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How employers can measure health plan success

An HR and CFO perspective on the metrics that matter to self-funded employers.

Unprecedented change is making its way to employer-sponsored healthcare.  More transparency into medical pricing and the inner-workings of a complex system bring new opportunities to employers frustrated by years of rising costs. With more visibility and control over how their healthcare is managed, how should employers evaluate health plan success?

A good place to start is to take inventory of how much information you have available. When reviewing health plan performance, most executives only see a few numbers: the overall claims cost and the network discount applied to help control that cost. Many are finding that lack of visibility no longer satisfies executive teams or other shareholders, and rarely shows the full range of opportunities available to better control costs.


“Healthcare is such a significant investment and if employers are only seeing limited metrics, they’re missing the whole picture,” says Healthgram Chief Financial Officer Lee Ann Brown.


The process starts by reframing the definition of health plan success. Instead of conversations around network discounts, focus can shift towards the underlying cost drivers in each workforce: high-cost claims and areas of waste and duplication.

Brown suggests employers start at the employee level, noting that detailed insight into cost and health costs can help them put more proactive and tailored cost-saving measures in place. “The more data you have, the better position you’ll be in to impact change,” she says.


Related resource: Request medical procedure pricing data for your ZIP code


Together with your benefits consultant, reframe how your team measures health plan success starting with these performance metrics:


How your costs compare to relevant benchmarks and your own claims history

Employers and their consultants typically look at spend per employee per year (PEPY). Use this high-level data to identify year-over-year trends in your own PEPY performance and how spend level compares with comparable companies by size and industry.


Management of the facilities and diagnoses driving highest-dollar claims

Line item visibility into your highest-dollar claims is essential to auditing how this spend is managed and identifying future opportunities for savings. Your Administrator and consultant should also be able to use this data to advise on a plan of action for engaging these members.


Savings beyond a network discount

Most health plans apply network discounts to save on provider costs, but savings shouldn’t end there. Ask about what your carrier or administrator is doing to secure additional savings, and exactly how much you are saving through these measures.

A reliance on auto-adjudication allows for savings opportunities on high-cost claims to slip through the cracks. Ask how your carrier carries out their due diligence, such as discovering the presence of other insurance, investigating fraud, waste and abuse, carrying out subrogation and including provisions that protect against 100% liability for out-of-network charges.


The financial impact of clinical outreach programs

If your carrier administers case management outreach, or if you have invested in wellness programs or employee clinics, be sure you have complete transparency into key performance metrics. Ask about case management engagement and the dollar amount of claims prevented through this outreach. For wellness, consider the percentage of employees successfully managing conditions or who have reduced risk factors.

Employers should also notice positive trends in employee utilization of high-value facilities and cost-effective alternative settings for those requiring long-term treatment. Ask for specific instances where your carrier or administrator has successfully reduced claims cost by introducing a more convenient and less costly care plan.


Dollars returned to the plan as rebates

It’s not uncommon for pharmacy benefit managers or other entities in the Rx chain to keep pharmacy rebates as profit instead of passing it along to employers. Work with your benefits consultant to ensure you get 100% pass-through on rebates.

Related resource: 8 questions to ask your PBM


Meaningful employee engagement

Also consider employee satisfaction and service. Just as employers are becoming more involved in how they pay for healthcare, so are employees. Are your employees more informed about their healthcare options? Do they know where to turn to for help? Do they get answers quickly and easily?

Keeping track of the data points below will help your Human Resources team craft customized communication strategies to raise engagement in specific offerings or among a certain subset of your workforce.


Healthgram Director of Human Resources Julie Ryan notes, “It’s important to know what matters most to your population and use data to shape engagement strategies.”


Look for:

  • Engagement rate among highest-risk employees
  • Employees engaged in outreach prior to a major medical procedure
  • Case management engagement rate
  • Availability of customer service or advocacy team
  • Employee satisfaction
    • NPS, issue resolution rate, or other metric
  • Individual, specific examples of claims reduction and employee experience
    • Employers should be able to point to examples of case management or proactive guidance that prove clinical and financial impact


The right reporting metrics are essential to a successful self-funded plan. See how we help employers discover and act upon savings opportunities and improve employee experience.


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