The Next Innovation In Controlling Healthcare Costs
As healthcare costs continually increase, understanding where the cost come from and how to manage them is critical. Bruce Barr gives a great editorial on why new trends are essential in controlling costs.
Original post from EmployeeBenefitAdviser.com on August 1, 2016.
Four decades ago, PPOs were hailed as the “silver bullet” to control healthcare costs. Participating providers were contractually obligated to accept discounted fees, which seemed like an obvious solution to out-of-control increases in healthcare costs. Self-funded plan sponsors readily adopted this approach to gain access to network discounts and lower their healthcare costs. In fact, some self-funded plan sponsors still periodically conduct a re-pricing analysis or another method of comparing which PPO yields the best discounts for their specific group.
However, as provider contacts expired, they were renegotiated at higher rates for providers and higher costs for plan sponsors. In addition, hospital charge-masters have increased at an exorbitant pace and have largely gone unregulated and uncontrolled. As a result, the significant discounts once achieved by PPOs no longer deliver the true savings that were seen in the 1980s and 1990s.
For example, a 60% discount on a $1,000 “oral cleansing device” (more commonly referred to as a toothbrush) clearly does not deliver value for the plan sponsor or member and is indicative of some of the billing practices that go undetected. The same could be said of a $150,000 knee replacement. Using a PPO for its discounted fees is somewhat analogous to buying a car by negotiating a discount off the list or sticker price.
As employers gain a better understanding of the questionable value of PPO discounts and pricing optics, reference based pricing (RBP) and reference based reimbursement (RBR) provide possible solutions by addressing the demand for:
· Price transparency,
· Benchmarking the cost of claims,
· Eliminating inappropriate charges, and
· A fiduciary or co-fiduciary serving on behalf of the plan sponsor.
With RBP, the plan specifies the amount that will be allowed for certain common procedures such as MRIs or knee replacements based on prevailing charges. Covered members have access to a list of participating providers who have agreed to accept these payments. Should the member choose a higher-priced provider, he or she may be responsible for the balance of the payment.
RBR uses a common “pricing reference” — often tied to the Medicare allowance and the actual cost for a specific service – and then reimburses the hospital or facility an additional 20-80%, allowing for the provider to make a “fair and reasonable” profit. For context, many PPO discounts result in net payments equal 250% or more of the Medicare allowance.
There are different ways this strategy can be implemented. Some employers begin using RBR exclusively for out-of-network claims. In other cases, RBR is used for all facility claims in conjunction with a PPO network for physician claims or an accountable care organization.
While used successfully by many employers, RBR can be disruptive for some employees when a provider attempts to “balance bill” patients for the difference between the set plan allowance and the provider’s billed charges. In the overwhelming majority of cases, however, these issues are quickly and easily resolved in favor of the plan sponsor and member. Rarely does a discrepancy like this lead to legal action.
Employers who decide to implement a RBR strategy need to carefully select a partner with expertise in communicating and educating employees about how these arrangements work and what to do should they receive a balance bill. The RBR partner should also have expertise in negotiating pricing discrepancies with providers, providing employee advocacy, indemnifying the plan and its members, and modifying the language in the plan document.
Many early adopters of this approach were often those who were subject to extreme increases in healthcare costs and who saw RBP and RBR as a last ditch effort that would enable them to continue to provide medical benefits for their employees. We’re now beginning to see more employers adopt this approach as a way to more effectively determine and control the cost of healthcare.
See Original Post Here.
Source:
Barr, B.F., (2016, August 1). The next innovation in controlling healthcare costs [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/the-next-innovation-in-controlling-healthcare-costs
5 Top Employee Benefits Questions and How to Answer Them
Original Post from BenfitsPro.com
By: Monica Majors
Legislative changes continue to markedly affect the health benefits marketplace. Employers and their workers face challenges on a number of fronts. Along with those challenges come questions that range from current and future requirements of health care reform, to providing adequate plan coverage that serves employees well.
By understanding the top-of-mind employer benefit issues and responding to them appropriately and effectively, brokers and advisors can better serve existing clients, attract new ones, and help employees protect themselves and their families going forward.
1. How can I meet my employees’ needs?
A key concern of today’s employers is making sure benefits they offer for both prospective and current employees are competitive. Businesses recognize the role a solid benefit program plays in attracting and keeping good talent, and they want to know what is included in plans offered by their competitors.
