Combat skyrocketing healthcare benefits cost: Choose the right vendor

We hate to be the bearer of bad news, but if you are seeing your healthcare benefits costs rising, you’re not alone. HR leaders across the country are sharing that their employers are seeing healthcare benefits costs skyrocket over the past 12 months. Mercer’s annual survey on employer-sponsored health plans showed that small and medium employers saw employer-sponsored healthcare benefits costs rise by 10% and may go higher in 2022.

What’s contributing to these rising costs?

To find out, HR Morning spoke with industry expert Adrienne Schneider, former head of benefits for American Airlines and founder of The Camille Group, an advisory consulting firm.

“There are a few factors that are contributing to the increase,” said Schneider. “Prescription drug costs, specifically in the specialty care space, are causing employers to see a rise in healthcare benefits costs. Plus, there’s been a huge impact on healthcare workers with COVID-19, so to be able to retain healthcare workers there have been increased labor costs that are being passed on to employers through negotiations with health plans and health systems. And employers are seeing the impact of the effects of deferred care from 2020 and 2021. Those are just a few factors that are impacting the cost of care.”

The company’s employee population also affects healthcare benefits costs, she noted, pointing to when she was at American Airlines about 8% of the population at the company was driving upward of 75% of its total healthcare benefits costs. The 8% were generally people who were considered high-cost claimants – employees who had complex conditions that required surgeries, hospitalization, and possibly even readmissions.

“Generally, employers see a very small percentage of populations impacting the majority of their costs from a healthcare perspective,” said Schneider.

Vendor Green Flags

How can employers lower their healthcare benefits costs?

The answer to this question starts with finding the right benefits partners/vendors. And according to Schneider, she looks for three important pillars when it comes to finding a quality vendor:

1. Cost containment – Benefits pros want to find vendors that can help tangibly contain costs and are willing to have ROI guarantees in place.
2. Customer experience – Benefits are hard to navigate, even if you know what you’re doing. That’s why it’s essential to have a trusted partner who advocates for and wants to engage with employees at the time they need it, like after they get out of the hospital. Employees need to believe they have someone by their side who can help them navigate their benefits journey, and thinks about them holistically, not just from a physical perspective, but also from a mental health perspective.
3. Innovation – You want an innovative vendor. Just because a certain solution worked yesterday, doesn’t mean it’ll work tomorrow. You want partners who consistently use data gathered from patients and other sources to continually ensure they’re enhancing their products and services. You want a vendor who is committed to staying at the top of their game.

“You want to work with medical carriers, and navigation and specialty vendors, who are working hard to make sure they’re doing their part to impact costs and bring them down for the employer in different and unique ways,” said Schneider. “You want partners who are willing to put their money where their mouth is.”

Vendor Red Flags

Vendors you don’t want to work with are those that charge a flat per employee per month fee without any ROI.

“Vendors that make no guarantees about the number of people that they can engage with is a big red flag,” said Schneider. “As are vendors who exclude high-cost claimants from their ROI guarantees.”

High-cost claimants are the population your vendors need to be impacting the most. Sometimes it requires Benefits pros to have some challenging conversations with vendors. While there may not be anything they can do to prevent someone from having a $50,000 claim after surgery, there are things vendors can do to prevent that person from turning into a $100,000 or $150,000 claimant.

“It’s really all about finding vendors who believe in their products and are very willing to engage with people. And then after that engagement or during that engagement, are willing to guarantee that the quality of their services is such that they can help you ultimately reduce costs wherever possible,” said Schneider.