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.
When employers are asked how they plan to control health benefit cost over the long term, they talk about improving employee health. This focus on employee health is one factor fueling growth in worksite clinics. Last year, Mercer’s National Survey of Employer-Sponsored Health Plans found that 29% of employers with 5,000 or more employees provided an onsite or near-site clinic offering primary care services, up from 24% in the prior year. Mercer followed up with these employers in a new, targeted survey on worksite clinics. Of the 134 respondents, 72% of those whose clinics provide general medical services said that managing employee health risk and chronic conditions is an important objective for the clinic.
Worksite clinics are a convenient way for employees to undergo biometric screenings (offered at 77% of clinics), participate in face-to-face chronic condition coaching (60%), and take part in lifestyle management programs such as smoking cessation (59%) or weight management (56%). Pharmacy services are offered at 38% of clinics, and just over a fourth (26%) provide mental health or employee assistance program (EAP) counseling in their clinics.
For more than two-thirds of survey respondents (68%), improving access to care was also an important objective. As the Affordable Care Act (ACA) expands health coverage to more Americans, primary care shortages in some parts of the US could be exacerbated. Establishing a new clinic, or expanding an existing occupational health clinic to provide general medical services, is one way employers can ensure that their employees — and in some cases employees’ dependents — will have access to quality care.
While the ACA may have spurred employer interest in worksite clinics, an IRS notice released this February has clouded the picture by suggesting that the cost of care received through the clinic must be counted in the ACA’s excise tax calculation. Some respondents (15%) believe their general medical clinic will hurt them in terms of the excise tax calculation by pushing them over the threshold for the excise tax, and some (11%) believe it will help, presumably by holding down the cost of the company’s health plan. Another 28% believe it won’t have an impact either way, and 46% simply don’t know how the clinic will affect the calculation. Typically, the cost of the clinic accounts for 10% or less of an employer’s total health care spend and for about half of the respondents, it accounts for 5% or less.
Measuring clinic success
The great majority of respondents — 85% — say that their organization generally perceives the clinic as a success. Specifically, 63% say it has successfully reduced lost work days, and 58% say it has been successful in helping members control chronic conditions.
Measuring return on investment (ROI) remains a challenge for employers, and only 41% of respondents were able to provide ROI data. An ROI of 1.00 to 1.99 was most common (23% of respondents reported ROI in this range), and 13% percent reported an ROI of 2.00 or higher. Only 5% have an ROI of less than 1.00.
The best measure of employee satisfaction may be utilization. Respondents report that 45% of employees, on average, used the clinic in 2014. Nearly half of respondents (48%) with a general medical clinic don’t require any copayment for clinic services, and 25% require a lower copayment than the employee would pay for comparable services under the company health plan. The majority of respondents with hourly employees (61%) do not require them to clock out of work for visits to the clinic.
For many employers, employee satisfaction is a more important measure of success than ROI. If employees are using the clinic, it means they haven’t been taking time off work to visit a doctor, and that they’re getting the medical care they need to stay healthy and productive.
In 2015, enrollment in consumer-directed health plans (CDHPs) reached a new milestone -- one-fourth of all covered employees. Mercer’s 2015 National Survey of Employer-Sponsored Health Plans found continued growth in both CDHP prevalence and enrollment rates. Growth has been fastest among large employers. More than half of employers with 500 or more employees now offer a CDHP (59%, up from 48%), and 28% of covered employees are enrolled.
CDHPs place additional responsibility on the consumer. Typically, while CDHP premiums are lower, the risk for out-of-pocket expense is higher. This year’s survey results suggest that employers and providers are catching up to the demand for support tools to guide employees in making the most out of their CDHPs. A growing number of large employers contracted with a specialty vendor to provide employees with transparency tools that deliver price and quality information about specific health care providers or services to employees (15%, up from 12% in 2014). An advantage of these tools is that they can help consumers find an appropriate provider and obtain an estimate of the cost of a visit before the visit.
In addition, telehealth services, which can help employees manage out of pocket spending by providing a cheaper alternative to seeing a physician in person for certain non-acute services, are now offered by 30% of large employers, up from 18% in 2014 and 11% in 2013.
