Self-funded health plan saves employers 20% more than major plans: analysis

Imagine360, a self-funded health plan out of Pennsylvania, reduces healthcare costs significantly more than major national carriers, an actuarial analysis by Axene Health Partners found.

The study found that employers saved 19.8% more than comparable commercial health plans in five metro markets: Atlanta, Dallas, Indianapolis, New York City and Tampa.

“There is not another solution in the market that an employer can purchase that comes even close to saving what we save in the first year,” said Chris Cigarran, Imagine360 chief commercial officer, told Fierce Healthcare.

The analysis also revealed 25% to 67% fewer Imagine360 clients exceed stop loss insurance deductibles, ranging from $25,000 to $250,000, because Imagine360’s model leads to a reduction in high dollar claims.

Lead actuary for the report David Axene said he was pleasantly surprised by the results.

“I was skeptical because I’ve been involved with other organizations … that were promising substantial savings but they weren’t getting it,” he said. “The idea that somebody who was in this space would retain me, the skeptic, to look at this, there’s a little bit of risk in that.”

He said the report focused on a proprietary database of government and purchase data, matching up healthcare services and comparing what Imagine360 and a national carrier paid. For example, Axene could use the database to calculate the average hospital payment of an appendectomy for a national carrier in those metro areas.

The analysis looked primarily at inpatient, outpatient and professional services, and the best outcomes for Imagine360 came from the inpatient and outpatient side of the house.

Imagine360 contracts with providers across the country. They also use reference-based pricing, a pricing strategy where the employer and third-party administrator set a flat rate price for healthcare services instead of contracting with a traditional payer and negotiating rates with a provider.

“We have an inherent belief that the current system, supported by big carriers, is fundamentally failing,” said Cigarran. “It’s the carriers’ responsibility to negotiate rates, and without prescribing intent, they have misaligned incentives to do that.”

Carriers have little incentive to compete on price, he said, because the vast majority of providers are available in-network and there is no transparency on price or quality. Imagine360, however, will contract with systems guaranteeing below market rates for direct partnerships and higher volume from employers.

Hendry Marine, a holding company for maritime businesses, switched to Imagine360 from a national carrier in 2019. Since then, rates have largely stayed similar, and the company has saved $21.9 million from billed charges, said Stephanie Koch, director of human resources.

“We haven’t had to raise the deductibles or change the plan design like you typically would in a traditional healthcare model with a BUCA (Blue Cross, United Healthcare, Cigna and Aetna plan),” she said, adding out-of-pocket expenses are also lower for employees.

Additionally, Koch said the company has more access to transparent data as a result of the switch to Imagine360. After a plan review in 2021, she noticed there was low utilization for preventive wellness benefits, despite 100% coverage through the Affordable Care Act. This was concerning to Koch because she believed shipyard workers need those services.

“We can tell that people were taking or not taking care of themselves, and there could have been a very catastrophic event had we not had data,” she explained.

Hendry Marine decided to bring an on-site primary care clinic equipped with a nurse practitioner and medical assistant to the shipyard twice a week. That decision has saved lives, said Koch.

Switching to Imagine360 allowed the company to switch from CVS Caremark to another pharmacy benefit manager, saving 30% on costs. A pharmacy benefit manager analysis was not included in the actuary report, though Imagine360 will help clients with navigating the space.

And because data showed diabetes prescriptions are a top drug utilized by workers, a diabetes program was implemented for members, which includes continuous coaching.

Axene Health Partners evaluated nearly $3.5 billion of healthcare claims enrolled in commercial health plan from January 2021 through August 2023.