From greater flexibility to lower costs, self-funded insurance is attracting the attention of more and more employers.
“Self-funding plans have been gaining popularity as a way for companies and employees to save money in the face of the recession, recent health care reform and increasing health care costs,” says Mark Haegele, director, sales and account management, for HealthLink. “Health care reform adds a number of taxes and restrictions on fully insured companies that those on a partially self-funded basis are typically able to avoid.”
Smart Business spoke with Haegele about how you can manage a self-funded plan to ensure your company gets the most out of its health care expenditures.
What’s the difference between a self-funded and a fully insured health plan?
With self insurance, or self funding, the employer assumes the financial risk of providing health care insurance. Typically, the company sets up a trust of corporate and employee contributions that are administered in house or subcontracted to a third party. A company can either hire a third-party administrator (TPA) or do the administration itself to save on fees that would normally go to an insurance company. A TPA can also take on fiduciary responsibility with reinsurance to further protect the employer.
When an employer is fully insured, it pays a fixed premium to an insurance carrier that assumes all of the risk.
Why would an employer choose to self-fund?
There are a number of reasons to go with self-funded insurance, and flexibility is one of the biggest selling points. For example, Company A can choose to exclude bariatric surgery on its health plan and Company B can include it, depending on its employees’ specific needs. In Illinois, the state mandates that fully insured businesses must pay for bariatric surgery, so only with self-funding do businesses have the ability to choose.
In another example, under self-funded insurance, an employer can identify disease prevalence and assign benefits to accommodate its employees’ specific needs. So, if an employer discovers a higher incidence of asthma and diabetes in its employee population, as a self-funded employer, it can choose to pay 100 percent of all of the services required to manage those illnesses. This keeps employees healthier — and out of the costly ER and hospital — by ensuring they maintain their treatment protocols for that particular illness.
It’s about identifying the makeup of the employee population, and designing and building self-insured plans to really support that population’s needs; you’re not stuck in a box of what you have to provide, based on what the state mandates or on your insurance company’s systems.
In addition, you can maximize your interest income on premiums that would otherwise go to an insurance carrier, and you can avoid prepaying for health care coverage, improving your business’s cash flow.
Finally, self-funded insurance is only subject to federal law, not conflicting state health insurance regulations and/or benefit mandates and state health insurance premium taxes, which can account for 2 to 3 percent of premium costs.
How common is self-funded insurance and how can a company determine if it is the best option for its needs?
Approximately 50 million employees and their dependents receive benefits through self-insured health plans, which accounts for 33 percent of the 150 million participants in private employment-based plans nationwide, according to the Employee Benefit Research Institute in 2000.
There’s a myth that self-funded insurance is not cost effective for employers with fewer than 1,000 employees. However, there are many TPAs that offer partially self-funded programs for companies with as few as 10 employees. In most states, including Missouri and Illinois, health care is a guarantee issue for plans with fewer than 50 lives. This means if you have 50 or fewer employees and you try self-funded insurance but it doesn’t work out, health insurance carriers must allow you to have fully funded insurance the following year.
However, if you have between 50 and 100 employees, you need to truly understand your risks because returning to a fully funded plan from a self-funded plan could increase your rates dramatically. Make sure that you have a trustworthy broker and/or lawyer review the plan you’re going to participate in before making your decision.
If a company assumes the risk of self funding, how can it protect itself from a catastrophic claim?
You can purchase stop-loss insurance for reimbursement of claims above a specified amount through a TPA. Only the employer is insured, not the employees or health plan participants, which means you can avoid most insurance taxes.
There are two types of stop-loss insurance, which acts as reinsurance:
- Specific stop-loss provides protection against a high claim on any one individual. The rule of thumb is $10,000 if you have 10 employees, $20,000 if you have 20 employees, etc.
- Aggregate stop-loss offers a ceiling on the amount of eligible expenses an employer would pay, in total, during a contract period. The carrier reimburses the employer at the contract’s end for aggregate claims.
You also can use TPAs to help decrease your risk. A TPA will have existing affiliations with health care networks to help manage the plan and save the most money. TPAs can also help manage the increased complexity of self-funded insurance.
Self funding is more viable than ever for employer groups with as few as 10 employees. Right off the top, employers save 3 to 5 percent of the total cost of their health plan through insurance companies’ risk charge and profit, coupled with the other advantages of plan design flexibility and additional tax avoidance associated with health care reform.
Mark Haegele is a director, sales and account management, for HealthLink. Reach him at (314) 753-2100 or Mark.Haegele@healthlink.com.
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Every employer is facing increases in the cost of health care, which are a function of price, utilization and intensity. And with every employer looking for ways to lower costs, imaging services are a prime target. Imaging services such as MRIs are one of the fastest-growing components of health care; and there are opportunities to help identify and limit all three cost drivers.
“High-cost imaging is something that you, as an employer, want to keep your eye on because it’s trending higher, typically, than the rest of your categories of care,” says Mark Haegele, director, sales and account management at HealthLink. “But the great news is that this is an area that you can control and you can manage.”
Smart Business spoke with Haegele about why imaging services costs are increasing faster than other health care areas and what employers — particularly self-funded employers — can do about it.
What is high-cost imaging and why is its use increasing?
