Title: Health Plan Cost Containment Strategies Source: https://ethosbenefits.com/services/cost-containment Publisher: Ethos Benefits Summary: Ethos Benefits evaluates and contracts cost containment for your plan: reference-based pricing, direct contracts, direct primary care and pharmacy programs. 1. [Home](https://ethosbenefits.com/) 2. [Services](https://ethosbenefits.com/services) 3. Cost containment. # Cost containment. Direct contracts and smarter pricing. Your plan's cost comes down to how often claims happen and how much each one costs. Ethos Benefits evaluates and implements strategies that change both: reference-based pricing, direct contracts with providers, direct primary care, specialty drug programs and international pharmacy, each with service level agreements and results measured against your data. [Request a Strategic Analysis](https://ethosbenefits.com/strategic-analysis) [Kalos Services: $13.5M in claims savings](https://ethosbenefits.com/results/kalos-services) ## What you get. Most cost containment is sold as a product with a savings promise. The real question is whether it changes the frequency or severity of your plan's claims, and whether the contract lets you measure it. 1. **Reference-based pricing** Claims paid as a set percentage of Medicare rates rather than a network discount, with member support for any billing disputes. 2. **Direct contracts** Agreements negotiated directly with hospitals, surgery centers, imaging centers and other providers for set prices and quality standards. 3. **Direct primary care** Primary care offered through a direct arrangement, so employees have easy access to a doctor and fewer avoidable emergency visits. 4. **Pharmacy programs** Specialty drug programs, manufacturer assistance and international sourcing where appropriate, run through your PBM strategy. 5. **Service level agreements** Every program contracted with measurable standards and performance guarantees, scored under vendor management. 6. **Measured results** Each program’s claimed savings checked against your plan’s own claims data. ## Two levers: _frequency and severity._ - **Frequency:** how often claims happen. Direct primary care, care navigation and plan design reduce avoidable claims. - **Severity:** how much each claim costs. Reference-based pricing, direct contracts and pharmacy programs reduce what the plan pays per claim. ## What it did _for Kalos._ Kalos Services, an HVAC and construction company in Central Florida, moved from a fully insured plan to a self-funded plan with reference-based pricing, direct primary care and a fiduciary PBM. Kalos reported $13.5 million in claims savings since October 2022, 34% fewer emergency room visits with direct primary care, and a 70% reduction in pharmacy cost per member. _Figures as published in the [Kalos Services case study](https://ethosbenefits.com/results/kalos-services), with Kalos’s permission._ ## Every program, _under contract._ Each program is selected through [Ethos Fiduciary Procurement](https://ethosbenefits.com/services/procurement), contracted with service level agreements, and measured under [vendor management](https://ethosbenefits.com/services/vendor-management). Programs that don’t deliver are replaced. ## Part of your Fiduciary Framework™. Every Ethos service reports to your benefits committee. The work is reviewed at your quarterly committee meeting, each decision is recorded with the reasoning behind it, and the record lives in your Ethos Fiduciary OS. That is what lets your committee show the plan was run prudently. [See the Fiduciary Framework™](https://ethosbenefits.com/fiduciary-framework) · [How fiduciary governance works](https://ethosbenefits.com/services/fiduciary-governance) ## Related reading. - [**What is reference-based pricing?** Benefits 101: How reference-based pricing works for self-funded health plans, why balance bills happen, where the No Surprises Act helps, and what employers need in place.](https://ethosbenefits.com/benefits-101/reference-based-pricing) - [**PBM spread pricing** Benefits 101: What PBM spread pricing is, a worked example, how to spot it in a pharmacy contract, and what the 2026 federal PBM law changes for employer plans.](https://ethosbenefits.com/benefits-101/pbm-spread-pricing) - [**What happens behind the scenes with your health insurance?** Insight: Where an employer's health plan premium dollar goes, where costs hide in networks, PBMs and claims, and the plan data federal law says you can get.](https://ethosbenefits.com/insights/what-happens-behind-the-scenes-with-your-health-insurance) [Browse everything in Learn](https://ethosbenefits.com/learn) ## Questions employers ask about this. What is reference-based pricing? Reference-based pricing pays providers a set percentage of what Medicare pays for the same service, instead of a negotiated network discount. It can lower claim costs sharply, but it needs strong member advocacy for the cases where a provider bills the difference. Does reference-based pricing work for a fully insured plan? Generally no. Reference-based pricing is used by self-funded and some level-funded plans, because the plan decides how claims are priced. How do you decide which programs to use? From the data. Claims analytics shows where cost is concentrated, and each program is chosen for the claims it addresses and contracted with guarantees. ## Keep reading Related to this page. - [**Pharmacy and PBM** Ethos Benefits reviews your PBM contract and pharmacy spend, finds where spread pricing and rebates go, and helps your committee decide what to change. _Read more_](https://ethosbenefits.com/services/pharmacy-pbm) - [**Vendor management** Ethos Benefits holds your health plan vendors to their contracts with service level agreements, performance guarantees, KPI scorecards and quarterly reviews. _Read more_](https://ethosbenefits.com/services/vendor-management) - [**Claims analytics** Your company owns its health plan data. Ethos Benefits connects your claims and pharmacy data to analytics and reviews it with you every month. _Read more_](https://ethosbenefits.com/services/claims-analytics) - [**Benefits strategy** Ethos Benefits builds a three to five year strategy for your health and welfare plans: goals, plan design, vendor direction and targets your committee tracks. _Read more_](https://ethosbenefits.com/services/benefits-strategy) - [**Renewals and marketing** Ethos Benefits starts your health plan renewal at least six months early, markets it to carriers and vendors, and puts every option in front of your committee. _Read more_](https://ethosbenefits.com/services/renewals) - [**Mergers and acquisitions** Ethos Benefits reviews employee benefits and health plan risk in mergers and acquisitions, and plans the integration so employees keep coverage on day one. _Read more_](https://ethosbenefits.com/services/mergers-and-acquisitions) ## See what your plan is really costing you. A Strategic Analysis starts with your plan documents and your broker agreement, then shows you what your plan costs, where the risk sits, and what a committee would decide with the full picture. [Request a Strategic Analysis](https://ethosbenefits.com/strategic-analysis) [Call (407) 803-4710](tel:+14078034710)