From Renewal Treadmill to Direct Contract
How FLG Owner refused a double-digit renewal and contracted directly with its local hospital — taking ~16% out of the cost of care.
Client Snapshot
| Company | FLG Owner LLC |
| Industry | Construction |
| Location | Fairfield, TX |
| Employees | 86 enrolled • 164 covered lives |
| Medical Cost (PEPY) | ≈ $9,533 per employee / year (pre-change) |
| Previous Plan Type | Fully Insured (BCBS Texas HMO) |
| Renewal Date | July 1 (annual) |
The Challenge
A fully insured HMO with no visibility — and a small-group claim profile that punishes one bad year.
FLG began where most small employers do: a fully insured BlueCross BlueShield of Texas HMO. The carrier set the premium, the plan changed only at renewal, and there was no claims data to explain either — and as the group grew, that structure couldn’t scale or answer the only question that mattered: what is actually driving our cost?
BeneSmart’s first move, effective 7/1/2024, was to get FLG off the fully insured plan and into a Sana level-funded structure — exposing the claims data for the first time. The data told the real story: a small-group profile where a handful of members drive the spend, and where hospital unit cost — not broad overuse — is the lever.
Then the 2026 renewal hit. Sana came in at +9.9% before being pushed back to +5.5% — pushing medical cost to $10,058 per employee per year, against a group already concentrated in a few high-cost claimants. For a group this size, one more big claim swings the year. You cannot renegotiate your way out of a unit-cost problem.
The Approach
Phases: Prepare → Architect → Steward
Prepare — Unlock the data
- Moved FLG off the fully insured BCBS Texas HMO into a Sana level-funded plan (7/1/2024) — exposing claims data for the first time.
- Pinpointed the real drivers: claim concentration in a handful of members, an emerging GLP-1 starter, and specialty Rx — not broad overutilization.
Architect — Contract directly for care
- Refused the 2026 renewal and rebuilt the plan: moved to Angle Health — an independent, level-funded program on the Cigna network — as the funding and administration wrapper.
- Layered a direct provider contract with Freestone Health Clinic (Fairfield, TX) inside the plan — fixing the unit price of local care at the source instead of paying a percentage “discount” off an inflated hospital chargemaster.
- Built formulary policy around GLP-1 and specialty drugs to control the most predictable future cost.
Steward — Win the next renewal now
- “Renewals are won between renewals.” Year-round claims oversight, plan-design tiering, and Rx management — not a scramble in the 60 days before July 1.
The Results
A double-digit renewal refused — and ~16% taken out of the cost of care.
| Measure | Before (Sana renewal) | After (Angle + Freestone direct contract) |
|---|---|---|
| Plan structure | Fully insured → Sana level-funded | Angle level-funded (Cigna) + Freestone direct contract |
| Cost per employee / year | $10,058 | $8,450 |
| Savings vs. the renewal | — | −$1,608 / employee / year (−16%) |
| Savings vs. current ($9,533) | — | −$1,083 / employee / year (−11%) |
Effective July 1, 2026.
- Cost of care addressed at the source: a direct contract fixes the price of care — the lever a PPO “discount” never touches.
- Volatility contained: structural change plus formulary control reduces the swing a single claimant can cause.
- Data-driven, not reactive: every decision traced to FLG’s own claims experience.
In Their Words
|
Key Insight
A PPO “discount” is a percentage off a price the hospital sets — and inflates. You can switch carriers every year and never touch the real number. FLG’s breakthrough was refusing to negotiate the renewal and instead contracting directly with the hospital that delivers the care. That is the difference between renting access to a network and owning the price of care.
The Road Ahead: Self-Funded Blueprint™
The Angle move and the Freestone contract are the foundation, not the finish line. BeneSmart’s Self-Funded Blueprint™ maps FLG’s path to full plan ownership — expanding direct-contract coverage, tightening stop-loss and pharmacy, and capturing 100% of surplus over the next five years.
| Years 1–2 | Level-funded foundation + first direct contract with Freestone (now) |
| Years 3–4 | Expand direct-contract coverage; optimize stop-loss and pharmacy |
| Year 5 | Full self-funded plan ownership — FLG owns its plan, data, and surplus |