To my fellow benefits advisers: are we part of the problem associated with rising healthcare costs, or are part of the solution? It’s time to do a little soul searching.
Building a benefits package is like building a home — and as an industry, advisers are still getting paid more on poorly constructed healthcare homes. We build plans with the same status quo contractors (i.e., insurance carriers) year after year, delivering rate increases and narrower networks with less value — while simultaneously taking a pay increase. To make matters worse we give the members of our healthcare homes little or no transparency of real costs for services and provide them a credit card (i.e. member ID) with unlimited shopping.
You wouldn’t build your home on a sinkhole, so why are we building healthcare homes like this? You wouldn’t give your kids credit cards for Amazon purchases with no spending limits, so why are we doing this in healthcare?
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The traditional ways of purchasing health insurance are ineffective and reactive. Let’s review several key points that adviser Craig Lack outlines in “Breaking Through the Status Quo,” published by NextGen Benefits Mastermind partners:
Step 1: We receive a renewal that is cost prohibitive.
Step 2: We work with a pricing formula that doesn’t incentivize a member to pay less or more. The healthy subsidize high utilizers and the group plan pays for them forever.
Step 3: We validate the renewal and bring the price down.
Step 4: We check the competing markets.
Step 5: We help our clients decide to implement a less-bad renewal and make a few plan changes like inching up the deductible or adding deductibles to prescriptions.
And the beat goes on — which has led us to healthcare consumption as the No. 1 reason for personal bankruptcy. It’s also a major drain on the U.S. economy, with total national health expenditures as a percentage of GDP at 17.7% in 2018.
Benefit advisers need to address the challenge of reducing the frequency and severity of claims. This is done with experience, since mastery is in the execution. Under this scenario, advisers are paid for producing outcomes and aligning our interests with clients. We are consultants who get paid for results.
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Where do you start? By preparing the site of the healthcare home, or the foundation. Do you have transparency built into your client’s solutions? If not, you can bet it is being built on a sinkhole. Can you identify where the money goes inside their plan for prescriptions? Do you know how much you are paying at hospitals as a percentage of Medicare to meet your clients’ fiduciary responsibilities as a plan sponsor? Check out all the partners you work with in building a plan to learn where their revenue streams come from. Did you know there are 36 ways a carrier, PBM or TPA can make money on prescription fills? Have you implemented strategies to help high utilizers move away from the plan?
With a foundation in place, it’s time to do the rough framing, plumbing, electric and HVAC. How is your plan designed? Does it encourage a relationship with a primary care doctor who oversees your client’s healthcare plan? Can this doctor spend time with members to learn about their whole wellbeing? Do you have rules and incentives in place for where to get care?
Direct contracts with providers of all types can be used to steer members toward quality and value. Health Rosetta, a national movement to fix healthcare at the local levels, can assist with direct contract strategies.
With foundation and framing in place, let’s turn to insulation. What are you doing to protect clients? Fully insured with a 105 plan, level-funded, partially self-funded, captive, using a PPO network or no network with a reprice partner? The more risk management in place, the less insurance will be needed.
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Now it’s time to install the trim, mechanical fixtures, flooring and landscape. We need to evaluate member experiences and the plan’s ease of use. Perception is reality, and we want a ROI for the second-highest line item in the SGA line on the P&L. Did you brand and market your client’s program? Is their plan ready to assist members when they are ready? Do members know where to get care?
Final walkthrough is where we audit what was built. Fair and reasonable pricing is allowed, greed isn’t for claims as our plan sponsors have a fiduciary responsibility. Some states have markups of seven times or more than Medicare-agreed rates. Have you looked at repricing a claim, line by line? Settled on a cash-pay price? Set up single-case agreements or letters of acceptance? Put in place direct contracts with local providers or considered international options?
Benefit advisers can lead our industry to greatness. The future belongs to those who can reduce the frequency and severity of claims, implement strategies that provide underwriting credit, while improving the quality of plans for those we serve.
