The Patient Protection and Affordable Care Act didn't end theinsurance industry in America, despite predictions to the contrary.But it did usher in a variety of changes that affect benefitsprofessionals. No longer able to compete primarily on price,benefits market participants are working to add other kinds ofvalue by becoming clients' go-to source for guidance on medicalcosts, supplemental coverage and everything in between.

No point in competing on price

It used to be that the services provided by David Contorno, CEOof Lake Norman Benefits, Inc. in Charlottesville, North Carolina,included shopping around when it was time for a client to renewhealth coverage. No more. “That's one thing that we have changeddramatically,” Contorno says. “We can't save money by shoppingaround. The insurance company isn't allowed to ask a lot ofquestions about the company, so if they come in too low, there willbe a big cost bump the next year. Your rates are based onpopulation health care use. You're going to pay what you should bepaying.”

Riding herd on medical costs

Instead, Contorno's firm focuses on a different question: Howcan we change the cost and quality of the medical care thateveryone is going to consume, no matter how healthy their habits?“In no way am I suggesting that we sacrifice quality for cost,”Contorno says. “But we still need to educate and incentivizeconsumers to be better consumers of health care. When qualitydoesn't matter, go to the lowest-price place. You get the same MRIwherever you go.”

There are lots of possible tools to help accomplish that,Contorno says, with the choice largely dependent on how muchengagement leadership is willing to offer. “We can arrange ahigh-quality telemedicine service,” he says. “Many of the things wevisit the doctor for can be handled via telemedicine. Is the CEOwilling to be the first person to use this?”

His firm also helps employees understand that what the companyhealth care plan pays out this year affects costs next year, andthe company provides workers with an app that automatically pricechecks prescriptions to see if a better deal is available nearby.The same app offers users telemedicine when they are in theemergency room, to potentially save the hassle and cost of hospitalservices.

Employers can ratchet up employees' incentive to use lower-costcare with reference-based pricing, Contorno says. “You can makepeople pay the difference between a reasonable cost for a medicalprocedure and a higher price, if they choose the more expensiveservice,” he says. “Most employers are looking at what Medicarewould pay and pay a multiple of that: perhaps 140 to 150 percent ofthat number.”

Medibid, a service that searches for and compiles metrics onmedical costs, including how often a given provider performs aparticular procedure, information from the Center for MedicaidStudies or its own internal data on outcomes, can help definewhat's reasonable. “On average, this service saves 40 percent to 60percent, though it may involve travel across the country,” Contornosays. “If employees choose to travel, the employer typically paysfor their travel expenses and either reduces or eliminates theirshare of the out-of-pocket costs. We can include overseas providersas well, though many employers are uncomfortable with that.”

Managing costs with voluntary and supplementalinsurance

Of course, keeping a lid on health care costs isn't the only wayto add value to a client relationship. Eric Silverman, principaland owner of Silverman Benefits Group in Bel Air, Maryland, runs aboutique agency focused on voluntary insurance. “The brokers I workwith are focusing on value-adds more than ever,” he says. “Many ofthe carriers are starting to offer a lot of the value-adds that Iused to have to pay for or search out.” Those include enrollmentimplementation solutions, administrative support (internal andcarrier specific), communication and marketing, and wellnessinitiatives.

Supplemental insurance is another way to help clients managebigger benefits. “All businesses struggle with the rising cost ofhealth care and providing the best benefit package. Supplemental isan opportunity to educate business owners on how they can bettermanage their benefits package for recruiting and retention,” saysJohn F. Means, president of Grahan Suddoth LLC in Baltimore,Maryland.

With both health care policy deductibles and medical costsrising, fewer and fewer employees can afford a surprise bill of$1,000 in the case of a serious medical situation, Means says. “Asupplemental policy can help pick up a deductible, and it can helpa lot in a catastrophic situation—accidents, bad illnesses,” hesays. In five to 10 years, Means believes a lot of companies willboth offer and pay for supplemental coverage, instead of askingemployees to pay for it if they want it. “That lets employers savemoney overall by having higher health coverage deductibles and away of helping employees pay them.”

It's also sometimes possible to improve absenteeism and worker'scompensation rates by adding supplemental coverage, Means says. “Acash infusion can be helpful during catastrophic situations in lieuof disability. We're seeing interest in coverage from bothemployees and their families.”

Strategic advisor and a one-stop shop

That's a lot of needs for one client to manage—and most clientsdon't want to be the ones to manage those needs, says Mark Gaunya,co-owner and chief innovation officer at Borislow Insurance inMethuen, Massachusetts. Nor do they want to coordinate nine or 10vendors. “They want one vendor to manage all those needs,” Gaunyasays. “It's not just about carrying insurance products anymore;it's about being a strategic advisor to the CEO, CFO, and humanresources people.”

Gaunya says he works to educate clients, particularly CFOs,about their benefit plans, how those plans are performing, and howmultiple benefits can link together.

Compliance details are often a point of confusion, so Gaunyahelps clients stay in compliance with state, local and federal law.“PPACA focused on insurance reform, not health care reform, and itincludes a lot of rules and regulations based on employer size,with fines that are business-crippling and potentiallybusiness-ending if you're out of compliance. I tell them the rulesof the road. I can't drive for them, but I teach them how todrive.”

Along the way, Gaunya also handles underwriting, health andwell-being, communication and education, benefits for companieswith an international presence, Medicare benefits for retirees,human resource consultation, insurance and investmentspractice—including group insurance voluntary and supplementalinsurance, optional individual life insurance, long-term carecoverage, disability insurance, and retirement planning forindividuals—and employee benefit consulting.

“The key now is the ability to manage all these parts and piecesand put together one or more to create a unique solution for anindividual client,” he says.