Managing Clinical Risk And Employee Health Produces Savings For Employees
Offering employees cash-based incentives for adopting healthy behaviors, providing clinically based care management programs, and implementing proven approaches to benefit administration and communication are among the practices that are most effective in cutting the costs of health plan sponsors, according to a study published by health benefits consultancy SHPS.
The report was based on responses to questionnaires completed by benefits and human resources executives at 115 mid-sized and large companies with a total of more than 3.7 million employees. Researchers studied the data in an effort to identify which practices lead to lower health care costs, assuming otherwise comparable benefits and workforce profiles.
Instead of reducing health care bills, certain practices correlate with higher costs for plan sponsors, the analysis showed. These practices include using deductibles and co-pays to drive health behavior, offering multiple plan designs, and managing employee health solely through wellness and education programs. Researchers also observed that employers that have experienced difficulties in assessing the quality of care in their provider networks report spending more than average on health care, as do companies with high rates of employee turnover.
On the other hand, the report said, there are certain practices that have been shown to produce substantial cost savings for the health plan sponsors studied. Among the companies that manage employee health through targeted, clinically based care management programs, average health care costs were found to be 18.2% lower than among companies that do not manage care. These programs monitor quality of care and offer nurse counseling support to employees who are catastrophically ill, and they also provide screening and on-site medical care to workers who suffer from chronic conditions. Researchers noted that, while the introduction of care management programs can increase costs in the first year as patients take advantage of newly available services, a mature care management program can save the employer around $1,400 a year per worker.
Giving cash incentives to employees for engaging in positive health-related behaviors was also found to correlate with lower health care costs for employers. These incentives might include the offer of a lower premium, a direct cash payout, or a contribution to a health reimbursement arrangement (HRA) or health savings account (HSA). Among the companies studied that offered one or more of these cash-based incentives, health care costs were found to be 15.1% lower than average. The study also found that cash-based incentives are most effective when offered in conjunction with care management programs that assist participants in altering their health behaviors and monitoring their progress.
In addition, researchers discovered that some companies have been successful in trimming their health care costs through excellence in benefits administration and communication. Researchers identified several specific practices that tend to result in lower costs, including selecting vendors capable of sharing information and providing seamless service to participants, ensuring that member eligibility data is accurate and up-to-date, implementing a coordinated process for data processing and recordkeeping, communicating all health-related messages with a common theme or brand, devoting a specific communications vehicle to the promotion of employee health, and targeting health communications to both employees and their families.
Commenting on the study’s results, Rishabh Mehrotra, president and CEO of SHPS, said the evidence suggests that “traditional methods of cost management, which rely primarily on the management of financial risk rather than clinical risk, are not enough to effectively manage the ever-increasing health care cost trend.”
Instead, Mehrotra observed, “significant improvements in the health care cost trend are achieved when employees improve their clinical status and reduce their need for health care services.”
