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Benefi ts RoundtableSeptember 2005

Health Care Cost- Containment TacticsTraditional and Nontraditional Tactics for Containing Health Care Costs

© 2005 Corporate Executive Board

Roundtable Staff

Lead AnalystNicholas Ferreira

Practice Manager Michal Kisilevitz

Executive DirectorConrad Schmidt

General ManagerPeter Freire

Creative Solutions GroupGraphic Design Specialist

Michelle Hoffmann

Graphic Design AssociateIngrid Shwaiko

Senior Publications EditorDebra Berkowitz

Managing EditorKerry Ellis

Benefi ts Roundtable

Corporate Executive Board2000 Pennsylvania Avenue NWWashington, DC 20006Telephone: +1-202-777-5000Fax: +1-202-777-5100

The Corporate Executive Board Company (UK) Ltd.Victoria HouseFourth Floor37–63 Southampton RowBloomsbury SquareLondon WC1B 4DRUnited KingdomTelephone: +44-(0)20-7632-6000Fax: +44-(0)20-7632-6001

www.benefi tsroundtable.com

Note to Members

This project was researched and written to address the research interests of several specifi c companies and as a result may not satisfy the information needs of all companies. The Corporate Executive Board encourages readers who have additional questions about this topic to contact the Roundtable staff for further discussion. Descriptions or viewpoints contained herein regarding organizations profi led in this report do not necessarily refl ect the policies or viewpoints of those organizations.

Confi dentiality of Findings

This document has been prepared by the Corporate Executive Board for the exclusive use of its research contacts. It contains valuable proprietary information belonging to the Corporate Executive Board and each member should make it available only to those employees who require such access in order to learn from the material provided herein and who undertake not to disclose it to third parties. In the event that you are unwilling to assume this confi dentiality obligation, please return this document and all copies in your possession promptly to the Corporate Executive Board.

Legal Caveat

The Benefi ts Roundtable has worked to ensure the accuracy of the information it provides to its readers. This report relies upon data obtained from many sources, however, and the Benefi ts Roundtable cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Benefi ts Roundtable is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Benefi ts Roundtable or its sources, or b) reliance upon any recommendation made by the Benefi ts Roundtable.

Catalog No.: BR13OX77H© 2005 Corporate Executive Board. All Rights Reserved.

Table of Contents

Letter to the Membership • iv

Roundtable Health Care Cost-Containment Resources • v

Health Care Cost Environment • vi

Section I: A Framework for Health Care Cost-Containment Tactics • 1

Section II: Nontraditional Tactics • 9

Section III: Traditional Tactics • 57

Order Form • 77

Letter to the MembershipHealth care cost containment continues to pose strategic and organizational challenges for the benefi ts function. Although health care cost increases appear to be slowing, the magnitude of these cost increases along with per employee health care costs is growing from year to year.

In response to this continued rise in costs, organizations are implementing numerous health care cost-containment initiatives. However, despite these initiatives, health care costs continue to negatively impact corporate profi ts, leaving benefi ts executives asking for more diverse, nontraditional tactics upon which to expand their suite of cost-containment tactics.

With a focus on nontraditional tactics, this study intends to summarize, in brief, various strategies that organizations are using to control health care costs. The Roundtable has also linked these tactics to the key health cost drivers that they address.

The Roundtable looks forward to comments from the membership on the usefulness of this study. If you have any questions about the study or would like to offer guidance for future efforts, please no not hesitate to contact the Roundtable at +1-202-777-5000 or through your account director. As always, we look forward to your feedback, and thank you for your continued support.

Benefi ts RoundtableWashington, D.C.September 2005

iv

Roundtable Resources on Health Care Costs

Roundtable Health Care Cost-Containment Resources

Roundtable Deliverables

Potential Roundtable Tools

✓✓✓✓

Health CareCost-Diagnosis Template

Health Care Cost-Containment Checklist

Health Care Cost-Containment Tactics

A menu of effective tactics for employers to address health care cost drivers

An Analytical Approach to Understanding Health Care Cost Drivers

Full assessment and analysis of health care cost drivers

The Implications of Health Care Costs

Short briefs that can be used to align executives and employees on health care costs and their implications

In Development

v

Still on the RiseEmployer premium growth is predicted to slow…

Employer-Sponsored Health Insurance PremiumsAnnual Percentage Increase

Percentage Increase

* Estimated. Source: Claxton, Gary, et al., “Employer Health Benefi ts 2004,” The Kaiser Family Foundation and Health Research Educational Trust, January 2005; Centers for Medicare and Medicaid Services, “National Health Accounts, Aggregate and per Capita Amounts, and Share of Gross Domestic Product,” February 2005; Health Value Incentive Survey, Hewitt Associates, 2004, accessed January 2005; Benefi ts Roundtable research.

Health insurance cost increases for employers are slowing and appear to be providing relief after years of double-digit growth. However, given the magnitude of increases in absolute dollars, these costs are still growing from year to year.

…but employer costs per employee continue to rise

●

●

●

●

●●

8.2%

10.9%

12.9%13.9%

11.2% 10.8%

0.0%

8.0%

16.0%

●

●

●

●

●

$0

$4,000

$8,000

Dollar Cost per Employee

Year

Annual Health Care Cost per EmployeeDollars

2000 2001 2002 2003 2004 2005*

2001 2002 2003 2004 2005*

vi

Year

Health Care Cost Environment

Cost per employee is projected to climb 11.2% in 2005.

23%

12%

11%

10%

10%

9%5%

4%4%

4% 2%3%

2%1% 100%

Key Cost DriversA small number of cost drivers account for the majority of cost increases

Estimated Contribution of Cost Drivers to Increase*2004 Percentage

Rx Dru

gs

Chron

ic Dise

ase

Salar

y

Malprac

tice P

remium

s

Aging P

opula

tion

Qua

lity of

Care

New Te

chno

logy

Hospit

al Ro

oms

Infl at

ion

Nurse

Shor

tage

Admini

strati

ve Ex

pens

e

Oth

er

Legis

lation

Net Pr

emium

s

Total

Incre

ase

The top fi ve drivers account for two-thirds of cost increases.

