- Assume that healthcare cost trends will accelerate
As you plan for 2023, place more weight on scenarios that assume accelerating health cost trends. In many self-insured employer-sponsored health plans, cost growth slowed in 2020 and is expected to do so again in 2021. The favorable experience, driven in large part from deferred and cancelled care due to COVID-19, is likely to dissipate going forward. Further, our baseline expectations for 2022, 2023 and beyond reflect a number of additional factors, including widespread inflation, labor shortages, and emerging gene therapies, that would also contribute to accelerating healthcare cost trends.
Some advice: Given the above, employers will want to ensure key stakeholders – in particular, the finance department – understand the increased likelihood of accelerating costs and greater volatility. Other actions to consider include revisiting health plan funding arrangements, adding or increasing stop-loss insurance, and exploring more aggressive value-based care strategies, which can mitigate cost increases while improving quality.
- Effective drug cost management will require an integrated approach
The gene and cell therapy pipeline is growing rapidly; in 2018 alone, the number of products in development rose by 25%, from 289 to 362. By 2025, the FDA estimates they will be approving 10 to 20 gene and cell therapy products per year. Many, if not most, of these drugs will be delivered in a clinical setting – which means that employers need to look at their prescription drug benefit on an integrated basis, with strategies focused on medical benefit management as well as the specialty drug pipeline.
Some advice: Evaluate the risk level of your population for high-cost gene therapy and cellular therapy claims. Based on what you discover, explore programs offered through your medical and pharmacy vendors focused on cost of care and clinical management of these new therapies. It may be worth considering alternative risk financing strategies, including stop loss or reinsurance solutions, installation payments and outcomes-based reimbursement.
- Address accessibility
It’s important to step back and examine the accessibility of your benefits from multiple angles. First, is care affordable for all employees? Can they access care in a way that fits into the flow of daily life? Are equitable benefits available to all members, regardless of gender, age, racial or ethnic identification, or whether they have disabilities? True accessibility – a foundational element of a successful benefit strategy – requires more than just checking a box; as you address gaps, you should see improvements in member experience and health outcomes. If not all employees benefit equally from your organization’s programs and providers, you may have work to do.
Some advice: Where you begin to improve accessibility will depend on where you have identified gaps: You may need to consider changes to eligibility requirements, health plan contributions, plan design, provider networks, program offerings, and so on. While there is no silver bullet, a strategy that can address many barriers to accessibility is virtual-first care. For starters, text-based asynchronous virtual care doesn’t require time off from work to access medical advice. For employees with limited flexibility in their work schedules, these services can greatly increase access to the healthcare system through a familiar channel – their cell phone. Virtual solutions can also help match individuals with providers who reflect their personal and cultural values but may not be readily accessible in all parts of the country. In particular, enabling virtual access to a more diverse panel of behavioral health care providers may be meaningful for people who are racial and ethnic minorities. Finally, virtual visits will often be less costly for the patient than an in-person visit – and cost can be a significant barrier to care, especially for individuals enrolled in a CDHP.
- Improve support for substance use disorders
The pandemic has had a serious impact on behavioral health. The use of unhealthy coping strategies to combat stress, burnout and worry are evident in the increased utilization of supports for substance use disorder. The challenge for employers is to engage employees with substance use disorders at earlier stages, when their needs are less complex and easier to treat.
Some advice: The impact of the pandemic on substance use is expected to be long term. Take stock of the programs and resources you have available today – and identify what is needed to complete the full continuum of care. A comprehensive program will emphasize education and prevention – such as training people to use healthy coping mechanisms – as well as programming for early treatment and higher levels of care. Be sure to explore virtual programs that can provide or enhance support along the entire care continuum.
