Insurers, brokers thwart cost cuts

The Healthcare Performance Management Institute reports that insurers and benefits consultants are getting in the way of employer efforts to reduce healthcare costs, according to Healthcare Finance News.

HPM Executive Director George Pantos, citing from a report entitled "Barriers to Reducing and Controlling Healthcare Costs," noted that insurers and consultants routinely hide critical data about healthcare spending from their own clients. Lacking such data, employers have little ability to target areas of expenditure that lead to premium increases.

"Insurers and brokers have little incentive to help their clients reduce spending on health benefits," Pantos said. "After all, most brokers and consultants are paid on commission--so the higher the cost of the policy they sell, the more money they make." As a result, there is no motivation for insurers to cut their own costs.

"Generally, most broker and consultant compensation arrangements are calculated annually based on a percentage of gross earned policy premium volume--while a handful offer flat fee arrangements," read a portion of the report. "Brokers and consultants may also receive additional annual compensation based on sales volume levels. This fee structure often conflicts with incentives for brokers and consultants to improve plan performance."

But if employers recoup healthcare spending data and evaluate it via independent performance management software, employers can cut as much as 30 percent from their healthcare bills, noted Pantos.

For more:
- read the Healthcare Finance News article
- read the HPMI report

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