Myths about self-funded health plans

Historically, self-funded health plans have been most effective for very large corporations. But with the rising cost of health care over the past 10 years, at a rate of nearly 10 percent, other alternative-funded solutions have become a viable option for many employers, even those with smaller employee populations.

Today, it is estimated that 61 percent* of companies within the U.S. self-fund at least a portion of their health plan, and since the passage of the Affordable Care Act (ACA) in 2010, there are even more benefits for employers who are willing to explore alternative-funded solutions to provide quality health benefits to their employees.

Smart Business spoke with Susan French, director of marketing at HealthLink Inc., about what employers really need to know about self-funded health plans.

What does the self-funding environment look like today, compared to five or 10 years ago? What do you expect for the future?

The ACA actually brought an increased interest in alternative-funded options for small group employers because many were unsure about offering an ACA-regulated plan. Also, alternative-funded options aren’t subject to certain taxes and mandates and are typically less expensive than fully insured plans.

As employers become increasingly more informed and involved in the health care benefits they purchase and offer to their employees, they are demanding more for their money. As insurance premium rates continue to rise, employers will also continue to seek new and innovative solutions to meet their needs. Alternative-funded options offer a variety of arrangements and the high-level of flexibility that employers are searching for.

Why would an employer consider moving to an alternative-funded option?

One of the key advantages to alternative-funded arrangements is increased cash flow. With an alternative-funded plan, an employer pays claims as they are incurred, rather than paying fixed monthly premiums to cover services that may or may not have been rendered. For many employers, this can positively impact their cash flow.

Another advantage that attracts employers is the flexibility to customize the benefit offering to fit their employee population. In an alternative-funded arrangement employers can work with the consultant and third-party administrator of their choice to build the plan they want.

There are also a variety of other cost-containment and reduction opportunities that can be particularly effective in an alternative-funded arrangement.

What are the most common misconceptions that you spend your time debunking?

Many employers are open to exploring new options and breaking away from the way health plans have ‘always been.’ Therefore, it’s far more productive to concentrate on educating employers that there may be a better way to control their spending.

Typically, misconceptions are easily disproved by focusing on the advantages of alternative-funded arrangements, such as the ability to use data to analyze fixed and variable costs to affect outcomes, as well as the opportunities for provider collaboration and enhanced cost containment.

How do the most effective companies handle the risks of a self-funded health plan?

Employers deal with risk all the time — this is nothing new. Alternative-funded arrangements often include an additional layer of stop loss insurance that outlines risk, protects against high-dollar claims and limits the amount of claim expenses an employer is liable for. As with many aspects of business, employers who are comfortable and strategic with handling risk are often the most successful with alternative-funded plans.

What else do you wish employers understood about self-funding?

There are many different types of alternative-funded arrangements, so employers shouldn’t focus solely on traditional self-funded solutions only. There are arrangements that act more like fully insured plans but can still offer employers the flexibility and security of a financial backstop they are looking for.

In today’s health care market, the savviest employers should be open to exploring all their options before deciding what is best for their company.

* 2014 Kaiser Family Foundation Employer Health Benefits Survey


Insights Health Care is brought to you by HealthLink Inc.

How stop-loss insurance can reduce the risk involved in self-funding

As more businesses look at self-funding as a way to control their health care costs, it’s not uncommon for stop-loss insurance to be part of the discussion. In fact, according to a recent study from QBE Solutions, 60 percent of self-funded employers now have stop-loss insurance.

While some businesses choose to forgo stop-loss to avoid the extra monthly premium costs that come with it, many others have determined it’s a necessary measure to protect their business from unexpectedly high claims.

“Organizations assume more risk when they self-fund, but most want safeguards in place to protect their business,” says Amber Hulme, Medical Mutual regional vice president for Central Ohio. “While insurance carriers have set products to offer, there is also typically a fair amount of customization involved in terms of the contract. It’s important to get all the pieces right.”

Smart Business spoke with Hulme about how stop-loss insurance works, why it could be a valuable tool for organizations that fund their own health benefits and what types of contract decisions could make a big difference in the long term.

What is stop-loss insurance?

