As health care costs continue to rise, it
is important to consider all aspects
involved in managing health and welfare plans. There are many mechanisms to
contemplate, and with knowledge, plan
managers can make educated decisions
instead of making decisions in a black box.
“Reinsurance, prescriptions, mental
health and disease management programs
are all potential and substantial cost-saving
areas,” says Jim Powell, senior vice president, Hilb, Rogal & Hobbs, Tampa. “I have
yet to find a plan that does not have one of
these potential areas for improvement.”
Smart Business spoke with Powell
about key information that helps plan managers improve their company’s health and
wellness programs and identify areas to
carve out benefit plans for cost savings.
Should companies simply raise plan benefit
levels to save money?
Many companies initially focus on the
benefit levels, including co-pays,
deductibles, co-insurance and employee
premium contributions, as the first mechanism to save plan dollars. A forensic
approach can be more beneficial. Typically
these plan changes are the last area to look
at because they most directly impact the
ultimate consumer of the plan — your
employees and their covered dependents.
Looking at areas outside of benefit and
contribution changes may identify areas of
improvement and cost savings without
negatively impacting the employee.
Should companies consider self-funding?
Many times, it is assumed that self-funding automatically saves money. The decision to self-fund a health and welfare plan
is really one born from the desire to control
the plan. Once the plan sponsor decides to
self-fund, many new alternatives become
available, like the ability to carve out the
reinsurance, for example. Very few brokers
and consultants, however, are real craftsmen in this area. It requires skill, expertise
and market relationships to properly structure and manage a comprehensive reinsurance program. Overall, benefit design is more flexible in self-funded plans as the plan sponsor begins to move away from
state-mandated insurance benefits and is
subject to ERISA [Employee Retirement
Income Security Act].
Can alternative prescriptions/Rx benefit programs lead to plan savings?
Pharmacy benefit managers (PBMs) have
become more aggressive in their pricing
and rebates, and this can be an important
area of focus in reviewing potential plan
costs and identifying areas for savings. It
may not always be the most cost-effective
solution for the plan to simply go with the
Rx vendor recommended by the health
insurance carrier. A full-service
broker/consultant can analyze the pricing
and services in this area, request and negotiate proposals from alternate vendors, and
present a recommendation for the plan
sponsor to consider. The resulting savings
to the plan and to the employees can be significant.
What about insurance carrier service?
Companies deserve and should request a
senior customer service representative
from their insurance carriers. What a difference you experience when dealing with a seasoned professional. Additionally, companies that use outside consultants benefit
greatly when their consultant discusses
plan financials with senior sales representatives and senior underwriters in order to
achieve the most advantageous outcome.
Should companies consider raising the plan
deductible?
Finally, it is important to benchmark the
plan provisions to ensure a competitive
position in your recruitment and retainment efforts. With this data, a plan sponsor
can make educated decisions about which
benefit levels can possibly be modified for
plan savings.
How are companies reinventing health plan
funding?
There are many creative ideas to consider in the plan design area. One firm I
worked with has tied their plan’s medical
insurance deductible to salary — the higher the salary, the higher the annual plan
deductible. The more an employee makes,
the more they share in the initial plan
claims. Another firm developed a varying
employee premium contribution schedule
based on earnings, so the more you make,
the more you pay in monthly premium contributions for health plan coverage. Other
clients are considering varying premium
contributions through participation in wellness, exercise and smoking cessation programs as a means to encourage healthy
lifestyles and lowering medical plan costs.
Health risk appraisals can also be used as a
means to collect data and motivate individuals toward lifestyle changes, which ultimately lowers health plan cost.
JIM POWELL is senior vice president, Hilb, Rogal & Hobbs,
Tampa. Reach him at (813) 261-7971 or [email protected].