Former hospital administrator moves to the other side of the table, using his insider knowledge to help plan sponsors manage their healthcare dollars wisely……
By Jack London
As a former hospital administrator, I’ve seen healthcare reimbursement from both sides of the equation. I understand why a hospital would be interested in a contract offering reimbursement at a percentage of charges. I also understand the responsibility employers have to make sure their healthcare dollars are being spent wisely.
We all know healthcare costs continue to rise. Employers are feeling the burden of providing quality healthcare benefits to attract and retain quality employees. If your health plan is part of your company’s mission and culture, it deserves the same level of strategic attention as any major business expense.
Healthcare benefit costs are projected to increase by approximately 9.5% annually — low end.
At Patient PAL we specialize in claims cost containment, and continue to see hospital charge masters increase 3–5% annually while many national healthcare networks continue to use a percentage of charges as their contracted reimbursement methodology.
Real-world example:
We encountered a nationwide “wrap” network that had contracted with a well-known hospital system in the Midwest. The network’s contract manager presented what was described as a favorable arrangement: the hospital was willing to participate in the national network at 15% off billed charges.
One hospital CFO once told me his organization could make money at approximately 37.5% of billed charges.
Now consider what happened to a self-funded employer under a similar arrangement. One of its members required treatment for a rare cancer, resulting in more than $3.5 million in healthcare costs over an 11-month period.
The claim was processed according to the existing contract. But was paying the claim exactly as contracted the only possible solution?
What if, when a claim reaches the plan’s specific stop-loss threshold, someone stops and asks: “Is there an opportunity to negotiate a better outcome for everyone involved?”
The employee needs the care. The provider deserves appropriate reimbursement. And the employer — particularly a self-funded employer — has a responsibility to ensure plan dollars are being spent responsibly.
In my experience, some of the most meaningful opportunities for savings occur when we stop looking at healthcare claims as transactions and start looking at them one patient at a time.
For TPAs, benefits professionals, and self-funded employers: When a large claim hits the specific stop-loss threshold, don’t automatically pull the trigger and pay the claim simply because the contract allows it. Pend it. Review it. Ask questions.
Explore whether a negotiated settlement makes sense. Sometimes the biggest opportunity to control healthcare costs isn’t changing the entire health plan. It’s found in taking a closer look at one patient, one claim, and one situation at a time.