Employers are also taking steps to educate their employees about consumerism in general. Over half (55%) of large employers that offer HSA plans say they have made extensive efforts to provide communications related to this topic, including decision-support tools and provider cost and quality.
While health care consumerism has always made intuitive sense, in the early days it may have been an idea ahead of its time. But now, the tools and resources that make true consumerism possible are finally available, and all trends point to additional and more sophisticated resources on the horizon. Offering a complete “consumerism package” to employees takes more effort than simply implementing a high-deductible health plan. But providing appropriate support tools and education may be necessary to ensure that a consumerism strategy leads to a paradigm shift, and not just a cost shift.
As Labor Day and the end of summer drew near, we noticed a flurry of articles reporting on studies showing the importance of taking vacation, not working insane hours, and perhaps most important, getting enough sleep. Not only does taking vacation prevent burnout, research shows that it improves performance: when you return from time away, you’re able to focus better and think more clearly and creatively. Working more than 55 hours per week puts you at a higher risk for stroke and heart disease and, because of sharp declines in productivity after 55 hours on the job, is ultimately a waste of time.
But getting enough sleep is where I want to focus. My daughter’s freshman roommate at college hung a poster in their room with the disturbing motto, “Sleep is for the weak.” (Luckily, my kid continued to average about eight hours of sleep a night, a formula that had served her well in a rigorous high school where far too many kids pulled all-nighters and felt overwhelmed and anxious.) Beyond a measurable loss of productivity (the equivalent of 11.3 days per year per worker, according to research out of Harvard), studies on the effect of sleep deprivation in the workforce have uncovered downsides such as employee disengagement and abusive behavior on the part of insomniac bosses.
The last few years have seen the rapid adoption of programs to diagnose and treat sleep disorders. Sometimes education about better sleep habits is all that is needed, but sometime a more serious condition, such as obstructive or central sleep apnea, will need to be addressed. Nearly a third of all large US employers (500 or more employees) now offer a sleep program to employees. Stress can cause or exacerbate sleep problems, and we’re also seeing growth in offerings of resiliency programs to help employees understand the difference between useful and harmful stress and to give them techniques to better handle it (11% of all large employers, and 15% of those with 5,000 or more employees, offer a resiliency program).
And now it turns out that lack of sleep is the single biggest risk factor for catching a cold! Previous research has shown that poor sleep is associated with chronic illnesses, but a new study conducted at UCSF concludes that when compared to those who get more than seven hours of sleep, you are 4.2 times more likely to catch a cold if you sleep less than six hours, and 4.5 times more likely if you sleep less than five hours.
So although prime vacation time is behind us, the cold season is fast approaching! Employers who haven’t yet taken action to help employees get better sleep have a new good reason to consider it. Just don’t stay late to do the research.
Spending on specialty drugs continues to be one of the fastest-growing areas of health spending. In an August report, the Congressional Research Service (CRS) references data from IMS Health that found specialty drug expenditures grew 26.5% in 2014, while total US prescription drug spending rose 13%.
Behind the surge in cost are expensive new drugs to treat hepatitis C, cancer, and multiple sclerosis, as well as increased prices for brand-name medications. In a July issue brief on specialty drugs, America’s Health Insurance Plans (AHIP) reports that in 2014 the average monthly cost of commonly used specialty medications — which often require injections or infusions — ranged from $5,700 to treat neutropenia (a low white-blood cell count) to more than $105,000 to treat prostate cancer. While specialty drugs accounted for just 1% of all scripts written last year, they represented nearly one-third of total spending. And there is little relief in sight. An increase of 16% each year is forecast for 2015 through 2018, AHIP reports. Because specialty drugs are based on advanced research involving living proteins, opportunities for preferred alternatives and generic substitutions are limited.
For employers, increases in spending on drugs accounted for about 70% of the growth in overall medical cost in 2014, Mercer estimates. While it may be that higher spending on more effective drugs is actually helping to hold down other medical costs, it’s still worth taking a close look at your specialty drug claims and developing a strategy to restrain cost growth. Mercer’s National Survey of Employer-Sponsored Health Plans found that experience varied widely among large employers in 2014. About a quarter of large employers (23%) saw an increase in the average annual cost per employee for specialty medications at the last renewal — and among those, the average increase was a sharp 22% — up from 15% in 2013. But at the same time, another 23% reported that the average cost stayed the same, suggesting that some employers are having success in managing this substantial cost. (The remainder — 52% — don’t track the change in specialty drug cost from year to year.)
