Health Insurance Alternatives: Best Ways for Health Plans to Save

The majority of employers in the United States offer health insurance as an employee benefit for a variety of reasons. It helps businesses attract new talent, retain current employees, and keeps employees healthy so that they remain happy and productive.

For decades, the most common method of providing healthcare benefits for employees has been via contracts with private health insurance companies. However, the continually expanding costs of providing employee healthcare have many employers looking for ways to save money. All too often, cutting spending on employee healthcare results in lower-quality care.

Luckily, there are a few non-traditional methods that can not only reduce the amount of money companies spend but also retain—or even improve—the quality of healthcare services. This article discusses some of the best health insurance alternatives.

The Problem With Health Insurance

Healthcare costs have steadily risen for years, and costs for maintaining contracts with health insurance companies have mirrored this rise. This is partly because private insurance companies contract with specific healthcare networks. In these contracts, both parties agree that any services paid for by insurance will receive favorable pricing—adjusted to allow both to profit when patients pay their premiums, deductibles, coinsurance, etc.

The root of the problem is the profit-driven nature of insurance companies. If the average cost of a procedure rises, they pass the higher price on to plan members (employees) or payers (employers). Regardless of how the proverbial buck gets passed, insurance companies profit when employers and/or employees pick up the economic slack. Furthermore, insurance companies rarely question the claims for which they pay, thereby making yet another contribution to increasing healthcare costs.

The bottom line is that, because insurance companies profit either way, they have no vested interest in seeing healthcare costs lowered. 

Health Insurance Alternatives

The good news is that employers don’t have to settle for the old tried-and-true methods. “Traditional” doesn’t always mean “better,” and health insurance is no exception.

Not only are both employers and employees responsible for a fixed monthly fee toward their annual premium, but they must also pay deductibles, coinsurance, and copayments. Moreover, when a claim finally comes due for payment, employers typically pay 80% of that amount.

Because the prices for each of these fees will rise along with healthcare costs, health insurance alternatives are becoming increasingly popular. Many employers are warming to the fact that they can either replace their entire network with self-funded plans or add cost-cutting tools to augment their existing health insurance. Let’s take a closer look at some of the most potent health insurance alternatives.

Reference-Based Pricing

In contrast to a private health insurance contract in which insurance companies pay for claims and then expect reimbursement from employers and employees, reference-based pricing is a data-driven cost containment approach that aggregates prices for similar medical services to support fair reimbursements.

Using a reference-based pricing model, the objective data makes it possible to reprice claims for more reasonable reimbursements from a position of knowledge.

Since reference-based pricing is a pre-payment cost containment method, bills are not final. Leveraging this pricing information also increases transparency in the reimbursement process, which is usually obfuscated by administrative procedures for premiums, copayments, and deductibles.

Reference-based pricing can also open the doors to better levels of care. Traditional health insurance plans usually require patients to seek care within their predetermined network of providers, whereas reference-based pricing makes no in-network requirements. Patients can expand their care options and potentially receive higher-quality care at lower prices.

Clean Claim Reviews

Medical billing is another element of health insurance that lacks transparency. When insurance companies pay bills in full, they leave no room for scrutiny nor time to ensure billing accuracy. This is problematic when one considers that upwards of 80% of medical bills contain errors.

Such billing errors could represent a difference in hundreds or even thousands of dollars. Clean claim reviews are an in-depth review process in which industry professionals pore over medical bills with a fine-toothed comb. This level of scrutiny is applied to every line item billed to identify and remove errors that otherwise would have been paid.

Clean claim reviews are a powerful pre-payment tool that combats healthcare costs and further increases payment integrity.

Another benefit of both reference-based pricing and clean claim reviews is that they are extremely flexible cost containment methods. While these health insurance alternatives can be used in tandem to replace existing healthcare networks, they can also be used in conjunction with existing health insurance plans to fill any holes in coverage.

6 Degrees Health Helps Employers Save on Healthcare Spend

At 6 Degrees Health, we do not sell health insurance. Instead, we offer a robust array of cost-containment solutions designed to improve or replace traditional healthcare models. Our self-funded solutions, like reference-based pricing and clean claim reviews, are backed by proprietary software that enables you to save up to 40% on your healthcare spend.

While private insurance companies are content to pass the burden of rising healthcare costs to employers and their employees as they turn profits, 6 Degrees Health aims to bring balance back to healthcare and help employers lower their healthcare spend and establish new standards for healthcare pricing transparency and integrity.

Interested in learning more about health insurance alternatives? Speak to a representative today to find out how our reference-based pricing model can help you realize the true costs of healthcare.