COVID-19 Will Change Business Health Coverage Renewals – Are You Ready?
It’s time to look again at self-funded plans and TPAs as a smarter alternative to major carriers
Today, most business owners and senior managers must contend with the reality of Covid-19 – a severe economic slowdown, home-based operations, employees and their families affected by the virus. Major carriers, however, are already looking at the future of employer-based health insurance, using this pandemic as their template for what you’ll pay and what might (or might not) be covered once this current crisis resolves.
You should, too, before your next coverage renewal arrives with unwelcome surprises. Your current carrier may talk about a dramatic discount on your next plan. But what good does that reduction do when the initial price is unreasonably high, the provider networks turn out to be too narrow, and their bureaucracy drains the life from you and your HR team?
One thing for sure – businesses will pay more for healthcare. One study from Willis Towers Watson predicts Covid-19 alone may drive up to a 7% price increase next year. That’s on top of the 5% increase likely to have arrived anyway. Your costs may rise even higher if you or your staff get hit with significant coronavirus expenses.
Very few companies with major carrier plans challenged the 5%-10% annual price increases when the economy was strong. Now, every dollar counts, and smart companies will look at self-funded coverage provided through third-party administrators (TPAs) as an alternative to business-as-usual with the major insurance companies.
Top TPAs deliver cost savings of 10%, 15%, even 20% within the first year, compared to major carrier programs. They provide comprehensive networks of healthcare providers, along with advanced clinical programs and other initiatives designed to deliver superior care at a reasonable cost. The best TPAs also include incentivized programs to increase participation, improve the onboarding experience, and coordinate top-tier stop-loss protection for unforeseen major medical expenses.
Large insurance companies answer first and foremost to their stockholders. Partly as a result, the healthcare industry in the United States wastes between $760 billion and $935 billion every year, representing 25% of all expenditures, according to the Journal of the American Medical Association.
The TPA model, by comparison, profits by helping your company manage its healthcare costs more efficiently. TPAs also run much leaner operations, focusing on efficiency. In short, TPAs succeed by helping their clients keep employees healthy, and return staff to work sooner when they get sick or hurt.
There’s no magic to the formula – just a different, member-centric approach that makes sense for organizations that self-fund their insurance. TPAs build more flexibility into their offerings and advocate aggressively on behalf of their clients. Their best-of-breed approach provides a richer pool of offerings that better balance needs and goals with expense. Their sales model uses consultants with the knowledge to tailor plans to each business. Innovation and value become essential differentiators, helping deliver superior care at a manageable cost.
As Covid-19 reshapes the healthcare landscape, it’s time to revisit TPAs. Here’s what you should look for:
- High-performance partners and broad provider networks with multiple options for each part of your plan. For example, multiple pharmacy benefit management providers give you options for selecting features you need without paying for anything you don’t
- An experienced independent consultant network skilled in matching your self-funded program to your company and its work culture. The best consultants will become long-term partners for your organization, helping fine-tune your plans over time as your business evolves
- Data-driven programs that focus on value and quality while minimizing overpayment, duplicate payments, or unnecessary treatments
- Virtual open enrollment for both January and mid-year clients, including the ability to expand enrollment for extraordinary circumstances such as Covid-19. Comprehensive member education, either in-person or virtual, must be part of these programs
- Transparency and openness, so that you understand what you’re paying, why you’re spending it, and the actions the TPA takes on your behalf
We live in uncertain times. A TPA may be your best strategy to manage health, wellness, cost control, and productivity more effectively once the pandemic is over. It’s certainly worth the time to find out if a TPA is the answer for your business.