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.

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 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

How to use data to customize your health plan and control costs

“In today’s health care market, data can be used as a valuable resource to control costs. By examining customized financial data sets, it’s possible to determine where heath care dollars are being spent and where there is potential waste,” says Brian Fallon, regional vice president of Network Management & Business Development at HealthLink Inc.

Smart Business spoke with Fallon about how employers can use data to build a customized health plan and control costs.

Why is data so valuable?

Health care spending can be analyzed in terms of fixed and variable costs. Fixed costs include administrative costs such as third-party administrator charges, network access fees and the premium for stop loss insurance. Variable costs are just that, variable, and include claim utilization cost incurred by covered members/their dependents, and are impacted by plan design, demographics and the health of the member population served.

Data allows fixed costs to be analyzed in order to find opportunities for saving. But more importantly, data allows you to look at variable cost. You can discover where costs are coming from, and if there are underlying root issues. Then, you have the opportunity to predict variable costs and, using custom plan design strategies and cost containment programs, control health care spending.

Does this only work for self-funded plans?

Historically, yes. For employer groups with less than 100 lives, fully insured employers receive a monthly list bill with premiums owed. Since the carrier assumes the risk and pools it with other employer groups, there is little, if any, reporting. Fully insured groups with greater than 100 employees receive some reporting but the availability varies among carriers. Typically, the greater the enrollment the greater the reporting, because once an employer reaches a certain size, there is less dependency on the risk pool and greater consideration of an employer’s own data.

The customization and flexibility of self-funded arrangements, coupled with the fact that a self-funded plan is the employer’s plan, not the carriers, make them ideal for utilizing data to drive more cost-effective outcomes. The chosen programs and services can be customized for the employer — the plan is theirs, the programs are theirs and the savings is theirs.

Is using data to this extent a recent trend?

Using data to look at costs has always been important and a major benefit of self-funding, but changes, such as Affordable Care Act mandates and the removal of lifetime maximums, have facilitated a more aggressive approach.

How can employers use customized data to examine their health care dollars?

Examining data in this way isn’t a product employers just purchase and apply. It’s a process — and the process starts with availability of data. This depends on whom an employer is working with, how transparent the company is willing to be and the degree of creditability within the data.

Some areas that should be examined are ages within the group, top diagnoses and incidences of high-cost medical conditions. Also, consider non-clinical data — out-of-network and emergency room usage — to see if it is a factor of high spending.

Once there’s concrete understanding of the health plan and member population, your advisers can show you how to proactively manage risks. The best way to affect outcomes is a collaborative relationship between all the required parties needed to design and administer a benefit plan. There are also new opportunities with providers who are willing to collaborate in shared risk agreements.

What else do employers need to know?

How data is presented can be as unique as the network or carrier itself. Discrepancies can distort accuracy, so employers need to understand what the data actually entails. They should know the difference between repriced and actual paid data, how current the data is, whether or not it has duplicates and, when looking at discount data, the facility level discounts. It’s also critical to review the facilities’ case mix indexing and the cost to charge ratios. These components can affect the data, the analysis, and ultimately, the conclusions.

Insights Health Care is brought to you by HealthLink

How employers can save money with best-in-class health plan design

One of the best ways to control your health costs and trends is through your plan design. That’s why a self-funded environment provides an advantage for employers, says Mark Haegele, regional vice president of sales at HealthLink.

“There’s more to plan design flexibility, and you can take ownership over the plan design to change participant behavior,” Haegele says.

Smart Business spoke with Haegele about some best-in-class plan design practices that employers can incorporate into their plan design to help save money.

How does pay for performance work?

This term is broadly used throughout health care, but for plan design it means properly aligned incentives and paying for the performance of members and health care providers.

A provider might be reimbursed, based on how it performs according to metrics. If a primary care provider treats a member, it’s hard to quantify if that member is receiving the appropriate levels of care unless you set up a performance metric and engage on it.

Not only can health care providers and hospitals be reimbursed for performance, it works for members, too. The plan design can reimburse members based on their commitment to seeking and ensuring they meet the minimum levels of care for an illness or their overall health. Is their blood pressure, cholesterol and body mass index in range? If they are in check, your employees and their dependents might get dollar credits toward their premium.

You can also measure upwards of 30 chronic conditions for the minimal levels of care associated with those conditions. If a member meets that treatment protocol, you can either 1) pay for those minimum levels of care or 2) ensure that member gets credit toward his or her premium.

What are benefit carve outs?

In a self-funded plan, you can provide preferred pricing and providers for certain services that are carved out of your normal benefits. This includes things like dialysis, cancer, certain elective surgeries, laboratory or high-cost imaging.

