Use Data to Negotiate Better Rates for Your Health Plans

Healthcare costs are on the rise and are expected to continue in that direction over the next few years. As a result, it’s important for employers to find ways to combat these high rates and anticipated increases. One way to do this is by using data to identify claim trends that may be inflating health plan costs. However, 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. This can make it difficult to negotiate with health insurers when renewal time rolls around.

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

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

Collecting employee data and adding it to a spreadsheet is not sufficient for employers. They must be able to identify macro trends that can reveal the performance of their plan, such as actual spending on claims compared to projected amounts and the number of large claims compared to the previous year. To make this task easier, programs that display data in charts and graphs can be very useful in quickly identifying trends and determining if a rate increase is necessary.

2. Drill down to granular data on a regular basis

Collecting employee data and adding it to a spreadsheet is not sufficient for employers. They must be able to identify macro trends that can reveal the performance of their plan, such as actual spending on claims compared to projected amounts, and the number of large claims compared to the previous year. To make this task easier, programs that display data in charts and graphs can be very useful in quickly identifying trends and determining if a rate increase is necessary.

3. Look for trends that are inflating healthcare spending

Regularly reviewing data is crucial in identifying sudden increases, such as recurring charges for costly care options when more economical options are available.

For instance, if data shows a growing trend of using the ER instead of telemedicine, hospital visits for x-rays instead of imaging centers, or out-of-network providers instead of in-network providers, employers can take steps to change this trend by communicating the available options to employees and encourage their use.

4. Consider workforce demographics

Examining potential changes in the employee population can aid in interpreting data trends more positively. Before negotiations, employers should consider factors such as:

• whether overall claims have increased or decreased year-over-year
• if downsizing or recruiting efforts have resulted in a change in the average age of the workforce
• if the organization will add staff, which may make it more appealing to insurers
• If agreements exist to offer other benefits from the same carrier (ex., life insurance, vision, dental, etc.), which can be used as leverage during negotiations.

5. Consult an experienced benefits broker

Employee benefits brokers and advisors can be valuable allies and resources for employers, providing expert guidance and a variety of tools to help turn data into actionable insights, such as:

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

BOTTOM LINE

Utilizing data in preparation for renewal negotiations can assist employers in securing fair rates, maintaining a stable financial position, and ensuring they can continue to provide comprehensive and affordable health insurance for employees. Get in touch with our Benefits team to learn how we can assist you in understanding and utilizing your data 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) https://www.kff.org/health-reform/press-release/vast-majority-of-large-employers-surveyed-say-broader-government-role-will-be-necessary-to-control-health-costs-and-provide-coverage-survey-finds/ (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.