With this post, we at the blog are officially kicking off annual planning for 2018. Over the coming weeks, we’ll be offering advice and check lists for 2018, including some special to-do’s for prescription drugs and time-off benefits. We thought a good place to start this year is with a list of best practices. The list below contains 25 health benefit best practices from the Mercer National Survey of Employer-Sponsored Health Plans. Each year we compare the performance of employers that use the most of these best practices with those using the fewest (the top and bottom quartiles). And each year we find that those using the most best practices have lower average healthcare cost increases. (In 2016, the two groups had average increases of 3.8% and 4.8%, respectively.)
As you review the list, highlight the practices you have in place. Once complete, there are two ways to look at your results. One way would be to look at all the things you are not doing and consider them as options for 2018. But if you already have many of these strategies or tactics in place, a better approach for your organization might be to carefully consider whether you are getting the results you expected. Is there opportunity to improve? Should you redirect funding to another program?
We update the best practice list every year. Let us know if you have suggestions.
WHAT’S WORKING TO HOLD DOWN COST GROWTH?
25 Best Practice Cost-Management Strategies
Source: Mercer National Survey of Employer-Sponsored Health Plans 2016
Raise your hand if you’ve recently had a thoroughly positive conversation about healthcare in America, like one where people were smiling and talking about how great it is. No one mentioned the soaring costs, 3-minute doctor visits, confusing bills, or any other negative experience.
Right, thought so. As an employer, you may be asking yourself what can you do about it besides offer the best healthcare benefits you can.
But the truth is, employers are pivotal players in today’s healthcare system. Nearly two-thirds of all health coverage is employer-provided, which translates into a nearly one trillion dollar annual spend. Your purchasing power has clout.
Here are 4 ways companies like yours can help reshape the health benefits market in the years ahead.
- Pay For Value, Not Volume.
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. These include accountable care organizations, patient-centered medical homes and other types of narrow networks.
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. Comparing utilization and claims data from a given market with national averages will reveal issues that can be addressed with value-based care strategies:
- Underuse: Is there too little preventative care, such as cholesterol and cancer screenings?
- Misuse: Are there too many complications following hospital stays, and a high re-admission rate?
- Overuse: Are there high numbers of procedures, such as knee and hip replacements, that may not always be necessary?
Value-based care can and should address these issues, improving the quality of care as it reduces unnecessary cost. But it also has certain entry costs for employers, such as care coordination fees and shared savings bonuses. All major carriers have agreements with value-based care providers, and if you’re self-funded, you’re likely already paying these added costs. To make sure you’re getting the greatest benefit, ask your carrier to be transparent about what you’re paying and what you’re saving.
- Join The Drive To Better Quality.
Quality means providers are delivering the right care at the right time in the right setting, error-free. It seems obvious, but the American healthcare system is still moving toward that goal.
Medical errors seriously injure or kill hundreds of thousands of Americans every year. And analysts estimate 34% of U.S. healthcare spending is wasted on things like inefficiency, unnecessary procedures, and the cost of treating medical injuries that could have been avoided.
How can you help turn this around? Make sure your providers are delivering quality data at least annually. If their numbers don’t thrill you, you can:
- Switch insurance carriers, or tie your contracts to higher-quality outcomes.
- Structure your insurance plans in a way that encourages your employees to seek out the higher-quality providers in your network.
- Personalize the Experience.
New technology is on your side in the challenge to engage employees in caring for their health. Here’s one example. Let’s say you discovered that 30% of your employees are smokers, and of those, most are between 20 and 30. Your smoking cessation program should offer:
- a sleek digital interface
- a buffet of online tools
- high-touch counselors who email and text
- rewards that appeal to Millennials, like gift cards
This kind of thinking can apply to medical providers, gyms, massage therapists—any business that provides healthcare to your employees. Hold your vendors accountable for achieving high patient satisfaction rates. Your employees are their customers.
- Embrace Disruption.
As an employer, you’re in a position to inject change into the healthcare system. Don’t be afraid to do it, even if it creates short-term disruption. Those quality goals you demand could be surprisingly effective, even if it means you switch to new wellness programs, providers—or even insurance companies.
Keep tabs on your vendors to ensure they’re producing outcomes that align with your company’s objectives. Define your expectations, and agree to a cadence for measurement and reporting.
