Mercer’s U.S. Leader of Health Reform, Tracy Watts, has suggested action items for health benefit plan sponsors in 2018.
In part one of her blog, Watts suggests plan sponsors have a strategy to manage specialty costs. “As the fastest-growing cost component of medical trend, specialty drugs are not an issue you can afford to ignore,” she wrote. “In our most recent National Survey, 83% of employers say managing specialty drug cost will be an important or very important focus over the next five years. The first step is to take a look at your current utilization and spend for these drugs. It’s not as simple as carving out specialty pharmacy—there’s as much opportunity for management on the medical side of the plan as on the pharmacy side.”
Secondly, Watts says plan sponsors should protect themselves from high-cost claims. High-cost claimants are at the top of the list of the most expensive sources of health care costs, according to a report from the American Health Policy Institute, so managing them is critical to keeping costs down.
In addition, according to Watts, historically, very large self-insured employers have not purchased stop-loss insurance. “Given the costs associated with medical advances and new specialty drugs, this may no longer be an appropriate risk strategy and if you do purchase stop-loss insurance your current coverage level may not be enough,” she wrote.
Watts also suggests health benefit plan sponsors help plan members understand the cost of care at various access points. She notes that for some employees, reaching the deductible for their plan in a given year would put a real strain on family finances. Plan sponsors can help by communicating to their employees about the relative cost of care at different access points.
For example, she said, a telemedicine visit costs approximately $40 and can be scheduled at an employee’s convenience; a visit to a retail clinic (like the Minute Clinics in CVS) costs $60 to $90 depending on the service; the average cost for a doctor’s office visit is around $125; a visit to an urgent care facility will typically cost $200 to $300 (or more, if it includes lab tests or X-rays); and an emergency room visit costs the most of all. “Once employees understand the basics—that they have options and that their choice of provider can save real money—you’ve paved the way for more sophisticated value-based care strategies (like Accountable Care Organizations and Centers of Excellence) that also involve choosing a cost-effective provider,” she wrote.
In part two of her blog, Watts says health benefit plan sponsors should explore strategies to help employees juggle competing financial priorities. For example, provide more medical plan choices. “Don’t assume two or even three choices are enough. In looking at over a million people covered by Mercer Marketplace 365, our bundled benefits solution, we find a fairly consistent distribution across all the options offered by an employer—whether it is three or five. In picking a plan, employees consider the trade-offs between paycheck deductions, out-of-pocket risk, expected healthcare use, and provider networks. Yes, more choice makes it more complicated—but people expect choice in everything they buy, and employees will be more satisfied with their health plan selection if they feel they were offered options for a range of financial situations,” she wrote.
Watts suggests plan sponsors should also provide decision support to help employees compare medical plan options that includes supplemental coverage for hospitalization or accident, and incorporate financial tools into their wellbeing programs.She also suggests plan sponsors should take a detailed look at how your paid time off benefits are administered and managed, and as far as health plan engagement and education, if plan sponsors are not sure what their employees want, they should find out. For example, based on research, one could generalize that Millennials want everything to be high-tech and navigated from their phone, but Mercer found that of the top six services that Millennials say they are interested in, three have to do with in-person advice and social support—not technology.
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