How to push back when your health carrier raises premiums

Business leaders continue to be challenged with increasing healthcare costs. Both fully insured premiums and self-funded claim projections have surged in recent years.

Either way, medical and stop loss carriers typically justify the increase by providing a list of high-cost claims.

One of the biggest mistakes companies can make is to take those lists at face value. Not only can they be misleading, but they also obscure ways to reduce premiums and other health expenses.

Health plans are facing a growing number of claims that exceed $500,000, a trend driven largely by new therapies and specialty drugs. For a company with 500 employees, two unexpected $500,000 claimants can represent 15% of its annual health expenses.

However, last year's claims are an imperfect predictor of next year's expenses, especially for smaller companies. The surge in high claims may well have been caused by situations that are unlikely to continue. The ongoing expenses of a claim for a one-time surgery following an auto accident, for example, are very different than for the ongoing treatment of a chronic condition.

The typical reports provided by insurance carriers don't include enough information to be useful to employers and could even be detrimental. It’s often impossible to tell which claims are likely to go up, continue at the same pace, or subside. For example, reports might list a dollar figure against a broad label like “cancer,” obscuring multiple diagnoses and treatments. There’s just enough information to “justify” a high renewal but not enough details to help predict future costs. These reports are often detrimental to employers because they could be exaggerating the problem and causing alternative carriers to decline to quote or increase their pricing.

How can an employer escape this trap?

By deploying a three-prong strategy in advance of carrier negotiations. This includes:

1. Marshal as much data as possible about the plan’s actual experience. For fully insured plans, a broker with strong relationships can often extract additional insight from carriers beyond the limited view they offer. Self-insured plans should have direct access to a wealth of data.

2. Brokers with clinical expertise can analyze data and identify current and potential strategies to manage the most prevalent chronic conditions among plan members, with the objective of reducing the ongoing cost of care and accurately projecting the future cost of large claims.

3. A good broker can also compare a company's experience to that of other organizations with similar member populations and benefit levels. If one year’s claims are significantly higher than expected, chances are it’s an anomaly.

When supported by a realistic assessment of underlying claims trends, an employer can make a strong case for better rates from their insurance carriers and for competitive offers from other insurers. (Additionally, companies with separate agreements with pharmacy benefits managers should conduct similar analyses and negotiations with prescription drug providers.)

Obviously, strategic data analysis alone cannot reverse medical inflation. However, it can help ensure that employers only pay to cover the expenses that their members are likely to incur.

How Alliant can help

Alliant offers clients a curated strategy to manage costs and maximize the value of health benefits through detailed data analytics, evidence-based clinical recommendations, and stop loss support that protects against catastrophic claims and unexpected financial liabilities.

Get in touch with one of our experienced benefits consultants and learn more about how you can protect your bottom line while still delivering the high level of employee benefits your workforce expects.