KICKING IT UP A NOTCH by Charles Crispin, President & CEO, Evergreen RE

Keeping a close watch over medical expenses is not as simple as it sounds. Really understanding your costs, what is driving trend and how to make sure you are getting the most bang for your dollar is complicated at best. As our colleague Ken Dowell of the Stanton Group discusses in his article, understanding how pharmacy benefit management companies work and staying on top of PBMs - internal or external - could mean millions of dollars to an organization.

The same can be said about keeping your eye on medical trends that could potentially have significant impact on your bottom line if your reinsurance program has not taken those trends into account. It sounds like a simple process, but not so. (See Capitation Rates & Data article on medical expense trends). Services once traditionally excluded from reinsurance programs may be considered catastrophic claims today, which in turn can create havoc on surplus.

Risk-bearing organizations need to kick it up a notch when it comes to doing in-depth analysis of their coverage to ensure not only the right levels of protection for today, but also what lies ahead.

In today's ever changing environment, it all boils down to paying close attention not just at the negotiating table -- an extremely important part of the process -- but also at how contracts are administered. On the pharmacy expense issue, if you don't demand good management and install an audit into the process, it could potentially have a devastating impact on your bottom line. Before purchasing reinsurance coverage, risk-bearing providers must also pay just as much attention to reinsurance contracts as they do negotiating tighter catastrophic coverage.