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As US healthcare costs accelerate toward a familiar position of outpacing overall inflation, no one is coming to save employers, said Marybeth Gray, an executive in health benefits consulting for Marsh McLennan agency. But being alone doesn’t mean having no power to change things.
At the CFO Leadership Council conference in June, Gray said the benefits and finance teams can lower costs with insurance carriers and pharmacy benefit managers (PBM)—no matter how big they are—with more engaged and informed negotiating.
But first...A company can’t make an informed decision on benefits without the CFO, Gray said. “We need to know the aggregate business temperature to know what to do on the benefits side,” she told CFOs, and for that “we need you at the table.”
Hello, Goliath. Yes, three PBMs control over 80% of the market, Gray said. But they still want and need your business, she told CFO Brew, so you can negotiate better deals if you know how they design their formularies. One example: Some PBMs have tried to charge the name-brand drug price for a generic medication because it was the only one in a certain class of drugs. Gray said that her agency’s contract doesn’t accept that. “We said, ‘That is absolute nonsense,’” she said. “If it’s a generic, it’s priced as a generic.”
Checking in. Employers should keep their benefit providers accountable throughout the year—not just at renewal time. “[Employers] have to go back to the carriers and say, ‘Having six people enrolled in the diabetic management program out of 300 is a fail—it’s an F,’” she said.
Even if your health plan is fully insured, you can still make sure that your carrier isn’t pocketing too much of your premium, according to Gray. Ask your carrier for the medical loss ratio, she said. They should be spending about 80% of your premiums on actual medical care.
“If 50 cents on every dollar you give them is spent on medical care,” she said at the conference, “you should get money back.”
One client’s dental insurance plan was set to increase 20% (despite the insurer spending only about half of the premiums on coverage) before Gray’s team called it out.
“You have to know what the right questions are to ask,” she said. “We’re trying to create amicable tension so that our employers are not paying too much.”