Many employers rely on network discounts to save on healthcare claims. However when compared, network discounts only range within a few percentage points of each other. If discounts only level the playing field, how can employers access deeper savings?
The concept of the network discount has become a decoy that distracts us from addressing the true driver of rising costs: the charged prices of medical services. While discounts are almost identical, costs for individual medical procedures can vary by more than 1000%.
Consider a simplified example: you secure a 50% discount on a single bandage, which should cost around $4. If you’re charged $40, you’ll still overpay even after applying the 50% discount. Now apply this concept to an $18,000 knee surgery. With multiple procedures being charged to your plan each year, it’s possible a lack of claims oversight and an over-reliance on network discounts can significantly impact your bottom line. Even more common procedures like MRIs and CT scans can be charged to your plan at much higher rates than what is considered a fair price.
Instead of relying on network discount or shifting responsibility to employees in the form of reference-based pricing, forward-thinking employers are demanding solutions that address these root causes of costs and provide quality care to employees. That way, a discount can truly achieve its original intention: to further secure the most competitive pricing on necessary medical procedures for your employees. We recommend an approach that includes the following:
Self-funded employers have a vested interest in reducing the frequency and severity of high-cost claims. Beyond a network discount, employers can ensure their carrier or administrator has the capability to review claims in greater detail than traditional auto-adjudication. Reviewing high claims for eligibility, other coverage and duplication is a strong foundation.
A proactive approach to managing high-cost claims is critical to optimizing both clinical and financial outcomes for employees. Case management outreach should prevent claims by identifying unnecessary procedures or treatments before they occur, and also find cost-saving alternatives for ongoing treatments.
One example: A new Healthgram member was receiving an ongoing IV infusion treatment a local hospital, which cost the health plan more than $42,000 each month. Our case management nurses discovered that the member could receive the same treatment at home for $850 each month. Annual savings totaled over $490,000. Without the ability to identify alternatives and engage employees with trusted resources, employers can be exposing themselves to unnecessary risk.
Prices for the same in-network procedure in your ZIP code can range by thousands of dollars, making network discounts less impactful. How will employees know where to get quality care at fair prices?
Some health organizations have introduced price transparency services that make pricing information more accessible to members. However, these self-help tools typically have low utilization rates because even when employees are motivated to seek out pricing, many find it frustrating and unclear. Employers need a better way to bridge the gap between pricing data and high-value facility utilization.
Many employers are aligning their members with a point-of-contact who helps them understand how their health benefits work and how to use the healthcare system wisely. This approach not only ensures each question is answered but makes pricing information real and usable to the member in the form of a trusted advisor. See how we’ve used this approach to help employers and employees save on high-cost procedures.
Corporate wellness programs can help reduce the risk for catastrophic claims and prevent development of future conditions. A RAND Wellness Program Study reinforces the impact of wellness programs with results from a ten-year study: well-designed programs save money and help mitigate long-term health risks.
Many employers are familiar with either chronic disease management or lifestyle management programs that address risks like smoking and lack of exercise. Instead of opting for one over the other, this study implemented both. The results show short-term ROI from intervening with those diagnosed with chronic conditions like diabetes and heart disease, as well as long-term risk reduction from lifestyle management programs. It’s this two-pronged approach that returned a $3.80 return for every $1 spent on the program.
Employers can adopt a similar approach. Engage members with chronic conditions to avoid high-cost claims or inpatient stays, while helping other members stay well. Outreach that engages employees in personalized health management based on a holistic outlook expands program impact, contributes to short and long-term costs savings and creates a trusted employee-health coach relationship by allowing employees to focus on the issues most critical to them.
Another way employers are controlling costs and retaining top talent is by offering convenient care options, such as onsite medical clinics or shared employer clinics. Financially, employers can save in the areas of direct office savings, productivity, absenteeism, and referrals avoidance. Employees also recognize their onsite clinic as an invaluable workplace benefit, offering returns in retention and recruitment.
Self-funded employers have an active interest in managing the cost of individual claims. It’s not enough to simply secure a strong discount, your partners must help you manage individual care events and be able to scale that guidance to work for your entire population. See how our clients are saving an additional 14% on average beyond a competitive discount.