By Daniel Corliss
There have been many shifts in the way mid-market to large health plans all over the country are purchasing healthcare in recent years, and change is certain to continue, even more so here in California. Employers in the state have seen very little evolution away from the traditional carrier financing model toward other financing options such as self-funding and level-funded products. But just like the San Andreas fault – that is also shifting.
Employers in California are already very heavily considering ASO and level-funded products as the “cutting edge” of plan design and increasing control over healthcare spend. Carriers such as Cigna and Premera who have a very strong presence in the Southern California market have already been marketing these solutions heavily due to strong shifts in interest and demand. However, in an ASO model a carrier is still able to dictate their network usage along with the accompanying ambiguous discounts which still promote overspending and blindfolding. Their level-funded products are still able to retain significant premium dollars via the excess claim fund, along with the same accompanying network detriment. Employers will begin to catch on to these “smoke and mirror” tactics and naturally move even further away from carrier products. So, here are my predictions on continued health and benefits trends for enterprise and large employers in 2020:
ASO and Level-Funded products will gain steam – but only as an evolutionary fad
These are very hot products right now in the California market – but for the same reasons I mentioned in my opening statements, these will be part of a continued evolution away from carriers and toward true self-funding with independent TPA’s and transparent plan partners. If you do not have complete transparency and control over your health plan, you are not in a truly self-funded plan arrangement. Employers that have complete unrestricted access to their claims data, facility/provider cost and quality information, disease management reports, pharmaceutical data, and direct-contracting capabilities will be the best equipped to make smart decisions and mitigate costs on the fly. Cost containment requires being fast and informed. You just can’t do that properly with red tape and a blindfold over the eyes.
Value/Reference-Based pricing is here
No-network and reduced-network health plans that utilize claim repricing methodology have taken the country by storm over the last five years with continued rapid growth year over year. Health plans that use great Reference Based Pricing/Value Based Payments (RBP/VBP) vendors are seeing very little pushback from facilities and providers (less than 2% of membership), along with up to 50% savings on total health plan spend the first year of implementation, without cutting or reducing benefits. A good RBP/VBP vendor doesn’t just reprice claims at a multiple of Medicare or cost, as most people think. They negotiate fair and sustainable rates with facilities and providers that both parties can agree to and put direct-contracts in place that benefit the entire community. They work as advocates on behalf of the plan and plan members to make sure that balance billing and collection attempts are stifled and resolved quickly. They also work as bill-review specialists to prevent fraudulent billing, upcoding, and duplicate billing. This type of arrangement works very well to contain costs and increase convenience if done properly with the right plan partners put into play, and it’s going to be a game changer in the California market for 2020 and beyond.
Technology will continue to evolve and become even more necessary
HRIS systems and benefits/enrollment platforms were the last big thing to hit our industry, and if you’re still using paper forms to track eligibility, census data, and enrollments then you are already back in the Stone Age. Many employers now are already looking ahead by leveraging predictive population health and outcomes data to mitigate member risk and costs. This is valuable information that allows employers and plan partners to deploy internal initiatives to promote happier, healthier lifestyles. Where we are starting to see even more truly transformative leaps in technology is in fully integrated employer platforms that blend claims, eligibility, and enrollment visibility and usage along with full vendor and plan partner marketplaces. Plan members or administrators can log in and check real-time claims data and utilization, out of pocket costs and deductibles, search for an EOB, or enroll a newborn child. They can also get direct access to their telehealth vendor, see a list of their network providers, and inquire about a bundled Total Knee Arthroplasty (TKA) surgery with their contracted surgical specialists. Platforms like these provide great transparency and steerage that save both the plan and plan members time and money, while also providing immense convenience and reduced bandwidth from the HR team. We will see continued innovation and need here in 2020.
Expect to see continued expansion of bundled surgical and medical tourism
As we all know, rising healthcare costs are unsustainable for employers and plan members. Where it really hurts the most is on high dollar claims that are elective and predictable, because those are savings that should be controlled and achieved. Direct contracting with high quality facilities and providers at a relatively much lower costs than your average carrier reimbursements can net a plan huge savings. There are many examples of how employers are already doing this, but let me paint a picture for employers in the Los Angeles area that may be right here near my office.
At Cedars Sinai hospital just down the street from me, the average billed charge for a laparoscopic cholecystectomy (gall bladder removal) is $32,000.49 according to MediVi, a highly utilized and trusted cost and quality platform that we use. The Surgery Center of Oklahoma, a nationally recognized leader in high quality, low cost surgical procedures charges $5,865 for the same procedure. Their website actually lists their costs for everyone to see right here: https://surgerycenterok.com/pricing/. I don’t know of a health plan out there that wouldn’t put a member on a plane and cover travel expenses while still netting their plan upwards of $20,000 in savings on a single gall bladder removal. Multiply that kind savings “x” times per year on all elective and non-emergent surgeries and you start to get the picture.
This is just one of the many examples of how smart employers and brokers can provide alternative options that promote transparency, produce better outcomes, added convenience, and incentivized cost control. Expect this trend to continue in 2020 as we continue to see more transparent cost, quality, and outcomes data by physician, facility, and procedure.
I think we will continue to see even more trends that are facets of the self-funding model continue to improve and grow in 2020 here in California. I am happy to see more and more employers take back control of their healthcare costs to help their company and plan members thrive!
Daniel Corliss is large group health and benefit plan advisor at DC Advisory, LLC in Los Angeles.
CORRECTION: In the February 2020 print edition, this article featured a graphic on page 26 showing case study comparison. Credit for that example goes to E Powered Benefits COO Emma Fox (efox@epoweredbenefits.com). Our apologies for the credit omission.
Daniel Corliss is large group health and benefit plan advisor at DC Advisory LLC in Los Angeles.