Health Benefits Packages: Give More; Pay Less
| June 12, 2019
The Hidden Value of Healthcare Benefits (And How to Give More of It)
Benefits managers overseeing the selection of employee health plans face daunting and conflicting challenges. It is not uncommon for companies to make decisions that conflict with each other – consider a benefits manager who is being asked to lower health plan costs while attracting, recruiting, and retaining talent in a strong job market. Employers often must choose between limiting employee benefits or paying more than they and their employers have budgeted for healthcare.
Neither scenario promotes a business’ long-term objectives, and benefits managers are left considering less than ideal options. Fortunately, as the healthcare industry continues to transition to a value-based care model, health plans like Healthcare Highways are offering solutions to help companies achieve a better balance between quality care and cost control. Equally important, with these new solutions, employers can give more than they pay for, redefining return on investment (ROI) in the healthcare benefits space.
“Healthcare ROI” is often a narrowly defined term that estimates solely the reduction in employee health-related expenses. Instead, consider a broader definition of ROI that accounts for less obvious but critical performance indicators. For instance, the value applied to maintaining a healthy and productive workforce or attracting the most qualified professionals. Before selecting a new health plan, benefits managers should appreciate the full breadth of potential factors influencing ROI.
The following questions can help:
How do fixed and variable costs compare?
The marriage of expected savings and patient services is a complex one. It’s easy to focus on fixed-priced items such as the costs of administering the health plan, i.e., insurance, provider access, claims processing and customer service. Employers often overlook variable cost drivers that can be significantly costlier than the fixed cost items–such as the number of services being performed and out-of-network plan costs.
The impact to a plan’s costs is highly dependent on these variable items. A plan may have relatively low fixed rates on administration costs, but plan costs may rise with new programs due to a substantial rise in variable costs. Consider the high cost a health plan pays for out of network provider claims.
A new analysis finds that people who receive common treatments from out of network (OON) doctors and facilities routinely receive bills that are 118 percent to 1,382 percent higher than what Medicare is billed for the same services. Plans that lack controls to manage these out of network claims understand the situation is not sustainable, but many also do not wish to incur higher fixed costs to manage out-of-network claims payment more effectively. Serious employers must consider plan changes that may raise fixed costs while lowering variable costs creating an ROI that makes sense.
What sort of provider networks are offered?
High-performance networks can provide employers advantages over broad networks if the providers selected have demonstrated an ability to produce positive patient outcomes while maintaining practice efficiencies. Good care and better efficiency ultimately produce lower costs for employers and patients. Broad networks offer more provider choice, but healthcare costs remain higher as medical providers in a broad network find it more difficult to coordinate member care, and large networks do not extend financial incentives designed to reduce costs and produce better care across the entire network.
Providers in a broad network typically operate within the traditional, fee-for-service model, which financially rewards them for volume of services, necessary or otherwise. Perceived transition inconvenience aside, high-performance networks are worth their value. High performance networks built well cost up to 35 percent less than traditional models, while sustainably improving long-term employee health outcomes.
How does the plan impact employee retention and morale?
Seventy-one percent of employees would leave their current employer if offered a position with better benefits. Benefits and HR managers should view the company’s health plan as a critical element to attracting and retaining talent. Forty percent of employees surveyed by Glassdoor cited health insurance as their most important benefit.
Basic coverage may supply the essential care employees demand, but benefits managers should ask whether the bare minimum inspires employee loyalty and energizes a workforce. Eighty percent of employees consider health benefits customized to their individual needs to be crucial to their satisfaction. That means demonstrating how health benefits answer employees’ individual concerns and health priorities and emphasizing how a value-based approach delivers bottom-line savings.
How will patient data work to support better decisions from providers as well as inform population health?
One of the biggest challenges for benefits managers is synching medical claims and pharmacy data, as these two entities report at different frequencies through different channels, creating an opaque view of employee health and spending, reducing projection accuracy. Equally important, without medical and pharmacy data integration, providers lack visibility into a patient’s full history, which can result in misdiagnoses or dangerous medication interference.
Because of their large scale, national insurance carriers typically provide this data roughly 45 to 60 days after an incident. Smaller, more nimble health plans can aggregate both pharmacy and medical data in near real time, allowing physicians to better manage their patient populations, improving health outcomes and delivering a more accurate, relevant picture of the health plan’s overall value to employers.
Does the plan have care coordination?
The healthcare industry is a complex system of providers, payers and regulative entities. Time has taught the industry that patients with critical or chronic medical issues need significant help navigating our complex medical delivery system. Without navigation services, these members are likely to utilize unnecessary services or treatments, both in- and out of network.
Health plans that help guide members to better care options and services lower utilization of unnecessary services and enhance the patient experience. Case in point: Stanford University’s introduction of care coordinators resulted in a 59 percent reduction in ER visits and a 13 percent reduction in overall costs. Not all health plans offer this critical service, or only offer it for certain members, leaving most employees to fend for themselves.
Health benefits managers should seek health plans that embed care coordination for all members, empower providers to make more informed decisions, and eliminate care gaps.
For employers seeking to reduce healthcare costs and increase the quality of benefits, it’s not enough to seek incremental improvements to conventional plans.
Employers must break free of the status quo by embracing new models that incorporate better tools for reducing inefficiencies and over-utilization of services.
MARC PINNEY | Chief Operations Officer, Healthcare Highways Mr. Pinney’s extensive career began as a sales representative and later Vice President of Sales for Gallagher Benefit Administrators. A Senior Benefits Consultant at Holmes Murphy & Associates after that, he then brought his deep expertise to Healthcare Highways, now serving as Chief Operating Officer and Executive Vice President of Business Development.