Containing Employee Benefit Costs Through Value-Based Insurance Design (VBID)

Shawn Fried, PMP

As the cost of healthcare continues to rise with seemingly no end in sight, employers of all sizes across the entire country are looking for ways to cut costs without compromising the quality of care. Many employers have already moved toward consumer directed healthcare, but another strategy some employers are turning toward is value-based insurance design (VBID).

While value-based insurance design is far from a topic discussed at the dinner table, it isn’t a new concept. In fact, one state adopted this plan design in 2008 and some principles of VBID, such as low-cost preventative care and wellness visits, were incorporated into Section 2713 of the Affordable Care Act (ACA).

VBID takes a very different approach than HDHPs (high deductible health plans)  when it comes to trying to save employers and employees money, so if you’re thinking of making a change to your employer-sponsored health insurance, it’s important to understand exactly what you’re signing yourself (and your employees) up for.

What Is Value-Based Insurance Design?

Value-based insurance design is a cost containment strategy being adopted and tested by some employers. This plan structure is different from traditional health insurance plans in that its purpose is to decrease costs for medical services deemed as “higher value,” while increasing costs for those considered to be “low value.”

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Topics: Employee Benefits, Cost Containment, Education, Plan Design

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10 Ways to Beat the Arizona Heat

David Rook

This June, Arizona experienced a near-historic heat wave that caused all kinds of strange things to happen, such as cacti falling over and planes being grounded. This is a safety concern for everyone, as heatstroke is a very real problem that causes death every year, especially among the infant and elderly populations. The Center for Disease Control (CDC) reported nearly 3,500 heatstroke-related deaths between 1999 and 2003.

Taking precautions at work, at home, and while on the road is extremely prudent. It can help keep your workforce safe by literally saving lives and/or helping prevent hospitalization. So as we enter August, in what is typically the hottest month of the year, consider implementing these tips in your workplace. Pass them along to your employees as well so everyone can be vigilant.

ON THE ROAD

Keep Extra Water in Vehicles

For companies with a workforce on the roads, it’s a great idea to keep extra water stocked in all work vehicles. Supplying large volume coolers will help encourage employees to stay hydrated. Even warm water stored in a truck will come in handy should an unanticipated roadside breakdown occur.  

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Topics: Education, workplace wellness, Arizona

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Why Your Cost Saving Strategies On Employee Benefits Are Failing

Jeff Griffin

As the third or fourth largest line item on most business’ profit and loss statements, employee benefits have been under pressure for years. Rising costs have impacted both employers and employees, but cutting benefits or pushing more of the financial burden onto employees will only exacerbate hiring and retention struggles. And as employers have figured out by now, relying on a once a year negotiation with their medical carrier is by no means an effective or sustainable way to curb costs.

While putting all your eggs in one basket by attempting to contain employee benefits cost via an annual renewal negotiation is still more mainstream than the exception, employers would realize far more sustainable savings if they sat down with an employee benefits broker who is dedicated to year-round cost saving strategies. Additionally, renewal negotiations, which are still very much a part of cost containment, should not only be focused on price, but also on the multitude of contractual issues which, when thoroughly reviewed, can yield substantial cost savings.

The three areas we consider of greatest importance to sustainable employee benefits cost savings are 1) wellness through the identification and management of chronic conditions within an overall health plan, 2) high-dollar claims intervention, and 3) the effective purchasing of healthcare in the open market.

Wellness Through the Identification and Management of Chronic Conditions

When designed effectively, with targeted population health data to guide the way, wellness programs can be very effective in bringing down the overall cost of your employee benefits program. But wellness programs should not be solely focused on modifying behavioral health patterns such as smoking, lack of exercise, and poor eating habits. In fact, by promoting age appropriate screenings, preventative care participation, and medication adherence for chronic conditions, wellness plans can really pay off in the long run.

Chronic conditions such as hypertension, high cholesterol, diabetes, depression, back pain, and heart disease represent a significant risk for an overall health program. These conditions present challenges in direct medical expenses as well as indirect costs such as lost productivity and absenteeism. In our experience, members with chronic conditions typically make up 25 percent of the overall population, but are responsible for 75 percent of overall healthcare spending. Programs geared towards disease management, medication/standard of care adherence, and unidentified conditions present the greatest opportunity for cost containment and large claim mitigation in employee benefits programs.

