Nicholas Castellano, Castle Benefits Consulting Group
In Partnership with
One of the most commonly used reference tools when searching for a car is the Kelly Bluebook, which provides unbiased valuations for vehicles across makes, models and conditions. There is also the health care “bluebook,” which can show various services and associated costs from low-to-high. For example, in looking at ten common procedures in Denver, CO, I searched details for a colonoscopy screening. The low price is $967, the high was $4,965 – a 516% difference. Another example is a chest CT scan, no contrast. The low was $267, the high, $2,663.
The average variance within the ten examples was 716%. For many employees, it doesn’t matter, as their copay or deductible is the same no matter which facility they decide to have treatment or services rendered. Often, what is not explained is that it actually does affect them at the end of the policy year, as these higher-cost facilities directly impact the total dollars spent in claims – thus having a negative impact on renewal rates.
Employees may very well see an increase in their contributions as many organizations cannot continue to absorb compounding rate increases year after year. The old adage “you get what you pay for” isn’t always true in the health care business.
Just because a facility charges the highest cost for their service doesn’t necessarily mean the outcomes will exceed every other facility. The inverse holds true for facilities charging the lowest; as costs do not always directly correlate to better or worse outcomes. For example, the costs for a knee replacement in the Washington, DC area among five hospitals – Sibley Memorial, $40k; Medstar Washington, $95k; Howard University Hospital, $78k; George Washington University Hospital, $190k; and Medstar Georgetown, $65k – don’t follow the quality rating the figures would suggest. On a quality rating scale of 0-100, Sibley Memorial exceeds the other hospitals despite being the least expensive.
Yes, there are sites for employees to find this information, but again, how many will actually spend the time doing the research? The reality is, people will spend more time searching online for the best overall value when looking for a car than they will for their own health care. But where does that leave the employee? In most plans, whether fully insured or self-insured, there is nothing in the benefits program to help, other than showing who’s in-network and who’s out.
How would an employee who needs a hip replacement feel if they had a concierge service who has already done the due diligence and be able to direct them toward a facility with tremendous outcomes, and that would waive the deductible or coinsurance? It would probably be safe to say that most employees would welcome that service. From the employer side, the charge for this service would have already been agreed upon at a much lower cost than normal.
The end result would be employees having the potential to spend less out of pocket expenses for procedures, as well as lessened mental stress about the process and services being rendered – thanks to professionals vetting facilities and researching outcomes. From the employer standpoint, at a time when filling job openings is difficult, having an employee return to work sooner helps with overall productivity and morale. It would also reduce the amount paid for services, creating the ability to retain unused claim dollars in the claim fund. Renewals would therefore be lower, and the likelihood of having to increase contributions would be mitigated. This also helps with the retention of quality employees, and is a perk for potential new hires.
Nicholas F. Castellano is President & CEO of Castle Benefits Consulting Group. He can be reached via email.
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