Group health insurance is one of the largest expenses your growing company will face. Premiums tend to creep up each year due to rising medical costs and utilization. Finding ways to control costs is essential if you want to keep group health affordable.
Here’s what you can do to keep group health insurance costs predictable.
Partner with Bowthorpe & Associates Insurance Producers and make better decisions with data.
Evaluate your claims data don’t rely on assumptions
Understanding where your dollars are going each month is the first step to controlling health care spend. Evaluate claims data for at least 12 months to identify trends you may be missing.
Review expensive claimants in your plan. How many emergency room visits do you see each year? How often are employees being admitted to the hospital? These are trends you can target for interventions like care coordination and case management.
Benchmark your plan against industry standards to see where you stand. Most plans will rise each year due to general healthcare inflation. However, there will be cost drivers specific to your plan you can target.
Tweak your plan design to save money
Plan design makes a big impact on how claims are spread throughout the year. By adjusting your deductible, copays, and employer contribution strategy, you can influence overall plan spend.
Consider offering a high deductible health plan paired with an employer contribution. Not only do these types of plans save on premium costs, but they also provide a safety net for employees should a catastrophic event occur.
One of the fastest ways to reduce claim spend is by shifting employees to a tiered or narrow network plan. These plans incentivize employees to use high-quality providers that have negotiated favorable reimbursement rates.
Move money away from areas of your plan that won’t impact employee satisfaction and focus on controlling costs.
Negotiate your pharmacy benefits before costs spiral
Drug spend is one of the top drivers of group health costs. Without intervention, pharmacy costs can balloon to unrealistic numbers.
Request transparency from your pharmacy benefit manager (PBM). Ensure your PBM is passing along rebates, has reasonable administrative fees, and allow auditing of drug pricing.
Use formulary tools to promote the use of generics and biosimilars. Preventing unnecessary access to expensive medications can help keep a lid on pharmacy costs.
Specialty drugs require special handling. These high-cost medications should be outlined in your plan and require prior authorization. Build partnerships with specialty pharmacies and conduct utilization reviews to ensure positive outcomes.
Invest in prevention to improve employee wellness
The best way to save on healthcare costs is to prevent them from happening in the first place. Investing in wellness and preventive care helps your employees stay out of the doctor’s office and on the job.
Encourage employees to schedule annual screenings, get recommended vaccines, and participate in wellness programs. The earlier you can catch illnesses, the better off your plan will be.
Many conditions like diabetes, heart disease, and asthma can be managed with simple interventions. Case managers can help employees with medication compliance, routine follow-ups, and health coaching. Preventing emergency room visits and hospitalizations go a long way to control costs.
Offering small incentives can boost participation.
Self-funding can lower expenses and stabilize premiums
Switching to an alternative funding model can help your business better manage healthcare costs. While fully insured plans are the most common, level-funded and self-funded plans give employers more control of their healthcare dollars.
Self-funded plans allow employers to pay for actual claims vs. fixed premiums. If claims are lower than the premium, the company will see savings.
Stop-loss insurance can help protect your company from large or unexpected claims. There are ways to share the risk with employees through a hybrid model.
These plans take more time to administer but can yield long-term savings.
Help Employees make better healthcare decisions
You can have all the controls in place, but if your employees aren’t thinking about cost when seeking care, you’ll continue to see high spending.
Percentage of employees who see the doctor when they don’t need care
Provide employees with tools that allow them to compare prices and understand the quality of care they will receive at different facilities. Urgent care centers were designed to fill the gap between primary care and the emergency room. If your employees know when to utilize these services instead of the ER, you’ll spend less money on avoidable services.
Making sure your employees have access to the right resources can help shape their behavior.
Conclusion
Controlling costs doesn’t mean making your employees bare minimum coverage. Evaluate your plan design, manage pharmacy spend, incentivize preventive care, and consider alternative funding methods to achieve your business goals.
Contact Bowthorpe & Associates Insurance Producers for more information on how you can gain control over your group health costs.
Frequently Asked Questions
How can I reduce the cost of group health insurance?
Small businesses can lower group health costs by adjusting plan design, evaluating plan vendors, offering high deductible health plans, and emphasizing preventive care and wellness.
What affects group health insurance premiums the most?
Claims history, employee health conditions, prescription drug costs, and healthcare service utilization have the largest impact on group health premiums.
Do high deductible health plans save employees money?
Yes, when coupled with employer contribution, HDHP’s are a great way for employees to lower their premium costs and receive tax advantaged savings.
How can employers control prescription drug costs?
Employers can implement formularies, promote the use of generics, and encourage pharmacies to be transparent about rebates and fees.
Is self funded health insurance better than fully insured?
Self-funded plans offer the ability to save money and have more flexibility. There are ways to share the risk with employees if your business doesn’t want to fully self-insure.