Employers: Don’t Wait for Health Care Reform

By Renya Spak

Renya is a Partner in the New York City office of Mercer Health & Benefits and leads the Health Innovation Team. The Health Innovation Team is responsible for cultivating new thinking and designing solutions that address the dynamic challenges impacting employer-sponsored healthcare in the US today. Renya continues to actively participate and lead consulting engagements that focus on strategic planning, population health management, and health innovation.

By Tracy Watts

Senior Partner, National Leader for U.S. Health Policy

Health benefit cost is notoriously hard to control, as a look at the wild fluctuations in cost trend over the past two decades shows. Yet for the past five years, annual cost increases have been in the low-single digits. While this period of low cost growth has been called a mystery, employers have certainly contributed to it with data-driven strategies that embrace consumerism and high-deductible health plans; emphasize the right site of care, from telemedicine to centers of excellence; and leverage innovations in care management and patient engagement.

That’s not to say the battle is won. Health benefit cost is still rising faster than inflation overall, and of course individual employers can still see increases of 10% or higher in a given year. We keep hoping for help in the form of meaningful health care reform to come out of Washington DC and the new administration. On the current short list of employer priorities:

Repeal the excise tax
Health Savings Account expansion
Prescription drug price transparency
Stand-alone Health Reimbursement Accounts

But while we can keep hoping, it’s time to stop waiting. Employers as a group can drive the market; after all, we cover 178 million lives. That’s a lot of leverage if we act collectively. Here are some foundational actions we believe should be taken by employers to make meaningful progress toward the goal of creating a more rational healthcare system that supports employers' strategic objectives:

Pay for value: It's time for employers to understand what percentage of their covered workforce is being cared for by providers under value-based reimbursement models – and how much you’re paying in additional fees. Request carrier reporting that includes the expected and actual impact of value-based reimbursement on cost, quality and member experience.

Drive to Quality: Inventory all the sources of quality information from current vendors and determine which source to promote. Evaluate plan design options that create a meaningful cost differential between seeking care at high- and low-quality care settings, and modify carrier contracts to exclude payment for “Never Events” (serious events that are preventable).

Personalize the Experience: It’s time to hold vendors accountable for achieving a high Net Promoter Score (NPS) by including a performance guarantee or contract provision. Employers also should offer services that provide high touch/high tech support to drive employees to become more empowered consumers, either through existing or new vendors.

Embrace Disruption: Employers should review procurement and contractual requirements associated with out-clauses and forming new partnerships with start-ups. Organizations must create the business case for change with internal leaders, socializing the business imperative.

These steps will go a long way toward achieving an employer-based healthcare system that works for all of us. Let’s lead by example.