Healthcare strategies that can save employers money
Todd Rolland compares the traditional strategies to new stratigies for healthcare savings in the artilce below.
It is no secret that employee benefit costs are rising. As an employer, we wonder what can be done to reduce costs and as an employee, we are curious if we are getting the best deal. Medical insurance costs are rising faster than many companies’ profit margins and outpacing inflation on a year-to-year basis.
Rising healthcare costs are eroding revenue unlike any other element within a business. Government regulations and rising premiums are also affecting cash flow which can impact all areas of business operations. Separating rhetoric and marketing from meaningful, impactful company-wide solutions is becoming increasingly difficult. However, as the paradigm shift of healthcare strategies gains momentum, sustainable solutions are becoming clearer.
There are evolving options with this new paradigm shift of healthcare strategies: traditional, direct contracting, reference-based pricing and bundled pricing. A strong market push for pricing transparency has created additional opportunities for employers to save money and control costs, and they are doing just that. Employers now have the ability to function much like the traditional PPO has historically functioned by negotiating directly with providers.
The traditional approach includes elements such as reinsurance, administration, PPO networks, pharmacy benefit managers, population health management, predictive modeling, multiple plan designs and wellness strategies.
New options
Direct contracting is also a viable option because providers are much more willing to contract directly with employers than ever before. The idea is to establish a delivery and pricing contract that accomplishes two primary objectives:
- An agreed-upon fee schedule for services performed that is less than typical insurance company PPO-contracted rates.
- Incentive for participants to utilize contracted providers for the care needed.
The third option, reference-based pricing, allows employers to structure partial self-funding plans that reimburse a certain percentage of Medicare reimbursements levels for claims. PPO fee schedules can be 100-200% higher than these Medicare rates. As a result, the reimbursement plan can save employers a considerable amount. However, there is still a risk in balanced billing. The direct contracting option protects the employer with balanced billing issues that they would otherwise experience with reference-based pricing methodologies.
Bundled pricing is rapidly evolving and creates a significant opportunity for employers to save money. Employers simply pay agree-upon cash pricing for surgeries performed on an outpatient basis, and in certain cases, an inpatient basis. The price includes all services including facility, surgeon, anesthesiology, pathology, radiology, etc.
Additionally, two strategies that are gaining attention around prescription costs are average script pricing and pass-through average sales price prescription pricing. Both offer employers opportunities to find significant claims savings.
See the original article posted on EmployeeBenefitAdvisor on August 9, 2016 Here.
Source:
Rolland, T. (2016, August 9). Healthcare strategies that can save employers money [Web log post]. Retrieved from https://www.employeebenefitadviser.com/news/healthcare-strategies-that-can-save-employers-money
Form 5500 changes could increase obligations for plan sponsors
With proposed changes to Form 5500, small business may need to be prepared to stay in compliance as exemption statuses may change. See the article by Joseph K. Urwitz, Srarh Engle and Megan Mard fro Employee Benefit Adviser.
Historically, Form 5500 has served primarily as an information return used by plan administrators and employers to satisfy their reporting obligations under the Employee Retirement Income Security Act and the Internal Revenue Code. However, the DOL and IRS are increasingly relying on information reported on Form 5500 as a key component of their compliance and enforcement initiatives.
As a result, the proposed revisions to Form 5500 would add a number of new reporting requirements designed to aid the DOL and IRS in assessing whether an employer-sponsored health and welfare plan is being operated and maintained in compliance with the Internal Revenue Code, ERISA and the Affordable Care Act. Most notably, the revisions would limit the reporting exemption for small health and welfare plans, and require employers to disclose significantly more information about their plans in a new Schedule J (Group Health Plan Information) to the Form 5500.
Proposed changes limit exemption for small health and welfare plan reporting
Under the existing reporting regulations, employer-sponsored group health plans with fewer than 100 participants that are fully-insured, self-insured or a combination of insured and self-insured, are not required to file a Form 5500. The proposed changes would eliminate this small plan exception and would require all employer-sponsored group health plans that are subject to ERISA (including grandfathered and retiree plans) to file a Form 5500, regardless of a plan’s size or funding.
The DOL’s executive summary on the proposed regulations states that this change will improve the DOL’s effective development and enforcement of health and welfare plan regulations, as well as the DOL’s ability to educate plan administrators regarding compliance. The new reporting rules will also provide the DOL with data needed for congressionally-mandated reports on group health plans. Under the proposed rules, the existing financial reporting exemptions for health and welfare plans on Schedule C (Service Provider Information), G (Financial Transaction Schedules) and H (Financial Information) will continue to apply. Small, fully-insured plans would have a new limited exemption and would only be required to complete basic participation, coverage, insurance company and benefit information.
