Administrative Services Only, or ASO, is a plan for administering employee claims that differs from a traditional fully insured plan. Under an ASO arrangement, the plan is self-funded by a client company, but a third-party service provider oversees the administration of employee health claims. In previous decades, this kind of arrangement was almost exclusively reserved for large employers and national accounts. Thus, for the longest time, it seemed like the most practical option for smaller companies was to go the fully insured route—even if it meant receiving insurance plans from bulky and outdated systems.
But the ASO market has since become more flexible and more expansive. A greater number of insurance carriers can now implement ASO arrangements for their clients at a much lower cost. That means that even small and medium-sized enterprises (SMEs) can tap the option of getting ASO medical plans for their employees, and that they can secure dependable health claim management services on a modest budget.
What exactly does it mean that ASO arrangements are on the rise, and how does this affect your insurance organization? To answer that, here’s a briefer on the general appeal of ASOs, and the ease of running ASO arrangements for SMEs on a digital insurance platform. In this discussion, you’ll also learn about the game-changer in the equation: stop loss coverage in ASO insurance plans.
The Appeal of ASO Arrangements for Modern-Day Organizations
First, let’s take a general look at how ASO arrangements are run today. Modern ASO solutions are built to work light instead of heavy. Both service providers and ASO clients will be doing their exchanges on a much more adaptable system for managing health claims, as opposed to the clunky and obsolete systems that were once their default.
Modern ASO solutions are equipped with sophisticated data management and calculation abilities, which in turn make them capable of tasks like the implementation of flexible administration fees. For example, administrators can adjust insurance coverage needs per age group (separating younger employees from retirees) and manage health claims from different tiers. Another perk that insurance clients can enjoy when they pursue ASO under an innovative new model is discount sharing options, which make upfront costs a little easier to bear. Some examples of possible discount sharing options that may be offered are split discount sharing and discount sharing with a guarantee.
The task of managing claims will be easier on a provider, too. Up-to-date ASO technologies can consolidate swathes of claims-related data from an employer portal, and then use a high degree of automation to produce customized and accurate claims reports.
In general, these are the overarching benefits that insurers and clients can anticipate with modern-day ASO arrangements. But there’s one key area in which well-implemented ASO will make the biggest difference, and that is none other than stop loss coverage.
Stop Loss Coverage is Key for ASO Providers
A central issue in ASO implementation is the provision of stop loss or excess insurance. Stop loss coverage gives client companies extra protection against grave and unpredictable losses, all by making the insurance carrier liable for losses that exceed certain limits (also called deductibles).
Thanks to today’s range of insurance technologies, it’s possible to handle complicated stop loss coverage and credit processes without having to resort to manual and siloed-off systems. An insurance organization like yours may find that providing stop loss coverage through ASO will be highly advantageous, especially to smaller companies with modest insurance budgets. Your company can market the implementation of customized stop loss coverage plans that fit your clients’ needs to the tee. Some of the benefits that you can leverage are fully automated stop loss policy administration and easy personalization of limits for different health coverage classes (e.g., pertaining to dental insurance, medical prescriptions, and the like).
With the right toolset, your organization will find itself empowered to manage both specific stop loss and aggregate stop loss insurance arrangements. You can make timelier adjustments to individual accounts with specific stop loss coverage, like ceasing stop loss credits (and preventing the expenditure of excess stop loss credits) because of immediate settlement. With regard to aggregate stop loss, it will no longer be as difficult to reconcile your numbers and to make the corresponding arrangements after your client has hit their monthly cap.
Some insurers may balk at the idea of taking on more liability through stop loss. But it’s apparent that an efficiently managed system will keep the carrier’s margins healthy—and it will make them more competitive to clients of all backgrounds.
Conclusion: Innovative and Customized Health Insurance Solutions through ASO
Innovative models for ASO can spearhead flexible pricing and efficient health claim administration, thanks to factors like superior data management capabilities and automation. New off-the-shelf ASO solutions can serve the needs of clients, all while maximizing revenue opportunities for forward-thinking insurance carriers.
If you represent one such insurance organization, equip your company to oversee ASO on a wider scale. Take full advantage of the reach this will give your organization, especially among SMEs.