Imaging services are tests such as X-rays and ultrasounds, as well as high-tech imaging including MRIs, CT scans, PET scans and nuclear cardiac imaging.
While some experts say that imaging growth has slowed in recent years, it’s still one of the fastest-growing segments of medical costs, accounting for nearly 15 percent of all health care costs, according to Blue Cross Blue Shield. As an employer, your inpatient costs may be consistent year over year and your physician costs might be consistent year over year, but for many employers, imaging costs are trending much higher than those in other areas.
How can employers address increasing use and cost?
Most managed care companies have drastic variations in their imaging contracts with providers within their network. At Hospital A, the cost of a MRI might be $600, while the cost of that exact same MRI at Hospital B, right down the street, is $4,000.
The discrepancy exists because, as managed care companies negotiate with hospitals, there is give and take on each type of care, from inpatient to outpatient to emergency room to imaging.
Hospital A may have offered the managed care company a good deal on MRIs in return for higher outpatient surgery costs, while Hospital B might need less income from its outpatient surgery but a higher MRI rate. Employers and employees are typically in the dark about these variations within a network.
In addition to educating employees on how to choose where they get their imaging services, you can align incentives or bonuses to drive employees toward lower-cost options. For example, if employees know their MRI co-pay is $25, do they really care if the MRI costs $600 or $4,000? The two MRI choices are both top-quality providers, and more than likely the exact same machine. But if you, as a self-funded employer, can offer the employee a $100 gift card if he or she chooses the $600 MRI location over the $4,000 location, your company saves more than $3,000.
How can employers help control overutilization of imaging services?
Overutilization issues often arise when there is no continuity of care by employees. An employee might go to a doctor and get a CAT scan at one hospital, but the next hospital doesn’t get the employee’s records, so the same test may be repeated. Overutilization occurs most often with aliments that are hard to diagnose, and in cases in which patients are constantly going in for tests for ailments such as migraines or for sleep studies.
Employers should use comprehensive case management to identify employees who have no continuity of care and/or have chronic problems that are most likely to result in overutilization. By managing health care cases closely, employers can help employees identify and retrieve previously done tests.
In addition, education can result in a decrease of utilization. A recent National Imaging Associates study found that a large percentage of MRIs are ordered to meet patient demand rather than to meet a true diagnostic need.
What is intensity of imaging services and what opportunities exist for employers to decrease these costs?
Intensity is when employees receive PET scans, when their problem could have been diagnosed with CAT scans. The intensity level of the service is higher than it needs to be, and therefore, the costs associated with that are higher than they need to be.
There are doctors who automatically run all MRIs, which translates into thousands of dollars, when they could have first run a CAT scan, which, in comparison, costs hundreds of dollars. For example, more than 10 percent of chest CT tests are ordered with no claim evidence of a previous plain film of the chest, according to a National Imaging Associates study.
In a self-funded environment, through physician profiling and comprehensive medical management, you can help reduce inappropriate intensity levels of services to employees. There are imaging programs in which employees call to pre-certify services, and if a higher level of care was ordered than is necessary, that can be managed down to a lower level of care.
By looking at all three factors — price, utilization and intensity — employers and employees can work together using benefit design, education and aligned incentives to lower the cost of imaging services.
Mark Haegele is director, sales and account management, at HealthLink. Reach him at (314) 753-2100 or Mark.Haegele@healthlink.com.
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The cost for work-related injuries in the U.S. in 2011 was $192 billion, with 60 percent of that directly related to medical treatment for injured workers, according to a recent UCLA-Davis study.
As a result, it is paramount that businesses get a handle on their workers’ compensation expenses, says Jeffery Hey, director, Anthem Workers’ Compensation.
“The best way to do that is to work with a managed care organization that has experience with, and knowledge of workers’ compensation and that has relationships with employers in order to mitigate risks for the company and reduce expenses, while ensuring that the injured worker gets quality care,” says Hey.
Smart Business spoke with Hey about how a managed care network can help you save costs, get workers back on the job more quickly and ensure that injured employees are receiving quality care.
What is the current state of the workers’ compensation market?
Workers’ comp is managed by each state’s government. Half the states allow employers, either directly or indirectly, to channel injured workers into networks, while the other half do not. For those employers that have the capability to channel into a network, you have to consider which networks are good, which have experience with workers’ compensation and which have the right mix of providers and facilities. For most companies, workers’ comp premiums are their second-largest operating expenses, so it is critical that employers gain control over how injured workers are treated.
How can employers begin to channel injured employees to a select subset of providers?
It’s essential that the employer knows how to set up a subset of doctors, facilities, hospitals and clinics to treat their injured workers. Unfortunately, most employers don’t have that experience, nor that expertise, to make those determinations.
Partnering with a managed care network can help you navigate the world of workers’ comp. Managed care networks help ensure that the injured worker receives quality care while emphasizing standard treatment protocols, case management and controlled access to medical care. In addition, they can also help manage the cost portion of the equation.
When selecting a managed care network to partner with, be aware that not all networks have experience working with workers’ comp claims. You need to find a network that has longevity, has experience with workers’ comp claims and is familiar with light duty and return-to-work protocols. The network should also be familiar with the paperwork required by the state and the state fee schedule.
Keep in mind that workers’ comp is a much different, proactive paradigm than the health side, and your PPO networks aren’t necessarily going to be the best fit for your workers’ comp needs, which include aggressive intervention for a faster return to the workplace.
