not a compliance SME)
Firm Example #3
Positives
Outside vendor was significantly cheaper
than hiring additional staff.
Challenges
Cost and staffing was the big issue. P&C
leadership resisted spending money on
compliance support for benefits.
Outside vendor brought a level of
Outside vendor could not attend face to
experience that the firm would never have
face client meetings as often.
been able to hire.
• Provided client and staff training
that internal staff could not provide.
Internal communication staff kept alerts,
seminars, and other communications
consistent. Outside vendor was described in
a way that made it look like they were part
of the firm’s “staff”
Using Compliance to
Generate New
Business and Revenue
Generating Ideas
8
Sales Strategies
• What method did you use to calculate the Reinsurance Fee?
– IRS allows 4 methods to calculate membership
• Actual count average, 5500, snapshot, snapshot factor
– Most of the time the snapshot factor method will save the employer money
Number of Subscribers (50% single 50% family)
Members per family contract
Total number of partipants
Total Fee Due
Savings
Actual Count
Snapshot Factor
Method
Method
250
3
2.3
500
419
$31,500.00
$26,397.00
$5,103.00
– Employers missed opportunity to deduct live that were covered by other group
insurance and employer plan was secondary
• Ask for a secondary member report from your TPA
Sales Strategies
• Did you set your employee contribution based on the wage or rate of
pay safe harbor?
– You might be wasting money…let us help you figure it out
– Consider Regan’s example when there are a relatively low number of employees
where coverage is unaffordable
• The risk of (b) payment is often less than the cost of setting the employer
contribution “too low”
• One of the best uses of our health reform compliance assessment tool is it’s
ability to estimate the number of employee likely to be subsidy eligible based
on household income and size assumptions
– We often find that there is a much lower (b) risk than the employer
thought
Sales Strategies
• Let me help you save money by helping low wage employees who are
eligible for Medicaid get off your plan.
– Subsidies available to individuals with household income above 100% FPL
– Subsidies not available to individuals who are also eligible for Medicaid
– ACA Medicaid expansion to 138% of FPL
Household
Size
1
2
3
4
5
6
100% FPL
$11,770
$15,930
$20,090
$24,250
$28,410
$32,570
138% FPL
$16,243
$21,983
$27,724
$33,465
$39,206
$44,947
Sales Strategies
Sales Strategies
• Let me take you though a compliance assessment
Revenue Generating Ideas
• Provide an administrative service that the employer are paying already
paying someone else to do
– Calculate and file the membership numbers for the reinsurance fee this fall
• A simple file attachment created tons of confusion
• We had firms pay us as much as $1000 - $2000 at the last minute to assist
• Many employers paid their TPA to do this – I heard some crazy numbers….
– Watch for opportunities due to a new issues (e.g. HPID#)
• A deadline will always cerate a short term increased revenue opportunities
for employers who waited to the last minute
• The administrative process on this one was confusing, but you could have
figured it out
Revenue Generating Ideas
• Do a controlled group analysis or discrimination testing for a client
– Actually have an external resource (e.g. Benefit Comply) do the work.
– If you collect at the data necessary and format it in a way that we can work with it
we will charge you less than if we have to do all the work.
– Revenue potential
• These projects can cost $2500 - $10,000
– But our fees will be lower than they will pay law firm or major consulting
firm for the same work so you could add a 25% admin fee and still be
below market costs.
• The challenge is that you need to be able to learn how to sell project work. It
is rare that you can quote a fixed price on these.
Revenue Generating Ideas
• HIPAA Privacy and Security Projects
– We charge $5500 - $7500 for a typical consultant lead employer HIPAA privacy
and security project.
• I have been told Mercer would charge $10,000 - $20,000 for the same project
– Two options
• Let our consultant do it and “charge up” for administrative assistance, project
management, training, etc.
• Use HIPAA web tool and train an employee to do the consulting projects for
the employer
Your Job – 3 Simple Questions
• What services would you include in a client compliance package?
– List in 2 categories
• Services delivered by staff
• Services farmed out to outside vendor
• Pick which revenue generating ideas we discussed that you believe are
the most likely to be feasible to implement
– The group has to agree on one even though it will be different for each firm! In
other words I want to know which one gets the most “votes” in the group
• Come up with one new revenue generating idea as a group!