What can employers do? A first step is to determine whether specialty medications are best covered under your medical or pharmacy programs so you can steer members to the most appropriate source. Assess the impact and ROI of current utilization management programs. Consider various disease-specific support programs that may reduce costs, and check that all compound medications require prior authorization and that both quantity and dollar value limits are in place.
Over two-fifths of large US employers (42%) encourage plan members to fill their specialty medications through a specialty pharmacy, most commonly by excluding some or all specialty medications from the retail drug plan or medical benefit (22%) or by offering lower cost-sharing (11%) if the plan member uses the specialty pharmacy. Specialty pharmacies help control cost with such services as patient support and education to ensure compliance and monitor side effects, and specialized handling and distribution of medications directly to the patient or care provider.
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.
As we’ve reported, consumer-directed health plans have mushroomed during the health reform era. In 2015, exactly half of all large employers (those with 500 or more employees) offered a CDHP eligible for a health savings account -- yet only 5% offered it as the sole plan available to employees at their largest worksite. Still, many employers are at least thinking about a full-replacement strategy.
In designing a full-replacement plan, how do employers take into account the fact that the plan must now work for all employees, rather than the minority who typically select it? And how is cost affected? 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. Here’s what we learned:
Employee demographics: Employees enrolled in a full-replacement plan are older, on average, than those enrolled in HSA plans offered as an option (44 years versus 41 years), and they are also more likely to elect dependent coverage (58% versus 53%).
Plan design: Plan design is generally richer among the full-replacement plans. Employers are more likely to make a contribution to a health savings account (80%, compared to 71% of those offering the plan as an option), and the median contribution amount is higher ($700 compared to $500 for employee-only coverage, and $1,400 compared to $1,000 for family coverage). While the median in-network deductibles are actually higher in the full-replacement plans (by $200 for employee-only coverage and $400 for family coverage), out-of-pocket limits are significantly lower (by $800 for employee-only coverage and $1,600 for family coverage), to protect employees that incur significant medical expenses.
Employee contribution requirements: Employee contributions are somewhat lower as well. Among the full-replacement plans, employees contribute 18% of premium, on average, for employee-only coverage and 23% for family coverage, compared to 20% and 27% among plans offered as an option.
And what about cost savings? With younger (and presumably healthier) employees in the optional HSA plans and richer plan design in the full-replacement plans, it’s not surprising that the average per-employee cost of coverage in the full-replacement plans is higher than in the plans offered as a choice -- $9,835 compared to $9,032. Clearly, the opportunity for tax-advantaged savings can make an HSA-eligible plan more attractive to many employees than a traditional PPO with similar cost-sharing levels. And plans that incorporate effective transparency tools and other consumerism resources may deliver higher-than-average savings. However, this analysis suggests that most HSA sponsors are not willing to offer as lean a plan when it’s the only type of plan rather than a choice among traditional options -- and that will necessarily be a limiting factor when it comes to cost savings.
And as organizations go through the significant change management process of moving away from traditional medical plans to all HSA-based ones, they may well be finding that reinvesting some of the savings back into making the program more worker-friendly could be just the sweetener they need to support attraction, retention and a happier work-force.
An important caveat: Because so few large employers currently offer an HSA plan as a full replacement, these results should be considered suggestive rather than representative.
We noticed “wearables” trending on Twitter a few days ago, and that sent us back to Mercer's National Survey of Employer-Sponsored Health Plans to see if our data was in synch with social media. We found that US employers are clearly on top of this trend, and may even be helping to drive it: Over a third (35%) of organizations with 500 or more employees provide workers with a device to track activity, such as a pedometer, accelerometer, or GPS. Perhaps not surprisingly, employers in the health care industry have moved the fastest — 45% provide employees with a device.
