The recent US Supreme Court decision legalizing same-sex marriage seems likely to affect employer offerings of domestic partner (DP) coverage. Many employers that now offer DP benefits chose to do so because their employees did not have a legal right to marry their same-sex partners and thus could not qualify for dependent coverage. But more often than not, DP benefits are also extended to unmarried opposite-sex domestic partners, so a change in policy could affect those couples as well.
Offerings of DP coverage have been growing steadily. According to Mercer’s National Survey of Employer-Sponsored Health Plans, over the past five years offerings of domestic partner coverage have risen from 39% to 55% among large employers (500 or more employees). Among jumbo employers – those with 20,000 or more employees – 76% offer DP coverage. There is still a wide variation by geographic region, however. Fewer than half of all large employers in the South and Midwest provide DP benefits (46% and 45%, respectively), compared to solid majorities of large employers in the Northeast and West (60% and 78%, respectively).
With the issue of marriage equality decided by the Court, some employers are debating whether to stop offering domestic partner benefits, which would eliminate the administrative burdens associated with the offering. Mercer polled employers about their thinking on this issue during a webcast conducted about a week after the decision was announced. Of about 150 employers responding, 19% offer DP benefits to same-sex couples; 55% offer it to same-sex and opposite-sex couples, and 25% don’t provide it at all. When we asked those currently extending coverage to domestic partners if the decision will cause them to rethink this policy, 4% said they have already dropped DP coverage in states permitting same-sex marriage, and 15% said they will drop it for the next open enrollment period. While another 28% said are at least considering it, the majority – 53% – said they are not considering it.
Those that provide it to same-sex couples only are more likely to drop it – in fact, 8% say they have dropped it in states that had already legalized same-sex marriage. Another 23% say they will drop it for the next open enrollment period, while 23% are at least considering it. The rest (44%) say they are not considering it. Employers that offer DP to both same-sex and opposite-sex partners are moving more slowly. The majority of these employers – 62% – say they are not considering dropping it. Only 8% plan to drop it for the next open enrollment period, and few – just 4% – have already dropped it in states that legalized same-sex marriage. About a fourth says they would consider dropping it within the next 2-3 years.
The recent ruling will require employers to take some immediate steps to ensure compliance. For example, you’ll need to revisit your definition of “spouse” in plan documents to ensure it covers same-sex spouses and your eligibility rules. And if you offer domestic partner coverage, you may also want to take this opportunity to review your objectives for the program and weigh your employees’ needs and preferences. This decision should reflect your organizational culture and attraction/retention strategies. If you decide to drop DP coverage, couples will essentially be required to marry or lose coverage. For the couples who prefer not to marry – same-sex or opposite-sex – a change in policy could have far-reaching impact.
As you finalize medical plan designs for 2016, make sure you consider these five compliance elements of the Affordable Care Act (ACA).
1. Embed individual out-of-pocket (OOP) limits. The ACA’s annual in-network OOP statutory limit for self-only coverage ($6,850) applies to all individuals, whether enrolled in self-only coverage or another tier (e.g., family). Be sure to confirm your medical carrier’s capabilities to adjudicate this benefit design feature. The penalty for non-compliance is $100 per day per individual.
2. Offer MEC to 95% of full-time employees. Under the ACA employer mandate, large employers must offer minimum essential coverage (MEC) to “substantially all” full-time employees and their dependent children (not spouses/domestic partners). In 2016, the “substantially all” percentage increases from 70% to 95%. Employers could be subject to assessments if at least one full-time employee receives tax-subsidized public exchange coverage. The assessment is an annual payment of $2,160 for each full-time employee minus the first 30 full-time employees.
