Big data, data mining, data analytics — there are a lot of terms thrown around in the benefits business, which could confuse  the growing importance of this strategy that some professionals say brokerages need to adopt.

When Scott Mayer, vice president of data analytics for benefits brokerage WorkforceTactix in Baltimore-Md. started in the benefits world, he was a group benefits broker. But his firm, which specializes in groups with 100 to 2,000 employee-lives, saw a need to differentiate themselves and Mayer was a key asset to that.

“My focus [as a broker] was on self-funding and our firm focuses more on risk management in addition to traditional brokering,” he explains. “They saw a need for data analytics and didn’t want to outsource that part.” So, Mayer took on a new role. Now he analyzes claims data for their clients, looking for the “smoking gun” in each group to help prevent health and wellness concerns before they even happen, he says.

“Any broker that has self-funded clients or even some with fully insured groups needs this,” he says, adding that it’s a similar strategy to what extremely large employers like Wal-Mart do when they establish relationships with centers-of-excellence hospitals and send all their employees there to mitigate costs through good outcomes and bulk-purchased procedures. “The technology [for analyzing claims in-house] hasn’t been available to agencies like ours before, partly because the resources that help drive down such costs haven’t been interested in talking to smaller groups.”

Now that’s changed, and Mayer says data analytics is the next key asset a brokerage should acquire. “All brokers have become experts in, or outsource, ACA compliance — the next level is that they need to become risk-management experts and either create that within the business or bring it in,” he says.

Outsourcing

Mayer acknowledges his position is unique for a brokerage and could take up a lot of resources. Many agencies are establishing an outside relationship with actuarial firms like Scott King’s Wakely Consulting Group in Englewood, Colo., which has developed a group of about 30 agent-clients. His offerings span actuary services like renewal evaluations, budgeting and rate development all the way to claims analysis such as  Mayer described.

“We started getting more calls from agencies asking for deep dive ACA analytics,” King says, explaining they generate reports on the number of employees  likely to switch to a public exchange, cause an excise or Cadillac tax and more. “Agencies do what they do best and we do what we do best. Agencies seem to really understand how to bring in good partners — and we’re good actuaries.”

He says he thinks there could be a trend to bring in data analysts to work directly for brokerages, similar to a pattern agencies made with wellness years ago, but there are shortcomings with that approach. For one, there’s the need for normative data, or information to compare client groups to, which actuaries have readily available. And, he says a chief financial officer or finance manager could prefer an independent, unbiased analysis.

He adds that the biggest incoming request from agents these days is for an analysis of self-funding feasibility. Many agencies have clients as small as the 100-employee size that are considering this option to offset Affordable Care Act compliance and cost issues. So far, King’s actuaries tend to recommend self-funding in about 50% of the employer cases but notes self-funding is an extremely detailed decision that is specific to each individual organization.

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