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County sees more than 42% reduction in PEPM healthcare costs over three years
Client
Public sector, county government with 100 employees
Challenge
The client was experiencing rising and unsustainable healthcare costs while their revenue stream was capped.
In 2015, two years prior to hiring Apex, its healthcare spend was $1.66 million. That spend increased to $1.81 million in 2016. The county altered benefit plans, which put more of a burden on employees, but the action still did not decrease healthcare spend.
The county also saw a reduction in per employee per month (PEPM) healthcare costs. In 2016, the PEPM was $1,428 and significantly dropped to $845 by 2019.
Solution
Apex analyzed the county’s historical claims and recommended moving from their fully insured model to a Capitalize Reference-Based Reimbursement (RBR) plan in 2017 as it would be more cost-effective. The employees’ benefits package was unchanged and deductibles remained the same from the previous year.
Results
The county’s spend dropped to $1.15 million, a reduction of approximately $658,000. In 2018, the spend decreased another $28,000 to $1.12 million.
By 2019, the client’s healthcare spend dropped to $922,499, a decrease of $207,000. The county also saw a reduction in per employee per month (PEPM) healthcare costs. In 2016, the PEPM was $1,428 and significantly dropped to $845 by 2019.
By using RBR, the government was able to maintain its employee benefits package without any negative modifications. At the same time, the healthcare spend and PEPM costs were reduced.
The county has reduced its spend by more than $893,600 since hiring Apex in 2017. Also, it was able to enhance benefits by adding employer-paid long-term disability along with two premium holidays.
Case Study
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