Use Data to Reduce Cost with Employee Benefits

Use Data to Reduce Cost with Employee Benefits

Nearly 90% of large employers believe the cost of providing health benefits to employees will become unsustainable in just 5-10 years. (1)

Use it to negotiate better rates for your health plans

It’s no secret that healthcare costs are on the rise and expected to continue in that direction over the next few years. So, what can you do to combat these high rates and anticipated increases?

Identifying claim trends that may be inflating health plan costs can help keep rates in check. Yet, many employers don’t know how claims impact the rate they pay and aren’t sure how to use the data they have to find out. Unfortunately, that can make it difficult to negotiate with health insurers when renewal time rolls around.

Implementing a comprehensive process that starts well before the renewal period, and on an ongoing basis, can help drive better negotiations. Not only can it help employers learn as much as they can from their own data, but it can also help them manage risk coming into their plans and position key trends they see to better negotiate with insurance carriers.

5 Best Practices 

1. Have clear, concise, and meaningful aggregate reports for data

It’s not enough to collect employee data and add it to a spreadsheet. Employers must be able to see macro trends that can indicate how the plan is performing, like:

  • Actual dollars spent on claims versus the projected amount assumed for claims
  • The number of large claims experienced relative to the previous year

Fortunately, programs that translate data into easy-to-read charts and graphs can be highly effective for seeing trends at-a-glance, clearly showing if the plan is on trend, and whether a rate increase is likely.

2. Drill down to granular data on a regular basis

Reviewing data just once a year or only in the aggregate is not enough to be well prepared for negotiations. Employers should review data regularly and drill down to a granular level so they can see specific numbers for data points like utilization, procedures, and prescriptions, for example, and if these services can be expected to continue over the foreseeable future.

EXAMPLE: Let’s say the data shows activity for diagnostic tests only given when someone has cancer. Just having that kernel of data can let you know that more expensive treatments will likely follow and be incurred by the plan.

Although there’s not much that can be done to avoid large claims, simply having the knowledge can avoid a big surprise when employers get their renewal rate – and allow for ample lead time to prepare a successful negotiation strategy.

3. Look for trends that are inflating healthcare spending

Reviewing data regularly is key to spotting sharp spikes, like recurring charges for expensive care options when more cost-effective options are available.

For example, if data shows rising use of the ER versus telemedicine, or hospital visits for x-rays versus going to imaging centers, or out-of-network providers versus in-network providers, employers can work toward turning the curve, particularly with communications that can remind employees of the options available and when to use them.

4. Consider workforce demographics

Looking at potential changes in employee populations can also help position data trends in a more favorable light.

So before sitting down to negotiate rates, employers may want examine if:

  • overall claims increased or decreased year-over-year
  • downsizing or recruiting efforts resulted in an older or younger average age for the workforce
  • the organization will add staff, possibly making it a more attractive risk to insurers
  • agreements exist to offer other benefits from the same carrier (ex. life insurance, vision, dental, etc.), which can be used as a bargaining chip during negotiations

5. Consult an experienced benefits broker

Employee benefits brokers and advisors can be strong advocates and resources for employers.

With expert insights and access to a wide range of tools, they can offer the support needed to help translate data into meaningful insights, including:

  • Pre-renewal rate projections
  • Administrative Services Only (ASO) summaries
  • Stop-loss reports
  • Reserve estimates
  • Modeling
  • Benchmarking

Bottom Line? 

Using data to better prepare for renewal negotiations can help employers achieve a fair rate, preserve a long-term financial position, and ensure they can continue to offer affordable and comprehensive health insurance to employees.

Contact us today to find out how we can help you better understand and utilize the data you have to effectively negotiate renewals with health insurers.

1 Vast Majority of Large Employers Surveyed Say Broader Government Role Will Be Necessary to Control Health Costs and Provide Coverage, Survey Finds, (KFF, April 29, 2021) (January 6, 2023).

This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.

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