Stop-loss insurance limits risk for a self-funded employer when one employee has a catastrophic claim, as well as when claims for the entire organization are higher than a set amount. It insures the employer, not employees or other health plan participants.

Stop loss policies are initially written as indemnity policies. In others words, the employer pays the claim and the carrier then reimburses them.

How does it work?

Well, there are two types of stop-loss insurance — specific and aggregate. Specific stop-loss limits the amount an organization would have to pay for an individual claim from a specific employee. Usually an organization pays a monthly premium based on how many covered employees it has.

Aggregate stop-loss limits the total amount the organization will have to pay in claims, for all of its employees for the full length of the contract.

Most choose to have both types of stop-loss insurance to cover both scenarios.

Why is stop-loss getting more attention lately?

One reason is because self-funding is getting more attention, especially for small businesses that have 50 or fewer employees. In 2018, those businesses may lose the transitional or ‘grandmothered’ status that has kept them exempt from many aspects of the Affordable Care Act.

Stop-loss insurance is one of the most crucial elements of a self-funded health plan, because it’s the best way to help the plan limit its risk. So, as more organizations take on the financial risk of self-funding their employees’ health care coverage, stop-loss will continue to be a critical component.

What factors should organizations consider?

There are several contract provisions that organizations need to understand and take into account.

One of the most important aspects involves a practice called lasering. When insurance companies give a quote or a rate renewal, they might place a higher deductible on certain individuals or even exclude them from coverage. That’s called lasering. Organizations need to understand their insurer’s policies on lasering, and how it might affect their coverage when it’s time to renew their contract.

Is there anything else to consider?

One of the biggest factors in stop-loss, and self-funding as a whole, is to know your population. Most insurance companies need to know about any employees with a history of high claims or any known health risks before they will even give a quote. It’s a good idea for organizations to be prepared with that information ahead of time.

There are various types of stop-loss coverage available, so start by talking to your insurance carrier or other stop-loss carriers to find out which options make the most sense.

Insights Health Care is brought to you by Medical Mutual

Is your corporate wellness program EEOC compliant?

There’s a good reason why more employers are offering wellness programs than ever before. The advantages are well documented — a successful wellness program can increase productivity, lower health care costs and reduce absenteeism among workforce.

In addition, a wellness program can boost employee satisfaction and loyalty, which helps with recruitment and retention.

Employer-sponsored wellness programs often involve participating in health risk assessments and biometric screenings to determine risk factors for chronic conditions. Some employers and health insurance plans offer incentive to employees who participate in wellness programs or achieve certain health outcomes.

“There’s been some concern that using incentives to boost participation may violate federal law, relating to Title 1 of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act,” says Tom Drennan, director of EAP Account Management at UPMC WorkPartners.

In May, the U.S. Equal Employment Opportunity Commission (EEOC) issued final rules to amend the regulations and offer guidance on how to implement them.

Smart Business spoke with Drennan about what employers need to know to offer wellness programs that are compliant with federal law.

How exactly must wellness programs be designed, under this final guidance?

Wellness programs must be designed to promote health and prevent disease. Employers can’t collect information simply to have it or to calculate future health-related costs.

Wellness programs that collect health information — typically through health risk questionnaires and medical tests and screenings — must use this information to create a program that addresses at least one of the employee’s identified conditions.

If the wellness program collects information but does not provide advice that helps participants improve their health, it does not meet the requirements of a well-designed program.

Employers must also tell employees in writing how their medical information will be obtained, used and disclosed. The EEOC has created sample notices for employers to review.

Can employers make employees participate in a wellness program? What kinds of incentives are allowable?

Participation in wellness programs must be voluntary.

The EEOC states that in order for a program to be voluntary:

  • Employers can’t make employees participate in a wellness program.
  • They can’t penalize employees for not participating.
  • They can’t make health benefits conditional upon participating.

The incentives for not participating in a wellness program can’t exceed 30 percent of self-only coverage.

How did the EEOC address privacy concerns?

Employers generally can’t have access to an individual employee’s health information.