3. Update FPL affordability safe harbor (generally $93 per month). The IRS established three affordability safe harbors employers may use to show coverage is affordable — Federal Poverty Level (FPL), W-2 wages, and rate-of-pay. For plan years beginning on or after July 22, 2015, the FPL safe harbor is $93 per month based on the 2015 FPL of $11,770 (higher in Alaska and Hawaii). The potential assessment for non-compliance is the lesser annual payment of:
- $3,240 for each full-time employee receiving tax-subsidized public exchange coverage
- $2,160 for each full-time employee minus the first 30 full-time employees
4. Consider treatment of opt-out credits in affordability calculations. A recent IRS FAQ regarding HIPAA’s health status nondiscrimination rules states that the required contribution of any employee eligible for a cashable opt-out (in this case, targeted “unhealthy” employees) would be the premium contribution plus the opt-out amount — raising the required employee contribution by the amount of the cashable opt-out. It’s unclear if this same analysis applies when calculating the affordability of coverage under the ACA’s play-or-pay requirements, individual mandate, and eligibility standards for public exchange subsidies. Employers with opt-out designs should review their plan’s affordability with their legal advisors. The potential assessment is same as for #3 above.
5. Prepare for play-or-pay and MEC reporting. The IRS will use the information from Forms 1094 and 1095 filings to confirm subsidy entitlement and assess payments under the individual coverage mandate and the employer shared-responsibility provisions. The first year for which the reporting is required is 2015, due in early 2016. Rules allow for a 30-day deadline extension for both furnishing the individual statements and filing the IRS transmittal, but each requires timely employer action. Employers filing late or inaccurate Forms 1094 and 1095 are subject to penalties of $250 per return, up to a $3 million maximum.
Every year when we tabulate our survey results, we eagerly dive into the results for jumbo employers (those with 20,000 or more employees) to identify and measure movement in the latest health benefit management trends. The jumbo employers have long been the pioneers driving health care innovation. They cover more people, so more at stake. They also tend to have more resources - people and financial - to devote to the cause. Their focus is not just cost, but also includes the other two components of the triple aim - quality and engagement. How do we know it works? Historically they have demonstrated lower rates of increase in health care cost than the overall averages and at the same time maintained richer benefits (lower deductibles, etc). But the real proof is in an analysis we do of 25 best practices across large employers in three areas – plan design, workforce health, and care delivery – where those in the top quartile for most best practices outperform those in the bottom quartile with about one percent lower trend.
Cost-management best practices
Plan design and delivery infrastructure
|Contribution for family coverage in primary plan is 20%+ of premium||Offer optional (paid) well-being programs through plan or vendor||High-performance networks|
|PPO in-network deductible is $500+||Provide opportunity to participate in personal/group health challenges||Surgical centers of excellence|
|Offer CDHP||Offer technology-based well-being resources (apps, devices, web-based)||On-site clinic|
|HSA sponsor makes a contribution to employees’ accounts||Worksite biometric screening||Telemedicine|
|Voluntary benefits integrated with core||Encourage physical activity at work (gym, walking trails, standing desks, etc.)||Value-based design|
|Mandatory generics or other Rx strategies||Use incentives for well-being programs||Medical homes|
|Steer members to specialty pharmacy for specialty drugs||Spouses and/or children may participate in programs||Accountable care organizations|
|Reference-based pricing||Smoker surcharge|
|Data warehousing||Offer EAP|
|Collective purchasing of medical or Rx benefits|
|Transparency tool provided by specialty vendor and/or used by 10% of members|
|Use private health benefits exchange|
While we like to pay attention to what jumbo employers are doing and use it as a lens to predict market movement, it does not mean they are the only employers doing innovative things. Let's take a look at some newer practices that we all could take advantage of:
- Provide access to Accountable Care Organizations. While the ACOs are still very much in the developmental stage, the move from fee-for-service to value-based care is starting to take hold to deliver better care.
- Expansion of the scope and reach of Centers of Excellence (COE) is another emerging trend. While we see the list of conditions for COE expanding, there are two schools of thought about how many facilities are best to offer. Some programs identify a small number of best-in-class facilities nationally and others take a regional best-in-class approach to provide access a little closer to home.