Roundtable analysis identifi ed 14 primary cost drivers that contribute to health care cost increases. These drivers broadly form the key targets for health care cost-containment strategies. While the impact of each driver on specifi c organizations’ costs may vary, in general a small number of drivers contribute roughly two-thirds of health care cost increases.

Source: Benefi ts Roundtable research.* Analysis done at the economy level; the impact of each driver on a particular organization’s cost is likely to vary. For more details on this analysis, see Understanding the Drivers of Health Care Cost Infl ation, Benefi ts Roundtable, June 2005.

vii


Organizations have varying infl uence over each of the 14 cost drivers. The top drivers, including prescription drugs, chronic disease, and quality of care, can be signifi cantly infl uenced by the organization and should be the focus of cost-containment efforts. In total, roughly 45% of all cost increases can be infl uenced by an organization (either internally or in collaboration with others).

Rx Drugs

Chronic Disease

Quality of Care

Malpractice Premiums

New Technology

Legislation

Hospital Rooms

Other

Net Premiums

Salary

Aging Population

Nurse Shortage

Infl ation

Administrative Expense

60%

80%

60%

0%

20%

0%

0%

25%

30%

0%

0%

0%

0%

0%

Opportunity to Infl uence Cost DriversOrganizations can infl uence roughly 45% of cost increases

17%

11%

8%

3%

2%

2%

1%

1%

0.5%

0%

0%

0%

0%

0%

Internally Infl uenceable1

Externally Infl uenceable1

Estimated Infl uenceable Part of Increase1

Estimated Overall Infl uence on Cost Increases2:

30.5% 15% 45.5%

Estimated Contribution to Cost Increases

23%

12%

10%

10%

5%

2%

4%

3%

1%

11%

9%

4%

4%

2%

1 Approximate percentage of driver-related costs.2 Weighted total based on percentage of contribution to the cost increase.

Source: Benefi ts Roundtable research.

=

15%

10%

20%

30%

15%

100%

20%

20%

0%

0%

0%

0%

0%

0%

viii


Profi t Net of Tax and HC Costs

Health Cost

Organizations are implementing numerous cost-containment initiatives to infl uence primary cost drivers. Despite this, health care costs continue to negatively impact corporate profi ts. In fact, in less than 10 years, profi ts could equal health care costs.

No Silver BulletThough organizations have been managing various cost-containment strategies…

Percentage of Organizations Pursuing Strategy

…health care costs still threaten profi ts

* Assumes a 5.8% annual growth in corporate profi ts and 10.8% growth in corporate health care costs. In 2000, corporate health care costs amounted to approximately 60% of corporate profi ts, net of tax and health care costs.

Source: U.S. Department of Commerce; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; Harris Interactive, http://www.benefi tnews.com, 4 February 2005; 2004 EBN-Hay Survey on Benefi ts Management, EBN Benefi ts Sourcebook, 2005; Benefi ts Roundtable research.

Percentage of Organizations

Name of Strategy

Imple

mentin

g Pay

-for-

Offe

ring o

r Plan

ning

Imple

mentin

g Well

ness

or

Using D

ata-D

riven

Using P

ortab

le

Comparison of Annual Corporate Profi ts and Health Costs*

Dollars(Billions)

Year

$2.0

$1.0

$0.0

Perfo

rman

ce In

itiativ

e

to O

ffer C

DHP

Diseas

e Man

agem

ent

Clinica

l Care

Electr

onic

Reco

rds

73%66%

48%

31%

9%

ix


● ● ● ● ●●

●●

●●

●●

●●

●●

●

■ ■ ■ ■■

■■

■■

■■

■■

■

■

■

■

2000 2002 2004 2006 2008 2010 2012 2014 2016

Given the challenging health care cost climate, which is expected to continue, benefi ts executives continue to look for new cost-management strategies and tactics.

Still LookingBenefi ts executives continue to look for innovative

cost-management strategies and tactics

“It’s time we began looking beyond our traditional means of controlling health costs.”

Fortune 500 Benefi ts Executive

“Benefi ts costs are slowing a little, but not enough. We need to do more.”

Global Benefi ts Director

“We must start thinking outside the box when proving employee health care.”

Fortune 100 Benefi ts Executive


x


Section IA Framework for Health Care

Cost-Containment Tactics

1

2 Health Care Cost-Containment Tactics

Two Tactic Groups

To address the primary drivers of health care costs, organizations should consider a broad range of potential tactics. The Roundtable separates traditional, more “proven” tactics from newer tactics that employers are using to control health care costs in their organizations.

Cost-Containment Tactics


NoteWhile multiple organizations are likely to have pursued each tactic, the following pages describe each tactic based on the experience of one or two of these organizations.

Newer, Innovative Tactics

• Tactics less commonly used by employers; implemented more recently

• Results from implementation experience may not yet be available; still experimental in nature

• Limited literature available for further review

Traditional Tactics

• Tactics used by many employers (though not all) to control and target specifi c areas of health care cost increases

• Proven results available from implementation experience (though for many the ability to quantify results is fairly recent)

• Literature and details available for further review

Section I: A Framework for Health Care Cost-Containment Tactics 3

Eight Key CategoriesRoundtable analysis places traditional and newer health care

cost-containment tactics into eight distinct categories

CommunicationThese tactics involve direct and indirect employee messaging by the employer or a third-party administrator. This communication may serve various purposes, including notifi cation of new plan changes and personalized health coaching.

Coverage RestrictionThese tactics involve limitations of employee or dependent coverage by the employer. These restrictions serve to reduce the amount of lives covered or levels of coverage that fall under the plan.

Vendor/Purchasing ManagementThese tactics involve the management and supervision of third-party vendors to which components of a health plan or program may be outsourced. The activities in this category involve vendor negotiations, purchasing concerns, quality mandates, and cost management.

