For the first 35 years of my career I was what you would consider a traditional broker. During that time I worked for a couple of large regional insurance agencies and was very successful in that traditional role.
Traditional brokers work with the BUCAH’s (Blue Cross, United, CIGNA, Aetna, Humana) of the world, trying to find what they believe to be the best insurance alternatives and options for their clients. I did just that, and got paid handsomely for it. I could even dictate what my commissions were, and receive commission overrides as well. In fact, I got a raise every time my clients got an increase in their premiums because my commission was a percentage of their premiums.
Here is the analogy: when you buy an expensive car does it lower the cost of the car when you change from Geico insurance to Safeco, or Progressive? No. Switching insurance companies for your auto insurance does nothing to the price of the car. It may simply mean a slightly lower premium for your insurance but it doesn’t change the cost of the car. The same thing goes for your health plan: switching insurance companies for your health plan (the car) doesn’t lower the cost of it.
Most employers expect that their broker will shop for a Geico, Safeco, Progressive, (BUCAH) etc. in an attempt to lower the cost of their “car”– their health claims. But the reality is that that does nothing to lower the cost of the claims.
It’s a simple task for a broker to simply gather up the information and send it off to various insurance companies. It doesn’t take a lot of work; brokers rely on the insurance company to do the work, and then the broker comes back and presents the results to the client. And, the results usually include the great purported discounts that the insurance company has.
When medical care providers can raise their rates anytime they want to (and they can legally), then what does this “great” discount mean? Actually, it means nothing at all. Just because an insurance company negotiated great discounts doesn’t prevent the medical provider from raising the rates – it amounts to a ‘discount off of what’?
If you want to make a difference about the cost of your car, what must occur is to get away from the BUCAHs of the world and look for real, viable, and proven solutions that not only reduce the cost of administration and stop loss, but gets to the root cause of the problem – and that’s claim costs. Looking to an insurance company that has a ‘discount off of what’, does absolutely nothing. Real results come from using Metric Based Pricing – either Medicare Plus or Cost Plus or a combination of the two, which transforms the way that providers are paid.
How can a broker, consultant, or an employer currently exercise transparent, fiduciary responsibilities when they don’t know what a provider is charging, and what an insurance company’s contracts for discounts are? At the end of the day, they cannot. Employers are using other people’s money (employee contributions) to purchase health insurance and they have no idea what they’re buying. They’re simply being quoted some plan recommended by the broker/consultant.
Metric Base Pricing allows an employer to know exactly what providers are being paid and exercise their fiduciary responsibility for the plan and to employees. The plan documents actually state what is going to be reimbursed to providers.
If you want to seriously affect your health care costs and insurance related expenses you have to get away from the ‘discount off of what’, traditional PPO networks, and insurance company programs. The solution is to un-bundle your plan and take advantage of all of the innovative solutions that have tried and true results.
If you want to know more about Metric Based Pricing and what it can mean to your company, you can reach me at firstname.lastname@example.org or 970-349-7707.