Traditional insurance providers intentionally make health care costs complicated. If you have ever asked, before the procedure, what you will pay out of pocket for something as routine as an MRI or a physical therapy appointment, you have likely experienced this firsthand. You can spend a few hours on the phone, transferring between departments and layers of the system, and still not arrive at a clear answer.
The opacity of the system makes it harder for you to make decisions about your care, but it can also serve as a smokescreen. It hides the costs, yes, but it also hides where the money goes.
Taking Spreads on Benefits Costs
To incentivize advisors and brokers to promote certain programs, some insurance providers compensate the middlemen for things like:
- Pharmacy services
- Medical management
We have even seen situations where advisors are making a bonus on a per prescription basis.
These incentives bias the strategic thinking that should go into your benefits plan. If your advisor makes a bonus if your employees use a particular service more often, the advisor may be motivated to do what is best for them rather than what is best for your business and your people.
That is not always the case, of course, but if those kinds of incentives are hidden from you, you can’t make an informed decision about whether that approach is right for the business.
How to Make Incentives Work in Your Favor
If you aren’t aware of how your current plan handles incentives along the health care supply chain, you should find out, and you can use our compensation guide (send me an email and I will give you a copy) for a list of every point where an advisor or broker could be making a premium on your plan. You can then use that guide in your next advisor meeting to confirm, point by point, what incentives might be impacting your plan.
If this approach to incentives is troubling for you, there is a better way: The next generation of benefits advisors aligns incentives with their clients. In other words, the advisor is rewarded when the plan lowers overall costs and provides better care for employees. This model flips the paradigm instead of incentivizing upcharges, hidden fees, and giant increases in annual renewal costs.
The good news is that Washington is working on new transparency rules to make these hidden incentives less of a problem, but your immediate next step should be to understand what is happening to you today.
Feel free to schedule a meeting with me if you’d like a hand doing so.