Employer Saves $800,000 in Six Months

In 2008 an employer group decided to move away from the PPO world into a program that utilizes Federal Law (ERISA) to pay providers a fair and reasonable fee for services.  Here is a summary of results after six months:

Allowed Amounts:    Under PPO Contract    Fair & Reasonable

– Facilities                    43% off Billed                  85% off Billed

– Physicians                  41% off Billed                   57% off Billed

Plan paid facilities on a cost-plus basis. All other providers were paid using a uniform formula applied to 2008 RBRVS as the basis of payment. Since ERISA mandates that a plan fiduciary must only pay a fair and reasonable rate, balance billing issues are subject to an appeal process handled by an out-sourced plan fiduciary. Plan participants are protected against balance billing through a propriety arrangement.

Total hard dollar savings for this South Texas employer during the six month period exceeded $800,000.

Editors Note: Tyler Independent School District and Blue Bell Creameries, among others, have achieved similar results utilizing out-of-the-box risk management techniques. Employers who are willing to consider these proven techniques can cut their health insurance costs by as much as 50% or more.

If you are not part of the solution, there is good money to be made in prolonging the problem.”

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