I recently read an article in PR Daily where Ray Day, Vice Chairman of the Stagwills Group Marketing and Communication Agencies had some very relevant things to say about the current crisis.

“Just like in sports you need to have two parts of your team running in parallel: one playing defense, focused on the crisis and the other playing offense, getting ready for the future.” He goes on to say that your ”defense team” includes those managing the current crisis, and at the same time with just as much energy he recommends building an “offensive team” that looks to the future and is not involved in the current crisis – and it needs to be balanced. “If you pour 95% of the attention into putting out today’s fire, you won’t create that hope for the future.”

Which brings me to my subject matter in this article. There are things that need to be done for the “defense” right now with respect to health plans:

  • Amend your plan document regarding claim costs associated with COVID-19. This is everything from covering testing, to telephone calls to doctor’s offices, to covering benefits while in the hospital, etc.
  • Make sure your plan document is current with respect to terminations, layoffs, and furloughs.
    • Stop loss carriers need to be aware of changes in your plan so there is no loss of coverage due to exclusions.
  • You may see a short-term reduction in claims due to employees and the family members stay at home and not getting routine appointments or elective surgeries so keep accruing – it will catch up.
  • Don’t utilize claim reserves to fund current expenses.
  • Add telemedicine to your plan if you don’t have it already.
  • Implement a specialty drug program that can dramatically lower or eliminate the cost of these expensive drugs.

On the “offensive” side of the plan, here are things that you should be doing to keep costs down now and in the future:

  • Reevaluate the way your plan is constructed and consider an unbundled plan.
  • Evaluate the unbundled plan vendors in this space. You only want to be working with Best In Class.
  • Eliminate the PPO. Whether or not you think you have the best provider discounts in your plan, they are meaningless when prices go up.
  • Implement a Reference Based Pricing (RBP) approach for the payment to providers. This reimburses providers on a Cost-plus, or Medicare-plus basis. The selection of the right RBP company is critical to the success of the program.
  • Evaluate your Pharmacy Benefit Manager (PBM) and look to a PBM that has zero spread pricing, and 100% of rebates paid to the plan.
  • Work with reinsurance companies that understand how to price premiums and factors utilizing RBP.
  • Make sure that you are working with a Broker/Consultant/Advisor who has lots of experience with these types of plans.

In a conversation with an underwriter today, they are expecting claim costs to go down for a period of time due to the typical claims that might otherwise occur being put on hold because we are isolating. But they also fear that with many hospitals not at capacity now or later, that when the crisis begins to taper off hospitals will increase their prices due to the loss of revenue.

Playing offense and defense is critical to the financial success of your health plan. What are you doing on both fronts? Are you simply hunkered down and accepting your renewal increase because you’ve got other things that you are focused on? Or, are you looking for ways to do things better in the future when something like COVID-19 or any other crisis hits us and your revenues, expenses, and profits are affected?

If you want any advice or assistance on playing both sides of the ball, you can reach me at 970 – 349 – 7707 or at frank.stichter@strategichpc.com

Good luck, stay safe, and stay healthy.