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Employee Benefits

Make 2020 the Year You Stop Playing It Safe!

Brooks Deibele
Brooks Deibele
Enterprise Sales Leader, Employee Benefits

It’s easy to kick the can down the road, accept a medical trend that has historically outpaced inflation by a wide margin, make minimal changes to mitigate spend, and continue to play it safe. I get it. But, how is healthcare impacting other business decisions?

Evaluating the Cost of Healthcare

Some key things to ask yourself:

  • With deductibles and out-of-pocket maximums increasing to offset trend, can your employees actually afford to use their benefits? We focus a lot on the uninsured, but far too many Americans are underinsured.
  • Is delaying necessary care leading to an increase in high-cost claimants? More often than not, a good trend versus a bad trend is driven by high-cost claimants.
  • Are you investing enough in prevention? Investing in primary care, targeted clinical programs, and behavioral health can drive significant ROI.
  • Are you using open access networks that feature a wide range of both high-quality and low-quality providers with no effective means to steer your employees and their family members? There are a wide range of strategies available to deploy based on your goals and objectives to drive savings and more favorable outcomes.
  • Are you passively or actively managing your pharmacy spend? Significant savings can be realized when pharmacy spend is aggressively managed and transparent terms are negotiated.
  • In addition to your fixed costs, do you have a handle on what your administrator is collecting in additional revenue through shared savings programs? Fixed fees get a lot of attention, but in many instances, less transparent fees that get bundled into claims become significant expenses that need to be monitored and negotiated.

When it comes down to it, the cost of healthcare is mind blowing and far too often the results are not commensurate with outcomes, and people are getting downright mad.

In fact, the State of Montana was so fed up with escalating costs and huge variations in reimbursement rates across provider systems they implemented a reference-based pricing (RBP) approach to cap reimbursements and reduce variation in payments. You likely know that provider reimbursements rates are significantly higher on commercial plans versus Medicare and Medicaid plans. As enrollment continues to increase at a rapid pace in these two areas, more and more pressure has mounted on commercial reimbursement rates. Montana didn’t stop at RBP, they also found a Pharmacy Benefits Manager (PBM) that was willing to pass back 100 percent of rebates without taking any “spread,” which is a practice where a portion of the negotiated discount is retained.

The result of Montana’s decisions has significantly shifted the trajectory of healthcare spend for the state, savings millions every year without cutting benefits for enrollees. Other states have begun or are considering implementing similar approaches to get a handle on both medical and pharmacy spend. Private employers groups are also beginning to more broadly consider alternative health plan solutions to rein in costs and improve outcomes.

It should be noted that most provider systems claim to lose money on Medicare reimbursements, but Montana reimbursement rates are currently set at over 200% of Medicare reimbursements and the state is still seeing savings.

Push for Change in Healthcare

RBP and alternative healthcare solutions are not for everyone. There are certainly some challenges that can come with RBPs, including the risk of balance billing for the member if no agreed upon rate is set with the provider. With that said, there are many other leading-edge strategies for employers to implement to drive savings, protect your employees and their families, and steer to higher quality, more efficient providers.

To drive meaningful change in reducing costs and increasing quality, employers cannot continue to play it safe. Insurers, providers, and point solutions alone cannot be relied upon to change the trajectory we’re on. Employers must begin to embrace some level of disruption and force change, and Holmes Murphy can help. My colleague Jason Mahler recently wrote an article in the Houston Business Journal that talks about this exactly.

Additionally, our Holmes Murphy President Den Bishop is on a mission to rid the healthcare system of its cost, complexity, and coverage issues. These are just a couple of ways we’re “not” playing it safe. I’d love to talk with you more about it, so please feel free to reach out. What are you waiting for?

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