If you have a weight loss program, for example, expect that a certain percentage of your employees will actually drop some body weight. As any physician will tell you, even small changes on the scale can produce major health improvements.
Four Strategies, Multiple Benefits
A healthier workforce means more productivity and better engagement overall. Your company, and your workforce, has everything to gain when you help lead the transformation of the healthcare sector. The bottom line—choose health partners that produce results. The expectation can create the reality.
This post is part of our “Driving Transformation” series, in which Mercer consultants share key take-aways for employers from the 2016 Oliver Wyman Health Innovation Summit, a recent conference hosted by Mercer’s sibling firm, management consultant Oliver Wyman.
A session focused on the power and promise of genomics was of particular interest to employers at the conference. Industry leaders discussed how genetic testing has now passed the price-vs.-utility intersection, making genetic assessments a potentially powerful tool to better identify health risks and target treatment for particular conditions.
Here are some examples of the vendors and their approaches in this space:
- Counsyl and Color Genomics -- Focus is on identifying inherited cancer genes and genetic counseling. The screening’s intent is to identify gene mutations for members and their providers for the most common hereditary cancers where advanced knowledge makes a difference in pursuing preventive measures or preparing for future implications.
- Interleukin Genetics -- Provides a genetic test focused on identifying those with a genetic marker that indicates a tendency to over-produce inflammation. Once identified, members are counseled to receive more preventive dental care, which has been shown to lower systemic inflammation. Better managing the chronic inflammation for such diseases as CVD, CAD, and diabetes has been linked to healthcare cost savings.
- InformedDNA -- Provides a utilization management service for prior authorization of genetic testing. Members complete an online genetic screening tool that helps identify candidates to receive a genetic test. The intent is to prevent unnecessary genetic tests.
The list of companies and approaches goes on and on, from those that focus on identifying gene mutations that impact how drugs are metabolized to those that help an oncologist choose between multiple therapies based on the genetic makeup of a patient’s tumor.
While many of the tests are currently marketed in a direct-to-consumer manner, some of the companies are increasingly focused on the employer market. As genomics continues its rapid evolution, employers need to prepare. Some initial steps include:
- Conduct a discussion with your health plan to understand its medical policy or recommendations for coverage of genetic tests.
- Conduct a discussion with your pharmacy benefits manager regarding its recommendations regarding pharmacogenomics.
- Explore some of the new vendors in this space. Our Mercer LABS team can point you toward vendors that may be of interest. (Mercer LABS evaluates emerging healthcare startups and their ideas, from cutting-edge areas like genomics and ingestible technology to old-fashioned, foundational services like claims processing and provider discounts -- often the areas most in need of disruption! We help prepare these new companies for the challenges of scaling up to serve the employer market.)
Genomics certainly has the potential to transform healthcare in ways we are just beginning to understand. It’s time to prepare for this future.
This post is part of our “Driving Transformation” series, in which Mercer consultants share key take-aways for employers from the 2016 Oliver Wyman Health Innovation Summit, a recent conference hosted by Mercer’s sibling firm, management consultant Oliver Wyman.
Prepared or not, a new healthcare market is emerging. Every stakeholder group operating in the healthcare ecosystem is changing. We’re seeing the simultaneous consolidation and fragmentation of carriers and providers, continuous introduction of tech start-ups bringing entirely new design mind-sets, and tumultuous evolution of the public exchange. Employers, who play the pivotal role of providing coverage for more than 60% of all those insured in the US today, are adopting new, aggressive strategies to shape the rules of the road in the new healthcare landscape.
One of the highly charged areas of change is around the evolving healthcare relationship between employer and employee. We know that healthcare benefits rank second only to pay in the employment value proposition. Employers are “staying in the game,” but wrestling with how to do it more efficiently and more effectively.
The theme of “Move Faster / Fail Smarter” was introduced at the Oliver Wyman conference as an underlying mantra of how to rapidly transform the healthcare ecosystem. What’s the applicability of this concept to employers? Can we, too, move faster and fail smarter?
Let’s say that an employer wants to transform their current wellness program from a one-size-fits-all model to a highly personalized health paradigm delivered by various new wellness tech entrants like Livongo (diabetes), Omada (pre-diabetes), Progyny (infertility), Kirbo (family weight management), and others.