Changes to form 5500-SF eligibility
Currently, a welfare plan with fewer than 100 participants, including a plan that provides group health benefits, may file the Form 5500-SF if it is not exempt from the reporting requirements and otherwise eligible. Under the proposed regulations, welfare plans that provide group health benefits and have fewer than 100 participants would no longer be permitted to use the Form 5500-SF. For example, under the proposed rules, a plan funded through a trust with fewer than 100 participants would be required to complete the Form 5500 and Schedule H and Schedule C, if applicable. Welfare plans that do not provide group health benefits, have fewer than 100 participants, and are not otherwise exempt from the reporting requirements would still be able to use the Form 5500-SF.
Proposed changes require disclosure of significantly more plan information
The proposed revisions would also add a new Schedule J (Group Health Plan Information) to the Form 5500. Schedule J would require group health plans to report detailed information about plan operations and compliance with both ERISA and the ACA. For example, plans would be required to disclose, among other things:
- The number of participants and beneficiaries covered under the plan at the end of the plan year.
- The number of individuals offered and receiving Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage.
- Whether the plan offers coverage for employees, spouses, children, and/or retirees.
- The type of group health benefits offered under the plan, i.e., medical/surgical, pharmacy, prescription drug, mental health/substance use disorder, wellness program, preventive care, vision, dental, etc.
- The nature of the plan’s funding and benefit arrangement, and information regarding participant and/or employer contributions.
- Whether any benefit packages offered under the plan are claiming grandfathered status, and whether the plan includes a high deductible health plan, a health flexible spending account, or a health reimbursement arrangement.
- Information regarding rebates, refunds or reimbursements from service providers.
- Stop-loss coverage premiums, information on the attachment points of coverage, individual and/or aggregate claims limits.
- Whether the plan’s summary plan description (SPD), summaries of material modifications (SMM) and summaries of benefits and coverage (SBC) comply with applicable content requirements.
- Information regarding the plan’s compliance with applicable Federal laws, including, for example, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Genetic Information Nondiscrimination Act of 2008 (GINA), the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and ACA.
- Detailed claims payment data, including information regarding how many benefit claims were submitted, appealed, approved and denied during the plan year, as well as the total dollar amount of claims paid during the plan year.
The DOL has generally requested comments on the new proposed reporting requirements for group health plans and has specifically requested comments on several of the proposed disclosures listed above, including the costs and feasibility of collecting COBRA coverage information and the methodology and reasonableness of collecting information on denied claims.
Next steps
The proposed revisions to Form 5500 are complex and will likely be subject to a number of changes in response to comments received by the DOL. It is clear, however, that future Form 5500 reporting obligations will require more data, more resources and be subject to increased scrutiny by Federal agencies. Employer sponsors of group health plans should begin to evaluate plan documentation and the potential new disclosures required by Schedule J to ensure that each plan sponsor will be in a position to access such information and adequately communicate the new reporting requirements.
See the original Article Posted on EmployeeBenefitAdvisor.com here.
Source:
Urwitz, J.K., Engle, S., Mardy, M. (2016, August 04). Form 5500 changes could increase obligations for plan sponsors [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/form-5500-changes-could-increase-obligations-for-plan-sponsors
The Next Innovation In Controlling Healthcare Costs
As healthcare costs continually increase, understanding where the cost come from and how to manage them is critical. Bruce Barr gives a great editorial on why new trends are essential in controlling costs.
Original post from EmployeeBenefitAdviser.com on August 1, 2016.
Four decades ago, PPOs were hailed as the “silver bullet” to control healthcare costs. Participating providers were contractually obligated to accept discounted fees, which seemed like an obvious solution to out-of-control increases in healthcare costs. Self-funded plan sponsors readily adopted this approach to gain access to network discounts and lower their healthcare costs. In fact, some self-funded plan sponsors still periodically conduct a re-pricing analysis or another method of comparing which PPO yields the best discounts for their specific group.
However, as provider contacts expired, they were renegotiated at higher rates for providers and higher costs for plan sponsors. In addition, hospital charge-masters have increased at an exorbitant pace and have largely gone unregulated and uncontrolled. As a result, the significant discounts once achieved by PPOs no longer deliver the true savings that were seen in the 1980s and 1990s.