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Topics: Employee Benefits, Cost Containment, Education

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How to Improve Employee Medication Adherence & Why It’s Critical To Your Benefits' Budget

Jeff Griffin

When working on cost containment solutions, many employers completely overlook a critical component that could secretly be costing them tens of thousands of dollars: medication adherence. Medication nonadherence is associated with a higher rate of hospitalization (and at a higher cost) than those compliant with their medication regimen.

It seems simple enough — people are prescribed medications and they take the necessary doses, right? Well no, not necessarily. Medication adherence is a complicated topic with multiple, unrelated causes that are difficult to pinpoint and treat. And unfortunately, this problem doesn’t actually have a simple solution. But nonetheless, it’s important for employers to understand what it is so they know how they can help — and how it affects their budgets.

What Is Medication Adherence?

Simply put, medication adherence is when patients properly follow directions for taking medications as written by a doctor or pharmaceutical company on the label. For example, many over the counter pain medications allow for one or two pills to be taken every four to six hours, but never more than so many in a 24-hour period. Some asthma medications require once daily doses, while others require two (morning and night), and others require four (two in the morning and two at night). In addition, many blood pressure and cholesterol medications are taken once daily.

Some medication requires a change in diet (such as avoiding certain foods, like grapefruit, which can counteract the drug) or have strict instructions on how to take the medicine, like not eating for a certain period of time after consumption. Many times, these food restrictions have to do with a body’s inability to absorb the medication or vitamins if certain foods are present in the patient’s system.

According to the Centers for Disease Control (CDC) there are three different forms of medication nonadherence:

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Topics: Employee Benefits, Cost Containment, Education, Behavioral Psychology, employee health, Pharmacy

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5 Ways to Help Employees Embrace High Deductible Health Plans (HDHPs)

David Rook

Many employers are making the move from traditional healthcare plans such as HMOs, POSs, EPOs, or PPOs, to high deductible health plans, commonly referred to as HDHPs. Employers find that HDHPs allow them to save on premium costs while at the same time encouraging workers to become more active and educated consumers of healthcare. Some companies might offer HDHPs as one of two or more medical plan options, although this strategy does them little good in terms of saving money if the majority of employees fail to adopt an HDHP plan.

Regardless of the options employers choose to offer, consumer-driven healthcare is on the rise and high deductible health plans aren’t going away anytime soon. As they continue to become more and more prevalent, it’s important for HR to step up their communication efforts. Employees will be (understandably) concerned and confused by the differences in HDHPs, but it’s nothing education, patience and a bit of behavioral economics knowledge can’t solve to ward off buyer's remorse. Here are some ways to help employees embrace high deductible health plans.

1. Communication is Key

As with any other change in your company, you must be very explicit and intentional in your communication. Remember that people like to have explanations for what is happening (and why), rather than have changes dictated to them without any kind of supporting information. Just remember Benjamin Franklin's oft-cited adage "Tell me and I forget, teach me and I may remember, involve me and I learn."

When introducing a HDHP, it's critical to hold an active (vs. passive) enrollment. It's also smart to hold an open enrollment meeting so your employees can ask you questions - just make sure they’re prepared for it by sending out the benefits information a few days prior to presentation. In this way, they'll have time to review the information and come prepared with any questions they might have. Be as candid as possible so they feel as though you’re understanding their concerns - and do your best to be as patient as you can to assuage their fears. This course of action will go a long way toward a smooth transition.

2. Educate Employees about How High Deductible Health Plans Work

If your employees have never been enrolled in a high deductible health plan before, they’ll have plenty of questions about how they work. Why aren’t there copays? How much does an office visit cost at the doctor? What if one of the members on the plan is seriously injured? For what type of person are HDHPs most appropriate? Although HDHPs are growing in popularity among employers, employees tend to know very little about them and therefore, shy away from them.

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Topics: Cost Containment, Employee Engagement, Education, HSAs

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The Evolution of Black Friday

David Rook
Black Friday has become an enormous "tent pole event" for both retailers and consumers. The day after Thanksgiving has become synonymous with outrageous deals – but also outrageous lines, all-night camp outs, poorly-staffed stores, and sometimes violent confrontations between shoppers vying to be the first to hit the shelves. 
 
