How well is your PPO network performing?

If we’re talking breadth of access and depth of discounts ― it probably looks pretty good! As far as helping you secure lower costs than their competitors ― it’s probably not making a big difference.

Based on our analysis of large company data, network usage (the percent of average in-network spend) varied from 96% to 97% among the top four national networks. And, the discounts varied from an average of 50% to 55%. Of course, a five percent discount advantage seems like a valuable improvement. However, the average per employee per year medical costs for the groups with the network that reported a 55% was the same as the average cost for the networks reporting the 50% discount.

Interestingly, the other big network reported a 52% discount, but had the highest average per employee costs (by about 4.5% to 5.0%). Finally, when we compared the entire population of data (about 670,000 lives of data), there was no correlation between per employee medical costs and network usage and discounts.

Moral of the story: With so much network access and pricing parity, there is room for other service elements to make the real difference. For example, who is providing the best member experience, the greatest transparency, and the flexibility to better manage high cost claimants via centers of excellence, site of care management, and custom sourcing of expensive genetic therapies?

The big networks are increasingly leveraging their market power to require their own PBMs, their own COEs, their own medical management, and their own stop loss insurance. You are the buyer. What do you value?

*From Chelko Consulting Group’s proprietary database of employer results.

“Keeping Score” is an ongoing series where we share findings from our work on employer-sponsored health plans, so you have the opportunity to compare how your plan is performing relative to others. We hope you find it beneficial. Because, after all, you can’t manage what you don’t measure.