How do current health plans allow members to pay less for services?
Have your employees paid cash for a service or prescription drug (Rx) and found that the cash pay price is lower than using your insurance?
The next question would be, who decides the price of healthcare services today?
These entities have no vested interest in saving anyone any money:
- The health insurance carrier
- The Provider (doctor, hospital, etc.)
Although they would like you to think that the other is the bad guy, the truth is they need each other to co-exist.
What can employers do? Give up? Of course not!
Learn how you can save 30%-60% in health costs with Alternative Reimbursements. It will be the entire theme of the month.
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In this blog, we will discuss:
- The PPO and its lack of value
- How to change the norms around paying for healthcare services
- 4 forms of Alternative Reimbursements
The BUCAH PPO networks don’t live up to their commitments
Businesses can access a wide-ranging Preferred Provider Organization (PPO) network through the large health insurers. These insurers claim to give members discounts on services from a selected group of doctors and hospitals.
What’s the idea behind this?
- Keeping employees in the health insurance network will maximize savings.
- Safeguard employees from receiving subpar care.
- And reduce the likelihood of disruptions and financial risks.
Isn’t The PPO Discount a Discount?
Health insurance companies claim their Preferred Provider Organization (PPO) networks provide huge discounts for services provided IN NETWORK. This is one of their main value propositions. The billed amount used to determine this discount is not fixed and has no real correlation with the actual cost to perform the service.
Your health insurance company’s discount from these inflated prices can be as much as 500%- 1,100%. Most health insurance companies pay between 250% and 500% of the service’s actual cost!
When prices aren’t transparent, it’s difficult, if not impossible, for employees, and their families, to budget accordingly.
Essentially, this PPO discount scheme guarantees that all employers pay an average of double or triple the cash pay price.
How to Use Alternative Reimbursements in Your Health Plan
Employers are afforded more clarity, stability, and predictability in the costs of healthcare services thanks to the alternative reimbursement plans that establish these conditions.
The potential for cost savings for employers is at 30–60%.
But why would providers accept less payment?
Here’s why. The current system pushes employees and their families to thousands of out-of-pocket expenses.
What is the solution? Alternative Reimbursements.
The insurance companies are unnecessary for these reimbursement strategies; therefore, you’re trimming some fat from the system.
We can achieve better pricing and higher quality providers for the everyday employer without a large insurance company involved.
Using more direct and transparent arrangements, a typical employer has a better chance of securing competitive rates and superior service from their providers.
Reimbursement strategies that employ these alternate forms of payment most likely have the plan waives the member portion, resulting in a more expedited and streamlined collection method of payment for the service provided allowing employers to offer a better benefit to their #1 asset.
What are the 4 forms of Alternative Reimbursement?
1. Direct Contracting
Establishing a direct relationship between a company and a healthcare provider(s) of choice is advantageous for everyone involved.
Healthcare providers get compensated more quickly, businesses can significantly reduce their second/third-largest expense, and employees can access more affordable, high-quality care.
Additionally, with direct contracting, employee costs are lowered, even waived, when they access these directly contracted providers.
2. Bundled Payments
The concept of bundled payments is as simple as it sounds. By using this model, businesses can consolidate all costs related to medical procedures like surgeries and other forms of specialized treatment into a single payment.
Everyday care episodes included in bundled payments range from orthopedic procedures to general surgeries like gallbladder removals and appendicitis.
Physicians, hospitals, anesthesia, and, even implants and physical therapy all receive aligned payments to encourage them to collaborate on providing exceptional care to employees.
3. Reference-Based Pricing
A reference-based reimbursement system establishes a concrete and transparent pricing model between businesses and healthcare providers. With RBP, an employer is using Medicare to establish the basis of how its health plan will reimburse for services. Typically paying a 50% net profit above cost, properly constructed RBP plans create a mutually acceptable transaction between the employer’s plan and the healthcare provider.
Reference-based pricing is how companies seek to get away from the confusing bill-charge discounts that conventional health plans offer.
When an employee receives medical care, the doctor’s office or clinic initiates a lengthy billing process that involves everyone from the clinic to the employee’s insurance company and back again.
Deductibles, co-payments, and co-insurance get calculated as part of the process. This procedure takes several months and significantly contributes to rising healthcare costs.
If you need urgent medical attention, you can pay for it in cash on the spot, just like you would for a candy bar at the gas station. Why can’t this be used for everyday planned care? Well, it can… think of paying cash using Venmo, only this is used to pay for services provided to a member of an employer’s health plan.
Because there is no need for lengthy paperwork or third-party adjustment when a patient pays in cash, many hospitals, practices, and doctors are willing to accept a reduced fee.
The claim that you can’t pay less for healthcare unless you pay less for healthcare may seem a bit whimsical at first glance. If businesses stick to the same model, they can’t hope to bring down healthcare costs.
Healthcare providers and insurance companies are not motivated to help patients cut costs. What business would want to reduce their revenue?
Due to the opaque nature of their pricing structure, they often hit employees with outlandish fees. It’s so bad that paying in cash is cheaper than using insurance. How unbelievable is that!
How can we fix it? Adopting an Alternative Reimbursement model is the key to lowering healthcare costs while still providing quality care to employees.