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
As the latest Mercer National Survey of Employer-Sponsored Health Plans shows, more employers are offering employees tools to make more informed healthcare decisions. Among the largest employers (those with 20,000 or more employees), 28% provided transparency tools through a specialty vendor in 2016, up from just 15% two years ago. An additional 62% say their health plan provides some type of transparency tool.
But some employers are taking consumerism a step further and actually paying employees for using these tools to select lower-cost healthcare services. As this Wall Street Journal article describes, the states of Kentucky and New Hampshire and Jackson Health System are three employers taking this approach.
Vitals, Inc., a healthcare comparison shopping tool used by the state of New Hampshire, estimates employers saved $12 million by using their tool on “shoppable” procedures (e.g., mammograms, MRIs, CT scans and blood work). More complex procedures for which people are understandably less price-sensitive, such as cancer treatments or brain surgery, aren't included. Typical savings for employees can range widely from $25-$500, often paid in checks or gift cards, according to Vitals.
Transparency tools can be a key source of cost and quality information, but these tools need to be visible and user-friendly to gain traction with employees and thus generate savings. Effective communication about the tools are essential, but you might also consider more innovative approaches like those used by the employers above to incent smart shopping behavior in your population.
The Kaiser Family Foundation recently polled Americans to identify their health care priorities for the next President and Congress. At the top of the list were issues related to prescription drug costs – specifically, making sure drugs to treat chronic conditions are affordable for consumers (74%) and government action to lower drug prices (63%). From an employer’s perspective, the latter is more important, as it would manage the total cost of the drug rather than simply limiting a member's out-of-pocket expense, which just shifts cost back to the plan. While drug prices will be a hot topic for lawmakers and the regulators to address when new leaders take office in January, employers might not want to wait and hope. Over the next five years, it is expected that 40 new specialty drugs will hit the market each year. Now is the time to develop a strategy to get in front of that influx of new high-cost drugs.