Medical costs, and drug costs in particular, represent the fastest-growing line item on every company's budget. Specifically, out-of-control prescription drug costs can have detrimental effects on a company's bottom line. When co-pays are increased too much, the most expensive, disease-prone employees may reduce their drug intake, leading to more medical claims and higher premiums.
Of all privately insured working-age people with chronic disease, 15.2 percent reported not taking their drugs because of the co-pay in 2003. The importance of controlling drug costs has never been more urgent. Here are some innovative tactics for controlling drug costs that you may be unaware of.
Encourage drug compliance. Employers can control costs by encouraging employees to take their prescribed medications, an important aspect of wellness training and preventive care. When employees who are on important maintenance drugs don't take them, it can lead to your biggest medical claims -- and a 5 percent to 15 percent increase in your premiums.
So how do you get the people who need drugs most to take them? Work off the report submitted by your consultant and reduce what your employees pay for the drugs that control the diseases that most affect your premiums. In the short term, shifting costs from a group with a large number of drug claims may increase the cost of your drug plan. But by lowering the threshold (i.e. the deductible), you'll find that many affected employees will start buying and using their prescriptions, and become healthier, which will lower your aggregate health care expenses in the long-term.
Discourage prescription leftovers. Leftover pills cost your employees their health. On some occasions, after the 30-, 60- or 90-day period of a prescription concludes, there are still pills left in the bottle -- because the employee isn't taking them as prescribed -- and the "scrip" isn't renewed by the patient in the expected timeframe. Moreover, the unused drugs become dated and ineffective over time, making your investment in the prescription a poor one.
In this case, a utilization report prepared by your benefits consultant can lead to "human intervention." This might be an in-person call or a notice of concern to the employee that he or she appears to be out of compliance with their regimen, which could lead to medical complications -- not to mention their possible removal from full participation in the plan.
Reward employee loyalty. Tie preventive care and compliance to employee turnover. Have your benefits broker conduct a survey that cross-references employee drug utilization and compliance with employee turnover. If the results indicate that your regular users of maintenance drugs tend to be short-term, make the higher tiers of your plan -- the ones with increased levels of coverage -- more readily available to employees after more time on the job; say on their 6-month or 1-year anniversary.
This way, you're not investing heavily in some employees' health just so they can leave once they're feeling better.
Recognize lifestyle differences.
Use your health management screening process to control costs. Sound obvious? Not if your benefits consultant hasn't shown you how lifestyle differences among your employees can affect your drug plan infrastructure. Do you charge your employees who smoke more than those who don't? You should. More and more companies, municipalities, even states have established this precedent, charging nonsmokers less for participation in drug and medical plans than those who inhale. Alcohol and controlled substance abuse, if part of a medical history, may also constitute special circumstances.
Suzanne Bruce is a vice president at Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia and New York region. Bruce has been a benefits consultant for more than a decade with expertise in managing self-funded medical programs, as well as the design of prescription drug, dental and vision plans.
Ellen Brosso is a vice president at Corporate Synergies. She specializes in short- and long-term strategic planning for her clients. To reach Bruce or Brosso, or for more information on what benefits service brokers offer, go to www.corpsyn.com or call Corporate Synergies at (877) 4-CORPSYN (877-426-7779).