Three Steps to Building a Better Health Plan Network

In our 2017 National Survey of Employer –Sponsored Health Plans, we asked employers to rate the importance of strategies they will be using over the next five years to advance the triple aim of lower cost, higher quality, and a better member experience. This post on network strategies is part of a series that looks at these six key strategies.

In the challenging pursuit of health plan cost savings, network strategies are one of the most effective options. Savings of as much as 10-15% of PPO medical claims costs can be achieved-- but it will take effort and there will be trade-offs. Offering an alternative to your traditional PPO network to your employees inevitably will cause some level of change. If you're willing to take that on, here are three steps you should follow to evaluate the multitude of network opportunities available in the market.

  1. Size the opportunity. Consider the markets where you have the largest concentrations of employees. Start by knowing where your members are and what vendors and networks are available. New options are available, including those that focus on a select group of providers, tiering of providers based on quality and efficiency and networks where the PCP manages all referrals. Most employers still use a national strategy to select provider networks, but some are beginning to quilt together the best options by location and even using incentives to steer to these options.

  2. Know your numbers. Understand your costs and key metrics. Use your in/out- of-network utilization, center of excellence penetration, total cost of care trend, accountable care organization (ACO) attribution and other metrics to establish a baseline comparison to what is available in the market. Many employers don't know their level of ACO penetration and their associated costs (e.g., care coordination fees, provider incentive payments, etc.) as reporting on results is relatively new and varies considerably by carrier. It’s important to establish a strong baseline in this step so that you have a clear understanding of how alternatives compare to the status quo.
  3. Review the alternatives. Evaluate the financial opportunity offered by other vendors and networks to determine how savings are achieved -- plan design, deeper discounts, provider quality/efficiency, etc. In many cases, this involves sophisticated financial analysis. Ferret out the real ACOs from the imposters and understand the contract underpinnings of each network model. For each alternative, understand the financial, quality, member and administrative impact. 

Following these three steps will help you determine what’s to be gained from a new network strategy. Maybe it’s a question of working with your existing vendor to steer members to better providers within your current network. Maybe a bigger change will yield bigger benefits. Identifying the most effective network options for your organization is challenging work and can take many months to complete. Don't go it alone -- leverage the knowledge and expertise of your benefits advisors, carrier partners, and other third-party vendors to build the right network strategy for your goals and objectives. The benefits for your organization and your employees can be significant and long-lasting.

More posts on Key Strategies:

Maura Cawley
by Maura Cawley

Maura is a Partner with Mercer Health & Benefits business and the national leader for Mercer’s Large & Jumbo Employer Team. She has more than 30 years of health care benefits experience in the employee benefits consulting field. Maura joined Mercer in 1990, after working at two insurance carriers and has extensive experience helping large employers implement actions to address the increasingly complex health and benefits environment. . As the leader of Mercer’s Large & Jumbo Employer Team, Maura works with a team of consultants across the country – sharing client experiences and best practices, identifying emerging trends and developing intellectual capital to address client issues. She also represents the large employer segment as part of the U.S. Health & Benefits national leadership team. Maura has assisted a broad range of companies with the development of benefits strategies tied to short- and long-term goals. She has deep experience in utilizing data to guide decision making and development of continuous improvement plans. Recent client engagements include major projects on health care strategy and design, consolidation of disparate business units into a common benefits platform, and development of a vendor integration operating model. Maura is a Phi Beta Kappa and graduated summa cum laude from Lake Forest College and has attended Mercer’s Executive Leadership Development Program.

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