high deductible

Are Groupons For Healthcare Good or Bad? Yes

Groupons have been in the medical news lately (for example “Groupons For Medical Treatment? Welcome To Today’s U.S. Health Care” and “Groupons for medical care are helping patients save money“) with stories of deeply discounted rates for some medical tests in several local markets across the country.

Here’s the net of the good and bad from a smattering of the news reports.

Good because the lower rates may make the tests affordable for some who need them and who may otherwise pass because they simply can’t afford.  In other words, if you have to have a test and don’t have coverage or if you have coverage but your plan’s deductible coupled with your network’s contracted rate for the test are out of reach, the Groupon rate may make it affordable.

Bad because the discounted rates sometimes prompt people to undergo testing unnecessarily and often without their doctor’s input or supervision.  In some respects, it could be a cousin to a practice known as “predatory testing” (offering free initial tests designed to encourage more not so free tests and/or costly treatments…….when they may not be necessary or advisable in the first place.)

And, bad because the quality is sometimes not up to par leading to a retest which usually ends up being performed somewhere else at an additional cost.  Essentially, patients end up having to pay multiple times to have the test done right.

According to one of the reports “Groupon dictates the price for its deals based on the competition in the area — and then takes a substantial cut”…

‘They take about half. It’s kind of brutal. It’s a tough place to market,’ said a provider that signed on with Groupon to market for his testing facility.”

Makes me think we could do just as well or even better fending for ourselves with a qualified provider of our choosing without Groupon as the middleman.  If a test is needed, first talk to your doc and ask for a list of multiple qualified providers.  And/or, check your insurance carrier’s online provider network directory for participating providers. Most insurance carriers now have online cost comparison tools that you can access by logging into your account. They are simple to use and allow you to shop for where you receive your healthcare. Once you have your lists of providers, check for quality ratings and pricing information.

After you do a little homework, select a few qualified providers.  Ask each of the providers for their best rates; and, what kind of break they’ll give you for pre-payment or paying in cash.

 

The Compound Savings of SharedFunding

The value of SharedFunding is that it creates a gap between what you were paying for traditional insurance and what you pay with SharedFunding.

Unfortunately it’s typical for insurance costs to increase annually. However, we’ve found that by creating a gap with SharedFunding, that increase can be on less premium.

Traditional Insurance

You’ll be glad you brought it! Photo by Ricardo Resende on Unsplash

When you have traditional insurance, you need to buy the plan that you want to offer your employees. Makes sense, yes? The problem is that you are paying for this plan for every employee regardless if they use it or not.

The real benefit of insurance can be compared to an umbrella. You’ll be glad you have it with you when it downpours. Additionally, you’ll never mind when the sun comes out and you are carrying your umbrella.

At BBG, Inc., we’ve come up with a way to provide the protection of an umbrella at a fraction of the cost of traditional insurance.

SharedFunding

With SharedFunding, you can reduce the high premiums you are paying to the insurance company by buying catastrophic coverage. You are still buying an umbrella but just with a little more gap between you & the umbrella.

Typically we recommend purchasing the highest deductible available ($5,000, $6,350, $6,650). However, BBG will work with you to determine the appropriate amount of risk.

Then we’ll build out the plan that you want to promise your employees and deliver it to them. This is called SharedFunding:

  1. You buy catastrophic coverage from the insurance company
    • Your annual premium costs go down ↓
  2. We deliver the plan you want to your employees
    • It’s a promise to pay rather than buying from the insurance company

But won’t we fund the difference back in claims?

Healthcare is used unevenly and in the 14 years we’ve been doing ShareFunding, no client has ever funded back the entire premiums savings in claims.

Here is a simple example:

Things are starting to look up. Photo by Jude Beck on Unsplash

Let’s say that traditional insurance costs you $1.00 (haha, I know what world do I live in?? Just trying to keep it simple).

BBG comes in and recommends you buy the highest deductible possible for $0.60. Right now things are looking up as you’ve reduced your healthcare costs by 40%.

The next step involves building the SharedFunding plan you would like to promise to your employees. BBG can build any type of ShareFunding plan you’d like. Most employers choose to mimic their former traditional plan. This way employees still get the same benefit they are used to receiving.

Most likely you’ll end up funding approximately $0.20 in claims for employees who utilize the SharedFunding plan.

That brings your final cost up to $0.80 for a 20% savings. Not too bad, eh?

The Compound Savings of ShareFunding

Saving 20% on your healthcare costs when you initially set up SharedFunding is lovely, yes? But what makes it even lovelier is what happens in the years to come.

Since pictures speak 1,000 words, let me explain with a graph:


Here at BBG we tend to look at the average cost per employee per year as a benchmark. The reason is that your enrollment fluctuates each year. You can calculate your average cost per employee per year by taking your total costs divided by your current enrollment.

The above graph includes numbers from a real client who has been SharedFunding since 2012.

