3 Factors Businesses Overlook in Their Benefits Plans
BY RYAN SPENCER
Business leaders face multiple challenges when picking a health benefits plan for their employees. In finding the best care for their workers, they must consider plan expenses, coverage, and the quality of care they may receive. As careful as most leaders try to be, we frequently watch them overlook the most important issues every year because they are overwhelmed by the complexity of the health system and the lack of time and detail available to make a thoughtful decision. You can overcome these problems and deliver better care for your employees by keeping track of the biggest issues.
In our experience, the three of the most important factors leaders regularly overlook are:
- Transparency - How much access to data around health care and health care costs does the plan provide?
- Communication - How is the data or plan benefits communicated to the employees?
- Population - Does the plan cater to the financial situation of the workforce population?
By digging deep down to truly understand these details, you can design plans that better serve your workforce.
Benefits plans are so complicated, most business leaders fail to realize that they can achieve greater transparency into their plan details, including contracts, pricing, and policies. Unlocking clarity into the finer details creates new opportunities for improved strategic and financial decisions on behalf of your employees. Some of the best places to start pushing for transparency in your current plan are:
1. Pharmacy contracts and arrangements. Pharmacy benefits managers (PBMs) have dozens of hidden revenue sources within a typical contract. Three common examples include:
- PBMs frequently receive rebates without passing the savings onto the customer.
- PBMs increase their profits through spread pricing, the practice of sourcing medication at one rate and then reselling it to the consumer at a significantly higher price point. For example, a PBM may source medication for $100 but then sell it to the consumer for $200 or $300.
- PBMs sometimes charge an administrative fee on reversed claims.
If you're not aware of what you're paying to your PBM, you’re only getting partial rebates or admin credits. It’s time to take a closer look. Ask for the rebates they never passed along and for medications at a reasonable markup. Regardless of whether they offer a refund, consider finding another PBM to partner with in the future.
2. Your consultant’s compensation. Ask your benefits consultant about additional revenue streams for their business. Yes, they have income coming from clients like you, but they may also receive commissions and bonuses from PBMs and/or insurance companies. Agreements with PBMs could create a conflict of interest for the consultant, which could then impact the financial results you and your employees receive. Your consultants should be willing to disclose all of their revenue.
3. The price of services at nearby hospitals. This data empowers employees to make informed decisions for both their health and their wallets. If a hospital 15 minutes away is 25% less expensive than the hospital around the corner, the savings could justify traveling a little further for non-emergency services, especially if the quality of the care at the alternate hospital is better or equal to the quality of care at the more expensive option.
With greater transparency, you capture new opportunities to slash costs for both your company and your employees.
Improved transparency leads to better data collection, and better data collection leads to the information necessary to make better health decisions.
For example, a common mistake we see is that employees often receive surgery from a surgeon without having any knowledge about the quality of his or her work. Many of these patients were just directed there from a friend or as a referral from another doctor within their health network.
The problem: When an insurance company puts a facility in their network, you receive access to both the best doctors and the worst doctors in that facility. An in-network referral does not mean you are guaranteed excellent service or outcomes.
With a larger data set, you can evaluate a surgeon’s success rates and discover how quickly patients recover before committing to surgery with him or her. By selecting a better surgeon, an employee receives better care, is less likely to require follow-up surgeries or corrective therapy, and the costs are more management across the board.
By sharing your data with your employees, you empower them to make educated decisions around their health.
Many of the leadership teams we talk to about health care plans forget to think about the majority of their workforce when evaluating health benefits. They make these decisions with other C-suite members and consultants who typically earn enough money to not worry about the financial costs of their own health care plans. Compounding the problem even further is pressure from increased costs outside of budgetary constraints that push them into making tough decisions surrounding the health plan. As a result, these leaders are left with an impossible picking an affordable plan that doesn’t always meet the needs of their overall workforce.
To make better decisions on behalf of your employees, think about their income levels. If your average employee earns $14-$16 an hour, a $4,000 high-deductible plan would be too expensive for them to use, making them functionally uninsured.
Overcome the population challenge by reviewing the average income for your employees and considering the health issues they currently face. Pulling these population details together forms a framework for the employer to begin managing the health care supply chain and develop a plan that works to serve your entire workforce.
Revamp your benefits plan by succeeding where other leaders fail. When you turn your attention to plan transparency, information access, and workforce population, you increase your chances of developing a high-quality plan for your employees. By altering your perspective, you unlock new levers that increase the level of care while keeping costs flat. With an employee-friendly plan, your workforce receives better care and may even increase your employee retention.