3 Ways To Optimize Your Health Insurance Costs

As health insurance costs continue to rise, many organizations are exploring alternative methods to manage their budget. Self-funded health insurance plans have gained popularity as a means to exercise greater control. However, without careful oversight, organizations can still find themselves leaving money on the table. In this article, we’ll uncover some of the potential pitfalls of self-funded health insurance plans and provide actionable solutions to help you optimize your health insurance costs while retaining the benefits of self-funding.

Here are some areas where financial “leakage” can exist within a partially self-funded health insurance plan:

Administrative Costs

Administrative costs are a significant contributor to the overall expenses of self-funded health insurance plans. These costs encompass various items, such as plan design, enrollment, billing, and customer support. Inefficiencies and administrative complexities can result in unnecessary expenditures. Here are a few solutions to help drive down administrative costs:

a) Automate Processes: Implementing automated systems can streamline various administrative tasks, reducing the need for manual intervention. This includes online enrollment platforms, automated claims processing, and self-service portals for members. These tools enhance efficiency, minimize errors, and decrease the administrative burden.

b) Consolidate Administrative Functions: In some cases, multiple vendors are involved in managing different aspects of the plan, leading to redundancy and increased costs. Consolidating administrative functions by working with a single vendor or utilizing a comprehensive third-party administrator (TPA) can help streamline processes and improve cost-effectiveness.

c) Regular Review of Plan Design: Conducting periodic reviews of plan design is essential to identify potential areas of cost savings. By analyzing utilization patterns and member feedback, adjustments can be made to coverage options, co-pays, and deductibles, ensuring the plan remains aligned with the needs of the insured population while optimizing costs.

Insurance Claims

Claims represent a significant portion of expenses within a self-funded plan. If you can’t control your claims costs, you will not control your insurance costs.?Inefficient claims management can lead to inflated costs and unnecessary spending. Employing the following strategies can help control claims costs:

a) Utilize Data Analytics: Leveraging advanced data analytics can aid in identifying patterns of excessive billing, inappropriate services, and potential fraud. By implementing robust analytics tools, plan administrators can detect anomalies, apply targeted investigations, and negotiate more effectively with providers to ensure fair reimbursement rates.

b) Implement a Wellness Program: Investing in a wellness initiative can yield long-term cost savings by promoting healthier lifestyles among your employees and potentially reducing the need for expensive treatments. By incentivizing employees to adopt healthy habits, such as exercise and regular check-ups, employers can reduce claims costs over time. Pay a little now to save a lot later.

c) Engage in Transparent Pricing: Encouraging providers to adopt transparent pricing practices enables plan sponsors to make informed decisions regarding cost-effective care options. Negotiating discounted rates for specific services or partnering with high-quality, low-cost providers can significantly lower claims expenses.?Incentivize employees to seek care with high-quality, low-cost providers by eliminating deductibles and copays when they see them.

Pharmacy Costs

Rising prescription drug costs continue to pose the biggest challenge to self-funded health insurance plans.?There are often hidden fees and unnecessary costs within a health insurance contract leaving an organization to pay more than they should.?Without a targeted approach, pharmacy costs will only get worse.?Addressing pharmacy expenses requires a multifaceted approach:

a) Work with a transparent Pharmacy Benefit Manager (PBM):?Working with PBMs allows self-funded plans to leverage their expertise in negotiating drug prices, managing formularies, and implementing cost-containment strategies. However, not all PBMs are created equal.?PBMs can help optimize pharmacy network contracts, ensure fair reimbursement rates, and provide tools for pharmacy cost analysis, but you need to make sure you work with a PBM who is transparent with their costs and contract design.

b) Leverage international pharmacies:?By working with international pharmacies, you can help your employees drastically reduce the cost of brand name medications.?International pharmacies provide the same medications your employees are taking today at a fraction of the cost due to the oversight of the pharmacy industry within the participating countries.

c) Take advantage of drug manufacturer assistance programs: Specialty drugs continue to be the largest source of increasing drug costs today.?Drugs like Humira can come with a price tag greater than $50,000 per year.?Drug manufacturer assistance programs can help provide financial assistance to members who need access to a specialty medication but struggle to pay for them.?By incorporating drug manufacturer assistance programs into your benefits strategy you can ensure your employees get the medications they need at a fraction of the cost.

Organizations with a self-funded health insurance plan are led to believe self-funding is the key to cost control, but it is only the vehicle to help you gain more control over your insurance costs.?However, with the right cost-containment strategies, you will optimize your budget and ensure you are not leaving any money on the table.