Quick answer
Broker demand for custom alternative health plans is growing fast. At the Council of Insurance Agents & Brokers' Employee Benefits Leadership Forum, alternative plans hit the mainstage for the first time. Three structures dominate the conversation: tiered networks with variable copays, tiered networks with HRA incentives, and traditional networks with Centers of Excellence.
Key takeaways
- For the first time, mainstage presenters at a major brokerage conference discussed self-funded alternative health plans
- Every employer group has unique workforce demographics, utilization patterns, and budget constraints—the status quo plan isn't cutting it
- Three definitions of "alternative health plan" dominate: variable copay tiering, HRA-driven steerage, and Centers of Excellence
- Handl Health helps carriers and TPAs develop and activate these plans in months, not years
At a conference late last month, I witnessed a trend we’ve been preparing for: For the first time, presenters on the mainstage were discussing the importance of self-funded alternative health plans.
It feels like we’ve been telling the industry for years about the importance of dynamic copay health plans. But before the Council of Insurance Agents & Brokers' Employee Benefits Leadership Forum, I’d rarely heard conference speakers acknowledge what we knew was true: to bend the healthcare cost curve in any substantive way, the industry needs to begin scaling alternative health plans. And fast.
It all makes sense because the custom health plan is something that more and more insurance brokers want to provide their clients. Every employer group has unique workforce demographics, utilization patterns and budget constraints. For many plan members, the status quo health plan just doesn't seem to be cutting it. Insurance brokers heading into renewal season are demanding creativity.
Historically, as each insurance renewal approached, insurance brokers searched for innovative self-funded benefit strategies to create measurable value. This health plan creativity meant engaging in direct contracting with centers of excellence or perhaps using a variety of providers – direct primary care, telemedicine and the like. But none of these truly reduced the ballooning healthcare costs employers faced.
Alternative health plans go beyond these systems, enabling custom-built health plans.
The non-traditional plan discussions continued in our conversations throughout the day, where benefits professionals would bring up alternative health plans as something they were thinking about before we even had a chance to. What I noticed is that, while it was by far the most common conversation, everyone seemed to define “alternative health plans” slightly differently.
What is an alternative health plan?
During the conference, I heard three broad definitions of “alternative health plan.” These plan structures are all based on steering patients toward low-cost, high-value care, but achieve that goal in various ways.
| Alternative plan structure | How it steers members |
|---|---|
| Tiered network with variable copay | $0 copay at Tier 1 providers; higher copays (e.g. $50) at lower tiers |
| Tiered network with HRA | Employer-funded HRA dollars usable at preferred providers |
| Traditional network + Center of Excellence | Direct contracts with high-value providers for select high-cost procedures |
Tiered network with variable copay: By tiering providers into categories (cost, quality, efficiency, negotiated rates, etc.), self-funded employers steer members to desired providers while allowing for some choice. How does this work in practice? A visit to a Tier 1 provider wouldn’t require a copay, but if a member wants to see a Tier 2 provider, it would cost $50, for example.
Tiered network with HRA to drive steerage through financial incentives: This is a similar approach to the first category of alternative health plans, but here the employer funds an HRA account to be used on preferred providers.
Traditional network structure with Center of Excellence: Think of this as “normal healthcare” with a few special arrangements for high-value providers. Employers directly contract with these providers (Centers of Excellence) for a few high-cost procedures.
How can carriers and TPAs meet provider-tiered plan demand?
As employers push their brokers for alternatives to traditional self-funded health plans, insurance carriers and third-party administrators (TPAs) need to design more flexible benefit offerings.
Handl Health enables carriers and TPAs to accelerate the development and launch of variable copay health plans focused on encounter- and episode-based care. By leveraging healthcare price transparency data and provider performance analytics, organizations can create provider-tiered benefit designs that align member incentives with value-based care objectives.
This approach allows large and small carriers to move beyond traditional network structures and offer innovative health plan products that support both affordability and member satisfaction.
At Handl, we’ve been helping carriers design the non-traditional health plans that brokers are asking for and employers are demanding. And we’re showing them how to develop and activate these new plans in months, not years. Together, we’re moving patients toward new plan designs and other custom configurations that prioritize low-price, high-value care.
Frequently asked questions
What is an alternative health plan (AHP)?
An alternative health plan is a self-funded plan structure designed to steer members toward low-cost, high-value care—most commonly through tiered networks with variable copays, HRA-funded steerage incentives, or traditional networks augmented with Centers of Excellence.
How does a tiered network with variable copay work?
Providers are tiered by cost, quality, efficiency, and negotiated rates. A visit to a Tier 1 provider might require no copay, while seeing a Tier 2 provider could cost $50—preserving member choice while steering toward value.
Why is broker demand for alternative health plans growing?
Every employer group has unique workforce demographics, utilization patterns, and budget constraints, and traditional plans haven't contained ballooning costs. Employers heading into renewal season are demanding creativity from their brokers.
What is a Center of Excellence arrangement?
An employer directly contracts with select high-value providers (Centers of Excellence) for a few high-cost procedures, layered on top of an otherwise traditional network structure.
How quickly can carriers and TPAs launch an alternative health plan?
With Handl Health's platform—leveraging price transparency data and provider performance analytics—carriers and TPAs can design and activate variable copay plans in months, not years.
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