Healthcare costs keep climbing, and PwC projects the commercial medical trend will reach 9% in 2027, its highest level in 17 years. Cost-sharing changes alone are not a long-term answer. Lasting savings come from thoughtful plan design that lowers total cost without compromising care quality for your workforce.
Here are five plan design tactics to help employers address healthcare costs.
1. Centers of Excellence
Centers of excellence (COEs) can improve outcomes and lower costs for high-cost procedures like cardiac, orthopedic, bariatric, transplant, fertility, and behavioral health care. Their scale often means lower rates, fewer complications, and shorter recovery times. When paired with a strong travel benefit and clear member education, COEs can become a practical lower-cost alternative to local care.
2. Direct Primary Care
Direct primary care (DPC) replaces fee-for-service primary care with a flat monthly fee that gives members ongoing access to a physician. That can reduce barriers to preventive care, ease administrative burden, and support better management of chronic conditions. DPC is typically a medium-term strategy, with results often building over 6 to 24 months, and tends to work best alongside a high deductible health plan.
3. Specialty Prescription Carve-out
Specialty drugs now account for a large share of pharmacy spending, which makes benefit design a major cost-control lever. A specialty carve-out routes high-cost medications to a dedicated vendor or pass-through pharmacy benefit manager, giving employers more visibility into costs and rebates. The approach adds some complexity, but for many mid-size and large self-funded employers, the savings potential can make it worthwhile.
4. Reference-based Pricing
Reference-based pricing (RBP) can lower costs by capping what a self-funded plan pays for shoppable services like imaging, lab work, and joint replacements. Instead of paying billed charges, the plan uses a set benchmark, often tied to Medicare-based pricing, which can create meaningful savings when paired with the right vendor support. RBP is a more advanced strategy, but for organizations with the right infrastructure, the cost-reduction potential can be significant.
5. High-performance Networks
High-performance networks steer members to providers that deliver better value through stronger quality and lower costs. Members who stay in network usually pay less out of pocket, making this a relatively simple way to influence provider choice without changing plan structure or adding a new vendor. The key is building a network around both quality and savings, then creating enough incentive to drive real behavior change.
Conclusion
Meaningful cost reduction rarely comes from one tactic alone. Organizations see better results when they combine strategies that fit their claims profile, workforce, and administrative readiness. The common thread is simple: plan design works better when it reflects how people actually use care, not when it relies on cost-shifting alone. Download the bulletin for more details.