Pricing and DesignThese tactics involve changes to the design or price of health plans and structures. Activities include specifi c plan design changes and fundamental structural changes to an overall health insurance scheme.

Employer-Driven Health ConstraintsThese tactics involve health behavior changes for an entire employee population. Behavioral mandates are usually unavoidable for employees.

Insourcing ServiceThese tactics involve delivering attributes of health care internally by the organization. Activities include the provision of on-site health care services that may have been previously outsourced.

Prospective TargetingThese tactics involve the collection and analysis of data for the purpose of providing preventive and targeted employee health care based on aggregate population data.

Voluntary Benefi ts OptionsThese tactics involve offering benefi ts that are supportive and supplemental to other benefi ts offerings (e.g., Health Savings Accounts).

$


8

7

6

5

4

3

2

1


Category Traditional Page Newer/Nontraditional Page

Communication • Self-Care Guide• General Disease Management

5974

• Online Rx Comparison Shopping• Showing True Cost• Harnessing Spousal Infl uence• Targeted Employee Education• Online Health Tools• Generic Drug Education• Constant Information Source• Early, Frequent Communication

1213141516171819

Coverage Restriction • Prior Authorization—Specifi c Drug Target

• Retiree Health Insurance

75

76

• Dependent Eligibility Audit• Alternate Enrollment

2021

Vendor/Purchasing Management

• Ensuring Hospital Quality• Hospital Quality Assurance• Coalition Purchasing• Claims Audits• Mandatory Mail-Order• Association-Sponsored

Plans (ASPs)

606162636475

• Virtual Company Doctor• Collaborate with Procurement• Vendor/Employee Performance

Initiatives• Direct Contracting with Medical

Professionals• Evidence-Based Health Care• Pharmacy Net-Cost Pricing• Specialty Drug Vendors

222324

25

262728

Pricing and Design • Smoker Surcharge• Dependent and Spouse Surcharge• Health Plan Consolidation• Self-Insured Model

65666768

• Doctors on Retainer• E-Prescriptions• From Co-Pay to Coinsurance• Salary-Tired Premiums• Doughnut-Hole Insurance• HRA-Tiered Premiums• Stop-Loss Coverage• Funded Family Accounts• Tiered Hospital Pricing• Defi ned Contribution Health Plans• Custom Health Plans

2930313233343536373839


$

Tactics by CategoryAll traditional and nontraditional tactics array


Category Traditional Page Newer/Nontraditional Page

Employer-Driven Health Constraints

• Drive Toward Consumerism• Limited Health Plan

7474

• Total Tobacco Ban• Healthier Vending Machines• Free (Healthy) Food• All-Inclusive Paid Time Off• Unavoidable Employee Exercise• Non-Smoker Hiring

404142434445

Insourcing Service • In-House Pharmacy• On-Site Pharmacy• On-Site Health Center• Beyond the Gym (On Site)

46474849

Prospective Targeting • Predictive Modeling• Preventive Health Incentive

6970

• One-on-One Coaching• Proactive Wellness• Optimize Care for Chronic Illness• “Broader” Disease Management

50515253

Voluntary Benefi ts Options • Supplemental Insurance Benefi t• Patient Advocacy Service• Nurse Advocacy Program

717273

• Health Savings Accounts• Free Medical Supplies

5455


and Groupagainst the eight cost-containment categories



Online Rx Comparison Shopping x

Showing True Cost x x x x

Harnessing Spousal Infl uence x x x

Targeted Employee Education x x x x

Online Health Tools x x x x

Generic Drug Education x

Constant Information Source x x x x

Early, Frequent Communication x x x x

Dependent Eligibility Audit x x x x x x x

Alternate Enrollment x x x x x x x

Virtual Company Doctor x x x

Collaborate with Procurement x x x x

Vendor/Employee Performance Initiatives x x x

Direct Contracting with Medical Professionals x x x x x

Evidence-Based Health Care x x

Pharmacy Net-Cost Pricing x

Specialty Drug Vendors x

Doctors on Retainer x x x x

E-Prescriptions x x

From Co-Pay to Coinsurance x x x

Salary-Tired Premiums

Doughnut-Hole Insurance x x x x x

Nontraditional Tactics Chronic

Dise

ase

Net Prem

iums

Legisla

tion

Hospital R

ooms

New Tec

hnology

Quality

Rx Drug

s

NontraditionalNewer and nontraditional

Nontraditional Tactics and the Drivers They Infl uence


Rx Drug

s

Quality

New Tec

hnology

Hospital

Rooms

Legisla

tion

Net Prem

iums

Chronic

Dise

ase

Nontraditional Tactics


Tactics’ Infl uencetactics address different drivers

HRA-Tiered Premiums x x x x

Stop-Loss Coverage x

Funded Family Accounts x x x x

Tiered Hospital Pricing x x

Defi ned Contribution Health Plans x x x x

Custom Health Plans x x x x x

Total Tobacco Ban x x

Healthier Vending Machines x x x

Free (Healthy) Food x x x

All-Inclusive Paid Time Off

Unavoidable Employee Exercise x x

Non-Smoker Hiring x x

In-House Pharmacy x x

On-Site Pharmacy x x

On-Site Health Center x x x x

Beyond the Gym (On Site) x x

One-on-One Coaching x x x x

Proactive Wellness x x x x

Optimize Care for Chronic Illness x x x x

“Broader” Disease Management x x x x

Health Savings Accounts x x x x

Free Medical Supplies x x x x

Nontraditional Tactics and the Drivers They Infl uence


Rx Drug

s

Quality

New Tec

hnology

Hospital

Rooms

Legisla

tion

Net Prem

iums

Chronic

Dise

ase

Traditional Tactics

Traditional Tactics’ Infl uenceTraditional tactics address different drivers to varying degrees


