Health care plans sometimes feel like a shell game. Consumer-directed plans. High-deductible plans. Health Savings Accounts. Narrow networks. Detailed deductibles for certain line items. It may sound great, but at the end of the day, it’s often just shifting cost to your employees, says Joe Turi, Vice President of Benefit Solutions at Zito Insurance Agency, Inc.
“Employers want to lower their premiums, while staying cognizant of the plan’s other variables. The problem is if an employer squeezes one part of the plan — the premium — just like a balloon, costs or a reduction in coverage pop out someplace else,” Turi says.
It’s better to take air out of the balloon by lowering the total premium cost, keeping the network as whole as possible and educating employees on how to best spend their health care dollars.
Smart Business spoke with Turi about how to manage a health plan with a focus on compliance and education to ultimately control costs and still serve employees.
Where do employers make mistakes?
Many employers are so focused on price, the plan loses quality and their employees get upset. Instead, they need to dive into the details of potential plans to really evaluate what’s covered and what’s not covered. Whether the company is a two-person group or a 2,000-person group, what it’s actually doing is financing health care claims while assuming prudent risk.
How should brokers help employers manage their health plans?
It starts with the employee relations component. The plan is a benefit that the company provides to attract and retain good talent. Employees have doctors they want to continue to see and hospitals they want to continue to access. The plan shouldn’t disrupt patterns of care, so how can the broker work with those doctors and hospitals in order to purchase health care better? The answer is managed care contracting.
Most brokers simply look at the discount arrangement — say 50 percent versus 25 percent. But what if Hospital A’s 50 percent discount is a $1,000 MRI, while Hospital B charges $500 for the same imaging with a 25 percent discount? After the managed care contract has re-priced that claim, it’s more cost effective to pay $350 than $500.
The broker and employer need to consider: Where do the employees go? How much are they going to pay for that care? Most importantly, how do they take their knowledge and get the biggest bang for their health care dollars? And, how do they transfer that knowledge to their employees?
Many times, it’s evaluating where the care is received — even on-site at work.
Do fully funded plans still allow access to this kind of detailed information?
Yes, but the process is different than with self-funded plans. For instance, a broker might need to collect Explanations of Benefits to see who is spending what and where. While employers cannot see that data, per the Health Insurance Portability and Accountability Act, a broker can report back to help create educational materials.
If education is so important, how can employers change employee behavior?
It isn’t easy, but over time, as trust is built up, there will be more adoption. It typically follows a 20-60-20 rule — 20 percent will be early adopters, the next 60 percent will follow along because they hear good things and the last 20 percent dig their heels in.
A broker who brings a spreadsheet every year and says, ‘This plan with this carrier will save you 2 percent over your current rate, so let’s go here’ isn’t helping minimize the risk. It’s better to take a consultative approach on compliance and education. The broker and employer need to work together to understand the cost drivers that impact the plan over time.
That’s when the air starts to come out of the balloon, the trend line comes down and cost increases are minimized.
Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.