Imagine the world where employers support and pay for medical innovation by directing employees to providers who use clinically and economically proven medical innovation. That future may not be far off; 150 million of 200 million commercially insured Americans receive health insurance via their employers, according to Kaiser Family Foundation, and many companies with self-funded health insurance incentivize employees to visit specific centers of excellence for elective procedures based on clinical quality and cost partnerships.
This content is sponsored by Paradigm Spine
These self-funded health insurance plans catapult employers into the value-based arena, and employers are active in identifying medical service economics, from overall disease management to making decisions for which medical services and procedures they cover.
"The self-funded employer sponsored health plan is most prevalent among commercial policies," says Vincent Zeringue, Paradigm Spine's vice president of business development West.
The self-funded health plan
In traditional fully funded plans, payers add a profit margin to premiums. Self-funded plans are attractive to large companies because employers contract directly with payers to cover employees. Within the self-funded plan model, employers pay payers a limited fee to help with administrative management of the plans. Self-funded and fully funded plans both engage larger payers in some capacity; economic-drivers are the main difference between the two plan models.
"[Self-funded] plans allow employers to recapture margins that would otherwise be ceded to an insurance company, when providing administrative services, in the context of a fully funded insurance plan," explains Ahmad El-Naggar, Paradigm Spine's director of corporate initiatives.
Employers take on full risk with self-funded health insurance plans, collecting premiums from their employers and putting the money into a collective account. As employees utilize healthcare services, employers debit the account.
Here are the essential characteristics of both health plan types:
Fully-funded health plans
• Company pays the payer a premium, which is valued at a fixed rate for a year based on the number of enrolled employees each month
• Monthly premium changes during the year if the number of enrolled employees shifts
• Payers collect premiums and pay healthcare claims based on coverage benefits
• Employees pay deductibles or co-payments mandated by the policy
Self-funded health plans
• Often large employers operate their own health plans
• Employers will self-insure to save the profit margin payers add to premiums in fully funded plans
• A self-funded plan consists of fixed costs, such as administrative expenses and stop-loss premiums
• Variable costs consist of healthcare claim payments
• Employers may opt to purchase a stop-loss policy to reduce liability and ease risk in cases of high loss
"Employers choose to self-insure for a couple of reasons. Financial risk or risk tolerance is a significant factor in whether a company self-insures or not. Self-funding healthcare is less expensive and provides employers the most options to customize benefit plans for employees," says Mr. Zeringue. "The difference between the two [plans] is there's an economic advantage with the self-funded."
Self-funded employers are much more aware of the economics surrounding covered medical procedures compared to employers offering fully funded plans, said Mr. El-Naggar. An employer's human relations director or benefits manager often oversees self-funded plans provisions and is permitted to provide "case-by-case policy approvals" for medical procedures. This decision to "approve" often correlates with a procedure's or innovation's demonstrated clinical outcomes, and more and more, the addition of proven economic outcomes, Mr. El-Naggar says. Employers are more aware of procedures and innovations that demonstrate clinical and economic advantages.
How medical innovation ties in
Transitioning away from a fee-for-service world, the healthcare environment is coming to demand higher quality at lower costs.
Medical innovation that demonstrates clinical and economic validity to improve a patient's condition is positioned to answer both of those needs. To achieve the proven innovation label, the service or technology must achieve positive long-term results, documented in peer-reviewed literature. However, with the transition to value-based care, cost matters now, too.
"In the last five years, to be defined as 'value' or 'proven innovation,' not only clinical validity, but economic validity related to those services has been brought to the forefront," Mr. Zeringue explains. Patients, employers, providers and insurers are now looking beyond the clinical superiority and expect the same economic proof as well.
"Increasingly, medical innovations are solving for those two variables with sharp specificity and efficiency, and accordingly, there are increasing innovative technologies, with data supporting favorable healthcare outcomes for patients and employees, and healthcare economics to reduce the financial burden on employers and health providers," explains Mr. El-Naggar.
