5. Direct Contracting/Direct Primary Care
Direct contracts are growing in popularity and with good reason – they provide another avenue to keep healthcare costs in check because they, in effect, cut out the middleman. Direct contracts based on a Reference-Based Pricing (RBP) reimbursement method can also be used to more accurately predict healthcare costs, with improved forecasting of resource needs and cash flow.
While seeming to offer discounts, fully insured plans through large insurance carrier PPO networks continuously end up costing employers and employees more money than alternative plans. During the negotiation process between providers and insurance carriers, providers will safeguard their revenue by leading with an increased rate that is higher than the actual cost of their services, so they can then discount. Reference-Based Pricing (RBP) plans avoid this pitfall as they don’t rely on a charge master rate. Instead, healthcare through these plans is data-based, with negotiated contracts for service and pharmacy charges that are closer to actual cost. For employees, direct contracts can provide more resources to help them navigate their healthcare, more control over experiences and minimized billing surprises because they have more information upfront. Direct Contracting often results in improved experiences, improved health and reduced costs, a win for both employers and employees.
These five levers are a good foundation for reducing your healthcare costs in 2021, and you don’t have to go it alone. A TPA partner, with their expertise and data, can show you how to reduce your healthcare costs and provide access to a right-sized, self-funded plan for your company, managing all the detail, compliance and employee education and communication.
You can’t keep doing the same thing, especially when it’s not working, and expect different results. Employers can’t continue to bear the brunt of the rising cost of health benefits and shifting that burden to employees isn’t the answer if you want to retain and attract talent. Only 18% of the employers surveyed in Mercer’s National Survey of Employer-Sponsored Health Plans revealed that they will shift more healthcare expenses to employees in 2021. Further, 57% of those surveyed stated they won’t make any changes to reduce costs in their medical plans in 2021. That’s a shame because thinking differently about health benefits in 2021 can affect the health of your company and its employees this year, and for years to come. Talk to your broker today about your options for healthcare coverage.