Method for health plan management

Abstract

A method for managing health plans includes the use of theoretically derived mathematical models. The methods may be used in the analysis of health insurance products. The method may also assist in the selection of a particular health plan's benefit and contribution strategy. The analysis may further be used in the selection of a health plan's funding arrangement.

1 . A method for comparing funding options for funding health insurance products, the method comprising the steps of:
 providing a forecast of a future period's individual claim total distribution for a group;   calculating probability distributions for the future period's individual claim total;   wherein the calculation is a log normal distribution of possible individual claim totals.   
     
     
         2 . A method as described in  claim 1 , further comprising the steps of;
 providing a forecast of a future period's aggregate claim total for the group;   calculating the probability distributions for the future period's aggregate claim total;   wherein the calculation of probability distributions for the aggregate claim total is a log normal distribution of possible aggregate claim totals.   
     
     
         3 . A method as described in  claim 1 , wherein the probability distribution calculations are shifted to reflect the impact of a specific stop loss insurance amount. 
     
     
         4 . A method as described in  claim 2 , wherein the probability distribution calculation is shifted to reflect the impact of a specific stop loss insurance amount. 
     
     
         5 . A method as described in  claim 2 , wherein a standard error of the mean of individual claims within the group is the standard deviation for the probability distribution of aggregate group claims. 
     
     
         6 . A method as described in  claim 1 , wherein individual log normal probability distributions are used to compare alternative levels of individual stop-loss insurance. 
     
     
         7 . A method as described in  claim 2 , wherein aggregate log normal probability distributions are used to compare alternative levels of aggregate stop-loss insurance. 
     
     
         8 . A method for evaluating the risks and benefits of sell-funding a medical benefit plan versus a fully-insured medical benefit plan comprising the steps of:
 providing a defined group for which a medical benefit plan is sought;   forecasting a self-funded cost scenario for a specific future time period, wherein the forecast includes a most-likely aggregate claim cost, an administrative cost, and a stop-loss premium cost;   forecasting one or more additional self-funded cost scenarios as described above, except wherein at least the aggregate claim cost is varied by a probability distribution of possible aggregate claim cost; and   comparing the plurality of self-funded cost scenarios to a fully-insured cost scenario.   
     
     
         9 . The method as described in  claim 8 , wherein the probability distribution of possible aggregate claim costs is a log-normal distribution of individual claimants within the defined group. 
     
     
         10 . The method as described in  claim 9 , wherein the standard deviation of the probability distribution is equal to the standard deviation of the distribution of the individual claimants divided by the square root of the number of individuals in the group. 
     
     
         11 . The method as described in  claim 9 , wherein the mean of the probability distribution of possible aggregate claim cost is equal to the mean of the individual distribution. 
     
     
         12 . The method as described in  claim 8 , wherein the step-loss premium cost includes a specific stop-loss premium cost. 
     
     
         13 . The method as described in  claim 8 , wherein the stop-loss premium costs include an aggregate stop-loss premium cost. 
     
     
         14 . The method as described in  claim 3 , wherein the effects of specific stop-loss insurance at a plurality of alternative deductibles with corresponding alternative premiums are compared for their effects on a probability distribution of expected claim costs and a probability distribution of expected total costs, for the purpose of determining the optimal amount of specific stop-loss coverage for an employer to purchase. 
     
     
         15 . The method as described in  claim 4 , wherein the effects of specific stop-loss insurance at a plurality of alternative deductibles with corresponding alternative premiums are compared for their effects on a probability distribution of expected claim costs and a probability distribution of expected total costs, for the purpose of determining the optimal amount of specific stop-loss coverage for an employer to purchase.