About WISHRM

By Melina Kambitsi, Ph.D., Senior Vice President, Business Development and Strategic Marketing

When you’re picking a provider network for your employee health plan, it’s vital to get a “disruption report” that helps you compare and contrast provider networks.

Unfortunately, some networks produce disruption reports that emphasize scenarios where they always come out on top. But that approach is unlikely to produce cost projections that translate into real-time savings.

What’s A Provider Disruption Report?
A Provider Disruption Report shows how switching networks will impact your bottom line. Also known as a “claims repricing report,” it should explore:

• How a network change will impact covered employees and family members based on their current use of doctors, hospitals and other health services.
• Which health systems are in-network or out-of-network.
• The savings that will result from switching networks. Because methods of calculating savings will differ, it’s important to get an “apples-to-apples” projection.

Getting the Right Information
Ideally, a disruption report should help you compare and contrast provider networks. You want to know how networks differ and what that means to you in health plan dollars.

Using the “gold standard” process for comparing networks is likely to produce the most reliable results. Here’s how it works:

1. The employer provides 12 months of claims data, based on how covered lives actually used health care services. This data will show what types of care were used and which doctors, hospitals, health systems provided that care.
2. The employer’s submitted claims are sorted by in-network providers based on each provider’s tax identification number.
3. Each network provides a database of six months of actual claims, which are also sorted by in-network providers based on each provider’s tax identification number. These claims show the actual savings produced by the discounts included in contracts for health care services.
4. The employer’s data is analyzed based on the network’s aggregated savings. This will project what savings can be expected based on covered lives’ actual use of services.
5. The combined results reveal the value of each network’s agreements with providers. The results should show both the overall discount achieved by the network and the dollars that the employer can expect to save, based on submitted claims. 

Ask the Right Questions
Unfortunately, many networks refuse to provide reports that meet this gold standard. Instead, they may use a “proprietary” disruption report process that favors their own networks.

Asking these questions can reveal vital differences between networks and their savings projections.

1. Is the network still stuck solely on discounts in its negotiations with providers? Good networks are moving beyond discounts to explore pricing approaches that are easier to compare and verify. For example, a strong network should work toward pricing that is based on a set percentage above Medicare rates, which gives you a built-in standard for price comparisons. Your network should also offer bundled payment options, where a single price that is known in advance covers many different services for an elective surgery.
2. How are total costs calculated? Check the process against the gold standard.
3. Does the cost evaluation use billed charges or paid charges?  The network savings delivered by the network’s provider contract should remain the same either way; however, using billed charges will result in lower projected total savings than using the paid amount.
4. Is the impact of your plan design included in the savings projections? Your plan’s excluded services, patient copays and co-insurance will greatly impact your total charges so your plan design should always be figured into savings estimates. When it is not, network savings are likely to appear artificially high.
5. Did the evaluation use the average area contracted rate or a specific rate for a specific provider? Using the specific rate charged by specific providers is always best. Savings should be calculated based on the doctors, hospitals and health services that your employees and family members are actually using. Some networks will instead use an average that includes their “best” savings or discount rates, even when they are not relevant based on actual usage. 

 
Make Sure It’s Not Too Good to be True
The provider disruption report is a vital step to finding out whether a network can live up to its promises. Remember, it’s up to you to make sure you’re not misled by reports that are simply too good to be true.