Six ways to be bold: Good network disruption is a big opportunity 

Healthcare is complex and expensive, as employer health plan sponsors are well aware. Managing a health budget means dealing with constant challenges: insured contract renewal rate increases, rising unit costs of procedures and drugs, medical advancements, an aging workforce – the list goes on and on. But within all this complexity are opportunities to provide better services more efficiently.  

In our National Survey of Employer-Sponsored Health Plans, a strong majority of HR leaders (71%) indicate that enhancing their health benefits to improve attraction and retention is a priority for the next three to five years. How to accomplish that goal while keeping healthcare affordable for both the organization and its employees? One of the biggest opportunities to explore is network strategy.  In a survey of CFOs asking for their perspectives on health benefits, 48% said they would emphasize network strategies as a means of managing cost.  

Disruption can be good

In looking for a healthcare provider, consumers often rely on online reviews. While these can help assess staff friendliness, wait times, and other aspects of the patient experience, they can only provide limited information, at best, about providers’ specialty areas and skill level; the health acuity of their patients; and their performance in terms of complications and outcomes. There is immense variability in clinical care delivery – the estimated amount of waste in healthcare is a staggering 25%. Disruption that aims to minimize the waste in care and spend is good disruption.

Here are six strategies employers can consider that capitalize on the opportunity to reduce waste and save by steering employers to better-performing providers – enhancing their care.  

Six bold strategies to drive good disruption – from the least to the most disruptive

1. Switch to an exclusive provider organization plan design.  Most large employers utilize broad networks for national coverage. Keeping all non-emergent care in-network prevents care occurring at non-accredited, non-contracted facilities. In-network providers are generally lower cost, and this approach can reduce balance billing situations for your population. 
2. Tier or overlay your network. Provide plan design incentives and navigational support to encourage your population to utilize higher-performing providers. There are many products that focus on this in separate ways. Some products tier their network and others will use copay price tags to nudge consumers towards more appropriate providers or types of care. Either way, at minimum two things are needed for this strategy to be successful: An understandable benefit design incentive or benefit differential to engage consumers; and an interface that consumers can use to make informed decisions on where to seek care – digital, telephonic or both.  
3. Expand a Center of Excellence (COE) strategy. to make some procedures mandatory.  Many employers already offer COEs – restricted panels of high-performing providers that can be used for common, complex but non-emergency services such as orthopedic surgeries – as a way to improve outcomes for patients while reducing plan costs. Now, employers are taking this to the next level and mandating the use of a COE provider. This has been possible with the expanding geographic reach and proximity of the centers of excellence solutions. 
4. Gatekeeper-style features.  Electing a primary care provider (in-person or virtual) and having referral requirements to seek specialty care, like a traditional HMO, may add administrative hurdles for patients, but they save money by helping to ensure patients receive the right level of care from the right provider.   
5. Narrow your network. Ranking providers based on quality, cost or both, and removing the bottom quartile (lowest quality and/or highest cost) from the network could be beneficial for the employer and patient. Direct contracting in a certain geography may be an option in locations with high concentrations of an employer’s workforce.  
6. Offer a Reference Based Pricing (RBP) plan. A small percentage of employers (3% of employers with 500 or more employees) have chosen an alternative to a traditional plan with a national or regional provider network – a vendor that utilizes RBP to set fixed reimbursement rates for each medical service. These rates are most often tied to Medicare, which is lower than what the commercial market typically pays for services. Providers that are dissatisfied with the payment may bill the patient for the balance of their fee; a risk plan sponsors will want to mitigate. Historical data from RBP vendors indicates that the rate of balance billing has been declining, due to various programmatic efforts implemented. 

Let’s get going!

There are many ways to be positively disruptive with network and plan design strategy. As you consider the options, it makes sense to start by reviewing your company’s goals, priorities and culture – these all factor into your organization’s ability to support a strategy. For next steps, you might consider: 

• Thinking locally. There are many national network strategies that will work well for your organization. But it’s worth considering the regional offerings that may be available in your key business markets.  
• Conducting a market analysis. This will help you identify a range of solutions that will support your mission and vision, whether through a carrier-driven approach or from new emerging alternative health plans.  
• Piloting a solution. If you like the sound of a new approach but it seems dauntingly different, consider a pilot. Identify one or two markets in which to assess the disruptive option alongside more traditional offerings.  

There are ways to gain the benefits of network and plan design strategies while minimizing the disruption. Given that today’s healthcare challenges are not going away, it might well turn out that, in the long run, the most disruptive strategy is to do nothing at all. Be bold!

This post is one in a series of resolutions to guide benefit strategy.