By Nancy L. Bolton
May 2, 2010
As the economy continues to sputter – whether firms are optimistic or pessimistic or politicians are right or wrong – the cost of health care continues to rise. I can’t think of any colleagues who aren’t looking for ways to address the ever increasing numbers that plague their bottom lines year after year.
Since the latter half of the 2000s, employers have been turning away from shifting costs to employees and toward strategic efforts like consumer-driven health care, high performance networks, onsite medical clinics and wellness programs.
But most of those innovative and reputable ideas don’t show immediate savings. Return on investment can be impressive, but often aren’t seen until year two, three or more after implementation. In these trying and unpredictable times – and as annual budgets become tighter – health care savings are needed STAT! ASAP! Yesterday!
So, it appears (at least from the view from my corner office) that cost-shifting to employees has once again take center stage as we attempt to control costs, avoid employee pay-cuts and keep jobs.
The playing field has changed dramatically since the mid-2000s. Benefits managers now find themselves dealing with a stressed-out employee population that increasingly feels overworked and underpaid. Many employers have tabled annual raises, while reducing staff and expecting surviving employees to pick up the slack.
Sure, most folks I know are grateful they still have jobs in this economy, but slashing benefits with wild abandon could lend itself to the proverbial straw that breaks the camel’s back if employers aren’t thoughtful in their approach.
The goal should be to find cost-shifting measures that don’t necessarily take benefits away, but rather redirect employees to lower cost plan alternatives.
Benchmark your plan
First and foremost, benefits professionals should review their plans against popular benchmarks like those found in annual Mercer and Kaiser surveys. Those wonderful documents are chock-full of interesting tidbits such as the average annual cost per employer, average annual deductible, average monthly premiums paid by employees and more.
This information will help benefits managers discover areas where their plans might be a bit richer than the national average, and lead to some low hanging fruit to slash, which will render immediate savings at renewal.
Secondly, survey local employers with whom you compete. Granted, that might be easier in some states than others – Florida law, for example, makes a public record of just about everything a local government does in the course and scope of its duties, including health plan design.
It was relatively easy for me to identify millions of dollars of potential cost savings for the coming year just by calling my good friends in the surrounding area. A quick survey of these “corporate cousins” revealed that many areas of our plan are considerably richer than the local norm.
Five years ago, we’d take those comparisons to the unions and start bargaining. But these days, we must closely review every potential cost cut and consider its personal effect on employees. If the cost-cutting of yesteryear bore the axe marks of a lumberjack, then today’s cost-cutting requires the skill of a surgeon.
For example, if your cost-shifting efforts include a bump in emergency room copays or coinsurance, it is wise to leave the copays for urgent care facilities alone.
If you’re going to apply a split copay for a specialist, then the primary care doctors should keep collecting the same copay as the prior year. If you’re going to bump pharmaceutical copays for brand name and preferred drugs, leave your generic copay alone, or even consider reducing it.
Review your data
Also, it’s time (in fact, it’s always time) to review your data. Is your disease management program working to ensure high levels of compliance employees with chronic disease? If not, consider dropping copays for treatment of those targeted conditions into the lower tiers or eliminate them entirely.
Employees may perceive such a strategy as a benefit enhancement and it provides the plan with an ounce of prevention (which we all know is worth a pound of cure).
While you’re reviewing your data, have a look at your diagnostic and imaging statistics. Significant tort reform doesn’t have a place in Obamacare, so if you’re offering imaging services at no charge, litigation-weary providers may be encouraged to prescribe expensive PET scans, CT scans, and MRIs at a rapid pace, knowing there are no out-of-pocket costs to their patients.
Consider cost-sharing for these services, or make sure your carrier has a prior authorization process in place.
Other ways to cut costs before the ink is dry on the next renewal is to conduct a dependent eligibility audit. With the average annual cost of dependents reaching thousands of dollars per year, employers should only be covering those that meet their eligibility requirements.
From my neck of the woods, it seems like cost-shifting in the benefits plan has once again taken center stage. Employers finding themselves back at this drawing board should remember that when making cost-shifting decisions for their health plans, balance is key.
Recession-weary employees need to know that employers have taken a thoughtful approach to cut costs, while still offering a competitive health plan with alternatives available from which they can still receive quality care. As long as we have our health, we have everything we need.
Used by Permission Employee Benefit News