- Would your procurement colleagues be ready to assess the capabilities of multiple wellness point solutions all at the same time?
- Could contract terms be negotiated rapidly with each?
- Would you have the administrative infrastructure to manage an exponential increase in the number of vendor contracts?
- How would you communicate the availability of these new programs in meaningful ways so your employees get personalized notifications that are relevant and timely to meet their specific needs?
- What happens if one of these programs fails to meet expectations or a brand-new startup has emerged and leapfrogged the competition? How quickly could you make a change?
These are all real considerations in the quest to move faster. While many employers have successfully created a culture that supports program pilots, others feel that pilots require the same degree of upfront heavy lifting as a full program roll-out. Here are a few ideas that could make it easier:
- Meet with Procurement to create a new model for health and wellbeing vendor management.
- Include Net Promoter Score as a key metric of success for all of your health and wellness partners – if your employees don’t have a magnetic, positive experience, it will be impossible to yield a positive ROI because engagement will be too low.
- Create a checklist and guidelines to assess new entrants consistently and proactively. It can be a full-time job to meet and vet new vendors in this space, which is completely unsustainable. Instead, know your cost drivers and risk areas – agree to meeting only with vendors who solve a high-priority problem for your organization.
Conducting pilot projects may be a “smarter way to fail” in your organization. The possibility that the initiative won’t be right for your organization is baked into the concept of a pilot. The key is to conduct the pilot in such a way that, whether you ultimately move forward or not, you’ve learned something to apply to your next effort.
Here’s an employee advocating for her own health: Before a medical appointment, she checks her health insurance to make sure the visit is covered. During the visit, she takes notes. Before the doctor writes the prescription, she asks, “Are there any generics?”
If more people had taken just that last step to use generic medications, consumers and employers could have possibly saved $25 billion -- yes, that’s billion with a B -- in out-of-pocket expenses between 2010 and 2012, the Journal of Internal Medicine reported in June 2016.
Persuading employees to be their own health advocates is a win-win-win for the employees’ health, their productivity, and the employer’s health care costs. Here are three steps to turn your employees into advocates for their own health:
- Tell employees they’re protecting themselves.
The physician may take the lead in providing medical services, but healthcare is ultimately a team sport. Because of the high potential for medical errors, patients are best positioned to play offense by asking a lot of questions and clarifying communications by all parties involved.
Medical errors may lead to serious or fatal events in 80,000 to 160,000 people per year, according to an April 2013 review of 25 years of medical malpractice claims by researchers at Johns Hopkins University. The most common errors are missed, incorrect, or delayed diagnoses.
The study underscores the importance of patients speaking up. Furthermore, seeking a second opinion results in revised diagnoses in 39% of cases, according to Advance Medical, a firm that helps patients obtain expert medical opinions.
- Point your employees to technology.
The palette of digital tools to empower employees to be their own health advocates is growing. Here are two:
About 30% of employers are encouraging the use of mobile health apps to help employees become more proactive about their health, according to Mercer’s 2015 National Survey of Employer Sponsored Health Plans. For those with chronic conditions, some apps could save up to $3,000 per patient each year, reported Health IT Outcomes in September 2014.
These tools pull back the curtain on healthcare pricing by comparing the price of specific procedures across providers in a given market. Given the wide range of prices charged for even common diagnostic services like xrays and MRIs, finding a lower-cost provider can save employees substantial out-of-pocket cost.
- Offer a “script.”
Many patients are murky about what to ask their doctors. However, questions like “What are all of my options?” can trigger alternatives that save money and have better outcomes.
The Agency for Healthcare Research and Quality lists 10 questions that can spark discussions between employees and their physicians. Consumer Reports even offers videos and brochures to help patients speak up about unnecessary tests and treatments.
Resources like these can teach your employees that self-advocacy is not only encouraged, but it’s also the key to value in healthcare -- managing cost while getting the best care.
When employers are working on strategies to manage health benefit cost, behavioral health benefits aren’t often top of mind. After all, only about 4% of claims are related to treatment for behavioral health problems. But what’s missing from that picture are claims for comorbid conditions – other health problems that go along with the mental illness or behavioral health issues. According to one analysis, together these account for 22% of total medical spend. 
