Benefit Plan Design

Numerous design features of a medical expense plan can control costs. These have traditionally been in the form of contractual provisions that shift costs to employees. The following are examples:

- Deductibles

- Coinsurance

- Exclusions and limitations

- Maximum benefits

In recent years, design features have been aimed at reducing costs rather than shifting them. In fact, benefit plans are often designed to provide a higher level of benefits if less costly alternatives are used. Examples of these cost-containment features include the following:

- Preadmission testing

- Second surgical opinions

- Coordination of benefits

- The use of alternatives to hospitals (such as skilled-nursing facilities, home health care, hospice care, birthing centers and ambulatory care centers)

- The use of medical savings accounts

Alternative Providers
The use of HMOs and PPOs has been popular for some years as a cost-containment method. These methods have now been joined by point-of-service plans.

Alternative Funding Methods
Employers are increasingly turning to funding methods that are alternatives to the traditional insurance company plan or Blue Cross—Blue Shield plan