Very specific language can be incorporated to help manage these cost items. Not only are you putting a limit on it, you’re also directing members to certain facilities.

How do member self audits help cut costs?

It has statistically been proven that when members get care, health care providers will make mistakes and bill for services that members didn’t receive. There have even been extreme examples where somebody has his or her broken arm set and gets billed for a hip replacement. Because there’s no mechanism to scrutinize these billings, mistakes often don’t get caught.

You can set specific plan language, so that if members ask for a list bill from their hospital stay (whether it’s in or outpatient), identify services that they didn’t receive and then get them eliminated from the bill, the employer shares the savings with the member.

What does ‘not to exceed’ language mean?

This is true reference-based pricing, with a list of common health procedures and the maximum that the plan will pay.

For example, a health network might determine knee replacements in your region on average cost $15,000. It also finds five facilities within 20 miles that charge $9,000. So, your self-funded plan might state that it will provide members with knee replacements, not to exceed $10,000.

It steers behavior and forces the member to ask questions and have a dialog with the insurance company, third-party administration or network about the cost.

How can state mandate exclusions be incorporated into plan design?

Under a fully insured environment, insurance companies have to cover everything that the state mandates. For example, bariatric surgery and infertility treatment have to be covered in Illinois.

If you’re self-funded, your plan design language can exclude state mandates. It highlights the fact that you have flexibility and control as a self-funded employer. You could even say: I’ll cover 50 percent, instead of the state mandated 80 or 90 percent.

Plan design features in a self-funded plan allow you to exercise more control over your health care costs, which is something that many employers are looking for.

Insights Health Care is brought to you by HealthLink

How to encourage healthier behavior in your employees

Employees are a company’s greatest assets — but their health issues can dramatically affect the workplace. Employees who aren’t healthy have lower productivity and higher health costs. The cost of health care has a major impact on a company’s bottom line, says Carla M. Flamm, account manager III at HealthLink.

According to the National Center for Chronic Disease Prevention and Health Promotion (CDC):

  • Four of the 10 most expensive health conditions for U.S. employers — high blood pressure, heart attack, diabetes and chest pain — are related to heart disease and stroke.
  • Work-related stress is the leading workplace health problem and a major occupational health risk, ranking above physical inactivity and obesity.
  • Productivity losses linked to employees who miss work cost employers $225.8 billion, or $1,685 per employee, each year.
  • Full-time workers who are overweight or obese and have other chronic health problems miss about 450 million more days of work each year than healthy workers.
  • A 1 percent reduction in excess weight and high blood pressure, glucose and cholesterol levels has been shown to save $83 to $103 annually in medical costs per person.

Smart Business spoke with Flamm about how to talk to your employees about their health.

How does encouraging healthy behaviors specifically benefit employees?

Employers have a responsibility and unique opportunity to promote individual health and foster a healthy work environment.

There are many reasons why people don’t take an active approach to their health. They may not know how or may lack the necessary tools. Providing relevant information and resources encourages employees to take personal responsibility for their health.

How does this benefit the employer?

As a result of your efforts, you can reduce health care costs. Plus, healthier employees equal greater productivity, higher morale and less absenteeism.

As employers of all sizes recognize these benefits, they are offering more wellness programs to their employees. According to the CDC, in 2014, 73 percent of companies with three-199 employees and 98 percent companies with 200 or more employees offered at least one wellness program as part of their health benefits.

When it comes to encouraging healthy behaviors, what are some best practices?

Senior leadership must drive the program. Some of the most common offerings include smoking cessation, discounts on gym memberships and distribution of monthly/quarterly reminders on relevant health related topics (i.e. healthy eating, stress management, self-care).

Many employers think about individual actions like quitting smoking, but you should also consider strategies designed to influence the overall work environment, not just one employee.

Does it matter how you communicate, and how can you ensure this is actually effective?

You’ll want to use the appropriate communication channels that fit your employee audience. Some examples include Intranet, posters, payroll stuffers and lunch-and-learns.

In order to ensure your communication doesn’t come across as lecturing or become one more piece of information that nobody looks at, you should create a wellness committee/team. This team from all levels of management can encourage feedback and help create a supportive work environment.

Why should you measure your effectiveness?

Measuring the effectiveness of your communication is just as important as delivering. Change rarely happens overnight. You’ll want to set realistic objectives and goals, and then determine if those goals were met and develop next steps.

In order to achieve engagement, employees must receive regular and effective communications, which are timely and relevant. It is critical that the employer determines how well the program has been received — listen to your staff and change your program activities if your employees are not engaged.

