How can employers get better transparency from their insurance companies?
The No. 1 thing is understanding what the parameters are in the marketplace for different carriers. A lot of times, the insurance company will say that information is not available, but if you work with a consultant who understands the parameters or who has other customers that are receiving that information, he or she can leverage that to get the information.
Also, when you are putting your insurance out to bid, make it a requirement that whoever underwrites that business must provide a certain level of information on claims use.
A consultant can help navigate through the maze of rules and requirements for insurance companies and types of information and reporting that you can obtain.
How can having this information save an employer money?
Underwriters want information, and the more you can provide, the more confidence it gives them to drill down to what your actual costs should be. When they get more aggressive, you get a more competitive price.
For example, say a company is trying to save money and so it raises the co-pay for an office visit from $20 to $30. The insurance company will say that move is worth X percent. But a consultant can go back and say, ‘Actually, it’s worth more, because we have data that demonstrate a larger discount.’
How can transparency help a company budget?
It gives you a good idea of what is happening within your group. With a medical plan, the insurance company typically gives you 60 to 90 days’ notice of your rate increase, and you don’t know what that is until you get that letter. But if you have claims data, there shouldn’t be any surprises. Future costs are more predictable and you have a better idea of what the rate increases may show. This will help you make decisions about your budget and plan design changes, such as increases in deductibles and out-of-pocket costs.
The thing to remember is that having data is power, and it gives you more control. And with more control, you have more leverage in the insurance marketplace.
Employers that embrace and require their vendors to provide data will be in a much better position in the future than their competition. They will know the health status of their employees and have information to benchmark against their peer competitors, industry, geographic location and size.
Steve Freeman is president of USI San Francisco. Reach him at (925) 472-6772 or [email protected].