Technology is being used to invigorate wellness programs in all sorts of ways. Gamification programs and other smartphone apps designed to engage employees in improving health habits are offered by 31% of employers, and 10% offer their employees devices to transmit health measures to providers. Employers are also tapping the power of social networks with group challenges like “biggest loser” contests (44%), onsite exercise, yoga or weight loss classes (50%), and peer-to-peer support programs (21%). Health coaching, for employees who appreciate individual attention, has been one of the fastest-growing wellness programs over the past few years. Face-to-face coaching is offered by 40% of employers, and telephonic or web-based programs are offered by 68%.
That all adds up to a big investment in employee health and well-being. While many individual employers have reported impressive results among their own workforces, these programs may be contributing to an encouraging trend that has recently surfaced. A recent New York Times article reported that Americans have cut back on calorie consumption. Obesity levels aren’t falling yet, but at least the upward trend has flattened. Health care providers, the media, and the government have also been hammering home that maintaining normal weight is critical to a person’s overall health — but employers have backed that up the message with a battery of resources to help their employees along the path to better health. For some, counting steps on a wearable is a fun and easy way to start.
While the recent IRS request for comment on implementing the 2018 excise tax on high-cost coverage gave us insight into what the IRS is thinking, it isn’t the formal guidance that we desperately need. This makes it tough on employers heading to the bargaining table this year. A recent article in The Wall Street Journal highlights the challenges facing the big three automakers as they prepare to negotiate this summer with the UAW, which historically has been very protective of its members’ health benefits. In other words, benefits are rich and costs are high. The law imposes a 40% excise tax on the annual cost of health plan premiums above $10,200 for individual coverage and $27,500 for family coverage. While it’s not clear whether UAW workers are enrolled in plans with costs that currently exceed the threshold, the employers and the UAW are concerned that, if costs continue to rise at their current rate, by 2018 the plans could face significant penalties. If they do, who pays?
Of course, the other option is to find ways to reduce plan cost and avoid triggering the tax. Typically, this would mean higher out-of-pocket cost for plan members, which unions have resisted. The big three automakers aren’t alone in facing this dilemma. Mercer survey data shows that, across all industries, large employers with at least 65% of their employees in unions have higher average costs — $13,659 per employee, compared to $11,421 among large employers with no employees in unions. What’s driving the higher cost? Only 8% of their employees are enrolled in a low-cost consumer-directed health plan, compared to 23% nationally. When a PPO is offered, the median individual deductible is $300, compared to $500 nationally, and 18% of sponsors don’t require any deductible, compared to just 8% nationally. In fact, virtually all cost-sharing provisions are lower among heavily unionized employers. And while these employers provide similarly robust health management programs, they are less likely to provide financial incentives to participate in the programs or to improve health habits. For example, only 13% provide an incentive for non-tobacco use, compared to 30% of employers with no employees in unions.
Where union plans are even more generous, however, is with premium contribution levels. Nearly a fifth of the unionized employers require no contribution at all for employee-only PPO coverage, compared to just 4% of the non-union employers, and the average contribution is just 15% of premium, compared to 24%. And when the unionized employers do offer a high-deductible health plan with an HSA, only 57% require any employee contribution, compared to 92% of the non-union employers. Low employee contributions don’t increase the risk of triggering the tax, since the threshold is based on total plan cost, but they do increase cost of the employer. Union employers looking for ways to avoid the tax could focus on plan design changes — like raising deductibles — to lower the total premium cost and yet still maintain union-friendly contributions that are below market.
Union plans also have cost drivers beyond their control — perhaps most significantly, their employees tend to be older. Adjustments for employee demographics is one of the many areas where we await guidance. That’s where these early challenges facing unionized employers could benefit the masses. This is a rare time where we find employers and unions on the same side of the table in Washington — pushing the government for guidance.
Do you know when your plans will hit the threshold? Our excise tax calculator will help you estimate exposure for the medical plan cost component — you just need to enter your number of employees and annual cost by medical plan tier.
A big news story last week was the CMS report on the slowdown in spending on health care in the US in 2013, which the authors attributed in part to a shift to high-deductible consumer-directed health plans (CDHP) in the private insurance market. Our response to that? Just wait until you see the numbers for 2014! As we reported last month, results from Mercer’s National Survey of Employer-Sponsored Health Plans for 2014 show the largest one-year jump in CDHP enrollment, from 18% to 23% of all covered employees. (This followed 2013’s more modest growth in enrollment, from 16% to 18%.)
