Client Stories | April 8, 2022

Significant Savings from Managing Out-of-Network Claims

Out-of-network provider reimbursement can be an obstacle to effective healthcare cost management. Healthcare networks generally don’t police those charges very well. Plan sponsors can use direct provider negotiations to manage out-of-network claims.

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What direct provider negotiations can achieve: a client story

The issue

The sponsor of a mid-size, self-funded group health plan was concerned about participants’ use of out-of-network services because billed charges for those services can be as much as 10 times the discounted costs paid to in-network providers for the same services. The high utilization rate — 10 percent out of network — was undermining cost management efforts.

Use of out-of-network services also increased participants’ out-of-pocket costs. Through balance billing, they were responsible for uncovered costs for claims not addressed by the No Surprises Act.

Our approach

Based on our recommendation, the plan decided to use a specialized out-of-network repricing service. The service vendor negotiates directly with healthcare providers. It uses Medicare fee allowances as the basis for the negotiations. Provider negotiations can also help manage No Surprises Act claims and avoid Independent Dispute Resolution.

We have a preferred provider relationship with the recommended vendor. That means the client benefited from significantly reduced fees that were lower than most fees charged by other vendors that offer a similar service.

After we helped the client implement the service, we created communications to inform participants. Our ongoing assistance includes monitoring the vendor’s service and savings.

The result

Between mid-June 2021, when the plan started to use the new service, and early March 2022, the plan’s savings were more than $2.5 million, reducing total spending on out-of-network claims by approximately 50 percent.

In addition, participants’ savings totaled $498,000 over the same period.

Claim appeals were significantly reduced because most were resolved by the vendor with no balanced billing.

The plan sponsor and the plan participants are extremely grateful for the significant savings.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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