The resulting increase in morale and productivity is a tangible benefit that goes beyond traditional insurance offerings. It’s also a great recruitment tool to differentiate yourself in the hiring market and attract more talent. The PEPM model, by offering consistent and transparent monthly payments, reduces financial risks for employers. This stability allows businesses to navigate unforeseen circumstances with greater ease, as they can anticipate and manage potential challenges without the fear of sudden spikes in healthcare costs. In essence, the PEPM model provides a robust foundation for effective risk mitigation. The PEPM model offers businesses greater cost predictability and stability.
- This metric can help leaders evaluate options, monitor progress through the process and assess the impact to the health benefit plan accordingly for the next year.
- I agree that the PMPM or PEPM model doesn’t really benefit the employer because they pay regardless of participation.
- For some employers the shared savings remain relatively small – a couple of dollars PEPM –but we’ve seen examples where they exceed the ASO fee itself.
- It’s also a great recruitment tool to differentiate yourself in the hiring market and attract more talent.
- For example, 67% of tech workers enjoy the flexibility of working from home.
PEPM Programs Employers Should Add to Their Benefits Package
They propose a pay-as-you-go model, which places the financial risk upon the vendor. This suggests the vendor needs to take initiatives and offer services the client will actually use. When employers pay PEPM fees, they are essentially paying for services that will almost never be fully utilized or found valuable by the entirety of their workforce. This is because PEPM fees are collected regardless of how many employees use the service.
By incentivizing quality instead of volume, it shifts the focus on improving the overall quality of care while also lowering costs. Implementing telehealth services into both models could help you provide even more value to your employees through access to specialized care. HCM bundles can include time tracking, benefits administration, talent management and other services. This option is sometimes more cost-effective than purchasing features piece meal, but the total price will depend on the quality of the individual components and how many employees you have.
The next message from PDA will continue this explanation of self-insured benefits as a window of practitioner opportunity. Focus with Physicians Direct Access, your IPA, on how commercial insurance pays you as a practitioner. Let us begin with BUCHA (Blues, United, Cigna, Humana, Aetna, etc.) and their annual determination of the payment for an office visit. Through a twisting pathway, the payment is ultimately determined and plugged into a charge master (pricing list) that represents all specialties, facilities, etc.
Evaluating mental health solution pricing models
Overrides and other forms of compensation are often disclosed at the back of the proposal in fine print which can make it difficult to assess whether a broker is earning a fair amount for the value delivered. As you search for the right benefits structure for your employees and organization, it’s likely you’ve come across the PEPM and PMPM billing models. On the surface, they seem pretty synonymous to each other—so what exactly is the difference between the two? To make sure you have the full picture, we’ll break down both models and clarify their unique benefits. They should become the go-to PEPM gurus to answer any questions and ensure a seamless program launch. It’s also a good idea to create educational resources and material that can be shared with employees that clearly explain what’s included in each program and the enrollment process.
Per Employee Per Month (PEPM)
For some employers the shared savings remain relatively small – a couple of dollars PEPM –but we’ve seen examples where they exceed the ASO fee itself. One could argue a larger shared savings amount is better, as it indicates more savings are being generated. But the underlying methodology must be reviewed to ensure the savings are meaningful. Employers must drive engagement – Engaging individuals to do anything is hard. Just as PEPM models encourage vendors to do less work, they also encourage vendors to care less about engagement.
For Employers: No Tax on Overtime Pay Explained
The lack of scalability in this model can make it less cost-effective and challenging to manage payroll as your business expands. In insurance, PEPM stands for per employee per month and is a method some carriers choose to price their benefits or coverage. While seemingly the same as the PEPM, PMPM calculates premiums on how many members are on the policy. The term member includes any spouses or dependents that may be on an individual employee’s policy, so the premiums could be more expensive if several employees select plans with coverage for dependents. Cloud-based productivity suites, cybersecurity solutions, or managed IT support for end-users are often priced per user or per employee. This ensures that a business pays for the access and support directly correlating to the number of individuals utilizing these technological resources.
How PEPM and PMPM differ and the benefits of each
- On the other hand, PEPM takes a more granular approach, treating each employee as a distinct entity with specific needs and preferences.
- When searching for the right payroll provider for your business, understanding pricing models is crucial for making a cost-effective decision.
- Learn how to successfully launch a PEPM benefit program so you know what to expect before implementation.
- The most obvious driver of employee benefits cost is the size of your business.
- Some may offer 1- or 2-year terms depending on the size or scope of the engagement, but 3 years is standard for most fully bundled EAP programs.
Care services, such as coaching, therapy, or psychiatry sessions, are charged for on a utilization-basis. While the initial quote may be lower, the total cost can fluctuate significantly based on the utilization of services. This pricing model requires the buyer to have a good understanding of expected utilization.
When you measure the value of your benefits against others in your industry, you’ll determine if you’re wasting money on benefits other companies aren’t providing. For a comprehensive picture, benchmark against local and national averages or even global benefits if you’re a remote-first company. Benefits providers may charge a one-time fee to cover setup and onboarding costs. It’s worth asking your provider whether they offer any discounts or promotions to keep these costs down. Statista reports that the share of people working remotely worldwide stands at 28%, although this varies by industry.
A shining example is Doctor on Demand, the country’s leading video telemedicine company. Its unique business model supports the next-generation telemedicine services, which are becoming a very popular benefit as shown by a survey among U.S. employers (Towers Watson, 2014). An alternative to the PEPM model what is pepm has been suggested by those who argue that a non-subscription model is better suited to the health and wellness needs of businesses.
Furthermore, subscription fees make it harder to generate positive return-on-investment (ROI). Many companies are now looking for a return on their corporate wellness programs to justify their existence (“Doctors on Demand,” 2015). In Powell’s post cited above, the author presents an example of a client with 40,000 employees who had access to a second opinion program.
Digital Health Recap – September 2025
The awareness generated by PEPM monitoring can lead to specific tactics to lower costs. We’d also like to take a moment to introduce OpenLoop, a white-label telehealth support company delivering a full-stack of innovative digital health solutions. Our mission is to empower healing anywhere by offering companies the digital tools and clinical support they need to expand access to care. A transition to PEPM models will need bold leaders and innovators—that’s where you come in. While the initial costs of PEPM and traditional models may appear comparable, the true advantages of PEPM emerge over time. The combination of better cost control, risk mitigation and a focus on preventive healthcare measures results in long-term cost savings for employers.
