Change The Game

Thanks for taking time out of your busy day to read this. HR is managing a heavier workload than ever before and the pressure is on to be an expert in every discipline in the workforce. I hope to equip you with some tools to manage with confidence what I believe to be HR's #1 priority - Employee Benefits. Each week I will give you..

1. One Benefit Topic to Ponder & a Homework Assignment
2. Some Content I Find Useful
3. A List of Upcoming Events I'm Attending and Webinars I and My Team are Hosting
4. Individuals In My Network Looking for Their Next Opportunity (HELP THEM!)

What a Deal!

Do you feel like you're getting a "deal" with your flat renewal or even maybe a "single digit increase?"

I've heard this a ton from businesses over the past year.

It's a shame really, because in most cases those businesses are grossly overpaying for healthcare for their employees.

Let's talk about a store that will remain unnamed for a second..

So at the unnamed store they mark everything up by 20-50% above where you can buy those same items everywhere else and then they send you coupons for 10, 20, EVEN 30% off!!!!!

What a deal! So in many cases, if you get the coveted 30% off coupon you are almost back to the actual price of the item.

It's marketing genius really but caveat emptor..

This reminds me a lot of the Group Healthcare Industry. It has multiple applications.

1. You have large hospital systems with secret pricing processes that jack costs up on procedures and services to then offer "discounts" to various insurance carriers.
2. You have insurance carriers that offer their clients flat or single digit renewals for their loyal business despite the fact that their original number was inflated and/or the paid claims were actually less than expected.

How About That Negative Renewal?

Has your organization ever received a negative renewal?

Has your insurance carrier every offered you a rebate of your premiums for your claims coming in less than expected?

Why not?

Instead they give you a flat renewal and everyone has a dance around the table. Nevermind that you had $2M in actual claims on $2.5M of expected claims and you will never get that $500K back.

If however, you had $3M on actual claims on $2.5M of expected claims you would be getting destroyed by the carrier on your renewal.

Sound fair? Of course not. The insurance carriers and hospital systems play by their own rules and those cards are stacked in the favor of the house...

Medicare Established Payment Rates

Private Health Plans pay hospitals on average 254% of what Medicare would pay them! - 2022 Rand Report

That should make you sick. Where else can you get those kind of margins? The federal government takes cost data given to them by hospital systems and providers, adds a nominal profit margin for those providers and sets the Medicare Established reimbursement rates annually. There is a lot of arguments by hospital systems that they profit margin is "unfair." Although it depends on region, service provided and many other factors most believe it is somewhere around a 5% margin.

Let's say it's 0% - which I don't believe it is but lets go there. If that is the case, those providers are still receiving on average a 254% margin!!!!

254% MARGIN - Shouldered by employers and employees.

It's ridiculous!

And that's an average, I can show you services where the provider marked it up to 800% of Medicare. I saw an upcharge when I was in HR for Dialysis where the provider marked it up 700% - Infuriating

What to do?

This is why you can not "poke" at cost containment if you are running a group health plan. jacking around with employee/ employer contributions, moving to a carrier wellness program or offering high deductible plans are not going to solve all your problems. If you want to see real savings to your organization and your employees you have to change the way your plan is structured and how you pay claims.

Change The Game

If you play the hospital system and insurance carriers rules you are agreeing to their cost and profit structures.

The only way out of that is to play by a different set of rules. A different game.

Referenced Based Pricing

Here in northeast Ohio it is said to be one of the least accepting of RBP, a process where you base your payment of claims off a predetermined % of Medicare established rates. However, that's just not true. 98-99% of claims are accepted and paid under 150% of Medicare rates under these plans.

I've been implementing RBP since 2016 and it may not be "EASY" but the savings are VERY REAL. And it's far better today than 10 years ago with much more protection against balance billing and streamlined support and communication for employees.

Tier and Steer

There are solutions out there where you are able to create reimbursement and coverage rates based on quality and cost data and "steer" members to providers offering high quality care and who are willing to accept reasonable profit margins.

Prescription Drug Plan Structure

I've talked at length elsewhere about this but I will say that restructuring your prescription plan including how those drugs are sourced, how the drug cost is established and how the drugs are secured by members can be a huge source of savings. Don't let the carriers decide for you.

Savings..

We are not talking about 10% savings when implementing these solutions. Nor are we talking about false savings like the 30% off coupons at the unnamed store..

These are real savings - 20,30,40% and sometimes more depending on your claims activity, current arrangement, and the extent of the structure change.

So lets say you have 300 employees and are spending the Kaiser average of $12k/ employee/ year - So $3.6M and you implement a structural change that yields 30%

That's over $1M

PLAY BY YOUR RULES, NOT THEIRS...

Here's your homework assignment:

• Dive in to the details of your current claims payment structure to determine if it is a traditional structure with providers setting rates and the carriers and network providers negotiating "discounts."
• Explore other options. Talk to your broker and solution providers about some of the solutions I mentioned.
• Go big! Don't "poke" at savings in 2025.

Upcoming Webinars

HRLG of NEO Regional Townhall Webinar Thursday February 20th 8:00am

Recognizing Implicit Bias in Your Decisions. Join Mary Pisnar with Baldwin Wallace University, for a Virtual Town Hall, to discuss Recognizing Implicit Bias in Your Decisions.

https://hrlg.memberclicks.net/bias#!/

USI Webinar - Lead with Insight: Transform Your Approach to Retirement Benefits February 20th 11am - Join us for a discussion on key industry topics such as Retirement Readiness, Compliance Retirement Review, and Benchmarking Retirement Plan Fees.

Register now: https://bit.ly/40ixH45

Events - I hope to see you there!

Thursday February 27 3pm-6pm Cleveland SHRM - Networking Like a Boss (I will be a panelist on this panel run by John Bernatovicz of Willory)

https://www.clevelandshrm.com/events/EventDetails.aspx?id=1920718

Friday March 14th USI 2025 Innovation Symposium!!! 7:30am to 4:30pm!!! Don't miss this! It's a free event and we will have over 40 employee benefit partners there along with a long list of fantastic speaker covering all the bases on innovations in employee benefits. We also have Keynote speaker Alex Sheen back for a different session this time that will be highly impactful!

Register now: bit.ly/3Lr06Ov

Thursday March 20th 2pm - 7pm at the Wild Eagle Saloon in Broadview - I'll be hosting a March Madness kickoff event for the 1st round of the NCAA Men's College Basketball Tournament. Message me for details. We're official folks - you can register here:

https://info.usi.com/MW-CLE-25-03-20-EB-SOC-MarchMadnessEvent_Registration.html

PLEASE CHECK OUT MY CONTACTS WHO ARE LOOKING FOR THEIR NEXT ROLE - LET'S GET THEM PLACED!

Lisa Matson - Looking for her next HR leadership role!

https://www.dhirubhai.net/in/lisa-matson/

Vicky DePiore - looking for VP of HR, Chief Human Resources Officer, and Senior Executive Human Resources roles.

https://www.dhirubhai.net/in/vicky-depiore-sphr-gphr-2b688612/

Tracy Smeejkal - Looking for full time HR roles and/ or consulting work (NEO)

https://www.dhirubhai.net/in/tracysmejkal/