BENEFIT SMARTER: HOW UNLOCKING DATA DRIVES BETTER RESULTS FOR PEOS

Rising healthcare costs are eating into operating budgets, and many employers are demanding more from their PEO relationships. No longer is it enough to simply handle payroll and compliance, PEOs are now expected to act as strategic partners, offering insights that can help employers make smarter decisions when it comes to benefits. The challenge: most PEOs are flying blind.

Even as they aggregate risk across hundreds of clients, many PEOs—especially those operating under fully insured models—lack meaningful visibility into what’s driving healthcare and pharmacy costs. This blind spot leads to a range of downstream issues including one-size-fits-all plan designs that don’t reflect the unique needs of different client segments, under-leveraged pharmacy data where rising prescription drug costs can quietly balloon without oversight, limited insight into utilization or gaps in care making it hard to manage high-risk populations proactively, and compliance vulnerabilities, particularly in the wake of enhanced fiduciary obligations under the Consolidated Appropriations Act (CAA).

What PEOs need is not more data, it’s actionable data. With the right insights in hand, PEOs can identify top cost drivers in both medical and pharmacy claims, spot high-risk or high-cost populations early to avoid costly procedures and prescriptions, analyze utilization patterns and surface gaps in care. Additionally, using predictive analytics and risk scoring can help model scenarios accurately.

Without access to sophisticated data and analytics capabilities, PEOs will often struggle to balance client needs with their own operational requirements and limit their consultative capabilities. However, when data is used holistically across virtual care, wellness, point solutions and chronic condition management, it enables smarter, more efficient benefit strategies.

7 WAYS DATA TRANSFORMS PEO OPERATIONS

1. Improved risk management. Actionable data helps to identify high-cost claimants early. This enables PEOs to engage in preventive action and smarter stop-loss purchasing. Flagging rising-risk members, such as individuals who need cancer treatments, dialysis, or NICU services, can prevent huge claims and negative outcomes. Predictive modeling is also an effective way to forecast costs and establish reserves.

2. Better cost containment and plan optimization. With health plan utilization, certain factors are known to be significant cost drivers – these include unnecessary ER visits, out-of-network claims, specialty prescription usage, and more. Access to data and analytics helps PEOs identify these cost drivers, as well as compare utilization patterns across client companies. Based on this information, they can design tiered plans or steerage strategies based on member behavior which will reduce medical costs and lead to better renewal performance.

3. More effective vendor and network performance monitoring. With visibility into vendor and network performance data, PEOs can evaluate TPA, PBM, and network partners based on their outcomes and cost efficiency. For instance, PEOs may want to monitor whether care navigation, telehealth, or wellness programs are working. Data makes it easier to hold vendors accountable with measurable KPIs. The result – stronger contract leverage and better vendor alignment.

4. Robust client-specific reporting. By providing each client with greater transparency into their own claims via a utilization dashboard, PEOs are more likely to see higher levels of client retention and consultative credibility. These dashboards demonstrate how employer workforce health trends stack up to benchmarks, compare network options for groups, and identify potential cost savings for individual groups – such as migrating to a different prescription drug formulary or targeting musculoskeletal claims.

5. More informed product and plan design. Data-informed benefit plans can be a source of true competitive differentiation and innovation. Leading PEOs tailor benefit design to unique industry, regional, or demographic needs. They also leverage utilization data to introduce innovative plan features like virtual primary care, diabetes management, and more. With analytics, PEOs can optimize contribution strategies to influence member behavior in ways that improve outcomes and reduce costs.

6. Stronger stop-loss and underwriting strategy. Data from actual claims is essential for negotiating stop-loss terms or captives. Data-driven insights empower PEOs, enabling them to bundle low-risk groups together, adjust attachment points based on trends, and spot anomalies or under-performing groups early. Greater visibility into analytics is also critical for reducing premiums, smoothing volatility, and improving margin control.

7. Improved regulatory reporting and compliance. Data is the key to supporting compliance with the ACA, Transparency in Coverage regulations, Prescription Drug Data Collection (RxDC) reporting, and more. With analytics, PEOs can validate plan performance against federal benchmarks and easily respond to audits, as well as client-level reporting needs. This helps reduce legal risks and smooths operations.

In today’s disruptive business climate, PEOs recognize the importance of financial resilience. Deep, data-driven insights can help these businesses identify the best next step to avoid financial risk and reduce non-essential spending. Access to robust claims data and analytics empowers PEOs to optimize plan performance, proactively manage health risks and improve employee well-being for clients and make decisions that enhance their overall operational efficiency and drive strategic growth.

Moving toward a more data-driven benefits strategy does not require starting from scratch, the right partners are out there. The key is integrating medical and pharmacy claims data across carriers and sources for a unified view of population health, selecting data partners that provide prescriptive analysis rather than raw data, and establishing KPIs that align with client goals and internal success metrics. Not all solutions are created equal, choose one that acts as a partner rather than just a vendor—helping you cut through complexity, deliver what matters most to your clients, and increase profitability.