IHA recently retained Hanover Research to identify and analyze major trends that employers have been using to reduce the cost of employee health care coverage.
Together, Hanover and IHA conducted focus-group style interviews with industry leaders from the Indiana Chamber of Commerce, Indiana Manufacturer’s Association and the Employers’ Forum of Indiana about the initiatives they’re using to combat rising health care costs. These 11 examples are the most widely utilized strategies that arose from those conversations.
1. By practicing Price Transparency—providing patients with detailed information about the cost of care and empowering them to choose providers that offer their desired level of value—employers hope their employees will be more likely to make fiscally responsible decisions.
2. Through Defined Contribution Health Plans, employees receive health savings accounts into which the employer makes financial contributions that employees may spend on health care. This method allows companies to cap costs and improve the control of their expenses and future liabilities.
3. Private Health Insurance Exchanges have become increasingly popular, as they allow for easier transitions to the defined contribution model by providing a marketplace for employer-purchased but employee-selected health plans. Companies utilizing private health insurance exchanges include Walgreens, Petco and Arby’s, to name a few.
4. While most Indiana employers have yet to implement Reference Pricing, the cost-savings potential for its universal adoption (which could total $9.4 billion, according to research from the Employee Benefits Research Institute) may make it a viable strategy in years to come. Reference pricing is a variation on defined contribution health benefit plans in which employers and insurance companies negotiate a bundled price for specific procedures with providers. Employers then agree to contribute a fixed amount for these agreed-upon procedures, and employees make up the difference.
5. A number of large national employers are practicing a form of Medical Tourism, partnering with medical centers of excellence around the country to offer employees a no-cost medical travel option for certain procedures. By selecting centers with proven quality outcomes, employers hope to lower complication and re-opera- tion rates and create more predictable cost structures.
6. More employers are utilizing Narrow Networks to help cut costs, either by partnering with a handful of national centers of excellence or by confining networks to a smaller geographic area. In Indiana, Anthem offers a narrow network plan on the state health exchange in which individuals who purchase a plan from the exchange trade limited choices for lower monthly costs.
7. While less than one percent of employees require specialty drugs, these drugs account for 20 percent of pharmacy plan spending. In an effort to reduce those costs, many employers have turned to Specialty Drug Cost Management initiatives—such as step-therapy protocols, which begin patients on generic versions of medications.
8. Some experts estimate the economic impact of health complications associated with failure to properly adhere to medications to be $290 billion. By implementing Medication Adherence strategies like employee education and prescription reminders, employers hope to cut the costs associated with preventable illnesses.
9. Some small businesses are opting for Self-Insurance, in which employers contract with third-party administrators who set up provider networks, collect employee premiums and make payments for costs of incurred claims.
10. Other groups of small businesses — referred to as Group Medical Captives — are joining together to form their own insurance companies.
11. The concept of Employer On-Site Clinics has evolved from providing occupational health and work-related injury treatment to its employees to providing more primary care services. While health care organizations have traditionally offered to include government employers and large and mid-range employers, as well.