Employers Move Ahead On Healthcare Without Washington

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

Employers Move Ahead On Healthcare Without Washington

With renewal season just around the corner and Washington unable to identify a viable plan for healthcare, employers are being left to fend for themselves when it comes to reducing their health insurance costs.

The good news is that both employers and individual consumers have already started to solve the healthcare problem out of necessity rather than wait for Washington.

In this four-part series we are examining the positive impact when stakeholders properly diagnose and start to solve the right problems. Regardless of which stakeholder you represent – consumer, employer, politician or simply a member of society – it is time for new conversations that will lead to new solutions.

See how employers are already addressing the problem that isn’t being discussed in Washington.

Cost of Care

As a professional in the health insurance industry it has been extremely frustrating to watch elected officials on both sides argue as to the best solutions for delivering affordable health insurance to Americans. While the Obama administration delivered on the promise to increase access to healthcare for a certain segment of the population and offered subsidies to assist with the purchase of insurance, it did nothing to reduce the actual cost of care.

Now with a new administration in place Washington continues to fixate on issues that have little relevance or impact in addressing the real problem behind rising health insurance costs and that is what providers charge insurance companies for their services.

The cost of the healthcare being sold to insurance companies is what drives our insurance costs. If you read my post from last week you understand that the problem starts with the fact that healthcare providers have long been rewarded by insurance companies for charging more for services once an insurer is involved.

If you missed that post you can read it here.

New Conversations for Employers

Because employers are writing the check for nearly 50% of all healthcare coverage in the country*, more and more are taking matters into their own hands and starting new conversations that address the cost of care versus the cost of insurance.

The Old Conversation:

Your broker shows up in your office for the annual renewal discussion. You discuss at length the cost of health insurance and discuss changes you can make to your contribution structure, plan designs, etc. as ways to lower your costs.

The New Conversation:

The new conversation for employers centers around the various ways you can go about controlling the cost of the care being delivered to your employees. Employers have more control than they think.

When working with employers to reduce health insurance costs I look at the opportunities in 3 areas:

  1. Education
  2. Motivation
  3. Innovation

1 – Education

The biggest impact employers can make when it comes to reducing costs is to educate, educate, and educate some more! As long as you’re writing the check it’s up to you to teach employees how to be better consumers of healthcare. Each time an employee chooses to save on healthcare it is money saved for all stakeholders. Unfortunately this is an area where employers spend very little time even though it costs them nothing.

Employers are not expected to be health insurance experts. I encourage business owners to lean heavily on their employee benefit specialists or insurance brokers to develop a robust communication campaign that teaches employees about all of the 101 ways to save on healthcare. It costs you nothing but the return can be significant.

2 – Motivation

When employees better understand how to navigate the health insurance system, you empower them to make decisions that are in the best interest of both their health and their bank accounts. I tell all employees that no one is as motivated to save them money as they are.

Employers should make every effort to make this motivation work in their favor.

3 – Innovation

There has been an influx of innovative insurance plans and products in the last few years that employers should be exploring with their insurance professional each year. These products come with various built in mechanisms that help employers better manage and reduce the cost of the care being delivered.For example, imagine an employer-sponsored medical plan that reimburses healthcare providers using Medicare pricing as a basic reference. It is an increasingly popular, aggressive cost control strategy that abandons the “network” mentality and simply pays 150% – 200% of what Medicare would pay for that same service. Referred to as Reference based pricing it is typically used for procedures with high cost variation but low quality variation, like joint replacement surgeries or certain medical tests.

I recently received a claim in my office for a
4 day hospital stay at Banner Gilbert.

The hospital billed the insurance company $59,427.80.

I had the hospital bill repriced by a vendor that sells
Reference Based Pricing plans to employers – meaning they
use the Medicare reimbursement schedule of fees
as a basis for paying claims – or (MCR).

At 100% of MCR that same hospital bill came back at $12,873.81:
a savings of $46,553.99.

At 150% of MCR it came in at $19,310.73:
a savings of $40,117.07.

Some Reference Based Pricing plans will pay providers
up to 200% of Medicare, which still offers a
significant savings over traditional network billing and
reimbursement practices while maintaining a
substantial profit margin for the provider

Shifting Focus

For years now, we have argued, legislated, and argued some more about all matters related to how we BUY healthcare. How we buy it for the poor, for the elderly, for employees, for people with pre-existing conditions, and the list goes on. Now, access to care sits as the largest hurdle for Repeal and Replace agendas.

The new conversations of tomorrow shift focus to how healthcare is being SOLD. We are increasingly seeing evidence that healthcare is made more affordable when we abandon the insurance provider network system and enter into contracts that allow us to negotiate direct, fees that are “reasonable and customary” for a particular service and for which providers can still profit and are willing to accept.

Which begs the question, if the network discount system was designed by insurance companies to make healthcare more affordable for consumers, is it still working? If not, isn’t it time we talk about it?

Ready for a New Discussion About Health Insurance and Employee Benefits?

Contact me at 602-903-4047, or jmorrow@employerbenefitsandadvice.com.

Next Week – New Conversations for Washington

*Source: Kaiser Family Foundation, Health Insurance Coverage of the Total Population 2015