By David Barton
Founder, Shenandoah Valley Group
For so many years I have watched companies large and small struggle to understand how best to control employee health benefit costs. Offering competitive benefit packages, or at least minimum coverage, is standard in today’s workplace, but understanding how to stay in the driver’s seat when it comes to managing costs can be confusing and even intimidating.
Add to that the changing landscape of benefit delivery. More plan options, expectations from employees and technology that is transforming benefit plan delivery.
The solution? A mindset change. Set aside what you’ve been taught about health insurance benefits.
Taking the Wheel
I want to start by saying what I always tell friends and clients – company benefits are simply about money management. It starts with finding the right benefit plan – and benefit communication system – to allow your company and your employees to best manage costs.
I often teach companies a different way to think about providing benefits and it boils down to one simple question – how do you want to control your checkbook?
Most companies don’t understand how much control they can have over insurance costs, while still offering great health benefits. It should never be confusing or intimidating – and it doesn’t have to be hard.
There really is no right or wrong way to set up a health benefits program. But, here is another key question to consider. How do you want to pay health insurance bills? Do you want to pay retail rates or wholesale rates?
If you answered wholesale, then a self-funded plan can make that easy. If you are only comfortable with a traditional insurance plan where you pay retail, there are still ways to save money.
Plan of Action
Here’s how it works. Starting with medical claims, employers can control how much they pay hospitals and doctors for services through what is called Reference-Based Pricing (RBP). You can read more about RBP HERE.
Self-funded plans allow companies to set spending limits and avoid overpaying for services, while still offering access to great care. In fact, a growing trend among health plan delivery is the concept of “steerage” which can help employers and employees identify the providers in a geographic area that offer the best care for the best price. Imagine that!
Another huge savings opportunity is through prescription drug programs, which can help you get some of the most expensive prescription drugs for free and save money on other common prescriptions.
Automatic Advantage
Perhaps some of the best news is the ease at which self-funded plans can now be administered and managed. Plans are tailored to meet a company’s budget and desired plan features and can easily be managed through alignment with third-party vendors who take care of the most important aspects, including medical claims and access to prescription drug programs.
But what most companies are still missing out on are the growing ways plans can be administered through automations. Open enrollment can be automated. Easy ticketing systems can be created to manage employee questions or issues with medical claims.
Systems can also be created to send automated alerts when an employee requires a certain medical procedure that can guide them to the best care options. Similarly alerts can flag when an employee needs a high-dollar prescription drug and help them find the best price.
While HR staff and companies maintain visibility over plans, their workload is significantly reduced. Think dashboards with real-time plan use information instead of monthly reports.
Behind us are the days when pre-boxed health insurance plans and annual premium increases are the only options. Companies can take advantage of easy shifts and advancing technology that can give them control over health benefit costs and a way to enhance how their employees experience health benefits.
At SVG, we have been advising companies on better ways to manage health benefits for 17 years and creating systems to help companies take advantage of technology to control costs and better deliver benefits. If you would like to learn more grab some time on my calendar. I look forward to helping you work smarter in 2024.