- Unlimited PTO supports the way people work now
The pandemic has changed the way people work, bringing renewed focus to time off and leave benefits. One trend gaining momentum is unlimited paid time off. Once seen as a niche benefit, unlimited PTO demonstrated its advantages during the pandemic; it allowed for multiple quarantines and avoided large accruals of unused vacation. In Mercer’s 2021 U.S. Absence Survey, one out of five survey respondents has implemented unlimited PTO for some portion of their employee population.
Some advice: As you look at benefits for the future, be sure to consider employees’ desire for more flexibility in time-off benefits. If you don’t yet offer a PTO plan, implementing one is a good first step. If you do, it’s worth considering unlimited PTO as a way to provide the ultimate in flexibility. Employers benefit as well, by avoiding scheduling challenges that can arise when many employees want to use up vacation or carryover days during the same few weeks. There are now better tools for managing unlimited PTO programs that reduce the likelihood of abuse. When well designed and communicated properly, unlimited PTO leads to better work/life balance and reduced liabilities from the traditional accrued PTO strategies.
- Evaluate vendor partners to ensure they are advancing your goals
The healthcare market is evolving at lightning speed, with traditional players introducing new network and plan design approaches and new entrants introducing innovative delivery models and provider payment approaches. Employers have an opportunity to reduce costs, improve quality and enhance member experience with these new offerings.
Some advice: Find out where you have room for improvement by evaluating these key elements of your current program:
- Provider networks. Determine whether your broad network is giving you real results in terms of quality and cost. If not, evaluate narrow or alternative networks offered by your carrier partner or network vendors, perhaps on a market-by-market basis. In addition to prioritizing quality, these networks may result in significant cost savings, sometimes with minimal disruption to employees.
- Centers of Excellence. Review your data to understand where your employees are seeking care and where those providers stand relative to others in the market in terms of cost and quality. Then evaluate options through your carrier partner or a carve-out vendor to steer employees toward the providers offering the highest quality at the lowest cost.
- Primary care. Review your data to see how many employees visit their primary care physician annually, how the PCPs in your network score on quality metrics, and how chronic condition management is performing. Is there room for improvement? By investing in primary care, you can better control downstream costs, like emergency room, specialist visits, costly surgeries, and more.
- Virtual care. Evaluate your current virtual care partners, whether they are part of your medical plan or a carve-out solution. Is it time for a change? As the virtual care space rapidly expands, you may be able to find new solutions that give employees better access to care, reduce urgent or emergent visits, and improve member experience.
Moving from strategy to action: Some final thoughts
Making large changes to a benefits plan can be daunting. For example, many of the Mercer experts contributing to this posts advised you to ride the momentum of digital health care, but once you’ve identified areas where you think a particular strategy will enhance your program, you also need to consider the obstacles that stand in the way of finding and implementing the desired solutions. Is it program costs? Procurement hurdles? Limited internal staff? You may be able to work with your carrier or carve-out vendor to achieve your goals, but if resources are limited, it’s worth considering a bundled approach that offers a curated set of health solutions from which to choose.
Choosing a pilot geography or business unit is one way to learn how innovative approaches will function within your organization. When considering this approach, think about the financial, clinical and administrative components of a successful pilot in addition to the member experience, and set your metrics accordingly. Keep in mind, some indicators of success will be leading, and others will take longer to prove out. Be sure to set expectations with your leaders appropriately – good things come to those who wait!
Contributors: Sunit Patel, Chief Actuary; Alysha Fluno, National Pharmacy Practice Leader; Kate Brown, Innovation and Intellectual Capital Leader; Sandra Kuhn, National Behavioral Health Practice Leader; Richard Cooper, East Market Practice Leader for Life, Absence, and Disability; Agnes Quiggle, Center for Health Innovation; Tabit Xthona Lee, Center for Health Innovation; Patti Rittling, Center for Health Innovation; Dan McMahon, Health Transformation Collaborative Leader; Beth Umland, Director of Research, Tracy Watts, US Leader for Healthcare Reform, Maura Cawley, US Large and Jumbo Employer Team Leader