In other words, behavioral and medical health problems very often go hand in hand. One study found that patients with depression visited their primary care doctor nearly twice as often as patients without depression in given year (5.3 visits compared to 2.9 visits, respectively).  That’s why prevention, early diagnosis and effective treatment of behavioral health issues could have a big impact on total medical spending. It’s also estimated that 24% of patients with chronic medical conditions have undiagnosed depression. Diagnosing and treating the depression might result in improved medical health.
There is also the indirect cost of productivity losses to consider. One study estimates that productivity loss related to behavioral health issues amounts to $2,025 per employee per year.  The growing problem of opioid addiction is a contributor. It’s definitely a workplace problem: 70% of people using illicit drugs, including non-medical uses of opioids, are employed. And it’s not just employees, but their dependent children that factor into the equation. With 12% of 18–25 year olds reporting that they use opioids for non-medical reasons, adult dependent substance abuse is driving medical costs for employers. And substance abuse is impacting your youngest members as well; 6% of 12–17 year olds report using opioids non-medically.  Between the direct (medical) and indirect (lost productivity) cost, opioid abuse could be costing employers as much as $8 billion per year. 
The purpose of this post was to get your attention! If it worked, now check out Sandra Kuhn’s post about what you can go to support better behavioral health in your organization.
 Castlight book of business and clinical review and indirect costs = $2,025 PEPY. 20% of $10,128 PEPY, based on Edington DW, Burton WN. Health and productivity due to behavioral health based on analysis from Castlight Clinical Team.
 Luber MP, Hollenberg JP, Williams-Russo P, DiDomenico TN, Meyers BS, Alexopoulos GS, Charlson ME. Diagnosis, treatment, comorbidity, and resource utilization of depressed patients in a general medical practice. Int J Psychiatry Med. 2000;30(1):1-13.
 Melek S, Norris D. Chronic Conditions and Comorbid Psychological Disorders. Seattle: Milliman, 2008. The National Council on Alcohol and Drug Dependence.
In late May, Martin Senn, the former CEO of Zurich Insurance Group, took his own life just months after leaving the company. Only three years earlier, the company's former CFO, Pierre Wauthier, also committed suicide, and not long after that, so did Swisscom CEO Carsten Schloter.
Statistics about senior executive suicides are scarce. Often, these tragedies are hidden from public view, with only the most prominent making the news. But suicide has cast a shadow on Silicon Valley. A disturbingly high number of founders and entrepreneurs have chosen this path: Austin Heinz, with Cambrian Genomics. Aaron Swartz, with Reddit. Jody Sherman, with Ecomom. Ovik Banerjee, with Venture for America. Matt Berman, with Bolt Barber. Ilya Zhitomirskiy, with Diaspora. Ian Gibbons, with Theranos. (And I worry that the problem is moving downstream. Last year, in the Silicon Valley town of Palo Alto, home to Stanford University and Facebook, there were four high school suicides.)
The pressure on executives and entrepreneurs is daunting. Picture feeling overwhelmed, at your most vulnerable, and not being able to share it because it might put at risk funding, or an acquisition, or an IPO. Who wants to follow or invest in a leader who is exhibiting weakness? On the entrepreneurial roller-coaster, there can be amazing highs and crashing lows.
The general statistics on suicide are sobering enough:
- Suicide is the 10th leading cause of death in the US for all ages. (CDC)
- More people die from suicide than homicide and war combined. (WHO)
- There is one death by suicide in the US every 12.3 minutes. (CDC)
- Depression affects 20-25% of Americans age 18 and over in a given year. (CDC)
- Suicide takes the lives of over 38,000 Americans every year. (CDC)
- 45% of suicide victims had contact with primary care providers within the prior month. (American Journal of Psychiatry)
- An estimated quarter million people each year become suicide survivors. (AAS)
Yet executives and entrepreneurs are apparently at still higher risk. Dr. Michael Freeman, a clinical professor at UCSF and himself an entrepreneur, has studied the connection between mental health issues and entrepreneurship. Of 242 entrepreneurs surveyed, 49% reported having a mental-health condition. Depression was the most reported condition, present in 30% of the group, followed by ADHD (29%) and anxiety problems (27%). As a point of comparison, the general US population only reports 7% as depressed.