As you can see their average cost per employee per year were at $15,197 with traditional insurance in 2012/2013. By switching to SharedFunding that year, we were able to reduce that number by 39%. Whoa!! Then in 2014/2015 they embraced a more robust form of SharedFunding and reduced their cost another 21%.

While we are pretty good, we are not magical. Unfortunately, you’ll notice their healthcare costs did rise through the years with SharedFunding. However, the true value of SharedFunding is that your increases are on a smaller premium amount; hence, the compound savings of SharedFunding.

To show this we assumed they would have received a trend increase of 5% each year if they had stayed on the traditional route. Based on past renewal trends, this was an appropriate average increase to assume.

Firstly, they are not even close to what their average cost per employee was in 2011/2012. Secondly, while both graphs go up the gap between them grows!

Closing Thoughts

Healthcare is likely one of your biggest expenses as an employer. The math of self-funding may not work for small employers, but the math of SharedFunding most likely will.  Here are BBG, we have fun delivering strong benefits to your employees while reducing the amount of premium you pay to the insurance company.

Your employees will still have access to the network that the insurance carriers provide. Additionally, you will be protected from catastrophic claims with a mini stop loss in purchasing a high deductible plan from the carrier. Furthermore you can deliver the same benefits to your employees by promising to fund. Lastly, with a promise to fund, you, the employer, will be able to retain more dollars in your business.

If you are interested in seeing if SharedFunding might be a good fit for your company, don’t hesitate to reach out to us for a no obligation analysis.

Lastly, we will be running a series on SharedFunding and in this series we plan to get into the details on a more granular level.

Coupons for Prescription Drugs: The Good, The Bad and The Ugly

Drug Coupons Explained

We encourage and help anyone we can to obtain a coupon for their prescriptions.. We know, however, that there are emerging issues with them.

Some background 

Drug manufacturers have some amazing but expensive medications. They have created coupon programs that help the consumer pay for the prescriptions up until that consumer reaches their insurance company deductible (most coupon programs require the consumer has insurance).

For the consumer, that appears to be fine.  That is the good.

Once the member meets their deductible (even though they may not have actually paid that full amount, due to the coupon), the insurance company is hit with the cost.  For the remainder of the year the carrier is paying the full cost on refills for that prescription.  That is the bad (at least for the insurance company).

The battle between the manufacturer and insurance company is now heating up. The manufacturer wants to let the consumer off the hook for the cost (so they will use their product) but wants to get to the carrier reimbursement portion. Some insurance carriers have concluded that since the consumer did not actually pay for the prescription, deductible credit should only be given for what the consumer actually paid. We assume more carriers will follow suit.

We are beginning to see the consumer caught in the middle. The manufacturers do not want to keep filling the prescriptions for free.  If they see that the member was not given deductible credit from the insurance carrier, the member is then billed for the full cost.  The consumer assumes the coupon will work and does not find out it was rejected until after the prescription has been filled. The consumer then gets billed.  And, that is the ugly.

We at BBG still see the coupon option to be worth researching and using.  However, we are urging our clients’ employees and dependents to research this and reach out to us for help. We know a lot about these options and are learning how get ahead of being blindsided.

About High Deductible Health Plans — Say It Ain’t Always So Joe!

Great friend, colleague, and highly respected industry consultant Joe Paduda writes today in his widely read Manage Care Matters column about the possible cost and claim shifting implications of uninsured and underinsured workers. In it he makes specific reference to HDHP’s.  Among the points Joe makes about ‘High’ deductible health plans are the following:

“44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles.”

“ ‘High’ deductible health plans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.”

I have great respect for Joe and his point of view. He’s as smart as they come, his points are always thoughtful, well-supported by research, and totally authentic (well maybe except for April 1 every year).

However, when it comes to high deductible plans I’d like to remind Joe and others — let’s not throw the baby out with the bath water. There are some innovative and practical uses of HDHP’s to lower costs and deliver better coverage that are most times overlooked by the national stats, commentators and think tanks.

As famed radio commentator the late Paul Harvey used to always say “And now for the rest of the story”.

The “rest of the story” is this: HDHP plans can be and are often used, at least in our little slice of the healthcare world, by savvy and practical employers to lower costs while still providing strong benefits. There’s a core of strong employers out there — many that we are very grateful to count as clients — that are utilizing high deductible plans in combination with reimbursement plans like our own SharedFunding  to reduce costs AND provide better coverage to their employees.

Comments like these from a recent conversation among a group of CEO’s speaking to a fellow CEO about SharedFunding are not unusual:

“Helped us tremendously with health costs.”

“We have had zero increases in premiums in the last 4 years.”

“We hired them last year (our year 1) to replicate the comprehensive plan most of our employees had……….. They did it – even using same insurer.”

“Here’s the key – they contract a very high deductible plan (like $11,000 for a family), and then manage all claims & reimbursements. All the paperwork flows through them. Our employees have much lower deductibles and copays they have to meet….”

Just sayin’.

Have a great Memorial Day Weekend.

Facebook Iconfacebook like buttonTwitter Icontwitter follow buttonVisit Our LinkedIn Profile