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Narrow Networks, Tiered Plans May Reduce Costs

Inflation, an aging workforce and people catching up on care they skipped during the COVID-19 pandemic are some of the main ingredients that will drive the cost of group health benefits over the coming years.

The key for employers grappling with these higher costs is how they can reduce their impact by switching up plan offerings and choosing plans that do a good job of managing specialty drug costs, which have been spiraling over the last decade.

Health spending dropped considerably in 2020 and 2021 as people stayed away from health care environments, but now people are back seeking care that was delayed. That’s caused a sudden spike in claims for health plans across the board.

Also, more health plans have boosted their mental health offerings, which patients have been taking advantage of, leading to further outlays, according to a recent report by Marsh McLennan Agency.

While there is not much employers can do about rising premiums, a combination of measures could help businesses defray cost increases in the near term.

Compare insurance plans and providers

If you’ve been offering the same plans every year, we can work with you to compare providers to see if there are better deals for you among their competitors.

Also, plans can vary greatly among insurance plans and each insurer will have different deals to offer. Even your current slate of insurers may have plans that you are not offering.

We can help you cut through the noise and find plans that may be a better fit for your organization.

It is important to keep in mind that a lower premium does not mean it’s the best deal. Some lower-cost plans may have narrower networks, which could result in some employees losing access to their regular doctors.

That said, there’s been a trend towards so-called “high-performance,” narrow provider networks that aim to reduce costs while maintaining efficiencies and quality of care.

Other cost-saving measures

Insurance carriers have been trying out new approaches to controlling costs, while improving health outcomes for their plan enrollees. Money spent up front on quality health services can yield future savings if the patient needs less treatment.

Some insurers and self-insured employers have been able to generate savings of 5 to 15% by employing:

Tiered networks — These health plans sort providers into tiers based on their cost and, often, quality relative to other similar providers who treat comparable patients. Providers with higher quality and lower cost are typically given the most-preferred tier rankings.

Centers of excellence — Many self-insured employers and more health plans are also contracting with “centers of excellence.” While there is no specific definition of a COE, these providers deliver positive patient outcomes, lower costs, raise member engagement and have high rates of patient satisfaction.

Often, an OEC may have a specialty, like a chronic disease or a specific service such as radiology. Working in tandem with a clinical analytics vendor, payers will connect members with health systems that demonstrate high performance in these areas.

Referral management — More health plans are also starting to use referral management software to improve efficiency and trust in care coordination.

These systems synchronize patient data transmission from one physician to another, and also to the patient. A referral management system aims to facilitate good communication between the consultant, specialist, health care provider and the patient.

The system increases trustworthiness and transparency of treatment and diagnosis, and decreases inefficiency in care coordination and operational arrangements.

The above measures can be applied across the care continuum — hospitals, primary care, specialty groups, post-acute providers and ancillary care — while maintaining access and quality of care.

The takeaway

Getting the cost equation right will be a challenge in the coming years as premiums are expected to rise at a faster clip than they have been in the last five years.

Talk to us about finding health plans that are offering different structures for addressing costs while also improving care for your workers.

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Many Injured Workers Feel Unsupported, Frustrated by Claims Process

A recent study has found that injured workers are often left feeling frustrated and fending for themselves after they file a workers’ compensation claim.

The survey of injured workers by researchers at the University of Waterloo in Ontario, Canada found that workers reacted in a number of ways when experiencing “procedural” unfairness, frustration in how their claim is being handled, or poor communications from their claims adjuster or employer. Some give up, some react confrontationally, others quit.wo

The study confirms what other studies have shown: Employers need to be actively involved in helping workers navigate the workers’ comp system, keep in touch with them to lend assistance and provide support, including a feasible return-to-work program.

Otherwise, they risk having a disgruntled injured worker who may take longer to recover or secure the services of a lawyer. And once lawyers enter the picture, the more likely it is that their injury will drag out and the cost of the claim will increase substantially.  

The claims process can be confusing and unfair to injured workers. The amount of money they receive when they are not working and on the mend is less than their paycheck, and poor communications often leave them languishing and wondering when they can return to work.

Negative feelings

Many claimants have a number of negative emotions when embroiled in the workers’ comp claims process, including feeling:

  • Confused,
  • Angry,
  • Frustrated,
  • Unsupported,
  • Abandoned
  • Disappointed, and
  • Wary.

Others did report some positive emotions, including determination and optimism.

Issues that caused negative feelings include:

  • Uncertainty about how to access work compensation programs.
  • Reluctance to speak up about their claim for fear of losing their jobs.
  • Not receiving adequate modified work so they can return to work early.
  • Receiving inadequate medical care.
  • Their employer trying to suppress the claim.
  • Unresponsive claims adjusters.

What you can do

Throughout the recovery process, communication is the key. Maintaining contact with your employee and keeping in touch with the attending physician about available work will help reduce anxiety about returning to work.

For many workers that may mean modified work with restriction to avoid reinjury. You may also consider having them work from home, if feasible.

Encourage an injured employee to follow through with recommended care to avoid long-term complications whenever possible.

If your worker is not getting a response from their claims adjuster, offer to assist them.

Check in with your worker regularly and let them know their colleagues miss them and are hoping they’ll soon be back on the job.

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Is Health Plan Self-Funding Right for Your Firm?

As group health costs continue climbing and more employees struggle with the cost of premiums and out-of-pocket expenses, some employers are starting to take a second look at self-funded, or partially self-funded plans.

These plans give employers more skin in the game and the ability to better address cost drivers and tailor their offerings to fit the needs of their employees.

But while the plans can save both employer and their workers money, they are not for every organization. Plus, there is a degree of risk as a few serious health issues among group participants can blow open claims costs.