For example, a 60% discount on a $1,000 “oral cleansing device” (more commonly referred to as a toothbrush) clearly does not deliver value for the plan sponsor or member and is indicative of some of the billing practices that go undetected. The same could be said of a $150,000 knee replacement. Using a PPO for its discounted fees is somewhat analogous to buying a car by negotiating a discount off the list or sticker price.
As employers gain a better understanding of the questionable value of PPO discounts and pricing optics, reference based pricing (RBP) and reference based reimbursement (RBR) provide possible solutions by addressing the demand for:
· Price transparency,
· Benchmarking the cost of claims,
· Eliminating inappropriate charges, and
· A fiduciary or co-fiduciary serving on behalf of the plan sponsor.
With RBP, the plan specifies the amount that will be allowed for certain common procedures such as MRIs or knee replacements based on prevailing charges. Covered members have access to a list of participating providers who have agreed to accept these payments. Should the member choose a higher-priced provider, he or she may be responsible for the balance of the payment.
RBR uses a common “pricing reference” — often tied to the Medicare allowance and the actual cost for a specific service – and then reimburses the hospital or facility an additional 20-80%, allowing for the provider to make a “fair and reasonable” profit. For context, many PPO discounts result in net payments equal 250% or more of the Medicare allowance.
There are different ways this strategy can be implemented. Some employers begin using RBR exclusively for out-of-network claims. In other cases, RBR is used for all facility claims in conjunction with a PPO network for physician claims or an accountable care organization.
While used successfully by many employers, RBR can be disruptive for some employees when a provider attempts to “balance bill” patients for the difference between the set plan allowance and the provider’s billed charges. In the overwhelming majority of cases, however, these issues are quickly and easily resolved in favor of the plan sponsor and member. Rarely does a discrepancy like this lead to legal action.
Employers who decide to implement a RBR strategy need to carefully select a partner with expertise in communicating and educating employees about how these arrangements work and what to do should they receive a balance bill. The RBR partner should also have expertise in negotiating pricing discrepancies with providers, providing employee advocacy, indemnifying the plan and its members, and modifying the language in the plan document.
Many early adopters of this approach were often those who were subject to extreme increases in healthcare costs and who saw RBP and RBR as a last ditch effort that would enable them to continue to provide medical benefits for their employees. We’re now beginning to see more employers adopt this approach as a way to more effectively determine and control the cost of healthcare.
See Original Post Here.
Source:
Barr, B.F., (2016, August 1). The next innovation in controlling healthcare costs [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/the-next-innovation-in-controlling-healthcare-costs
Workers Overwhelmed by Health Care Decisions
Employees are feeling the stress of healthcare costs. In the article below by Jack Craver, he provides insight as to the pressures workers are currently dealing with in todays healthcare marketplace.
Original Post from BenefitsPro.com on July 29, 2016
In case you haven’t noticed, Americans are in a tough spot on health care.
For one, their health care costs far more than that in any other country. Even worse, perhaps, they increasingly have many more decisions to make about how to pay for that care.
A new report demonstrates the frustration and hopelessness that grips so many in the face of health care decisions.
The study by Alegeus, the benefit account platform, surveyed 4,000 adults about their health care choices. It showed that there are seldom health or insurance-related choices that Americans make with relative ease or comfort.
There are no health care finance decisions, for instance, that a majority of Americans don’t find challenging. At the top of the list was “planning for out-of-pocket costs,” which two-thirds of respondents say they found either challenging or very challenging. Fifty-five percent say the same about choosing health care benefits.
Fifty-two percent said they found “maintaining health and wellness” challenging. If respondents are being completely honest with themselves (and the pollster), that figure would probably be much higher, considering that three-quarters of Americans are overweight or obese, and a certain percentage of those who aren’t still engage in unhealthy habits, such as problem drinking, substance abuse, or smoking.
One of the reasons health care is so expensive, many argue, is that for so long, Americans have been shielded from the true cost of care by generous employer-based insurance policies. As employers increasingly shift to high-deductible plans or consumer-driven health plans, millions of Americans are for the first time confronting decisions that in the past were left to higher-ups.
Alegeus CEO Steve Auerbach explained the shifting dynamics of health care shopping to BenefitsPRO.
“In the past, with health plans paying for the majority of health care costs, consumers have been conditioned to be disengaged,” he says. “This shift to consumer directed health care represents a complete paradigm shift in how consumers will need to manage their healthcare going forward — and there is a sizeable percentage of consumers who are resistant to this change. It is definitely going to take time for consumers to acclimate, build confidence, and rise to the occasion.”
