Cost Containment Medical

franfields

Does anyone have strategies that are working to reduce the rising cost of medical insurance?

Down_the_Middle

Whoah!!!! Suggesting way to achieve world peace might be easier..
I'm "thinking" about the deferred comp concept of offering $'s for employees to buy what they want on the open market, thereby avoiding the exponential increased cost each year. My health plan costs will stabilize but employee satisfaction may go South..., so I'm still pondering that issue.

Your industry and market competitiveness will probably dictate what you can/cannot do, but for the sake of offering some suggestions: If you buy an insured plan now, going self-funded might offer more stability to rising costs (depending on your utilization and financial capacity), plus doing all of the obvious----plan design changes, cost shifting to employees, offering a 2nd or 3rd alternative plan, having alot of wellness & early detection pieces in your plan design, network discounts, d/c'ng other H & W plans and shifting the dollars to the health plan side, etc........

If you're like everyone else, little things are not what will make a difference and most employers have already picked the low hanging fruit. I think the issue will be for employers to use the health plan as their centerpiece (and suck up the corresponding cost) or scale it back significantly and let it shift to a secondary type of benefit. Gimmicks sometimes work, but if your market does not respond to them, then you've lost your ability to compete. I share your concern over this health cost problem.!!!!

Margaret Morford

I know that conventional wisdom says self insurance is the way to go. However, when our company was LBO'd, I investigated the possibility of taking us fully insured rather than remaining self-insured. We had 1,200 employees in several states. The fully-insured rates had fallen to the point that they were almost comparable to self-insured. We were able to shift the risk back to the insurance company. We also were able to dump three quarters of a million dollars in reserves back to the bottom line. We tied all the medical insurers in for two or three years so that we didn't get soaked Year Two. Make sure you cost both fully-insured and self-insured.

Margaret Morford
theHRedge

Terry

I work for an insurance broker and I can tell you I have seen renewal increases from 10% to 60% this past year. I absolutely suggest shopping the market. Very similar plans vary greatly in rate. My husbands company only offers PPO products which are the more expensive option than a HMO or POS, and none of his plans have really great benefits. The cost difference between an HMO or POS, even with identical in-network benefits, can be significant. My last job, the director of risk management said, at least in the company's plan, out of network charges accounted for 80% of the utilization on the POS plan. Savings result when in-network services are used so if most people go out of network, then you will see a escalating premium. It is thought that people that go out of network go directly to a specialist rather then their PCP again contributing to higher costs. Increasing in-network office visit co-pays can help reduce premium costs.

Another option is to change to a three-tier pharmacy card. Now that Pharmaceutical companies can advertise direct, they are creating consumer demand and rising RX cost (and of course the advertising needs to be paid for.) The three tier card allows a higher co-pay for non-formulary RX with no hassle for a doctors intervention to have it covered. Non-formulary is not usually covered on your single or two tiered copay RX cards.

franfields

We were self insured a couple of years ago. That was a mistake. We only have about 105 employees.

bsa

Educate employees about your coverage and the optimum way to use it. Things like -- stay in the network, ask for generic drugs, ask questions before agreeing to a procedure.

I had to make a real pest of myself, but I finally got to the bottom of the increase we received. Over half of our utilization was prescription drugs. The prediction is that prescription drug use is only going to increase due to advertising by drug manufacturers. Because they see it on TV, people think they have to have that drug, never mind that it is expensive - insurance will pay for it!!

Terry

I call it the "magic pill" syndrome. Take a pill, cure your weight problem, take a pill, cure your cholesterol problem, or my favorite, take pill, cure your toe nail fungus. And the side affects for some of these sound worse than the problem. While I would never begrudge anyone the right to medication, so many things can be controlled through other means like diet and exercise or topical meds that the "magic pill" could be necessary for far fewer people than it is prescribed.

xsafford

Here are two ideas that I have not yet succeeded in persuading our company to adopt.
Option 1: Purchase health insurance with a very high deductible (say $5,000 per person). Then create an actual deductible amount for your employees that the company will set. That is: the company pays directly to the employee once he meets his company established deductible. Again it doesn't matter who the provider is or who the family member is. This will give you the benefit of self-insurance with the confidence that you won't take a big hit (if someone gets really sick). The rest of this plan is to not hire a plan administrator.
For our vision plan we give each employee a set allowance per year. Then we say just bring a receipt in and we will reimburse you. It doesn't matter who the provider is or who the patient is. Everyone knows the cap, and so employees police costs themselves. Apply the same concept to medical. You do away with all of the administrative costs and headaches. Just reimburse up to your limit, and then your insurance does the rest. Cutting the insurer out of the loop can result in a substantial saving.
Option 2: Contract directly with a group of doctors. Every employee goes to your doctors, and the doctors eliminate the need for insurance administration. Again you take out a very high deductible policy, and you contract with doctors for a set fee per person. Your costs are known to the last penny. You could even negotiate with more than one group of doctors to give your employees some choice.
The thrust of these ideas is to eliminate the middle-man (i.e. the insurance company). If you are like us the insurance company and the broker add zero value and a lot of cost. We also have a lot of unhappy employees who feel they've been screwed by the insurance company.
I'd like to hear some feedback on these ideas, so fire away.

kaad

I have seen option 1 used in a slightly different manner about 25 years ago. The difficulty with a high deductible that you administer yourself is that it puts you into the claims adjusting business. Also, your carrier will apply claims to its deductible on the basis of what is payable under your policy or agreement, so those claims not only have to comply with the policy, they have to be provided to the insurer to apply to the deductible on its claims management and payment system. 25 years ago, claims were easier to adjudicate, but even then, the insurer adjudicated the claims and applied the deductible. The employer, through the administrator, reimbursed the employee for the "unused" portion of the deductible, i.e. the amount between the employer's set deductible of $100 and the insurers $500. Employees were encouraged not to misuse benefits in this way since they could get actual cash. There were tax and insurance contract problems though that resulted in it not being used. This was also prior to Section 125 plans.