Two Key Aspects for Success in Self-Funded Employer Insurance

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Employer healthcare costs continue to rise. A survey from the National Business Group on Health (NBGH) estimated that in 2020, employers will spend six percent more on healthcare, an average of $15,375 per employee, if they do not implement cost-management tactics.

One of the most effective tactics to lower spending moving forward is to institute a self-funded employee insurance program. This method can “lower expenses and improve cash flow since the employer only pays for healthcare their participants use,” according to HealthNow Administrative Services. By switching to an administrative services only (ASO) arrangement, employers can recoup up to 20 percent of spending that insurers would otherwise allocate for profits and costs, such as executive salaries and marketing.

To thrive in self-insured plans and mitigate the inherent risks of such plans, employers should consider adopting high-performance networks that elevate primary care and offer patient engagement tools, which can lead to additional savings.

The Importance of High-Performance Networks

Employees, like their employers, are struggling to pay skyrocketing healthcare costs. An analysis by the Commonwealth Fund showed that “average deductibles in employer plans more than doubled between 2008 and 2017, from $869 to $1,808.” Employers can help lower these costs and attract best-in-class talent by adopting optimized narrow networks. As Amy Cheslock, President of Privia Medical Group — Georgia and Cumberland Region, notes: “There is a pronounced and growing interest and opportunity to narrow networks or create plans that preferentially steer individuals toward selected providers as a way to offset medical costs that can’t be absorbed by individuals or managed through benefits designed by employers.” A narrow network may direct employees away from high-cost settings in favor of cost-efficient physicians and providers.

Self-insured employers should consider narrow networks that emphasize primary care providers. Prioritizing primary care can lead to significant cost savings. A pilot program by Centivo illustrated the benefits of this approach; “Employers involved in the study saw cost savings; emergency room visits decreased 30 percent, routine primary care visits increased 23 percent, and preventive care visits increased 64 percent.”

The lower the out-of-pocket costs for preventive care, the more likely patients are to utilize such treatment and avoid costly emergency procedures in the future. Emphasizing primary care has been shown to reduce overall healthcare spending; the American Academy of Family Physicians found that patients “who have a primary care physician accumulate 33 percent lower healthcare-related costs.” Under a self-insured model, these savings could be transferred to employers.

While primary care is a crucial component of a successful self-insured plan, successful narrow networks must include high-quality specialists. Furthermore, the primary care providers should direct patients to those in-network designated specialists. The key to achieving this goal is a referral management system that connects providers with “only the highest quality, cost-efficient providers. That in turn leads to lower specialty care costs.”

Tools to Engage and Empower Patient-Employees

The same high-deductible health plans that self-insured have contributed to the rising trend of healthcare consumerism. Under this framework, patients “shop” for care in terms of cost, convenience, and other factors.

To appeal to their employees’ desire for convenience, employers should invest in tools that engage their employees as patients. One of the most effective of these tools is telehealth. Patients can visit their physician from the comfort and safety of their home or office. The convenience can lead to higher utilization for services, such as reviewing lab tests, while also avoiding more costly encounters (e.g., an emergency department visit).

Another useful tool is a patient portal. Portals empower patients by enabling them to interact with providers and their healthcare experience through a digital platform. A robust portal has several essential capabilities for patients to utilize:

  • Send and receive secure messages with their physicians
  • Schedule appointments
  • Pay your bill online
  • Access lab results
  • Request prescription refills
  • Receive reminders about important health screenings

Imagine how this service benefits patients, your employees: Instead of leaving the office and commuting to their physicians’ practice, a patient can review a test result or refill a prescription without leaving their desk. Similarly, patients can message their physician in a secure, HIPAA-compliant manner to ask questions that don’t require a scheduled visit. Combined with telehealth, patient portals expand the reach of a narrow network to better connect patients with their physicians. According to Mobius MD, “Research has found that portals can improve outcomes via better care coordination, patient education, and patient-provider communication. Similarly, studies have found that patients with access to doctors’ notes had higher rates of medication adherence because they were more engaged in their treatment plans.”

Self-insurance is one way for employers to lower healthcare spending while meeting employees’ needs. However, to be effective, this strategy must include a strong primary care base and tools to easily connect patients with their providers. One way to ensure these objectives are met is to partner with a larger organization that has demonstrated experience with custom and high-performance networks.

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