Employers and Advisors Seek Solutions to Control Health Care Dollars

Rising costs for medical treatment and the current  dismal economic forecasts have companies searching for ways to control benefit spending. Employers,  brokers and advisors are seeking innovative ways to provide affordable, quality health care programs. Fortunately, there are solutions. Primarily, the  focus is on population health management and real-time medical risk assessment in an effort to detect chronic disease states and prevent them from escalating into high-dollar catastrophic care expenses.

Proactive cost-containment solutions are appearing everywhere and becoming a staple in most benefit plan offerings. These high-dollar claim deterrence tactics appear as stand-alone wellness programs, integrated health risk assessment surveys, early detection screening, lifestyle coaching services, and carve-out chronic condition management programs.

To help ensure participation, employers are incentivising people in a variety of ways. Some are offering the opportunity to lower health benefit out-of-pocket expense through earned reductions in contributions as well as reduced deductibles and co-payments. To entice greater participation, many companies are using gift cards as rewards when employees complete health risk assessment surveys.

Alternatives to Fee Schedules and Risk Modeling
Another mechanism making its way into the marketplace is the Accountable Care Organization (ACO) model. ACOs offer alternatives to traditional PPO fee schedules and health care financial risk modeling. Based on clinical accountability and rewards for improved care, these re-emerging models of integrated care coordination and accompanying compensation structures are promising to lower health care expenses through various methods, including improved communication and reduced hospital readmission related to treatment complications. ACOs are driven by the desire to achieve better outcomes and reduce treatment inefficiency related to disconnected care delivery. Through reward (and penalty) compensation models, ACOs begin to share health care investment risk by becoming greater stakeholders in patient health and welfare.

ACO models are still in the process of defining themselves and seeking their rightful place within employee benefit coverage. As these organizations continue to demonstrate their efficacy and potential return on investment to employers, ACO home-health models could become a mainstream solution in the employee benefit marketplace. 

Other trends show employers looking inward for accountability in reducing their benefit expenses. Dependent eligibility has traditionally been based on the honor system but is now under greater scrutiny by both employers and insurance carriers. Recent studies have shown that nearly 15 percent of covered dependent health benefit beneficiaries do not meet the criteria for coverage. These ineligible dependents are estimated to cost health care plans 6 to 8 percent of total health care-related benefit expenditures annually.  Increased pressure to lower benefit expense coupled with increasing awareness of potential IRS, ERISA, and Sarbanes-Oxley penalties have many employers adopting a "trust but verify" approach to eligibility and enrollment. Employers are taking it upon themselves to audit dependent benefit eligibility and are receiving assistance in this effort from carriers and independent auditing vendors. To help alleviate the negative perception of eligibility verification and to reduce retribution concerns many employers are offering amnesty to encourage employee cooperation in the auditing process. Employers who perform dependent eligibility audits are realizing returns through reduction of premiums and lower health care-related expenditures.

Self-Funding and Voluntary Programs on the Rise
Cost-cutting trends and avoidance of the PPACA regulations are also creating significant growth in self-funded benefits and ancillary product markets. A 6 percent annual increase is projected for self-funded benefit structures over the next several years, but what is capturing the most attention of industry experts is the increasing movement of smaller employer groups to self-funding or partially self-funded benefit models. Historically, entry into self-funding was limited to large or mid-sized organizations. However, the bar continues to be lowered regarding census requirements for these models. Driven by the desire to participate in the upside of paying only net the cost of coverage expenses, previously fully insured employers are turning to self-funded benefit models. Current estimates now place self-funding at nearly 60 percent of all covered employees nationally.

Additionally, hybrid premium alternative funding models are gaining traction with both employers and their advisors and are continuing to grow in various forms throughout the marketplace.

New momentum is also being witnessed across ancillary and voluntary product offerings as employers attempt to maintain overall employee benefit package satisfaction. The increased momentum may be a result of the perception of declining value when it comes to health care benefit offerings. In recent years, we have continued to see increased cost shifting of member responsibility through higher contribution rates, increased deductibles, and higher overall out-of-pocket expenses. Ancillary benefits such as dental, vision, life insurance, and disability are affordable products that can help increase employee satisfaction with benefit packages and provide added peace of mind during uncertain economic times.

The current transformations we are witnessing in Florida and the national employee benefit marketplace are unparalleled in our industry's history. With health insurance exchanges, ACOs and individual coverage mandates on the horizon, stakeholders such as insurance carriers, employers and advisors are navigating uncharted waters concerning defined group benefits. Those organizations and individuals who seek new and innovative solutions for the stewardship of the health and welfare of employees and their families will find no shortage of emerging products and services waiting to help them on their quest.