Health benefit cost growth has been relatively stable over the last 10 years (apart from a couple of COVID hiccups), rising about 3% annually on average. That’s not likely to continue. Increased labor and supply costs in the health care sector will drive cost growth higher, and expensive new treatments for serious health conditions will result in greater claims volatility.
But while you can’t control healthcare price increases, there are steps you can take to control your health benefit spending – without shifting cost to employees.
Reduce waste and seek value
- Take a close look both at your medical plan’s fixed administrative fees and at variable fees for things like shared savings. Do the actual amounts you are paying match your contract? Review out-of-network shared savings programs and the magnitude of these fees to be sure they are in line with expectations. These costs generally come through as a claims expense and can be challenging to tally.
- Pay attention to your claims data. While we’re still waiting for definitive studies, there is reason to be concerned about the health impacts of delayed care due to the pandemic. Are you seeing an increase in members presenting with more advanced cases of newly diagnosed conditions? This is a good time to review your data to see where members with serious health issues are seeking treatment. There may be an opportunity to steer them to higher quality providers and centers of excellence – and to achieve better outcomes as well as cost savings.
- Evaluate the effectiveness of new programs and resources you may have added over the past few years. Are they delivering value and having a positive impact on your members – and on overall health benefit cost growth?
Focus on pharmacy – in your medical plans, too
Global pharmaceutical spend is expected to exceed $1.5 trillion by 2023, with close to 50% of that amount spent on high-cost specialty drugs. Gene and cellular drug therapies are entering the market rapidly, some carrying price tags of $2M or more per treatment, and most will be administered in medical facilities. In the US, new federal and state PBM and Rx legislation has the potential to increase employer costs by restricting strategies that help plans manage cost. As PBM contracts become more intricate and Group Purchasing Organizations (GPOs) change the rebate landscape, managing a pharmacy program has never been more complex – but with costs set to explode, it’s never been more critical.
- Evaluate your population’s risk for high-cost gene therapy and cellular therapy claims. Based on what you discover, explore programs offered by your medical and pharmacy vendors focused on cost of care and clinical management of these new therapies. It may be worth considering alternative risk financing strategies, including stop loss or reinsurance solutions, installation payments and outcomes-based reimbursement.
- Manage pharmacy costs across all benefits. With 20%+ of total health care spend relating to pharmacy, and most specialty therapies falling under the medical plan, a holistic approach is needed to manage drug costs across all medical and pharmacy benefits.
Explore a digital path to more affordable healthcare
In today’s labor market – and with inflation already creating financial stress for employees -- shifting healthcare costs should be your last resort. Instead, think about ways to shift care to less costly sources. Digital health solutions can reduce cost for both the plan and the patient, and improve member experience and health outcomes. If navigating the market to source, implement, and manage a digital ecosystem seems too onerous, you might consider platforms or bundled solutions that provide an array of best-in-class point solutions to maximize savings, as well as a digital “front door” that guides members through their healthcare journey.
- Keep the needs of your population top of mind as you explore possible digital health tools that deliver value and support convenience and affordability.
- Evaluate the “front door” of your current program. Does it optimize the way people engage with the healthcare system and help them get the best care for their condition? Is there room for improvement?
- Consider personalization: In today’s five-generation workforce, a program that allows members to select an array of benefits to meet their differing needs and preferences may deliver the greatest value.
Optimizing your benefits program requires a multi-pronged approach: Reviewing plan contracts and financial performance, preparing for future costs, and incorporating new digital solutions. Taking action now can help you build a higher-performing plan that delivers quality, affordable care in the years ahead.
This blog post elaborates on one of the six “must-do” strategies Tracy shared in her post, 2023: The Year to Get Creative with Strategic Planning.