May 04th 2021

Self-Insured Employers: Lowering Medical Costs and Improving Care

Employers and their employees get the most value and best outcomes from their health plans when patients get the right care, when and where it's needed. Unfortunately, that doesn't always happen.

Healthcare Waste

Waste accounts for 25% of total healthcare spending in the U.S., and costs $760 billion to $935 billion every year. A significant portion of that waste ($76 billion to $101.2 billion) is due to overtreatment or low-value care.

Mitigating Top Cost Drivers for Self-Insured Employers

Cutting medical costs is a top goal for executives when they make group health plan decisions for their organization. But combating healthcare waste> should be just as important right now, when many employees will be seeking care in the wake of the first wave of COVID-19 vaccinations.

One common way employers seek to curtail medical costs and gain efficiencies is by self-funding their health plan. This means that the employer actually pays the medical expenses for their employees, and the insurance company administers the benefit program for them. This is different than fully insured health insurance, where the health plan pays the medical expenses and administers the benefit program. You may be surprised to learn that 67% percent of employer-covered workers were in a self-funded plan in 2020, which was significantly higher than in 2019 (61%).

67% of people are paying for their own health insurance in 2020

Self-insured employers seek to control medical costs across the healthcare continuum, particularly in specialties such as:

  • Musculoskeletal care
  • Lab tests
  • Specialty drugs
  • Radiology
  • Cardiology
  • Sleep disorders
  • Medical oncology
  • Radiation therapy
  • Post-acute care

Utilization Management Lowers Medical Cost Trend for Self-Insured Employers

One tool at the disposal of self-insured employers to lower medical costs and improve care is utilization management. Such programs can eliminate tests, treatments, and procedures that research has shown are ineffective, unnecessary, dangerous, or unusually costly.

Utilization management programs can also identify duplicate services, uncovered benefits, and incorrectly coded claims to produce additional savings for self-funded employers.

Improving Self-Insured Employers' Patient Care Quality with Utilization Management

A strong utilization management program also improves the health plan member (employee) experience by ensuring that all care is based on a patient's current clinical information, history, and presentation, which prevents repeating previously unsuccessful treatments or testing. Utilization management programs follow evidence-based clinical guidelines to support sound medical judgment and confirm that care is medically appropriate.

Clinical guidelines help physicians determine which procedure best meets the patient's needs while avoiding unnecessary exposure to potentially harmful substances such as radiation and contrast material, or side effects from treatments.

Clinical guidelines are also a foundation of the prior authorization process that helps improve patient outcomes. Following guidelines makes obtaining prior authorization easier and more efficient for clinicians and administrators and helps ensure that the proposed care is necessary and appropriate.

Clinical guidelines are typically based on:

Clinical Guidelines

  • Criteria established by medical societies
  • Scientific evidence published in peer-reviewed medical literature
  • Input from practicing physicians and academic experts.

In the past, self-insured employers spent too much on overtreatment and low-value care, but utilization management is increasingly helping them to lower medical costs and improve care by eliminating waste and ensuring quality outcomes.

Learn how you can lower medical costs for your self-insured plan while improving care for your members with utilization management solutions.