Enough with the Blank Checks
With U.S. healthcare costs hitting $5.7 trillion — more than $15,000 per person per year — employers are feeling the heat. Now is the time to demand payment reform from a system that assumes employers will pay double-digit premium increases because they have no choice.
But employers, you have a choice. And in many cases, you have an obligation to scrutinize broker contracts and fight for the best plan for your population.
Judi Group Managing Director Jeff Hogan joined a recent episode of Moving to Value Unscripted to share a roadmap for plan sponsors to secure their plans, restructure vendor contracts and lower unit costs over the next 12 to 24 months.
Phase 1: Immediate Protection (Months 1–3)
Establish Internal Fiduciary Governance: Form a dedicated fiduciary committee that pairs finance and legal oversight with HR to actively manage purchasing decisions, monitor plan spend and mitigate personal executive liability under ERISA.
Execute Required $1,000 Compensation Disclosures: In accordance with Consolidated Appropriations Act (CAA) rules, formally evaluate every health vendor receiving more than $1,000 annually. Review direct and indirect compensation streams to verify fee reasonableness and eliminate illegal prohibited transactions.
Lock Down Legal Protection with Privileged Plan Reviews: Engage legal counsel to conduct forensic diagnostic reviews. This grants attorney-client privilege while auditing legacy contracts, identifying structural liabilities without exposing past oversight.
Phase 2: Contract Restructuring (Months 4–8)
Mandate Full Claims-Data Rights: Ensure upcoming renewal contracts explicitly grant plan sponsors full ownership of historical and prospective claim-level data, clinical records and itemized billing — completely free of carrier gag clauses.
Audit Legacy Administrative Services Agreements (ASAs): Forensically benchmark ASAs before finalizing renewals to eliminate hidden TPA revenue streams, such as retained shared-savings percentages or confiscatory out-of-network fees.
Eliminate Hidden PBM & TPA Spreads: Structure pharmacy contracts to require 100% pass-through of drug rebates and eliminate spread pricing on specialty medications to comply with expanding federal transparency mandates.
Phase 3: Active Procurement (Months 9–15)
Re-Engineer and Right-Size Stop-Loss Coverage: Independent analysis shows over 70% of self-funded employers carry stop-loss insurance, but many pay double the market rate due to broker-controlled risk arrangements. Evaluate catastrophic risk independently to correct inflated premium terms.
Audit Point Solutions and Prevent Upcoding: Demand explicit audit rights to challenge clinical upcoding — such as DRG acuity spikes — and benchmark point-solution fees against actual population health needs rather than vendor sales claims.
Phase 4: Ecosystem Transformation (Months 16–24)
Unbundle and Carve Out Networks: Exercise contractual rights to unbundle services when carrier networks fail to meet population needs, carving out pharmacy benefits or specialized clinical programs.
Expand Direct Contracting and Primary Care: Bypass traditional carrier middleman markups by directly contracting with regional centers of excellence and expanding direct primary care to drive predictable, high-quality care at significantly lower unit costs.
The era of passive healthcare purchasing is over. As skyrocketing renewal rates force plan sponsors into a corner, regulatory shifts like the Consolidated Appropriations Act provide employers with both the legal imperative and the leverage required to demand full transparency.
By treating healthcare as an active, audited procurement function rather than a black-box administrative expense employers can protect their balance sheets while ensuring high-quality care for their employees.
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