Most employers know the health insurance renewal cycle by heart. The renewal arrives with an increase, the broker goes back to the carrier, a slightly smaller increase comes back, and everyone calls it a win. Brenda Kruse, CFO of Axiom Healthcare Services, described it that way when she and Donovan Ryckis, CEO of Ethos Benefits, joined Eric Dyson on his podcast Be More Than A Fiduciary. “We just kind of got tired of being in that rut,” she said.
The episode also aired as Business of Benefits episode 67. This article covers what Axiom did differently, in Donovan’s and Brenda’s words where we can.
What should you do when your renewal goes up?
Treat the renewal as an offer to test, not a bill to pay. Ask for your claims data and the reasons behind the number, then check whether the increase is earned. At Axiom, Brenda said, the data showed “the renewal that we got wasn’t really what we deserved.”
Axiom’s initial renewal offer was a 2.6% increase, which most employers would accept. Ethos Benefits asked Axiom to hold off. The renewal was negotiated to an 8% decrease with the same plan and the same enrollment, and then to a 13% decrease with a carrier that gave the plan full data and audit rights. Deductibles went down, and employee premiums fell 27 to 38% depending on the plan.
| Step | Renewal |
|---|---|
| Initial offer | +2.6% |
| Negotiated, same plan and enrollment | −8% |
| Final, with a carrier giving full data and audit rights | −13% |
Figures from the published Axiom Healthcare Services case study.
Why is the renewal cycle so hard to break?
The cycle is hard to break because the renewal arrives late and the usual response changes nothing inside the plan. Donovan described the typical move as “sidestepping,” moving the employer from one carrier to another without fixing what drove the cost. A slightly lower rate from a new carrier still carries the same pharmacy contract, the same network prices and the same lack of data into next year.
Timing makes it worse. When the incumbent’s renewal arrives a few months before the effective date, there’s little time for anything but a quick comparison. Donovan’s alternative is a three to five year business plan for the health plan, in place of what he called “the reactive kind of 3 months out from renewal.” For how far ahead to start, see the health insurance renewal timeline.
Where was the money actually going?
At Axiom, it was pharmacy. “60% of our costs were in pharmacy,” Brenda said, “and yet our previous broker really wasn’t even trying to change our pharmacy plan at all.” The prior renewal proposal did not address pharmacy.
Donovan’s view is that the pharmacy benefit manager should usually be the first thing an employer fixes, because it is the least disruptive change. Employees don’t change doctors, pharmacies or medications, and the plan stops paying for spread pricing and retained rebates. Brenda said that from where she sat, she “didn’t see any disruption.” Mail-order prescriptions became free for Axiom’s employees. For what to look for in a pharmacy contract, see how to choose a PBM.
Why negotiate data, not just price?
Because next year’s renewal depends on it. Donovan put the problem in retirement plan terms: imagine a 401(k) adviser who can’t tell you what investments are in it, what they cost or how they performed. “That’s how healthcare operates,” he said.
A carrier’s year-end summary that says the plan spent a certain amount on heart conditions doesn’t point to a fix. Claim-level detail does: which hospitals, which procedure codes and what the plan paid. Axiom’s prior proposal would have moved it to the most restrictive data option on the market. The final carrier gave the plan full data and audit rights, which is why the case study counts that step separately. For what the law already guarantees, see health plan claims data access.
How do you keep the next renewal from starting over?
Put a committee in charge and make the decisions on the record. Donovan calls it internal alignment: a committee of the CEO, CFO and HR at minimum, so each brings the questions their role cares about. Axiom formed one with a charter, regular meetings, KPIs and ongoing education.
The committee now requires compensation disclosures from every service provider. Brenda explained why: “We wouldn’t want to incentivize our employees for bad performance. So why would we want to incentivize our brokers for bad performance?” When a broker is paid a percentage of premium, a renewal increase is also a raise for the broker. The health plan fiduciary committee guide covers how to set one up.
How Ethos Benefits helps.
Ethos Benefits treats the renewal as the last step of a plan year, not the first. We start with the claims, separate the parts of the plan, go to market early and record each decision with the committee. Our renewal process is built on that order. To see whether your next renewal is earned, Request a Strategic Analysis.