Steps For Establishing An Effective MSA Program
Step One: Analyze the Existing Program

Develop a thorough understanding of the current levels of benefits, costs, and recent trends of the existing overall compensation and benefits program. Begin with the total cost of compensation relative to revenue or invested capital as the client prefers to track it.

Break the compensation elements into their various components so the health benefits, medical care, and workers compensation portion can be identified. If possible, internal employer costs for health benefits management should be tabulated. The goal is to establish desired levels of compensation that meet the company's objectives. The overall goal should be to allow transfer of current excess health care spending from insurers, administrators, intermediaries, and providers to employee take home pay or into employee investment or retirement vehicles.

Analyze existing benefit and worker's compensation plans, including exposures, coverages, utilization, loss experience and costs. By using appropriate models, actual costs can be compared to expected costs by benefit category. These models will help identify areas of benefit value, excess, abuse, and other concerns.

The actual claims experience should be separated into its cost and utilization components to identify problems and to establish a basis for future comparison. The analysis of the distribution of claims by provider source (physician, occupational therapist, emergency room, rehabilitation facility, hospital, etc.) provides insights into the relative charge levels of providers and of provider categories and groups. This will be useful in negotiation with providers.

The trend data should be reviewed on an incurred basis rather than a paid basis to avoid the year-to-year distortion attributable to processing of claims or submission patterns. Trend analysis includes: annual cost per employee, employee/family, and covered lives; cost as a percentage of payroll and as a percentage of revenues or total outlays. Analyze other benefit provisions to determine whether health care savings can be used to increase other benefits with no increase in total expense to the employer.

Have an actuarial firm experienced in MSA program management provide the actuarial services required in the overall and targeted analysis. These services will help project current and future loss reserves to the extent desired.

This analysis should produce a comprehensive understanding of how existing costs can be structured to balance growth consistent with overall company productivity and profit experience. This should prompt an analysis to determine how to increase both the cash and non-cash compensation of all employees.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org