Larger employers that self-fund their group medical plans have historically selected their health plan administrators based on the available provider network, the discounts applied to in-network services, and the competitiveness of the administrative fee. Self-funding by itself does not reduce claim spending, not even by a dollar.
What are you doing to reduce your frequency and size of claims? Annually quoting and shopping your group does nothing to reduce your frequency and size of claims. Stop reducing your benefits, increasing co-pays, increasing deductibles, increasing employee contributions and reducing providers. This has the opposite desired outcome.
Access to in-network providers is evaluated based on proximity. Another important factor is continuity, which is analyzed by comparing networks to the providers currently used by plan members to determine the potential degree of disruption if a change were made.
“Healthcare Business as Usual,” also referred to as Einstein’s definition of insanity; more is needed for sound financial analysis in today’s dynamic health marketplace.
Putting It All Together
The basics are still important and complicated and hard to arrive at 100% accurate results. Carrier transparency exists only to a minimum degree. The rapidly changing nature of the health care market creates the need to complement historical efforts with added analytics to better understand the total equation. Any decision is a moment in an ongoing process, but that decision should be grounded in the best possible foundation for an informed decision. Is there a New Simpler Approach to Health Plan Financial Analysis or Healthcare Consumption Audit?
I believe so.
Scott Hettesheimer has 43 years of experience as a consultant and strategist helping employers evaluate and select health benefit plan service providers. This discussion is intended to illustrate the complexity wrapped in “Healthcare Business as Usual.”
Each employer should consider its own goals and priorities and identify the number one reason people buy health insurance: to have access to the very best healthcare available at times of need.
What is your health insurance company doing to present the best available healthcare at the time of need?
Let me simplify and replace the above complicated, “Healthcare Business as Usual” process.
The second concern is the cost and percent of the increase. 80% of your premium paid is used to pay claims – the ACA law. How do you compare which insurance company benefit plan is going to best reduce cost and flatten renewals? The advertised benefit of a network is their discount. When pricing per procedure is variable, and discounts are arbitrary, there is no way to arrive at accurate numbers. Remember MLR from the ACA, it states insurance companies cannot raise rates. The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%. Insurance companies selling to large groups (usually more than 50 employees) must spend at least 85% of premiums on care and quality improvement. (source www.healthcare.gov)This is the ACA, law. Claims must increase so insurance companies can increase profit and increase shareholder’ value.
Employers always ask how can our solutions create real savings? Aren’t we just “buying” a discount today so you can raise your rates next year? ABSOLUTELY NOT. Sustainable saving is created by paying a fixed percentage of Medicare without any chargebacks or balance billing.
To calculate what this means to you financially, you need:
1. Identify your past 12 months of paid claims
2. Identify what percent of Medicare your network pays
3. Adjust to determine the “True Cost” or Medicare cost
4. Apply our paid percent of Medicare to the true cost you just calculated
5. Compare your data; your answer to 1. To your answer in 4.
Now you know the difference in cost by having a Network, any Network (a discount plan) and not having a network, a “True Cost + Plan.
To verify the above, refer to the Rand Study
Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely
Findings from an Employer-Led Transparency Initiative
What are you doing to reduce the frequency and size of claims?
What is your insurance company doing to control and or reduce claim spending?
Additionally, our solutions vet physicians and hospitals to identify the performance and cost.
1. Comparing pricing per procedure charge
2. Illustrate clinical and financial outcomes
3. We score physicians with a grade – A thru F for outcomes
4. Replace networks @ 250% of Medicare with 140% to 70% solutions
5. Remove Network limitations, replace with any doctor, any hospital
Each employer should consider its own goals and priorities.
You should seek the guidance of a qualified adviser.
Contact Mr. Hettesheimer for a Consultation!