He noted, however, that a similar “paradigm shift” took place with retirement benefits two decades ago, as many companies moved from defined-benefit pensions to 401(k)s.
“The infrastructure for education and support had to be built, and consumers had to adapt,” he says. “But now 401(k)s have become ubiquitous.”
See the original article here.
Source:
Craver, J. (2016, July 29). Workers overwhelmed by health care decisions [Web log post]. Retreived from https://www.benefitspro.com/2016/07/29/workers-overwhelmed-by-health-care-decisions?kw=Workers%20overwhelmed%20by%20health%20care%20decisions&cn=20160801&pt=Daily&src=EMC-Email&et=editorial&bu=BenefitsPRO&slreturn=1470060827
Rising Health Care Costs: Driving Factor Causing Changes to Employer Health Plans, SHRM Survey Finds
Get the latest trends in healthcare benefits in the survey conducted by SHRM.
Original Post from SHRM.org on July 13, 2016
- Ninety-six percent of organizations offered some type of health care plan to their employees.
- Mail order prescriptions have gone down by 6 percent over the past five years.
- Eighty-five percent of organizations offer mental health coverage, compared to 91 percent just last year.
- Organizations were evenly split as to whether they offered coverage to spouses who had access to health care coverage through another employer, or if there was a spousal surcharge for health care coverage.
- Several new health-related items added to the survey this year: health care services such as diagnosis, treatment or prescriptions provided by photo or video (23 percent), high deductible health plan not linked to an HSA or a health reimbursement account (HRA) (17 percent), genetic testing coverage for diseases such as cancer (12 percent) and a smoking surcharge for health care plans (20 percent).
The ACA’s uncertain lifespan following the Cadillac Tax delay
Are you questioning how the ACA will continue with the delay of the Cadillac Tax? Neil Model gives a breakdown of the "what-ifs" scenarios.
Original Post from BenefitsPro.com on July 26, 2016.
Since the delay of the Affordable Care Act’s (ACA) “Cadillac Tax” provision, which was passed on December 18, 2015, some may be wondering how the ACA will be funded until 2020. I do not believe we have been given the answer.
The Cadillac Tax was to be imposed as a means of funding the ACA by penalizing employers for offering high-cost employer sponsored health insurance plans to employees. One must take into consideration that with continued double-digit healthcare premium increases, the so-called “high cost” plans are not so far-fetched for many more employer sponsored plans in the future. The Cadillac tax was also to double as an incentive for plan sponsors to look at less expensive plan alternatives by the time the tax would be imposed, which is now 2020.
The tax, were it not delayed, would have assessed a penalty of 40 percent for plans costing an employee more than $10,200 annually, and family plans costing an employee $27,500 annually. I have little doubt that the craftsman of the ACA actuarially assumed there would be more employers subject to penalties in future years, despite most efforts to curb premiums.
But because the tax has been delayed, questions about how the ACA will be funded until 2020 have arisen. While still some plan sponsors speculate about whether the ACA will ultimately be repealed, others are still preparing for 2020 by attempting to provide affordable plan options for their employees. This is and will become increasingly more difficult due to spiraling health care costs and corresponding premiums. I have heard it asked many times: “How much more can I impose on my employees?” Add to that concern the even greater Rx inflation due to new and very expensive drugs coming to market for Hepatitis C, rheumatoid arthritis and cholesterol.
Though there have been no definitive plans announced to supplement the funding that would have resulted from the Cadillac Tax, other taxes and fees have been responsible for the partial funding of health care reform, some paid by individuals, others paid by employers, including numerous taxes on medical device manufacturers, indoor tanning services, charitable hospitals that fail to comply with Obamacare requirements, brand name drugs and health insurers. Other fundraising for the ACA comes through the elimination of tax deductions for certain drug coverage and tax increases for those with a certain income threshold.
Since the ACA’s emergence, we have read about failed state exchanges, bankrupt cooperatives, and the significant losses the major insurance carriers have incurred participating in the federal exchanges. We have also seen the failure of the government to pay the subsidies to insurance carriers in the timely fashion promised and expected. With the various delays and elimination of ACA funding clauses, we all must wonder where the money to pay for ACA will ultimately come from. Does everyone have a mirror?
According to an article by Reuters with information from the Congressional Budget Office, U.S. taxpayers will ultimately be responsible for $660 billion this year alone as a subsidy to those receiving health insurance under the age of 65. Those figures are expected to rise to $1.1 trillion over the next decade.
