Care management

Refocusing the Strategy: Care Management Programs Help Employers Reduce Healthcare Costs

Kanav Hasija
Sat 15 August 2020
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Employers in the U.S. happen to be the largest purchasers of healthcare, and a significant number of insured Americans receive their healthcare through an employer-sponsored plan. Health insurance premiums for employers are expected to increase dramatically in 2021 due to the impact of COVID-19. An analysis by Covered California forecasts that nationally, premiums will rise between 4% and 40%—and possibly more.

With healthcare costs significantly surpassing the overall rate of inflation, conventional approaches such as incremental cost shifting via plan design changes have been unsuccessful. This is why employers are becoming responsive to new programs that offer reliable medical benefits and the opportunity to reduce costs. 

Before discussing how employers can deliver first-class healthcare, let’s take a look at what spiked the healthcare expenses without delivering any significant improvement in the quality of care:

  • Managed Care Didn’t Deliver What it Promised

Managed care, originally intended to be a healthcare system to monitor the utilization of services, grew rapidly in the 1990s. The objective was to ensure that patients received a suitable level of care while efficiencies achieved cost savings. Instead, it became a system that validated unreasonable provider negotiations and price cutting, inefficient healthcare delivery, and cost-shifting.

This caused consumers to become increasingly disconnected from the actual cost of healthcare. Many adopted a “use it or lose it” philosophy and exploited healthcare services. Under managed care, employer-sponsored health plan expenses surged dramatically.

  • Shifting Healthcare Costs is a Temporary Solution

Many employers in recent years have resorted to short-term measures, like shifting healthcare costs. Increasing employee deductibles, co-pays, premium contributions, and other out-of-pocket costs has been a routine ploy to mitigate annual healthcare cost upswings.

In addition to being unpopular with employees, these maneuvers are no more than a temporary solution. They fail to tackle the actual sources of rising healthcare costs—America’s aging population, high-cost healthcare technology advances, unhealthy lifestyles, and inefficient healthcare delivery and coverage systems. Healthcare cost-shifting can lessen demand, but it will not impact or curb need.

Instead of cost-shifting and deductibles creating financial barriers to care, consumer-driven healthcare brings employee well-being, engagement, benefits management, and communications solutions together in a single place.

Leading a company through a tactical transformation to deliver enhanced employee care can be challenging. It requires an employer to assemble an ingenious combination of success drivers: the “plan” that offers effective financial incentives, consumer-focused tools and information, and targeted employee education and financial information. 

Thriving employers healthcare programs typically share these core elements:

  • Integrated Care Management

One of the more essential components of consumer-driven healthcare, integrated care management, can help employees prevent or delay the onset of certain medical conditions, manage existing chronic and acute diseases, and upgrade their overall health status.

Care management refers to a gamut of programs designed to promote employee health and productivity, enhance clinical quality, and maximize the efficiency of healthcare delivery to impact overall care and costs. It embodies all aspects of healthcare and employees of all ages, from a healthy 23-year-old to a 60-year-old with multiple chronic conditions.

 The most effective care management programs include:

Responsive Health Management

Risk evaluations, coaching, and other decision assistance for self-care and treatment options

Health Promotion

Primary prevention, including onsite programs

Case Management

Care planning and coordination for complicated cases

Chronic Care Management

Secondary and tertiary prevention; focused on cost-intensive chronic diseases

Health and Safety Alerts

Use of data to detect emerging high-risk, member-specific issues

Despite utilizing various aspects of care management, some traditional health plans fail to impact the 20 percent of members who usually expend 80 percent of costs. This often happens because they are not targeted, nor is their care coordinated, and hence opportunities to identify and manage a number of chronic conditions are missed. To streamline care for their employees, employers should consider ways to make their current care management offerings more effective and meaningful. 

  • Reward-Based Incentive Program

A well-organized, reward-based incentive program incorporates and aligns each care management element with account-specific decision making and helps transition employees to smart engagement tools.

With a rewards-based approach, companies can help employees feel good about their benefits and encourage a change in behavior that leads to improved performance and health. Typical incentives for completing health risk appraisals or taking part in certain wellness initiatives such as smoking cessation or weight loss might include:

  • Cash
  • HRA contribution
  • Points toward rewards
  • Gifts/Prizes

Example: As part of a company Flexible Rewards Program, employees could earn points for certain actions, such as completing a health risk appraisal (20 points), attaining particular fitness levels (20 points), achieving health status improvements (20 points), completing health awareness training (10 points) or registering on the health plan website (10 points). After reaching certain point goals, employees could then claim rewards, such as additional PTO days (1–5 days), HRA/HSA contributions ($100–$500), and cash rewards (lower than tax-advantaged rewards).

  • Focused Vendor Management

While many vendors claim to have a consumer-focused platform with robust tools and resources to engage their members in healthcare management, not all vendor toolsets are created identical. Transformation in the healthcare environment requires way more than a plan design and website. There are many elements that must work together to transform passive patients into engaged customers.

For those program components that do not fulfill desired standards, best-in-class specialty vendors may be combined with the health plan administrator. Focused vendor management is critical for elevating the employee experience, both during implementation and on an ongoing basis. Initiatives to assess and manage vendor operations and performance can make the difference between an effective and an untenable healthcare transformation initiative.

  • Defined Measures for Success and Program Improvement

The ideas and theories behind healthcare transformation may sound favorable to an employer, but in the absence of specific success measures, a program’s effectiveness will never be realized. This is why companies should establish benchmarks for:

  • Utilization impact
  • Employer cost control
  • Workforce financial impact
  • Health status improvement
  • Workforce productivity
  • Employee satisfaction

Once success measures are established, the employer must continually monitor and fine-tune the program to ensure the strategic goals are being met. This is an ongoing collaborative process that is necessary to promote long-term employee support for a company’s employee care program.

Employers’ efforts to check health costs and augment the quality of care have been the driving force behind building integrated and coordinated care delivery. Care-focused programs have the ingredients necessary to address rising costs while improving the overall quality of employee healthcare. Giving employees the tools they require to make decisions about selecting the right healthcare, at the right time, in the right setting will improve the quality of their health and satisfaction with their health benefits. 

A modern, data-driven approach

Based on emerging technology and trends, it is inevitable that care will be organized around the consumer. The ability to connect the right technology infrastructure with care delivery positively impacts care coordination and drives improved margins. Care management programs that can measure, manage, and realize results are also critical. 

Therefore, an effective transformation will leverage best practices in integrating the various elements of benefits with the organization to support an organization-wide change initiative. Innovaccer brings together an integrated solution for employers that delivers better employee healthcare, benefits management, and communications solutions in a single place.

To know how a FHIR-enabled Data Activation Platform can help you in revamping your employee care management strategy, get a demo

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