Published Date: 03/17/2014
This article was authored by Tom Vertich, CEBS, SPHR, Principal, Health & Welfare Consultant at Hill, Chesson & Woody.
Perhaps you are among the many employers who have become conditioned to controlling costs by passing along rate increases to employees and/or raising the medical plan’s out of pocket costs. While this has been very effective, and perhaps the simplest way to keep health plan costs down, we all recognize this is not an easy way out. It is hard knowing that it will be difficult on your employees to have to absorb more health care costs.
Additionally, many employers may have almost exhausted this option. Not only are new affordability provisions and employer mandates from the Affordable Care Act putting limitations on cost shifting, but many employees have reached a tipping point and are no longer able to absorb the health care cost increases without offsetting pay raises.
Who says that it only has to be difficult on your company and employees when controlling your health plan costs? There are quite a few things you can do to control health plan costs that won’t put a strain on your employee relations. Three examples include: negotiating your health insurance contract with better leverage, looking to see if your current insurance carrier can offer better discounts and finding ways to improve employee health.
Negotiating your health insurance contract with better leverage
If you don’t have a small group health insurance plan, one way you can use leverage in your renewal negotiations is to better understand your plan’s historical claims experience. If your plan is fully insured and you tend to stick with one insurer, you want to see if your plan’s surplus years (plan years where your plan did better than expected) were better than your deficit years. Using this as the basis of your negotiation, rather than yearly price shopping with other carriers, may result in lower rates over time.
While it seems counter intuitive, you could be losing money if you take your group health plan to market every year. That’s because the focus of the insurance company shifts to making sure that your plan is profitable in the upcoming year. The fact that the insurer made a fair (or perhaps a slightly-more-than-fair) profit over the length of your relationship may be de-emphasized in the renewal negotiation process.
You want a fair price for your health insurance and insurance companies like keeping customers when they’re receiving a fair price. Over a long period of time, that is what usually happens if an insurance company keeps a customer’s business. If you leverage your relationship with your insurance company, you actually have a better chance to negotiate with the carrier for a better renewal in the bad years.
If you don’t market your group health plan every year, the other carriers will take your quote more seriously since they know you’re probably not just doing a price comparison. Also, they see how your current insurance company is enjoying a long, profitable relationship. Those are the customers that they want too, so they may be more motivated to give you a strong offer when it is time to consider a change.
Investigating if your current insurance carrier can offer better discounts
The next way to lower your plan costs with minimal pain is to get better discounts from the health care providers that your plan members use. If your plan uses your insurance company’s regular PPO network, you may also be leaving money on the table. Chances are your carrier offers other networks with a somewhat shorter list of doctors and hospitals – in exchange for deeper discounts. Oftentimes, the smaller network still includes nearly all your members’ providers that were on the larger network. If that is the case, then you and your employees can save money on the treatment that your plan provides – with little noise from your employees.
Finding ways to improve employee health
Finally, you could try improving the health of your employees. It makes sense – healthier employees have fewer medical issues. This strategy won’t work right away, but if done correctly, it can be one of the most effective ways to control costs over the long haul. We’re not just talking about wellness programs; we’re talking about health management of your plan’s membership.
What’s the difference? A true health management strategy not only includes wellness programs, it requires that you begin by assessing your plan members’ needs and their willingness to make changes. You should also analyze the barriers to the goals you want to accomplish, create a strategy and form a plan of action.
Health management means knowing where you are in terms of your current plan’s usage and where you are trying to go. To do that you need measuring tools such as a claims data warehouse to see where your members’ gaps in care are, and the tool needs predictive modeling capabilities to see where your plan’s claim drivers are likely to be in the future. When coupled with health risk assessments and biometric screenings, you may get a more complete picture of where you have been, where you are and how much further you need to go.
Wellness programs can’t be successful though unless they are CONSTANTLY communicated. Your employees have to get the message in an easy-to-absorb manner with emphasis that it is important to not only their health and finances but also to your company.
Finally, no wellness program would be complete without an evaluation process. At the beginning, you want to develop that process along with your expectations. By getting a total picture of how the wellness program is performing, you have the opportunity to improve it as part of your health management strategy.
So now you know the difference – health management is a well thought-out, intentional effort to understand your population’s health needs and to find ways to improve it.
Shared cost savings and improved health will always be win-wins for your company and your employees. There are no silver bullets to controlling health care costs. But by designing and implementing an overall benefits strategy that is consistent with your company’s culture and financial objectives, you can bend your health plan’s cost trend.