It’s not revolutionary to point out the shortcomings of today’s healthcare system. For both patients and companies alike, it’s become a familiar cycle: repeated poor experiences lead to low expectations. With no alternatives in sight, we settle for the status quo of annual renewal increases and employee confusion.
For better outcomes, we need a fresh perspective. Here, we’ll break down common self-funding facts and misconceptions and ways companies can use new information to regain control over their healthcare investment.
Fact: Fully-insured companies pay an annual fixed premium to cover all anticipated costs. Self-funded companies pay healthcare claims as they actually occur, affording them fewer fixed costs and more opportunity to manage overall claims expense. That opportunity for savings is significant: Depending on company size, variable claims cost can account for up to 80% of total healthcare spend.
To carry out the process, companies partner with a carrier or third-party administrator to pay claims in accordance with their plans. But claims administration on its own doesn’t lead to lower costs.
TPA claims administration functionality is often limited to ensuring claims are paid and applying a generic discount to overall costs. In contrast, claims management independently acts with your interests in mind to reduce the variable claims expense. This process involves individually auditing claims, using workforce-specific data to keep employees healthy and proactively supporting high-cost claimants – functions legacy insurance carriers aren’t built for.
Fact: Most employers use a network discount negotiated by a carrier or TPA to help them save on claims expense. Typically, these discounts hover around 50% between carriers, meaning that regardless of your carrier or TPA arrangement most companies access relatively the same discount on procedure costs.
Yet deeper savings opportunities exist beyond network discounts. And to access them, it helps to understand the basic economics of medical pricing.
Providers set their own “chargemaster” rates for services. As a result, in-network procedure prices for the same service vary widely within the same ZIP code; a knee arthroscopy in Charlotte NC can cost anywhere from $1,993 to more than $18,819 depending on the facility.
Related: Request a custom price variance report for your market to see how your claims costs can vary.
Companies risk overpaying, even with a discount in place, when no one is paying attention to utilization patterns at highest-cost facilities. Without the ability to identify these instances before employees get care, let them know of their options and guide them to the highest value facilities, overspending at these highest-cost facilities can have a significant effect on overall claims expense.
Fact: Employees deeply value their benefits. According to Glassdoor’s Employment Confidence Survey, nearly four in five (79%) of employees would prefer new or additional benefits to a pay increase.
Yet it’s clear that healthcare hasn’t kept up its end of the bargain. Only 57% of consumers report experiencing good customer service from their insurers. They’re also paying more than ever in their share of medical bills, are less sure of how to use their healthcare benefits and must often navigate the confusing and expensive system on their own.
Compare those stats to those from our book of business:
Change is never easy, but with the right partners and guidance, a better employee experience and deeper savings are within reach.
Fact: Giving your team access to wellness programs, customer service, case management and plan insight data are key elements in a managed health plan. However, disconnected systems can have limited impact at best, and at worst increase confusion for employees due to multiple contact points and incomplete information.
Think about the current ecosystem: In addition to your legacy carrier or administrator, you may have a wellness program vendor, advocacy company and others. Your team or employees may even work with multiple contacts or departments within each entity.
Companies are taking advantage of more comprehensive healthcare models that build these functionalities into one system. 18 percent of mid-sized and large employers make all or most of their benefit offerings accessible to employees on a single, fully integrated platform. Another 19 percent say they are working towards full integration. Furthermore, the J.D. Power 2017 Member Health Plan Study found health plans that utilize an integrated delivery system outperform traditional health plans on every factor measured in the study, including member satisfaction.
Partnering with the right health plan administrator can ensure proper management of your healthcare investment. Start by requesting a custom price variance report for your ZIP code to discover where you could be overpaying.