That niggling doubt in the back of your mind isn’t just your imagination. It’s likely that you’re not getting the lowest rate for group benefits. How do we know you’re overpaying? Simple – just about everyone is.
Cost transparency is a trend these days. Over the last 15 years, websites including Healthcare Bluebook,NewChoiceHealth and GoodRx have been making costs clearer to consumers. Others have been reviewing doctors and facilities to find out who offers the best care, with the best outcomes. For example, Healthgrades, RateMDs and Vitals posts reviews from patients and helps you find the right doctor for a given condition.
With all this data, it’s no secret that business health care costs are inflated. The question is, what can you do to control those costs? Two options below: one focused on the consumer, the other on your business.
1. Make employees active participants
Let’s start with consumer-directed health plans. According to the NCBI, these “are health insurance plans that use high deductibles coupled with personal health spending accounts to increase consumer accountability for health care spending.” They make the consumer (your employees and their enrolled dependents) more responsible for the cost of care, relieving your business of some of that burden.
2. Control costs by designing your own plan
Controlling costs doesn’t have to stop at the consumer level. As a business, you can make an even bigger dent in your healthcare costs, especially your premiums, with self-funded health insurance.
What is self-insurance? Wikipedia defined it as an “insurance arrangement whereby an employer provides health benefits to employees with its own funds.” Unlike fully-insured plans, where you contract an insurance company to cover your employees and their dependents, self-funded plans require you to shoulder the risk yourself.
If your eyes just bugged out a bit, let’s add a quick caveat. Yes, self-insuring companies are responsible to pay their employees’ medical expenses. But the liability on these plans is not unlimited. Businesses can set limits on individual and total (aggregate) payout, drawing hard lines around their claims exposure.
They can also control how the plan is designed. Here we come to one of the great benefits of a self-funded plan: you decide which benefits to offer and what your terms of eligibility will be. You analyze your own claims data, determine the best benefit design for your employees, and guarantee the best possible rates.
Speaking of rates, this is an idea worth explaining. There’s a big difference between retail and negotiated rates. Retail rates are hugely inflated; on this level, even a deep discount isn’t enough – you’ll still be overpaying. Negotiated rates, by contrast, start with the lowest available rates, usually the Medicare rate, and work from there.
For example, say a facility charges $5K for an MRI. A carrier may pay only 50 percent ($2,500) through their PPO network contract. That sounds like a great deal, until you find out that the true regional cost of an MRI only comes to $1K, and that with negotiation, you could be paying $1,400 instead of $2,500. By switching to negotiated rates through a self-funded plan, you gain a major opportunity to reduce costs.
That said, if research and negotiation sound daunting, be aware that you don’t have to navigate it alone. A good broker will do the legwork, find the lowest or best-value rate and negotiate it for you. To learn more about self-funded health insurance, check out our previous article, “Self-Insured Health Insurance Plans: Could Your Small Business Benefit?”
Healthcare is a complex industry. But when you approach it strategically with competent guidance, you can cut your annual healthcare benefits costs by 15 percent or more. We know, because the businesses we partner with have done it.
It feels good to know you’re paying the best price for your benefits program, and to have money in the bank at the end of the year for hiring, system upgrades and other investments.
At BeaconPath, we can help you develop a strategy that looks five to 10 years down the road, achieves significant cost-containment and gets your business performing at its highest level. Contact us to learn more or download our Self-Insurance Self-Assessment to determine if self-insurance could be right for your company.