Benefits

Coping with Cost Increases

Organizations are turning to analytics platforms to help curb rising
healthcare premiums and deliver better care options to employees.

By Heather Lavoie

Healthcare benefits are the single largest expense for most employers after payroll. The costs are staggering: In the decade leading up to 2014, Kaiser Family Foundation research revealed that the average premium for family coverage increased 69 percent. In 2014, average annual premiums for employer-sponsored family health coverage reached $16,834,
and 20 percent of family plans were at least $20,201. Recently, the National Business Group on Health (NBGH) surveyed their membership of large employers and reported that their members expect a six percent increase in health benefit costs in 2016. Employers attribute rising costs to specialty pharmacy fees, specific diseases or conditions, and overall medical inflation. For 43 percent of employers, the number one cost driver is high-cost claimants.

Some employers largely fly blind in terms of knowing the details behind the numbers and being able to effectuate a difference. This is now starting to change. Nowadays, most large employers and an increasing number of medium and smaller employers self-fund their health benefits. In fact, traditional fully-insured benefit plan memberships dropped by more than 10 percent from September 2013 to September 2014, and today more than three in five companies are self-insured.

Employers primarily chose self-funded plans—also known as administrative services only (ASO)—because they offer greater control over cost containment. In contrast to their fully insured counterparts, self-funded employers have the flexibility to make benefit plan design changes. This includes shifting employee cost-sharing arrangements, implementing incentivized wellness programs, and identifying case and disease management intervention opportunities. There is also access to more reporting and claims that can inform plan changes and strategies for mitigating cost increases. Even so, as evidenced by the recent survey of NBGH members, ASO employers also have had limited success in impacting the cost curve. Not for lack of trying, however. For example, Intel led a multi-year effort to collaborate with physicians, hospitals, health plans, and other employers to reduce clinical and administrative costs by applying supply chain management best practices, according to a Harvard Business Review article. Unfortunately, healthcare information is often primarily limited to claims expenses from three to four months after the medical event.

Some organizations are just beginning to make full use of the same analytics and insight platforms that hospitals and physician practices are using to manage the quality and cost of their patients in accountable care organizations and other risk-based contacts. These robust reporting platforms integrate claims, utilization data, clinical information, hospital admissions information, lab results, and medications with benefit information and patient-generated data including Fitbit activity and consumer purchasing behavior. This creates a near realtime holistic view of the employee. This can help enable employers to improve the cost and quality of employee health.

With this information, employers can make informed decisions about the effectiveness of their health insurance plans for their employees as a whole—whether they are self-funded or fully insured. Organizations can also measure the plan’s efficacy in managing the quality and cost of healthcare for specific employee populations such as diabetics and high-cost claimants, who are thought to be one of the primary drivers in increasing healthcare costs.

Far too often, the care for high-cost claimants—those with more than $100,000 in claims expenses— lacks coordination and patient engagement. In many cases, these patients are frequent fliers in terms of emergency room visits and hospital admissions, but are not regularly seen by their primary care physician. Today’s analytics platforms can pinpoint these patients as well as the hospitals and physicians that deliver the best quality and cost outcomes. Employers empowered with this kind of information can more successfully partner with health plans, hospitals, and physicians to meet quality and cost goals, and also help employees navigate their way to improved health.

More than ever before, employees are looking to their employers for guidance since they are are spending more money on healthcare. Premium contributions, deductibles, and co-insurance have all increased. In 2014, workers paid $4,823 on average annually toward premiums for family coverage and $1,081 toward the cost of worker-only coverage, according to a survey by the Kaiser Family Foundation. Deductibles are also rising with the average deductible reaching $1,217, up 47 percent since 2009. To contend with increasing health costs, most employers have had little choice but to ask their workers to pay more. This means that employees need insights and information into how to maximize the effectiveness of their healthcare dollars. Luckily, today’s robust reporting platforms can help.

It’s a fortuitous and exciting time. For the first time, innovative analytics and insights platforms are finally able to match employer and employee desire for the detailed information necessary to make timely, informed, and personalized healthcare quality and cost choices.

Heather Lavoie is COO of Geneia (www.geneia.com)

Tags: Benefits

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