- Use technology to engage employees in caring for their health. Employers are incorporating wearables and mobile apps into their well-being programs to help
- Telemedicine is one of the fastest growing trends. It offers employees a way to access care at a significantly lower cost in the convenience of their homes.
- Onsite services are another way to "meet employees where they are.” Worksite clinics, although not without their challenges, have been implemented by a growing number of larger employers. But smaller employers have new options to consider in this space, like shared or near-site clinics.
Where to start? One of the best practices that has been on our list since the very beginning is access to claims and utilization data in a data warehouse. It is likely not feasible or even practical, to try to do everything. Use your data to identify where the greatest opportunities are to focus your efforts and get you on the right path to tackle the triple aim.
A few weeks ago, we provided a list of five considerations for open enrollment regarding Affordable Care Act (ACA) compliance, focused on avoiding shared responsibility payments, imbedding deductibles in out-of-pocket limits, and complying with the new ACA reporting requirements. Today’s list addresses some requirements that expand beyond the ACA — including a few items you’ve probably checked off your list but might need to look at again because of recent guidance.
- Preventive care. Ensure that nongrandfathered group health plans comply with the final ACA rules and recent guidance on cost-free preventive services.
- Other ACA reporting and disclosure. In addition to the new ACA reporting requirements, review delivery operations for summaries of benefits and coverage (SBCs) and watch for revised SBC templates. Prepare for round two of online submission and payment of ACA’s reinsurance fee.
- Midyear changes to cafeteria plan elections. Decide whether to permit midyear changes to cafeteria plan elections for either or both of the status-change events in IRS Notice 2014-55.
- Same-sex marriages and domestic partnerships. Assess how the US Supreme Court’s Obergefell v. Hodges ruling legalizing same-sex marriage nationwide affects your benefit programs and employment policies. Also consider the decision’s indirect implications for domestic partner coverage.
- Mental health parity. Check that plan designs and operations provide parity between medical/surgical and mental health/substance use disorder (MH/SUD) coverage. Federal audits of health plans now evaluate compliance with the final Mental Health Parity and Addiction Equity Act (MHPAEA) rules that took effect in 2015. In addition, state legislative activity and litigation around parity issues continue.
- Wellness. Review employee wellness programs against the proposed Equal Employment Opportunity Commission (EEOC) rules requiring voluntary participation and restricting incentives for completing health risk assessments and/or biomedical screenings. Be prepared to make changes after the EEOC finalizes these rules for nondiscriminatory wellness plans under the Americans with Disabilities Act.
- Fixed-indemnity and supplemental health insurance. Review fixed-indemnity and supplemental health insurance policies to ensure they qualify as excepted benefits under the ACA and the Health Insurance Portability and Accountability Act (HIPAA).
When finalizing health benefit designs and contribution strategies, be sure to update all employee communications materials as well as terms and agreements with your vendors.
While employer plans typically provide comprehensive coverage, there are a number of health services that some employers cover and others don’t. The ACA requires qualified plans offered through state public exchanges (and small, fully insured group plans off-exchange) to cover “essential health benefits” (EHBs). States were allowed to define EHBs by selecting a benchmark plan from current insurer offerings, and some state benchmark plans included less common coverages — for example, autism treatment, bariatric surgery, and infertility treatments.
While large, insured group and self-funded employer plans are not required to cover EHBs, they had to eliminate any lifetime or annual dollar limits on essential benefits they did offer, as of Jan. 1, 2014. Employers had the option of dropping a coverage rather than removing benefit limits. At the same time, it was possible that employers comparing their plan to a state benchmark plan might feel the need to add a coverage to make their plan more competitive.
To see if the focus on essential benefits has affected employers’ coverage decisions one way or the other, we compared the prevalence of a number of special coverages in 2013 and 2014, using data from Mercer’s National Survey of Employer-Sponsored Health Plans. The results were mixed, suggesting that large employers’ decisions about what to cover remain influenced by employee expectations, corporate philosophy, and geographic norms.
