As a result of several high-cost claimants, a company with a fully insured health insurance plan was faced with a 75% premium increase. This equaled $1.7 million, an increase that would have crippled profitability. The company sought bids from other large healthcare insurance groups (BUCA), but found no relief.
After extensive research, and with cooperation from the CEO and HR director, the CFO partner helped the company transition to a self-funded medical plan with a Third-Party Administrator (TPA).
The company worked with a new broker, who was familiar with and knowledgeable about self-funded health insurance programs. Their three-year implementation and transition were as follows:
- Year one - the company moved to a self-funded plan, utilizing a large insurance company’s platform for their network and as the Pharmacy Benefit Manager (PBM). Stop Loss insurance was procured to protect the company by capping high claimant costs, both individually and in aggregate.
- Year two – the company changed platforms, going to a new TPA and incorporating reference-based pricing, which audits and negotiates medical facility charges (the reference price typically being Medicare rates). In addition, the company initiated a pharmacy carve-out, working directly with the PBM and allowing the company to benefit directly from rebates.
- Year three – the PBM was swapped out for a more aggressive/hands-on specialty group that was more focused on multiple strategies to keep pharmacy costs down.
Through years 2019 – 2022, the company saved $5.5 million in healthcare costs, lowering the spend for both the company and its employees. Plus, the plan provided employees with access to an entire support team to guide them to the right care and help resolve any billing issues.