Here are four steps to quick results
With health-insurance costs up nearly 80% since 2000, many employers have already switched to self-insurance to control costs. But according to Alicia Faust, a manager in RSM McGladrey's health-care consulting practice, employers could save up to an additional 15% of health-plan costs by more effectively managing the third-party administrators (TPAs) they've hired to administer their plans.
Four strategies can deliver immediate savings:
Keep the right people covered
An eligibility audit can save up to 10% a year by weeding out divorced spouses, grown children, and others who are no longer eligible for benefits. "Putting the right eligibility processes in place means you realize those savings every year," says Faust.
Only pay eligible claims
TPAs often pay bills that they shouldn't - such as covering more appointments than the employer benefit plan allows. "We've seen anywhere from 2% to 5% of claims paid incorrectly," Faust says.
Don't foot the bill for other employers
Many two-career families use only one employer's health plan. Plan designs that make it more attractive for employed spouses to sign up for health-care coverage at their own workplace can significantly trim costs. These changes do not affect other dependents.
Keep your TPA accountable
Write performance standards into your TPA contracts, such as requiring that up to 98% of claims be paid accurately, and 80% or more of claims be paid within 30 days. You get money back if those standards aren't met. Reserving the right to audit paid claims for 12 months after termination can also add up to big savings.
"Tightly managing your TPA can be the difference between affordable benefits for your people and another year of double-digit cost increases," says Faust.
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