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Employer-sponsored healthcare benefits are not insulated from the changes taking place in the broader healthcare marketplace. However employers, particularly large employers, are attempting to drive the conversation and actions toward issues that are important to them. One of the best ways to do that is to pressure health plans to help them achieve their healthcare goals
Employer-sponsored healthcare benefits are not insulated from the changes taking place in the broader healthcare marketplace. However employers, particularly large employers, are attempting to drive the conversation and actions toward issues that are important to them. One of the best ways to do that is to pressure health plans to help them achieve their healthcare goals.
Quite simply, given the large cost increases employers continue to face, they want more for their money and they expect health plans to help them get it. Whether they are self insured with administrative services only (ASO) arrangements or fully insured, employers expect more from health plans.
No matter what their size or situation, employers are looking for data. “They want data to support how pricing was developed [and to understand] what kinds of claims are driving costs and what kinds of wellness or education programs can be implemented to improve health and productivity,” says Rudy Garcia, president of Qandun Insurance Agency, Inc. in Glendale, California. Better health and productivity can not only control the cost of health benefit programs but also “reduce workers compensation claims and keep employees healthy and at work, reducing absenteeism, presenteeism and overall turnover of the workforce,” he says.
If that seems like a tall order, it is. But that doesn’t mean employers won’t stop asking for what they want. “The data and analytics piece in healthcare is becoming increasingly sophisticated,” says Ash Shehata, a partner at KPMG LLP.
“Employers are demanding greater transparency in the cost and quality of healthcare,” Shehata says. He notes that data analytics can allow health plans to be more predictive about the expected costs of healthcare even down to the individual employee level.
Another way employers want to use data is to identify whether their efforts at managing costs and care are working as expected and where to concentrate those efforts. “This can include data that highlight where an employer’s experience with medical service price variation or inappropriate care--seeking behaviors can be addressed through new programs or consumer tools,” says Greg Mansur, a principal in the healthcare practice of PricewaterhouseCoopers in Los Angeles.
In the past, strong administration and customer service were key employer focuses when evaluating health plans. Employees and their dependents had to have access to the care they needed and the health plan had to deal with the resulting claims quickly and accurately. The performance metrics employers used to measure health plan performance reflected this and tended to focus on performance guarantees for areas such as claims service, customer service, network adequacy, and various process measures around other service functions such as ID card delivery and medical management performance, says Mansur.
Now, employers are looking for health plan partnerships focused on much broader objectives. “The ‘Triple Aim’ is on the minds of many employers today: (1) improving the health of their populations, (2) improving outcomes for patients while improving the patient/care experience and (3) reducing per capita costs,” says Mansur. “Health plans are viewed as critical partners in these objectives.”
Metrics associated with wellness extend beyond health insurance claims. “Employers are also looking at managing disability costs and what the health plan is doing to keep people well,” says Shehata. To that end, employers are focused on metrics relevant to those goals, such as days lost to disability. In addition, employers want to identify what can prevent large medical claims, such as metrics on the success of smoking cessation programs, how well individuals adhere to their medication regimens, and the outcomes of disease management programs. For example, the latter might translate into simple questions such as, “Are my diabetic employees staying out of the ER?” says Shehata.
Meeting performance expectations is not the only metric of success in today’s employer/health plan relationship. “We are seeing a greater emphasis now on how carriers achieve outcomes that reduce costs, improve health or improve consumer engagement,” Mansur says.
One of the most significant developments in employer-provided healthcare benefits is the slow but growing shift toward a defined contribution approach to financing these benefits. Much like the shift from traditional pension plans to 401(k) plans for retirement, the move to defined contribution healthcare benefits would provide employees with a defined contribution toward their healthcare coverage rather than a set benefit. In other words, instead of employers offering one or more plans with employees contributing a certain percentage or amount for the coverage, employers using a defined contribution approach would provide employees with a lump-sum amount that employees can use to purchase healthcare coverage. If the coverage costs more than the employer’s contribution, the employee must make up the balance.
“Employers see a defined contribution as a way to better control their costs,” says Shehata. In support of this shift, “private exchange products are gaining a lot of traction among employers.” Health plans that work with employers moving toward this defined contribution approach will also need to do things a bit differently.
For one thing, “a defined contribution model needs to operate within the parameters of the health reform law and this means that the cost of plans that meet the minimum thresholds for plan value and affordability stay that way,” says Mansur. “Health plans need to deliver better trend performance for employers to make the transition to defined contribution a real success.” A major part of that is finding ways to help individuals become better and more informed consumers of healthcare services. “Being able to effectively engage consumers so that they make good care decisions [will help to ensure] that the health plan network is delivering real value in terms of cost and quality,” he says.
Joanne Sammer is a freelance writer based in Kansas City.