Three mistakes health plans should avoid when making cost-containment decisions

May 13, 2021
Josie Rasberry

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Large health plans, health cost sharing groups, discount medical plans, smaller health insurance companies. Although they all offer coverage differently, one thing they all have in common is a need to keep organizational costs low. Making cost-containment decisions isn’t easy, and shouldn’t be taken lightly. Every health plan’s specific needs will vary, but generally, there are common mistakes you can avoid. Doing so will ensure you’re making decisions that will benefit both members and your bottom line.

Only making cuts that hurt members.

For many health plans, it might be tempting to lower organizational costs by increasing premiums, sharing costs, or other member expenses. If you care about retention and member satisfaction though, this should be a last resort. Even if you don’t contribute to members’ out-of-pocket expenses, there are other cuts that hurt members that should also be avoided. If there’s a third-party service or a convenient tool that members use often or provides significant savings to members, don’t get rid of that perk just to save money. When making cost-containment decisions to lower organizational costs, always look at what you can do internally first before making changes that negatively impact members. Even simple changes like reducing how many print materials you use or getting rid of internal software that goes unused can help lower organizational costs without ever affecting members.

Not adding any services to help lower your cost curve.

This is a huge mistake that many health plans make. When trying to save money, your first thought probably isn’t to add any new services or tools. But it should be! The right tools and software can actually increase efficiency while reducing overall costs. Third-party services and tools that contribute to member support can be extremely beneficial. Healthcare navigation and patient advocacy services take workloads off your members, guide members to the most affordable options for care, and improve member satisfaction. For example, in 2019 we helped a previous client save four times the amount they invested through healthcare navigation and bill negotiation.

Keeping features because “you’ve always had them.”

On the opposite side of tip #2, health plans also make the mistake of keeping features that don’t add value. There are several reasons the same invaluable service or software gets renewed year after year. It could be because there’s an executive who likes the service and doesn’t want to let go of it. It could be that no one manages this service or software and so it blindly gets approved every renewal period. It could even be that your health plan hasn’t measured the ROI on any services and tools, and so you're not aware of what’s wasting money and what's valuable. When making cost containment decisions, make sure to run an analysis on all your various software, tools, and services to see what has a good ROI and what doesn’t. 

Final thoughts.

The choices you make to lower your health plan’s organizational costs should be personalized to your needs and goals. But when you begin the decision-making process, keeping the three avoidable mistakes in mind will save you a lot of time and effort. To recap:

  • Think of members first.
  • Start using third-party services that save you money in the long run.
  • Nix the features you’ve had forever that don’t offer any value.

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