A Modern Alternative to Group Health Insurance
How Employers Can Free Themselves from Unsustainable Employee Benefit Costs
Do you dread your annual renewal? Unpredictable cost increases threaten budgets and erode employee satisfaction. Many employers put up with this system year after year because they think it’s their only option, but it’s not. With a direct healthcare plan, you can save a significant amount while offering your workforce high-quality, affordable care.
The healthcare providers in your community want the same thing you do – to help people secure they care they need to support well-being. In the direct model, employers contract directly with their community health systems and providers, bypassing carriers to deliver a more sustainable care option. This isn’t short-term relief for your annual healthcare headache. It’s an innovative approach that offers a long-term solution.
A New Approach for Employer Health Plans
Even with employer-provided insurance, many workers go into medical debt when they experience serious health challenges. At the same time, out-of-pocket costs are so high that many people avoid routine and preventive care, sometimes leading to worse health outcomes. As an employer, it makes you wonder why you’re paying those massive premiums.
How Much Could You Save?
Employers typically save 20% to 30% in the first year when switching to a direct plan, and renewal increases average around 1.9%.
Employees, their workers, and their families are struggling. It’s time for a new system that removes barriers to care. That system is the direct plan model.
Instead of purchasing a health plan from a carrier, you can contract directly with the health systems and providers in your community. When your employees need care, they care go to direct partner providers for affordable services. This direct contract forms the basis of the health plan. You’ll also work with a pharmacy benefits manager, third-party administrator, repricer, and reinsurer to round out your plan while controlling your costs.
How Much Could You Save?
Employers typically save 20% to 30% in the first year when switching to a direct plan, and renewal increases average around 1.9%.
How Does a Direct Partnership Plan Work?
From your employees’ perspective, a direct plan works very similarly to a traditional carrier-based plan – only it can be much more affordable and with fewer barriers to care.
Care
When your employees and their families need care, they go to your community health providers to receive affordable services.
Prescriptions
A transparent pharmacy benefits manager provides access to affordable drug coverage so your plan members can fill their prescriptions.
Claim Handling
A third-party administrator handles the claims.
Outside Care
Occasionally, your plan members may need to seek care from providers you have not partnered with. The tiered plan allows this, but the out-of-pocket costs are higher. You use a repricer to handle the claim.
Catastrophic Coverage
In the event of catastrophic claims, your program’s stop-loss coverage kicks in to shield you from excessive costs. You use a captive and/or reinsurer for stop-loss coverage.
The Ownership Mindset
Four Elements of a Direct Plan
Access
The employer contracts directly with community health systems and providers to gain access to services.
Prescriptions
A transparent, pass-through pharmacy benefits manager facilitates access to drugs.
Stop-loss
Catastrophic coverage is provided through a captive and/or reinsurer.
Administration
A third-party administrator handles claims. A repricer adjudicates claims outside of the direct partnership.
Designing Your Employee Benefits
As the employer, you have complete control over your direct plan design. You select the deductible, copays, and out-of-pocket maximum. If you want to cover certain treatments like childbirth with low or no out-of-pocket costs, you can.
Careful plan design can also encourage cost-effective solutions without limiting your workers’ choices. For example, a tiered system of coverage makes it easy to steer plan members toward the community health providers with whom you’ve established partnerships. When your employees and their families use these providers, they enjoy low out-of-pocket costs.
You can reinvest some of your savings to expand your employee benefits in ways that meet the needs of your workers while advancing your company’s goals. In a traditional model, plan options tend to get worse year after year. In the direct plan model, your program can improve year after year.
A Solid Option for Mid-Sized Employers
If you have between 20 and 1,000 employees to cover, you may be a good candidate for a direct plan. Direct plans work very well in smaller communities with only a couple of health system options. However, employers in larger urban areas can also take advantage of the direct plan model.
What You Need to Get Started
If you’re interested in pursing a direct plan that contains your costs without sacrificing quality, it’s time to take the first steps.
Here’s what you’ll need:
- Education: This is a new healthcare system, so there’s a bit of learning curve. You’ll need to learn about the direct plan model, as well as your community health systems and the needs of your workforce.
- Self-funding: A direct plan is a self-funded plan. Since you’re removing the carrier from the equation, you become the payer. Although this can sound scary at first, don’t worry. With proper program design, you can save money and control your risks.
- Partnerships: You’ll need to partner with your community health systems to gain access to care. You’ll also need to partner with a third-party administrator, a transparent pharmacy benefits manager, a repricer and a reinsurer.
- Mindset: Managing a direct plan isn’t necessarily more work for employers, but it is different, involving fiduciary responsibility and a hands-on approach to managing your health plan and its costs. Think of your direct plan as a Ferrari. It’s a lot nicer than the average car, but if you don’t give it the maintenance it requires, it can start to break down. Say goodbye to passively purchasing coverage and letting your carrier call all the shots. You have to be accountable.
- Support: As your program manager partner, H2B can guide you through the process. We’ll oversee the development and execution of the program, and we’ll create a Direct Corporate Health Partnership Agreement between you and your community health system. You can count on our experienced team to walk you through every step of the process.
Interested in learning more? Read about other employers who have taken control of their health coverage with direct plans, and download the solution brief.