Traditional Tactics and the Drivers They Infl uence

Self-Care Guide x x x x

Ensuring Hospital Quality x x x x

Hospital Quality Assurance x x x x

Coalition Purchasing x x x x

Claims Audits x x x x x x x

Mandatory Mail-Order x

Smoker Surcharge x x x x

Dependent and Spouse Surcharge x

Health Plan Consolidation x

Self-Insured Model x

Predictive Modeling x x x x

Preventive Health Incentive x x x x

Supplemental Insurance Benefi t

Patient Advocacy Service

Nurse Advocacy Program x x x x

Drive Toward Consumerism x x x x

General Disease Management x x x x

Limited Health Plan

Retiree Health Insurance x x

Association-Sponsored Plans (ASPs) x

Prior Authorization—Specifi c Drug Target x

9

Section IINontraditional Tactics


Category Newer/Nontraditional Page


• Total Tobacco Ban• Healthier Vending Machines• Free (Healthy) Food• All-Inclusive Paid Time Off• Unavoidable Employee Exercise• Non-Smoker Hiring

404142434445

Insourcing Service • In-House Pharmacy• On-Site Pharmacy• On-Site Health Center• Beyond the Gym (On Site)

46474849

Prospective Targeting

• One-on-One Coaching• Proactive Wellness• Optimized Care for

Chronic Illness• “Broader” Disease Management

505152

53

Voluntary Benefi ts Options

• Health Savings Accounts• Free Medical Supplies

5455

Category Newer/Nontraditional Page

Communication • Online Rx Comparison Shopping• Showing True Cost• Harnessing Spousal Infl uence• Targeted Employee Education• Online Health Tools• Generic Drug Education• Constant Information Source• Early, Frequent Communication

1213141516171819

Coverage Restriction

• Dependent Eligibility Audit• Alternate Enrollment

2021


• Virtual Company Doctor• Collaborate with Procurement• Vendor/Employee Performance

Initiatives• Direct Contracting with Medical

Professionals• Evidence-Based Health Care• Pharmacy Net-Cost Pricing• Specialty Drug Vendors

222324

25

262728

Pricing and Design • Doctors on Retainer• E-Prescriptions• From Co-Pay to Coinsurance• Salary-Tired Premiums• Doughnut-Hole Insurance• HRA-Tiered Premiums• Stop-Loss Coverage• Funded Family Accounts• Tiered Hospital Pricing• Defi ned Contribution Health Plans• Custom Health Plans

2930313233343536373839

Nontraditional Tactics by Category


$

Section II: Nontraditional Tactics 11

Three Innovative TraitsNewer, innovative cost-containment tactics have at least

one of these three distinct qualities

“Unavoidable”

Employees cannot avoid the action and must consider the impact on their health plan selections or personal health decisions. At best, the tactic requires careful employee deliberation with regard to personal health care choices.

“Raises Eyebrows”

Employees are somewhat “shocked” by the action and may even question whether the policy is reasonable. At best, the strength of the tactic’s urgency captures employees’ attention to further inquire about health care issues.

“Demonstrates Value”

Employees plainly see how the tactic will benefi t them and the organization. At best, employees recognize how this tactic will help improve their health, control the price of health care, and help the broader organization.

Can they do that?

$/


The Roundtable’s analysis has revealed that newer, innovative cost-containment strategies have three common traits. They are typically unavoidable to employees, are likely to raise eyebrows among the employee population, and will demonstrate value for health care consumers. Each newer, innovative tactic displays at least one of these traits or more.


Online Rx Comparison ShoppingOnline price lists arm consumers with information to fi nd the best Rx deals

In order to save money on popular prescription drugs and encourage consumerism, employees are encouraged to explore online price lists. While only a handful of employers currently use online price lists for prescription drugs, anecdotal evidence suggests that these sites provide reliable savings. Success of an online price list is contingent upon the employee using these lists regularly to compare prices.

• Self-insured organizations may benefi t most from price comparisons

• Many drug price–comparison Web sites are available for free

• Price lists may encourage consumerism in health care consumption

• It is important to compare drug prices on even terms of dosage, shipping costs, generics, and brand names

• Price comparison may receive more uptake if employees face a coinsurance payment

• Current evidence suggests a savings of $75 per employee per year

• Savings can be up to 75% for select drugs

Source: Gonzales, Gloria, “Online Tools Promote Rx Comparison Shopping; Drug Price Web Sites Could Bring Employer Savings, Boos Consumerism,” Business Insurance, 8 November 2004; Ault, Alicia, “Rx: Read This; Comparison Shop for Pills? A New Tool Lets You,” 21 December 2004; Benefi ts Roundtable research.

Key Affected Drivers Results

Considerations

Location A Drug Y $50

Location B Drug Y $46

Location C Drug Y $62

Location D Drug Y $69

Online Price Lists

Employees can actively search for the lowest price for their prescriptions.

Driver Rank

• Prescription Drugs 1

• Chronic Disease 2

• Quality of Care 5

Communication

Examples

• http://www.pharmacychecker.com

• http://www.destinationrx.com

• http://www.price-rx.com

• http://www.medicare.gov


Showing True CostPosting prices of common procedures helps consumers

understand (and appreciate) true cost

To show health care consumers the true dollar value of common diagnoses, the state of Maine employs a price-posting brochure containing the average prices for the most common inpatient procedures, such as childbirth and stroke. This price list is part of a brochure that also contains a short article and FAQ on health care costs. The goal of the brochure is to help residents of Maine become more effi cient health care consumers while realizing the value of health care services and comparing different providers’ prices.

• Employer applications include

– Showing average price-lists adjacent to open enrollment materials

– Including an average price list on claim forms

• Plan enrollees can see the true value of the services they receive, and they are likely to appreciate them more and potentially make “wiser” decisions

Source: Author Unknown, “Statewide Average Inpatient Hospital Charges for 15 Most Common Diagnoses,” http://www.maine.gov/governor/baldacci/healthpolicy/reports/average (accessed 23 June 2005); Benefi ts Roundtable research.


Considerations

Choose Your Plan

T Plan A PPO

T Plan B HMO

T Plan C POS

Average Costs

Pregnancy $5,000

Stroke $25,000

ER —Asthma $1,600

Lipitor—30 Day $100

Doctor’s Visit $110

Employees can see the true costs of common medical claims.

