10 Things to Avoid to Maximize ROI on Your Company's Group Health Plan

Navigating the complexities of group health insurance can be daunting. Ensuring that your organization's health plan is delivering a strong return on investment (ROI) is vital for financial well-being and employee morale. In this list, we will explore 10 critical missteps to avoid to ensure that your company’s group health plan is optimized for maximum ROI.

1. Taking a Flat Renewal or No Shop Offer

So you just got a flat renewal or maybe it came in under a 5% increase and you decide to take the offer and renew. This is referred to as a "no shop offer or no shop renewal." While it is tempting to avoid the hassle of evaluating the market, you are likely in the strongest position to make an impact on lowering your costs and improving your plan.

Why It's Important

Medical cost inflation is a constant, so even if you had a great loss ratio and your claims are below expectations, you will likely still get an increase of some degree. A low increase can mean that you are a profitable customer and there is a statistically low chance of future risk based on the health of your group. This is the best time to review your

Key Steps to Take

• Create a formal RFP process for going to market, you can find a template for this on the SHRM website
• Evaluate alternative funding strategies, such as level-funding, self-funding and captives
• Engage with an outside benefit consultant, not all consultants shop the same market or take the same approach

2. Overlooking Employee Engagement

Your group health plan investment is only as strong as the employee participation and understanding. Disengaged employees might underutilize valuable prevention services or fail to manage their conditions effectively.

Why It's Important

Low engagement leads to higher health care costs and lower employee satisfaction, which can indirectly affect productivity.

Key Steps to Take

• Integrate tools and resources that make it easy for employees to understand and use their benefits.
• Communicate regularly about plan updates and wellness initiatives.
• Solicit feedback through surveys and focus groups to ensure employee voices are heard.

3. Not Considering Tailored Plan Options

Employee demographics and company culture are unique, necessitating health plans that fit specific needs. Choosing a one-size-fits-all approach, such as a fully insured plan, might result in suboptimal outcomes and overpaying for coverage.

Why It's Important

Tailoring health plans can lead to higher satisfaction, better health outcomes and lower costs.

Key Steps to Take

• Analyze workforce demographics to determine what types of coverage are most valuable.
• Complete a risk assessment for your employee population to identify high cost conditions and prescriptions, then formulate a plan to contain and control the identified risks.
• Approach this expense as you would any other cost of goods sold in your business, inputs impact outputs. Care in impacts premiums out.

4. Ignoring Programs that Incentivize Positive Employee Behaviors

Wellness programs may be the first thing that comes to mind, however, most of these programs are underutilized and do not change the behaviors of your most costly claimants. Failing to invest in these initiatives can be a costly oversight.

Why It's Important

Healthy employees lead to lower healthcare costs and improved productivity, incentivizing your employees to get the care they need at the right place, for the right price, will lead to

Key Steps to Take

• Encourage positive behaviors with incentives, such as removing the deductible for common procedures.
• Implement tools that give employees access to healthcare costs before they get treated, such as price transparency tools or a medical management program (think like a concierge for costs and care).
• Measure the impact of these programs through utilization and claims reports.

5. Failing to Communicate Benefits Clearly

Complex health insurance terminology and benefit structures can lead to misunderstandings and underutilization. Clear communication is key to ensure that benefits are optimized.

Why It's Important

Benefits aren't getting any easier for the layperson to understand. Misunderstood benefits can lead to dissatisfaction and missed opportunities for lowering the cost of care.

Key Steps to Take

• Provide detailed, jargon-free content that explains benefits and how to use them.
• Use multiple channels such as email, employee portals, and in-person meetings to ensure all employees receive the information.
• Train HR and management to effectively communicate with staff about their benefits.

6. Neglecting Regular Claims Reviews

While benchmarking your health plan against similar organizations can highlight areas for improvement and optimization, it's important to realize, that even if you are benchmarking against your own industry, no two employee populations possess the same risk. Your focus needs to be on your claims spend, you can't lower the cost of insurance if you don't lower the cost of care.

Why It's Important

This is important because your employee risk demographics and claims performance are the best tools you have when negotiating for better coverage at a lower cost.

Key Steps to Take

• Conduct quarterly claims reviews with your benefits advisor.
• Conduct monthly claims reviews internally.
• Partner with a 3rd party to independently review all large claims

7. Not Evaluating Networks and Pharmacy Benefit Managers

Having the wrong provider network or PBM can lead to higher costs and a lack of transparency.

Why It's Important

Quality and cost-efficiency of care are heavily influenced by network design, no two networks pay the same fee for service. Similarly, all PBMs are not created equal, finding the right PBM can be a huge advantage to lowering your costs.

Key Steps to Take

• Regularly assess network performance and utilization.
• Conduct a claims repricing assessment to see what you would pay elsewhere.

8. Neglecting Compliance Requirements

Healthcare is a heavily regulated industry, and compliance mistakes can be costly. Ignoring this can result in fines, legal action, and reputational damage.

Why It's Important

Compliance keeps your plan and organization out of legal and financial trouble.

Key Steps to Take

• Stay up to date with changes to healthcare laws and regulations.
• Conduct regular internal audits to ensure compliance with all laws and regulations.
• Work with legal counsel and consultants to address compliance challenges.

9. Increasing Deductibles to Lower Costs

While increasing deductibles can lower premiums in the short term, it can also lead to higher out-of-pocket costs for employees and discourage them from seeking necessary care.

Why It's Important

This strategy may save money in the short term, but could result in more serious health issues and higher costs down the road.

Key Steps to Take

• Consider alternative cost containment strategies before shifting costs to employees
• Carefully evaluate the impact of increased deductibles on employee satisfaction and retention.
• If increasing deductibles is inevitable, consider self-funding a secondary plan than will offset the increase.

10. Focusing on Premiums Over Strategy

While premiums are an essential aspect of health insurance, focusing solely on this cost can be detrimental to your overall strategy. Premiums do not tell the full story and making decisions based solely on this number can lead to missed opportunities for improvement.

Why It's Important

If premiums are the output then cost of care is the input. A solid strategy designed to lower the frequency and severity of claims will lead to lower premiums. Don't ignore the fact that premiums are tied to claims and cost of care.

Key Steps to Take

• Focus on strategies that address the root causes of high healthcare costs, such as chronic disease management and preventative care initiatives.
• Leverage data analytics to identify areas for improvement and develop targeted strategies.
• Continuously evaluate the effectiveness of your strategies and make adjustments as needed. Keeping a pulse on your claims and cost of care is critical to ensuring long-term sustainability for your health plan.

Conclusion

For companies looking to maximize ROI on their group health plans, it is paramount to be proactive and strategic in their approach. By steering clear of these 10 common pitfalls, businesses can better manage their health benefits to align with employee needs and organizational objectives, ultimately leading to a healthier, more satisfied, and more productive workforce. Remember, health plans are not "set it and forget it" benefits — they require continuous attention and thoughtful management to deliver the best results.