Strategic decisions are not made on a spreadsheet when there are factors in the real world that influence cost, quality, and access to health care.
There are a plethora of cost containment vendors in the self-insured health insurance ecosystem that focus their entire existence on driving down the cost of healthcare either directly at the patient level, or upstream at the employer level.
These solution providers may focus specifically on the self-insured marketplace, but the problems they are attempting to solve apply to all of us across the health plan spectrum regardless of the insurance financing platform. Let’s learn about some of these health plan cost containment strategies to consider.
Cost containment in this segment focuses simply on paying less than mainstream network contracts. These payment models may consist of either removing the network completely, layering in a prebuilt “narrow network”, leveraging Direct Contracts between providers and your company, or layering in surgical bundles. And in some instances doing more than one strategy at a time.
Removing the network typically means replacing the PPO or HMO’s network contract of fee-for-service payment agreements with multiple providers with a Reference Based Pricing model of healthcare claim payment. In this method, your plan administrator will pay claims at a percentage of Medicare’s fee schedule for medical care. These contracts typically range between 120% to 160% of Medicare rates. With many of the PPO contracts paying out over 300% of Medicare rates on inpatient hospital claims in many instances, the savings on these plans can be realized quickly.
Often offered alongside a Reference Based Pricing style health plan are “Incentive Tier” providers who have offered a Direct Contract to a specific employer or to a group of employers through an intermediary contract holder. Due to the lower claims pricing offered on these contracts, your health plan administrator can pass on those savings directly to your employees either through $0 copays or reduction or removal of deductible expenses.
But, not all solutions go to the full extreme of a Reference Based Pricing platform. There are also cost containment vendors who have created a “narrow network” of providers whose pricing is favorable enough to incentivize employees and their family members to use their services at reduced expenses to the employee at the point of service. Much like the Reference Based Pricing model, this is a fast way to reduce medical claims expenses to your health plan, but at a slight trade-off of savings in exchange for clarity and ease of use for your employees.
There can be gold hiding in plain sight when it comes to your prescription spending. Identifying which prescriptions your employees currently use is really the first step to unlocking the savings or in fancy insurance lingo, cost containment.
If your plan is on a self-funded platform either with a carrier based administrator (ASO) or a independent plan administrator (TPA), just simply shopping your historic prescription spending amongst competitive pharmacy benefit managers (PBM) might be the golden ticket.
But in addition to vender shopping to see who has the lowest admin and drug costs, you may want to identify any outlier prescriptions and match them back to the employee’s records to see if you can qualify them for either Patient Assistance Programs or Manufacturer Assistance Programs. Now, some of these financial assistance programs might not function properly if the prescription is covered by your health plan, so you may want to start asking the questions now about the ability to customize or remove specific drugs from your company’s covered drug list, a.k.a. “the formulary”.
A good resource to start exploring these types of prescription programs is Needymeds.org. You can also ask specific PBMs to look at your current drug list and see if any of their advocacy programs could identify and potentially work directly with your employees if you were to choose their PBM solution.
The critique here is that too many Primary Care patient encounters are very fast, drive-by type experiences where a physician needs to treat billable services and normally only focuses on sick care services as they are paid on a fee-for-service structure.
Rearranging this in either a flat per member per month model of payment or even an annual lump sum of money is the first step to adjusting this financial arrangement.
Many companies will invest in a local Direct Primary Care office to be that one-stop physician. Other companies will purchase bulk time slots from a dedicated Near-Site clinic or network of Near-Site clinics. And yet even others will work with a larger physician’s practice to become their preferred Primary Care Office where claims are not paid through the health plan, but these practices focus on well care, chronic disease management and medication adherence or reduction programs.
The pitch for cost containment on any of these arrangements is a progression of the member getting healthier and having more of their services handled by the Primary Care Physician versus getting referral to “up-stream” to higher priced specialists or hospital owned diagnostic and imaging centers.
This one makes sense when you’ve been a patient in the midst of a healthcare crisis. You need an advocate to help navigate the healthcare maze and get the best care possible.
Where this cost containment solution goes a bit further is all about the level of engagement you ask of the advocate program you would consider purchasing.
Would you like an advocate to ask “why” an employee needs an ID card when one is requested? Well, if you think about all of the myriad of claims costs that are likely about to hit your health plan, of course you would.
You can place an advocate in front of your health plan in such a way that they can help steer your employees to the highest quality providers for services. And man, wouldn’t it be nice to get them healthier faster?
You can also embed an advocate as a core function of your health plan. You can replace your carrier’s call center with an advocate team who is going to focus on quality and cost. You can even arm these advocates with additional savings programs outside the mainstream programs from your health insurance plan if the costs make sense. And, you can also start to intercept potential outpatient or inpatient surgeries as early as a request for a diagnostic lab, x-ray, or when a complex imaging request comes in for pre-certification. Again, how much of a better experience would it be for the patient to have an advocate discussing available options at the beginning of a healthcare journey versus trying to intercept and redirect a decision for surgery after the patient has self-directed their research amongst their primary care and specialist physicians without any guidance. Lots of money can be saved right here.
The list can become endless once you start down the cost containment rabbit hole. I’ve highlighted just the big ones above, but know there are any more great programs like the ones that focus on Physical Therapy for Musculoskeletal (MSK) issues, Diabetic management programs, Cancer Care programs, and many, many more.
If you can identify a need, you can start to find a way to make both the patient experience and your company’s financial expenditure better through these health plan cost containment strategies.