How CFOs can better forecast employee healthcare costs

Written on Oct 12, 2017

By Jessica Salerno, OSCPA content manager

The trick to effectively forecasting health care expenses could be transitioning to a value-based payment model.

Shaun_Young“The easiest way to think about it is if you need a knee replaced, the doctor will do these procedures and submit the bill, and whatever they submit they get back, and it’s called a bundle payment,” said Shaun Young, CEO of Zarmacy. “Whereas in a value-based payment, a doctor that’s in a bundled contract will only get $25,000 dollars, no matter how much or how little they do, so they’re really incentivized to provide efficient care.”

“So, if you implement that type of a bundle program inside of an employer, an employer can not only reduce their cost, but also sustainably predict what their costs will be and actively forecast their expenses for the coming years.”

A fee-for-service method incentivizes doctors to do more procedures, tests and scans, Young said.

“Whereas in a fee-for-value world they really care about what happens to you,” Young said. “Like how your diabetes progresses, how your surgery progresses, and it’s not so much the volume-paced type of healthcare.”

Young will present “Implications of New Payment Models: From Fee for Service to Value-Based Payments” on Oct. 19 at the Columbus Health Care Summit. He will examine the implications of achieving value-based payment target levels and discuss developing action plans to address changing payment structures.

Young said he hopes to get across what value-based healthcare is and what it isn’t, along with providing some examples of how other companies have done this method in the marketplace.

“There are ways to start controlling your healthcare costs and value-based healthcare is one of many,” Young said. “I think it’s one of those things that sounds like a black hole, but there are very actionable steps employers can do to start taking control.”

Register for the Health Care Summit today!

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