What Employers Should Be Asking Brokers About Alternative Solutions

Employers have a responsibility to advocate for their employees and ensure they have benefits that work for them. Healthcare is one of the key factors that employees consider when making career decisions, with 66% citing benefits as “very important”, according to a McKinsey study.  

To maintain employee satisfaction, it is essential for company leadership to frequently review benefits and make sure they are offering affordable, logical and diverse options. Here is a list of questions employers might find useful when discussing healthcare with their brokers.

  1. Why might an employer decide to self-fund their health plans?

The first step toward thinking about alternative solutions is to realize the status quo is not the only option. The healthcare system in the United States is broken and has become completely unaffordable for many American workers. The U.S. spends more on healthcare than any other developed country, and the cost of healthcare has gone up like no other consumer product over the past 15 years. Too often, traditional insurance plans in the U.S. have left those with lower salaries “functionally uninsured.” For these employees, medical care is unaffordable and their insurance is not a “true” benefit that improves their quality of life.

It can be difficult for employers to gauge the cost of care due to the nationwide variability of charges. Often, there is no rhyme or reason for the amount hospitals charge for treatments or procedures. Charges can vary wildly from state to state and even across hospitals in the same cities.

It does not have to be this way. There are alternatives to fully funded plans, such as self-funded solutions, that can significantly reduce healthcare costs for employers and their workers. These solutions help employers spend responsibly on healthcare for employees while maximizing the benefits offered. Employers can ensure that employees will receive affordable care regardless of where they are located.

  1. How can employers get a clear picture of healthcare costs and variable charges in their region(s)?

A great way to learn about healthcare costs by region is by referring to the RAND Corporation’s Hospital Price Transparency Study. The study examines claims data provided by self-insured employers, state-based all-payer claims databases and health plans and then compares the prices to those paid by Medicare. The report focuses on making these prices accessible and transparent so that employers can compare prices between hospitals and determine whether the prices they are paying are appropriate. The study has found that prices vary widely, with the average employer or private insurer paying 224% of what Medicare pays for the same services at the same facilities. Higher medical costs can lead individuals to delay or avoid care altogether, putting them at risk for more serious illness or injury. Additionally, while hospitals and insurers are subject to price transparency rules, those rules often can be difficult to access and understand for the everyday consumer.

Employers should ask their brokers what alternatives they have to large health insurance companies. Plans that implement different pricing strategies, such as reference-based pricing (RBP), can help reduce healthcare costs and provide health plans and patients with a logical understanding of what they are being charged. Our next question will examine just how these types of plans differ from traditional PPOs.

  1. How do charges calculated by PPOs differ from charges calculated by reference-based pricing (RBP)?

Preferred Provider Organizations (PPOs) are the most prevalent type of commercial health plan in the U.S. A PPO health plan is built around a “preferred provider” network that offers a discounted rate to members that use the healthcare services of those contracted providers. The “discounts” that these plans provide are typically applied to a highly inflated rate, meaning members are paying amounts well above the actual cost of care.

RBP takes a different approach to healthcare claims, using an established benchmark like Medicare to determine what is paid for healthcare services. Then, starting at that reference point, a fair profit margin is added to determine provider payment. This helps employers and employees save money on their healthcare by reducing extreme markups.

  1. What kind of savings can an alternative solution such as RBP deliver?

Self-insured businesses can add an RBP solution to their health plan and reduce annual costs by 15-30%. As an example, let’s examine the average price paid for a CT scan. CT scans in the U.S. are priced on average at $3,821. A typical PPO plan provides a 50-60% discount, which lowers the price to $1,528. That sounds like a good deal until you realize the actual cost of the CT scan, as reported by the facility, is only $100. The PPO’s charge is a 3,800% markup!

RBP health plan solutions work differently. For example, Imagine360 uses the actual cost of care ($100) and what Medicare pays ($125) as a guide and adds a profit margin for the provider. Instead of paying $1,528, an Imagine360 member pays just $150 for the same procedure at the same hospital.

  1. How can employers overcome objections from colleagues being asked to buck the status quo and try a different health plan approach?

Transitioning to a new health plan can be daunting for employees and employers alike. After years with the same carrier, employees might have concerns about changes to their access to care. However, if a company’s current plan is costing employees a fortune or being underutilized due to high costs, a change could be necessary. RBP gives employers and their workers sustainable solutions with significant savings.

At Imagine360, we work with companies to ensure a smooth transition to their new plan, even offering a dual-option solution in which employees can choose between a PPO or reference-based pricing.

Finally, we provide robust member advocacy and support. If a provider ever has a question about payment, our members have a team of advocates to help resolve any billing issues and further maximize healthcare savings. Unlike traditional PPO plans that often leave members to resolve issues themselves, Imagine360 assists and advocates for the member.

  1. Since medical benefits are one of employers’ highest expenses after wages, this has great savings potential for businesses. Is there a business “profile” best suited to alternative solutions like RBP?

Historically, industries with lower profit margins can benefit the most from RBP, but RBP works for all types of businesses. We help provide savings for companies in a wide range of industries such as auto sales, construction, restaurants, senior living and more.

Our solutions are designed for self-funded companies, and our full-service health plan solution includes expert plan administration, member support, reference-based pricing and direct contracts.

To learn more about how Imagine360 can help your company save on healthcare costs, visit our case studies page or reach out to us today.


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