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UltraLink - FOCUS...on benefits
May 2005
Tips for Managing Health Costs Now
A recent article in Inc. Magazine lists 9 strategies employers can consider immediately to help moderate their health costs. They include:
Shop around for competitive pricing, even in "good"
years. Call competitor health plans with the rate your
incumbent plans provide and see if they can beat it. If so,
go back to your incumbents and negotiate and be
prepared to switch, if necessary.
Consider health savings accounts and high
deductible plans. Both employer and employee can
contribute to an HSA, and leftover funds can be retained
over years and are portable across jobs.
Use a broker or consultant who works for you
- i.e., one who takes the time to understand your business
and any special circumstances that impact benefits
decisions, and whose compensation arrangements
encourage finding the best deal for you.
Modify your benefit design. Consider tiered networks,
higher deductibles and co-pays, switch to coinsurance,
etc; all can lower premiums substantially.
Tighten - and enforce - eligibility requirements.
Many businesses are eliminating spousal coverage
if the spouse has insurance, and are extending probation
periods for new employees from 3 to 6 months.
The Segal Company, a New York-based human resources
consulting firm, reports that requests for dependent
eligibility audits increased 30% between 2000 and 2004,
and large companies using audits have found many
divorced spouses, retirees and children whose eligibility
had lapsed still receiving benefits.
Consider self-insuring, if you have at least 100
employees. Excessive per person and total claims can be
covered through stop-loss insurance, and avoiding ERISA
requirements allows for greater flexibility in plan design.
Consider joining a purchasing pool if you are eligible-
California's PacAdvantage or New York City's Health Pass,
for instance, or those provided by business groups,
Chambers of Commerce or other organizations. Due
diligence is important before signing up, to ensure the pool
is well run.
Outsource health benefits selection and
management to firms with expertise in the field. Firms
that negotiate with the same health plans for multiple
clients will have greater negotiating power than would
an individual employer, and their familiarity with the
benefits selection process allows for greater efficiency
and probably better results.
Improve the health of your employees by providing
wellness activities or programs and financial incentives for
employees to use them. Even low-cost interventions, such
as healthy snacks in the vending machines and lunch-time
walking programs can help.
Source: Inc. Magazine, April 2005
ROI on Smoking Cessation Benefits Increasing
The increasing effectiveness of smoking cessation strategies, combined with ever-rising costs of disease-related care, has shifted the ROI for benefit coverage of smoking cessation in a positive direction. Recent findings on ROI have prompted Medicare to provide coverage for some anti-smoking counseling, and employers will likely face pressure to follow suit.
Nicotine replacement therapy in the form of patches, gum and inhalers can boost success rates for those attempting to quit to around 25%, and use of additional drugs such as Zyban that help control nicotine cravings can also help. A 3-minute conversation initiated by a physician about smoking cessation and counseling on telephone-based "quit lines" also can increase quit rates and are increasingly available to smokers.
Kaiser Permanente's Center for Health Research recently analyzed six years of utilization data on 200,000 members to assess the impact of these kinds of interventions. Their findings: an investment of between about $2 and $9 per plan member per year results in positive returns after 2 years, and, after 5 years, a net annual return of between $20 and $26 per member per year. Productivity improvements can be even more significant. At Destination Harley-Davidson in Tacoma WA, free access to smoking cessation programs has enabled 8 of 90 employees to quit in the past 4 years. The owner estimates that getting one technician to quit raises his or her productivity by as much as $25,000 in annual business.
Source: The Wall Street Journal, April 26, 2005
Another Cost Management Strategy: On-Site Health
Clinics
For some companies, one answer to rising health care costs has been to bring easily accessible health care back to worksites. And unlike in the past, it's not just manufacturers who are doing so. Companies in healthcare, entertainment and media, and communications are taking this approach with some success.
The 2003 National Business Group on Health/Watson Wyatt survey of 120 companies with more than 1,000 employees found that 31% of respondents had onsite clinics, with 59% of those reporting that the clinics manage costs effectively and 54% reporting that the facilities increase employee productivity. Privacy concerns are addressed by having a third party manage the clinics.
Two companies featured in a BenefitsNews.com report on worksite clinics are Fleetguard, a manufacturer of filtration and exhaust systems in Tennessee, and Discovery Communications of Maryland. Both report that onsite clinics provide net cost savings and the ability to implement internally-provided wellness initiatives, which further increases health awareness and responsibility among employees.
Source: BenefitsNews.com, April 18, 2005
Owens Corning Describes Successful CDHP
Implementation
At the March, 2005 meeting of the National Business Group on Health, Owens Corning Benefits Director Mark Snyder shared that company's experience with promoting consumer-driven health plans to their employees. The Owens Corning experience is of particular interest because it was so successful: 70% of their 9,000 non-union, salaried employees enrolled in the CDH plan, compared to the 20% or less rate that most employers have experienced to date.
How did they do it? Under pressure from senior management to maximize enrollment in the CDH plan, Snyder reported using the following strategies:
. Help employees understand the effects of health costs
on the bottom line and how that impacts them
personally;
. Make CDH the most attractive plan by pricing it more
favorably;
. Base the HRA contribution on claims experience so that
it can be justified to employees;
. Alter existing managed care offerings to keep
employees from enrolling in them simply because they
are familiar;
. Make the CDH plan the default for those who fail to
choose a plan;
. Listen to employees. Many didn't like the high deductible
of the first year's CDH offering, so a second option was
added in the second year with a lower deductible but
higher co-pays.
An additional advantage to the company of the campaign to promote CDH plans is the effects it had on all employees, regardless of which plan they were in. The communications on health care costs and overutilization were provided to all employees, as was access to the web-based decision support tools. Additionally, the company now provides $300 in first-dollar preventive care to all employees.
Source: Inside Consumer-Directed Care, April 1, 2005
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