Traditional health plan designs and operational approaches created to reimburse network providers at varying negotiated levels based on activity are no longer sufficient and may soon be outmoded. They are evolving to accommodate new value based concepts of what it means to perform and provide value to plan sponsors, employees, and their plan administrators. Read more on 5 key considerations when defining your value based plan and network requirements.

Design of the benefit plan for an employee population and design and creation of the associated provider network are two different, but tightly related issues. Both should be driven by specific and individual plan sponsor objectives.

Employers should be clear and specific when articulating their needs and priorities. Payers and TPAs should naturally be responsive to their current and prospective employer-customer needs when designing and delivering products and services.

Here are 5 key requirement considerations driving value based benefit plan and network design:

1. Attract and Retain a Highly Qualified and High Performing Workforce?

The priority of this requirement in terms of benefit design can vary by factors including:

  • Industry type
  • Competition for employees in each location
  • Current and near term health of the macro economy

Your employee acquisition and retention priorities and requirements may differ by employee level within the organization or by specific skill sets.

The relative importance of employee acquisition and retention for any population or subset will drive the investment employers are willing to make in minimizing out of pocket cost, minimizing hassle, and maximizing access, service, and quality of care for the employees. As a consequence, it will also drive the specifics of plan and network design as well as operational performance requirements.

2. Balance Cost, Quality, Service, and Access?

This is a given. You always need to balance cost, quality, service, and access. The question is: What balance for which populations? Higher quality, better service, and access don’t necessarily involve more cost; but realistically they usually do. Clearly defining the level of overall investment you are willing to make and the balance you are trying to achieve will be critical to these decisions on:

  • Narrow or wide networks and formularies
  • Provider selection for network inclusion
  • Level and form of employee cost sharing
  • Emphasis on value based provider contracting

Payers and administrators should consider offering multiple product designs to support various sponsor definitions of “best balance”.

3. Shift to Value Based Contracting?

To what extent do you want your plan to engage in pay for performance (value driven) provider contracting? Conceptually, value based contracts provide tighter control over the balance of cost, quality, service, and access objectives described above. But there are real world trade offs. Generally, these approaches work better with more narrow networks that better support tighter clinical integration. And depending on the specific plan designs, there is a risk that patients may perceive some services are being withheld in the interest of cost savings. There are also service level risks since these are new approaches and administrative operations – processes and systems – are not yet stable.

Overall the industry is moving inexorably to value based care and contracting. But does your organization want to be a pioneer, early leader, or a follower?

4. Access as a Design Objective Priority?

Access to providers – defined as locality, breadth of provider types, number of providers from which to choose, and availability for appointments – is of key concern to all patients and plan members. So it is worth special attention in defining your access requirements as a plan sponsor. Wider access means more providers in a network leading to less ability to steer volumes of patients to those providers. This results in less price negotiating power for those paying the bills. Employers must clearly understand:

  • How concentrations of employees match geographically to provider locations. Are there enough providers within reasonable distance? Are there rivers people won’t cross? Are there parts of town where people prefer not to go?
  • Are you a local, regional, or national employer? Do you need to consider multiple local healthcare market dynamics in determining network requirements?
  • Are there significantly better branded and preferred providers where your employees are? How important is it to honor those preferences?
  • Are there significantly better branded and preferred providers where your employees are? How important is it to honor those preferences?
  • Do your employees and their families’ demographics suggest that certain types of providers must be readily accessible? How about cultural/language compatibility?
  • Does your industry type suggest that certain types of providers must be readily accessible?

5. Patient Exposure to Cost?

Patient exposure to cost through co-pays, deductibles, and premium contributions are key factors of any benefit plan. They comprise the major tool to influence patients’ selection of providers and services.

  • What is the total level of cost burden you are willing to place upon individual employees to achieve your preferred selection and steerage objectives?
  • What level of cost sharing is necessary given your population demographics to influence behavior to the desired extent?
  • What overall level of cost sharing, when combined with the employer contribution, will support the total healthcare program cost (and presumably value) you wish to be available to your population?

For more information on optimizing value based benefit plan and provider network design, download this related ebook: Optimizing Plan & Network Design for Value Based Care.

Optimizing Plan & Network Design for Value Based Care free eBook

Contact us for a free consultation to see how our extensive healthcare experience can help optimize your growth and operational performance. Together, we can determine if a collaborative partnership can help you efficiently achieve your core business objectives.