We saw the most growth (though still modest) in treatment of autism spectrum disorders in 2014. Overall, 85% of large employers provide coverage for at least some diagnosis and treatment services, up from 82% in 2013. Diagnostic services are covered by 78%, up from 74%. Of the different forms of treatment, speech, occupational, and physical therapies and medication management are the most commonly covered (70% and 67% percent, respectively, up from 68% and 63%). Inpatient and outpatient treatment services are covered by 61%, up from 56%. However, there was little change in coverage for intensive behavioral therapies, now provided by 37%.
Bariatric surgery has been shown to be an effective means of improving the health of severely obese individuals. However, only 58% of large employers cover bariatric surgery, unchanged from 2013, and more than half of these will only cover surgery for individuals who have first complied with a behavior modification program. Bariatric coverage is more common among larger employers, and there we did see some growth: Among employers with 5,000 or more employees, 75% offer it, up from 71% in 2013.
Coverage for infertility treatment is about on par with levels seen two years ago. Following a slight increase in 2013, coverage prevalence has returned to 2012 levels. Coverage for evaluation by an infertility specialist is now provided by 59% of employers. Drug therapy is covered by 37%. There has been slight growth in coverage for in vivo and in vitro fertilization, now covered by 25% and 26% of employers, respectively, up from 23% for both in 2012. Coverage for advanced reproductive procedures stands as 14%, up from 11% in 2012 but essentially unchanged from 13% in 2014. Employers in the Northeast are the most likely to cover infertility treatment and employers in the West are the least likely — perhaps because employees in the West are, on average, younger than elsewhere in the country.
Coverage for gender reassignment surgery, while still rare among all large employers, is growing. In 2014, 8% of all large employers provided this coverage, up from 5% in 2013. However, only another 3% say they are considering it. Larger employers are more likely to include this surgery in their plans. But while coverage is offered by 23% of employers with 10,000 or more employees, there was no growth in 2014, and only 5% say they are considering adding it. Employers in the Northeast are twice as likely to provide this coverage as employers in the South.
Despite its popularity, coverage for most alternative medicine therapies remains the exception rather than the rule. While most employers provide coverage for chiropractic services (91%), just under a third cover acupressure or acupuncture (32%), and fewer than a fifth cover massage therapy, homeopathy, or biofeedback. Apart from slow growth in coverage for chiropractic and acupuncture/acupressure treatment, these figures have changed little over the past 10 years. As the employee population ages and looks for help with the inevitable aches and pains, employers might want to consider whether adding coverage for these relatively low-cost services might save money in the long run.
Health reform has accelerated employer adoption of consumer-directed health plans (CDHPs). More than a third of all large US employers (500 or more employees) — and nearly two-thirds of jumbo employers (20,000 or more employees) — offered an account-based CDHP in 2013. However, because CDHPs are usually offered as an option alongside PPO or HMO medical plan choices, enrollment remains relatively low, at 18% of all covered employees.
CDHP coverage costs 15% less, on average, than PPO coverage, and 18% less than HMO coverage, but limited enrollment translates to limited savings. Some employers have already taken the step of offering a CDHP as the only plan, and more are considering it. While just 6% of all large employers offered a full-replacement CDHP to employees at their largest worksite in 2013, 16% say they will do so by 2016, as shown in the chart above. That figure rises to 29% among the jumbo employers.
But do employers that offer CDHPs as a full replacement see the same level of savings as when the plan is offered as an option? And, in designing a full-replacement plan, do employers take into account the fact that the plan must now work for all employees, rather than the minority who typically select it? To find out, we analyzed data from Mercer’s National Survey of Employer-Sponsored Health Plans to compare HSA-eligible CDHPs offered as a full-replacement strategy to those offered alongside PPOs or HMOs.