Insights Health Care is brought to you by HealthLink

What employers need to know about behavioral health services

Although there is less stigma regarding behavioral health treatment than there used to be, many people still don’t understand what services are available or how to access them. Employers also may be too restrictive in their coverage and assume excluding services saves money.

The Mental Health Parity and Addiction Equity Act of 2008 requires that if behavioral health services are covered, the coverage be no more restrictive than the medical services coverage. The law removed limits on behavioral health benefits and improved access to behavioral health services, says Tom Albert, director of Behavioral Health Services at HealthLink.

“Most people don’t know that the parity law exists or that it may have changed the coverage of behavioral health services on their health plan,” Albert says.

Smart Business spoke with Albert regarding behavioral health services, including why they should be integrated into your medical management program.

What are behavioral health services?

Behavioral health services include the assessment, treatment or referral to a provider of psychiatric and/or substance abuse treatment. These services may be provided in a hospital, freestanding psychiatric or substance abuse clinic or medical office, depending on the severity of symptoms. Providers include psychiatrists, psychologists, social workers, master’s level counselors or advanced practice nurses.

Did the Affordable Care Act (ACA) affect these services?

The ACA made health insurance available to an additional 27 million people. It also defined psychiatric and substance abuse services as essential health benefits, which means that small group and individual marketplace plans must include coverage.

Are employers concerned about increased usage and ultimately cost?

Yes, employers are concerned, but excluding coverage isn’t always a good idea. In a given year, the National Alliance on Mental Illness indicates that 25 percent of adults will have an emotional problem, substance problem or mental illness. Over a lifetime, that rises to more than half. So, excluding coverage puts employers at risk for lost productivity due to absenteeism or presenteeism.

Also, excluding coverage may not save you money, as costs can shift. A 2008 study found that medical costs, not including behavioral health treatment costs, were about 54 percent higher for individuals with depression. Depression and other mental health problems can manifest themselves in physical symptoms. It makes current medical problems worse and can lead to new physical complaints.

How should employers manage the behavioral health of their employees?

Make sure your health plan(s) include coverage for psychiatric and substance abuse services, including eating disorders. These disorders, if left untreated, can result in higher medical costs, so you end up paying for it anyway.

Ideally, give your members access to mental health and/or substance abuse providers without referrals. If you’re worried about overuse, remember that there are different levels of care — acute inpatient hospitalization, residential treatment, partial hospitalization, intensive outpatient treatment or outpatient treatment. The most expensive services can be carefully managed with a medical necessity review — as long as it’s not more restrictive than your medical plan’s authorizations.

Also, choose a health plan that integrates your behavioral health into the management of your medical services. This allows medical and behavioral care management teams to work together on the needs of individuals with comorbid psychiatric and medical issues. Not only does this improve quality and treatment outcomes, but it also helps to control cost of care and makes it easier to ensure you’re meeting the requirements of the mental health parity law.

If your plan offers an employee assistance program (EAP), make sure the phone number or website is posted around the workplace. EAP services are a cost effective way for employees to get access to a mental health professional with no out-of-pocket cost. It allows them to evaluate and talk through a problem and decide what services may be appropriate. For many, EAP intervention is all that is needed.

Insights Health Care is brought to you by HealthLink

How to encourage your employees to choose a primary care physician

Only 78 percent of Americans acknowledge having a family doctor or primary care physician (PCP), according to a 2012 study by the Physicians Foundation. And for those ages 18 to 34, that lowers to only 64 percent.

Susan Lehne, account manager at HealthLink, says that as insurance plans have gone away from the health maintenance organization or HMO model and people look for something that’s not going to take them as long to seek care like emergency rooms, urgent care centers, telemedicine or retail pharmacies. Lehne is seeing a reduction in members choosing a PCP to guide their care because of these alternative care solutions.
This could be a costly problem for employers.

“Somebody needs to be looking at you,” Lehne says. “Somebody needs to be paying attention to your medical needs.”

Smart Business spoke with Lehne about the benefits of PCPs that can help both employees and employers.

Why is having a PCP important?

A PCP is your home base — the person you go to on a regular basis for routine exams and most of your care. Then, if that doctor feels that you need additional assistance, you would be referred to a specialist.

A PCP is a resource for all data about your health. That doctor keeps all of your medical records and tracks your height, weight, blood pressure, blood work, etc. His or her office also receives your records every time you go to a specialist.

This allows a PCP to have a big picture of what’s going on with your health, because he or she is seeing you hopefully at least once a year. That doctor is more likely to see a trend quicker, and early detection is key for many types of treatment.

