As the cost of employee health care coverage continues to climb, self-funded employers are facing increasing pressure to manage expenses while maintaining access to and choice of quality providers. Aon predicts a 9% rise in health benefit costs for employers in 2025, with smaller organizations often facing even higher increases. Given this environment, self-funded employers have a strong incentive to take better control of their plans’ health care spending through strategic approaches that prioritize efficiency, transparency, and proactive plan management. “Total cost of care for an employee health plan consists of two components: utilization and price,” says Chelsea Glenn, chief growth officer at Northwell Direct. “Employers who pay for their own health insurance coverage are highly impacted by both factors. Identifying the right network and administration partners can help an employer to manage these levers effectively. This ultimately leads to substantial savings and softens year-over-year cost trends.”
By partnering with providers on a tailored network offering, instituting targeted interventions based on claims experience, and providing access to proactive wellness programs, self-funded employers can better navigate rising health care costs while improving outcomes for employees.
When an employer cuts out the middleman and partners directly with local providers on their benefit design, they can often access better pricing on health care services compared to traditional insurance networks. By instituting a high-performing Tier 1 network with local providers and then wrapping the solution with a traditional national option, employers can access greater discounts while minimizing member disruption. A tiered benefit design that incentivizes member use of Tier 1 can lead to greater employer savings and a more coordinated care experience for patients. This allows employers to direct employees to high-quality, cost-efficient providers without sacrificing choice.
“We have over 34,000 providers that we’ve contracted with, offering a high-performing, high-quality network at discounted prices,” explains Glenn. “With Northwell Direct’s network forming Tier 1 and the national wrap in Tier 2, you do not limit employee choice, but instead you get the best of both worlds: members incentivized to use the cheaper Tier 1 without the discontent caused by a non-tiered narrow network product,” she said. “Our ultimate goal—and that of our employer customers—is to ensure access while improving affordability.”
By integrating a tiered network model in direct partnership with local providers, employers can guide members toward options that offer both affordability and excellence. This approach not only leads to lower out-of-pocket expenses for employees but also ensures that employers maximize the value of their health care investment.
With traditional national networks, employers have little control over the rates they pay for health care services. These rates are pre-negotiated by national carriers and applied broadly across their networks. However, self-funded employers have an alternative option: working directly with provider-led networks like Northwell Direct to access more favorable pricing.
“Northwell Direct is partnering with employers to solve their affordability challenge across the New York Metro,” Glenn said. “We cut out the middleman with our Tier 1 network, giving employers access to enhanced rates and then providing at-the-bedside care management to improve utilization trends.”
This direct model allows self-funded employers to secure lower costs across the full span of health care used by their employees within the provider network.
A major challenge that employers can face is understanding exactly where their health care dollars are going. Without sufficient transparency into their own claims data, self-funded employers may struggle to track utilization trends and respond with tailored cost-saving initiatives.
“When employers are empowered with insights from their claims data, they can identify areas of inefficiency and better influence member utilization,” she said. “For instance, imagine an employer learns from their claims data that the diabetes rate in their population is 10% higher than average and costing an additional $100 per member per month in health care spend compared to non-diabetics. This human resources and benefits team can now make a much more informed decision about prioritizing a diabetes management solution to help members get their condition under control.”
Claims data provides a detailed breakdown of medical and pharmacy services received, enabling employers to monitor spending patterns and detect potential opportunities. For example, an employer could see high utilization and spend for elective surgical procedures – such as knee replacements or back surgery – and opt for a center of excellence approach with select providers at a discounted rate.
“If you were submitting your expenses for the month, and you didn't itemize any of them, it would be difficult to know which expenses were necessary vs. which might have been avoidable with more proactive planning,” Glenn adds. “Claims transparency ensures employers aren’t just blindly writing checks but are actively managing their health care spend.”
Employers can partner with organizations like Northwell Direct to access direct-to-provider networks to help understand their claims data trends and identify opportunities for intervention—both via targeted care management programming and benefit design changes.
In addition to targeted interventions (focused on specific diseases and conditions), employers can take a proactive approach to health care cost reduction by investing in workplace wellness programs. These programs are integrative solutions aimed at reducing the risk of future health care needs within the broader employee base, including:
Mental health programs: Access to mental health care is a significant challenge, often leading to untreated conditions that drive up overall healthcare costs.
“If employees are able to access mental health providers when they need it, that can positively impact their overall health care utilization and spend,” Glenn explains. “Mental and physical health are intimately linked, so an inability to access appropriate care in one is likely to cause negative impacts in the other. Being able to treat the whole person, inclusive of mental health, allows people to stay healthier and can reduce the longer-term risk of developing comorbid conditions, emergency visits, and/or hospitalizations.”
Access to primary care for everyday needs and symptomatic triage: Regular engagement with a primary care provider can significantly lower employees’ long-term health risks and help them to proactively identify and manage burgeoning issues before they manifest into high-cost conditions. Similarly, for members with onsetting symptoms, primary care can be promoted as a first line of triage and treatment, reducing the risk of unnecessary emergency room utilization.
Included in Northwell Direct’s network offering is a virtual service that offers same-day primary care appointments for members who are sick and virtual visits with emergency medicine providers to keep people out of the ER and at home.
This creates easy access pathways for members to make better choices on where they seek care.
“An employee with a fever who is successfully treated by a primary care provider or virtual emergency medicine doctor the same day avoids a very expensive emergency room visit,” Glenn notes. “Often people end up in the emergency room because they didn’t know about more accessible options or didn’t have any support in helping to identify the right type of provider that could solve their problem.”
Education and access to preventive screenings and vaccines: Routine screenings for conditions like cancer, diabetes, and cardiovascular disease can lead to earlier detection and better health outcomes, ultimately reducing employer costs.
“Employees may face a host of barriers related to proactively seeking preventive screenings and vaccines—from lack of awareness and education to finding enough time in their day to having convenient and accessible options for receiving this kind of care,” Glenn explains. “Employers can help reduce these barriers through hosting education and screening events at their offices and providing employees information and navigation support to help them understand and find care.”
Northwell Direct partners with employers to provide onsite screening services for diabetes, heart disease, and skin cancer and easy education and navigation tools for more intensive screenings like colonoscopies and mammograms.
Self-funded employers have multiple strategies for taking greater control of their health plan spend. By strategically leveraging tiered networks, direct provider contracting, targeted claims-based interventions, and proactive wellness initiatives, employers can reap significant value in improving health outcomes and lowering overall health care costs.
“Employers don’t have unlimited health care dollars. With the right strategies in place, they can take control of their costs and provide better health care for their workforce,” Glenn said.
To learn more about how Northwell Direct can help your company save on health care costs, call (844) 694-3728 or email NWDirect@northwell.edu.
The Northwell Direct Network is provided by the Northwell Direct Administrative Services Organization, Inc. Wellness and clinical service offerings from Northwell Direct are provided by affiliated Northwell Health entities and their licensed providers. The Northwell Direct Network currently is available only to self-insured employers.