Many Americans rely on employer-provided health insurance to pay for medical care, but insurance doesn't always guarantee affordability. From 2009-2019, families’ health insurance premiums increased 54%, and workers’ deductibles doubled, on average.1
Rising health care costs have led a growing number of self-insured employers — including International House of Prayer (IHOPKC) in Kansas City, Missouri — to circumvent a traditional health plan network strategy by looking for alternative network options.
In January 2019, leaders at the faith-based organization and their benefits consultant engaged Cerner to help reduce costs and improve access to care for health plan members. Through its benefits administration — or third-party administrator (TPA) — services, Cerner identified and negotiated a direct contract with a Kansas City health system to cover most health care services, plus additional direct contracts for urgent care and chiropractic services not available through the local health system.
Before working with Cerner, the organization used reference-based pricing to cover members’ care at hospitals and reimburse services at pre-established rates, relative to Medicare rates. Without a direct contract, however, providers and health systems didn’t always accept the reference-based reimbursement as full payment.
“Previously, if there was a gap between a health system’s charges and the maximum allowable coverage, our employees sometimes had to pay the difference, which was unacceptable to us,” explained Joseph Taylor, senior director of operations.
The direct contract establishes mutually agreed-upon reimbursement rates, as a percentage of Medicare rates, which benefit both the health care organization and IHOPKC.
IHOPKC’s members utilized narrow-network providers for 76% of care in 2019, helping the direct-contracted health system expand its patient base and grow revenue. The arrangement created new opportunities for the health system to support community members and advance its population health initiatives, too.
The employer’s health plan and its members saved 16% on overall health care, including 29% when using direct-contracted facilities in 2019, compared to what they would have paid with a broader regional preferred provider organization (PPO) network.
The direct contract also protected IHOPKC members from more than $140,000 in balance billing.2 The savings yielded additional benefit in the form of members’ peace of mind.
The plan provides IHOPKC employees with newfound support and convenience, too. Care navigators from the contracted health system help members identify providers, schedule appointments and coordinate care. If members have questions about their health plan or medical bills, an IHOPKC-dedicated Cerner HealthPlan Services associate answers their calls — in just 15 seconds, on average, in 2019 — and provides answers specific to their health network plan.3 Cerner HealthPlan Services further supported positive member experiences with 99.95% IHOPKC claim processing quality and 99.98% financial accuracy.4
In 2019, IHOPKC offered employees four health plan options — two narrow-network plans and two broader-network plans. After realizing savings and new benefits with direct-contracted plans in 2019, IHOPKC leaders solely offered narrow-network plans for 2020.
“Cerner helps us better manage costs, provide high-quality health benefits, realize significant savings and improve the customer experience for our employees,” said Taylor.
1 Claxton, Gary, et. al, "2019 Annual Survey Employer Health Benefits," Henry J. Kaiser Family Foundation, accessed June 30, 2020, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2019
2 From January 2019 - December 2019, calculated by subtracting the sum of members’ allowable care charges from the sum of providers’ care charges. Without a direct contract, members would have been billed for the difference between these figures.
3 Average speed to answer IHOPKC members’ calls from January 2019 - December 2019
4 From January 2019 - December 2019 for IHOPKC claims. Claim processing financial accuracy = (dollar amount of audited claims paid accurately) / (total audited claim dollars paid). Claim processing quality = (claims processed correctly) / (total number of claims processed).