The existing confidentiality requirements that are part of the ADA rules haven’t changed. But two new ones have been added:

  • An employer may not require an employee to agree to disclose medical information or waive any confidentiality protections as a condition for participating in a wellness program.
  • Any data gathered by the wellness program and then shared with employers must generally be in aggregate form that isn’t likely to disclose the identity of individual employees, except as necessary to administer a health plan.

Tracking how wellness programs use personal information can be tricky for human resources professionals. There are many advantages to working with a company that is experienced in keeping your company compliant.

Insights Health Care is brought to you by UPMC Health Plan

How to use tiered and narrow networks to control health care costs

If you’re an employer, chances are you’re looking for ways to control health care costs, yet still provide high-quality coverage to your employees.

Health insurance plans with restricted networks are becoming an increasingly popular option for businesses looking to curb rising employee premium costs. When done right, they can save money without sacrificing quality. However, limited networks can confuse even the most astute employer — not to mention employees.

Smart Business spoke with Kimberly Cepullio, VP Sales, Account Management and Product Development, UPMC Health Plan, about restricted networks, including some questions to ask as you weigh the choices for your health plan.

What’s the difference between narrow networks and tiered networks?

In a narrow network a health insurance carrier contracts with select doctors and hospitals that charge lower prices, or have a track record of quality. By steering a greater volume of business to these providers, insurers can negotiate lower prices. The savings are passed on to employers and their employees in the form of lower premiums. The tradeoff for lower premiums is less choice for members.

A variation of the narrow network is a tiered network, which offers a potential compromise. In this plan design members have access to a broad network of providers. Within this broad network, health care providers are ranked based on cost — and quality. Differing cost-sharing arrangements drive members toward certain providers.

Members have the lowest cost share when they receive care from level one providers. Their out-of-pocket costs are higher when they see providers in other levels. This type of plan lets your employees decide whether to incur higher costs to see their preferred provider, or have a lower cost share and see the network’s preferred providers.

What kinds of questions should employers be asking when considering tiered or narrow networks?

  • Does the network encourage improved patient outcomes? The main objective of tiered or narrow networks is to lower costs for employers and members. Some plans also seek to improve patient outcomes by incentivizing its preferred providers to provide coordinated care and achieve certain quality metrics. For example, a shared saving arrangement ties provider payment amounts to the ability to stay within budget while meeting quality standards.
  • Is there an adequate pool of providers for the patient population? Normally this isn’t a problem but employers need to be careful here. For example, some narrow networks offered by some insurers may not include providers who offer highly specialized care. For some patients, especially those with complex health conditions, such restrictions can be problematic.
  • How well do your employees understand their options? Many members choose a plan with a narrow network because of the lower premiums. People may not understand the tradeoff between choice and price. Make sure your insurer has a communication plan to explain what it means to choose a narrow network. Before committing to a plan, employees should be able to search for doctors in the network they’re considering to see if their doctor accepts that plan.

In general, including a tiered network plan among your insurance offerings to your employees is a smart move. It incentivizes employees to seek medical care at preferred or low-cost tiers. That’s a good thing for them and for you.

The key is to not limit the employee’s ability to get the care he or she needs from the provider that is in the best position to provide that care. Therefore, it is especially important that employees with unusual or complex medical conditions take extra care when it’s time to select a tiered plan. Once they choose their plan, their complex condition may force them to pay a higher cost to have that condition treated at a non-preferred provider. Again, this is why communication is key to making wise choices.

Insights Health Care is brought to you by UPMC Health Plan

How organizations can become better prepared for open enrollment

Fall is upon us and we’re getting closer to the end of 2016. That usually means it’s time for health insurance open enrollment for the coming year. This can be a confusing and stressful time for many employees. Is there anything organizations can do to make the process go more smoothly?

“Research shows that employees are not as well-informed about their benefits as human resources (HR) professionals might think,” says Veronica Hawkins, Medical Mutual vice president of Statewide Accounts. “There are a variety of ways organizations can communicate better and make the rollout of health care plans easier.”

Smart Business spoke with Hawkins about the ways organizations can help their employees understand the process, while also helping them become better health care consumers.

Why is open enrollment so confusing for employees?