Employers of all sizes, but especially large employers, added CDHPs in 2014. Offerings of CDHPs jumped from 39% to 48% among employers with 500 or more employees, and from 63% to 72% among jumbo employers (those with 20,000 or more employees). While the use of CDHPs has been growing steadily, the trend has accelerated as employers anticipate growth in enrollment in the post-reform era. (As the graph above shows, 66% of all large employers, and 88% of the jumbos, expect to offer a CDHP in 2017.) In 2015 the ACA provision goes into effect requiring employers to extend coverage to substantially all employees working 30 or more hours per week. Well over a third of large employers (38%) were affected by this rule and will need to extend coverage to more employees as a result. What may drive up enrollment still further is that employees who have chosen not to elect coverage in the past now have a stronger incentive to do so — as the minimum tax penalty for not obtaining coverage rises to $325 for 2015 from just $95 this year.
CDHPs offer employers a way to mitigate growth in spending as they cover more employees. The average cost of coverage in a CDHP paired with a tax-advantaged health savings account is 18% less than coverage in a PPO and 20% less than in an HMO: $8,789 per employee, compared to $10,664 for PPOs and $11,052 for HMOs.
These plans are also a top strategy for employers looking for ways to avoid paying the “Cadillac tax” in 2018 — a 40% excise tax on health coverage that costs more than $10,200 for an individual or $27,500 for a family. Mercer estimates that about a third of employers are currently at risk for triggering the tax in 2018 if they make no changes to their most costly plan.
While new plan implementations are driving up CDHP enrollment, we are also seeing growth in enrollment in existing plans as employees become more comfortable with consumerism and employers provide them with tools to help manage the higher deductible. In a consumerism strategy, high deductibles are meant to give employees a financial incentive to shop more carefully for health services. The growing availability of transparency tools is allowing more employees to compare health provider price and quality information and factor cost into their decision making. More than three-fourths of large employers (77%) say their employees now have access to this type of information, either telephonically, on the web, or through a mobile app.
This year also saw a surge in offerings of “telehealth” services, from 11% to 18% of all large employers — and from 18% to 34% of jumbo employers. These services allow employees to access primary care services over the phone at a low cost to help keep out-of-pocket spending low. In addition, voluntary benefits like critical care coverage or a hospital indemnity plan allow employees to supplement a less-expensive medical plan at a low cost. The majority of employers say that they offer voluntary benefits specifically to help employees fill gaps in employer-sponsored benefits. It’s a major shift from the old “first-dollar coverage” mentality. These tools put the consumers in the drivers’ seat, giving them the ability to make smart financial decisions about their health care spending.
|Large employers (500 or more employees)||Jumbo employers (20,000 or more employees)|
Voluntary benefits offered specifically to fill gaps in employer-paid benefits
Most employers still offer a CDHP as a choice alongside a traditional PPO or HMO. Just 7% of all large employers, and 11% of jumbo employers, offered a CDHP as the only plan available to employees at their largest worksite in 2014. While this practice may become more common — 18% of large employers say it’s likely they will offer a CDHP as a full replacement within the next three years — for now it remains the exception.
Faced with the prospect of an already-fragmented health care system strained further as more Americans gain health insurance in the public exchanges and through employer plans, employers are turning to onsite clinics as a critical component of their health care strategy. Worksite health services are a way for employers to directly influence health care delivery and provide a convenient and quality product to their employees — enhancing the benefit package while improving productivity.
While the first worksite clinics primarily served to provide first aid and urgent care, today the majority offer general primary care services — and the number is growing. Among employers with 5,000 or more employees — the size group most likely to have implemented a clinic — 29% offer an onsite or near-site primary care clinic, up from 24% last year. An additional 9% offer a clinic for occupational services only. While onsite clinics may be more practical for large worksites, near-site/shared clinics situated in office parks or urban office buildings offer access to smaller employers or large employers with smaller locations.
