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The Evolving Role of the Carrier in Healthcare




From negotiated provider discounts to claims administration, employers have come to rely on the services and protection offered by health insurance companies. But in recent years, carriers are beginning to recognize that discounts alone will never enable them to influence the total cost of healthcare or how care is delivered to their members.


Americans are increasingly interested in more rational, more predictable and more affordable healthcare benefits. This demand, coupled with proposed federal legislation that addresses these concerns, has created a new world order around U.S. healthcare.


As a result, some insurance carriers have begun to rethink their role and forge closer relationships with providers to accomplish three key objectives:


  • 1) Provide an improved patient and family experience when care is needed
  • 2) Support the physician experience of caregiving – as well as streamlining the insurance and administrative burdens placed on them – to improve clinical outcomes
  • 3) Demonstrate a lower total cost of care, which includes both unit cost control and clarity around who is delivering the best clinical outcomes


These issues can be overwhelming at times for companies trying to navigate the healthcare marketplace and provide the best care for their employees. Here are some strategies employers can utilize to push carriers to deliver a better and less expensive healthcare benefit.


Seek Out Provider Groups That Welcome Accountability

Network size and traditional provider discounts are increasingly falling out of favor, with more employers looking for ways to forge relationships with high-performing, lower-cost providers near their employees’ homes.


One way to do this is insist that the insurance company demonstrate that a subset of their network will agree to be accountable for quality care delivery, as well as willing to assume risk for the year-over-year costs. Instead of a traditional discounted fee-for-service approach, employers should explore pricing that is based on a percentage of Medicare reimbursements.


Moving from traditional fee-for-service to a value-based model may mean that providers are offered bonuses or pay-for-performance compensation. This kind of model should provide increases to compensation based on rigorous shared-savings arrangements.


This approach requires employers to understand who is delivering the best care so that they can build communications and design incentives around those care providers.


The impact of this transformation will affect local provider relationships and reinforce the importance of the primary care provider’s role in improving outcomes and controlling costs.


Promote Clinical Outcomes-Based Narrow Network Options

For years, narrow network plans have offered deeper discounts by eliminating certain local providers from their networks. Today, narrow networks must focus on bringing concrete value to employers and patients in both medical outcomes and lower costs of care


Some examples of this model include Centers of Expertise, Patient Centered Medical Homes and Accountable Care Organizations (ACOs), but these options must be supported by a strong primary care model that oversees all patient care.


On the spectrum of value-based care, the most successful models promote and reward primary care physicians that display evidence of thoughtful care, reliance on peer teamwork, evidence-based care models and a “sticky” relationship with patients and their families.


In geographies with higher concentrations of primary care physicians, the overall cost of care is 10 percent lower.1


Effective primary care physicians are also generally well-equipped to diagnose most illnesses themselves, preventing patients from needing care from more expensive specialists or emergency room physicians. 


And when treatment by specialists is warranted, primary care physicians – with empirical data on high performers – can better guide their patients through that part of the healthcare delivery system.


Think Local When It Comes to Solutions

Hospital ACOs hold great promise but require years of effort to forge an efficient, patient-centered model2. High-performing, local patient-centered medical homes willing to assume some financial risk are likely to yield better costs and better care in the short term.


Employers increasingly need access to information on which providers have the best record of outcomes for specific types of surgeries or procedures. For example, a hospital may have a better track record in the community for orthopedic procedures but may not have lower costs or optimal patient outcomes for cardiac procedures.


This kind of local-specific data can help employers make better-informed decisions about performance and value-based care, as well as determine where their healthcare dollars are best spent.


As the available data on healthcare cost and quality advances, there will be a clearer picture of the wide variability — not just from hospital system to hospital system, but among hospitals within the same system and the same market.


There is ample evidence that among hospital systems prices can vary nearly threefold3, ranging from 150 percent of Medicare rates at the low-end to 400+ percent at the high-end.


Consumers and their physicians must have current, clear data to make informed choices about their health and care options.



Our healthcare delivery system is undergoing a transformation, and the evolving role of the carrier must be at the center of that change. Fueled by rising costs and vast increases in our access to health data, carriers are faced with the need to re-define their role and forge trusting, collaborative relationships with providers and employers that maximize benefits to all sides.


This is not an easy task. The historical reality of the carrier’s role means that after spending decades building an industry based on negotiating deeper and deeper discounts with providers, carriers must now adapt to a paradigm that requires they rethink not only their role but how healthcare is delivered to patients.


To fully reap the benefits of this evolving model, employers should look to value-based care solutions to provide the best and most cost-effective care for their employees.


Provider and network decisions must be supported by local solutions and available data, as well as by embracing tried-and-true solutions like encouraging employees to develop a recurring relationship with primary care physicians and rewarding those providers for quality care.


Ultimately, carriers, hospitals and providers must work together to reimagine our care delivery support model so that it better meets the needs of patients.





1Health Affairs, Primary Care: Can It Solve Employers’ Health Care Dilemma, 2008.

2NEJM Catalyst, Explaining Sluggish Savings under Accountable Care, 2018.

3White, Chapin and Christopher Whaley, Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative, 2019.