Most employees don’t consider themselves to be very knowledgeable about health insurance. They’re also unsure about when they can make changes to their plans. Less than half know they can change their benefits because of qualifying life events, like marriage, divorce or the birth of a child.

This shows that employers can do a better job of informing employees of their options.

What should organizations ask of their carrier?

After an organization has made the decision about which health insurance plan to purchase for employees, it can be difficult to make sure employees understand what’s available to them. Employees often have a lot of questions during open enrollment.

It’s the carrier’s job to provide a variety of materials and support to help these employees better understand their benefits. Some will schedule on-site meetings with employees to answer questions and review plan benefits. Organizations should definitely take advantage of these options since they can help save a lot of time and effort.

How can organizations communicate better?

Surveys show one-on-one meetings, direct mail pieces and information on the organization’s website are the top three most preferred communication methods. One-on-one meetings won’t be possible for every organization, but a more personal touch throughout the open enrollment process can reduce anxiety and lead to better understanding.

Bringing in a benefits counselor is another good option. This can be someone who works for an employer or is brought in from a broker or third-party benefits administrator, or TPA, to be a point person for all benefits questions. Having an expert available to guide employees through the open enrollment process can improve their experience.

Organizations can use their own Intranet, internal websites and HR platforms to provide employees with important information about their benefits. Some companies even handle their open enrollment online, which younger employees appreciate.

Organizations should also take advantage of any online tools offered by their carrier. These tools can help members better manage their health care, keep an eye on deductibles, find providers and more, to help control their costs.

What are some other best practices?

The open enrollment period shouldn’t be the only time during the year an organization talks about its benefits program. Employers can make an effort to keep an open dialogue and remind employees to take advantage of their benefits. This will help prepare them to select benefit options each year based on their needs and those of their families.

It’s a good idea to write about employee benefits regularly in employee newsletters or on an internal blog. These are easy ways to remind employees of the value of their benefits program.

Insights Health Care is brought to you by Medical Mutual

Utilization management: The effect of pre-admission and post-discharge planning on health and costs

“Many employers and their health plan members assume that a utilization management program’s only goal is to approve or deny medical procedures and save costs for the health plan. In reality, utilization management programs are designed to help members navigate the health care system and achieve optimal medical outcomes in the most timely and cost effective manner possible,” says Dr. Jay Moore, senior clinical officer at HealthLink, Inc.

“To achieve this,” Moore says, “utilization management teams provide medical necessity recommendations and aid members in making medical treatment decisions, but they also provide important pre-admission and post-discharge outreach that can positively impact a member’s health and help contain costs.”

Smart Business spoke with Moore about what employers need to know about utilization management.

How do utilization management programs typically work?

Providers send a notification when they have a patient who is being admitted to the hospital or is being considered for an elective admission in the future. The request for services is compared against evidence-based policies to ensure the care is safe, appropriate and high quality. When this is verified, the service is approved.

If the service is not approved, an explanation is provided to let the patient and doctor know why the decision was made. Specific resources are also provided so that the evidence that underlies the decision is readily available. If the patient or physician disagrees with the decision, simple processes exist to submit more information or appeal the decision. This process usually results in the patient receiving the safest, highest-quality care that is evidence-based and effective.

Why might health plan members mistrust or have wrong assumptions about these programs?

The focus in these reviews is always on medical appropriateness, quality and safety. If a procedure or hospital admission is in the best interest of the patient, it is approved. Members may not always be aware of why a procedure or admission was approved or denied, they only know the end result.

Members who are unsure about these decisions can take a more active role in their health by talking to their doctor or contacting the utilization management team to learn more about the review process and discuss their case.

How should utilization management be employing pre-admission and discharge planning? How will this impact member health and plan costs?

Discharge planning from the hospital should begin as soon as the patient arrives. Utilization management teams should work with hospital staff to address any needs the patient might have before leaving the facility.

With this sort of proactive planning, care gaps may be avoided and members can receive the highest quality medical service.

If this doesn’t sound like what happens with a business owner’s health plan, what should he or she do?

A utilization management team should be dedicated to providing the highest quality, safest and most effective care to members. This reduces health care waste and allows members to receive high quality care. If this is not happening, the employer contact their broker or network to discuss medical management options.