A third party administrator, broker, or agent can help you determine whether a managed care network is appropriate for your needs.
Once you’ve identified a potential network, how can you test its capabilities?
Before making a selection, run test bills through the network and do comparison shopping. The managed care network should be willing to take your bills and run tests and show discounts back to the business. Even though the workers’ comp medical side is not all about discounts, discounts will save you money.
If you find a great provider network that can also help you out with medical case management use and fee schedule compliance, all the better. Discounts are very important in terms of the overall equation of determining whether the network is a good fit for your company.
Also consider how big that network needs to be and what types of reports you should be looking at to make sure not only that workers are getting quality care, but that you, as the employer, are getting a good return on your investment.
What else does an employer need to consider when selecting a managed care network?
Make sure that not only is the network strong but that there are specialty firms that can be brought into play to interface with the network to make sure that injured workers get the quality care they need and that the employer has a good handle on the cost of the treatment provided to the injured worker. Get aligned with the right medical case management, if appropriate, to make sure you are managing your costs and getting that injured worker back to work as soon as possible. In addition, you need to know that, within that network, there are physicians specializing in occupational medicine who are skilled in diagnosing and treating work-related injuries and who understand that getting workers back to work is in line with their functional capacity to provide good medicine.
What things should employers be aware of when working within the workers’ comp system?
If the physician places a worker off work and says he or she can’t come back, with no restrictions and no explanation, that should be a red flag to the employer that something is going on. Or if the physician makes an appointment for the worker to return every four to six weeks instead of for more regular review, that’s not good, either. There has to be consistency in terms of treatment and good communication between the physician and employer to make sure that the system is working the way it is supposed to.
It’s also a red flag if a provider is reluctant to refer the injured worker to a specialist, there are very few written notes, the physician provides narcotics for minor injuries or therapy seems never-ending.
There has to be common sense and integrity in the process, otherwise, the business is going to lose on their part of the deal. In the long run, by partnering with a managed care network, you are providing both yourself and your employees and everyone involved benefits.
Jeffery Hey is director for Anthem Workers’ Compensation. Reach him at (314) 925-6038 or firstname.lastname@example.org.
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When third-party administrators (TPAs) solicit quotes for stop loss insurance for their client companies that self-insure, they may not be getting the maximum discounts available from stop loss carriers if the carriers don’t receive transparent data from the provider network.
That’s why it’s so important to make sure the network is sharing data at every level, says Brian Fallon, director, payor relations and new business development and data analytics at HealthLink.
“TPAs are now asking the carriers about the network ratings and the frequency of their evaluation,” says Fallon.
Smart Business spoke with Fallon about network discounts and how they may impact stop loss pricing.
How is a managed care network evaluated by a stop loss carrier?
A key component to the evaluation of a managed care network is its claimed discounts relative to stop loss pricing. Several factors are involved in determining the effectiveness of a discount. Some include the location of the member, the location of the employer (they are not necessarily identical) and the composition of the provider contracts.
The clinical referral patterns of the providers are also taken into consideration and are important, as a member located in a rural market may incur initial care at a rural facility. However, specialty or tertiary care will typically migrate to a metropolitan market, where the available scope of services is enhanced and the managed contracts are structured on a per diem or DRG basis. Those contracts also contain fixed pricing for inpatient and outpatient services, reducing the exposure to billed charges.
All factors contribute to a stop loss carrier evaluation of the network. Additionally, carriers review the structure of the network, the volume of claims flowing through the network on an aggregate basis and the credibility factor assigned to the network. A network with credible claims data will have less reliance on manual pricing.
Why is transparency of data so important?
The greatest challenge that a reinsurance carrier has is the lack of transparency provided by the networks being evaluated. Networks may provide average savings or net effect discounts that are not regionally based but are reflective of larger geographic regions, thus distorting the accuracy of the discounts. Carriers need to be able to consider the contractual allowed amounts at a specific facility, as well as paid amounts. In addition, networks need to disclose actual facility rates inclusive of actual stop loss provisions at the facility.
Network discounts at high dollar amounts are not reflected accurately via the averages that are commonly cited. When brokers or consultants market self-funded employer groups with stop loss, typically they only provide the overall average discount for the group. Networks and ASO carriers market their overall average discounts and, again, the focus is on the total claims.
How do network discounts impact stop loss pricing?
The discount information is important for complete understanding of the aggregate attachment point calculations, but not really relevant or helpful for specific or large claim evaluation.
PPO discounts for high-dollar claims after the specific deductible will differ from the averages that are typically provided. The actual discounts are typically lower on shock claims, but the reduction in stop loss liability is higher. Networks should be able to engage in the discussion with the carrier as to the net effect discount as it relates to various stop loss price points.
Other factors impacting stop loss pricing are the availability of vendors or arrangements that impact trigger diagnosis such as dialysis or an effective pharmacy benefit management program. Pricing offsets can be as impactful as a 5 to 10 percent of the specific deductible premium.
We are also seeing the emergence of small groups entering the self-funded market. Mandated benefits, premium taxes and the unknown liabilities contained in Patient Protection and Affordable Care Act (PPACA) legislation are now providing small employers enough motivation to explore self-funding.