What do patients need to know about selecting a PCP?

You may need to shop around to find someone that you like, but it’s also critical to figure out what it is that you need from your PCP. Make a list of your needs and rank them.

Do you want a PCP that is going to look at you and listen to what you have to say? Or, do you want someone who knows all of the pieces in the industry and does more research? The needs of a person who is in their late 60s will be completely different than the needs of a family that’s just starting out.

Also, make sure that you understand what are your avenues for communication, so you can make a plan, before a health concern crops up on a weekend or in the middle of the night.

Why do employers need to care about this?

Early detection makes a huge difference in regards to cost, because if a medical provider catches something earlier, it’s easier to treat.

A PCP also costs less than a specialist, which in turn affects health costs. So, if your employee already has a PCP, he or she will be more likely to see that person because they have a mark on his or her face — rather than go straight to a more costly dermatologist.

A recent study by the Commonwealth Fund evaluated 10 western countries’ ability to care for patients who are considered the costliest. The U.S. has the youngest population of those surveyed, but it had the highest incidence of chronic disease and spends 50 to 150 percent more on health care per capita than the other nine countries.

How can employers encourage plan members to regularly go to a PCP?

You don’t want to preach to your employees and their dependents, but it is important to make them understand the importance of having a PCP and routine services like an annual exam, mammograms or screenings. In order to encourage this, your plan design can provide incentives for members undergoing these routine services, such as a credit on the premiums or deductibles.

Employers generally need to do a better job of explaining why they have a particular plan, what that plan brings to their members and what they did on their side to keep costs down. Then, make sure that your plan members know that they need to do their part, too, which includes choosing a PCP and getting routine services that will hopefully reduce or maintain the health plan’s costs.

Insights Health Care is brought to you by HealthLink

How gain share models put the control back with the member and provider

In today’s health care system, there’s a lot of misalignment. People feel the insurance companies are just out to make money. They perceive that the providers are struggling and building more services, more MRIs, more tests, more this and that. And the member is caught in the middle, says Mark Haegele, regional vice president of sales at HealthLink.

The employers aren’t in alignment with the insurance company. The insurance company isn’t really in alignment with the member. And the member isn’t in alignment with the provider.

Many in the health care industry are working to change that.

“It goes by a lot of different names in the industry, and I don’t think that the industry has settled on a specific name because there are so many different variations on the theme,” Haegele says.

Whether it’s a narrow network, community-based model, exclusive provider organization plan, accountable care organization, etc., the idea is to get everyone on the same page and create more of a partnership amongst the stakeholders.

Smart Business spoke with Haegele about how gain share models fit into this growing trend of alignment.

What is a gain share model?

In self-funded health insurance, gain sharing may be a component of provider to employer direct contracting. The employer or its third-party administrator (TPA) designs a benefit plan in partnership with a selected provider. In exchange for the employer directing business to the provider, the provider will agree to lower unit costs. The TPA creates and administers the benefit design and projects estimated costs. If the costs come in less than the projection, the employer shares those savings with the provider.

With a self-funded plan, an employer is buying stop-loss reinsurance. The underwriter looks at the employer’s claims experience, group demographics, etc., in order to predict the expected claim cost. The stop-loss insurer begins to provide insurance at what is called the maximum liability, which is usually the expected claim cost times 1.25. In a gain share model, the providers take on that 25 percent risk corridor between the expected claim cost and the maximum liability.

If costs come in lower than expected, in some cases the employer will share 50 percent of that underage with the provider.

Why would a health provider take on that risk of potentially added costs?

First of all, they want to make sure the preferred plan design that they’ve helped create succeeds. This makes the arrangement even more attractive to the employer.

Also, the hospital knows it will be getting a higher volume of patients, as fewer of the members receive care at other hospitals, so it may be willing to take on extra risk for that extra volume.

The provider is taking on a much bigger role managing the care. They have more ability to directly communicate with the membership, as well as get reports from the TPA on what’s happening within the plan. For example, it can better onboard members and align them with a primary care doctor, which in turn lowers emergency room visits and keeps patients compliant with their health care.

Employers can focus on running their business, and the provider takes on more risk, in order to potentially share in some of the gains for spending its time and resources on managing care, which is their expertise.

How have hospitals responded to this idea?

It’s interesting. Certain providers are all over it, and others are hesitant and want to crawl before they walk.

One difference maker has been that people don’t want to get a call from their insurance company to talk about their diabetes, blood pressure, etc. But if their provider calls them, it’s actually better received and more likely to result in better health.

In this new model, the member, provider and employer are working together to control costs and better manage the members’ health.

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