Brokers serving the health benefits marketplace can best serve customers by knowing the current market landscape well, speaking confidently about it and sharing that knowledge with customers. Key to this knowledge is understanding what the employer currently offers, what types of employees make up its workforce, what their needs are, and what gaps may currently exist.
Then, talk with insurers and learn what industry and market insight they may possess based on geographic and industry-specific factors. Search out findings made available from insurance- and customer-specific industry research organizations and trade associations. You can also mine data from within your own office, such as aggregated customer information by industry.
Integrate all of this information with comprehensive benefit offerings available from the carriers you represent, and show employers how they can gain a competitive market advantage with the right benefit plan.
2. How can I control my costs?
The question of controlling costs is common for obvious reasons. Small groups, in particular, are looking for creative ways to keep their health benefit expenses down. Brokers can address this question by understanding current offerings and combining that with knowledge of the plans available through the carriers they represent.
Understanding the various coverage tiers available and sharing that knowledge with employers is key. Often, implementing a health benefit program that meets the minimum required coverage levels brings the lowest cost.
Other cost-reduction strategies include addressing coverage for dependents or part-time employees. Some employers may consider eliminating dependent coverage or reducing contributions for this coverage. Also, determine with the employer the cost versus the benefit of including part-time staff in the plan. Employers may need to make tough decisions to maintain viable programs for employees.
Employers need to consider other costs that may come into play. For example, new IRS and ACA reporting requirements for employers to notify employees about new mandates bring with them administrative expenses. While they may not be able to eliminate these costs, brokers can help provide guidance and increase awareness around the changing requirements. They can also recommend approaches that might help employers streamline the process to reduce the impact of the requirements.
3. What about exchanges?
Employer questions about health benefit exchanges are prevalent. How do the exchanges align with the employer’s desire to deliver benefits in a cost-effective manner? What advantages do they offer? What are the drawbacks? Brokers need to be familiar with individual and group exchanges — both private and public.
Brokers working with some employers may find that certain tax advantages come along with using a public exchange. Private exchanges offer other benefits, from cost-management tools to a broader set of administrative support options and a choice of benefit options that extend beyond basic medical coverage. Group or employer-focused exchanges are becoming increasingly popular as a way to efficiently manage health benefits. Brokers should become familiar with the pros and cons, as well as processes involved.
It’s important to understand the advantages for different employer groups, as well as the reputation and satisfaction levels of exchanges, and use that knowledge to help employers select the right option.
4. What’s on the horizon?
Large employers are concerned about looming changes. They wonder how new regulations—for example, the Cadillac tax —may affect them in the future. Brokers need to be knowledgeable about what is coming down the pike, and how to minimize negative resulting impacts.
Preparing for the Cadillac tax, for example, may require a strategy shift. While the tax is primarily levied against health plans for coverage deemed “too rich,” it will ultimately affect employers and workers. Health plans are likely to pass off at least some of the costs to employers in the form of higher premiums. Employers may then pass costs off to workers in the form of higher cost-sharing arrangements. Of course, employers will have to consider how this will impact employee retention and recruitment.
The Internal Revenue Service posts helpful information about the ACA’s requirements on employers on its website: irs.gov/affordable-care-act. The Centers for Medicare & Medicaid Services website is another valuable resource: cms.gov/cciio/.
5. Why you?
The final top question may be one employers don’t explicitly ask; but it’s one you need to answer: “Why should I use you as a broker?” How is it that you set yourself apart from other brokers — industry knowledge, market strategy or customer service? Brokers need to carefully and clearly explain benefit plan designs, educate employers, guide them through the maze of changes in the benefits arena, and explain all the implications.
Building knowledge is the first part of the answer. Learn about laws, regulations and your employers’ workforce attributes. Learn more about the products offered by carriers and through the exchanges. Combine that knowledge with employer and employee data you capture to design programs that can help employers attract and retain good workers. Work with financially strong carrier partners to find and deliver the right benefit plans, and consider offering your clients a multi-year strategy where appropriate. And leverage administrative, technology, client portals and other resources your carrier partners offer.
Be sure to document and explain the advantages you can bring to the employer. Also, encourage satisfied customers to provide testimonials, directly and on social platforms, and then share these testimonials and references to help differentiate yourself and your shop from your competitors.
By understanding the needs of your clients, offering cost control solutions and keeping businesses apprised of changes on the horizon, you set yourself apart from other brokers and demonstrate your value as a trusted adviser. New and existing clients will come to you year after year for help in designing affordable health benefit plans that will attract and hold onto good workers.