Tracking Healthcare Trends
When it comes to healthcare-plan design, experts say there are some strategies that companies can pursue now in anticipation of changes on the horizon.
By Lin Grensing-Pophal
There's no doubt that healthcare is an industry in flux, and, because of the key role that many employers play in providing access to healthcare through health-insurance plans, virtually every industry in every geographic area is also in flux.
The National Business Group on Health's Large Employers' Health Plan Design Survey offers some insights into the issues that employers are currently grappling with. The NBGH findings are consistent with the trends that large healthcare consultancies are seeing through their own surveys.
For the upcoming enrollment season, employees should expect little disruption in current plan offerings, says Brian Marcotte, CEO of the Washington-based National Business Group on Health. However, he says, "I think we're going to see a sharp increase in telehealth and a continued focus on healthcare decision support tools and resources for employees."
During last year's open-enrollment season, he says, the message was: "Pay attention to your plans because your plans may be changing." This year, he says, the message will be: "The plans aren't going to be changing that much, but pay attention to the tools and resources your employer is giving you to help maximize benefits."
Looming most prominently on the horizon for employers is the pending Cadillac tax, which will go into effect in 2018, says Marcotte.
"I think the biggest takeaway in the survey is that nearly half of large employers say that, if they don't take additional measures to control their costs, at least one of their health plans will trigger the 40 percent excise tax, or so-called Cadillac tax, when it goes into effect in 2018." This is basically saying that "the Cadillac tax is really not a tax on generous plans, it's a tax on all plans-eventually all plans will trigger the Cadillac tax," he says.
Jim Winkler, chief innovation at Aon Hewitt in New York, agrees. "Virtually every employer we work with, unless they make significant changes, will be subject to the excise tax."
Indeed, the impending impact of the excise tax is the biggest call to action for employers to come from the NBGH survey, as well as "any of the surveys that have been done over the past several years," says Tracy Watts, senior partner and national leader for U.S. health care reform at Mercer in Washington.
"It won't take very much time for an employer to have the inevitable happen," she says, "which is to hit that [40-percent] threshold."
Meanwhile, new offerings of consumer-directed health plans by employers have leveled off this year, says Marcotte, after a significant increase in their adoption over the past five years or so.
"Last year," he says, "we saw a 50-percent increase in the number of companies that went to consumer-directed health plans as the only option." This year, however, "we saw very little movement," he says, adding that employers may be taking "a wait and see" approach.
"This could be the calm before the storm," he says.
Employers that would prefer not to go to a consumer-directed only plan are waiting to see if the Cadillac tax will be repealed, he says. "There are a third of large companies today that only offer consumer-directed health plans-we saw very little movement for 2016, but in 2017 we could see another 26-percent jump if the Cadillac tax isn't repealed."
Sandy Ageloff, a Los Angeles-based senior consultant at Towers Watson, says she has seen similar trends. "They've really sort of reached almost the saturation rate in the market," she says. "Somewhere between 75 to 80 percent of employers in most surveys say 'Yes, we have a consumer-directed plan.' "
Despite making the plans available to workers, however, enrollment remains below 50 percent.
Another interesting result from this year's survey, says Marcotte, pertains to specialty pharmacy. While it only impacts about 3 percent to 4 percent of the workforce, it has moved up to the second-most costly driver of medical inflation for the majority of companies. Consequently, one of the key tactics that companies indicate they will be focused on in 2016 is the aggressive management of specialty pharmacy drug costs, he says.
Organizations are apparently already taking steps to stem the rising costs associated with specialty pharmaceuticals, as the NBGH survey shows an increase-from 33 percent to 55 percent-in the use of freestanding PBMs' specialty pharmaceuticals, and a jump from 29 percent to 53 percent in prior authorization for drugs.
Ageloff says this is likely to be a continued area of focus. "This is certainly something we hear from employers as being a very critical issue," she says. "More and more employers are looking at ways to manage the utilization of specialty pharmaceuticals."
As employers look for better ways to manage their healthcare-coverage costs, while also taking steps to positively impact employee health, telemedicine and the use of decision support tools are both on the rise. Last year, according to the NBGH survey, 48 percent of employers made telehealth options available to employees; in 2016 the number jumped to 74 percent.
Towers Watson's research also shows an increase in organizations' interest in telemedicine, says Ageloff. "Our data shows that, in 2016, close to 40 percent of employers have some type of telemedicine program in place and 80 percent expect to have those in place by 2018."
Nearly three-quarters of employers provide self-service decision support tools, according to the NBGH survey, either on a company intranet or through an online portal. These tools, experts say, can help employees make more informed plan-option decisions.
Too often, says Watts, employees choose the most expensive plan option because they feel that's "the best" plan. While understandable, basing a decision solely on cost may lead employees to the wrong coverage for their needs.
"If you give people a tool, something that helps them really understand the financial implications of the decision they're making about which plan to enroll in, they can better understand their options," says Watts.
What are the implications of this research for HR professionals? For starters, it may require a different type of conversation with employees-one that may seem to be far more intrusive in terms of personal choice than those that have taken place in the past.
"HR has a bit of a balancing act in terms of 'I have to engage my employees in a dialogue about healthcare and healthcare costs, while at the same time, [HR] has to make sure it is creating a really engaging work environment that's allowing [the organization] to attract and retain the right employees," says Winkler.
Employers are starting to take a more directive approach to their communication with employees, Ageloff says. "We're seeing more and more employers looking at centers of excellence to drive employees to the top-performing places for care. We also see them using more highly performing and narrower networks," she says. "In our data, close to 40 percent of employers say that, by 2018, they expect to have high-performing or narrow networks in place with benefit design incentives to drive employees to the top-performing tier."
Fortunately, while HR needs to move to a far more strategic place when it comes to benefit plan design and management, they don't have to go it alone, as there has been a growing role for corporate finance representatives in these discussions, Ageloff says. "We're seeing more and more employers say the partnership between HR and finance has gotten closer and we expect finance will play an important role in healthcare decision making going forward."
Winkler agrees. "HR is increasingly being more directly tied into the business itself and understanding, and being accountable to, business metrics while also managing program costs."
For HR professionals, this may all seem somewhat overwhelming. But, "I think these are really exciting times to be in our business," says Watts. "With each passing day we just get more and more opportunities for different types of strategies. It's a lot to take in, but I think that there are a lot of great opportunities for us to continue to not only manage costs, but to drive better quality and to maintain or improve the health of the population. Those are all good things."
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