Employers: 10 Ways to Improve Your Employee Health Costs

January 10, 2017
Patricia Ingerick, MBA, MSHS / Director of The Geneia Institute


In the eight days since the 115th Congress convened, there has been much discussion about repealing the Affordable Care Act. Those in the know expect the ACA repeal to be fast-tracked, and could happen in as few as eight weeks.

Given widespread disdain for the so-called ‘Cadillac Tax,’ a 40-percent excise tax on employer-sponsored health coverage that exceeds $10,200 for individual coverage or $27,500 for family coverage, many believe it will be included in the ACA repeal. If it happens, most employers will celebrate.

We believe the employer party could be short-lived … but it doesn’t have to be.Employee Healthcare Costs

After all, employer healthcare costs continue to climb. The Kaiser Family Foundation reported the average annual premiums for employer-sponsored family health coverage reached $18,142 in 2016, up three percent from 2015 and more than 200 percent from 1999.

At the same time, employee health continues to decline – and that points to future cost increases.

That’s why Geneia partners with employers and empowers them with comprehensive information that leads to cost and quality improvements. As our chief strategy officer recently wrote in a thought leadership article about the questions the savviest employers are asking their health plans,

“We strongly believe there is a compelling opportunity for employers to reverse this dynamic and improve the quality and cost of healthcare. It begins with timely data and actionable insights and employer willingness to use this information to hold health plans accountable for the return on investment on their healthcare spend.”

Our work with employers led us to create a list of 10 ways all employers can work to improve employee health costs:

  1. Compare plan costs to other employers.
    Knowing how you compare to your peers in terms of your risk-adjusted employee population data and benefit plan design will help you evaluate how well you’re managing your healthcare spend.

  2. Analyze demographics within your employee population that may drive utilization.
    The social determinants of health – age, gender, race, ethnicity, marital status, education, income – can have a larger influence on an individual’s health than the care he or she receives and will impact your organization’s healthcare cost trends.

  3. Assess frequently accessed providers and places of service.
    Learn as much as you can about your provider network to identify opportunities for your employees to receive quality and cost-effective care. This will also help you identify barriers to receiving care, such as lack of public transportation to reach provider offices.    

  4. Identify missed opportunities for your employees to receive appropriate preventive care.
    Knowing which employees need and would benefit from routine preventive care such as blood pressure checks, diabetic screenings, mammograms or colorectal screenings could help defray future costly conditions. This also provides you an opportunity to educate your employees that these services typically don’t carry a copay.

  5. Analyze and compare the use of in- verses out-of-network services and generic verses brand-name medications.
    Use of out-of-network providers and brand-name prescription drugs adds considerably to the cost of healthcare. Educating your employees about the price difference between in- and out-of-network and generic and brand-name drugs will save money for you and your employees.

  6. Identify employees that could lower their risk for chronic conditions by making lifestyle changes.
    Lifestyle choices account for 50 percent of what determines an individual’s need for healthcare services. Identifying employees who smoke or who are overweight and providing resources such as counseling or access to smoking cessation or weight management programs can help mitigate rising healthcare costs and contribute to a healthier workforce.

  7. Analyze available quality information.
    Knowing and steering your employee population to high-quality providers will lead to better outcomes and overall lower healthcare spend.

  8. Evaluate where and why employees receive healthcare services and determine what conditions could be better treated and managed through less-expensive outpatient services.
    Are your employees using the emergency department when they could see a primary care physician or go to an urgent care center, both of which are less expensive and more appropriate places of care? Could they use a free-standing laboratory for routine blood work instead of a lab located within a large health system? Helping your employees understand how and where to seek appropriate care for certain conditions will impact the amount spent on services.

  9. Determine how engaged and active your employees are in managing their healthcare and participating in wellness programs.
    You have an opportunity to increase participation in wellness programs and increase your employees’ engagement in their overall health by analyzing data and understanding potential barriers.

  10. Identify prevalence of knee, hip and back surgeries and related physical therapy.
    Data shows the cost of these procedures can vary greatly among providers and facilities. As these are common conditions, knowing which providers and facilities are the most cost-effective and also have the highest quality scores can have a large impact on overall healthcare costs. In addition, there may be opportunities to improve your work site, purchase more ergonomic equipment or improve safety training if you discover a lot of employees with certain joint or muscle conditions.

For most employers, employee health benefits are the second largest expense. Until recently, many employers have felt powerless to contain this expense.

That’s changing … and creating more opportunities for employer celebrations. The availability of comprehensive, timely information and analytic insights coupled with employer willingness to use this information to get more return on their healthcare investment offers the very real possibility for engaged employers to improve the costs and quality of employee healthcare.


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