The conclusion for the TPA is to know how a stop loss carrier rates the network being promoted to the client –— and how often the networks provide the data. Networks used to be sold by the merits of the participation of providers.
TPAs and their clients alike are looking for new ways to address cost. We see the emergence of conversations of narrow networks — that is, steering through benefit plan design — to the most cost-effective providers. Reported discounts are also being evaluated on an adjusted cost basis through case mix indexing. Members are also becoming prudent consumers as they share more of the burden of cost.
Now, networks will be challenged to provide these methods of transparency to the reinsurance carrier to ensure accurate valuation of the network in order to obtain price points to compete in the self-funded market. It’s also incumbent on the TPA to have the dialogue with the reinsurance carrier regarding network valuations and for the network to demonstrate their effectiveness to both the TPA and reinsurance carrier.
Brian Fallon is director, payor relations and new business development and data analytics at HealthLink. Reach him at (314) 925-6222 or Brian.Fallon@wellpoint.com.
When employees hear the term “consumer-driven health plan,” they may panic. The thought of a high-deductible plan that only covers preventive care until that deductible is met can sound scary to employees used to a system of co-pays and co-insurance.
So if you are moving to this type of health plan, you need to start explaining it early and include a tax expert to show employees how they may actually benefit, says Randy Ressel, vice president in Missouri for HealthLink.
“You need to make this decision well in advance of open enrollment and then help employees understand why you are making this change,” says Ressel. “This is the time for a frank talk from the CEO, because if employees don’t get that, they will suspect the change is something they are not going to like, that is going to cost them and that it’s going to benefit the company. But that is not necessarily the case, so you have to tell them, and tell them again, because it’s different from what they’re used to.”
Smart Business spoke with Ressel about consumer-driven health plans and the steps you can take to ease the transition for your employees.
What is a consumer-driven health plan?
It is a high-deductible health plan that meets IRS codes for having a health savings account attached to it. Nothing is covered with the exception of preventive care until you hit a high deductible, generally $2,500.
The plan is accompanied by a health savings account. Similar to a 401(k) plan, tax-deferred money goes into the account. But unlike a 401(k), in which taxes are paid when money is withdrawn, funds in an HSA are withdrawn and used tax free on approved expenses.
That can be a huge benefit. For example, if you are taking a prescription drug for $100 a month, under a consumer-directed health plan, you are not going to have drug coverage. So if you pay cash, you pay $100 of after-tax income. But if you are in the 25 percent tax bracket and pay out of your HSA, you effectively save $25 because you are paying with pre-tax dollars.
How can a company get started on the transition?
Timing is everything. This is not so much a benefit change as a cultural change. Instead of insurance companies driving care, consumers are the ones making the decisions and driving outcomes, which is a very big change.
Talk early and often about that culture change and make decision-making tools available to employees. Employees can input personal information, along with their health care expenses last year, to help quantify the cost of going to an HSA. Education sessions should begin at least 90 days before the effective date, and attendance must be mandatory. Otherwise, employees will arrive at open enrollment and hurry through the process without understanding their choices. And that is the worst possible situation to be in.
How should a CEO present the plan to increase the chances of employee buy-in?
The CEO should say, ‘We’ve all heard how much health insurance costs are going up. You may not see it because we pay for the majority, so while you may think you are paying the full amount of the increase, that is not the case.’ This presents an opportunity to tell employees exactly how much the company has paid for benefits. Tell employees that you foresee issues down the road with the cost of employee benefits, and because you want to continue providing these benefits, you need their help in using health care dollars wisely.
How can employees help keep costs down under a consumer-driven health plan?
First, use generics. There is a huge variance in drug costs, and generics allow you to retain a larger amount of money in your HSA, so if a big expense arises, it won’t wipe out your fund.
Second, patients should ask their doctors questions. If a doctor recommends an MRI and surgery, ask if there are other options. If he or she says no, then ask about the least expensive place to get an MRI. The cost in some cities can range from $600 to $2,300, so if you are paying out of pocket, it pays to find the least expensive option.
How can employers encourage employees to participate?
One of best ways is to take the employer cost savings from the plan and allocate it into the HSA of anyone who elects that coverage. You can also offer incentives. For example, if someone has asthma and is contacted by a health coach, and the employee agrees to participate in a program, the employer could deposit additional funds. Or if an employee agrees to quit smoking, the employer could contribute funds. That’s a real incentive to get people to be healthy.
Also, the culture of change must begin with management. If there are three plans to choose from and the CEO chooses something other than the consumer-driven health plan, employees won’t buy in. You have to lead by example.
The same is true with weight loss, health risk assessments and other things you want people to do. If you’re not doing them, too, it’s less likely that employees will participate. Establishing weight loss or walking competitions can also have a positive impact on health, and offering rewards for the winning team will encourage employees to participate.
Finally, give employees regular feedback about how the plan is performing. That is key. In your original CEO talk, you said you are doing this because you’re afraid that if you don’t do a better job managing health care dollars and improving health, you won’t be able to provide this benefit down the road.
So how’s it going? Quarterly, or at least semi-annually, tell employees what the budget is, what you’ve done so far and whether you are doing well, or need to do more work. This gives them a vested interest in continuing to buy in to the program.
Randy Ressel is vice president of sales in Missouri for HealthLink. Reach him at (573) 651-4940 or Randy.Ressel@wellpoint.com.
