strategies for addressing healthcare costs docs/healthcare/2015... · fully insured plan: employer...
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STRATEGIES FOR ADDRESSING
HEALTHCARE COSTS
Scott McCarty
480-392-1711
NCPERS
Healthcare
Symposium
January 25, 2015
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Healthcare Costs are Growing Faster
than Wages and Inflation
Employees are Being Asked to Pay
More
Benefits are Being Reduced
THE HEADLINES
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There Is No Silver Bullet But…
We Can (and Should) Do More
PRESENTATION THOUGHT
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A STRATEGIC APPROACH TO HEALTHCARE
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Funding Options
Plan Type
Cost SharingPlan Design
Plan Management
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A STRATEGIC APPROACH TO HEALTHCARE
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Funding Options
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Fully Insured Plan
Premiums + Out-of-Pockets = Expenses + Profit
Self Insured Plan (Recommended)
Premiums + Out-of-Pockets = Expenses
FUNDING OPTIONS
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Claims are Claims
Fully Insured Plan: Employer is Paying for the Risk the Insurance Company is Taking
How Long will You Stay?
Insurance companies will ALWAYS make a PROFIT
What are You Buying?
Sharing Information is Rare in Fully Insured Plans
BE SELF INSURED
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Proven to be Less Expensive
5% to 15% Depending Upon Cost Structure
No Taxes, No Profit
Your Not Too Small…Risk Management
Aggregate Usage Data is Valuable
IDs Employee Out-of-Pocket Costs
Plan Design Flexibility / Control
BE SELF INSURED (CONTINUED)
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A STRATEGIC APPROACH TO HEALTHCARE
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Plan Type
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PPO
(Preferred Plan Organization)
VS.
HDHP with HSA
(High Deductible Health Plan with Health Savings Account)
PLAN TYPES
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Lower Premiums in Exchange for Higher Deductibles and Out-of-Pocket Costs paid for by a Health Savings Account (HSA)
Patient Evolves to Consumer
Catastrophic Coverage
70% of Insured Use Less Than $1,000 in Benefits Annually
HDHP WITH HSA
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HSA
Tax-Free Savings Account that
can be used to pay for Qualified
Medical Expenses
Employee’s Account Forever
HDHP WITH HSA (CONTINUED)
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Growing in Popularity
15% of Market
Think “Low Premiums” Instead of “High Deductible”
Traditional Plans “Over-Insure”
ER / EE Natural Tendency for Risk Aversion
HDHP WITH HSA (CONTINUED)
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Flexible Design Allows Employers to Determine
Balance Between Premiums and Out-of-Pocket Amounts
Helps with ACA
Members with More Claims will Pay More
HDHP WITH HSA (CONCLUDED)
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A STRATEGIC APPROACH TO HEALTHCARE
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Cost Sharing
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Defined and Sustainable for Employer and Employee
Create Employee Accountability
Get the Right Care, at the Right Time, in the Right Place
Improve Understanding of Health Care Costs
COST SHARING GOALS
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Merely Shifting Costs to
Employees is Not Sustainable
Consider an Employee’s
Financial Exposure – It’s More
than Premiums
COST SHARING GOALS (CONCLUDED)
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ANNUAL FAMILY COVERAGE:
$18,000 FINANCIAL EXPOSURE
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$11,000 Premiums
$7,000 Out-of-Pocket
(Co-Pays, Co-Insurance, Deductibles)
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1. Employer: Known Costs
Premiums
2. Employee: Known and Unknown
Premiums: Known
Out-of-Pocket: Unknown (to a Maximum)
TWO PERSPECTIVES:
EMPLOYER AND EMPLOYEE
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FINANCIAL EXPOSURE$18,000 FOR FAMILY COVERAGE
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$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Employer Employee
$4,000 Premium
$7,000 Premium
$7,000 Out-of-Pocket
Co-Pays
Co-Insurance
Deductibles
UNKNOWN
KNOWN
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Percent of Operating Budget
Relative to “Hot Buttons”
Pension Costs
Street Preservation
Include Lost Time & Productivity
EMPLOYER PERSPECTIVE
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TOTAL EMPLOYER IMPACT-
ALMOST DOUBLE CLAIMS
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Medical Claims
55%
Lost Time &
Productivity
45%
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EMPLOYEE PERSPECTIVE
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Premiums
+ Out-of-Pocket
= EE Financial Exposure
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Percent of Salary
1. Premiums
ACA Limits Exist
2. Out-of-Pocket Cost Maximum
EMPLOYEE PERSPECTIVE (CONCLUDED)
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$18,000 FINANCIAL EXPOSURE
40% EMPLOYER VS. 60% EMPLOYEE
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Employer Premium
$7,000
Employee Premium
$4,000
Employee Out-of-Pocket
Maximum
$7,000
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A STRATEGIC APPROACH TO HEALTHCARE
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Plan Design
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Make Incremental Changes
Reducing the Value of the Benefits Is Not
Strategic
Education and Wellness are the Best
Ways to Manage Costs – We Have More
Control Than We Think
KEY THOUGHTS
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WE HAVE MORE CONTROL OVER OUR
HEALTH THAN WE THINK
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Behavioral
Habits 40%
Genetic
Disposition 30%
Social
Circumstances
15%
Health Care
10%
Envirnomental
Exposure 5%
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1. Wellness Incentives Carrot, Stick, or a Combination?
2. Specialty Rx
3. Increase Out-of-Network Maximums
4. Increase Use of Generic Rx
5. Increase Use of Mail Order Rx
6. Spouse Ineligible if they have access to other coverage
PLAN DESIGN ELEMENTS
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1. Limit Number of Plans
2. Medical Case Management RN used to Increase Patient Engagement
3. Disease Management Incentives
Decrease if In Program
Increase if Out of Program
4. Consumer Navigator
Vendor Shares in Savings if “Top Quality” Provider is Used for Procedure
PLAN DESIGN ELEMENTS:
THE CURRENT WAVE
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A STRATEGIC APPROACH TO HEALTHCARE
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Plan Management
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Employee Committee Members with
Different Backgrounds and Opinions
Challenge Actuary Projections
At Year-End, Actual vs. Recommended
Don’t Accept the Medical Trend Increase
Intense Data Analysis
CONSIDER THE FOLLOWING
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Employee Information
Sick Leave Usage
Age
Tenure
Audits
Contract Performance
Dependent Coverage
INTENSE DATA ANALYSIS
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Relationship to Workers Compensation
Claims Analysis
Chronic Disease
Utilization vs. Per Unit Cost Changes
Large Claim Impact
Out-of-Network Impact
Specialty Rx
INTENSE DATA ANALYSIS (CONTINUED)
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There Is No Silver Bullet But…
We Can (and Should) Do More
FINAL THOUGHT
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Questions,
Comments,
Final Thoughts,
or Stories
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THANK YOU !