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February 18, 2021
In many ways, health care for our employees becomes a choice between cost and convenience.
Employers often either grant unfettered access to care, limit care options or put an additional price tag on some care options. This is not always the case, but it does happen. I will say that many clinic options, if priced correctly, will offer more convenient care at a lower cost. However, it does make you use that option.
The most obvious example of cost vs. convenience is use of the emergency room. If employees are allowed unrestricted access to the emergency room for the most basic care it becomes an expensive cost on the benefit plan. To prevent this from happening, employers sometimes increase the cost, or the co-pay, for use of the emergency room to make sure emergency care is what is actually needed.
What it means
Cost vs. convenience manifests itself in a variety of ways in health care. Care providers and networks will offer deeper discounts in exchange for steerage or volume. Other examples include:
- Narrow networks will offer substantially deeper discounts for exclusivity and almost always require a benefit differential for members going outside the narrow network
- Direct contracts with care providers or facilities generally have the same requirements
- Some pharmacy benefit managers will require prescriptions be purchased at certain pharmacies
On a much simpler level
- Fully insured employers, often for convenience, put everything in the hands of the insurance company, but this also takes away the employer’s ability to control costs
- Some employers, including school corporations, cities and towns, join trusts or association plans with the idea of simplifying union negotiations, taking the burden of benefits off their plate, or believing that sharing the risk and reward is better than taking control of benefit decisions
For you as the employer, understanding cost vs. convenience boils down to this: It is important to have a broker who understands the philosophy of your leadership and the culture of your organization in order to devise the proper strategy. This understanding helps your broker to determine which conveniences your team is willing to forego, and which cost containment strategies you are willing to pursue.
Don’t underestimate costs of convenience
Understanding the costs associated with convenience is also important.
For example, a clinic can be a great convenience for employees and their families under the right circumstances – and that convenience can either be cost-effective, or very expensive. Understanding the nuances is part of the job of a valued broker.
Narrow network pricing can also be very tricky. Often, narrow network pricing assumes that everyone will stay in the network. However, there are usually members who are already under the care of providers outside the narrow network. Moving to a narrow network would require those members to change care providers and care path, and not doing so would increase costs for the member and the employer. Understanding and explaining the disruption is the job of your broker.
The world of health care is often a series of choices between convenience and cost containment strategies. Having a broker who understands your organization’s culture and can strike the proper balance is critical.