Ah, the fall colors, football, and cooler crisp morning air – you might be thinking that I’m referring to the colorful fall season we enjoy every year. Actually I’m referring to that wonderful time of year that occurs for roughly 70% of employers in the U.S. – health plan renewal time.
Most plans renew on a calendar year basis, thus coinciding with plan deductibles, coinsurance and out-of-pocket limits. Of course, it’s a time of year when plan budgeting occurs and related changes that employers may deploy. If you’re one of the fortunate ones, you’ve received the “good” news early and have tried to do the appropriate planning, communication, and open enrollment with employees.
The problem with calendar year renewals is that because most plans renew January 1st, getting time with an underwriter to negotiate more favorable terms and rates, as well as obtaining other potentially competitive quotes is difficult due to the sheer volume that underwriters have to deal with. Going back and forth to negotiate with an insurance company takes time, after all, employers are requesting a sharper pencil deal, exploring alternatives which produce different rates, etc. In the meantime, underwriters continue to ask for more claims experience and information on ongoing claims. This in turn, delays decisions, creates uncertain budgets, puts open enrollment up against deadlines, and creates a lot of stress for everyone involved – Finance, Human Resources, employees and family members. Mix in the holidays and you have a wonderful time of year – NOT.
So now that you’ve received your renewal, how do you like it? Are you continuing the Definition of Insanity or are you doing something to actually lower the costs of your health plan? I’m not referring to cost shifting to employees through higher contributions or higher deductibles, but lowering costs through proven strategies that address the root causes of plan increases.
There may be many areas within your plan that you can explore – pharmacy costs, chronic conditions, carve-out programs, high hospital charges, and non-compliance, to name a few. If your broker has access to a data analytics program they should be able to slice and dice the data to find where your problems exist and then explore and deploy strategies that address the “hot spots” that have occurred throughout the year and those that will continue to occur. If an analytics program is not available to you, you should consider exploring this – not just the same old reporting package you get from time to time from your insurance company or Third Party Administrator – but an analytics program that really allows you to drill down on your data.
There are numerous strategies that you can implement that will result in lower premiums, lower expected claims, and thus lower risk. Underwriters who have access to data – not just monthly reports – and also understand what is occurring within a plan and what short and long term strategies have been proven to lower costs, will reward those plans through better pricing. I recently had a client that implemented strategies that reduced their premiums by 30%! Their expectation is that claim costs will also be lower at a commensurate rate.
Do your due diligence and explore the new strategies and programs that target where your “hot spots” are and you too will be rewarded.
Unfortunately the brokerage business is one which is overpromised and under delivered. You don’t know what you don’t know.