Five Strategies for a Smarter Self Funded Health Plan
Employers are switching to self-funded health plans quite rapidly, but the swing from fully insured to self-funded health plans did not happen overnight. Healthcare costs have grown steadily for decades, but they have especially ballooned in recent years. 2022 will be the most expensive year ever, and these yearly price hikes have backed employers into a corner, forcing them to innovate and engage with their health plans like never before.
Many large corporations have been offering self-funded health plans for decades. In fact, from 1996 to 2018, self-funded health plans for employers rose from 28.5% to 38.7%. Four out of five had 500+ employees, which makes sense because large employers can leverage their sizeable patient population to drive down prices when negotiating with health systems.
However, what is new are smaller businesses learning how to reap the rewards of self-funded health plans; what they lack in size and direct contracts they make up for by banding together with other employers to join larger group-purchasing coalitions, who directly negotiate contracts on their behalf.
Here’s how The Alliance, a not-for-profit cooperative helps employers create smarter self-funded health plans.
Through sophisticated provider network design, The Alliance offers employers three ways to access and customize their network.
- The Comprehensive Network by The Alliance: This “standard” option serves as a broad choice network for you to offer your employees a wide selection of choices. It encompasses over 38,000 healthcare providers, hospitals, doctors, and clinicians.
- The Alliance & Trilogy Health Networks: This option offers your employees even more choice, and covers over 90% of Wisconsin, encompassing over 45,500 healthcare providers. This option gives your employees the most choice possible.
- The Premier Networks by The Alliance: This option is for employers who want a fully customizable health plan. The Premier Networks allow employers to structure their health benefits into a tiered platform, which they can use to offer a set range of provider options to their employees while incentivizing them to use high-value providers. This carrots-and-sticks approach lowers both the employer and employees’ healthcare costs without restricting patients to a particular provider.
The Alliance doesn’t just allow employers to customize their network, but we also guarantee special provisions in our contracts with participating network providers. Reference-Based Contracting provides the baseline employers need to pay a fair price for services by paying providers a percent of Medicare – the single largest purchase of healthcare in the US – rather than focusing on savings off billed charges.
This driver of payment reform offers a more transparent and appropriate benchmark to measure relative value while also enabling employers to use benefit plan design to incentivize employees to utilize low-cost, high-quality providers.
Lastly, Reference-Based Contracting protects your employees from unexpected charges while also providing the ability to predict future healthcare costs better. That’s why most of the providers in our network use this unique contracting methodology.
Access to data is what makes The Alliance different, and by deep-diving into yours, we can find savings for your self-funded health plan where others can’t – or won’t – with our Smarter Health analysis.
This healthcare analytics tool provides employers with data-driven insights that can help you understand where your healthcare dollars are spent, and more importantly, where we think you can save.
After better understanding your patient population, you can find out where to focus your resources for the most impact. For example, if you have a high concentration of employees with a specific health condition, you can steer them to a nearby high-value provider through financial incentives that save you money in the long haul.
Smarter Care AdvisorSM
Our patient tool, Smarter Care Advisor, helps employees understand where to find a procedure and how much it might cost. The tool ranks providers from low to high cost and by distance within a 100-mile range of a given location and get contact information for a provider along with a cost estimate. Smarter Care Advisor helps educate and empower employees to make better healthcare decisions, which is the first step to a successful steering program. This tool not only helps patients seek care where the quality is good and the cost is low, it also creates competition and encourages providers to lower their prices.
As a not-for-profit cooperative owned by its employer-members, The Alliance can offer a cooperative shareholder benefit back to our employers each year. When our net proceeds exceed our operation costs and budget, the Board of Directors can approve shareholder benefit distributions in the form of patronage checks.
Each employer’s amount varies based upon how much they use the network, but the more money we save them, the more we give back. For the last five years, the average patronage dividend has been 6.5%.
Smarter Self Funded Health Plans Start Here
Contact us and let’s discuss how we can help your self-funded health plan succeed!