Adjacent Enrollment and Cost Information

Communication

Driver Rank



• Hospital Rooms 5


Harnessing Spousal Infl uenceSpousal infl uence can impact employee health behaviors

In order to infl uence employee behavior through an effective source, Eastman Chemical creates targeted health communications for employee spouses, who in turn use the information to infl uence employee health care decisions. A bimonthly newsletter (which largely includes the same information communicated to employees) is mailed directly to the spouse regarding topics of health care strategy, health service specifi cs, and appropriate use. The newsletters help increase awareness of smart health care consumption and wellness and use health promotion services.

• Organizations will likely want to notify employees that communications are being sent directly to their partners/spouses

• May signifi cantly reduce costs through decreased overall use of health care

• This tactic tends to have more impact when the spouse is the key decision maker, whether employees are already getting communications at home or not

• Eastman Chemical employees receive reinforcement on key health care promotion messages from the most effective source outside the organization—the spouse

• Eastman Chemical employees and families display an increased use of wellness and health promotion services



Considerations

Spouse Employee

Communication

Driver Rank



• New Technology 6



Targeted Employee EducationMore informed health care decisions lower costs

To target select chronic diseases for cost reduction, Lowe’s institutes a program to teach employees who are suffering from chronic diseases how to better manage their conditions. The program aims to keep employees with chronic conditions out of the hospital by educating them about their conditions. As part of a broader disease management effort, since 2002, this Lowe’s program has been aimed at workers with diabetes and cardiovascular problems.

• Employee education will be better received when coming from an authoritative source*

• Employee education should be linked to an existing communication strategy

• 7% reduction in medical and drug costs for participants since program inception in 2002

Source: Author Unknown, “Health Costs: Good News At Last,” http://www.businessweek.com/magazine/content/05, 30 May 2005 (accessed 1 August 2005); Benefi ts Roundtable research.


Considerations

Targeted Disease Communication

Heart Disease Tips

Diabetes Tips

SmarterEmployees

=Medical and

Rx Drug Costs

7%

Communication

* See Roundtable Communication Effectiveness and Planning Tool (at www.benefi tsroundtable.com) for the most effective ways to communicate with employees.

Driver Rank






Online Health ToolsOnline health tools promote self-care, quality, and consumerism

In order to provide health care information and promote understanding and self-care among its employees, GE’s Web portal contains a proprietary prevention program called “Health by Numbers.” Introduced in 2004, Employees gain access to information relating to various health issues such as cigarette smoking, exercise, and healthy eating habits. The program also includes best practice treatment guidelines for specifi c conditions and diseases to help employees better manage their conditions. Future plans for the site include the addition of hospital/physician ratings and the ability to get a second opinion.

• Most third-party-administered health portals do not carry medical liability and often urge the patient, when reading the information, to seek professional medical attention

• Health portals may impose a fee schedule that refl ects the size of the subscribing organization

• Some health portals allow program customization to refl ect and support organizational branding efforts

• Positive feedback from employees across all business units

• More informed employee decisions

Source: Cross, Margaretann, “Big Companies Push for Better Online Tools,” Managed Care Magazine, 2 March 2005; Benefi ts Roundtable research.


Considerations

I want to eat healthier. How should I start?

Healthy Eating Habits

Employees can obtain best practice treatment information without a doctor visit.

Communication

Online Health Tools

• Web MD• Medscape

Health Portal Examples

Driver Rank






Brand/Generic Price Comparison

Generic Drug EducationNotifying employees of generic availability helps boost generic usage

To increase overall generic drug use, Verizon Communications began a program to notify its employees of generic drug availability. Employees scheduled to refi ll a brand name prescription are sent coupons and letters promoting purchase of the generic equivalent. These materials are sent via mail to employees who are just about to refi ll a prescription rather than to the entire employee population.

• $15 million to $20 million in projected savings

• Targeting those who are about to refi ll a prescription may increase the ROI for communications about generic drugs because employees’ perceptions are most infl uenced close to the time of making a decision

• Education about generic drugs can be placed on an internal organization Web site

Source: “Drivers of Health Care Costs, Pharmaceutical Cost Trends,” Pharmacy, September 2004; http://www.drugstore.com; Benefi ts Roundtable research.

Considerations

ResultsKey Affected Drivers

Communication

Prescription Drug Price AverageBrand Versus Generic

Drugs that have a generic equivalent can be obtained for 35% of the brand name cost.

Brand Generic

= 65%Drug Brand Generic

Celexa $72.99 $39.99

Prozac $121.42 $15.99

Mevacor $68.99 $36.99

Driver Rank



Constant Information SourceConstant personal sources help increase employee knowledge

To lower its quarter-billion-dollar health care cost expenditure and increase employee knowledge, 3M instituted two employee-facing initiatives. 3M HealthLink allows employees to access a confi dential 24-hour registered nurse who answers health care questions. In addition, the Health Dialog service gives employees access to confi dential health coaching. These initiatives, among others, encourage 3M employees to voice concerns about their health, obtain necessary assistance, and stay informed on health care issues.

• 11% of employees use offered services

• More informed employees

• Access to alternate or confi dential information sources may be integrated into an existing employee assistance program

• Employee information sources may also include information on the organization’s health plan coverage options

• Confi dentiality of individual inquiries, when relating to employees’ specifi c health conditions, must adhere to HIPAA regulations

Considerations

Source: 3M; 2005 H&P Rebate Site Manager Presentation; Benefi ts Roundtable research.


Communication

Information Sources

24-Hour Access to Nurse

Coach and Employee

Driver Rank






Early, Frequent CommunicationA series of early communications promotes CDHP enrollment

To offset double-digit HMO cost increases, Banta Corp. used a series of mailings to introduce their new CDHP offering. The communications entailed four mailings to employees’ homes, with each subsequent mailing containing more detailed information about the new offering. Banta also offered incentives to encourage attendance at educational meetings along with funded health savings accounts of $1,000/$1,500 for single/family coverage. Banta required active enrollment in January 2004, which encouraged employees to make a choice among their new health plan options.