The burden will not only fall on the backs of the consumer, but on employers that want to help lift the burden of the high cost of health care. And, providing major medical insurance might not be enough in today’s environment. Ultimately, it will come down to employers educating themselves on the most effective strategies and seeking the guidance from benefits brokers to come up with creative, alternative solutions that will make it easier for employees to live healthy lives.
As the lifespan of the ACA remains undetermined, employers need to educate and prepare as best as possible. Uncertainty, especially with the election around the corner, will be a key theme the rest of this year, particularly in the health care realm.
So, the question remains: Will the ACA keep fighting the good fight going forward, or will it crumble under pressure?
Study quantifies skyrocketing copays for the insured
Dan Cook provides insight on reasons for the Skyrocketing copays in the article below.
Original Post fro BenefitsPro.com on June 28, 2016
There’s been considerable focus on health insurance cost-shifting to covered individuals and families since the passage of the Affordable Care Act. But much of the shift occurred before Americans started looking to insurance exchanges for less costly coverage.
That’s what a research team composed primarily of University of Michigan scholars found when insurance records for 2009 to 2013 were examined. The study found that inpatient hospitalization costs paid by patients rose 37 percent from 2009 to 2013, to the point that the average insured individual was paying more than $1,000 annually in shared costs.
The biggest driver of the increase were deductibles, which rose a staggering 86 percent during that period. Coinsurance was the second largest factor, rising 33 percent during that time.
Individuals bore a greater share of the cost increase than did those with family coverage, the study said.
“In 2013, total cost sharing was highest for enrollees in individual market plans ($1875 per hospitalization) and consumer-directed health plans ($1219). Cost sharing varied substantially across regions, diagnoses, and procedures,” the researchers reported.
But it wasn’t just the average amount that the research team found troubling. Some among the insured were hit much harder than others by out-of-pocket costs, and that bears further investigation.
“Wide variability in out-of-pocket spending merits greater attention from policymakers,” the report concluded.
Additionally, more attention should be paid to cost-sharing trends among those with insurance rather than focusing just on the uninsured, the study’s lead author Emily Adrion told Fortune.
“There have been so many stories about how much hospital costs are for the uninsured and underinsured, but what’s lost is how much people with insurance are paying,” she said.
Read the full article at: https://www.benefitspro.com/2016/06/28/study-quantifies-skyrocketing-copays-for-the-insur?ref=hp-news&slreturn=1468802076
Source:
Cook, D. (2016, June 28). Study quantifies skyrocketing copays for the insured [Web log post]. Retrieved from https://www.benefitspro.com/2016/06/28/study-quantifies-skyrocketing-copays-for-the-insur?ref=hp-news&slreturn=1468802076
3 Key Takeaways of Designing Employee Benefits Programs
Original Post from BenefitsPro.com
By: Nate Randall
Throughout my career, I’ve had the good fortune to work for a variety of industry leading organizations from stratospheric startup Tesla Motors to Fortune 100s Safeway and Washington Mutual.
I planted myself knee deep in managing, analyzing, and creating everything related to employee benefits and have learned more than a few finer points along the way.
The common thread across these three companies was a genuine desire and drive to apply innovative, forward-thinking approaches to change and improve the way employee benefits are delivered.
I’ve reflected on my experiences to give you three takeaways that helped these companies make the biggest impact possible with their benefits and employee experience programs.
Innovation isn’t easy
Much has been written about long work hours. Stories abound of people sleeping in their cars or under their desks and subsisting on Top Ramen and frozen vegetables. That might exist for you at some point along the path, but that’s not the type of innovative environment that I’m talking about here. I am talking about an atmosphere that applies a conscious drive for change which can lead to meaningful acceptance of new ideas.
Whether you’re rethinking the value of the way health insurance is delivered to families or trying to disrupt a 100-year-old automotive industry, mindfully striving for innovation isn’t a cakewalk.
That’s because humans are programmed not to like change, and for many, working through innovation doesn’t come naturally. It takes a laser-focused and cognizant decision to examine the way things are traditionally or typically done. To do that, you’ll need to gather data, build a team, prove a case, influence, iterate, fail, and to achieve success, you’ll need to do all of these things quickly with minimal errors and missteps.
In my experience, it all comes down to the team that you surround yourself with. When hiring or building your team, I always advise to think creatively about your problems and look for passion in those you recruit. More important than having “done it before” is an intense drive to solve problems and an underlying interest in the core subject.
