In this article, Cheryl Matochik, Managing Director for Market Analytics, and Geoff Kuhn, Senior Director, outline the challenges employers face with limited visibility into health care costs from their network providers and third-party partners, a situation compounded by inflation, legal pressures, and federal transparency mandates. To tackle these issues, employers are increasingly engaging third-party audits and revisiting vendor partnerships to improve cost control and health care quality for employees.
Traditionally, brokers and consultants have used “discount analysis” to gauge the cost-effectiveness of networks, relying on standard discount data to compare network pricing. However, this approach can be misleading, as hypothetical discount percentages don’t always translate to actual savings, given the variability in service prices among providers. With the advent of the 2020 Transparency in Coverage (TiC) rule, more granular and real-world data is available on negotiated provider rates, presenting an opportunity to improve cost transparency. However, this data is often inconsistent and requires substantial processing to be usable.
Employers and brokers can leverage TiC data to create more accurate cost models, compare actual provider costs, and potentially inform employee steerage strategies, steering them toward cost-effective providers. This approach, while complex, offers a more comprehensive view of health care expenses than discount analysis alone, allowing employers to make more informed decisions about network selection and cost control.