For a long time, Black Friday was seen as simply a good day to get a head start on Christmas shopping and save some money. However, in recent years, store openings have crept earlier and earlier, even into Thanksgiving itself, and viral videos of stampeding shoppers, brawls, and even some deaths have contributed to a growing sense that the infamous “holiday” has gone too far. Add to this the numerous complaints from employees on social media and the rise in popularly of online/mobile shopping, and one gets the sense that the importance of Black Friday is finally waning.

The Origins of Black Friday

While the term "Black Friday" wasn’t coined until the 1960s, the day after Thanksgiving has been known as the official start of the Christmas shopping season since Macy’s established its Thanksgiving Day Parade in 1924. The term "Black Friday" is associated with by-hand accounting practices, where red ink was used to indicate a loss and black ink to indicate a profit: holiday shopping moves retailers from the red to the black.
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Topics: Employee Benefits, Company Culture, Education

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The Birth of Labor Day (Pun Intended)

David Rook

The Birth of Labor Day (Pun Intended)

As experts in the field of employee benefits, it seems only fitting that we share with the curious the origins of Labor Day, most especially as we enter this holiday weekend. Labor Day is, after all, a celebration of the American labor movement and is dedicated to the social and economic achievements of workers.

We have President Grover Cleveland to thank for the getting the first Monday of September as a holiday every year. Several factions lobbied for the holiday to be on May 1st, to link up with International Worker’s Day, which is celebrated in over 80 countries worldwide. But for President Cleveland, May 1st was too close to the date of Chicago’s Haymarket Massacre, which occurred on May 4th, 1886.

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Topics: Paid Time Off (PTO), Education

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Where The Presidential Candidates Stand On Employer Sponsored Healthcare and Employee Benefits

Jeff Griffin


Americans are concerned about the future of their health care system—and for good reason. It's projected that we will spend 4.5 trillion dollars on health care in 2019 and five trillion by 2022.

According to a recent study from the Society for Human Resource Management, 79 percent of employers that provide health insurance are "very concerned" about rising health care costs. HR professionals know health care concerns go well beyond the effects on the organization's bottom line. Health care benefits play a critical role in recruitment, retention, employee morale, and productivity.

So, where do the presidential candidates stand on employer-sponsored health care and employee benefits?

 

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Topics: Employee Benefits, Education, Legislation

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Where The Presidential Candidates Stand On Employer Sponsored Healthcare

David Rook

The healthcare debate hasn't been as tumultuous this election cycle as it has been in the past, but regardless of who sits in the Oval Office in January, there will be changes in employer sponsored healthcare. Here's what you need to know about potential legislative changes and employee health benefits.

The Democrats

Hillary Clinton:
After years of championing a single-payer system, Clinton shifted her stance to fully support the Affordable Care Act with a plan to extend current legislation. She has stated that building upon the Affordable Care Act is a more practical solution than instituting a single-payer system, but acknowledges flaws in the existing ACA. Notably, high deductibles and premiums. Her plan incorporates increased tax credits to offset high premiums and other out-of-pocket costs. She also plans to "fix" the "family glitch" so that families can make up the gap in costs between employer coverage and health care costs. Under Clinton's plan, little will change for employers but consumers can expect to see relief in the form of expanded public options and tax credits.

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Topics: Employee Benefits, Education, Legislation

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The Dangers Of Shifting Too Much Cost To Employees And What You Can Do About It

David Rook

Despite healthcare reform, which naturally led most reasonable people to believe that runaway healthcare costs were finally going to be tamped down, the cost of obtaining health insurance is still very much on the rise. In fact, from 2006 to 2015, the average out-of-pocket costs per worker rose almost 230 percent, according to a recent Kaiser Family Foundation report.

No matter if someone is acquiring coverage on a state or federal exchange, or if they are obtaining coverage through an employer-sponsored plan, most everyone is feeling the pain.

In the case of workers who are covered by an employer-sponsored health plan, increases are likely coming on two fronts; higher premiums and higher deductibles.

Higher Premiums

While health plan premiums paid by employers are rising this year at lower rates than in year’s past, they are still outpacing inflation. No longer able to absorb these constant increases all alone, these growing expenditures are almost always now shared between employer and employee.

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Topics: Employee Benefits, Cost Containment, Education, Plan Design

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