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Self-funding 101: Unbundling the health plan


A typical health plan is made up of various components. Some of these, such as the network, are seen by everyone involved. Others—like claims processing or fraud, waste, and abuse monitoring—happen in the background. And then there are the features which are built in as protection against certain high-cost events, but which a plan may not actually use in any given year. Cost containment solutions for air ambulance transport are one example. Together, these components make up a health plan’s supply chain.

When an employer buys a fully insured health plan, they don’t have to worry about any of this. They simply pick the carrier, and everything else is decided for them. It’s easy, but can lead to all sorts of waste.

In an attempt to contain costs, many employers are moving to unbundled, self-funded plans. Some of these plans still involve a pre-packaged set of plan features, but others allow the plan sponsor to handpick features and vendors in order to tailor the plan to their specific needs. We call these “unbundled” health plans.

Unbundling a health plan creates opportunities for significant savings, because it allows employers to bring in specialty vendors that are able to effectively move the needs on the issues driving that plan’s costs. However, these plan features don’t do any good if members aren’t actually using them. It’s critical that an unbundled health plan is able to manage this complexity in order to connect the right members to the right plan feature at the right time.

A great benefits advisor is able to help employers successfully unbundle their health plans by bringing in the right TPA to manage the healthcare supply chain, helping the employer design an effective and efficient plan, and then making sure members understand how to use that plan. In this blog post, we’ll break down some tips for how to effectively do these things.

Choosing the right Third-Party Administrator (TPA)

A key part of managing the healthcare supply chain for unbundled plans is choosing the right TPA. An underperforming TPA is just one of a variety of vendors involved in a plan; they approve and pay claims, but that’s about it. A great TPA, on the other hand, is at the center of the action. Because they see all the plan’s claims, and therefore have a comprehensive view of what’s going on, TPAs are in the best position to coordinate all the other elements of the plan, allowing you to present employers with a single interface and point of contact.

Here are a few things to look for when choosing a TPA:

The ability to provide useful data

The decisions you and your client make about their plan will only be as good as the information you have. Look for a TPA who can compile relevant data about how the plan is performing, and then present that information in a way helps you make informed decisions.

The ability to activate the right part of the plan at the right time

Some elements of an unbundled health plan, such as medical management, will be used almost constantly. Other, more specialized features are there when you need them, but won’t always be at the forefront. Look for a TPA that knows how to connect a member’s needs to the right service providers in an efficient and effective way.

The ability to help you find and choose the right vendors

Running a health plan involves a variety of partners, from the PBM to the Medical Management provider to all kinds of specialty services. But there’s no reason for you or the plan sponsor to have to find them all on your own. Look for a TPA who excels at supply chain management, and already has established relationships with top-notch vendors.

The ability to streamline communication

HR shouldn’t have to keep track of several different contacts and phone numbers. Neither should the members. Look for a TPA who can act as the first point of contact for any issue, and then triage issues out to other vendors when appropriate. For example, at Flume we put every member-facing feature behind the Flume Concierge, so members only have to keep track of one phone number.

Choosing the right plan features

Self-funding provides the flexibility to design a plan that’s custom-made to meet the needs of your clients and their employees. But that flexibility is only as good as your ability to take advantage of it. Rather than opting for another cookie-cutter health plan, work with the plan sponsor and TPA to design a plan that will move the needle on the issues that really matter to your clients.

Some plan features are valuable across the board, such as Medical Management. Others require employers to make trade-offs based on their specific priorities: for example, some network solutions are easier to use but more expensive, while others are less expensive but require more effort from members.

You also want to think about any specific conditions that have an outsized impact on the group. If a significant number of employees have diabetes, for example, then it may be worth adding a diabetes management program to the plan.

Communicating effectively with employees

A self-funded health plan will often require members to act differently than they would on a fully insured plan. For this reason, it’s vital that you clearly and effectively communicate plan changes. This is especially true for unbundled plans, where leaving members to navigate complexity on their own can lead to a bad member experience and money left on the table.

Don’t just give members basic information about their plan, such as the deductible and out-of-pocket max. This information is important, but it’s also relatively easy for them to find on their own. Instead, focus your efforts on teaching members how to use their plan. What do they need to do to set up an appointment with a new provider? What opportunities do they have to save money by allowing the plan to steer them toward one facility over another? Emphasize what’s in it for them. This sort of member education can reduce noise and drive better financial performance for the plan. 


Unbundling the health plan comes with challenges, but for many groups the rewards are well worth it. By choosing the right TPA, carefully designing the plan, and effectively communicating with members, you can provide your clients with tailor-made health coverage that saves them money without overwhelming them in the process.

Interested in working with Flume Health to provide a plan like this? Get in touch.