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Choosing Wisely

As more employers make changes to their benefit offerings to adapt to rising costs, some are turning to tools designed to help employees decide which plan is best for them.

Sunday, May 1, 2011
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For Eric Mastny, the choice was simple.

It was early spring last year when Mastny, the compensation manager for Malt-O-Meal, a Minneapolis-based breakfast-cereal producer, learned the company would begin offering a high-deductible healthcare benefit with a health-savings account to its 1,800 employees in three states.

"We were trying to roll out this HSA program and give people a meaningful tool for making sense of all the issues that come out when you're dealing with this whole different concept of healthcare," he says.

After looking at a variety of tools on the market, he says, the high cost and limited functionality of the selection became dispiriting, until a board member suggested they take a look at the online decision support tool from Asparity Decision Solutions, based in Durham, N.C.

It offers users a "tool set" including a medical-cost calculator, a comparison module that lets users compare different plans side-by-side, and a savings-account estimator.

"When we first saw it, we were seriously blown away," he says. "This exactly fit what we thought we wanted to have. It was quick, customizable and fairly intuitive for our user base, and we were really pleased about that."

What's more, employees also reported positive experiences after using it.

"It just laid out the dollars-and-cents implications [of different health-plan options or medical events] for them, and they really liked having localized cost data pre-loaded into the system," says Mastny.

Indeed, the preloaded data -- which allows employees in different states to see the local price of a specific medical procedure is a must-have component of any product.

"We were throwing a lot of information at people, and so the company also gave our employees a classy tool that they could relate to and was also easy to work with," he says.

Since the adoption of that tool, some 66 percent of employees have switched over to the HSA-based plan. Mastny says that figure pleased another subset of the organization: the company's leaders.

With healthcare costs looming as a major pain point for workers and their employers in the coming years, many organizations may be looking for a path similar to Malt-O-Meal's when it comes to getting their employees to take on more of the healthcare payload through high-deductible consumer-driven health plans.

The trend toward consumer-driven healthcare can be seen in the dramatic rise of health-savings accounts and health-reimbursement arrangements, which grew to 5.7 million in 2010, up from 1.2. million in 2006, according to the Employee Benefit Research Institute in Washington.

And according to the Towers Watson/National Business Group on Health's 16th annual report, entitled Employer Survey on Purchasing Value in Health Care, CDHPs cost -- on average -- about $930 less than traditional preferred-provider plans for employee-only coverage and $2,868 less for family coverage. About 27 percent of the employers surveyed plan to begin offering CDHPs in 2012, the survey found, joining the 53 percent of employers that already have such plans in place.

Experts say tools that let users compare different plans side by side or see the true out-of-pocket costs associated with a particular plan may help employees become both better decision-makers for their own health plans and better consumers overall -- which is part of what CDHPs are intended to do.

"We budget for our house and for transportation and for food, but people haven't been budgeting for health," says Alexander Domaszewicz, a principal at New York-based consultancy Mercer. "These tools help people to start thinking about that process."

Overall, these tools may help employees put healthcare costs on the same mental list as their mortgages, car payments and grocery bills, he says.

"The real intent of consumer-directed plans is to get people to think about their plans throughout the year, instead of just once a year at open enrollment," says Domaszewicz.

Early Education

While organizations often implement decision-support tools as a vehicle for coaxing employees to migrate to a new CDHP, others may simply offer them in order to get their workforce more exposed to the benefits choices available to them. And the sooner that exposure starts, the better, according to one national accounting firm.

At Grant Thornton, a Chicago-based accountancy with more than 5,000 employees in 50 offices across the country, new hires are encouraged to use an online decision-support tool called PlanWise, says Lou Ann Hutchison, the firm's national director of human resources.

The tool is offered by SHPS, a Louisville, Ky.-based integrated health solutions provider.

"We continue to hire, on average, 1,000 people per year, and about half of those are entry-level, so this is their first time going through a plan decision," she says, adding that at least 65 percent of the company's new hires have used the tool to date.

"The best use of this tool, for our culture and population, is as a way to educate individuals about their buying decision and [to ensure] that they really understand our plans," Hutchison says. "It really helps them think through what's important and where they're at economically, and that whole education process really seems to resonate with our folks."

PlanWise gives employees a cost factor and shows which of the four available plans offered by Grant Thornton most aligns with their stated preferences.

"Our people [now] have the information in their hands to help them make decisions with their families," she says. "This is a buying decision, and having the best information available will enable them to make a better decision. ... It doesn't just kick out an outcome that you automatically are put into."

Dan Farrell, the firm's national manager of HR communications, says he used PlanWise during open enrollment a few years back, in part because of the incentive offered: a $600 healthy-lifestyles credit against the plan premium.

"I'm a relatively busy person and so I do not just take things just to take them," he says. "It was robust and helpful and meaningful for me."

He says he was impressed by the variety of options that PlanWise laid out for him.

"It helped me step back and see all my options, because it pointed out new [plan] features and plans that I wasn't aware were offered."

