No organization can be competitive in the global economy without healthy and productive employees.
Employer-sponsored health insurance plays a significant part in maintaining employee health, unfortunately most plans’ designs are reactive in nature, focusing heavily on providing medical services after employees get sick and not much on helping employees and their families improve their health.
That has obviously not worked well. The ‘total’ cost of a health care for a company should include medical, dental, pharmacy and vision claims, but also include lost productivity from absenteeism. This total cost is growing at an unsustainable pace. With this trend, companies should demand the same focus on cost constraints and ROI as they do for other areas.
The following steps can help in creating a structured approach to health plan design. This will enable plan administrators in understanding the key metrics to focus and regularly measuring the plan performance against them.
Step 1: Identify goals and metrics
The employee health plan should be designed in alignment with the overall business goals. Despite its obviousness, less than 10% of the organizations have a written strategic benefits plans with measured goals.
By clearly defining goals and metrics—whether in cost savings, health outcomes, member experience, productivity, absenteeism and presenteeism—on a regular basis, companies can accurately identify issues and make constant adjustments necessary to boost health plan performance.
Step 2: Data Collection and analysis
Data collection and analysis are important to provide a baseline status of your objectives and metrics. The data sources may include employee medical costs, claims and clinical data, quality measures, workers’ compensation costs, and biometrics. Bringing consistency into this process will go a long way into driving the necessary behavior changes in employees.
The analytics should be designed around the metrics established in step 1. This should be as specific as possible. For example, if you have a chronic disease management program, what are the goals of the program (lower HbA1C by 1%, Reduce weight by 3%, Reduce absenteeism by 5%)? Once these metrics are established, you can start monitoring and managing them.
Step 3: Discover Employee Preferences
Isn’t it better if companies ask the employees about their preferences rather than just asking brokers? Determine which services and benefits have value for employees- whether they favor low cost over a broad network, or whether a certain type of benefit is higher priority over the other. This can be done using web based surveys. Building your plan around your people’s needs and conditions will result in higher member satisfaction.
Step 4: Determine high cost drivers
Costs based on Conditions
Determine which health conditions drive total costs, including medical costs and lost productivity. This can be done by analyzing medical claims data in conjunction with payroll, employee performance and worker compensation data. Get a good understanding of the risk profile and total cost of prevalent conditions of the covered population and its impact on health status and productivity for the workforce.
Costs based on network
Do variability analysis across providers in your network. Understand what providers are charging higher for similar conditions in different locations with similar quality. This will help you remove providers who add limited value, but contribute significant costs to your plan. You can also do that based on services- for example pathology, imaging, outpatient etc.
Step 5: Create Cohorts
The needs and preferences of the workforce are growing more diverse, increasing the need for flexibility to build more modular and customized health plan designs. The more progressive the organization, the more flexible the design needs to be, to appeal to the needs of four different generations of employees working side by side.
The data collected from step 3 and step 4 can be used to create such cohorts. This can be based on disease groups and/or employee preferences including people who care most about the coverage vs. employees who would like to reduce their out of pocket costs.
Step 6: Benefit Design
Design benefits specific to each cohort. The focus of each benefit is to have a positive impact on healthy behaviors that leads to increased productivity, reduced medical and workers’ compensation costs and a better bottom line. Employees should also see the path to cost savings in the form of lower insurance premiums and co-pays.
Step 7: Aligned Network
Most organizations continue to actively shift costs to employees, yet they are reluctant to pull the levers that control access to benefits and manage their utilization. More than 80% of your costs go to providers. Controlling spiraling claims and costs that inflate premiums is paramount. Now that you know what employees care about and the key cost drivers, get a network that is aligned to your goals- a network that can deliver on providing the best experience to employees, can provide you visibility and reduce your costs. Set operational processes that facilitate better collaboration with such providers, establish incentives and centralize accountability.
Step 8: Test plans
Once equipped with data, use tools to find out how employees in the cohort would react. Get incentives in the mix. The right incentives go a long way in influencing employee participation, which impacts health and drives cost and productivity improvement. Incentives can range from cash cards and reward points for catalog shopping to a reduction in co-pays or premium contributions.
Step 9: Communicate
Communicate to employees early, effectively, and often. Provide customized employee-facing communication pieces for each plan. Engage employees to make the best benefit choices for themselves and their families. The goal is to help your employees become savvy healthcare consumers in order to lower costs for both parties.
Step 10: Evaluate
Monitor the metrics for healthcare cost drivers and health program results on a regular basis. Are the goals defined in step 1 trending in the right direction, if so accelerate the pace of improvement.