5 ways to reevaluate health benefits design for open enrollment season

Millions of employees are seeking new career opportunities and making moves to organizations that demonstrate they put their employees front and center. One of the best ways employers can show this is to reevaluate health benefits and offer a design that doesn’t restrict employees’ choices and allows them to access the treatments they need.

As the cost of healthcare continues to rise and the fall open enrollment season approaches, reevaluate employee health plans to ensure that a greater share of treatment costs is not being shifted onto employees.

Everyone is wrestling with healthcare costs that are too high and it’s tempting for employers to look for ways to rein them in. When designing benefit plans however, employers should look beyond containing the short-term costs of coverage to be sure plan elements aren’t impediments to needed healthcare.

Executive decision-makers, human resources professionals, company health benefits managers and employees can make more informed decisions about healthcare plan design if they have a better understanding of utilization management (UM), the cost containment methods that restrict employee access to healthcare services.

Control costs

To control costs, plans often rely on UM tools such as prior authorization and step therapy, which requires patients to try lower-cost medications before moving on to higher-cost options. Among the unintended consequences of these tools are administrative snarls, harmful delays, debilitating stress, costly out-of-pocket expenses, and interference with patient/physician decisions regarding the best course of treatment.

Employers must balance their need to stay on budget while providing adequate coverage for their employee healthcare needs. Many companies rely on third parties to help them design their plans. These experts, whether benefits consultants or the insurer’s customer team, often recommend packages that limit access to prescription drugs as a way for the employer to save money.

But, like a seesaw, when you push down on one side – prescription drug benefits for example – the other side of the seesaw – medical benefits – goes up. When patients can’t access the drugs they need, they are more likely to become sicker, spend more time in the hospital or even become disabled. No employer would choose to save money in ways that harm their employees. However, they may not know that their benefit design and utilization management practices are what is causing a problem.

There are steps that employers can take to design plans that offer reasonable, better and more cost-effective coverage for their employees who receive health care coverage through their jobs.

Avoid adverse impact

Here are five ways to ensure that an organization’s health plans don’t end up having an adverse impact on employees:

1. Keep copays and deductibles low so employees don’t rack up medical debt or decline and/or stop needed treatments due to their out-of-pocket costs. High deductible plans have been shown to discourage preventive services as well as medical care and treatment, and delay the diagnoses of metastatic cancers.
2. Limit the use of pre-authorization, a requirement that certain services, treatments or prescriptions be approved in advance by the insurer, to only those treatments frequently abused or mis-prescribed.  
3. Steer clear of step therapy for chronic and serious conditions. It requires using a less expensive and often less effective medicine before a more expensive and often more effective one is authorized. Delays in getting the right treatment can lead to costly and disruptive side-effects or ineffective and possibly harmful treatment caused by the wrong medicine.
4. Ensure that the drug formulary is based on current clinical guidelines and out-of-pocket costs to the patient, rather than on rebates paid to the plan sponsor or the PBM. Restrictive drug formularies can require employees to switch drugs mid-treatment (even when they are stable on the current drug), disincentivize the use of generics, make needed treatments so expensive that employees abandon their treatment and risk getting sicker or incur medical debt to get their prescription.
5. Count all copays paid by or on behalf of a patient toward their deductible and out-of-pocket maximum. Employees who depend on expensive specialty drugs may need financial assistance to help with their copays and they shouldn’t be penalized by having to cover their co-pays and deductibles twice.

Know the impact

Company leaders who decide on which benefits to offer and how to structure their health insurance plans should design plans that are straightforward and provide their employees with coverage that allows access to the treatments they need at the time they need them. The unintended consequences of certain utilization management practices can be harmful to patients and to their employers who need a healthy and productive workforce.

If employers understand the real-life impacts of utilization management practices, they can make better choices that help their employees avoid needless delays, time consuming appeals, and staggering out-of-pocket costs, thereby supporting productivity, job satisfaction and retention.