Improve Benefits, Lower Healthcare Costs

IMPROVE BENEFITS, LOWER HEALTHCARE COSTS Five steps to save money on better health benefits for your employees.

BY T.J. MORRISON

Like many businesses designated as essential services, HVACR companies have been working tirelessly to serve their customers and navigate the unique challenges posed by COVID-19. Between the usual summer demand for air conditioning and the hesitation many people are feeling about inviting anyone outside the family circle into their homes, HVACR business owners are now facing many obstacles.

One is ensuring they can provide their employees with high-quality health benefits without breaking the bank. As essential workers, HVACR technicians need access to affordable, reliable and effective medical care that will enable them to keep doing their jobs. But, with budgets incredibly tight in just about every industry, the majority of contractor entrepreneurs may feel caught between a rock and a hard place.

Not knowing that they can provide health benefits , in tough times like these, employers typically feel forced to consider every option including: loans and/or layoffs.

Before they do that, though, there are five things you can do to free up money being funneled into expensive health insurance plans.

LEARN TO BE LIBERATED FROM THE STATUS QUO

Traditionally, health benefits provided to employees come from one of the bigbrand insurance carriers. These cookiecutter plans are often accompanied by exorbitant fees, and often, carriers increase premiums 10-20 percent.

The usual justification is that “healthcare costs are rising.” When employers break ties with these insurance carriers, and become fully responsible for their health plan by switching to a self-funded model — the employer pays directly for beneficiaries’ claims — they can see for

The best investment an employer can make is in high-quality, value-based healthcare providers, especially those in primary care.

themselves just how little truth is in that become known for pocketing the prescripstatement. tion drug rebates they are supposed to pass And, without any unnecessary fees, they can see a savings somewhere between 20-30 percent versus the cost of a PPO. This equates to an estimated savings of $2,800 per employee. along to patients. There are transparent PBMs out there, however, and there are some who are willing to sign a contract that says that employer owns their company’s prescription claims data. Understanding what kinds of mediOPTIMIZE HEALTH PLAN cations are used most often by the benINFRASTRUCTURE eficiaries covered by their health plan,

Converting to a self-funded insurance employers have the opportunity to look plan can be confusing, which is why it’s into lower-cost generics and/or invest in important for employers to have all the services that could help their employees right resources and tools. This starts with become less prescription-dependent. picking the right benefits advisor. Some advisors receive commissions, bonuses and other perks from insurance ADD VALUE-BASED PRIMARY CARE carriers, which unfortunately means they The best investment an employer THE NEW TAX SITUATION FOR LIFE may be incentivized to keep employers can make is in high-quality, value-based SETTLEMENTS on health insurance plans that aren’t achealthcare providers, especially those in It’s important to realize that life settlement proceeds tually in their best interest. To make sure primary care. Compared to the physicians are taxable (unlike death benefits to beneficiaries). their benefits advisor is fully committed that are stuck in the fee-for-service system The good news: Thanks to the Tax Cuts and Jobs Act of 2017, the tax rules on a life settlement you receive are now the same rules that apply if you surrender your policy to the insurance company. This can make it more tax-effective to choose the life settlement option. to doing right by their organization, it’s imperative that employers pick an advisor that is willing to be fully transparent about whether and what commissions they receive. It’s also important for employers to bring on board a carrier-independent third-party administrator (TPA), which — in which providers are paid according to how many tests/service/procedures and patients they see — value-based physicians are able to provide patients with lengthier, more in-depth appointments through which they can get a better, more complete picture of the patient and their potentially harmful lifestyle factors. can process claims and take on other adValue-based physicians don’t beneministrative duties. Stop-loss insurance fit from having people constantly come will also help make the transition to through their doors. Rather, value-based self-funding less stressful, as it can be used physicians in a direct primary care model to protect the employer against large, unare paid a flat, monthly fee. Their incenforeseen claims. tives are aligned with the patient’s.

CARVE OUT PHARMACY BENEFITS

Pharmacy benefit managers (PBMs) are the middlemen that have unfortunately

LEAVE BEHIND VALUEEXTRACTING PPO NETWORKS

For historical reasons, PPO networks often charge three to five times the amount that Medicare pays healthcare providers. And on top of that, they tack on monthly fees for each and every member.

A cost-saving alternative is to use reference-based pricing, in which employers and their benefits advisors contract with healthcare providers at a rate that exceeds Medicare reimbursement, but is less than what traditional insurance plans pass through. Then, employers ensure they see the savings that come from reference-based contracts by incentivizing employees to use chosen providers by waiving copays.

Bob Whalen, CEO of HB McClure in Harrisburg, Pa., saved more than $500,000 in the last three years by doing each of these things. His company already had a self-funded health plan, but he still wasn’t seeing anywhere near the savings he and his employees were looking for.

Knowing that his still-expensive healthcare costs were hurting the whole company, Whalen decided to take his health plan transformation to the next level. He hired a carrier-independent TPA, partnered with a transparent PBM, and bundled payments for imaging and surgical needs. He slashed the cost of a knee-replacement procedure by more than $30,000 and grew his business from 170 employees to more than 500 employees.

The success Whalen found for HB McClure was a direct result of following the five steps outlined above, and even in these uncertain times, other HVACR companies can experience similar results by embracing this method. For these essential businesses, doing so may prove to be equally essential.

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T.J. Morrison is president of Benefits Design Specialists, Inc. For additional information, visit bdsadmin.com.