Your company offers medical benefits, and it offers pharmacy benefits. But if you are not integrating these two components, you may be spending more than you need to, says Mark Haegele, director, sales and account management at HealthLink.
“Having both data sets boosts your ability to see the whole picture of your members and your costs,” says Haegele. “It really opens the door for new opportunities to control costs. If you just have the medical claims data, or just the pharmacy claims data, that only gives you part of the picture. But when you integrate that information and tie the pharmacy claim information into the medical claim information, then, all of a sudden you start to see the full story relative to specific members and, in particular, specific cost variances. And that really opens the door to do some pretty creative things with information, ultimately allowing you to control costs.”
Smart Business spoke with Haegele about steps an employer — particularly a self-insured employer — can take to manage health plan costs.
Why should employers integrate medical and pharmacy claims data?
Having that data under one umbrella can help improve care by creating a complete picture of a member’s health. Integration increases the identification rate for chronic conditions and care management programs as a result of improved access to key data.
It allows for better case management, increasing the likelihood that patients will receive the correct medication at the right time, avoid negative drug interactions and help members comply with prescribed therapies. In addition, patients with chronic diseases often do not get the help they need, resulting in more severe and costly complications, and higher rates of diseases and death.
How can an employer use integrated data to manage costs?
If you combine your pharmacy and medical data, you can then sort your data by members who have more than five prescriptions per year. You can further refine that information to determine from how many different physicians a member may be getting a single prescription.
For example, oxycodone is a very common concern in the marketplace, and an employer may have health plan members who are getting that prescription from five different providers. Without that integrated data, you wouldn’t know that. But by targeting controlled substances, you can identify those who are abusing the plan and then, in conjunction with your consultant or broker, notify those prescribing physicians so that they become aware of that situation.
Employers are often shocked to learn what is in the data. A plan member who is getting 15 or 16 prescriptions per month from 10 different doctors is clearly problematic, and identifying those people can help you control your costs.
What other action can an employer take using integrated data?
The second specific action that employers can take to control costs is to look at the use of antidepressants. This is a high-cost category, often in the top three most used prescriptions, which presents an opportunity.
Antidepressants are generally intended to get a person through a tough time, for example, as the result of a death or a highly stressful situation. Most are not really intended for chronic continuation for multiple years. When an employer has the data, it can identify those members who have been on antidepressants for more than a six-month period. Then you can introduce that member to a case manager, or into an employee assistance program, or refer that person to a psychiatrist for one-on-one therapy. Oftentimes, with three or four session — which are typically purchased by the employer anyway in an EAP — the member feels better and is able to get off of those drugs, reducing both usage and costs.
How can integrating medical and pharmacy data help employers assist members with chronic illnesses?
Employers can pull the data for members who have been diagnosed with one of five chronic illnesses — cardiovascular disease, hypertension, asthma, diabetes and COPD — then, with their consultant, identify whether those members are on a routine and taking their prescriptions for that specific illness. You can see if members are compliant, based on their refills, and can identify those who are not.
As an employer, you can then do a number of things to increase compliance within those categories. The employer can offer to pay for those drugs, because even though they are generally inexpensive, some members may not take them if they are living paycheck to paycheck. By simply paying for those drugs for its members, an employer could save the plan a lot of money.
You can also make a strategic decision as an employer, especially in a self-funded environment, to get members to work toward trying to achieve a better compliance rate. You can use your medical data to identify those members who have these diagnoses and couple that with your pharmacy data to identify those who are taking prescriptions.
Look at a 12-month period and how many scripts per month members are taking to identify any tailing-off patterns because refills have not been made. Maybe someone filled the first 90-day prescription, and the second one, but then never got it again.
What happened? How do you get the member back on track? Does the employer need to pay for the drugs? Do you need to assign a case manager to that member?
All of these things are fairly simple, straightforward specific actions that employers can take in their health plan to control costs and improve the health of their members.
Mark Haegele is director, sales and account management at HealthLink. Reach him at (314) 925-6310 or Mark.Haegele@healthlink.com.
Obesity can have a significant impact on employers, in health care and workers’ compensation costs and in lost productivity.
Health care costs for obese employees are as much as 21 percent higher than costs for those at a healthy weight. In addition, overweight or obese full-time workers with other chronic health conditions miss 450 million more days of work each year than healthy workers, costing businesses $153 billion in lost productivity, according to a Gallup poll. When you consider that Centers for Disease Control estimates say that one-third of Americans were obese in 2010 and that six in 10 are overweight, that creates a significant impact on U.S. businesses, says Steve Martenet, president of HealthLink.
“Many Americans receive their health care through their employers, and obesity impacts not only general health care costs but also other costs,” says Martenet.
Smart Business spoke with Martenet about the impact of obesity on businesses and what they can do to combat it.
How can employers begin to combat the obesity epidemic?
Biometrics can provide a snapshot of the health of your employees. If 75 percent of your work force is classified as obese, you are looking at a very different solution than if that were 5 percent. The higher the percentage of obese employees, the more those people are costing your business.
Once you understand how much obesity is potentially costing you, you can determine the best plan of attack to try to manage that. It starts with creating a culture around general health and wellness and fitness, and a culture around transparency in which employees know how much benefits actually cost — just not what the co-pay is — and then create awareness around what employees can try to do to positively impact those costs.
