Medical inflation continues to outpace employers’ annual revenue growth. As a result, both company profits and employee take-home pay are taking a hit. For middle market companies exploring cost-saving solutions for their organization, the rising price tag of health insurance is more concerning than ever.
Self-funded and fully insured employer plan sponsors primarily access treatment through what the industry calls, “BUCAH” plans -- Blue Cross Blue Shield, UnitedHealth Group, Cigna, Aetna and Humana. Although BUCAH networks provide more transparency than the fully-insured market, they offer self-funded employers little to no cost mitigation support or advance service cost explanation.
For this reason, many companies are turning to “narrow networks,” a type of health plan where members receive care from a specific list of doctors, hospitals, outpatient facilities and labs. Narrow networks typically offer saving greater than a typical BUCAH plan can provide. While BUCAHs do offer narrow network options, we will look at those narrow networks with no BUCAH fingerprint.
Today, 7% of health benefit plan offerings in the US are provided through narrow networks. The majority are created by and for employers with more than 5,000 employees enrolled, according to the Kaiser Family Foundation.
There are two types of narrow networks to consider: High Value networks and High Performance networks.
High Value networks offer claims cost savings over carrier-owned PPO networks. These networks subscribe to the belief that the best medical providers perform more procedures and can provide both better outcomes and lower “volume” prices. Value based network offerings are available in all 50 states.
High Performance networks offer the same cost savings, but take a more active role with their providers, regularly vetting them in an effort to improve service, treatments and patient outcomes.
Stop-Loss Group Captives are a self-funded option that allow for the pooling of large claims to benefit smaller, middle market employers. Self-funding principles are based on paying known claims and buying insurance for unpredictable, larger claims. Combining Group Captives with a well-built narrow network benefits employers and employees alike.
Don McCully runs Medical Captive Underwriters LLC, (www.medicalcaptive.com). Focus is lowering medical trend and spend for enrolled employers. ClearCaptive is a 50-state open access medical stop-loss group captive solution for middle market employers with 50 employees enrolled or greater