Last year, an electrical contractor was presented with a 23% increase from CIGNA, the incumbent insurance company. The group had a bundled plan with CIGNA, and was told that their claims experience warranted the increase. Their only alternative was to dramatically change benefits to employee by raising deductibles, copay’s, and out-of-pocket limits.
Instead, the group chose to unbundle their plan utilizing Best In Class vendors, as well as innovative approaches to the reimbursement methods to medical providers. They were able to do this effectively without changing any benefits to employees whatsoever.
The first step was to examine the cost of claims administration. Turns out that CIGNA was charging significantly more per employee per year than an Independent, National “Top Shelf” Third Party Administrator (TPA). As it turns out, the TPA also had a much better member advocacy program to help members navigate the entire health care system, specific physician searches, appointment setting, network questions, etc.
The next step was to shop the Stop Loss. We were able to find an A+ carrier who dramatically reduced the Specific Premiums as well as the Aggregate Attachment Point, because of their knowledge and understanding of hospital cost to charge ratios, PPO pricing with CIGNA vs. our innovative approach.
Next was to identify and implement a more competitive Pharmacy Benefit Manager (PBM) that was transparent, did not charge excessive administrative fees, did not profit from spread pricing, and would refund 100% of the drug rebates.
Lastly, through our relationship with a firm that approaches provider reimbursements completely different than a traditional PPO – which continues to be a “discount off of what” methodology – the group’s provider costs have been reduced dramatically with very little balance billing to the member.
Financially, the group’s maximum annual costs (worst case scenario) dropped by 30%. This means that what they could have paid CIGNA was 30% higher per employee per year for budgeting purposes, than the plan they implemented, before a claim was even paid!
Now for the really impressive numbers: the plan is actually running at 43% of the annual plan maximum, and 50% lower than the underwriter expected the costs to be YTD!
The interesting part of this is that we haven’t yet attacked the cost of Specialty Drugs, which tend to elevate not only the costs of drugs for both employer and member alike, but can have a dramatic effect on the entire plan costs.
The new plan has obviously had a direct impact on the bottom line of the P&L.
Would this be something that you should consider? Sometimes, You Don’t Know What You Don’t Know!