Full-replacement CDHPs tend to have richer plan designs than CDHPs offered as an option. When a CDHP is the only plan, employers are more likely to make a contribution to a health savings account (77%, compared to 70% of those offering a CDHP alongside a PPO or HMO), and the contribution amount is higher (the median employer account contribution for a family is $200 higher when the HSA plan is offered as a full replacement). Deductibles are about the same, but prescription drug benefits are more often covered at a separate, higher benefit level (67% of full-replacement plans, compared to 57% of plans offered as a choice). And employers with full-replacement plans go to greater lengths to explain the plan to employees and help them to use it (24% say their communication efforts are “very extensive,” compared to 15% of employers with optional CDHPs).
But employers offering CDHPs as a choice require lower contributions. While full-replacement plan design is richer, without the need to entice employers to select the CDHP over other plan types, employee contributions are higher. The average employee contribution requirement for full-replacement HSA-eligible plans are $82 and $268, respectively, for employee-only and family coverage, compared to $64 and $244 for plans offered as an option.
Many assume you lose most of the savings with full-replacement…not true! Some critics of the CDHP model have argued that CDHP savings are due at least in part to risk selection — younger, healthier people opting to enroll in the CDHP. However, as shown below, the average per-employee cost for a HSA-eligible CDHP offered as a full replacement — in which risk selection is not a factor — is only 7.5% higher than for an optional CDHP. And it’s still 15% less expensive than the average PPO plan.
Average Per-Employee Medical Plan Cost
In Mercer’s most recent survey of employer-sponsored health plans, we saw PPO deductibles increase and more employers move to consumer-directed plans, which typically have higher deductibles than traditional PPO plans. For many, escalating upfront deductibles are a real financial burden. What are employers doing to soften the blow? According to our survey, 18% of employers are offering a telemedicine option for employees, up from 11% in 2013. The largest employers are moving fastest — 34% of those with 20,000 or more employees offered telemedicine services in 2014, nearly double the number offering it in 2013.
Telemedicine provides members with on-demand access to physicians who can diagnose, treat, and prescribe medication, when appropriate, for many medical issues. Members are required to complete a medical history prior to consult request. Doctor consultations are available 24/7 via telephone or video and in many instances can be arranged with very little lead time. A board-certified physician licensed in their state reviews their medical history and provides a consultation over the phone or through video. The physician recommends the treatment for the member’s medical issue. If a prescription drug is required, the physician will electronically send the order to the member’s pharmacy of choice. The physician documents the consultation in the member’s history, and information is made available to the member through an online archive and, if requested, to the member’s primary care physician.
So what does a telemedicine visit cost? Typically between $30 and $50, depending on the vendor. The real savings come because a telemedicine visit frequently replaces a more intensive setting of care, whether a doctor’s office, urgent care facility, or emergency room. If the member is paying out of pocket for the visit because they have not yet met their deductible, they can save a significant amount of money.
Obviously, consulting a doctor from home is also more convenient than making a trip to their office. But do people feel confident that an electronic visit will produce the same result as a live visit? There’s evidence they do — especially if they and the doctor can see each other. Harris Poll did a survey for American Well and found that 64% of those surveyed said they were willing to see a doctor via a video telemedicine visit. Further, about the same percentage (63%) said they thought a video visit would result in a more accurate diagnosis than a phone or email consultation. (See full infographic below.)
Don’t currently offer telemedicine? You can add it now — no need to wait for open enrollment. This benefit is very easy to add in the middle of a plan year. Employees will appreciate a lower-cost alternative especially early in the year when the re-set button has just been applied to their deductible.
The Commonwealth Fund released findings from its Health Care Affordability Tracking Survey, which focused on those with private insurance between the ages of 16 and 64. The primary finding was that three out of five privately insured adults with low incomes, and half of those with moderate incomes, reported that their deductibles are difficult to afford. The survey also found that some individuals delayed or avoided care as a result.
While small firms are more likely to have very high deductibles than large employers, Mercer’s newly released National Survey of Employer-Sponsored Health Plans found that large employers raised the individual in-network PPO deductible by 15% in 2014, to nearly $800 on average. At the same time, enrollment in high-deductible consumer-directed health plans rose from 18% to 23% of all covered employees. As employers shift more financial accountability to employees, finding tools and resources to package with high-deductible health plans becomes an important consideration.
