As health insurance costs are rising at their fastest level in nearly 20 years, it’s important to have a clear idea of which metrics to track to ensure you’re seeing a good return on investment and that your employees are satisfied with their health plan.
Having the right metrics can also aid in negotiating better terms during the insurance selection process. This knowledge is essential not only for budgeting, but also for planning benefit offerings that meet the needs of your workforce and your firm.
While the goals for your health plan will differ from other employers, there are a number of common metrics that organizations track to gauge health plan performance. Your insurance company tracks the following metrics, and so should you:
Cost Per Member
This is typically calculated by dividing your plan’s total health care outlays (in a given month, for example) by the total number of members covered in the same period.
If you do this month after month, you can identify cost patterns and where you should focus on reducing costs without compromising quality of coverage and care.
Loss Ratio
This is calculated by your group plan’s total premium divided by how much the plan pays out in claims. The ratio evaluates the health of your plan and is a key factor used by insurance companies when calculating next year’s premiums.
If your plan’s loss ratio is lower than the industry standard, that information provides leverage for you when negotiating premium increases and coverage changes.
You may also be able to forecast future premium increases by tracking your current and historical loss ratio.
Employee Utilization
To track how often your employees use their health plans you’ll want to calculate the average claims filed per member. Divide the total number of claims submitted by the number of covered employees.
You can compare your average to the industry average utilization. If your staff are using their plans less frequently than their peers at other companies, it could point to issues, such as the plan being too costly, either via the employees’ share of premiums or out-of-pocket costs.
By digging deeper into claims, you can see where your workers are mostly going for health care services. If they are largely opting for high-cost providers, you can take steps to try to explain the long-run benefits of choosing another provider that may cost them — and the plan — less without sacrificing coverage.
Network Quality and Response Times
It’s vitally important that your staff don’t feel they are stuck in a health plan that requires them to jump through hoop after hoop to get coverage.
You can get an idea of how well your plan’s network is meeting your employees’ needs by measuring the quality of your network. Network sufficiency, as it’s also called, consists of a number of metrics and factors:
- The number of providers in the network,
- Accessibility to medical care,
- Claims response times,
- Number of medical specialties available,
- Appointment wait times, and
- Costs of out-of-network care.
You can use this information to discuss options with us and your carrier for expanding coverage to help your employees better access care.
The Takeaway
There are also other important metrics that you can use to get a sense of how well your plan is performing and serving your employees.
Health plan metrics provide you with valuable insights into your plan’s effectiveness and whether or not its expenses are running hot. Having this information can help you work with us and your group health insurer to craft a plan that meets the needs of your workforce.
One word of caution: If you plan to make changes based on what you find, it should be done with prudence and caution as you don’t want to compromise plan coverage or employee health.