A New Way for Fully Insured Employers to Manage Rising Healthcare Spend
At Garner, we believe that for too long fully insured employers have been unable to access innovative solutions to help them manage the cost of their benefits and the health of their employees. In fact, most fully insured employers are left with almost the exact same health plan options that they were given over 30 years ago. As premiums continue to rise rapidly, fully insured businesses often see no option but to stay with their existing insurance carrier and defray costs elsewhere, often by cutting headcount and salaries. That’s why we created Garner’s fully insured offering: a new way for fully insured or level-funded businesses to keep their existing medical carrier while achieving guaranteed savings, enriched benefits, and improved employee satisfaction. Our program has two key components: (i) we turn a portion of the fully insured premium into partial self-insurance, including a stop loss guarantee that minimizes risk, and (ii) we use these self-funded dollars to incentivize employees to see the highest quality doctors. High-quality doctors generate lower healthcare spending by keeping employees healthy and out of the hospital. Therefore, when employees see high quality doctors, employers can offer richer benefits, generate material savings in the first year and lower their annual claims cost. The average 250-life group will save over $2.5 million over a four year period with this design. Below we describe how Garner can work for fully insured employers in more detail.
Provider performance matters
We have gathered healthcare claims records on over 180 million patients, giving us a unique opportunity to understand where the inefficiencies in the healthcare system come from and what to do about them. The results are clear: the single biggest reason why employer healthcare costs are high is that many doctors fail to follow current medical best practice and produce poor health outcomes. The chart below summarizes what our data shows: underperforming doctors add 2.7 sick days per employee per year, and add over $3,000 to the cost of every episode of care. This cost is ultimately passed on to the employer and employee through higher premiums and out-of-pocket care.
Provider performance matters–even for fully insured employers
When we show the above data we often hear the common concern: “we agree, but unfortunately even if we lower our medical claims the carriers will get all the savings.” Garner has created a new way for fully insured employers to share in the savings from more efficient and effective healthcare. The result is immediate savings, richer benefits and lower claims costs over time. The key to our program is to transfer a portion of the fully insured premium into a Garner incentive account. Specifically, this is how the program works:
Employers increase the deductibles on their existing fully insured health plan. Alternatively, some employers who have an existing HRA or HSA match use Garner as a replacement for those programs.
With Garner’s help, employers offer a self-funded benefit via an HRA that covers the out-of-pocket for employees who engage with Garner and see a top performing doctor.
The employer pays Garner a single fixed monthly payment which includes both administrative fees and HRA claims activity. This gives the employer protection if claims activity is greater than expected and we return 80% of unused funds if claims are less than expected.