Early in my career at Tesla, an HR manager said to me, “there are three reasons people come to Tesla. Either they are passionate about cars, passionate about the environment, or passionate about their chosen profession. And Tesla is the best place in the world to be for all three of those things.” Notice there is nothing about money, benefits, or perks. That brings me to the second lesson I’ve learned..
Top talent doesn’t care about perks (until you take them away)
Rarely do candidates and their families make the decision to change their lives — in some cases moving across the country or world — because of the benefits and perks you offer.
Attracting top talent is about storytelling. It’s about having a mission and purpose that a person (and his or her family) can identify with through hard work. I have literally witnessed thousands of people join a common mission early on with little more than unlimited cereal and coffee being offered as the perk. And this was in the geographic backyard of arguably the most intense company perk culture on the planet in Silicon Valley. At the end of the day, people want to feel like they are contributing to something bigger than themselves.
Don’t get me wrong, I don’t mean to imply employees don’t care about the benefits offered to them. They must be satisfied knowing that the basics — health, disability, life insurance, and retirement — are covered. But in my experience, top talent doesn’t make the decision to join a company because of free lunches and massages on Wednesdays.
Keeping that in mind, it is extremely important to construct benefits and perks with care and thought. Once implemented, any experienced HR manager will tell you his or her sad tale of trying to take something away that people are accustomed to.
It’s also imperative to align benefits with perks. Trust me, employees notice if either appears alien to the company culture and mission. I learned this lesson at Safeway during a program that linked the amount of premium a person paid for health insurance to their biometric measures like blood pressure and cholesterol. Employees scratched their heads wondering why the company cafeteria featured cheap burgers and sodas in comparison to the healthy (but pricey) salad bar if poor eating habits could potentially equate to higher health insurance premiums. To promote the healthy lunch options, we had to align its costs with the culture we were trying to foster.
Silicon Valley has become legendary for perks and what many of my colleagues across the country consider frivolous and extravagant benefits. While I agree that many of the Valley’s largest and most iconic brands along with many wannabe cool kids are foolishly wasting time, resources, and money on programs that really do not serve any identifiable goal, I will argue that offering smartly aligned, personalized benefits and perks are the wave of the future. And that brings me to my third and final take-away...
Let the people choose
We have a lot of choice in our lives. We choose the items, price points, and brands to put into our carts when shopping at Safeway. Every Tesla purchase is made to order, built to the specific requirements of the buyer. Google organizes information to make it individualized and useful. Amazon provides a personalized online shopping experience. Uber and Airbnb tap into excess individual capacity in existing systems to create value. We all have different needs, priorities, family situations, and interests, so is it so difficult to offer benefits that can be personalized, too?
The traditional way of offering limited choice employee benefits and perks for everyone (i.e., group benefits) is outdated and bloated with waste. Upwards of 30 percent of compensation costs are funneled to these traditional benefits and American companies spend over a trillion and a half dollars on these inefficient benefits per year.
And that doesn’t even include any so-called perks. In my own research, most employers are paying anywhere from $7,000 to $25,000 per year for a single traditional benefits package. That’s a huge chunk of change and much of those benefits will never be used by the individual if it doesn’t apply to their situation or they find no personal value in it.
Instead of these antiquated and engorged traditional benefits, smart people are creating systems and methods whereby employees can build personalized benefits packages that meet individual needs and circumstances. Giving people the choice and ability to craft what they need can and will make a real difference in people’s daily lives.
Adoption by forward-leaning employers along with regulatory cooperation will finally result in a system for employee benefits and perks that is modern, flexible, and valued. A system that looks like the rest of our world: personalized.
Health Care Consumerism Is More Than A Benefit Design
Original Post from BeneftisPro.com
By: Steven Auerbach
The shift to health care consumerism is well underway. Trends continue to point to increased financial responsibility for consumers with rising deductibles, increased consumer out-of-pocket responsibilities, and accelerated adoption of consumer-directed health care plans (CDHPs), health savings accounts (HSAs), and other account-based benefit offerings.
According to Mercer, enrollment in CDHPs among large employers nearly doubled in the past three years from 15 percent to 28 percent of covered employees.
Employer adoption of these consumer-directed benefit designs will continue to grow for the foreseeable future, driven by the need for cost control, the impact of health care reform and the looming excise tax. The costs of providing health care continue to rise, surpassing $25,000 for an average family for the first time in 2016 (Milliman Medical Index).
However, the fact that the term “consumer-directed health care (CDH)” has become almost synonymous with CDHPs and HSAs is a bit of a misnomer. In reality, CDH is much more than a benefit design – it is a paradigm shift for how consumers must manage their health care and make health care decisions going forward.
