The combination of working with a TPA to better understand the health care usage habits of your employee population (through plan data analysis) and having the flexibility to make plan adjustments when needed is a big benefit of the self-funding structure. A TPA with 25-plus years of experience, Integra Administrative Group was asked to bid on a local account and found that a staggering amount was being spent on emergency room (ER) health claims within the segment of employees earning minimum wage. It turned out that employees saw the ER co-pay as “free” since they weren’t asked for any payment at the time of visit. Based on this revelation and the data studied, Integra recommended eliminating the urgent and office care co-pays when it started managing the account to encourage using these more cost-effective services for non-emergency conditions. This change was implemented and saved the employer $140,000 in claim costs the first year alone and resulted in a three-year trend of approximately 50% in savings. Read the full article below to see how analyzing data by employee population can lead to smart decision-making that often produces significant savings with self-funded plans.

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Data Proves Key as Plan Cuts ER Costs by Nearly 50% Over Three Years

The Situation: A third party administrator (TPA) that’s been in the self-funded business for 26 years, Integra Administrative Group was brought in to bid on a local, 1,000-life account in Delaware. About half of the employee population was in the low-income category, earning minimum wage or just above. When the company’s HR representative was going over health benefit info with the Integra team, the member co-pays were shared: $250/emergency room (ER), $50/urgent care and $20/office.

As the conversation went on, it was mentioned that many members initially perceive the co-pay for visits to the ER as “free” because they aren’t charged upon arrival or asked if they have insurance.

This was an eye-opening moment for Integra, and in further studying the company’s health plan data, the TPA found that there was an exceedingly high number of ER visits for non-emergency conditions within the population of employees at or just above the minimum wage level. Integra discovered that, for this low-wage segment of the group, $227,905 had been spent on ER services, with 758 ER visits in just one year. According to the data, the average cost of an ER visit was $1,500-$1,700, so when employees were going to the emergency room, they were paying 10 times more than what it would cost for an urgent care visit and 12-13 times more than an office visit.

The data trends led Integra to realize that patients were choosing to go to the ER for non-emergency conditions simply because they didn’t have the cash available upfront to cover the $20 or $50 co-pay for an urgent care or office visit. Not only were employees paying more because they were choosing the ER, but many were having their wages garnished after hospitals would follow up to collect money for services. It was a problem that was driving health plan costs up and causing employees to incur – and further perpetuate – unmanageable amounts of debt.

The Solution: After Integra went through the data and considered the employer’s specific plan population, the TPA recommended to eliminate the office visit and urgent care co-pays. This was a step toward encouraging employees to choose these options – when symptoms/conditions warrant them – instead of going straight to the ER.

Because of the flexibility the self-funding structure allows, the plan was able to easily implement this change and it quickly resulted in substantial savings.

To communicate what was happening with co-pays, employee meetings were held, benefit booklets were updated and Integra worked directly with plan members to explain the financial advantages of choosing urgent care and office visits for non-emergency conditions. Plan members were very responsive to this change as the cost for ER visits came down to $88,364 for the population earning minimum wage or just above, and the number of visits dropped to 368 in the first year without the co-pays. This cut ER costs by nearly one-third and meant almost $140,000 in savings, as well as 390 fewer cases of ER care. In tracking the annual data, the savings averaged approximately 50% over three years.

Having access to data in a self-funded plan means having the ability to make more informed decisions … decisions that can ultimately benefit the employer, the plan and the employees! Plan flexibility can also be a big difference-maker, as evidenced in this case. By considering the employee population and making the single change of eliminating co-pays with urgent care and office visits, Integra’s client was able to save an estimated $243,000 in just three years.