Containing health care costs while trying to contain the coronavirus

In late 2019, SHRM reported that employer health care costs could go up as much as 6 percent in 2020. The COVID-19 pandemic has temporarily reduced some health care costs simply because procedures and visits have been delayed. On the other hand, the coronavirus has increased certain costs because of testing and treatment. And, because regular exams have been postponed and symptoms possibly missed, overall health care costs will eventually go up.

No matter how long it takes to control the coronavirus, employers will need to find ways to help their employees control, and hopefully reduce, health care costs. The good news is, there are a lot of potentially effective ways to make that happen.

Start with a culture that promotes health and wellness

Creating and maintaining a workplace that encourages and promotes the overall well-being of your employees means implementing ways for them to be healthier in both their personal and professional lives.

For employees to be motivated to become healthier and prioritize wellness, it helps to develop a workplace culture that supports and rewards healthy behavior and habits. For example, provide healthy snacks and encourage exercise instead of passing out free donuts and making employees consistently work a lot of overtime.

By creating a culture of wellness, you ensure that every part of your work environment — including physical, emotional, mental and financial health —contributes to the total well-being of every employee. 

Make employees more responsible for health care costs?

Offering a high-deductible health plan (HDHP) will more than likely result in savings for the business by assigning more of the cost of health care to employees. Shifting costs to employees places more responsibility on them to make smarter health care decisions because it’s coming directly out of their pockets.

Proponents argue that this encourages employees to shop for the best value as well as the best prices for health care. The problem is the lack of transparency in the market. It’s difficult to understand the difference in providers’ costs—some don’t choose to publish prices—and employees aren’t used to “shopping” for health care.

Some of this can be ameliorated by offering co-funded Health Savings Accounts (HSA) and finding ways to deliver high quality care at more affordable prices, such as telemedicine visits and providing access to concierge services that help employees find the best health care values.

Be open to health savings accounts (HSAs)

According to BenefitsPro.com, a survey of more than 2,000 U.S. employees by Guardian Life a large percentage avoided routine or recommended medical procedures because of higher deductible costs. If employees aren’t getting the care they need because of increased out-of-pocket costs, that can negatively affect employee health, which can actually raise costs.

Health Savings Accounts can help address that problem by giving employees a tool to pay for these health care costs so that finances don’t become a roadblock to getting the care they need.

HSAs can be opened by any U.S. taxpayer who is enrolled in a high-deductible health plan. It allows them to contribute and withdraw funds tax free, as long as those funds are used to pay for qualified medical expenses. In addition, funds can be rolled over and allowed to grow if they are not spent.

Promote more efficient, effective care

Consider working with your carrier to tie doctor and hospital payments to evidence-based, high-quality patient outcomes. This can align patient and provider incentives to encourage more efficient and effective care, prevent reoccurrence of illness and reduce complications, or—when treatment is needed—getting the patient the right care and the right site of service, sooner.

In addition, SHRM reports that 17 percent of best performers use bundled-payment approaches in their medical plans, compared with only four percent of high-spending companies. Bundled payments are a form of contracting that combines pre- and post-procedural care into one negotiated price that can deliver savings and simplify billing for organizations and employees.

Make more use of telemedicine

A 2020 McKinsey survey reports that there has been a huge surge in the use of telemedicine, primarily caused by the pandemic: 11 percent of U.S. consumers using it in 2019 jumped to 46 percent. The study also reports that health care spend in 2019 for telemedicine was around $3 billion; projections put that as high as $250 billion in the near future.

Telemedicine is far less expensive than a traditional doctor visit. It allows patients to access health care, including after office hours, and makes it easier for individuals who struggle to get to a physical location. When it’s done correctly, telemedicine can combine with traditional care to greatly elevate patient engagement; if done incorrectly a patient can feel isolated and become less engaged.

The use of telemedicine will more than likely be the default for a while, at least until a vaccine for COVID-19 is widely available. But telemedicine could become more deeply embedded into the care delivery system even when the pandemic is under control.

Concerns and issues remain, including the level of security, how effective telemedicine is compared with in-person visits, and reimbursement. The McKinsey study also points out that there is a gap between consumer interest (76 percent) and actual usage (46 percent). This could be due to lack of awareness and education as well as not understanding whether or not telemedicine is covered by a particular insurance policy.

Controlling health care costs by the numbers

Companies with lower health care spend know how to evaluate their programs to improve future benefits: 53 percent of best-performing companies—and just 34 percent of others—are using data to analyze benefit results. For instance, they may conduct multi-year evaluations of claims data and employee feedback to see if their initiatives improved employees' health and well-being.

Gathering and analyzing data can provide a clearer picture of total health plan costs:

• Enrollee information, such as the numbers of employees, spouses or partners, and dependents enrolled and using the health coverage
• Direct costs such as paid claims and administrative costs
• Indirect costs such as lost time because of disability
• Use of benefits trends
• Data on the cost of health care and employer cost-sharing 

Consider becoming a fully funded self-insurer

A self-funded insurance plan takes funds that would pay to an insurance carrier and establishes a fund to pay for claims. A third-party administrator is hired to receive and manage the claims and a broker or benefits consultant is brought in to develop the customized medical plan for group. The best candidates for self-funded programs are ones who foster a wellness culture and have great open communication with their team regarding health and wellness. In the end, these companies often see significant savings.

Add strong incentives to your wellness program

According to SHRM, 48 percent of the companies that perform best in terms of health care spend offer holistic well-being programs, compared with 34 percent of companies with higher- than-average health care spending.

A UnitedHealth Care survey reported that 70 percent of employees would consider taking proactive steps to improve their health and wellness. On the other hand, 63 percent of employees weren’t willing to devote more than an hour a day to improve their health and well-being.

The nation’s best wellness programs are able to find a balance between the requirements needed to deliver an incentive program and the need to help employees improve their health.

Pick the right incentives
An incentive or reward can take many forms including cash, gift cards or prizes. But there are other, often more compelling ways to attract involvement including wearable fitness trackers, discounts on insurance premiums, paid time off, contributions to an HSA or HRA, or a lower co-pay or deductible.

It also helps to focus on a limited number of behavior changes, do whatever you can to make understanding and using the program easy for employees, and consistently communicate its benefits and value.

Pharmacy strategies can help cut overall costs.

More than 60 percent of employers say drug and medical spending is unsustainable for their business, reports the National Alliance of Healthcare Purchaser Coalitions. The survey introduced these recommendations for how employers could address and manage these costs:

• Demand price transparency
• Invest in employee preventive care and chronic condition management programs
• Factor in indirect costs and their impact—how stress, anxiety and medical debt impact an employee’s overall health.
• Negotiate prices for specialty drugs, which often carry the most exorbitant price tags
• Avoid a one-size-fits-all approach and take advantage of PMB specialty pharmacies for employees who need these high-cost drugs

Don’t forget to integrate non-health care benefits 

Many companies overlook opportunities to uncover additional savings by combining traditional health care with other benefits. Incorporating financial-based benefits such as providing student loan or financial management assistance with benefits that reduce stress — caregiving help, time off, vacations, even pet insurance—can help keep employees more engaged, happier, and ultimately healthier.

Find out what MMA can do to help

Marsh & McLennan Agency has the expertise and the experience to help you analyze your health care needs so you can make sure you have the right kind of plan for your employee population, the best wellness program, and the best ways to communicate with employees about their health and health care. To learn more, get in touch with your MMA representative.