Paradigm Spine's coflex® meets the highest standard of "medical innovation" qualifications. The coflex® technology has documented peer-reviewed data demonstrating safety, superior clinical efficacy and durability of outcomes over long-term with the addition of positive economic outcomes. Paradigm Spine has proven the use of coflex® potentially decreasing "the overall financial burden of lumbar spinal stenosis on our healthcare system," Mr. El-Naggar adds.
Self-funded employers seek innovation that helps manage their financial risk while simultaneously satisfying their employees.
"The ability to empower or enable an employee to access and receive both clinical and economic proven innovation is key," says Mr. Zeringue. "Adopting innovation to meet both financial and quality outcomes need, allows the employer and employee to receive this degree of satisfaction."
Leveraging self-funded plans for medical innovations
Patients are increasingly speaking up with opinions and need about their healthcare, in seeking the best medical procedures. Both quality and cost factor into these decisions. Seventy percent of patients reported increased engagement with their healthcare during the last two years, according to a 2017 Patient Engagement Perspectives Study.
"Today patients/employees are more empowered and informed regarding their own healthcare than they have ever been," adds Mr. El-Naggar. "Patients (employees of self-funded employers) are empowered to influence or change the course of their medical care and treatments they receive."
The Patient Protection and Affordable Care Act promotes increased patient engagement, as it burdened patients with increased out-of-pocket expenses.
"Medical consumerism, or patients engaging in healthcare decisions aligns both the parties paying for healthcare, the employer and patient. Proven medical innovations, is what both employers and patients desire and supports increasing medical consumerism," Mr. Zeringue notes.
If an employer's medical policy does not support proven innovation, there are actions for the patient to take. Employees should document a physician prescribed the innovation, and the innovation has been proven for the patient's condition. Examples of "proof" may include FDA approval of an innovation, long-term outcomes published in peer-reviewed journals and society guidelines. Employees should also provide, from their perspective, why they desire approval for the service/innovation. Often patients identify benefits of less invasive service, estimate quicker recovery and more often, ability to receive care in an ambulatory surgery center, avoiding the inpatient admission.
"Employees have a substantial opportunity that cannot be understated to seek out the medical procedures/innovations they and their medical care providers believe are best for them, regardless of the explicitly stated coverage policy of their insurance plan," says Mr. El-Naggar.
While providers work the authorization appeal process on the payer front, employees should seek approval with their HR departments. As HR directors and benefits managers focus on the satisfaction of their employees, healthcare options to include medical innovations are important. Employees active in obtaining approval for their care will allow employers to consider and provide access to optimal treatments.
"Already this year, we've seen a number of large employers with self-funded healthcare, including Wal-Mart, Albertson's, Boeing and many hospital systems, approve employee requests for coflex®. These examples of coflex® approval by the employers were made following provider receipt of a prior-authorization denial," adds Mr. El-Naggar.
Employers, HR departments and employees all play a role in advancing access to proven medical innovations. "Similar to patients, employers look to clinically and economically proven medical innovation to lower costs and provide high-quality patient outcomes along with increased employee/patient satisfaction. The combination of both employer and employee alignment is what allows for expaned medical innovation access," says Mr. Zeringue.
Conclusion
As demand for healthcare value continues, providers must deliver increased quality care and lower costs. Self-funded employers look to and rely upon clinical and economically proven services and medical innovations to offer employees where quality is improved and cost may be lowered.
Equipped with a better understanding of their care plans, benefits and ability to obtain approvals for care, employees will no longer fail to have a role and influence during decisions related to their healthcare. Providers, employers and payers must all align to ensure patient engagement and patient satisfaction is at the top of mind.
Via self-funded health plans, employers have the power to seek out and fight for medical innovations that offer patients the best outcomes. Medical innovation — supported by clinical and economic validity — will help all stakeholders satisfy the patient.
More articles on devices:
Amedica adjourns stockholder special meeting — 5 takeaways
Medtronic receives recognition for social responsibility: 5 takeaways
Medacta hosts 250th MORE AMIS Learning Center: 7 things to know