5 Ways Self-Funded Employers Can Change the Cost of Healthcare
By Mike Roche, Director of Business Development, The Alliance 
Improving access to high-value healthcare is important to The Alliance. Here’s how our self-funded employers are changing healthcare – and how you can, too.
Pool Your Purchasing Power
The more employers that join together to pool their purchasing power (like they do at The Alliance), the more money can be saved through contract negotiations. That’s because providers want to serve their community’s best interests.
Pay The Alternative Way
Innovative employers don’t play the “discount” game when it comes to paying providers. Here’s an example of why discounts aren’t indicative of value:
- Provider A charges $12,000 for a surgery at a discount of 50%, and the patient pays $6,000.
- Provider B charges $6,000 at a discount of 20%, and the patient pays $4,800.
As you can see, higher discounts don’t necessarily mean lower overall costs. That’s Reference-Based Contracting by The Alliance uses Medicare as the baseline. Employers need to pay a fair price for services. Paying providers using Medicare’s methodology means the focus isn’t on a discount off billed charges but instead on the largest purchaser of healthcare in the US. So, when Medicare’s rates change, so do those using this methodology.
This payment method offers a more transparent and appropriate benchmark to measure relative value while also enabling employers to use benefit plan design to incentivize employees to utilize low-cost, high-quality providers and protect their employees from unexpected charges. It’s also why over 85% of the providers in The Alliance Smarter networks agree to this unique contract provisioning.
In addition to our reference-based contracting, employers can also contract differently with certain providers to combine health care into bundles. Health care bundles mean that employers and employees know the prices in advance and pay a single price for many different services that can be part of a test or surgery, for example. While not every test or procedure can be delivered in this way, those that can often save a significant amount over typical fee-for-service.
Unlock Your Claims Data
Access to data is the biggest difference when it comes to self-funding vs. fully insured plans. The Alliance helps self-funded employers dive into their claims data, where we find savings that others can’t – or won’t – using analytics tools like our Smarter Health analysis. Smarter Health provides employers with data-driven insights that pinpoint where their money is being spent – and where they can save.
Utilize Advanced Primary Care
Employers know that primary care is the key to uncovering long-term healthcare savings. By focusing on preventative care, primary care doctors are in the best position to help patients maintain and improve their health, detect, and treat problems early on, manage chronic conditions when they occur, and refer patients to the right specialists when necessary.
Advanced Primary Care is an elevated standard of primary care that’s measured by improved health outcomes for patients, lowered total health spending for employers and employees, and achievement of higher levels of patient satisfaction and activation.
Create Custom Provider Networks
Custom Provider Networks produce significant savings for both employers and their employees by custom-tailoring provider networks based on that employers’ unique goals. Through innovative provider network design, The Alliance offers employers three ways to access and customize their network to offer broad choice while still allowing for steering and tiering to different providers to encourage employees to go where care is good and costs are low.
Start Self-Funding Smarter
Need help transitioning from fully insured to self-funded insurance (or level-funded insurance)? Want to learn more about how to use your data to unlock better benefit design or create a custom provider network? Contact us.
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