Sеlf-insured health plans arе incrеasing in popularity, especially among larger employers bеcаusе thеy offеr morе flexibility, greater control over plan dеsign and the potential for combating rising health costs than purchased insurance.
While this certainly is a way to avoid the administrative fees and profit margins charged by insurance companies, sеlf-insured sponsors also face their own unique challenges, especially when it comes to controlling plan spending without restricting high-quality healthcare benefits to its workforce. This article explores effective strategies that self-insured healthcare sponsors use for plan cost mitigation and long-term sustainability.
Factors Contributing to Rising Healthcare Costs
Understanding the reasons behind the increasing costs of healthcare is essential to recognize the importance of cost control:
Rising medical service costs
Prices of prescription drugs
Prevalence of chronic conditions and,
Advancements in medical technology all contribute to higher healthcare spending.
Ways Self-Insured Healthcare Sponsors Control Plan Spending
A study conducted by the Kaiser Family Foundation in 2022 highlighted the increasing importance of self-insured healthcare options, with a significant 65% of employees with coverage now enrolled in self-funded plans. As the number of individuals opting for these plans continues to rise, plan sponsors must be prepared for unexpected challenges, such as large claims.
To address these challenges, healthcare claims solutions play a vital role by automating various aspects of the process, including claims submission, validation, and adjudication. By implementing these solutions, plan sponsors reduce costs and ensure accurate and timely processing of claims.
Sponsors of self-funded plans implement the following strategies:
Data Analytics and Risk Management
Data analysis helps health sponsors identify high-cost claimants, track utilization patterns, and target interventions to manage their healthcare expenses more effectively. By leveraging data analytics tools like healthcare claims analytics software, plan sponsors can identify potential cases of fraud, waste, and abuse by analyzing their claims data.
Risk management focuses on identifying plan members with chronic conditions or complex healthcare needs that require expensive treatments and interventions. With this information, sponsors develop targeted care management programs to proactively address these needs, prevent complications, and minimize costs.
Telemedicine and Virtual Healthcare Services
Telemedicine and virtual healthcare services have transformed the way healthcare is delivered. As the options for remote work increase, health plan sponsors are increasingly offering their plan members more convenient access to medical care and consultations remotely.
These advancements are complemented by the integration of advanced healthcare claims solutions, which have offered sponsors multiple cost-effective means of providing healthcare. By encouraging their workforce to use telemedicine options, health plan sponsors reduce the necessity for expensive in-person visits and enable earlier detection and intervention in healthcare matters, thereby lessening the demand for costly medical interventions and reducing the frequency of emergency room visits.
Pharmacy Benefit Management
Self-insured sponsors gain access to control plan spending by outsourcing the management of prescription drug benefits to specialized Pharmacy Benefit Managers (PMBs). PBMs act as middlemen between healthcare sponsors and pharmaceutical companies by negotiating lower drug prices and optimizing medication formularies to encourage the use of cost-effective medications. By incentivizing the use of these preferred drugs through lower copayments or other cost-sharing arrangements, PBMs steer plan members towards more affordable options without compromising the quality of care.
Through data-driven insights such as prescription drug utilization, PMBs empower plan sponsors to make well-informed decisions regarding plan design and identify opportunities to save between 40% and 50% on prescription drug costs. PBM services, complemented by healthcare claims analytics software, promote medication quality and ultimately improve the overall financial management of self-insured plans.
Wellness Programs and Preventive Care
Medical claims related to chronic conditions can have a significant financial impact on self-insured plans. According to research by the CDC, chronic conditions and risk factors resulted in an annual cost of $36.4 billion for U.S. employers due to employee absenteeism.
This emphasizes the need to promote healthy lifestyles and behaviors, such as fitness, healthy eating, and stress management to help reduce the risk of chronic diseases and reduce the need for costly medical treatments. In addition, plan sponsors utilize preventive care services, such as vaccinations, cancer screenings, and regular check-ups – for early condition detection and management.
Employee Education and Engagement
Transparency and communication extend beyond cost control; they foster a culture of informed healthcare decisions and overall wellness. Self-insured sponsors prioritize educating employees about healthcare costs, shedding light on deductibles, copayments, and out-of-pocket expenses, and empowering employees to become knowledgeable consumers of healthcare services.
Moreover, sponsors provide resources and tools that enable their employees to make well-informed choices regarding healthcare providers, treatments, and cost-effective options. This not only promotes appreciation of their healthcare benefits but also encourages active engagement in preventive care, effective management of chronic conditions, and adherence to treatment plans.
Controlling plan spending comes with the responsibility of effective management. By implementing these strategies, healthcare sponsors achieve significant cost savings, enhance the quality of care, and deliver high-quality healthcare benefits to their plan members.
For more information on healthcare claims solutions and how they can control spending in your insurance plans, contact us today.