This is a problem that needs to be addressed. There is a lot of loneliness and depression in this world, and many people feel like failures because they can’t live up to impossibly high standards they see in the media or set for themselves. Perhaps Silicon Valley can heal itself. There are any number of new startups attempting to solve different issues in the mental healthcare space, which may include access to care, delivery of care, or quality of care. Notable names include Lantern, Ginger.io, Lyra, and Breakthrough (acquired by MDLive).
But this is also a cultural issue. Suicide needs to be openly discussed; stigmas need to be removed. On National Council Hill Day 2016 last month, hundreds of behavioral health providers, administrators, board members, consumers, and community stakeholders gathered in Washington DC and visited Capitol Hill to advocate for better resources for mental health and addiction treatment in their communities.
It’s been painful to read some of these statistics and stories as I researched this post. There are times during my own academic and professional career when I have gone through periods of depression, and wasn’t sure how to ask for help. (Fortunately, I’m in a happy place now.) If you’re reading this as a benefits professional, do your employees -- and your execs -- have easy access to help? And if you yourself are going through a hard time, remember there are people you can talk to, without fear of judgement or implication.
If you're struggling and need help, reach out to the National Suicide Prevention Lifeline by calling 1-800-273-8255 anytime.
Mercer’s Washington Resource Group recently released our top 10 compliance priorities for 2017 health benefit planning. There aren’t any surprises on this list. In fact, we’ve recently blogged about many of them. Employee Benefit News created a slide show on our Top 10 and here is a list of related posts and podcasts if you want to take a deeper dive into a topic.
- Wellness Plans (podcast): More innovative designs make it critical to know the new rules that begin on January 1, 2017.
- Essential Health Benefits (podcast): Check those dollar limits and maximum out-of-pocket maximums against updated benchmark plans for 2017.
- Mental Health Parity (podcast): Make sure your benefits are aligned with current law and best practices.
- Employer Shared Responsibility: Affordability (podcast): Know the impact of opt-out cash and flex credits; 30-hour (podcast): Understand what payments must be converted to hours of service; ACA Reporting (podcast): Make sure it’s right – no more good faith standard and the old deadlines return for the 2016 reporting year.
- Preventive care: Modify benefit terms to reflect latest recommendations and guidance on preventive care.
- Summary of Benefits and Coverage (podcast): New model SBC must be used for open enrollments on and after April 1, 2017.
- FLSA overtime rules: It’s not just a compensation issue – don’t forget to consider the benefits implications.
- Expatriate group health plans: Position group health plans covering globally mobile employees to take advantage of ACA relief.
- HIPAA privacy, security, and electronic transactions: Revisit health plans’ privacy and security obligations.
- DOL fiduciary rule: Assess the impact on welfare plans with an investment component.
The thinking on financial wellness has evolved a lot in the last few years. It’s no longer just about planning for retirement—it’s about how to make progress towards goals and reach financial independence. In a diverse employee population, people are in different life stages and have different mindsets, which affect their financial concerns. Here are five tangible ideas to start a conversation about financial health in your workplace to bring about positive change.
1. Understand the strategic benefits
Financial stress can lead to absenteeism, presenteeism and low productivity among employees, but financial wellness programs can tackle these problems and complement talent acquisition, retention and other people-related issues that determine an organization’s future success.
High-performing programs have a clear tie to business results. Improving your workers’ financial wellness has an effect on how patient, productive and engaged they are on the job – and ultimately on revenue and profits.
2. Provide individualized content
An effective financial wellness program resonates with each and every individual. Say “401(k)” to the 23-year-olds just out of college and they might just tune out. However, they may be more likely to listen if the conversation is about saving to move out of their parents’ house or paying off their student loans. Gathering quality data about your own employees lets you know what vendors and resources to invest in. Don’t make assumptions about your people – ask them what is top of mind. Of course, there are some issues with self-reporting – some might be overly optimistic about the true state of their financial affairs and others might not know – but this is a good place to start.
3. Focus on real action
A lot of Americans aren’t financially savvy, which has real consequences on their finances. Even when financial education programs are offered for employees, it is difficult to get them to make the connection between learning and acting on what they have learned. Employees should be given the proper tools to be guided on an action-oriented path for their individual circumstances in order to make significant strides towards financial wellness.
