What can we do about the cost of healthcare right NOW?

I was having a conversation last week with a third-party administrator that we haven’t worked with in the past. We had a lengthy conversation about the state of the industry, the frustration around rising healthcare costs, and the lack of real solutions. It wasn’t unlike the conversations that I’ve been having over the past 20 years in this industry – maybe with a 2016 flavor attached to it.

On the heels of my recent Behavioral Health article I started of thinking about the conversation a bit more and how the opportunity seems ripe to disrupt some of the typical high cost categories. And, being in the football mood that I was yesterday with the Super Bowl, I’m going to suggest that this industry go through a “discount triple check”. The “double check” option was already taken and copywritten by a large P&C insurance company, so I had to think of a 3rd way to check the costs of healthcare.

One of the questions I asked of the TPA contact, was the following:

“Do you have a handle on your claims expense down to the category of care, and do you know how much your clients are paying today as a percentage of Medicare, for the main 3 categories of your network and non-network pricing?” (they are below)

  • In-network (this means the true, primary PPO in-network)
  • In-some-network-somewhere (this means supplemental networks with or without a logo)
  • Out-of-network (this means anything not in the first two buckets, but still may include usual and
    customary, negotiated, or other claims)
  • NOTE: the sum of these categories should add up to 100% of eligible claims

I can tell you from having so many conversations in and around this space, the large bulk of individuals I talk to seem to blend the first two categories and call all of that in-network and may refer to out-of-network as just the claims that didn’t have any pricing of any kind (including usual and customary) attached to them. This will be important as we talk about the “discount triple check” approach.


The “discount triple check” is fairly simple. The new way of measuring discounts is to look at the 3 buckets of claim pricing I listed above, and to examine claims, charges, discounts, and outliers for EACH of the 3 buckets separately. Following, is an illustration of the analysis:

Claim Bucket Claims % Charges % Discount % Outlier %
In-Network (PPO) 86% 74% 52% 4%
In-Some Network (Wrap PPO) 11% 21% 28% 22%
Out-of-Network (UCR, NEG) 3% 5% 9% 31%

By taking the approach above of looking at health claims in the bucket of their actual discount type, we learn a few things. First, we isolate the discount % by discount category. Second, we look at the number or % of claims in each bucket and perhaps more importantly, the % of charges for those claims. I often hear the following statement across this industry:

My out-of-network claims are only about 3% or 4% of the total – we don’t have a problem there.

What is often a reality of the “discount triple check” approach, is two outcomes:

  1. The true out-of-network claims found both in buckets 2 and 3, are really understood, and
  2. The outlier claims are looked at with closer scrutiny across all buckets

How would your claims stack up? What are you leaving on the table? Would you like an analysis of your or your clients’ claims to really understand what is possible and how Medicare-based pricing (reference-based pricing using Medicare) can help you obtain significant additional savings with low to no risk? Are you willing to do the “discount triple check” and identify some market-ready approaches to increase your net discount?

Let’s talk – we have a plan for you.