BY: STEVE BETLEY | Senior Benefits Advisor
In today’s connected world, there is a growing expectation of transparency. From legal contracts and legislative policies to internal and external company operations, there are plenty of reasons why knowing the whole story is not only important, but highly beneficial, to all parties involved – especially when money and ethical practices come into play. Nobody likes to be taken advantage of, so why does it seem like transparency is just now becoming such a hot topic? The truth is, the need itself has never changed. But, because of our free access to information, ability to rate and review companies, goods and services, and an influx of stories exposing the unethical or illegal business practices of certain companies and corporations – our collective level of trust certainly has.
Although most of this recent exposure seems to cater to the B2C market, the issue of transparency, driven more specifically by trust in a company’s external partnerships, is a growing concern with B2B markets as well. With governmental legislation driving healthcare and insurance costs to new highs, it’s important for companies to understand exactly where their money is going, which is information that isn’t always universally known or understood. To illustrate my point, I want you to ask yourself a few questions: How well do you understand your company’s health insurance plan? Could you identify overspending on medical costs and procedures? Is your current health carrier the best option for your company? And, most importantly, if you don’t know this information, how easily could you find the answer you’re looking for? In this piece, I’m going to touch on exactly why questions like these are important by providing a deeper look into medical costs, pharmacy/specialty costs and carrier partnerships.
It’s no secret that medical costs are expensive, but understand that when I say “costs,” I’m specifically talking about the true costs of procedures, materials, labs and hospital stays as it relates to healthcare facilities. Our healthcare system is built on overcharging the individual or company who purchases health coverage through an insurance carrier that has a contract with a provider. In my own experience, these charges may be anywhere from 200-400% of the billed Medicaid amount. Why does it matter? These overcharges spell serious financial implications for employers and individuals, creating higher healthcare costs for all. Knowing this information is key for choosing the right carrier or carriers and preferred healthcare networks, structuring your company’s health and wellness plans and creating accountability between all parties involved with these medical costs.
How well do you understand the processes and procedures detailed in the contract between your company and your Pharmacy Benefit Manager (PBM)? In my own personal experience, I’ve noticed that a great deal of PBMs often promise transparency, but design their contracts to take advantage of the employer’s welfare plan – most of the time without the employer even knowing about it. Even though it would be completely unreasonable to demonize this profession as a whole and expect that every PBM uses these unethical practices, what it does accomplish is providing an extra emphasis on the importance of understanding the relationship your company has with your PBM. Much like medical costs, taking a “set-it-and-forget-it” approach to these relationships could create significantly higher costs that don’t need to happen.
If you’ve had the chance to read my case study about the importance of forming effective consulting relationships for your business, then you will understand why carrier partnerships sometimes require an extra layer of scrutiny. Having spent over a decade in the insurance industry, I’ve seen competitors and past employers specifically place business at key renewal times with their ancillary carrier partnerships to receive an increased kickback bonus. This also often occurred even when there was a less expensive or more comprehensive solution available for their client or prospect. Although this may create a short-term benefit for the firm, a move like this can easily lead to long-term issues for both the client and their ongoing partnership with the firm, which can cause a split between both parties. When carriers are recommended for your company, always take the time to understand exactly why this specific carrier was chosen. Your firm should be upfront and honest with their rationale, and provide access to specific information that can be referenced later in order to validate the claims of their recommendation and the contract.
We live, work and operate in a connected society where accountability is enforced through an unprecedented access to information, which often puts companies on the spot to operate ethically and do what’s best to keep their clients, customers, shareholders and employees satisfied. But is that enough? Sometimes, it isn’t. Establishing trust and accountability, asking the right questions and taking the time to investigate contracts, bills and claims of external operational partnerships is the key to making sure that your company’s spending is providing the highest benefit possible to itself and not just a second or third party.
At the beginning of this piece, I had you ask yourself some important questions about your business. Now that I’ve explained why it’s important to ask these questions, I want you to take some time to revisit them and think about their potential impact. Do you know everything you need to know about your company spending? Take a closer look – the answer may surprise you.