Small employer considerations

While medium-sized and large organization are more apt to self-fund due to their resources, 21% of employers with three to 199 plan participants were self-funded in 2021, according to a study by the Kaiser Family Foundation. That’s compared to employers with:

  • 200 to 999 plan participants: 63%
  • 1,000 to 4,999 plan participants: 86%
  • 5,000 and more plan participants: 87%

Recently, insurers have been trying to address small and mid-sized employers’ concerns about risk and costs by rolling out “level-funded” plans. These vehicles provide a lower level of self-funding with a stop-loss insurance program that has lower attachment points than typical plans.

For level-funded plans, the insurer estimates the employer’s expected monthly expenses, which include:

  • A portion of the estimated annual cost for benefits,
  • The stop-loss protection premium, and
  • An administrative fee.

The employer pays the above to the insurer every month. If, at the end of the year, claims were significantly higher or lower than expected, there will be financial reconciliation between the employer and the carrier.

These level-funded plans differ from fully self-funded plans, where the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. The employer will usually contract with a third party administrator or insurer to handle claims and provide administrative services for the plan.

Employers may purchase stop-loss coverage to protect against catastrophic claims.

Stop-loss basics

While these plans are called self-funded, there is still a portion of the costs that is insured to protect against catastrophic claims or unexpectedly high utilization.

There are different types of stop-loss insurance that pay the cost of claims at a certain attachment point, when plan, individual or claims spending exceeds a designated value:

Specific stop-loss coverage — This policy provides protection for the employer against a high claim on any one individual. This is protection against abnormal severity of a single claim, rather than abnormal frequency of claims in total.

Aggregate stop-loss coverage — This policy may limit the total amount the plan sponsor must pay for all claims over the plan year.

The benefits

Customization — Self-funded plans let employers customize their plan to meet the needs of their workforce.

Cost control — Self-funded plans only pay the actual costs, as opposed to fully insured plans where the premium goes towards the expected health care costs the insurer has forecast, plus its overhead, reserves, profit margin, and more.

Access to claims data — The employer gets detailed access to claims costs, so they can see what claims are driving costs. By looking at claims and plan participant needs, the employer can better decide which benefits to provide, enhance or remove if they are not being used.

Disadvantages

Compliance — Since the employer will be paying for the claims, they will be responsible for fiduciary and compliance issues.

Cash flow — The plan will need to have sufficient money going into its accounts regularly to pay for claims as they arise.

Volatility — Medical outlays can be unpredictable. A spate of high-cost claims can wipe out any potential savings.

The takeaway

If you’re fed up with rising group health plan premiums, talk to us about self-funding. We can review your current insurance arrangement and your plan costs to help you decide if it’s right for you.

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How to Coax Disengaged Employees to Sign Up for Health Coverage

One of the most difficult aspects of annual open enrollment is reaching workers who are disengaged from the process and never bother signing up for your group health plan and other benefits they could take advantage of.

While employers shoot for maximum employee enrollment, there are always those employees who for a multitude of reasons never take the first step of signing up for benefits. These workers are likely going uncovered for their health insurance and risk serious outlays if they have to see a doctor or go to the emergency room.

They also miss out on preventative services that insurers are required to provide without cost-sharing and that can help them maintain their health.

This disengagement is more typical with younger workers, who may feel that the extra expense for their share of their health plan premium isn’t worth it since they are young and healthy. A recent study, the fifth annual “HSA Bank Health & Wealth Index,” noted that targeted communications to millennials and Gen Zers are key to sparking their interest.

One way to do that is by focusing on pending life events that younger-generation workers may be encountering:

Marriage and children — Employers can focus their messaging to these generations of employees by highlighting these major life milestones and the importance of having health insurance in place.

Both of these events should be a wake-up call that it’s time to get serious and purchase health insurance to either cover their spouse or impending children. Childbirth is expensive and newborns require numerous doctor’s visits and vaccinations in their first year and beyond.

Turning 26 — This is the age that individuals are no longer allowed to be covered by their parents’ health insurance. Young workers will often forgo their employer’s health plan as they are still covered by their parents’ plans.

They may not be aware that this is the cut-off age. If you have Gen Z workers, you should consider sending out e-mail blasts to them about this law and that if they are turning 26 in the coming year, they’ll need to find new coverage other than their parents’.

Health savings accounts

There is one group of employees that is more engaged in their health insurance than any other, according to the Health and Wellness Index: Those who have health savings accounts that are linked to an HSA-eligible high-deductible health plan.

Also consider that one in three employees are uncertain about their ability to cover future health care expenses. HSAs, if used properly, can provide the peace of mind and the funds to cover those costs. 

HSAs are savings accounts that allow your employees to put a portion of every paycheck into the account to bank for future medical expenses. These accounts can be kept for life and transferred to new employers. They are funded with salary that has not yet been taxed and the funds in the account can be invested, much like a 401(k) plan.

The study recommends targeting your communications to the disengaged by appealing to the traits that most HSA users have:

Spenders — This group of HSA owners will use most of the funds in their accounts to pay for qualified medical expenses.

They want information that helps them get the most bang for their buck. You can do this by sending them lists of eligible expenses and directing them to online technology that helps them get reimbursed.

Savers — This group doesn’t touch their HSA balances, even for current medical expenses. Instead, they prefer to use their account to save for future expenses, even in retirement.

They are interested in tools to track expenses not paid from their HSAs and direct deposits for self-reimbursement.

Investors — This group of employees are also savers. They seek to maximize growth of their HSAs by investing the funds to grow them even more.

They are interested in information that can help them make good investment decisions and changes. Providing them with timely advice can help them start an HSA and continue investing in it in the future.