A Mercer survey of 131 employers that offer an onsite or near-site clinic found that while screenings and immunizations are the most common general medical services offered at worksite clinics, more clinics are introducing expanded comprehensive primary care in which patients with chronic illnesses can be managed on an ongoing basis. Pharmacy services and laboratory tests are the newest offerings, each offered at about a third of the clinics Mercer surveyed.
But the concept of how worksite clinics can be used has shifted and broadened. For example, many employers have positioned their clinics as onsite centers for wellness and health promotion and use them as a way to create a “culture of health” in the workplace and to encourage employee participation in the wellness programs. Of the employers surveyed, the majority use their worksite clinics as a convenient way for employees to undergo biometric screenings (72%), participate in face-to-face chronic condition coaching (63%), and take part in lifestyle management programs such as smoking cessation, weight management (both offered by 60% of clinics), and nutrition management (57%). More recently, worksite clinics have begun to play a role in telehealth — either by offering services directly using clinic providers, or by coordinating with a separate telehealth vendor so that the clinic providers are notified of off-hours activity and get a copy of the record.
Data on return on investment make a good case for companies to add or reshape worksite clinics. Most employers that are able to measure say that the cost of running the clinic accounts for less than 2% or between 2% and 5% of their organization’s total annual health care spending (37% and 36%, respectively). And among employers that have been able to measure ROI, more than half reported a return of 1.5 or greater — and a quarter reported a return of at least 2.5. Only 12% say they have not yet broken even on their investment.
At a time when employers are looking for any possible source of health cost savings, they may find a worksite clinic can deliver that, and more. But increasingly employers are coming to view worksite clinics as a way to ensure that employees — and in some cases employees’ dependents — have easy access to quality care. Significant improvement in productivity is gained by reducing employee time away from work. Most employers in the survey reported average wait times in their clinics of 10 minutes or less. In addition, the convenience of onsite clinics allows and encourages employees to get the preventive care they need every year instead of putting it off.
Tara Lewis assisted with the reporting for this article.
A couple of weeks ago we reported preliminary findings from our latest National Survey of Employer-Sponsored Health Plans showing that employers predict an average increase of 3.9% in total health benefit cost per employee. If their prediction is accurate, it will mean a fourth year of cost growth under 5%.*
It’s important to note that the 3.9% projection takes into account the changes employers will make to hold down cost growth. If they made no changes, cost would rise an estimated 5.8%. It’s also important to remember that 3.9% is only an average, and that some employers — 23% — expect to see no increase in per-employee cost at all, while 15% are bracing for increases of 10% or more.
Range of Projected 2015 Cost Increases
How to explain this variation? A number of factors that can affect health plan experience from one year to the next, such as high-cost claims, changes in the employee population due to a merger or acquisition, or changes in the provider network, are beyond an employer’s control. Fully insured employers are vulnerable to carrier rate hikes, especially in markets with limited competition. But our research shows that the steps an employer takes — or doesn’t take — to manage cost over time have a significant impact on their health plan cost and cost growth.
For a third year, we analyzed survey results to see to what extent health plan cost is affected by the use of about 25 best practices (listed below) — strategies ranging from meaningful health plan cost sharing to the use of delivery system innovations such as telemedicine and surgical centers of excellence.
When 1,121 large employers (those with 500 or more employees) responding to our 2013 survey were divided into three roughly equal groups based on the number of best practices they have implemented, as shown in the bar graph at the top of this article, the average per-employee total health benefit cost was 8% percent higher for those in the bottom group — those using the fewest best practices — than for those in the top group.
These encouraging findings, similar to the results of our past analyses, lend support to the belief that the slower cost increases of the past few years are partially the result of concerted employer actions. Perhaps this is why, even after the public health exchanges have become a reality, the largest employers — those with the resources to implement the most sophisticated cost-management strategies — remain the most committed to providing health coverage for the foreseeable future. The advent of private health exchanges, which can incorporate many of these best practices, may offer an opportunity for employers of all sizes to benefit from the strategies shown to bend the health cost trend.
* Mercer will release the actual cost growth for 2014 in November, based on employer costs through September 2014. The Kaiser Family Foundation’s survey, released in September, reported a cost increase of 3% for 2014.