A successful open enrollment period is the result of well-planned communication, efficiency and the ability to offer the most relevant, desirable benefits package possible. But making sure all of that happens comes at a price. And you want to make certain you get what you need at the best possible price.
It's no surprise that the majority of your benefits costs are wrapped up in health care. Health care costs have been increasing incrementally over the past two decades. The reasons include changes in employment and benefits laws, along with new initiatives and options in health care benefits, particularly from the Affordable Care Act (ACA) and substantial increases in pharmacy spend with new high cost drugs coming out. That’s why you need to ensure that you’re finding as many ways as possible to manage the costs of the health coverage portion of your overall benefits programs.
But how do you control costs, especially when most of your expenditures are dependent on the wellness and safety of your employee population?
START WITH WHAT’S DRIVING COSTS
A lot of employers feel as though they have no power to rein in benefits costs. They see the problem as beyond their control. Are employees doing what they can to prevent disease and maintain health? Are they using the right medications in the right ways? Are they quitting smoking? Getting tested for the right issues at the right times?
It may seem like there is no effective way to truly control how much your company has to pay, especially when it comes to health care. But there are a number of strategies you can use to lower initial costs and keep ongoing costs in line.
HOW DO YOU CONTROL COSTS?
Choose the right carrier. Don’t assume a larger carrier will provide better rates or more discounts. If your company is located in a concentrated geographical area, you can often get better rates from regional carriers. And don’t forget to ask about what kind of discounts they can negotiate.
Focus on quality. Steer employees to health care systems that have high quality and lower cost. Looking at the total cost of care for a provider system is important. It is not just about the discount on services, but rather is the system also providing positive outcomes. Did it take one appointment to get to the correct diagnosis or did it take three? Carriers do rate providers by performance. Ask your carrier for their metrics and drive employees to the best end result for them and the plan.
Consider pay-for-performance as incentives for your health care provider.
Offer the best customer service. Carriers or third-party administrators can help employees and their dependents get the best care at the best price, better adhere to their medication regimens, and get early intervention that can help reduce the chances for the onset of disease.
Use rebates to offset costs. If the rebates come back to the company, you can make those decisions. If you’re self-funded, make certain that if your carrier or third-party administrator (including PBMs) retains the rebates, they use them to reduce costs.
Data Analytics. Depending on the number of employees you have, you can have your broker do a data analysis to help you understand where you’re spending is going and how you might be able to rein in those costs. Using data analytics allows you to analyze top high cost claimants and provide actionable items to help reduce the overall claims spend.
Pharmacy Benefits Manager (PBM). Use a PBM to help control high (and, in some cases, rising) prescription drug costs. A good PBM can negotiate the best prices and offer substantial discounts that can help keep your costs as low as possible. PBM reviews are also helpful to make sure you have the best possible contract language and program.
Health Savings Accounts (HSA). HSA plans offer the only triple tax savings for employees. Money goes into the account tax free, any interest growth on the money is tax free and when used for health expenses are never taxed. These can help employees meet their deductibles with tax-free savings and can create pre-tax savings for employers, especially when you’re contributing to the accounts.
Consumer-Driven Health Plans (CDHP). These plans can help employees keep premium costs lower by giving them greater responsibility for more of their health care costs (higher deductibles), which can be offset to a large degree by using an HSA.
Encourage preventive care. Motivate employees to assume more responsibility for maintaining and improving their health. Early intervention is better than having to manage disease, and less costly. Advocate for screening for cancer (including colonoscopies), diabetes, and heart disease. Again, upfront preventive costs will always be lower than ongoing management costs.
Disease and Condition Management. Sometimes preventive care isn’t enough or the employee has an existing condition or a workplace injury resulting in an ongoing medical problem. These are your high-cost claimants. But with the use of CDHPs, HSAs, medication adherence, nurse coaching, wellness programs, diet and exercise advice and regular doctor visits, you can be as sure as you possibly can that disease or injury management is effective.
Audit family-member eligibility. If you’re providing coverage for nonqualified individuals, you’re not only wasting money but also risking violating federal requirements and the Internal Revenue Code. Providers of dependent-eligibility audit services have reported in recent years that more than 12 percent of covered dependents have been found during audits to be ineligible.
Consider alternatives such as telemedicine. Expand your telehealth options to include mental health resources. Many times individuals in crisis need more immediate help than they can receive by setting an in person session. Allowing individuals that need to seek care sooner than an in-person appointment may be available can prevent expensive emergency room visits.
Self-fund your health plan. Under a self-funded arrangement—also called self-insured—the employer assumes the liability and risks of providing health coverage in exchange for more control over the plan's administration and funding. Self-funded plans are most prevalent among larger organizations, although self-funding can work for smaller companies also.
Scaling back or eliminating medical benefits for retirees. Only 20 percent of employers continue to offer a retiree health plan, according to a 2016 SHRM Employee Benefits Survey.
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MARSH McLENNAN AGENCY CAN HELP
Providing health benefits is important to help you be competitive. But keeping costs under control is essential to the long-term health of your company. Marsh McLennan Agency can work with you to develop just the right plan for your organization.
To learn more about making Open Enrollment easier and more rewarding for everyone involved, watch for more articles in this series. And be sure to contact your MMA representative to set up a meeting to work through your plan.