Dimensions of consumer-directed health care
The underlying premise of CDH is that, if given more financial responsibility for health care and empowered to make informed decisions, consumers will make better choices – leading to improved health outcomes and decreased overall health care costs. Implicit in this definition are two equally important dimensions:
- Benefit designs that require increased consumer financial accountability
- Empowerment and engagement to support decision-making
The market has made considerable progress shifting to benefit models that increase consumer financial responsibility, as evidenced by the data above. While new plan designs have been created and successfully implemented, financial accountability is only the beginning— behavior must change too, not just costs. We have only just begun to unlock the second dimension of health care consumerism.
Giving somebody new responsibility without the education, tools and support to manage those responsibilities is like giving a teenager the keys to the car without teaching them to drive.
Unlocking consumer engagement
So where does the health care industry really stand in terms of engaging and empowering consumers to make better choices? The health care industry is still struggling to drive meaningful consumer engagement.
Consumer fluency is low. Alegeus research is clear that consumers still don’t have a good grasp on how the plans work, how to predict and manage out of pocket costs, how to determine coverage, etc. Engagement overall is low. The average consumer interacts with their health plan just one or two times per year – and more than 40 percent of members have never taken the time to log-on, dial-in, subscribe, or download any content from their benefit providers.
And in many cases, consumers are resistant to change. When asked whether they wanted to take a more active role in managing their health care, 50 percent said no thanks.
Employers are now spending nearly $700 per employee on various employee engagement programs related to health care, per Fidelity. There are more tools and resources than ever before. Yet most of these programs are delivered with a “one-size-fits-all” approach, and the consumer experience is still very fragmented.
However, by its very nature, CDH may be the key to unlocking consumer engagement. CDHP members are significantly more engaged than their counterparts in traditional coverage for one very important reason…
People pay attention to their money
According to our research, people enrolled in CDHPs scored universally higher on all measures of engagement. CDHP members:
- Are considerably more fluent in the details of health care coverage, costs and billing
- Are more value-conscious - 50 percent more likely to research and compare costs for health care purchases
- Interact more frequently– the average CDHP member interacts with their account 10-50 times per year
- Leverage available resources & channels - one-third more likely to consume content and engage with their benefit service providers through available channels
- Are more likely to participate - twice as likely to participate in employer engagement and wellness programs
Although CDHP members interact more frequently, the key to true engagement and behavior change is not just driving more interactions, it is driving strategic engagement that is targeted, timely and relevant.
Health & wealth must converge
The path to true, meaningful engagement in health care may lie in the convergence of these financial components with the traditional health care domain. No matter what age, health status, or consumer segment, the responsibility for managing finances and costs will become universal.
The convergence of claims, financial transactions and other behavioral and demographic data will provide a robust foundation for targeted engagement.
The fact that consumers pay closer attention to their finances presents a unique opportunity to tap into a captive audience with personalized offers, messages and value-added tools designed to improve engagement, influence behavior and enhance decision-making.
For the vision of consumer-directed health care to be fully realized, it is imperative that employers and benefit providers do not overlook the critical importance of education and targeted engagement to empower better decision making – and better outcomes for all stakeholders.
5 Crucial Wellness Strategies for Self-Funded Companies
Originally posted on CareATC.com
Instead of paying pricy premiums to insurers, self-insured companies pay claims filed by employees and health care providers directly and assume most of the financial risk of providing health benefits to employees. To mitigate significant losses, self-funded companies often sign up for a special “stop loss” insurance, hedging against very large or unexpected claims. The result? A stronger position to stabilize health care costs in the long-term. No wonder self-funded plans are on the rise with nearly 81% of employees at large companies covered.
Despite the rise in self-insured companies, employers are uncertain as to whether they’ll even be able to afford coverage in the long-term given ACA regulations. Now more than ever, employers (self-insured or not) must understand that wellness is a business strategy. High-performing companies are able to manage costs by implementing the most effective tactics for improving workforce health.
Here are five wellness strategies for self-insured companies:
Strategy 1: Focus on Disease Management Programs
Corporate wellness offerings generally consist of two types of programs: lifestyle management and disease management. The first focuses on employees with health risks, like smoking or obesity, and supports them in reducing those risks to ultimately prevent the development of chronic conditions. Disease management programs, on the other hand, are designed to help employees who already have chronic disease, encouraging them to take better care of themselves through increased access to low-cost generic prescriptions or closing communication gaps in care through periodic visits to providers who leverage electronic medical records.
