Strategic Benefits Management

Transcription

1 Strategic Benefits Management Ensuring Your C-Suite is on Top of Key Issues Matthew L. Snook, Partner

2 Topics for Today The 2-Way Street of Information Sharing Critical Issues Pathways for Issue Management

3 The 2-Way Street of Information Sharing

4 It is a Two-Way Street...with decisions relating to how benefit programs are designed, and how benefit dollars are spent. Too seldom do HR leaders connect corporate needs, driven by C-Suite guidance...

5 Defining What is Important What problems are most apparent? What successes are most important? Are there any major corporate initiatives going on? What does the C-Suite need most from HR? How can HR increase its value?

6 Now it is Your Turn! To adequately inform the C-Suite of key issues...we have to first understand them!

7 Critical Issues

8 The Old Basic Healthcare Cost Equation is changing Number of Services Cost of Service* Total Cost Influenced by: Plan Design Health Promotion Consumer Focus Disease Management Eligibility Managed by: Negotiate Carrier Administration Fees Evaluate/Negotiate Appropriate Network Discounts Network Size/Depth Large Claim Case Management Having a cost-effective program means controlling both variables of the equation * Plus administration cost

9 The New Basic Healthcare Cost Equation Service Provided Quality of Service Better Outcomes/Value Evidence-based Promotes prevention and reduces risk Correct quantity of care Services have predictable results Outcome driven not cost driven Least costly equally effective OOP is reduced with better outcomes Having a cost-effective program means controlling both variables of the equation.

10 But cost still matters, and so education does too! Inpatient Procedures (DRG) Max Average Median Back & Neck Proc Exc Spinal Fusion wo CC/MCC $71,318 $15,050 $13,491 Cardiac Defibrillator Impl wo Cardiac Cath wo MCC $99,625 $68,816 $66,347 Cesarean Section wo CC/MCC $73,207 $14,618 $13,550 Cor Bypass wo Cardiac Cath wo MCC $61,977 $46,163 $41,839 Major Jnt Replmt or Reattach of Low Extrem wo MCC $91,276 $30,975 $29,226 Vaginal Delivery wo Complicating Dxs $104,534 $9,548 $9,177 Specific Procedure Codes / Groupings Max Average Median MRI Spine $5,744 $841 $697 CT Scan Head $3,501 $341 $277 Diagnostic Colonoscopy $3,930 $1,159 $995 Knee Arthroscopy/Surgery $9,136 $3,049 $3,133 Low Back Disk Surgery $13,068 $4,256 $4,032 Knee Arthroscopy/Surgery $12,659 $5,588 $5,950

11 Catalyst for Change The ACA Excise Tax 40% excise tax starting in 2018 on high cost employer-sponsored coverage. Employees include former employees and surviving spouses. Tax is on the excess benefit (the amount over the dollar caps). Initial cap set at $10,200/self-only and $27,500 coverage other than self-only (family). Higher thresholds ($11,850/$30,950) for retirees and workers in high-risk professions. Higher threshold ($27,500) for single multiemployer plan coverage. Complex cost indexing and adjustments may apply. No guidance has been issued Include in the Calculation Employee and employer share of group health plan premium. Including executive medical benefits and possibly international benefits. Contributions to (and certain reimbursements from) a health FSA. Employer contributions to a HSA or an Archer MSA. HRA. Most employer-sponsored on-site clinics.? Employee HSA or Archer MSA contributions if made through pretax salary reduction (perhaps).? Employee Assistance Programs (perhaps).

12 What is a Cadillac Plan? ALL of Them. $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Excise Tax Threshold Plan Cost

13 One Example Current Premiums - Projected Premiums Enrollment Single 112 $8, $9, $9, $10, $11, $12, $13, Party 162 $17, $18, $19, $21, $22, $24, $26, Family 310 $22, $24, $25, $27, $29, $31, $33, Total (Annual) 584 $10,771,250 $11,525,238 $12,332,004 $13,195,244 $14,118,912 $15,107,235 $16,164,742 Taxable Amount $84,616 $477,235 $908,939 $1,382,810 Excise Tax (40%) $33,846 $190,894 $363,575 $553,124 Notes: 1. Assumes aggregate trend of 7% annually. 2. Assumes that the 2018 Tax Thresholds are increased by 3% annually for 2019 through 2021 (CPI+1%) threshold is $10,200 for Single coverage and $27,500 for Family coverage.

14 Pathways for Issue Management

15 The Narrowing of Networks S Cost Only Cost Only Current Narrow Network Alternatives Broad Network Cost Only Cost and Quality Accountable Care Organization

16 The Reference-Based Pricing An Overview Objectives: Steer members to lower cost providers, without compromising quality Create a reason for the covered population to think more like consumers Increase members awareness about the cost and quality of services they receive under their benefit plan Select a few prevalent and discrete services/ procedures/episodes and define a threshold (e.g. median cost) that will be eligible for reimbursement by the plan Discrete services: radiology, laboratory, colonoscopy Services on a bundled basis: total knee replacement, normal delivery, elective C-section, hernia repair, etc. Pharmacy: brand drugs without a chemical generic equivalent The member would be fully responsible for allowed charges in excess of the threshold 16

17 The Reference-Based Pricing Example of how it works D ABC Company sets a reference price for MRIs of $800 based on the median price for this service in a given geography The website shows which providers are able to provide the MRI at or under the reference price, as well as those who are above this point, and the price of services for each provider Plan design covers MRIs at 10% member co-insurance Scenarios: Member selects a provider who charges $1,500 for the MRI $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 Member additional payment, $700 Member normal copay, $80 Plan pays, $720 Member selects a provider who charges $700 Member pays: $780 = (10% x $800) + ($1,500 - $800) $0 Provider charges $1500 for MRI Reference price Member normal copay, $70 Plan pays, $630 Provider charges $700 for MRI Member pays: $70 (10% x $700)

18 Private Exchanges S Funding: DB or DC Employee support Administration Employer defined contribution Employee contribution or combination Online Call center Print & Eligibility determination Data-driven events Election management Contribution calculation Election data Deductions Carriers Payroll Reporting & premium data HR professionals Integrated benefit processes

19 Private Exchanges Savings Opportunities S MEDICAL RIGHT SIZING NETWORK OPTIMIZATION IMPROVED CARE MANAGEMENT SAVINGS POWER PURCHASING DEFINED CONTRIBUTION BUYING COALITIONS

20 Accountable Care Organizations S ACO is a catch-all term for provider(s) participating in population-oriented, value-based care delivery and reimbursement models Focused on creating the right motivations for evidence-based, patient-specific treatment plans, and thus optimal outcomes Under-care = lower probability resolution, longer, more costly treatment Over-care = wasted resources with no return Will only include provider organizations that are working under value-based shared savings or risk arrangements on the total cost of care for one or more sets of attributed* patients * Note: The rules for attributing patients to an ACO can vary based on the contracting entities. Attributing refers to allocating overall responsibility of a patient s care to a specific primary care provider (PCP) based on services received from the PCP versus other providers using claims data (rather than patient election).