A combination of partial self-funding, direct contracting with local providers, and reference based pricing is the ultimate and perfect solution for employers and employees to address rising healthcare costs.
This combination works so much better than any insurance company and their PPO contracts. It gives employees the flexibility to choose any provider they want to – no networks – and gives the employer control over the health plan.
There are 2 fundamental questions every employer should ask: 1) “what are the benefits I want to offer my employees”, and 2) “what’s the best way to pay for them.” Because partial self-funding permits an employer to customize their plan design, they aren’t locked into a design that an insurance company wants to sell them. Self-funded plans are governed by ERISA and exempt from state insurance law. An employer can design their plan to fit their employees needs and company culture, so we can set question #1 aside. Let’s address question #2.
From a cash flow perspective partial self-funding allows the employer to only fund claims if and when they occur. There is no prepayment of funds to an insurance company and have them hold their money regardless of the claims incurred. Cash flow is key. Reinsurance provides protection for the plan and a Best In Class Third Party Administrator provides all of the administrative services and more than a BUCA (Blue Cross, United, Cigna, Aetna).
Direct contracting with local providers affords employers the ability to contract at better rates than what that same provider would otherwise negotiate with a BUCA. Providers also have a sense of loyalty to community’s members and want to be included in the plan. What they don’t want is to negotiate lower reimbursement rates for all insurance companies. But they are willing to negotiate with local employers directly.
Reference Based Pricing gives employers the cost control mechanism over all other providers throughout the country. The reimbursement rate is usually on a Cost Plus or Medicare Plus basis. Once again, since all providers are reimbursed based on the same formula, employees can choose any provider they want to – no networks.
This combinations of these “three legs of the stool” give employers the ultimate control and cost savings in their health plan. All benefits are paid at the In Network level – remember, there is no out-of-network benefits. If an employer is with a BUCA they have no control over plan design or cost – it’s all rolled up into what the insurance company wants to sell – not what the employer wants to offer to their employees.
So what you have is the Ultimate Plan that has customized plan design for employees (question #1), cash flow and cost control savings for the employer (question #2), no network – employees can go wherever they want, contracts with local providers and stakeholders, better service and administration, the elimination of the “discount off of what” PPO, and reimbursement rates that are 20 to 30% lower than a BUCA. What could be better than that?
If you want to check out how you can create the Ultimate Plan for your business, give me a call at 970 – 349 – 7707, or email me at [email protected].
