Is your evaluation of your health plan and health plan options based on the total cost of care or does it rely on discount comparisons alone?Consider this: Inappropriate care drives up utilization rates which will eliminate benefits package savings long-term, regardless of depth of discount or unit cost. A dollar saved by a discount has differential charges attached for OON [out-of-network] services. Major insurance carriers create profits by taking percentages of savings: If an employer saves $500 on a $1,000 OON service—whether it was necessary or not—30% of that (or whatever percentage negotiated) usually goes to the carrier. This can increase utilization (how often healthcare services are used by employees), which is a problem for your company. Why? It’s better to not pay any part of an unnecessary procedure, however deep the discount. A 50% discount on a $1,000 procedure is good, but employers save $1,000 dollars rather than $500 by not paying for an unnecessary procedure all together. It’s critical to note lowering utilization does not necessarily lower unit costs.
Are performance guarantees based on the total cost of care (which considers both discounts and the appropriateness of care)?For a health plan to incentivize appropriate care, financial incentives must reward care that directly (and efficiently) improves health outcome, this leads to a reduction in unnecessary tests, treatments, or more expensive interventions instead of similarly effective, less costly (and physically invasive options). In high-engagement, patient-centered primary care experiences, employees don’t overutilize services in an attempt to self-manage their wellness journey or as an acute response to a health crisis that could have been mitigated or eliminated with more proactive primary care treatment. This is best accomplished with a health plan built on a network of providers that practice according to a value-based care model.
Is the company’s health plan primarily composed of vaue-based (or capitated) provider contracts that gaurd against inappropriate care by shifting the financial risk from the employer to the providers?Capitation provides financial alignment [and] goes a step further–shifting financial risk for services from the plan sponsor to the provider by compensating providers a fixed amount for the care of each of your employees. Capitation is a type of value-based care model. Healthcare providers are paid a prospective amount per member per month (PMPM), or a “cap” to provider care. Providers keep any net savings below the cap/PMPM amount, while adhering to or surpassing defined quality and efficiency standards. Without contractually-binding arrangements that shift risk and incentivize based on measurable care and efficiency metrics, accurately calculating the ROI of a health plan is nearly impossible. If you can’t calculate ROI, how do you know if your company is losing revenue that could be used to prevent layoffs, reduce the need for furloughs, or mitigate salary cuts?