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Cost Containment Strategies for Self-Insured Plans during Coronavirus

Amid the coronavirus frenzy many employers are concerned with the cost of health insurance claims as the number of COVID-19 cases increase nationally. Small businesses across the U.S. are already feeling the financial crunch from coronavirus restrictions that have millions of people taking refuge from the virus outbreak by staying at home and avoiding unnecessary shopping trips. In addition, employers are facing potential claim increases due to medical costs related to COVID-19. Businesses are proactively seeking more aggressive strategies that can reduce overall costs in their self- insured plans.

ONEDIGITAL INSIGHT ▼

Employee benefits costs are qualified as “payroll costs” under the Paycheck Protection Program (PPP) and changes made to benefits plan design may impact the amount of relief an employer might receive. Consult with your OneDigital advisor to determine the best course of action for your business.

ONEDIGITAL INSIGHT ▼

Employee benefits costs are qualified as “payroll costs” under the Paycheck Protection Program (PPP) and changes made to benefits plan design may impact the amount of relief an employer might receive. Consult with your OneDigital advisor to determine the best course of action for your business.

ONEDIGITAL INSIGHT ▼

Employee benefits costs are qualified as “payroll costs” under the Paycheck Protection Program (PPP) and changes made to benefits plan design may impact the amount of relief an employer might receive. Consult with your OneDigital advisor to determine the best course of action for your business.

There are several strategies that can almost always reduce costs. Many of these methods can be reviewed and implemented before plan renewals while some are best done during renewal negotiation.

Before looking at strategies to reduce costs, business should proactively assess the costs to their plans based on data that is available today.

  1. Prescription Drug Formulary Review

    Many plans offer drug allow employees to access prescription drugs using very generous drug formularies. This often allows employees to get very expensive prescriptions for a very low copayment cost even if there are generic or alternate drugs that can treat the patient much more affordably. This is a perfect time to review your prescription program to assure that your plan maximizes rebates, has a formulary option that reduces costs and is provided by a platform that is competitively priced.

  2. Network Provider Review

    Reviewing your network relationship to assure that your business is partnering with a network of hospitals and physicians that are providing the deepest possible discounts on services.

  3. Reference Based Pricing Platforms

    These plans use Federal Medicare guidelines to set reimbursement rates to hospitals and facilities. These plans could reduce hospital claims by 30%- 40% of carrier negotiated reimbursements. Reference based pricing have been shown to provide significant impact to claims and plan pricing.

  4. Plan Design Modifications

    Plan design changes can not only reduce cost Plan design changes can not only reduce cost but change employee behavior. Often, this strategy eliminates overutilized benefits from the plan such as unnecessary emergency room visits and may encourage telemedicine for high-volume low-cost office visits.

  5. Reinsurance Negotiations

    As plan designs and networks may change, so too might the associated cost of re-insurance. Many health plans are managed by traditional health insurance carriers who are also providing the stop loss insurance. A strategy that is often employed is to move the reinsurance from the traditional health insurance carrier to an insurer who specializes in Re-Insurance. This tends to carve out hidden costs that go directly to carrier margin.

Change is not easy. As business owners are looking for ways to reduce costs, there are strategies that can be implemented within benefits plan design, rather than having to turn to furloughs or layoffs. Shifting areas of the plan structure may have great impact on cost and little impact to the employees and their families.

The situation is evolving minute-by-minute, and so are your challenges. Visit OneDigital's Coronavirus Advisory Hub for the latest information, resources and stimulus guidance for employers.

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