According to a 2012 Rand Corporation study, both program types collectively reduced the employer’s average health care costs by about $30 per member per month (PMPM) with disease management responsible for 87% of those savings. You read that right – 87%! Looking deeper into the study, employees participating in the disease management program generated savings of $136 PMPM, driven in large part by a nearly 30% reduction in hospital admissions. Additionally, only 13% of employees participated in the disease management program, compared with 87% for the lifestyle management program. In other words, higher participation in lifestyle management programs marginally contributes to overall short-term savings; ROI was $3.80 for disease management but only $0.50 for lifestyle management for every dollar invested.
This isn’t to say that lifestyle management isn’t a worthy cause – employers still benefit from its long-term savings, reduced absenteeism, and improved retention rates – but it cannot be ignored that short-term ROI is markedly achieved through a robust disease management program.
Strategy 2: Beef Up Value-Based Benefits
Value-Based Benefit Design (VBD) strategies focus on key facets of the health care continuum, including prevention and chronic disease management. Often paired with wellness programs, VBD strategies aim to maximize opportunities for employees make positive changes. The result? Improved employee health and curbed health care costs for both employee and employer. Types of value-based benefits outlined by the National Business Coalition on Health include:
Individual health competency where incentives are presented most often through cash equivalent or premium differential:
- Health Risk Assessment
- Biometric testing
- Wellness programs
Condition management where incentives are presented most often through co-pay/coinsurance differential or cash equivalent:
- Adherence to evidence-based guidelines
- Adherence to chronic medications
- Participation in a disease management program
Provider Guidance
- Utilization of a retail clinic versus an emergency room
- Care through a “center of excellence”
- Tier one high quality physician
There is no silver bullet when it comes to VBD strategies. The first step is to assess your company’s health care utilization and compare it with other benchmarks in your industry or region. The ultimate goal is to provide benefits that meet employee needs and coincide with your company culture.
Strategy 3: Adopt Comprehensive Biometric Screenings
Think Health Risk Assessments (HRAs) and Biometric Screenings are one and the same? Think again. While HRAs include self-reported questions about medical history, health status, and lifestyle, biometric screenings measure objective risk factors, such as body weight, cholesterol, blood pressure, stress, and nutrition. This means that by adopting a comprehensive annual biometric screening, employees can review results with their physician, create an action plan, and see their personal progress year after year. For employers, being able to determine potentially catastrophic claims and quantitatively assess employee health on an aggregate level is gold. With such valuable metrics, its no surprise that nearly 51% of large companies offer biometric screenings to their employees.
Strategy 4: Open or Join an Employer-Sponsored Clinic
Despite a moderate health care cost trend of 4.1% after ACA changes in 2013, costs continue to rise above the rate of inflation, amplifying concerns about the long-term ability for employers to provide health care benefits. In spite of this climate, there are still high-performing companies managing costs by implementing the most effective tactics for improving health. One key tactic? Offer at least one onsite health service to your population.
I know what you’re thinking: employer-sponsored clinics are expensive and only make sense for large companies, right? Not anymore. There are a few innovative models out there tailored to small and mid-size businesses that are self-funded, including multi-employer, multi-site sponsored clinics. Typically a large company anchors the clinic and smaller employers can join or a group of small employers can launch their very own clinic. There are a number of advantages to employer-sponsored clinics and it is worthwhile to explore if this strategy is right for your company.
Strategy 5: Leverage Mobile Technology
With thousands health and wellness apps currently available through iOS and Android, consumers are presented with an array of digital tools to achieve personal goals. So how can self-insured companies possibly leverage this range of mobile technology? From health gamification and digital health coaching, to wearables and apps, employers are inundated with a wealth of digital means that delivering a variation of virtually the same thing: measurable data. A few start-ups, including JIFF and SocialWellth, have entered the field to help employers evaluate and streamline digital wellness offerings.
These companies curate available consumer health and wellness technology to empower employers by simplifying the process of selecting and managing various app and device partners, and even connecting with tools employees are already be using.
Conclusion:
Self-insured companies have a vested interest in improving employee health and understand that wellness is indeed a business strategy. High-performing companies are able to manage costs by implementing the most effective tactics for improving workforce health including an increased focus on Chronic Disease Management programs; strengthening value-based benefit design; adopting comprehensive biometric screening; exploring the option of opening or joining an employer-sponsored clinic; and leveraging mobile technology.
Which strategies or tactics are you considering to implement in 2017?