Is there anything else you’d like to share?

Medical management programs as a whole can be really effective in helping employers, and their members control their health care spending. They shouldn’t assume that their health plan has all the right programs in place.

Employers need to take an active role in the health plan they are offering their members and work with their broker or network to explore their options for medical management programs.

Insights Health Care is brought to you by HealthLink, Inc.

How organizations can spend less on high-cost specialty drugs

The cost of specialty drugs continues to rise. In fact, it almost doubled from 2003 to 2014, according to a study from UNC-Chapel Hill. While less than 2 percent of the U.S. population used these drugs in 2015, research from pharmacy benefit manager Express Scripts shows they represent 37 percent of the nation’s drug spending.

By 2018, the figure is expected to reach 50 percent.

“Specialty drugs can cost several thousands of dollars for each prescription,” says Amber Hulme, Medical Mutual vice president of the Central Region. “And every year, costs go up, more drugs are released and organizations see their drug spend increase by 20 percent or more. That’s why it’s so important for them to take steps to control their own spending.”

Smart Business spoke with Hulme about the importance of having programs in place to control spending on these expensive, specialty drugs, and what steps organizations can take that will make the biggest impact.

What are specialty drugs?

Specialty drugs are often used to treat very rare or complex conditions that usually affect a very small portion of the population. They are typically biological drugs that are infused, injected or require special handling. Some common examples are those drugs used to treat cancer, multiple sclerosis, rheumatoid arthritis and AIDS/HIV.

What’s the best way for organizations to manage specialty drug costs?

First, make sure a specialty pharmacy is handling specialty drugs for your employees. Specialty pharmacies normally have the best pricing available. A retail pharmacy dispensing a specialty medication doesn’t have enough volume; they may only have one or two patients for certain conditions. A specialty pharmacy, on the other hand, might distribute these drugs across a much larger region and serve many more patients.

So it’s important for organizations to check with their insurance carrier or pharmacy benefit manager to see what specialty pharmacies are available in the pharmacy network. They should encourage — or even require — employees to use specialty pharmacies to help employees get the best possible prices for these expensive drugs.

What services do specialty pharmacies offer?

In addition to better pricing, specialty pharmacies do in-depth patient care and training. Clinicians will often train patients, for example, on how to administer medications that require self-injections. There’s also outreach to patients to make sure they are taking their medications.

One problem with specialty drugs is adherence. When employees take their medications properly, they’re more likely to be able to come to work, and less likely to need costly emergency room trips. This can make a big difference to an organization in terms of overall medical costs.

What other cost-saving measures are there?

Many organizations implement processes called ‘prior authorization’ and ‘step therapy.’ These two programs require that patients meet the appropriate criteria for the medication and first try a proven, but more affordable, drug before a more expensive alternative will be covered.

Another measure is to limit supplies of specialty drugs to 30 days. This helps avoid unnecessary costs that occur when a patient experiences intolerable side effects after the first few doses or the drug is no longer effective. Also, organizations with high employee turnover, for example, may not want to offer a three-month supply of a drug that costs thousands of dollars.

Anything else organizations should know about specialty drugs?

One development that could change the market is the use of ‘biosimilars,’ which are essentially generic alternatives to specialty drugs. It’s the same concept as traditional generics, where other manufacturers can sell the same drug for a lower price — potentially 15 to 20 percent less than the cost of the original drug.

So far, the U.S. Food and Drug Administration has only approved two biosimilar drugs, Zarxio (a drug used in cancer treatment) and Inflectra (a drug used for inflammatory conditions), but it is expected to approve others in the relatively near future.

Insights Health Care is brought to you by Medical Mutual

How to pick the right pharmacy plan for your business

As with health plans, there are a lot of pharmacy plans to choose from these days, and they all think they’re the best, says Chronis Manolis, RPh, vice president of Pharmacy Services in the UPMC Insurance Services Division, which is an integrated partner company of UPMC Health Plan.

Go big — it’s more economical!

Go small — it’s more customizable to your organization!

Go pharmacy-only carve out — we’re the experts!