• 65% CDHP enrollment

• $2.5 million expected savings

• 7–8% increase in costs versus 15% in previous years

• 37% of enrollees use online tools

• An active enrollment requirement (the absence of default enrollment) forces employees to participate in open enrollment if they want health care coverage

• Incentive for educational meeting attendance may include reduced premiums on health plans

Considerations

Source: Author Unknown, “Communication Is Key to Banta’s Successful CDHP,” Managing Benefi ts Plans, 1 March 2005; Benefi ts Roundtable research.


Communication

Driver Rank






Dependent Eligibility AuditAuditing dependents eliminates ineligible plan members

Example 1: As part of broader efforts to reduce health care costs for its employees and retirees, Ford Motor Company conducts regular health plan eligibility audits through which ineligible dependents are removed from Ford’s health plans. In addition, Ford employees found to have ineligible dependents are required to repay any premiums and claims incurred during the period of ineligibility. This repayment is achieved through a direct payroll deduction spread over 12 months of paychecks.

Example 2: To eliminate “freeloaders” from their suite of health plans, Delta Airlines required its employees to prove the health insurance eligibility of their dependents in 2004. Required documents included birth certifi cates, tax returns, and student grades. Delta hoped to save more than $13 million in 2005 and did not expect repayment from employees for erroneous enrollment.

• Eligibility audits may pose administrative challenges

• Coordination with health plan vendors may add additional challenges when conducting eligibility audits

• Employers may seek to recover lost money from employees as identifi ed through the audit

• Eligibility audits may cost $7,500 or more in total, depending on the organization’s size

• Ford

– 60,000 ineligible dependents removed to date

– 10% reduction in number of plan participants

– $17 million paid back to Ford from employees

• Delta

– Expected savings of $13 millionin 2005

Source: Wojcik, Joanne, “Employers Auditing Plans to Trim Ineligible Members; Delta Hopes Audit of Dependents Will Save It $13 Million,” Business Insurance, 19 July 2004; Hirschman, Carolyn, “Exams for Health Plans,” HR Magazine, 1 January 2005; Ford Motor Company; Benefi ts Roundtable research.


Considerations

Employee and Dependents Employee and Eligible Dependents

Eligibility Audit

($ Penalty)

Driver Rank



• Technology 7

• Net Premiums 14



Alternate EnrollmentEncourage enrollment outside company plan

In an effort to reduce the number of participants in its health plans and ensure accurate levels of employee coverage, Chi Corporation* offers its employees $600 to enroll in a spouse’s plan with another company. The $600 is prorated and distributed evenly across paychecks throughout the plan year. Chi Corporation encourages this option only when the spouse’s plan better meets an employee’s needs.

• Signifi cant decrease in health care costs

• Encouraging enrollment in other organizations’ health plans may be met with restrictions from these organizations

• A fi nancial incentive may be needed to encourage enrollment in other organization’s plans

• Dependent eligibility restrictions may complement this alternate enrollment scheme

Considerations

* Pseudonym. Source: Chi Corporation; Mellon’s National Health Care Trend Survey 2005, 31 March 2005; Benefi ts Roundtable research.



• Fewer people in a health plan reduces overall use of health care and therefore affects all drivers

Potential Alternate Enrollment Savings

$3,400Savings if employee enrolls in another company’s plan

$4,000Average health care cost per employee

in 2005

$600Encourage enrollment

in a plan outside the company


Virtual Company DoctorDoctors diagnose patients via voice, data, and video connections

To fulfi ll the need for low-cost children’s medical care in Rochester, N.Y., several child-care centers employed a “telemedicine” program that allows doctors to see children for common illnesses and diagnoses via live, remote connections for less money than a regular offi ce visit. A staff member at each location is trained to operate basic medical equipment such as a stethoscope. This telemedicine network currently serves 8,500 children and is being expanded into public schools. In a corporate setting, employers can provide low-cost, convenient doctor visits by using telemedicine (on site).

• Staff members at a telemedicine site must be trained to use various medical equipment

• Diagnoses may be less accurate due to insuffi cient data connections or on-site staff error

• From an employer’s view, this tactic is better for organizations that have many employees concentrated in a small number of locations

• Sickness-related child absence decreased 63%

• 92% of parents were able to remain at work longer

Source: Author Unknown, “Virtual Doctor Makes Day Care Calls,” http://www.cnn.com/2005/HEALTH/parenting/05/05(accessed 5 May 2005); Ozols, Jennifer, “A Job Or A Cigarette?” Newsweek Magazine Web Exclusive, 24 February 2005; Benefi ts Roundtable research.


Considerations

DAY CARE Doctor’s Office

Child Absence Down

Parent Works Longer

New York, N.Y.—Employer Rochester, N.Y.—Doctor

Virtual Doctor Illustration


Driver Rank





Collaborate with ProcurementProcurement strategies help negotiations with health plan vendors

In order to harness the negotiating expertise of their procurement team, the benefi ts personnel of Rhodia, a specialty chemical company, collaborated with its purchasing personnel to more effectively manage health plan supplier negotiations. The purchasing experts emphasized supplier scorecards and the management of ongoing supplier expectations. Benefi ts personnel then applied these proven purchasing principals to health plan purchasing. During this process, Rhodia established limitations for each executive’s scope of infl uence.

• An intermediary may be used between the two main executives involved in the collaboration

• Concepts from procurement may not directly translate into a benefi ts-buying process but can provide a sound purchasing framework

• Millions of dollars in savings

• More effective vendor negotiations

Source: Lee, Karen, “Benefi ts and Procurement Collaborate to Corral Costs,” Employee Benefi ts News, 15 June 2005; Benefi ts Roundtable research.