From the employer perspective, high-deductible plans are attractive because they are less expensive but still meet the minimum criteria for what must be offered under the ACA to avoid assessments. But, thinking about these plans from the employee perspective, there are two key concerns. First, if you’re providing a choice of plans, how do you make these plans attractive to employees? For them, the essential question is “what is a smart buy?” As deductibles get higher, employees will weigh how much they are willing to pay for health insurance when the deductible is so high that they may never get any value from it other than preventive care. That’s an especially important decision for low-paid workers. A second concern is whether plan design will result in employees delaying or avoiding care. While it might be penny-wise to forgo a physician visit when a health problem is first detected, in the event the problem is serious, the savings pale next to the higher cost of more intensive treatment at a later stage, especially when early treatment offers the potential for a better outcome.
So what can employers do to help employees manage higher deductibles and make good decisions, for both their finances and their health?
During open enrollment — the point of purchase for health insurance — decision-support tools can be very helpful in facilitating good financial decisions. Not only can employees model the cost of the care they expect to need and their total out-of-pocket expense, some tools will suggest amounts to contribute to supplemental accounts such as a Health Savings Account. The most advanced tools utilize an individual’s medical claims from the prior year to illustrate their out-of-pocket expense had they been enrolled in the currently available plan options.
Even after open enrollment, there are ways that employers can help plan members with high deductibles stretch their health care dollars and become better health care consumers. Suggestions include:
- Encourage healthy behaviors by paying incentives into accounts that can be used to cover deductible expense.
- Provide access and promote use of a nurse line, concierge, and/or health advocate for members to consult about care needs, provider recommendations, and the approximate cost of various options for care.
- Provide access to transparency tools — technology that members can use to research cost for office visits, lab tests, and prescription drugs from different providers.
- Sponsor and promote access to lower-cost care options via telemedicine and convenience care clinics for more routine health care needs.
- If you have on-site occupational health professionals, consider transforming their role to include primary care and wellness support.
- Expert medical advice is a helpful service to help navigate members to qualified second opinions and referrals to centers of excellence.
While the navigating the health care delivery system is still daunting to many, we have seen big advances in the availability of tools and resources to help us all become smarter shoppers for health care. And there is much more to come.
The Equal Employment Opportunity Commission (EEOC) grabbed headlines this week by filing for a temporary restraining order against Honeywell, claiming that the company’s wellness program violates both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). While the EEOC had filed two previous suits in this area, both were against companies that had taken fairly extreme measures against employees who didn’t perform actions required to receive wellness incentives. In this case, the EEOC is alleging violations by a wellness program closer to the mainstream in which employees are required to undergo biometric testing to help identify health risks as well as a blood test to determine whether the employee or spouse uses tobacco.
According to the EEOC, the financial impact of not taking part in the screenings — two separate premium surcharges and the loss of an HSA contribution, amounting to a maximum of $4,000 for an employee and spouse — is enough so that employees are essentially being forced to undergo screening. Honeywell has called the suit “frivolous” and says the EEOC is “out of step” with the current health care marketplace — especially given that their program meets the requirements of both the ACA and HIPAA. Employer groups have been frustrated that the EEOC has not issued guidance about how the ADA and GINA apply to wellness programs, despite repeated appeals over the past few years.
While the EEOC action is obviously worrisome for employers that use financial incentives, here are a couple of points to keep in mind before panicking: First, we don’t know yet whether the restraining order will be granted — a hearing will take place on Monday. Second, even if the restraining order is granted, the case is being heard in a lower court in Minnesota, so it will have limited jurisdictional impact (although the ripple effect could be significant). So even if your program design is similar to Honeywell’s, it’s most likely that you’ll have time to consider a response. Long-term, it’s worth asking yourself two questions about your incentive strategy: how much of an incentive — and what type of an incentive — is enough to accomplish your goals, and what’s the best way to communicate the incentive to avoid employee backlash.
