Most employers face challenges understanding the factors driving costs in their health plans. Often they don't know what their employees and their families need or want. Most have never received data from their plan carriers to show them what they pay for services including fees for administering the plan and the costs of health services. Most blindly write checks for the costs that are furnished to them and rarely seek accountability for the adequacy and appropriateness of those costs. For most employers, spend on the health plan is the second largest expenditure they make after wages. In short, most employers think that there's nothing that they can do to manage and attenuate the trajectory of cost increases. They're wrong.
Legislation passed in 2021 (the CAA) now imposes significant new compliance burdens on employers and specifically leaders in the C suite. In many cases, the focus of this burden is the CFO. ERISA health plan fiduciaries have personal liability to ensure that the plan assets are used only to benefit the best interests of plan members. Compliance liability extends to employer boards of directors too. Most CFOs are unaware as to how their plans operate or where to begin their compliance journey.
I've had the opportunity over the course of the last four years to address many groups of CFOs on the topic of CAA and fiduciary duties. I often begin my talks with this question: In what other area of your business do you not know what things cost, what they should cost or could cost and in what other area of your business do you give your vendors a blank check to pay themselves for what they ask for?
Employer leaders have, for the most part, designated responsibility for the management of their plan to human resource personnel, many of whom have not had training in finance, risk and procurement. They, in turn, often rely on brokers who often place coverage with carriers who pay them commission and other incentive money for placing that business with them. Clearly, their interests are not aligned with the interests of plan members.
Health plans, via their standardized networks, do not account for each employer group's unique characteristics such as the prevalence of disease process, demographics and provider choice. Health carriers have become integrated supermarkets that merchandise services in the best interests of their shareholders rather than to furnish what is in the best interests of individual employer groups.
Many employers, because of CAA mandates, are now finally receiving their data on their populations, which gives them insights into misalignments in their contract care. The information demonstrates huge cost and quality variation in service episodes that are high volume. The employers discover huge opportunity to reduce costs, create predictability in their plans, and limit confiscatory middleman costs.
OpenNetworks is designed to help employers take back control of their health plans with customizable networks that uniquely serve the interests of each employer. Employers are given the opportunity to choose services and contracts and the terms of those contracts so that they can integrate predictability and accountability into their plans.
OpenNetworks offers employers a glide-path to integrate custom local networks into their plans. The platform also gives the employer the opportunity to model different types of contracts from different systems and providers.
Employers sponsor health plans to attract and retain their employees. The opportunity now exists for employers to take control over their plan and to not be beholden to commodity carriers. The opportunity now exists to secure custom solutions that service the unique needs of employer populations. That opportunity also promises to reduce costs and to create predictability and member satisfaction.