4. Rely on thoroughly vetted, integrated and monitored vendors
Every day, there seems to be a new services provider offering ways to improve your employees’ financial health. It’s a jungle out there – and picking the wrong vine to swing from could land your employees in an alligator-infested pond! Every vendor chosen for employees should be highly regarded in their area of expertise and then monitored to confirm that they maintain this standing, uphold the promised level of service, and minimize ongoing reputational and operational risk.
5. Employ insightful metrics
As you start to understand statistically significant segments of your population, you can then think of targeted strategies for each group, rather than speaking to your employees as a homogenous whole. For example, cluster analysis is a statistical method of grouping people based on important shared characteristics: gender, ethnicity, age, location. While there will always be exceptions, this “profiling” does generally provide a relatively accurate picture of the needs of different employee groups because it’s based on actual data.
As a new field, financial wellness is not yet well-established and is evolving rapidly. As we learn what works and what doesn’t work, we need solutions and products that can adapt and respond rapidly. A key buzzword in this area is “iteration,” where we see what is working or not and adapt the solution in response to that feedback. In the case of digital solutions, this can lead to weekly or monthly releases of enhanced solutions.
If you’re thinking of introducing a financial wellness program in your organization, find out what’s keeping them your workers from meeting their various financial goals, instead of just making assumptions. Then you’ll be better equipped to find the solutions that will fit for the needs you discover.
This post is part of our 2017 Planning Checklist series.
The latest and top iPhone App – Pokémon Go – has some unexpected health benefits. The new app from Nintendo (that’s right, the makers of Wii and Wii Fit) requires users to walk around outside and capture the Pokémon around them. The app has users walking, running, and jumping through their neighborhoods to capture the Pokémon. Check out the description in this Mobi Health News article. Perhaps this app will inspire your next workplace wellness challenge.
I was interested to read about a Harris poll on millennials’ savings priorities. The good news is that they are saving – in fact, they are saving more than their Gen X counterparts. The not-so-good news is that they have a lot of priorities that come before saving for retirement – and they’re hoping to retire, on average, at a youthful age 62! Just another nudge for employers to step up communications encouraging optimal use of all the employer-sponsored benefits and provide tools to support effective financial planning. We’re not talking about adding new benefits – just better packaging and communications for higher employee engagement and appreciation.
Employee well-being programs have become a mainstay in employers’ overall benefit offerings. Most large employers offer programs designed to support health and well-being, and each year our National Survey of Employer-Sponsored Health Plans finds that more are contracting optional and niche services from health plans or specialty vendors, as opposed to offering just their plan’s standard services or in-house initiatives (48% did so in 2015, up from 30% in 2012). That’s why we were surprised to see a recent Wall Street Journal article suggesting that employers may be taking a step back from wellness programs. The article pointed to SHRM’s 2016 Employee Benefits Survey, which found that certain wellness program elements have decreased in prevalence, notably onsite seasonal flu vaccinations and 24-hour nurse lines. But although certain services are being offered less, the study reports that more employers are increasing wellness offerings (45%) than decreasing them (19%). It also highlights that employers are becoming more strategic in their program offerings; if employers are taking a ‘step back’, they’re doing so to take stock of their current offerings and evaluate what works best for their workforce.
Other developments in the health care ecosystem may account for changes in wellness program offerings. As access to retail health clinics continues to expand, making flu shots easier and cheaper to obtain than with a primary care physician, some employers may pull back on this offering and dedicate those budget dollars to other well-being resources. And our survey found sharp growth in offerings of telemedicine in 2015 (from 18% to 30% of large employers) and advocacy services (from 52% to 56%), both of which may be taking the place of some previously offered 24-hour nurse lines.
Employee well-being programs will continue to evolve as employers assess their offerings, whether based on participation levels, employee surveys or ROI analysis. Health care market developments and innovations that arise will also impact well-being offerings, but it’s clear that these programs have become an essential part of the American workplace and are here to stay. There was lot of buzz earlier this year over a study published in JOEM (which we’ve written about here) linking robust health and well-being programs with better stock performance – perhaps because the findings resonated with many sponsors of high-performing programs who have been hoping for a better way to measure the value of their investments in employee health.