Update: November 3, 2014. The EEOC’s motion for a temporary restraining order was denied by the judge from the bench. This is good news for Honeywell and all employers hoping to get on with open enrollment without interruption. However, the judge specifically said she wasn't ruling on the merits. So if the EEOC pursues the case, the court may still rule on the underlying issues.
Last year saw the biggest one-year enrollment increase ever in account-based consumer-directed health plans – from 18% to 23% of all covered employees – as employers added plans at a rapid pace. All the growth is in plans with Health Savings Accounts – HSAs – and yet the other type of account, the Health Reimbursement Account, hasn’t gone away. About one in ten employers still offer an HRA, as they have for the past three years. In this informative article "HSAs Surge, Leaving HRAs in a Niche" in Managed Care Magazine (p.27), Mercer’s own Jay Savan explains the pros and cons of HRAs and why some employers prefer the doughnut to the bagel.
Final rules released last week on the mandate for nongrandfathered health plans to cover preventive services without cost sharing largely consolidate and clarify existing guidance. For closely held for-profit entities with religious objections to covering all or certain contraceptive services, the regulations give new details on how to obtain the same accommodation available to nonprofit religious organizations and their affiliates. The regulations will apply for plan years starting on or after 60 days from the date of publication in the Federal Register (Jan. 1, 2016, for calendar-year plans).
President Obama has officially nominated Andrew Slavitt to become CMS Administrator. Slavitt has been serving as Acting Administrator since Marilyn Tavenner stepped down earlier this year. He previously was an executive with Optum, a division of United Health, and was involved in ACA implementation in that capacity. Slavitt needs Senate confirmation and will face tough questioning from Republicans who want to grill the administration over the ACA in addition to drilling down on Medicare and Medicaid issues.
A recent article in The New Yorker entitled “OverKill” by Atul Gawande describes the harmful effects of unnecessary medical care, with a focus on the resulting adverse medical consequences. It framed the issue of medical waste using a different lens than I typically apply, and I find myself thinking about the implications frequently.
As Mercer’s Chief Actuary for Health and Benefits, I have spent nearly a year leading an internal initiative aimed at understanding how value-based care is changing the health care landscape. Value-based care is a term used to describe a number of strategies for reducing unnecessary care and encouraging the practice of evidence-based medicine by changing incentives for providers and patients. In particular, I’m looking at the implications for the employers with whom we consult. My focus, first and foremost, is on all things financial. Studies point to the large degree of waste in the medical system, and as employers look at ways to flatten the medical trend curve, eliminating waste seems a logical place to start.
I am also a spouse and a parent, though, and will admit to the tiny voice in my head that asks if it were my child or spouse who was ill, wouldn’t I want to exhaust all possibilities to cure them? How do we find the right balance between personal and global interests?
What this article points out, though, is that medical waste is not just a case of better safe than sorry. In many cases unnecessary medical procedures are actually harmful to the patient. Beyond throwing dollars down the drain, we are actually putting health and, in some cases, lives at risk.
As consultants, we continually work with employers to identify cost-effective solutions that improve the health and well-being of their employees and dependents. The value-based care movement has the potential to do just that, by creating financial incentives and accountability within the health care delivery system. These incentives, part of a broad payment reform movement, reward providers for managing cost, improving quality, and increasing patient satisfaction with the health care system.
Many aspects of our current health care system are broken, and it needs transformative change in order to address the fundamental problems that Gawande describes. There are grass-roots movements under way focused on driving this transformation, led by organizations like Catalyst for Payment Reform and National Business Group on Health, and as employers, you can lend your voice to the collective call for action. Wasteful spend for unnecessary tests and procedures not only pressures our profit margins and competitiveness in a global economy, it can harm the people we are looking to help — our employees and their families.
Learn more about value-based care and how you can help to drive this transformation.