Any cost-effective employer-sponsored health insurance plan requires transparency and vigilance. But, that’s easier said than done. With the complexity of the product and the opaque nature of the contract negotiation process, it can be difficult for burdened HR teams to keep track. Soon, organizations find themselves over budget and unable to pinpoint problems.
This was the reality for one employer, a 250-person financial services consultancy with a highly educated workforce. They were smart consumers, doing their part to contain costs. But, at the end of each year, they still found their self-funded plan was getting more and more expensive despite steady claims.
Both the organization’s leadership and employees were comfortable with the coverage they received and persevered as costs ticked up each year. That is the nature of the game—or so they thought.
PULLING BACK THE CURTAIN
Like most, this employer’s health plan was one of their largest expenses with After years of offering informal advice to this organization, Corporate Synergies was hired to officially pull back the curtain on their plan. The team started with an in-depth audit of the organization’s existing plan design and contracts.
Self-funded plans are only as good as their fine print. The first contract sets the tone for each renewal negotiation, another reason to partner with an experienced and trusted advisor. If your first contract isn’t tight, thorough and designed with your best interest, it eliminates opportunities for savings and cost management options. Tools like network discounts, coverage services and prescription rebates should be a major focus.
THE CORPORATE SYNERGIES DIFFERENCE
While reviewing contracts, Corporate Synergies found a good network and coverage for employees, but poorly negotiated pricing packages. This employer was paying far above the industry average for similar claims based on Corporate Synergies’ proprietary real-time benchmarking tool.
Additionally, the audit uncovered a missed opportunity in pharmacy benefits: Their legacy contract did not direct pharmacy rebates to the employer, and they were missing out on considerable potential savings.
To close this gap Corporate Synergies implemented a stronger network with deeper discounts, selected a new pharmacy benefit manager (PBM) and conducted interviews for a new third-party administrator. Since many employees had established relationships with their healthcare providers, Corporate Synergies worked to maintain the same provider network and ensure minimal network disruption.
The new plan expanded access to coverage and reduced the overall per employee monthly cost by 24%; in addition, the new PBM contract routed all rebates to the employer. These savings kept employee contributions flat year over year and allowed greater profitability for the organization, leading to higher wage increases and larger year-end bonuses for employees.