Examples of Cost Containment in Healthcare: What’s Included and How it Works

Many employers are searching for cost containment solutions to offset the skyrocketing costs of healthcare coverage for their employees, which comes as no surprise. According to data from the Society for Human Resources Management, the average cost per employee for employer-sponsored health insurance plans increased by 6.3% in 2021. And costs are expected to continue to rise even higher in the near future.

This trend of rising healthcare costs makes it more important than ever for employers to find ways to balance healthcare and maintain profitability since healthcare costs are often among the highest company expenditures. Fortunately, a variety of avenues exist for cost containment and can help employers of all sizes mitigate healthcare costs as well as increase the quality of employee healthcare. Let’s take a quick look at some of the best examples of cost containment in healthcare. 

Examples of Cost Containment in Healthcare

Cost containment is a strategy companies use to make healthcare spending more efficient by lowering costs without compromising the quality of care provided to employees. While a multitude of cost containment measures exists from which to choose, some will work better than others, depending on the employer’s unique situation. Knowing this, it’s important to understand how different cost containment measures work. 

Payment Integrity

Payment integrity is a process that ensures the billed amounts patients receive are accurate and free of erroneous charges. Typically, payment integrity is most beneficial when a clinical review is performed before payments are sent. The pre-payment review is important because medical billing errors are pervasive, with about 80% of all medical bills containing some pricing error. Providers and hospitals are not infallible and patients are frequently overcharged for services. However, providers are very good about ensuring that patients are never undercharged. 

Some excellent payment integrity solutions, such as Clean Claim Reviews, are available to help protect against such egregious billing errors.

Clean Claim Reviews

A Clean Claim Review is a pre-payment cost containment solution that goes beyond typical clinical reviews to evaluate medical bills, plan documents, utilization review and utilization management (UR/UM) notes, medical records, and prior denials to identify and remove inconsistencies that would have been paid by the patient. Clean Claim Reviews double checks that bills are accurate and patients are not being overcharged.

Reference-Based Pricing

Reference-based pricing is a self-funded healthcare reimbursement model that distinguishes itself from traditional insurance models by using a benchmark of prices for services rendered to negotiate lower payments for services and procedures.

Instead of simply paying an amount that has been billed, reference-based pricing acts as something similar to comparison shopping for lower prices. For example, if it is known that Medicare pays much less for a service than what a patient is billed, that translates to informed pricing, which brings more flexibility and lowers payments for the same procedures.

Out-of-Network Wrap

Under traditional healthcare plans, using in-network providers is cheaper than going out-of-network. This is because the out-of-network providers don’t receive the discounted rate patients receive for services performed in-network. 

However, one of the downsides is that it limits where patients can go to receive care. Furthermore, the discounted insurance rate is less important when healthcare is paired with other cost containment solutions such as reference-based pricing, which negotiates lower prices regardless of network status.

Increasing patient options for facilities to receive care results in lower prices as well as more access to quality care. 

Stop-Loss Insurance

Stop-loss insurance, sometimes called re-insurance, is a package that protects against catastrophically expensive losses. This is typically used by employers who are using self-funded insurance plans such as reference-based pricing. Essentially, they use an additional insurance company to protect against health insurance claims that exceed a specified threshold. There are two forms of stop-loss insurance:

• Aggregate Stop-Loss: Provides a cap on the total amount paid for healthcare expenses during the contract period.
• Specific Stop-Loss: Protects employers from severely expensive individual claims.

Because cost containment methods can be implemented individually or in various combinations, it’s important to identify the best solution for your organization. 

6 Degrees Health for Comprehensive Cost Containment

Knowing the best examples of cost containment in healthcare can be a great first step to saving on your healthcare spend. However, partnering with an expert can not only help you find the perfect cost containment solution but also maximize the efficiency of cost-saving measures.

6 Degrees Health is an industry leader in healthcare cost containment solutions. Our approach involves comprehensive reference-based pricing solutions, clean claim reviews, and out-of-network solutions to lower your healthcare spend by up to 40%. Our focus is to shift the balance of payments away from providers and back in favor of patients. 

Want to know more about the benefits of cost containment?  Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.