How can biometrics help improve health?
It’s a matter of education. Once they understand where they are in terms of BMI and their health conditions, it’s easier to get people to adopt certain behaviors and take steps to address those conditions. Biometrics lets them know what shape they are in and allows them to understand what they need to start doing to take control of and improve their overall health. If people know they have a certain BMI and understand what that will mean in 10 or 15 years, they may be more willing to take actions today to address that so they will be healthier in the longer term. Being healthier will ultimately cost them, and their employer, less in premiums for health insurance.
How can employers make employees care about costs associated with obesity?
Educate them about how health care is financed, how much employers are paying in premiums and that premium costs are tied to claims. The more claims a company has due to unhealthy lifestyles and obesity, the more you’re going to pay in premiums, which is potentially less that employees have to take home in disposable income. That makes it real that there is a dollars and cents impact on employees.
Educate them through meetings, e-mails or brown bag lunches. Another effective way is a quarterly statement that shows employees their total compensation package: This is cash compensation, this is vacation compensation, this is how much your health insurance premium is, this is how much goes to the 401(k). Then they get a total picture of what that employer is funding.
Once they understand how much the employer is really paying for health insurance you can start educating them on what drives that premium. That presents opportunities to make real changes in their personal behavior, managing chronic conditions and improving their lifestyle. They can see that what they do is directly related to premium costs and their overall compensation. If one segment of the pie gets too big, other segments — such as pay or 401(k) contributions — get smaller
How can you encourage employees to participate in wellness programs?
Employees are more likely to buy in to an employee-led initiative if they have a hand in creating the program. That said, however, you have to lead by example. If management is not involved, it’s easy for front-line associates to not take it seriously. Executives have to be part of the health screenings and be active in their participation in the program.
How does obesity impact workers’ compensation costs?
Obese workers are more prone to injuries on the job, and it takes longer for them to recuperate from those injuries, driving up workers’ compensation costs.
According to a Duke University survey, employees with a BMI of 40 or higher had 11.65 claims per 100 full-time employees, at an average cost of $51,091 per claim and 183 lost work days. Employees with a healthy BMI had 5.8 claims per 100 employees, at an average cost of $7,503 and 14.19 lost days. When you look at the numbers, they are staggering.
How can childhood obesity impact employers’ costs?
In much the same way that employees do. Medical costs for obese children are higher, and if they have health problems, that leads to lost productivity for the parent. If a parent is at work and worried about an obese child and the social ramifications of obesity, they are not truly focused on what they need to be doing at work. It’s a little more difficult to address, because what you do in the workplace may not make it home.
However, employers can offer educational materials that go down to the child’s level about eating healthy. Employers also have the option of purchasing wellness products built around creating a culture of health.
Ask your health plan administrator what services it offers around health and wellness to help create a culture of health and wellness in the organization.
Steve Martenet is president of HealthLink. Reach him at (800) 624-2356 or SMartenet@healthlink.com.
With employers facing ever-rising health insurance premiums, most are looking for a way to control costs.
To do that, they are increasing co-pays and deductibles, or decreasing benefits. But there are other steps you can take to accomplish that goal without impacting benefits or increasing employees’ costs, says Mark Haegele, director, sales and account management at HealthLink.
“Lowering the cost of health care is driven by managing utilization,” says Haegele. “There are a number of things in your data covering members’ use that you can address to help control costs. Too often, people are not educated about alternatives to the emergency room, and educating them can help control costs.”
Smart Business spoke with Haegele about how to lower the cost of health care without modifying benefits.
Where should employers start?
From 1996 to 2006, the annual number of emergency visits grew from 90.3 million in the U.S. to 119.2 million, and from 34.2 to 40.5 visits per 100 residents. So start by looking at emergency room usage and other high utilization data points to identify trends in your health care that are areas of concern. Those are the areas you should focus on and on which you can ultimately have an impact.
Emergency room utilization is something very tangible that you can get your arms around. Identify if overuse of the ER is an issue, and, if it is, identify what is driving it. Then you can implement action plans to correct it and to lower the cost for that high-cost category.
What should an employer be looking for?
First, over the last three years, has the number of visits per member per month gone up year after year? And has the cost per member per month gone up year after year? If the answer is yes, ask why. It will help you understand what you can do to control that cost category without cutting benefits.
Look at frequency of visits per person to identify whether there is a subset of people who go to the ER 10 or more times a year. If there is, you need to determine how to address those people. Do you need to have case management nurses reach out to them to help them find a better path to care? Do they need help finding a primary care physician? Can you educate them on more appropriate levels of care that are available?
What other patterns in ER utilization should employers look for?
Employers should look at the reasons for ER visits. There are two categories — symptom, injury or poisoning; and disease and virus. If someone breaks an ankle, that person is going to the ER. But the disease and virus category is a different story. We find that more than 60 percent of ER visits are for disease or virus, for things such as sinusitis, flu, cough, headache, etc.
This category can be managed. There are 24-hour nurse lines, urgent care clinics and clinics in pharmacies, and all of those are lower-cost alternatives for that category. The cost of the ER averages $800 to $900, versus as little as $65 to $150 for the alternatives. If more than 50 percent of ER visits under your plan fall into this category, you know where to focus your energy. Then you can implement specific action plans to modify utilization and create awareness.