Considerations

Procurement Scorecard

Health Plan Purchasing Scorecard

$ savings

Benefi ts/Procurement Collaboration and Learning


Driver Rank




• Net Premiums 14


Vendor/Employee Performance InitiativesPerformance targets for vendors create incentives for better outcomes

In order to promote better medical care outcomes from vendors and medical professionals, General Electric launched the Bridges To Excellence program, which rewards top performers a potential $10,000 per year (on average). The program assumes that an 8–10% local population participation, including employees, creates a patient base that is large enough to measure outcomes across various procedures and illnesses. Performance measurements involve tracking outcomes of cancer screenings, immunizations, and care for chronic illnesses such as diabetes, depression, asthma, and cardiovascular diseases. The Bridges To Excellence test market included Boston, Cincinnati, and upstate New York.

• Quantitative performance targets may be absolute or relative measurements, based on available data

• Qualitative targets may be less measurable and easier to achieve for providers

• A predetermined methodology, such as a composite scoring approach or incentive models, may be used to measure overall provider performance

• Organizations may use third-party collection and analysis of performance data

• A study in one of the four markets found that the average annual cost to treat a person with diabetes was 15% lower for doctors who participated in the program

Source: “Provider Incentive Models for Improving Quality of Care,” National Health Care Purchasing Institute, Bailit Health Purchasing, March 2002; Cunningham, Robert, “Professionalism Reconsidered: Physician Payment in a Small-Practice Environment,” Health Affairs, December 2004; Benefi ts Roundtable research.


Considerations

Treatment

$

Good Outcomes

• Cash incentive for doctor/hospital

• Repeat business for doctor/hospital

• Potential employer volume discounts

• Quality control achieved

Poor Outcomes

• Poor quality

• Further medical costs

• Employee dissatisfaction


Driver Rank





Direct Contracting with Medical Professionals

Direct contracting allows cost savings and enhances employer–doctor relationships

In order to reduce escalating health care costs, particularly with regard to doctor visits, Purdue Farms contracts directly with 60 hospitals and 5,000 doctors for the care of 45,000 employees and dependents. Direct contracting enables Purdue to resolve diffi culties more effi ciently and gives Purdue more bargaining clout when negotiating contracts in specifi c geographic areas where their employee population is suffi ciently large.

• Direct contracting allows employers to build more customization into their health plan with customized co-pays or fees

• Direct contracting fosters better relationships between the employers and medical professionals

• Employees may not be satisfi ed with doctor selection in the negotiated network

• Overall decrease in health care costs, 20% below meat/poultry industry average following a period where they were increasing at roughly 18% per year

• Favorable negotiating leverage

Source: Ceniceros, Roberto, “Direct Contracting Helps Rural Employers Wield Clout,” Business Insurance, 28 February 2005; Author Unknown, “When Is Direct Contracting a Viable Cost-Control Tool?” Managing Benefi ts Plans, 1 June 2005; Benefi ts Roundtable research.


Considerations

Purdue

PurdueContract

PurdueContract


Driver Rank





• Net Premiums 14


Evidence-Based Health CareImprove quality with data-driven diagnoses and predictions

In order to study the effects of physicians who practice in accordance with evidence-based guidelines, Vanderbilt University Medical Center used input from 89 health plans that covered 78 million lives. Results indicate that evidence-based care can improve quality of care and take hold with the use of physician incentives and self-guided care. Health plans may also start using evidence-based guidelines as a central element for consideration. Organizations may have an opportunity to discuss this with their health provider and incorporate the use of such guidelines in the treatment of employees.

• Evidence-based care requires population health data, which can double as predictive modeling data

• Higher quality health care, which should reduce cost over time

Source: Galambos, Colleen, “Evidence-Based Practices in Health Care: Social Work Possibilities,” Health & Social Work, 1 November 2004; Author Unknown, “Study: Health Plan Focus on Evidence-Based Care,” Healthcare Financial Management, 1 August 2004; Benefi ts Roundtable research.

Key Affected Drivers Potential Results

Considerations


* Evidence-based care is a quality-improvement strategy using best practices in diagnoses and treatment.

For this demographic group, evidence shows that Method B is best.

Evidence-Based Averages

Driver Rank



Diagnoses Treatments Effectiveness—Demographic Group

Effectiveness—National Average

• High cholesterol Method A 91% 96%

• Chronic fatigue Method B 95% 89%

Method C 86% 86%

Method D 79% 78%


Pharmacy Net-Cost PricingValued-based formularies save money for employees

In order to control prescription drug costs for employees, employers are making employee drug use more effi cient by switching to value-based formularies. Value-based formularies ensure the most appropriate drugs at the lowest net cost are used and are based on identifying the most cost-effective, clinically proven drugs that deliver valuable outcomes are used. This model ensures the lowest overall net drug spend. Value-based formularies require a full disclosure fi nancial agreement with the drug supplier.

• Identifi cation of drugs that possess the highest value for an employee population may require claims analysis and research on specifi c drugs

• Full fi nancial disclosure from prescription drug suppliers may be diffi cult to obtain

• Net drug spend calculations may include administrative fees

• Lower overall prescription drug price

• Effi cient use of clinically appropriate prescription drugs

Source: McCauley, Ann, “HealthTrans Signs Five-Year Contract to Provide Medicare Part D Pharmacy Services,” Business Wire, 9 June 2005; Lettrich, Phillip, “Meeting Employees’ Pharmacy Needs and Managing Costs Using Value-Based Formularies,” Employee Benefi t Plan Review, 1 April 2005; Benefi ts Roundtable research.


Considerations

Drug List

Lipitor

Pravachol

Vytorin

Lunesta

Ambien

Zoloft

Celebrex

Paxil

Levitra

Viagra


Net-Cost Pricing

1. Identify the most clinically effective drugs

2. Obtain higher volumes of chosen drugs

3. Negotiate net-cost pricing

Driver Rank



Specialty Drug VendorsMatching specialty drugs with specialty drug vendors can cut plan costs

To reduce the expenditures on specialty drugs, employers are seeking to purchase specialty drugs from specialty vendors. While 5% of a population may have an illness requiring a specialty drug, those specialty drugs may account for 25% of drug expenditure. Carving out these specialty drug benefi ts from current plans in favor of specialty vendors can provide better value with lower prices. Conditions that require specialty drugs include hemophilia, severe arthritis, and cancer.

