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Situation

A large auto parts distribution company saw their health benefits claims rising. They needed to find ways to reduce their costs to maintain a healthy bottom line and continue to grow their business.

Solution

During the broker-RFP process, Oswald identified numerous areas of improvement that could be implemented in one to two years. Given the company’s size and claims experience, we quickly realized that the most impactful and sustainable approach would be to address the complex conditions and specialty pharmacy costs of the plan. During our plan assessment we identified the following:

• 3% of their population drove 57% of their claims
• Cancer was the leading diagnosis
• They had two punitive lasers on the stop-loss insurance
• There was no independent clinical review of their pharmacy program (outside of the medical carrier’s internal teams)
• No consumerism within the plan – employees did not know how to best utilize their own health insurance plan

To address these findings, we implemented the following changes once we were formally engaged with the client:

• Laser Removal: Negotiated existing lasers for heart transplant and stem cell treatment out of the stop-loss contract. The new contract has a no-new-laser provision.
• Brought on an independent clinical review and employee advocacy team to help treat complex conditions quicker and give the employee a better experience
• Switched to an independent pharmacy benefit manager and took on a more claims-driven model (driving drug costs down), rather than the existing rebate-driven model (drugs are more expensive but the company gets rebates back from carrier)
• Reduced Fixed Costs: Reduced administrative fees for a new TPA agreement.
• Reduced Claims Costs: Achieved greater network discounts through new TPA network and increased rebates.
• M&A Due Diligence: Performed due diligence on five add-on acquisitions for benefits, 401(k), and property and casualty over the first 12-months of our partnership.

Results

More than $2.3 million in value was realized within the first two years of our partnership. Oswald continues to look for ways to reduce costs and flatten the trend curve.

View more Success Stories here.

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