Each month, employers dutifully pay their health care premiums, but many don’t understand what they’re getting for their money.
By demanding claims data transparency in health plans, employers can better understand their expenses and shift money to the areas that will best benefit their employees.
“A lot of insurance companies don’t want to give you that information for a lot of different reasons, but that’s like getting a credit card statement without any detail about your purchases and just paying it,” says Steve Freeman, president of USI in San Francisco. “With claims data transparency, the insurance company provides the employer with the details of the claims expenditures. And the more information you have, the more power, leverage and control you have over your health care spending.”
Smart Business spoke with Freeman about claims data transparency and how employers can use it to control their health care costs.
Why are insurance companies reluctant to share claims information with employers?
If an employer knew it had a better-than-average claims experience, it could more easily go to another insurance company and get a better deal. Employers with a worse-than-average claims experience would see their information and know they couldn’t get better rates elsewhere, and wouldn’t bother seeking out a better deal. This leaves the insurance company with only risky clients.
Some insurance companies will provide the information for companies that are at a certain size employee group, for example, 200 members. Others will say they need 200 members in each of the plan choices, such as POS and PPO plans. Also, insurance companies have different rules regarding data depending on the state in which employers are doing business.
How can employers benefit from health care transparency?
Typically, health care premiums are the second-largest expense for most employers, behind payroll, and they need to get their arms around what is driving premiums.
Transparency gives employers a better understanding of claims utilization by employees and what services are being used. Are people going to the emergency room, versus utilizing an urgent care clinic? How many office visits have employees made? What is the hospitalization rate, prescription drug usage, large claims information? How are disease management programs being utilized? What is inpatient utilization versus outpatient utilization versus benchmarking norms? Is the employer above or below those benchmarks?
At the end of day, claims costs drive premiums and rate increases. But if the insurance company doesn’t give you any information, it’s hard to know where you stand.
How can this information help an employer structure a wellness program?
This information gives you more detailed aggregate information about your population and its needs, allowing you to offer more customized solutions. If you have a lot of employees with conditions such as asthma, diabetes or high blood pressure, you can craft a more customized wellness program, instead of just guessing and pulling one off the shelf.
