A Better Way to Business Survival than Loans, Layoffs and Locking the Doors — Step 2
Optimize health plan infrastructure
Once you liberate yourself from the status quo, you’ll probably feel a few things — empowered and exhilarated, but also daunted about what to do next. That’s why Step 2 is all about picking the right people and tools to help. [See Step 1 here.]
Step 2. Optimize health plan infrastructure
Disclaimer: As vital as this step is, it can get a bit technical and boring since it concerns the underpinnings of the health plan. However, if you do a good job selecting a properly aligned benefits advisor (PDF), you won’t have to immediately deal with many of these “in-the-weeds” issues.
Not all benefits professionals are the same. Unfortunately, the model of the industry has been to have benefits brokers paid by carriers, pharmacy benefits managers (PBMs) and others who have a fiduciary duty to their shareholders to have healthcare spending increase — we find as many as 17 undisclosed revenue streams where someone purporting to represent a buyer earns their income from sellers. Obviously, this works directly against business leaders and other healthcare purchasers.
Business leaders who are taking the next step to liberate themselves from the status quo need to make sure they have a benefits professional that’s going to work in their best interest. That means asking their current benefits broker three questions, as I’ve previously disclosed to Entrepreneur:
1. What kind of commissions and bonuses do you receive from carriers, in total? Note: Be sure to ask about indirect compensation they or their brokerage firm may receive from carriers or PBMs.
2. Do you receive more than half of your compensation from one carrier?
3. Can you meet with me now?
Questions one and two help ensure your benefits professional is most incentivized to help you. The third is more a question of strategy, because the longer your broker delays your time to meet, the less time you have to shop elsewhere. It’s a common trick to put you in a tough spot.
If your benefits professional isn’t willing to share this information nor meet early and often to discuss options — any ethical benefits broker will happily complete this simple compensation disclosure form attesting to you where they or their office receives compensation — it might be time to find someone new. The same could be true even if they do have the “right” answers to the above questions, because as you’ll soon see, managing a self-funded plan that improves outcomes and saves money will take a special kind of advisor with expertise in this space.
Ideally, they’ll know to effectively “spring clean” the underpinning of the health plan. They’ll know how to spot the provider and vendor contracts that have “gotcha” clauses, and they’ll be familiar with the fact that the most sophisticated and heavily resourced legal departments in the world have laden so-called “standard” agreements with an almost endless litany of value-extraction devices. With a wise benefits advisor, we regularly see $1000 per employee per year in savings (video from recent Health Rosetta Summit) be cleaned out of carrier-controlled health plans (even when self-insured).
They should also know a thing or two about stop-loss insurance as it’s necessary to protect yourself from shock claims — sadly, many benefits brokers have scant knowledge and farm out this important decision. In addition, they should be able to point you to a vetted list of better providers and vendors, including carrier-independent third-party administrators (TPAs). You’ll need a TPA to process claims and make sure things run smoothly.
Switching from a carrier controlled (aka “fully-insured” plan) to an independently administered, employer based health plan (step 1), plus hiring a benefits advisor, purchasing stop-loss insurance, and finding an independent TPA (step 2) are essential starting points. This “boring” step may only address 15% of your overall spending, but it unlocks savings opportunities in the other 85%. But my next post is where I’ll start to reveal where the big savings come.
Next in the series is the “C” in the LOCAL acrostic — Carve out PBM:
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Dave Chase is the co-founder of the Health Rosetta (an organization sharing and implementing practical, non-partisan fixes to healthcare), and author of the book, “The Opioid Crisis Wake-up Call: Health Care is Stealing the American Dream. Here’s How We Take it Back.” Follow the link to the book for a free download of the book. Chase’s TEDx talk was entitled “Healthcare stole the American Dream — here’s how we take it back.” See the Health Rosetta website for how to get involved, resources and how to join others to support its mission.
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