2017 EMPLOYER SERIES. 6 Things Employers Need to Know About Rising Health Care Costs. Cost Management Key Findings

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1 2017 EMPLOYER SERIES 6 Things Employers Need to Know About Rising Health Care Costs Cost Management 2017 Key Findings

2 It s one of the biggest challenges employers face today: keeping health care costs under control while keeping employees happy, healthy, and satisfied with their benefits. There s no silver bullet. But one of the most important ways employers can keep costs in check is by choosing a health insurance provider with a clear commitment to making high-quality care efficient and affordable. Annual premiums for employer-sponsored family health coverage reached $18,142 this year, up 3% from last year. (Kaiser Family Foundation/Health Research & Education Trust 2016 Employer Health Benefits Survey.) Here are 6 of the key strategies and tactics that forward-thinking health plans are using to keep health care affordable. If your plan isn t using them, it s time to ask questions Proactively Managing Drug Costs 2. Coaching Members to Better Health 3. Preventing Unnecessary High-Cost Care 4. Making Critical Connections 5. Offering Plans that Fit Your Employee Population 6. Reimagining Care Delivery 2

3 1. Proactively Managing Drug Costs Prescription drug costs continue to rise, with specialty drugs in particular representing a huge driver. The cost of prescription drugs now accounts for almost 20% of employer health plan spending. 1 Leading health plans have made controlling pharmacy spend a priority, with a range of strategies. Smart plans use some, if not all, of the following: Flexible Prescription Drug Programs and Plan Options Multi-tiered plan designs allow employees with complex drug needs to get the coverage they need while encouraging use of lower-cost drugs when possible. Close Monitoring of Medication Compliance When medications aren t used as directed, there can be expensive consequences. Plans can employ specialty pharmacy teams to help ensure adherence, counseling employees with chronic or acute conditions that require drugs. Member Engagement Tools Empowering members with digital tools for refilling prescriptions, researching drugs, and learning about lower cost options helps ensure adherence and turns members into informed consumers. Integrated Pharmacy Benefits Manager A growing number of plans include an integrated pharmacy benefits manager (PBM), primarily because it simplifies everything. Employers have one vendor, one contract, one invoice, and one contact. Members have one vendor and one ID card. And real-time data sharing between the PBM and the health plan leads to better care outcomes for members. Active Management of Specialty Drugs Experts predict specialty drug use will increase to 45% of all pharmaceutical sales by Insurers can keep costs in check with integrated pharmacy benefits management, where access to real-time data allows plans to encourage members to get the most cost effective and clinically appropriate site of care. And plans can and should work to secure price protections, reassess preferred drug strategies, and negotiate rebates for new drug launches. 87% of employers 1 in 3 employers 87% of employers identify rising pharmacy costs, specifically specialty drug costs, as their top priority over the next three years. (2016 Willis Towers Watson Best Practices in Health Care Employer Survey) 1 in 3 employers say specialty prescription medication was their highest driver of health costs in (Large Employers Health Plan Design Survey, National Business Group on Health, 09 August 06) 1. Kaiser Family Foundation Study: 2. Smart Business, Integrating pharmacy with medical benefits can help your bottom line. 3

4 2. Coaching Members to Better Health It s far more cost effective to keep people healthy than it is to treat them when they re sick. And a healthy workforce is a happier and more productive one. But, helping employees live healthfully requires more than just wellness incentives. The best health plans take a holistic approach to improving and maintaining their members health. Here s how: Putting Employees in the Driver s Seat Employees are more invested in their health and wellness when they re in control. Many health plans now offer online tools and apps that employees can use to customize their wellness goals and track their progress. Condition Management and Coaching Health plans that are serious about keeping members well make a point of directly engaging those with chronic conditions or other risk factors. And this goes beyond templated brochures and outreach when a condition is diagnosed. The most effective condition management happens in the form of coaching one-on-one conversations between nurses and physicians and health plan members, with the goal of steering members toward appropriate care, medication, and healthy lifestyle choices. Collaborating for Workplace Wellness The best health plans go beyond out-of-thebox wellness programs and actually work with employers to create tailored programs that work for their specific workplace and company culture. Health plans can assess employers specific goals and trouble spots, whether it s the evolving medical needs of an aging workforce or the stresses on millennials saddled with college debt, and create a comprehensive wellness program that addresses all of those needs. Superior plans go beyond the usual checklists and fitness club rebates to address the availability of healthy foods at work, encourage flexible time for fitness, and even accommodate errands like dry cleaning dropoff that can help reduce employee stress. 58% 60% 58% of plans analyzed offered some type of wellness incentives in (2016 Willis Towers Watson Best Practices in Health Care Employer Survey) 60% of large employers say it s very important to achieve a culture of health at work, but only 20% report achieving it. (Optum 7th Annual Wellness in the Workplace Study, 2016) 4

