As a broker, you know that the provider network’s job is to negotiate rates with providers throughout the network so that the insurer, employer and patient pay less for each visit or procedure. But are these negotiated rates actually what they seem? Often, they are based on discounts. For example, a contracted provider will give all members of a specific network 40% off of fees for care from that provider.
The problem with traditional network discounts
There are a variety of problems associated with these traditional provider network discounts, including:
- False sense of savings—While a 40% discount may sound like a great deal, the contract likely doesn’t specify what the original cost of a visit or procedure is, so sometimes 40% off of one provider’s fee is still a higher price than 20% off of a different provider’s fee for the exact same service. In addition, providers can bump up the price of their services or tack on additional costs without violating their contracts. When employers review discount reporting, it shows 40% savings, and while it feels like money saved, it often isn’t.
- Inaccurate comparisons—When comparisons are based on the overall network discount, there is a threefold problem:
- Networks can calculate savings rates differently
- A network can have a higher average discount if it uses more high cost/high discount providers
- Some provider networks exclude high value/low discount providers
|Average billed comparison for major joint replacement|
|Facility||Average Charge||Discount||Total Allowed Amount|
|Peer Facility #1||$53,982.00||33%||$36,167.94|
|Peer Facility #2||$65,854.00||40%||$39,512.40|
|Peer Facility #3||$27,500.00||0%||$27,500.00|
In the example above, comparing just based on the discounted percentage wouldn’t give you an accurate picture of the lowest cost option.
- No transparency or predictability—It’s very difficult for employers to help their employees “shop around” when it comes to healthcare costs. Because the discount doesn’t correlate to an actual price that patients can compare, there is no transparency or predictability of true costs until the bill is received.
- No inflation protection—Many contracted discounts offer no inflation protection for the employer or consumer. A provider can increase the base prices year over year, making the discount percentage mean less and less savings. A contracted discount should cap the amount that a provider can raise their rates.
A better cost-savings approach
A more effective way to control costs is for provider networks to negotiate lower fixed costs for each visit or procedure that a provider offers. This is the only way to provide true savings for employers and consumers, as well as accurate comparisons, transparency and inflation protection.
HPS is striving to change the narrative in healthcare today by delivering savings and simplicity to employers and consumers. If you’re not familiar with HPS, we offer the most comprehensive independent provider network in eastern Wisconsin, as well as our exceptionally simple one-statement, credit card-like billing experience for patients (the SuperEOBⓇ). Our employers and their employees also benefit from excellent network cost savings and payment assistance (including zero-interest payment plans).
Here are a few ways we’re helping employers and consumers take control of their healthcare:
- 70% of our total claim dollars are via a negotiated fixed fee
- 97% of all of our provider contracts have inflation protection built-in
- We have contracted with providers in two-thirds of Wisconsin counties
- 96 hospital facilities and 22,600 individual providers offer negotiated rates through HPS
- 94.6% member utilization in our core service area
- We partner with high-value providers all over the state
In addition, we are partnered with NOVO Health to offer bundled payments for common procedures like lumbar fusions and knee replacements. This saves employers and patients thousands of dollars and delivers predictability and peace of mind.
HPS isn’t just another provider network. We do more than negotiate discounts and rates – we simplify the experience for all involved. We are committed to providers, employers and individuals alike, and:
- Do our best to meet or exceed payment turnaround time of 20 business days for client claims (in 2018, we averaged 14.7 days for full payment)
- Are constantly striving to improve our network by adding new providers via improved pricing and unique cost-saving solutions like telemedicine and bundled services
- Offer interest-free payments, patient advocacy and the SuperEOBⓇ
- Are constantly expanding our network
- Offer continued value through effective contracts that focus on the employer’s needs first