With rising healthcare costs and uncertainty surrounding ongoing reform measures, why enter the medical excess reinsurance market now?
SCOR has been very thoughtful and deliberate about entering into the medical excess reinsurance market. Yes, there’s a lot of change underway, but disruption – whether from competition or regulation – creates opportunity, and we believe there is opportunity in providing reinsurance and support services to both existing participants and emerging entities who are taking medical risk.
What are the key factors for success in the medical reinsurance market?
First and foremost, it’s the quality of our team. I have always believed that success starts with hiring the very best people. The medical reinsurance market is a complex and evolving market. I was hired by SCOR with the expectation that I would build a team of professionals who know the U.S. medical business, understand the changing landscape of the underlying market, and are able to take that knowledge to create innovative solutions that will help our customers grow and meet their goals.
Today that team is in place. I couldn’t be more confident in the actuaries, underwriters, medical management staff, claims and operational experts working on SCOR’s Group Health team. They are all very experienced and have strong relationships and reputations with all the players in the medical excess reinsurance market – brokers, insurers, HMOs, providers, self-insured employers and TPAs.
SCOR may be a new player, but everyone on the team has the experience and expertise to navigate the changes that are occurring. The market knows what to expect from us.
What are some of the more substantial changes underway or likely to take place?
There are multiple initiatives in some stage of development, but I think the shift to a value-based model of healthcare delivery is one of the more substantial changes, and one that is creating new risks and challenges for provider groups. A value-based model is designed around patients that benefit from a team of medical professionals who coordinate their care across the healthcare system. As of March 2017, there are over 900 Accountable Care Organizations (ACOs) who are participating in value-based contracts with HMOs and the state and federal government. These ACOs are covering over 32 million people in the United States. As this model continues to evolve, the reinsurance market will also transform as these entities will need protection against both severity and frequency of claims. Managing that risk is where reinsurance comes in.
What products and services is SCOR launching?
SCOR has four medical excess reinsurance products scheduled for release throughout 2017. SCOR is already accepting RFPs for two products: HMO Reinsurance and Medical Excess Reinsurance. SCOR provides excess coverage to an HMO’s entire population (commercial, Medicare and Medicaid) as well as other innovative programs such as Dual Eligibles or state-specific Medicaid programs. For Medical Excess Reinsurance, we provide an excess layer of coverage for an insurance company’s book of medical insurance business. This product also includes coverage for captive insurance companies. Typically, the buyer will retain a large layer (deductible) on each covered person and cedes the balance to SCOR.
The other two products are Employer Stop Loss and Provider Excess. They are insurance products subject to filing and regulatory approvals by each of the states. This process is well underway with the help of many people, including both the SCOR Global Life and SCOR Global P&C legal team. Employer Stop Loss provides larger, self-insured employer group medical plans with coverage over their retained deductible. Provider Excess Insurance provides coverage to physician groups or hospitals who are accepting risk from HMOs or the government through capitation. Capitation is a form of payment where the provider receives a monthly amount as reimbursement for claims for a covered person instead of receiving a fee-for-service payment. For these last two products, we will be targeting clients with January 1, 2018 effective dates.
Importantly, all products will be supported by our medical management team that is anchored by our VP of Medical Management, Julaine Novak, and our SCOR Medical Director, Bill Rooney. This will include providing consultative access to high-cost services such as transplant or dialysis networks, neonatal intensive care unit services, specialty drugs and negotiation for out-of-network claims.
How is the launch going so far?
The response has been very positive, confirming our contention that there is opportunity in this market. Participants need financially strong risk partners for reinsurance coverage, support services like medical management and, of course, fair and reasonable claims adjudication.
All of these products are distributed through specialty broker and consulting groups throughout the U.S., most of whom we already have an established, long-standing relationship.
We’re also attending and sponsoring the major healthcare conferences, meeting with clients, responding to an influx of RFPs and already writing business with key producers. For more information about our medical insurance solutions, please contact our VP of Sales,