The latest in our series on controlling health care costs is an interview with Jamie Lagarde, the CEO at Sedera. Sedera is a medical cost sharing company…a very different approach to paying for health care. I hope you enjoy it.
Q: Please tell me about Sedera and how the company got started.
Sedera Health was founded by Dr. Tony Dale. A former physician from Great Britain, Dr. Dale’s interest in the American medical system began in the mid-1990s when he had to have surgery in the U.S. Through this experience, Dr. Dale saw the tremendous inconsistencies and staggering costs built into the American health insurance system. He knew there had to be a better way.
Dr. Dale recognized the unmet needs in the health insurance industry and founded Sedera Health in 2014 as an alternative solution.
That alternative was the formation of a medical cost sharing community. While the concept of cost sharing is not yet widely known, the philosophy has a 30-year legacy of success. Sedera was founded on the principle that people should share one another’s burdens. As of June 2018, the Sedera sharing community is over 6,000 members strong, representing 45 states including Massachusetts.
Q: How does medical cost sharing work?
Instead of paying monthly premiums to an insurance company, members share a given amount on a monthly basis and draw from community funds as medical Needs arise. Monthly shares are generally lower than typical insurance premiums. Through Sedera’s medical cost sharing model, members save between 30 – 60% of the costs that are typically incurred with traditional health insurance plans.
Sedera uses a tool called the Initial Unshareable Amount (IUA) to structure how medical costs are shared with the community. The IUA represents the specified financial amount (in dollars) that members are required to bear on their own prior to any amount that may be eligible for sharing.
Sedera’s members meet the ACA requirements separately through an employer-sponsored self-insurance arrangement that includes Minimal Essential Coverage (MEC). Sedera members have access to three levels of care:
Preventive care – through employer’s self-insurance group plan
Low cost medical care – paid out-of-pocket or via Health Savings Account (HSA) if available
High cost medical care – members are cash-pay; costs are shared for qualified needs that exceed the IUA
Some Sedera members have access to their employer’s self-insurance arrangements that include the required components for HSA compatibility. This is solely the employer’s decision as a plan sponsor to their ERISA group plan.
Q: Tell me more about how Sedera community members access healthcare.
Sedera members are not bound by a provider network. Because they are self-pay patients, they have the freedom to choose their own provider. Members can seek care with any provider or facility who is willing to accept cash payment in exchange for services. Sedera educates its members about what it means to be a self-pay patient and how to interact with healthcare providers.
In the four years that Sedera has operated, it’s been our experience that member companies coming from a group insurance plan typically save anywhere from 30-60% in monthly costs. Although harder to quantify, they will also save significantly in out of pocket costs.
Sedera employs several tools to help the sharing community receive the highest value for its investment. Membership includes unlimited access to telemedicine with no ($0) consult fee. Sedera also partners with a patient advocacy group to ensure that members are receiving the best price for the services and care they seek.
Sedera requires a minimum of 3 participants (primary members) in order to join the medical cost sharing community.
Q: Can you please help me better understand medical cost sharing?
Because many people are unfamiliar with the concept of medical cost sharing, we frequently field questions about how medical claims are handled. There is no maximum limit to the amount that Sedera will share towards a specific medical need. However, the need must be within the scope of the Guidelines before it will be eligible for sharing. Because of the economic impact of very large medical bills (e.g., those over $100,000), Sedera has devised an internal mechanism to ensure that adequate shares are available to meet both our member’s normal and high-cost needs. For the very large medical expenses that occur from time to time, Sedera makes provision by allocating 15% of member’s monthly shares to remain available through a benevolence fund that member companies have independently established. Sedera reserves the right to negotiate medical expenses with providers, and to prorate available shares, as necessary, in order to address all members medical expense needs.
If shareable needs are ever significantly greater than shares available in any given month, Sedera may prorate the needs amount requested for medical expenses. This involves an across the board percentage reduction of needs payments but does not necessarily mean that all member needs will not be met in that month. In months where a proration occurs, most members who had a shareable need that month will only have the prorated amount shared, which may still leave a significant burden on some members. In such cases, we have a special needs sharing program in place to potentially assist in these scenarios. The monthly update would show the extra amount the member company, and other member companies assigned that need, would send so that the member’s need would be fully met.
Q: Any final thoughts you would like to share?
Thank you for the opportunity to tell your audience about Sedera. I am proud to tell you that in year four of operation, the Sedera community has had adequate contributions to share all of medical needs of our community that fall within the guidelines.
With very strong growth and retention rates, the Sedera Medical Cost Sharing Community is a high-end, non-insurance alternative for employers, employees and their families. If you would like to learn more, please give us a call at at (800) 473-5472 or send us an email at firstname.lastname@example.org.
I hope you found this information interesting. If you’d like to discuss creative ways to contain your company’s health care costs, click the link below or give us a call at (866) 724-0008.