Benefits of open referral

In a bid to contain costs and make medical insurance more sustainable and easy to use, a growing number of insurers have introduced open referral models to direct policyholders to one of their approved specialists. But while the model can make premiums cheaper, it is not without its detractors.

Open referrals – where the GP does not specify a particular specialist – have always featured in the claims received by all insurers; in 2012, almost one in five of Aviva’s claims was on an open referral basis. But while insurers have always offered it, four – Aviva UK Health, Axa PPP healthcare, Bupa and Simplyhealth – have now launched it as a product option.

All will direct policyholders to a specialist, but the approaches offered do vary. For example, Bupa gives its policyholders a choice of two or three consultants when they use its open referral process. Axa takes a similar approach, but Aviva takes a slightly different tack on its large corporate product GuideWell, referring policyholders to just one of its 10,000 recognised specialists unless there are several available.

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Simplyhealth’s Connections product also uses an open referral model but rather than recommend specialists, it refers policyholders to a hospital within its network, where they are able to discuss a suitable specialist.

Additionally, while the other insurers have focused on large groups, Simplyhealth is aiming more at the smaller end of the market. It launched Connections to SMEs at the end of April and has soft launched it to individuals, with a formal launch expected later this year.

Open referral benefits

Although their approaches vary, all offer policyholders the opportunity to save money. Having control over the specialist a policyholder sees means insurers are able to negotiate better deals, which can be passed on to policyholders.

Just how much of a saving this can mean varies depending on the insurer and the type of business being written. While some will offer a reduced premium upfront, others point to long-term savings as an incentive to move to open referral.

For example, Simplyhealth offers its Connections customers a lower premium, with SME business enjoying a saving of roughly 10 per cent. Axa PPP healthcare takes a different stance; rather than offer a discounted premium, its corporate clients enjoy a rebate of 6 per cent of their healthcare spend at some of Axa’s partner hospitals.

Convenience is another major selling point. Leaving the specialist decision to the insurer means they can select a hospital in a location that is convenient for the policyholder. For example, Axa PPP healthcare provides a fast track appointment service, booking an appointment for the policyholder with an appropriate specialist near to their home or work.

Open referral also means that, as fee levels are agreed as part of the insurers’ specialist approval process, there is no risk of a shortfall. These occur where the specialist’s charge exceeds the cost of the treatment accepted by the insurer. Although this only occurs in a small number of claims – for instance just 3 per cent of the fees submitted to Axa PPP healthcare are not paid in full – they can be a major cause of customer complaint.