During my 28 years in theemployee benefit industry, health insurance has gone through manychanges. I have experienced traditional non-network insurance withdeductibles as low as $250, HMO and PPO networks, copays forphysicians, ER and urgent care, HSAs, FSAs, HRAs and health care reform. And all came about in anattempt to help control health care costs in employers' self-fundedmedical plans.

As the HMO and PPO networks still exist with major insurancecarriers and the PPO networks with independent networks, they donot offer the savings they were designed for when first introducedto the market over 25 years ago. These networks featurenon-transparent agreements with physicians, hospitals and othervendors for reimbursements that, in most cases, still have theinsured being balance billed because the difference between theagreed reimbursement amount with the carrier or network isdifferent from the retail price charged by the provider.

We are slowly entering a new era where employers are demandingnew ideas and solutions to reduce claims costs and stop losspremiums. The days of the PPO and HMO networks are slowly becomingas obsolete as the rotary phone, because the current system is justnot working.

A one-question survey was sent to 300 employee benefit brokers,consultants and account managers in March 2019. The question: “Doyou feel as though carrier and independent PPO networks are notsaving the claims dollars on covered benefits outside of aphysicians office visit?” The results showed that 82 percent said“yes.” It's evident that many brokers believe the networks are notthe long-term answer, but brokers and consultants continue to pushbusiness to the traditional model or utilize TPAs with carrier orindependent networks because it's the status quo, what we havealways done.

Based on President Trump's persistency and determination to undoObamacare, we are bound to see some amount of change before heleaves office, whether after one term or in six years. The freemarket approach to health care is continuing to come to light andis being brought to market by cost containment vendors that arenegotiating with hospitals, out-patient surgery centers, imagingfacilities, and cancer and oncology centers, to accept feeschedules in the range of 125 percent to 150 percent of Medicare.This is going to become the new norm, providing competition in themarketplace and controlling costs.

The problem is that no carrier or independent PPO network isgoing to allow all these cost containment vendors to replace theirvendors or change their agreed reimbursements. They might allow,say, the carve-out of dialysis or organ transplant vendors, but notall of them. Self-funded plans in today's environment need to dosomething different that will help reduce claims costs and stoploss premiums. The only way to do this is through reference-basedpricing and opening the market to allow all cost containmentvendors to provide insureds with another option. When designedcorrectly, these strategies will have zero out of pocket cost tothe insured when using one of the direct contract vendors. Theincentive is to waive any deductible or out of pocket cost to theinsured. By utilizing a cost containment vendor, the savings in theclaim will be 30 percent to 80 percent, based on procedure versusthe traditional PPO network. Because of the negotiated arrangementswith these different vendors, there's no balance billing like therewould be in most PPO network plans.

Related: Balance-billing court cases force hospitals tojustify charges Here's an example of how this works:How do most people deal with health care? Our first move is eitherto go to our PCP or specialist in the network or, in case ofemergency, the urgent care or hospital. From that point, the issueis resolved at the facility or you are referred to go somewhereelse, right? We have all been taught that the physician is alwaysright; therefore, we are going to do what they say, right? I'mafraid that if a physician told an insured that the way to fix whatails you is to go home, climb on your roof and belly flop intotheir front yard, 30 percent might just do it.

But physicians may not always be right. Therefore, there must bea way for insureds to easily have alternatives that will providethe same or better care and that will waive their deductible orcoinsurance.

The key to building this successful model with employers issimple: First, remove the PPO network. At the end of the day, theonly network that needs to exist is a physicians-only network. Why?Well, he physician is usually the first stop in non-emergencysituations and from there, the patients are referred to the nextphysician or facility.

Second, include multiple cost containment vendors that canprovide savings of 30 percent or more in the following high spendareas: surgeries, imaging, lab, durable medical equipment, dialysisand diabetic supplies, organ transplant, cancer and oncology, toname a few. Third, wrap the plan with reference-based pricing so services will benegotiated up front, except for emergencies, at 150 percent to 180percent of Medicare.

Fourth, don't rely solely on education in a group meeting orwhen speaking to new hires. As we all know, employees anddependents will not remember six months into the plan year and willjust go and do what their physician tells them. Rather, providethose things but add concierge care to the program. On the back ofan insureds medical card, require that all services outside of aPCP or specialist require insureds to call and pre-authorize with aconcierge member that can redirect them and provide the option oroptions to a cost containment member and the incentive of no out ofpocket cost should they choose that direction. It's second opinionin the best form.

Employers are voicing their concerns over the rising claims andadmin costs of their health plans and brokers and consultants areconstantly on the lookout for new ideas that can make an impact andhelp them stay ahead of their competition.

When you can provide the same or better care, no out of pocketexpense, and zero balance billing, it's the win-win we all try tostrive to achieve in all forms of our lives. And it's going tochange the mindset of how we purchase our medical care goingforward.

Mark Hatcher, VP of the Southwest Region for IBA(International Benefits Administrators) has been in theemployee benefits space for over 28 years. Mr. Hatcher spent mostof his career as an employee benefits broker and consultant beforetransitioning into the self-funded TPA space.