Go pharmacy-plus-medical plan — we’re more comprehensive!

“As we say, it’s noisy out there,” he says.

Smart Business spoke with Manolis about six recommendations that will help you decide which pharmacy plan is best for your company and your employees.

1. Look for a large player

This really just comes down to the influence over purchasing power that larger plans have.

For example, larger plans are better able to negotiate drug discounts with pharmacy benefits managers (PBMs) such as Express Scripts Inc. In these cases, when a pharmacy company goes to a PBM with 50, 500 or even 5,000 lives, that company has far less leverage to obtain discounts on its drug costs than if the pharmacy company covers 500,000 lives.

2. Look for a pharmacy plan that is integrated with a medical plan (i.e. not a ‘carved-out’ pharmacy plan)

If your medical and pharmacy insurer is one and the same, this entity will know your employees better. It manages their overall health including medical and pharmacy claims and understands the impact of drug on overall costs.

Integrated plans have programs that allow for comprehensive ‘whole-person’ management.

Additionally, having access to both medical and drug claims data enables enhanced analytics to highlight opportunities to improve quality and lower overall costs.

3. Look for a formulary (list of covered drugs) that receives independent medical oversight

The best pharmacy plans include independent oversight committees of pharmacists and physicians that continuously update their formularies based on new products, new evidence and market trends.

4. Look for a formulary customized to your market

Some formularies are created using national demographic and drug trend data. Problem is, this national ‘data’ may or may not apply locally.

5. Look for a multitiered formulary

This makes it far easier to influence drug selection and control costs, including the extremely high cost of specialty drugs.

6. Look for a player that has an aligned and comprehensive strategy to manage members on specialty drugs

Specialty drugs are high cost, injectable or oral drugs used to treat rare and chronic conditions.

It’s projected that specialty pharmacy costs will drive 50 percent of all pharmacy costs by 2018, and yet involve only 1 to 2 percent of your members.

By finding a pharmacy plan that takes a holistic, ‘whole-person’ approach to members on these specialty drugs, it will promote cost effective, high quality care not just for your drug costs but for your overall health care costs.
These strategies will help you better plan for and contain your pharmacy costs.

The right pharmacy plan and formulary will also help guide your employees to the right drugs that are both affordable and appropriate.

Insights Health Care is brought to you by UPMC Health Plan

How cost containment can be part of your targeted health care strategy

Health plans often take a reactive approach to members’ health by intervening only after services are rendered, but with detailed data sets, it’s possible to manage risk before it occurs.

“By using data to uncover utilization trends, high-risk members, inappropriate and costly treatment and plan waste that may not be visible through simple claim data, the most effective cost management strategies can be customized for each employer’s unique situation,” says Brian Fallon, regional vice president, Network Management & Business Development, at HealthLink Inc.

Smart Business spoke with Fallon about how to determine the most effective cost containment programs for your health plan.

What are the dangers of a reactive approach to your members’ health?

A reactive approach implies no employer or employee engagement whatsoever, where members probably aren’t taking an active role in their own health care. This lack of engagement makes a company health plan a commodity. It’s there if members need it — but they hope they never have to — and they don’t give it much thought until they do. The danger with this approach is that every employer has a bad year at some point,  and it will be too late to affect outcomes.

How can employers change this?

With a proactive approach, employers can predict, prevent and better respond to medical issues before they arise, leading to better quality and more cost-effective outcomes for members.

The first step is to sit down and go through claim data. Data is the key to understanding what is going on within your dynamic health plan.

Next, employers can analyze the benefit offering by reviewing where members get medical services and whether those providers and facilities are in-network, as well as emergency room utilization rates. A detailed review, on at least a quarterly basis, can give employers a good view of what’s going on so they can update benefit levels or implement programs to control spending.

What risk management strategies have you seen work for effective cost management?

Designing a program that analyzes and addresses all aspects of the health plan, data reporting, stop loss insurance, network utilization, etc., is the best risk management strategy to contain costs. For example, if an employer discovers members are going out of network, it may be time to re-examine the network. Or, cost data may show that it may be time to add additional stop loss coverage to the plan design. Examining and understanding data is the most effective risk management strategy.

