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Focus on Employee Benefits: Reduce Your Healthcare Benefits Costs

Apr 9, 2018

Healthcare benefits are a key factor for most employees in choosing a job or remaining at one. Consequently, some 92 percent of employers expect to provide benefits over the next five years. In a tight labor market, your practice must offer attractive benefits in order to compete for talent.

Yet the cost of healthcare benefits continues to increase. 2018 is expected to be the fifth straight year of five-percent cost increases — and your private practice, with its small risk pool, will face a similar hike.

“Consumerism” Moving Too Slowly

Employers and payers have promoted “consumerism,” whereby employees become more educated and involved in health insurance decisions. The learning curve is slow, but this shared decision-making model isn’t going away.

Two decades of data summarized by The Wall Street Journal in 2017 showed that consumerism, where implemented “leads to better outcomes, fewer invasive procedures and lower costs.”

This means your practice will need to find new ways to engage employees. To do so, you’ll need to look at programs that can:

  • Offer a high-value plan,
  • Increase employee education and appreciation,
  • Improve outcomes, and
  • Manage costs.

The goal is for employees to rely less on expensive choices — in drugs, specialist care and out-of-network providers.

Customization Is Key

Achieving these goals will rely on programs that can accommodate your staff’s differing needs, risks and perceptions. Today’s marketplace offers more mix-and-match solutions than ever before; here are some options.

• Shifts in benefits allocation.

Not all employees value every benefit equally, so find out who wants what. Your Millennial staffers may judge student-loan assistance or maternity leave as more valuable than standard healthcare coverage. And your older employees may want more help catching up on their retirement plan contributions.

• Increased employee contributions and compensation.

This would reverse tradition, which is a big reason healthcare pay is seen as low. But few staffers will disdain a raise, while a choice of several benefit plans can still offer affordable premiums.

• Medication management help.

High-cost drugs are the leading factor in healthcare cost increases. Some patent drugs are unavoidably expensive, but low levels of patient education and compliance also play a big role. So does receiving medications in costly settings when it’s not necessary. Medication management programs help patients shift away from these habits.

• Telehealth and e-Health.

These cost-reducing services are growing — 20 percent of employers report that eight percent or more of their employees use them. Employees are usually pleased to receive solid medical advice without waiting for an office appointment.

• Catered services.

These amount to extra help for employees in understanding their plans, benefits, second-opinion rights and treatment options, as well as where to seek care. Some two-thirds of companies say they’ll offer such decision-support services in 2018.

Consumer-directed health plans.

A CDHP may appeal to your healthier employees who are willing to shoulder greater risk via higher deductibles and out-of-pocket ceilings. They’re similar to other plans, but they offer low premiums and are commonly paired with tax-advantaged accounts like Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs).

• Health Reimbursement Arrangements.

Essentially self-insurance, an HRA requires your practice to reimburse employees after they pay for approved medical expenses and premiums. These reimbursements are only up to a point, however, because most HRAs put a ceiling on your contributions. Employees can use this plan to pay for more expenses than group plans cover.

• Level-funding.

This is a special kind of self-insured plan with stable costs for administration, claims reimbursement and stop-loss coverage. A third-party administrator (TPA) pays claims, with year-end resolution if they are more or less than your practice’s payments. Level-funding is especially well-suited to medium-size practices with a strong culture of wellness and shared decision making.

• Narrow networks.

These networks offer a smaller number of providers in return for lower costs. They’ve been popular in the ACA health exchanges, but only seven percent of employers offered them in 2016. Narrow networks are more likely to catch on as insurers assemble networks of trusted quality and employers incentivize their use.

• Wellness programs.

These can pay off in greater productivity, less absenteeism and fewer claims for chronic conditions when employees use them to manage and improve day-to-day health. They’re also famous for increasing employee satisfaction.

Meeting the Challenges

The ongoing fog of healthcare politics and the complexity of benefits systems have posed big challenges to employers as well as employees. Customized solutions, however, can help meet your staff’s needs while sustaining profitability.

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