In an era of nonstop healthcare industry change, employers and brokers are increasingly seeking innovative solutions to manage rising costs while maintaining quality care. Alternative health plan designs that include reference-based pricing have emerged as a promising option, yet misconceptions often obscure their benefits. Let’s explore some common myths and uncover the truth about these modern alternative solutions.
Misconception #1
Alternative Health Plan Designs Are Too Risky
A common concern is that alternative health plan designs expose employers to excessive financial risk and lack cost transparency. In reality, these health plans often use risk management strategies and predictable fee structures, making budgeting simpler and reducing costs. Many employers assume these offerings prioritize cost reduction at the expense of healthcare quality. While they do aim to control costs, they focus on restructuring payments and improving care coordination—not shifting costs to employees.
Industry Insight
Unlike traditional models that rely on negotiated discounts off hospital chargemaster rates, Claritev’s VistaraTM bases payments on an external benchmark for facility claims, often a percentage of Medicare reimbursement, rather than arbitrary pricing. Claritev’s Vistara also couples this benchmark pricing for facilities with proprietary access to the PHCS for Value-driven Health Plan network for practitioner and ancillary provider services. This approach enhances cost predictability and transparency, helping clients who move from traditional health plans to Claritev’s Vistara, which can result in savings of 25-35% on average annually.
Moreover, Claritev’s administrative fee is a straightforward per-employee-per-month (PEPM) charge—predictable and transparent—unlike other solutions that use a percentage of billed charges (that don’t align performance with the large unpredictable fees that erode your net savings). This clarity extends to stop-loss insurance, which can also be more affordable due to this structured pricing, predictable fees, and consistent average percentage of Medicare deductions.
Misconception #2
Alternative Health Plan Designs Compromise Coverage
Many assume that alternative health plan designs utilizing reference-based pricing offer less comprehensive coverage to employees than traditional insurance. Additionally, some employers worry that transitioning to these solutions will be perceived negatively by employees, especially if provider access or billing practices change. In reality, this allows employers to design unique plans to employees’ specific needs, often improving coverage for certain conditions and providing a more flexible, enhanced member experience.
Industry Insight
Employee health benefit satisfaction is closely tied to care access and cost transparency. Many alternative solutions, including Claritev’s Vistara, integrate concierge services and price transparency tools, ensuring that employees understand coverage and avoid surprise expenses. Claritev’s member tool, HST Connect, delivers real-time price estimates based on decades of claim experience to secure the most accurate estimate, empowering members to plan for the costs of treatment.
For instance, if a Claritev member receives a balance bill, the provider settlement process is managed from start to finish to reach a quick and satisfactory resolution – virtually eliminating members’ responsibility for balance bills. We also offer Balance Bill Protection, one of the only products of its kind in the market.
Organizations using these models with proactive employee education report higher engagement and satisfaction.
Misconception #3
Alternative Health Plan Designs Limit Provider Choice
A persistent concern is that alternative health plan designs restrict provider access. While some use narrow networks, many incorporate custom network configurations that balance cost savings with provider access.
Industry Insight
Some designs blend reference-based pricing (RBP) for facility claims with established networks for physician services. For example, Claritev’s PHCS for Value-Driven Health Plan Network includes nearly 990,000 practitioners and over 78,000 ancillary facilities. Accredited for credentialing by NCQA, this network ensures quality and broad access. Employees can also use digital tools to compare providers based on quality, cost, and likelihood of accepting health plan reimbursement rates.
What also sets Claritev’s reference-based pricing apart is its collaborative approach with providers, communicating reimbursement expectations upfront. This strategy has resulted in a 99% provider acceptance rate, enhancing the patient experience.
Misconception #4
Alternative Health Plan Designs Are Too Complicated to Implement
Shifting from a traditional PPO to an alternative health plan design may seem overwhelming for HR and benefits teams, but modern solutions simplify the transition.
Industry Insight
Many providers offer flexible implementation options, allowing employers to gradually adopt reference-based pricing or apply it selectively, such as to out-of-network claims. Real-time reporting, predictive analytics, and risk-scoring models further streamline the process, making it easier to track savings and performance. Some third-party administrators (TPAs) even provide comprehensive claims processing and advocacy support, easing the operational burden on employers.
Misconception #5
Employees Won’t Accept Alternative Health Plan Designs
Many employers believe employees won’t change their healthcare habits, making it difficult to drive engagement with cost-conscious healthcare options. However, the opposite is often true when transparency and education are prioritized.
Industry Insight
Studies show that employees make more cost-effective decisions when given price transparency tools and access to high-value providers. Many solutions, including Claritev’s Vistara, include member education programs, mobile apps for easy provider searches and price estimates, and concierge services to guide employees toward in-network or cost-efficient options. Fast-payment services for providers also ensure that employees aren’t denied care due to unfamiliar reimbursement structures, further boosting engagement.
Misconception #6
Only Large Employers Can Benefit
A common misconception is that alternative health plan designs only suit large companies with complex self-funded pools. However, mid-sized and even smaller self-insured employers can benefit significantly from these solutions.
Industry Insight
Many providers, such as Claritev, support employers with as few as 500 employees across diverse industries like construction, healthcare, education, retail, and transportation. The scalability of these offerings allows businesses to customize coverage based on workforce needs while achieving substantial cost savings.
The Growing Appeal of Alternative Health Plan Designs and Vistara
As the demand for cost control and transparency grows, more employers are exploring alternative solutions to traditional PPO structures. Alternative health plan designs are expected to continue to gain traction. With the right health plan design and offerings, these models can provide:
- Financial Transparency: Straightforward fee structures that enhance cost predictability
- Provider Collaboration: Engagement with providers to ensure fair reimbursement and high acceptance rates
- Member Empowerment: Tools that help employees make informed healthcare decisions
- Cost Control: Effective strategies that reduce spending without sacrificing quality
- Customization: Flexibility to tailor coverage to specific workforce needs
As the healthcare landscape evolves, alternative health plan designs present a compelling solution for organizations seeking to balance cost management with quality care. Understanding the facts behind these solutions can help employers make more informed decisions about their healthcare strategies.