5 3. Preventing Unnecessary High-Cost Care Unnecessary or just unnecessarily expensive care can quickly drive up costs. Health plans should be vigilant about ensuring members get the most appropriate care for any given medical need in the most cost-efficient way. The good news: health plans have access to data lots of it and they can use it to their advantage. Data and Analytics Plans can use claims analysis to identify gaps or redundancies in care, steer employees toward programs to reduce lifestyle-related risks, and help ensure that employees are getting the right care and treatment at the right time. Providing Self-Service Options Plans can help minimize unnecessary care and specialist visits by offering multiple ways for employees to access care, like a 24/7 nurse helpline or telehealth, for remote doctor visits. Preventing Unnecessary ER Visits By reaching out to members after ER visits, plans can both help ensure that members are getting the right follow-up care and also offer education on when emergency room visits are and are not necessary, for future reference. Connecting with Patients After Hospital Visits When insurers connect with employees after discharge from the hospital and provide education and coaching on follow-up care, they can help minimize the chance of a readmission. The Right Care at the Right Time When consumers couldn t get an appointment with their PCP or needed care outside of regular office hours: 61% 38% went to the ER 18% went to a specialist went to urgent care There s nothing glamorous about data analysis of insurance claims coding. But it can yield invaluable insights when it comes to containing costs and improving quality of care. Smart plans will constantly audit their backend data to: Identify and address gaps in care. Prevent overlaps and redundancies. Flag coding errors that could lead to unnecessary care. THE GOAL: To help ensure members get precisely the right care and that providers bill accordingly. (One Medical, Heads up HR: blog/newsworthy/healthcare-access-survey/) 5

6 4. Making Critical Connections When employees have specialized medical needs, the costs can add up fast. But when health plans make the effort to reach and engage these members in case management and coaching programs, they can help make sure members get the right care and support and minimize costly complications. Engagement strategies tailored to employees with specialized needs: Members with Chronic Diseases Conditions like diabetes, kidney, and heart disease require ongoing monitoring and medication. Women with High-Risk Pregnancies Good prenatal care and education is essential when it comes to avoiding complications. Employees with Mental Health and Substance Abuse Issues Nearly 1 in 3 adults with a medical disorder has a mental health condition, and 68% of adults with a mental disorder report having at least one general medical condition. 3 Look for a health plan provider that takes an integrated approach to medical and behavioral health. Pediatric Patients Released from the Hospital or NICU Human-to-human connection with parents and caregivers of this special patient group provides invaluable support at a vulnerable time. Critical connections start with the people who make them. Ask your health plan about their care management programs. The best plans include collaboration between members and registered nurses, allowing them to work together to define and support the pursuit of members personal health care goals. 3. Robert Johnson Wood Foundation, The Synthesis Project. 6

7 Tiered plans, different provider network options, and flexibility in cost-sharing structures can help you more effectively manage your total benefit costs. 5. Offering Plans that Fit Your Employee Population It s a balancing act to keep costs low while optimizing coverage. That s why it s so important to choose an insurer with options that will work for your specific employee demographics and demands. Tailored Options Make sure your health insurance provider is willing to tailor their plan offerings to meet both your needs and those of your employees regardless of your company size. Tiered plans, different provider network options, and flexibility in cost-sharing structures can help you more effectively manage your total costs. Diversity Counts If your workforce is culturally diverse, or includes a number of non-native speakers, multilingual customer care is a must. But you ll also want to make sure your plan understands and supports the ways different groups prefer to access and engage with medical care. Older Employees People are staying in the workforce longer, and it s having a direct impact on health care costs. Combined medical and pharmacy costs of age 65+ employees are 3x higher than those under 65. Look for an insurer with targeted program experience and proactive care management for older workers. $ 3X Higher Combined medical and pharmacy costs of age 65+ employees are 3x higher than those under 65. 7

8 6. Reimagining Care Delivery Alternative care delivery models are rapidly gaining popularity among providers, insurers, and employers alike. By working with providers, insurers can help control costs in three key ways: by negotiating prices, streamlining administration, and supporting high-quality, value-based care. Accountable Care Organizations (ACOs) ACOs bring hospitals, physicians, and other providers together, with the ultimate goal of providing coordinated care, avoiding overlapping services, and preventing medical errors for a specific population. A number of major plans now operate or sponsor ACOs. Joint Ventures Collaboration between health plans and provider networks is increasingly common. By sharing data and coordinating closely, plans and providers can focus on delivering high value care, minimizing waste, and improving patient outcomes. Tiered Provider Networks This type of plan offers the same coverage as full network plans, but at lower member costs when designated preferred providers are used. Employer interest in new care delivery models, including high quality and limited network plans, has doubled in the past 5 years. (McKinsey & Healthcare, Employer Interest in Transformative Healthcare) 8

9 Your employees shouldn t have to choose between quality health care and affordable health care. In fact, the two go hand in hand. Ask your health insurance provider what steps they re taking to control prescription drug costs, keep members healthy, manage complex medical needs, and work more effectively with providers. Talk to your insurance broker to ensure your health plan is proactively controlling costs, not just passing them along.