Tips for Businesses with Self-Funded Insurance to Improve Overall Healthcare Spending

Saving money is the primary reason that many employers decide to provide self-funded insurance. Balancing that objective and the healthcare needs of employees can be an ongoing struggle. Trimming benefits would help you cut spending, but not without sacrificing employee health and morale. Instead, think about making some strategic shifts to your plan. For some employers, it only takes a few small changes to dramatically slash healthcare spending.

Tip #1: Bring Healthcare Onsite

At first glance, the idea of incorporating a medical clinic into your workplace might not seem like an effective money-saving decision, nor a simple one. But for some employers, giving employees access to onsite or near-site clinics can dramatically cut self-funded insurance costs.

Having a clinic onsite or nearby makes it convenient for employees to seek medical care. Visiting the doctor typically means missing work, which is one reason why people may wait too long to go. Removing the barriers to seeking medical care means illnesses can be diagnosed early on. That can keep sick employees from spreading germs throughout the workplace and infecting others; keep employees from ending up in the hospital; and, in cases of more serious medical conditions, may allow employees to start treatment quickly and prevent more expensive treatments down the road. Employers with their own clinics can easily gather and track data around employee health costs.

Employee time is also saved when they can get medical care without having to take several hours off of work to travel to and from appointments. Keeping employees healthy and working boosts productivity, another financial benefit for the self-funded employer.

It’s true that onsite clinics are typically offered by very large employers, but there’s been a movement in recent years to make these clinics accessible to smaller employers too. Don’t discount this as an option if you offer self-funded insurance.

Tip #2: Trim Pharmacy Benefits Waste

High drug costs are one of the single biggest threats to self-funded employers. Controlling these costs is essential to improving your overall healthcare spending. One potential cost-saving strategy for a self-funded employer involves making changes to its formulary, the list of covered medications that may be prescribed. In a survey of 15 plan sponsors, using 2017-2018 data, Commonwealth Fund found that large self-funded employers could save from 3 to 24 percent on outpatient pharmacy costs by removing wasteful drugs from their formularies. Offering brand-name drugs when generics are available, or offering combination drugs when the individual ingredients are cheaper on their own, are examples of wasteful drug spending cited in the survey.

Changing your pharmacy benefit manager, or restructuring your relationship to your PBM, are also potential options to explore.

Tip #3: Lean Into Data Analysis

If you’re not routinely analyzing data about how your employees use your self-funded insurance, you’re probably missing cost-saving opportunities. Data is one of a self-funded employer’s greatest assets. Looking at clinical data and data related to claims allows the employer to monitor things like how employees are using preventative services, what percent of its healthcare spending is going toward prescription drugs, how its network is being utilized, and more. If you’re not already poring over data regularly (as opposed to once or twice a year), start doing it now

Tip #4: Consider Unbundling Stop Loss

Using a bundled approach to self-funding has its merits. Administratively, it simplifies things when all your plan components are provided by the same carrier. Some employers may assume they’re saving money by bundling their services. You might get a discount from a telecom company for getting all your TV, phone and Internet services from them, but the same isn’t necessarily true for insurance carriers.

Unbundling its health insurance plan allows an employer to seek out the best rates for each component of its plan. The employer can control exactly what kind of programs and benefits it offers, while carriers have to offer competitive pricing to win these customers. Unbundling stop loss coverage from the rest of your plan allows you to work with a carrier that will tailor it to meet your specific needs, instead of being locked into the stop loss coverage that’s part of a bundled plan.

Though it may seem daunting to cut costs without cutting the benefits that your employees want, it’s absolutely possible. Stop Loss Insurance can help you find solutions. We know that you have questions about your self-funded insurance, and we’re here to answer them. How can Stop Loss Insurance help you cut healthcare spending? Contact us today to find out.


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    In 2011, the top 5 most expensive medical conditions treated in US hospitals were: Septicemia, Osteoarthritis, Complication of device, implant or graft, Liveborn, and Acute myocardial infarction

    From 2010 to 2013, the number of claims that were individually $1 million or above rose by 1,000%

    In 2017 approximately 18% of the American public will purchase insurance through exchanges, radically transforming the health insurance landscape.

    In 2014, 98% of large firms (= 200 Workers) offer 1+ wellness programs to their employees.

    The most costly 1% of patients account for 20% of national health expenditures – accruing average annual expenses of nearly $90,000 per person.

    6% of firms offering fully-insured plans report they intend to self-insure because of Obamacare.

    In 2014, PPO plans remained the most common plan type, enrolling 58% of covered workers.

    In 2012, 93% of businesses with 5,000+ employees and 80% of companies with 1,000-4,999 employees were self-funded

    Massachusetts has the third-highest prevalence of self-funded insurance in the small-group market (Fewer than 50 employees).

    In 2013, the average deductible was $2,906 for individuals selecting plans from marketplaces. This compares with average deductibles of $1,135 for an individual with employer coverage.

    In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage, up 5% and 4% respectively from 2012.

    From 2010 – 2013, cancer followed by chronic/end stage renal disease and leukemia accounted for the top 3 costliest illnesses.