How the best companies hold the line on health plan costs

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What’s the prescription for bringing healthcare costs under control? It’s not a single cure-all, but rather a series of medications designed to work together to keep your health plan costs from crippling you. 
Unfortunately, there’s no singular magic elixir to cure what ails your health plan: rapidly increasing costs.
The good news, however, is a treatment regimen does exist that can keep cost increases closer to inflation than what they typically have been for most companies: four to five times inflation.
Towers Watson, a renowned human resources consulting company, and the National Business Group on Health (NBGH), a non-profit advocate for large employers’ healthcare concerns, just conducted their 19th annual survey of large employers to pinpoint the most effective healthcare cost control strategies.
While the full results won’t be released until later this month, we can look back on the results from last year’s survey in anticipation and see what’s traditionally been most effective at controlling healthcare costs.
Last year’s survey was completed by 583 employers. Towers Watson and NBHG separated out the companies that had the greatest success keeping healthcare costs down and identified the most common measures those employers took to rein in costs.
While the survey respondents were large employers (each had at least 1,000 employees), and thus many were self-insured, most of the cost control strategies they used can be applied to just about any group plan.

Best cost-control strategies of 2013

The most implemented strategies of top performers last year:

  1. Procured a pharmacy benefit manager in an attempt to tamp down pharmaceutical costs
  2. Provided employees with healthcare cost transparency — revealing the price per service
  3. Consolidated health and productivity programs under a single vendor
  4. Contributed funds to employees’ health savings accounts
  5. Provided tools via health plans that reveal service prices and hospital quality info
  6. Audited their pharmacy benefit manger
  7. Invested in enhancing case management for serious, high-cost health conditions
  8. Offered educational resources by way of social media, discussion forums and blogs to help employees make better decisions about their health and care
  9. Rewarded or penalized employees based on biometric screening data (not related to smoking status), and
  10. Created wellness rewards and penalties, and tied them to measurable improvements among employees and spouses alike.

Top strategies for 2014

The survey also asked top performers what their cost-containment strategies were for the 2014 plan year, because, as Towers Watson and HBGH put it: “Best performers are successful over the long term because they continue to look for new ways to lower costs.
The most popular strategies for 2014:

  1. Make plan design changes after analyzing how they’ll impact other parts of employee compensation — like retirement contributions and salary
  2. Manage the employer-provided health subsidy as part of the total rewards budget rather than as a health plan budget item
  3. Increase employee contributions in tiers with dependent coverage at a higher rate than individual coverage
  4. Structure employee contributions based on employees taking specific steps to improve their health
  5. Adopt payment methods that hold healthcare providers more accountable for the quality and cost of care
  6. Offer telemedicine programs
  7. Base account-based health plan contributions on employees’ health management and wellness activities
  8. Offer specialty treatment providers/networks
  9. Formally track outcomes from vendors
  10. Use reference-based pricing for medical plan
  11. Contract directly with physicians, hospitals and/or accountable care organizations, and
  12. Provide access to private or corporate health exchanges.

Info: Reshaping Health Care: Best Performers Leading the Way, from Towers Watson and NBGH.