How much time and resources are needed?

It can vary depending on how impactful an employer wants to be. Some strategies, like shopping for a new stop loss carrier or implementing a telemedicine program, don’t take longer than a typical renewal. If an employer wants to dive deep into the data, however, in order to build and implement a customized health plan, that can take considerably longer.

What mistakes do employers make when setting up these programs?

The biggest mistake is trying to decide which programs are most effective, and then implementing them on their own. Sometimes data is not credible or there is not enough to make sound conclusions. Employers need to partner with a network that can bring in the large data sets needed to analyze and address risk, and who can collaborate with providers on their behalf.

What else do employers need to know?

No matter what network, stop loss carrier or plan design an employer chooses, cost containment is very important.

It’s also critical to understand that cost containment strategies should be as individualized as the group itself. Shelf products should only be considered with the full understanding of what they contain, not just because they are new or seem unique. Cost containment strategies should be based on the member population. These programs are supplementary resources and shouldn’t be the sole driver of cost containment. Instead, they should be part of a targeted strategy to control costs.

Insights Health Care is brought to you by HealthLink

How to forge successful partnerships directly with health care providers

Insurance companies and providers have always co-existed in a unique relationship when it comes to patient care. The providers seek to administer the best care to patients and the insurance company seeks to “manage care” while at the same time managing cost. The paradigm can be conflicting.

However, by partnering with providers and facilities, employers may get more competitive rates and more cost-effective health outcomes. In turn, health care expenditures, the patient experience and medical outcomes are also improved.

“This sort of collaboration empowers providers, making them more accountable for the care they provide, and engages members, making them more accountable for their personal health and wellness,” says Brian Fallon, regional vice president of Network Management & Business Development at HealthLink Inc.

A more complete and proactive approach to member health and benefit utilization shifts the focus from just treating the diagnosis to delivering the right amount of care in the right setting. It also aligns the provider and member incentives with the goals and objectives of the health plan, which can decrease overall health care spending.

Smart Business spoke with Fallon about increasing collaboration between health plan stakeholders.

How is the dynamic between providers, insurance carriers and employers changing?

The Affordable Care Act (ACA) has had a dramatic impact on health care.  From the medical loss ratio mandates, elimination of lifetime maximums, mandated plan design and, of course, additional tax liabilities, employers are looking very closely at their health plan configuration.

The ACA has also attempted to emphasize the quality of care so doctors and hospitals are becoming more attuned to the health care consumer. Provider reimbursement will soon be influenced by pay-for-performance measures, as well as patient satisfaction scoring. Carriers have already started instituting pay-for-performance models and the increased availability of transparency tools has employers and members engaged in the assessment of health care costs. This environment makes it advantageous for an employer to collaborate with a health system and design a custom health plan that drives members to the highest quality, affordable care.

How can employers help make these partnerships successful?

Employers can start the conversation with their broker, to begin to address all aspects of the plan — namely, a plan that focuses on cost, quality and access. All the parties have to work together. You need a broker who is willing to facilitate this sort of dialogue, a network partner who can support custom plan designs and a third-party administrator to administer it all. Once you have the right pieces, face-to-face communication becomes important. Each party needs a clear understanding of what they gain from the partnership and what they’re willing to give in return.

How much time needs to go into these kinds of collaborations?

Time is absolutely a concern for employers of all sizes and a lot goes into these sorts of collaborative negations. This is not an ‘off-the-shelf’ product that can be bought and applied. It’s an individualized process that could take 30 to 60 days.

Much is dependent on the willingness of the employer and provider. It’s important to make sure everyone — internally and externally — has the same collaborative goal before this sort of custom plan design can be developed and implemented.

What’s the best way to get started?

Reach out to a broker, and tell them you’re interested in exploring opportunities to reduce your health care spend. If those opportunities include collaborating with a provider or facility, make sure you have willing parties who have the data and flexibility to sit down with providers on your behalf.

The best way to approach provider engagement is for employers to show how both parties can gain from the collaborative effort and that they have the required resources to make the partnership successful.

Insights Health Care is brought to you by HealthLink