Over the past few months we’ve been writing about what you can do to combat the trend of health insurance costs increasing at a higher rate over the next 2-3 years than we have seen in the past 10 years with careful planning and benefit adjustments. Our recommendations focused on what you can do as a buyer of group health insurance, but what about your health insurance provider. What are they doing to combat rampant inflation, other than just asking you the buyer to just pay more, or asking you to pass the costs onto your employees through plan design changes such as increasing your plan’s deductible.
Unfortunately our short answer to what most health insurance providers are doing to help manage increased healthcare costs is: Not enough. We have seen a worrying trend over the past few months of insurers time and time again missing opportunities for cost containment. Missed opportunities for saving ultimately get passed onto clients in terms of higher renewal rates. If your premium is US$1m every US$10,000 in healthcare spend is the equivalent of 1% of your premium when negotiating your renewal.
As a broker we are tired of the insurers we work with just passing on these costs to our clients when it’s clear that they could have managed our client’s healthcare spend better. Here are a few cost containment areas that as a buyer of group health insurance you need to immediately ask your health insurance provider about:
- Negotiated discounts with healthcare providers – ask direct questions of your health insurer about their negotiated discounts at your top 10 utilized hospitals and clinics. It’s common in Asia for hospitals and clinics to offer the lowest prices to self paying customers, so as a minimum you want to ensure your insurer is getting access to those same prices. Aim for negotiated discounts as high as 50% and ask your broker to compare your current health insurer’s negotiated discounts with other insurers in the market.
- Case management – you need to ensure that all of your employee’s claims (and treatment) are necessary and appropriate. The easiest way to do this is to make sure your insurer has robust pre-authorization requirements for certain medical procedures or treatments, utilization reviews, and chronic condition case management.
- Healthcare provider “steerage” – your insurer should have clear strategies to help ensure your employees do not always choose the most expensive hospitals and clinics. Your health insurance plan design helps with this, but is your insurer also doing enough to steer employees to lower cost alternatives? For example, are they realistic with the alternative options they recommend for steerage – if a non-English speaking employee is planning to seek treatment at a private (but costly) hospital with English-speaking doctors, does your insurer always recommend public hospitals with no English-speaking doctors as an alternative? Because understandably that approach will fail. Insurers need to make recommendations that realistically have a chance for success. A more realistic alternative option would be another lower-priced private hospital. Or insurers can apply some out-of-the-box thinking (see point 5 below) by agreeing to pay for your employee’s flights and hotel if they agree to travel to a lower-priced hospital in another country (such as Thailand) or city for the treatment.
- Wellness and maternity packages – many hospitals and clinics in Asia have packages and promotions for easily packaged services such as health check-ups (annual physicals) and maternity delivery. Make sure your employees are aware of these packages, that the packages are tailored to match your health insurance plan benefit limits and – importantly – make sure that your health insurance provider will reimburse the packages in full. Often these packages will include a few items that if billed outside the package would not be covered by your plan, but since purchasing the packages helps save a lot of money compared with buying each item separately, it should be an easy cost containment strategy for your insurer to just cover the whole package.
- Out-of-the-box thinking – a follow-up to point 4. Sometimes health insurers can be too rigid in their thinking and not covering wellness packages simply because one or two items in the package are not standardly covered even when the package prices represent a clear saving is just one of the ways we see a lack of out-of-the-box thinking that is ultimately costing our clients money. Similarly, your plan might not include teleconsultations as standard but if one of your employees is trying to choose between two hospitals for a particular treatment and the insurer can cover a teleconsultation session with the doctor at the lower priced option, it’s clear that decision will help to save money in the long-term.
Finally, one final recommendation – make sure to ask for quarterly reporting (particularly on their successes in steerage – see point 3 above) from your insurer on the savings generated as a result of their cost containment methods.
You should be working closely with your broker and your health insurance provider to ensure that your insurers cost containment strategy aligns with your company’s approach to healthcare and health insurance.
But most importantly, you need to ensure that your insurer is not missing the “low hanging fruit” opportunities for savings by not doing enough which ultimately will cost you come renewal time. When negotiating your renewal, insurers will talk about the need for them to stay profitable. But that can’t just be done by asking clients to pay more. It could be that your insurer will refuse to lower your premiums because doing so will result in your account losing them money on your business – well how’s about rather than asking you to pay more, they put some “skin in the game” by saying they will do better with cost containment (which saves everyone money).
If you are looking for clear actionable advice and strategies for managing your health insurance spend in a way that not only saves you money, but never results in a diminished healthcare experience for your employees, please get in touch. This is just one of the ways we help our clients deliver world-class employee benefits programs, with predictable and sustainable renewals, with empathy, warmth and care.