After using PlanWise, Farrell chose not to make any changes to his plan, but not before asking himself some tough questions.

"I chose to [remain] in the most expensive healthcare plan, just peace of mind for myself, but looking through the options really made me ask myself: 'Is [the current plan] really the best plan for me?' "

In order to maximize the effectiveness of any tools offered to employees to guide their healthcare decisions, Hutchison says, clarity of communication is key.

"If education is what you're striving for, make sure that both the tool's design and the communication used to convey its availability are clear, in order to highlight all the aspects of the economics that you want employees to know about," she says.

When PlanWise was first rolled out at Grant Thornton, she recalls, the company was already offering a CDHP tied to an HSA that the firm would contribute into on the employees' behalf. But the tool didn't properly highlight the company's contribution, which ended up confusing some of the employees who were using the tool.

So the following year, that amount was "called out" on a separate line, so employees could better see the money that the organization was putting in.

"It was burying one of the better features of the plan and, once we explained that to employees, the light [bulb] just went on," Hutchison says.

Chris Ryan, chief strategy and marketing officer at SHPS, says a fully-planned communication campaign should accompany any rollout of tools designed to help employees make decisions about their healthcare.

"It's exactly the same discipline as an editorial calendar," he says. "Both are planned a year out, with different topics set out to give small chunks of information often. It's an ongoing discussion, rather than giving out a 10-page pamphlet and giving them two weeks to make their choice."

Ryan says another effective technique for getting decision-support tools' usage rates up is to get the employees themselves to share their experience using it, through short video testimonials on the organization's intranet.

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"Social proof is a very important concept in getting people to change their behavior," he says. "If you see your co-workers using it, you'll feel better about using it yourself. It's really about getting to a tipping point where everyone is comfortable with the the new norm."

Magic Bullet?

Domaszewicz, who heads up Mercer's health-consumerism group at the company's office in Newport Beach, Calif., says many healthcare decision-support tools have gotten more sophisticated without adding a lot of complexity.

"They're getting a lot more sophisticated, into more of an Amazon.com-like feel, where comparisons of plans can be made side by side, where you can see what plans other people in similar situations may have chosen, [and where] all that best meet the criteria you have entered.

"Also, a good number show in- and out-of-network, or 'retail,' costs, but not all," he says. "And yes, these features are valuable, but are not absolutely necessary, and there are good tools that, for simplicity's sake, do not include all the [available] details and features, and sometimes simple is good."

An important ROI on selection-assist products, he says, could include positive employee feedback (anecdotally, or through surveys or focus groups) to ensure they better understand the health benefits being offered to them and feel more confident about their choices. 

"A high use of robust plan-selection and budgeting tools can translate to greater participation and deferral rates into health-savings accounts and flexible-savings accounts, which can translate into modest payroll-tax savings for employers," he says.

Ease of use is an important factor in determining whether employees will become users of a decision-support tool, says AonHewitt's Sara Taylor.

Taylor, the health and welfare product development leader at the Chicago-based consultancy, says its DecisionDirect web-based tool can offer employees a good view of their choices, typically within five minutes.

DecisionDirect is based on a question model that helps employees assess their individual financial and health needs, and then provides a recommendation of which plans to look at and why, says Taylor. The tool is primarily geared toward choosing medical-benefits plans, but can also be modified to include 401(k) guidance, she adds.

Employees need to have a basic understanding of two factors before using DecisionDirect, says Taylor: their family's general health and a basic idea of how much they're already spending on healthcare-related expenses.

The questions are designed so they can be easily answered by employees, including: Is your family healthy? Do you anticipate a major dental expense this year?

Recent research by the firm has shown that employees who have used DecisionDirect are three times more likely to make choices on medical and prescription coverage that are less costly to the employer and are three-and-a-half times more likely to participate in a company's flexible spending account.

In addition to DecisionDirect, AonHewitt also offers more in-depth tools to help employees make healthcare-based decisions.

"We have a resource available to employees that aggregates all their claim information, (including dental, pharmacy, vision, etc.) and tells them how much they use healthcare and how much they spend on healthcare," she says. "It's actually very hard for employees to find that information on their own." 

Taylor says HR leaders looking to help their employees make sound healthcare decisions need to ensure clarity in their offerings.

"You can quickly over-engineer these types of tools" and thereby lose their effectiveness, she says. "The harder it is to use the tool, the less people will use it. "

In order to ensure overall program success for HR, Taylor says, communication is key. "[HR leaders] need to tell their people that these tools are out there," she says. "Education is the No. 1 barrier to use of these things."

And regardless of which decision-support tool an organization ultimately chooses, efforts to educate employees about their healthcare options can't simply end with the choice of a decision-support tool or suite of tools.

"These types of tools are not going to be the magic bullet to get employees into a CDHP," says Taylor. "It's one lever, and it can be a powerful one, but employers implementing a CDHP strategy need to pull multiple levers. These tools are just one piece of the puzzle."

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