Jason Rutz, who leads Freedom Healthworks’ Growth and Partnership division, discusses health benefit solutions with Logan Valentine, a benefits consultant with ONI Risk Partners in Indianapolis.
As a benefits consultant at ONI Risk Partners, Logan Valentine helps small and large employers combat the ever-increasing costs of healthcare with creative solutions that save employers money and give employees the benefits they want.
Jason Rutz, who leads efforts to grow the Freedom Healthworks network of direct primary care practices, believes the DPC model for delivering healthcare — which facilitates a direct relationship between doctor and patient without insurance companies, hospitals or networks — benefits not only employees, but also employers.
Here, Rutz interviews Valentine about employee benefits and why employers need to consider the DPC option:
That has been the experience for a lot of employers over the years. Many go from carrier to carrier. If you’re in a small group, it depends on how the rates have been filed. If you’re in a large group, it can depend more on whether the carrier wants to buy your business, in which case you may get a higher increase in the second year to make up for what they bought it for.
But what we’re seeing now in the marketplace are health insurance consultants bringing new ideas to employers. Consultants are working together to educate each other to bring better solutions to their clients, such as alternative funding options and different types of care in the form of direct primary care, on-site clinics and near-site clinics.
I think it depends on a case-by-case basis. I think carriers, either way, need to adapt to what consultants are bringing to the marketplace. The direct primary care movement is definitely going to force them to change. They’re not naive to what is happening in the marketplace. But they do want to protect their PPO networks. As time goes on, we’ll see how many choose to adapt compared to how many don’t.
Can you better explain the strategies that can be employed to not only help reduce costs, but also increase the perceived benefit level of plans?
A big one right now is reference-based pricing, which many large companies are adopting for cost-containment purposes. It allows the employer to cap the amount they’ll agree to cover for certain non-emergent medical procedures, and it allows the employee to shop around for best pricing.
The most important thing with that model is aligning the interests of employees, employers, insurance providers and carriers, so everyone wins. That’s obviously easier said than done, but it’s top of mind for a lot of people.
When you look at how we’re giving care, I think creating good consumers of healthcare has been a challenge for many years. That’s why high-deductible health plans emerged, why experiments with Health Savings Accounts (HSA) started, etc. But I think it comes down to providers who care about what they’re doing for patients, which is what leads me to believe in the direct primary care model.
Do you see some of those strategies being employed not only from small- to medium-sized groups, but also larger groups? Can they employ the same strategies and get the same benefit?
To an extent. Some of it depends on how many employees you have. Obviously, it’s somewhat harder for smaller employers to do an on-site clinic because they don’t have the capital or a large group of employees to enroll in the plan.
That’s where the direct primary care model comes into play as a benefit to those employers. Some may join as a near-site model for a shared clinic, where multiple employers pay for the cost of it. Many employers find direct primary care to be a great benefit because you’re paying per employee, per month, no more, no less. And your employees get access to care throughout the year.
By utilizing direct primary care, we know we have the physician at the forefront of that employee’s or member’s care, which is hopefully going to trim down health insurance claims in the future. We’ll be able to get rid of some of those high-cost claims, but still take care of our employees with serious health issues and increase the overall health of the group. That’s where employers see a true return on their investment.
In your opinion, how does direct primary care fit into the overall strategy for employers?
Direct primary care can be a good fit for any employer that chooses to implement it. I think it fits in best with a certain segment of our employer groups, such as those who can’t afford to house an on-site clinic or those with fewer employees.
With self-funded insurance plans, the money used to pay for primary care visits in the traditional healthcare model can instead be used for access to a primary care physician of their choosing within the direct primary care network. That’s where it fits the best. It might be an employer with two employees or 200. It depends on each employer’s affordability.
Once that happens, if they build into their plan appropriately with the correct funding model, as well as the correct education to their employees, it then becomes an engaged relationship between the physician and the employee. I believe that benefits everyone in the long run.
Can you explain the difference between level-funding and self-funding, and why these two options are more advantageous than fully insured with DPC?
With fully insured, you are paying extra for access to a network, essentially. Whatever your premium is per month, you’re going to pay that to the carrier, whether you have 10 times the number of claims or one claim the entire year. Then you’re adding the cost of access to a DPC practice.
When looking at self-funding and level-funding, we get into the financial responsibility of the employer on a portion of their claims. In self-funded health care, the employer assumes the direct risk for payment of the claims for benefits. Level funding allows groups to safely transition to self-funding with predictable monthly claim funding and protections to limit liability.
Once either self-funding or level-funding becomes part of the plan, the employer has more control over their costs and the health insurance package becomes an incentive to win over employees. As long as those long-term relationships develop between your employees and your physicians in a direct primary care practice, you’re going to see the win on the back end.
Are there any other options for employers who are looking for something different? They’re tired of getting the same old rate increases and higher deductibles every year.
Take the time to listen to different perspectives. There are many theories are out there about what you can do, but until you actually see it on paper and let someone comb through your data, you’re not going to find something you can truly believe in.
Our clients allow us to look at their claims data, so we can talk to them about past renewal experiences, what’s been done, what hasn’t been done, and what’s available to them in the marketplace. Once we look at fixed costs versus claims costs year over year, many employers can see benefits that will come from making very minimal changes, rather than blowing up their whole plan.