by Michael Rodgers
Did your company’s healthcare expenses rise last year? If the answer is YES, there may be some good news on the horizon.
Really? What is it?
Today, there is new technology available to you and your benefits professionals that is rapidly changing the way companies manage their healthcare program costs. These changes, if implemented correctly, can have a material impact on your company’s bottom line. Predominantly available in the Midwest and West coast markets for over 10 years, this technology is now available in the Northeast and its use is earning vast praise by financial and HR executives who identify its value.
The technology is based on the concept of data-mining a company’s claims utilization information. The executive consults a professional to decipher the data and assist him/her with the successful negotiation of lower renewal premiums. This method is vastly different from the conventional, i.e. less transparent, approach used by most carriers when developing renewals for their customers because it offers your own independent evaluation and record of the claims utilization which, for groups over 100 employees, is what directly drives the increased cost of the medical program renewals, regardless of whether the plan is fully insured or partially self-funded.
There are 10 key areas of a medical program into which these tools are able to mine in order to help facilitate a deep analysis of a company’s overall claims utilization data. You can now analyze each individual area for network and plan design inefficiencies, model potential change, and track year-over-year performance of the concern areas. This enables you to easily measure trends of problematic issues, address them, and create solutions quickly, without the calorie burn of yesterday.
Just So You Know…
The key to the success of the data-mining process lies in the readability of the specific coding of claim reimbursements from physicians. This coding (commonly known as CPT – Current Procedural Terminology) is the basis of reimbursement for all physicians’ providers from the insurance companies. Every time a patient of any health insurance program receives a service, the physician provider must include these codes to submit the claim to the insurance company for payment. The CPT codes capture all of the information in one line item such as: the type of service, the setting in which it was received, the length of visit, the charge, a rough diagnosis (ICD-9 code), and many more pieces of critical information. So, who can read these codes anyway? The answer is, basically, hardly anybody.
This process of analysis is rapidly changing the way benefits professionals work, plan, and recommend alternatives. Armed with this data, benefits professionals can track material changes and work together with insurance carriers on an entirely different level. The power shifts to you, the premium payer, and away from the premium collector! You come armed; the benefits professionals can disarm the insurer. Actually, you no longer need to rely on the insurance carrier’s underwriter for estimates of trends, plan alternatives or hard copy reports (have you ever really tried to read those?). With our help, as you analyze your specific data, you can observe both areas of weakness and strength. It becomes a much more dynamic, collaborative process of program management. Plan design and network design can be specifically tailored for each group.
Make no more mistakes. You no longer need to rely upon marketing a census to carriers to receive their lowest cost bids. That process, although still commonly used, is the old and inefficient brokerage technique of yesterday. Instead, you are able to choose a plan design, a network and an administrator (carrier) before going to the market. The benefits professionals know at that stage that they are only contacting the markets which they already know are solutions for our clients!
What’s in it for me?
Picking targeted plan design modification, or overlaying stronger network managers, to maximize the claims’ discount are just two examples of how benefits professionals help lower the paid amount of claims (utilization). Of course, these may result in:
- lower costs and lower renewals
- enhancement of employee satisfaction
- changing carriers less frequently
- identifying longer-term strategies
- creating longer-term partnerships
- inflating your bottom line
- putting forth less effort
“I’m concerned. Don’t reduce our benefits”.
We’ve heard that too. In fact, it doesn’t mean that benefits are reduced. Since the data gathered from the carrier includes specifics with regard to the census data, utilization data, as well as plan design information, the modeling tools highlight changes that may not have normally been suggested. There are many instances where increases of benefits in particular areas of the plan can lower utilization in others. For example, emergency room visits, wellness benefits, co-payments, or even some outpatient services are smaller areas that can affect other larger parts of a program’s utilization. This methodology will help you fine-tune each area and help you determine the right plan – for you. If your data shows that that ER usage is extremely rare for your group, why would you choose a plan that has a high amount of coverage in that area? You wouldn’t. And you don’t have to.
While these new tools and processes are helpful during the renewal and plan year, it is important to realize that it is only one tool and no two analyses are alike. Without a doubt, these tools create a consistent, measurable process that can be repeated year after year. But it is still the benefits professional, your advocate, who reads and interprets this information on your behalf. In many cases this new information will represent more information than is possessed by the actual underwriters or carrier representatives. Your benefits professional is the one that can articulate this information in a usable format to structure renewals, negotiate pricing and build programs with lower costs.
About the Author:
Michael Rodgers is a benefit professional with over 17 years of experience in the New England marketplace. His firm, Axial Benefits Group (ABG), specializes in corporate employee benefits consulting and brokering for all size companies. ABS is located in Burlington, Massachusetts.