Health care benefits are the single largest expense for most employers, after payroll. The costs are staggering, and most employers largely fly blind in terms of knowing the detail behind the numbers and being able to effectuate change. This is now starting to change.
Recently, the National Business Group on Health surveyed their membership of large employers and reported that their members expect a 6% increase in health benefit costs in 2016. Employers attribute rising costs to specialty pharmacy, specific diseases or conditions, and overall medical inflation. For 43% of employers, the No. 1 cost driver is high-cost claimants.
In the decade leading up to 2014, Kaiser Family Foundation research revealed that the average premium for family coverage increased 69%. In 2014, average annual premiums for employer-sponsored family health coverage reached $16,834, and 20% of family plans were at least $20,201.
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Most large employers and increasing numbers of medium and smaller employers self-fund their health benefits. Traditional fully insured benefit plan membership dropped by more than 10% 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 or ASO — because they are said to offer greater control over cost-containment. In contrast to their fully insured counterparts, self-funded employers have the flexibility to make benefit and plan design changes such as shifting employee cost-sharing arrangements, implementing incentivized wellness programs, identifying case and disease management intervention opportunities, and more. Typically, they also have access to more reporting and claims detail to inform plan changes and strategies for mitigating cost increases. Yet, as evidenced by the recent survey of NBGH members, even ASO employers have had limited success in impacting the cost curve.
Not for lack of trying, however. Even for the largest employers — like Intel, which 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— health care information was primarily limited to claims expenses that hit as much as three to four months after the medical event.
Leading-edge reporting platforms
The savviest employers and employer coalitions 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 all of the information now available to hospitals and physicians — claims, utilization data, and clinical information and outcomes such as hospital admissions, lab results and medications with benefit information and patient-generated data including Fitbit activity and consumer purchasing behavior — to create a near real-time holistic view of the employee. This view draws from the same information that informs the clinician perspective on the employee but is customized and appropriate to the role of employers and HR personnel and presented in easy-to-understand dashboards.
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These leading-edge reporting platforms enable employers to participate more fully in improving the cost and quality of employee health. Employers now have the information necessary to 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 — as well as measure the plan’s efficacy in managing the quality and cost of health care for specific employee populations such as diabetics and high-cost claimants, who are thought to be one of the primary drivers in increasing health care 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 cost-effectively yield this information as well as insights into which hospitals and physicians deliver the best quality and cost outcomes, and perhaps most importantly, present it in a way that existing staff, rather than analytics experts, can use the data. 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. Like employers, they, too, are spending more money on health care. Premium contributions, deductibles and co-insurance have all increased. In 2014, workers on average paid $4,823 annually toward premiums for family coverage and $1,081 toward the cost of worker-only coverage, according to the Kaiser Family Foundation. Deductibles are also rising with the average deductible reaching $1,217, up 47% since 2009. To contend with increasing health costs, most employers have had little choice but to ask their workers to pay more — and that means that employees too need insights and information into how to maximize the effectiveness of their health care dollars and are a ready audience for the insights provided by today’s robust reporting platforms.
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 health care quality and cost choices.
Lavoie is COO of Geneia.
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