How can employers create that awareness?
Education is the No. 1 thing. Post information for employees, do e-mails blasts, distribute articles on proper use of the ER, do payroll stuffers, anything you can to get the word out that there are alternatives to the ER.
A lot of employers have penalties, so if an ER visit is not a true emergency under the plan design, it doesn’t pay. But hospitals have ways of getting around that. Typical plan designs waive that penalty if a patient is admitted. Guess what? Now your admissions just went up.
A better approach is to educate people so they know the proper use of the ER. And explain that if the ER coinsurance is $150, that’s $150 out of their pocket, whereas, if they went to an urgent care center, the cost is much less. And oftentimes, the wait is shorter, as well. Sell your members on appropriate lower levels of care that are more easily accessible, less expensive and more convenient.
How do hospitals play into the equation?
Hospitals are not off the hook. Hospitals code ER visits from one to five, with five being the most severe cases, but some hospitals never code lower than three. As a result, we recommend to employers that, if they identify a hospital overcharging for ER visits, they address the issue with the hospital.
The employer, in conjunction with the insurance company, can co-write a letter explaining its issues with the ER. Say, ‘We’d like you to consider two things. One, reconsider the way you’re coding ER visits, and, two, consider establishing an urgent care center for lower level visits to your facility.’ One letter isn’t going to result in a new facility, but it does create awareness of the way it codes, and we will often start to see coding that is more appropriate. By showing the hospital the data demonstrating high coding levels for low levels of care, you create awareness.
The employer, the hospital, the member and the insurance company all have to work together to address this issue. As an employer, look at your benefit design and ways you can support the insurance company to educate members. It is the responsibility of members to do what is good for them, keep dollars in their pockets and appropriately use their benefits. Hospitals and providers have a stake in the game, as well. Everyone shares equal responsibility in managing this.
Editor’s note: The ER is just one category of many in which employers have the ability to impact cost. In coming months, HealthLink will address other categories, including high-cost imaging, implants, 23-hour observation and surgery.
Mark Haegele is director, sales and account management, at HealthLink. Reach him at (314) 925-6310 or Mark.Haegele@healthlink.com.
As an employer, you may see your employees simply as workers, hired to help you achieve an end.
But they are real people, with lives and problems outside of work, and those challenges could impact their productivity on the job, says Greg Banks, HealthLink EAP account manager.
“Whether you like it or not, your employees’ personal lives follow them inside your property line every single day and affect their ability to do their jobs,” says Banks. “If you ignore that, that’s your choice, but it’s not what’s real.”
Smart Business spoke with Banks about how contracting with an employee assistance program (EAP) can help employees deal with life’s challenges, improving both their personal lives and their productivity on the job.
What is an EAP?
EAPs are not a new concept. Beginning in the late 1970s, most large companies had internal EAPs that mostly focused on alcohol and drug use. Today, most EAPs are through an external vendor provider program and there is a much broader scope in the service menu. They still do alcohol and drug counseling, but, from an employer perspective, the benefit is about productivity.
An EAP provides employees who are facing a challenge in their personal lives with a resource that they can easily access to help them solve that problem, so they can be where they are supposed to be at work, doing what they are supposed to be doing, and doing it safely and with full presence of mind.
From an employer perspective, if someone has a cocaine problem, it is in some ways no different than someone who has a childcare problem. If the result is that they are not at their job, getting the job done safely and in the way that it is supposed to be done, the bottom line to the employer is the same. And that’s where the EAP comes in. It’s about risk management and employee productivity.
They’ve become the norm at large organizations, but they have also made the leap into mid-sized and smaller organizations.
Is it costly for an employer to offer this service?
No. It’s very inexpensive, less than $2 per employee per month.
The service menu is very deep, offering legal, financial, childcare, elder care, drug and alcohol counseling, etc., but the services are capped. The EAP provider is responsible, for example, for four counseling sessions, but it doesn’t have to put the employee in the hospital and pay those bills. That is the responsibility of the health plan. There is a limit on those benefits, so it is a fairly constrained risk.
The other factor keeping the cost low is the Internet. EAPs can deliver more services to more employees with fewer people because of the electronic tools available today.
Can an employer mandate that an employee seek help through an EAP?
Ninety-eight percent of the time, it is the employee or a household member who initiates contact. However, it is also an option for employers to coordinate EAP services with corrective action or a performance improvement plan to help someone save his or her job. For example, if someone has a problem and that person’s performance has deteriorated, the employer, in the process of dealing with this person, can bring in the EAP, which can case manage that situation with that employee for a period of time.
What would you say to employers who say their employees’ personal lives should remain private?
First, the service is confidential. While the employer will get a report stating which services were accessed and how often, it will not know who accessed them. The CEO won’t be able to distinguish the CFO from the newest hire in the report.
Second, all you’re doing is giving people who are having problems a way to get some help so that they can continue to be at work and be able to do their jobs. Rather than sending employees home if they are having a problem and leave them wondering what they should do, the EAP gives them a path. And when that path is sanctioned by the employer, it gains legitimacy in people’s minds.
The employer is acting as a vetting service, saying these are good resources, you can trust them and they are legitimate and credible resources. That makes it easier for people to take that first step and seek the help they need.
When an employee calls the EAP, how does the process work?
