Are you kicking the can down the road? I recently wrote an article about playing offense and defense with respect to your health plan. It appears from the reactions that I’m getting, most companies are kicking the can down the road – meaning that they are only playing defense and accepting whatever renewal is being given to them, and expect to deal with the costs later.
Actually, now is the perfect time to evaluate options for the future. You don’t need to make decisions right now but you can begin the investigation of how to effectively lower cost for the long haul – and I’m not talking about cost shifting to employees. In this way, you’ll be better prepared to pull the trigger on a cost-effective plan sometime after the crisis subsides.
Here are the steps you need to take:
- Gather all your claims data in the prior and current year in a format that can be repriced. This includes all medical and pharmacy data.
- Have the claims data repriced by a reputable Reference Based Pricing (RBP) company, and a couple of Pharmacy Benefit Managers (PBM).
- How do you select a reputable RBP company and PBM? You enlist the services of an experienced broker who specializes in this space. (I know one if you want one).
- The outcome of the repricing exercise will give you an indication of whether or not compelling savings can be realized – which there typically is. The amount of savings will tell you what you have left on the table, and what you can expect the future.
- Next steps would be to select the appropriate vendors needed (TPA, stop loss, etc.) and develop a timeline for implementation.
Here’s what not to do:
- Have your broker send out a RFP. The problem is that these RFPs are written for conventional insurance companies and PPOs. They don’t reflect the current market trends.
- Ask an insurance company for a quote. This is simply a continuation of the status quo.
- Grasp at plan design options that cause shifting to higher deductibles, co-pays, out-of-pocket costs, or higher contributions for employees. These tactics no longer work, as employees are already struggling financially.
Recently, I’ve spoken to a couple of underwriters and they said that employers are seeing a bit of a down tick in claim costs. This is because employees and family members are not receiving the routine and elective procedures that they might otherwise incur – because they’re isolated at home, and non-essential/elective services are not being provided. Many hospitals are well below capacity and are losing revenue or closing because those elective procedures are not being performed. The expectation is that once those services are allowed, the hospitals are going to be increasing prices to adjust for the current loss of revenue, hence higher prices and claim costs to everyone.
There are those that predict another wave of the virus later this year or next. Regardless, you want to have a plan in place that protects your employees, your company, and the sustainability of your plan. Now is a perfect time to play offense and defense.
If you’d like to learn more about the process and how you can take advantage of it, please reach out to me at [email protected].