The nice thing about an EAP is that it’s not just one service or another. For example, say a woman has small children, is caring for elderly parents and is feeling overwhelmed. That person might want to see someone face-to-face for support and clarification about why they are waking up at 3 a.m. and why they are yelling at the kids.
But she may also benefit from assistance related to elderly care services, so there’s an elderly care consultant brought in. She may also need assistance with after-school activities for the kids, and maybe some financial planning to work on a budget that has been challenging for her. There is not a boundary on how many different kinds of services the employee can choose when she picks up the phone and calls.
If someone is really not doing well in life, an EAP is a great front door, a way to access critical services for mental health issues, drug and alcohol problems and other life challenges. For a very small investment in EAP services, an employer can help employees live happier, healthier, more productive lives.
Greg Banks is a HealthLink EAP account manager. Reach him at (720) 225-6724 or Greg.Banks@wellpoint.com.
Health care fraud costs the nation more than $200 billion a year, accounting for between 5 and 10 percent of health care expenditures.
That’s about $800 a year per person with health care coverage, a cost that is reflected in increased premiums, says Howard Levinson, clinical fraud director of the Special Investigations Unit at HealthLink.
“Fraud also results in lost benefits, inaccurate medical records and increased out-of-pocket spending by patients,” says Levinson.
Smart Business spoke with Levinson about health care fraud, and what employers and their employees can do to help curtail it.
What is health care fraud?
A small percentage of dishonest health care providers commit fraud for financial gain, using the health care delivery system to do so. Fraud can also be committed by members and insurance brokers, medical identities can be stolen, theft occurs, but much of the fraud and abuse we investigate are committed by health care providers, whether that is a single doctor, a hospital system, a pharmacy or a medical equipment company.
What are some examples of fraud?
One of the most common health care frauds is when an unscrupulous provider bills for services not rendered. With millions of claims submitted each year to insurance companies, it is impossible to ensure that every claim is accurate. The insurance industry relies on providers to be truthful. As a result, providers can submit fictitious claims or add on services that they didn’t perform so that they will receive a higher payment.
Fraud can also occur when services are misrepresented. Providers may know that a particular treatment, therapy or drug won’t be paid for by the insurance company, so instead of billing what they actually did for the patient, they misrepresent that service as something else, something that is payable by the insurance company.
Upcoding is another common form of fraud. When a patient visits the doctor, every service is assigned a code for billing. The fraudulent provider may submit a claim with codes that indicate the doctor rendered a more comprehensive level of care than what was done. For example, a patient may be healthy and go for a basic checkup, but the physician bills as if the patient were really sick, exaggerating about how much work he or she did in order to get paid more.
How can employers and their employees help reduce the risk of fraud?
Employers should educate their employees about the importance of paying attention to the explanation of benefits they get in the mail after they’ve received health care services. Look for items that might not be correct, or for services that were not performed. Tell employees to check their bills and EOBs to make sure they received the services they and their insurance company are paying for. Too often, members throw away these EOBs without reading them because they can be difficult to understand. Employers could work with the insurance company to assist their employees in deciphering the EOBs.
Employers should also educate employees about medical identity theft, in which someone steals medical ID numbers, then bills services to the insurance company. While this results in charges for services not rendered, it can also wreak havoc on the member’s medical records. For example, if someone is using your medical identity to bill your insurance for HIV infusion therapy drugs, now you’re saddled with a diagnosis of HIV and a record of having received hundreds of thousand of dollars worth of drugs. You may be perfectly healthy, but it can be very difficult to clear that up and get insurance somewhere else.
In addition, make sure that employees are sensitive to the fact that they shouldn’t give out private health care information to anybody who doesn’t have a need for it. And members should be very careful choosing a doctor that they trust and that the doctor or his or her staff are not going to do anything untoward with their health care information.
Health care fraud is a violation of your trust by your doctor, hospital or pharmacy, etc. Anything an employer can do to instill a culture of ethics among its employees can help decrease the risk of fraud.
How can fraud impact patient care?
Patients may not actually be getting the services that they need. If you’re going to doctors whose primary focus is not on your health care but on how much money they can get out of your insurance company, are you getting the proper treatment? Often, when fraud is occurring, patients are not.
They’re undergoing expensive diagnostic tests that they don’t need. Or the doctor may not be doing the right tests because he or she is more involved with patient’s insurance card than with the patient’s health.
What can an employer or employee do if fraud is suspected?
Most health care insurance companies have fraud hotlines that you can call to report suspected fraud. Or if you’re not comfortable calling the hotline, report your concerns to your HR department. Some significant fraud investigations have started with patients calling to say they were billed for something they didn’t receive or that the doctor only spent five minutes with them and they were billed an exorbitant fee.
We need the assistance of our insured members to weed the garden of bad providers. We don’t want members to be treated by fraudulent doctors. It’s wasted health care dollars and dangerous to the health of members. Our investigators, often in cooperation with law enforcement, are working to identify the fraudsters, investigate, intervene and then remove them from the system. Health care fraud increases all of our costs. If you can get your employees to recognize potential fraud and abuse and pay attention to it, your company could see improvements to its bottom line and keep your employees healthy.
Howard Levinson is clinical fraud director of the Special Investigations Unit at HealthLink. Reach him at (314) 923-6203 or Howard.Levinson@wellpoint.com.