• An organization’s current PBM may offer specialty drugs as part of a package offering

• Purchasing coalitions may be more effective in the specialty drug market due to the low relative volume of specialty drug sales

• Lower specialty drug costs

• Higher employee satisfaction

Source: Brandle, Sean, “Special Delivery: The Impact of Specialty Drugs on Benefi t Plan Costs,” Workspan, 1 March 2005; Benefi ts Roundtable research.


Considerations

Prescription Drug Benefi ts


Driver Rank


Specialty Drug Carve-Out

Rx SpecialtySpecialty drugs can account for 25% of drug expenditures.

Crestor Effexor

Zocor Neurontin

Cialis Lortab

Vioxx Fosamax

Oxycontin Prilosec

Valium Xanax

Lexapro Concerta

Compath Ethyol

Casodex Purinethol

95% of drugs are common prescriptions

Separate specialty drug contract to a specialty vendor

5% of prescriptions require specialty drugs


Doctors on RetainerMaintaining doctors on retainer enhances delivery of care

To improve the quality of preventive medicine, some employers turn to retainer medicine, also known as concierge or boutique medicine. Doctors on retainer are personal, on-call doctors dedicated to only a few patients, offering lower patient-to-physician ratios, better coordination with specialists, house calls, and hospital advocacy. Retainer physicians can charge up to $250 per month per person and may be suitable for higher-income employees’ benefi t offerings or for employees with serious health conditions.

• Higher quality of care through personal attention

• Reduced hospital visits through house calls

• Reduced long-term expenditure on chronic diseases and prescription drugs

• Most retainer medicine plans charge for additional care but not additional access

• Retainer physicians may not control patients’ access to outside medical services and facilities

• Retainer medicine physicians may not be covered through a health plan network

Considerations

Source: Allen, Russ, “Doctors on Retainer Catch On,” Risk & Insurance, March 2005, http://www.ifebp.org (accessed 2 August 2005); Benefi ts Roundtable research.


Pricing and Design

Doctor on Retainer

Driver Rank





House Call Few Patients—Personal Attention

Specialist Coordination


Source: Anderson, Tom, “Automakers Test Drive E-Prescribing,” Employee Benefi ts News, March 2005; Benefi ts Roundtable research.

E-PrescriptionsElectronic prescriptions prevent errors and promote generic drugs

To reign in the cost of prescription drugs and reduce paperwork errors, General Motors Corporation, Ford Motor Company, and Daimler Chrysler AG are working with Medco Health Solutions to promote the use of an electronic prescription system. An electronic system would reduce errors in pharmacy dispensation of prescriptions and alleviate billing errors. Currently, given the program’s early stage, only 4% of physicians use electronic prescriptions.

Studies Show

• E-prescriptions would prevent two million prescription errors per year

• E-prescriptions increased generic drug usage by 8%

• E-prescriptions reduced pharmacist-to-physician phone calls by 42%

• E-prescriptions may require additional IT investment from third-party administrators

• Employee access to e-prescriptions may require new Web-based programs with personalized, secure portals

• E-prescription programs may be able to capture claims data for prospective modeling purposes

Considerations


Pricing and Design

Electronic Prescriptions

Doctor uses e-prescription

program

Patient receives correct prescription

at pharmacy

Driver Rank




From Co-Pay to CoinsuranceA switch from co-pay to coinsurance shifts the burden of responsibility and cost

To offset the burden of prescription drug costs, Starwood Hotels and Resorts eliminated its three-tier co-pay structure and moved to a coinsurance model in 2004. This model requires employees to pay 25% of generic and 35% of brand name drug costs. Starwood uses reference pricing on several therapeutic classes of drugs. When the cost of a prescription is below the reference price, the coinsurance adheres to the aforementioned percentages. When above the reference price, the employee incurs additional out-of-pocket expense.

• A co-pay-to-coinsurance scheme can also be applied to doctor- and hospital-related costs for certain types of visits or treatments

• Determination of therapeutic drug class reference prices may be infl uenced by PBM discounts or negotiations with drug suppliers. It may also be infl uenced by predictive modeling as part of a disease management program after identifying key cost-driving conditions

• Increased employee awareness of true price of prescription drugs

• Better employee assessments of the value of generic versus brand name prescriptions

Source: Elswick, Jill, “U.S. Employers Embrace European Rx Model,” Employee Benefi ts News, 1 May 2005; Elswick, Jill, “More Prescription Drug Plans Try Coinsurance,” Employee Benefi t News, 1 February 2005; Benefi ts Roundtable research.


Considerations

Driver Rank




Employee Cost Employer Cost

Co-Pay

Coinsurance

Amount of Health Care

$

Co-Pay

Coinsurance

Amount of Health Care

$

Under a coinsurance system, both employee and employer face a constant percentage of total costs; each bear moderate risk for high costs.

Pricing and Design

Under a co-pay system, the employee faces predictable costs at no risk, and the employer pays a higher percentage of costs and has more risk of potentially incurring high costs.


Salary-Tiered PremiumsEmployee premiums refl ect salary level

To ease the health premium burden on employees with low salaries, Wachovia began a salary-tiered pricing system for health insurance premiums in 2005. Four salary tiers, ranging from less than $30,000 to more than $100,000, saw premiums rise 17–40%.

• Across organizations, 18% of employers have some form of salary-based health insurance premiums

• Employer must guard against excessive premium raises from one tier to another; care must also be taken to ensure that employees do not “take home” less money than before when moving into the lower end of a higher salary tier

• There must be enough employees in the high-paying tier to absorb the reduced premiums for those in the lower tiers

• Some organizations allocate as much as 80% of the total premiums to their high-paid executives

• Positive feedback from many employees

• Lower-salary employees spend a lower percentage of their income on premiums

Source: Carlson, Leah, “Employers Tier Heath Benefi ts by Salary: Helping Low-Income Workers Afford Health Coverage,” Employee Benefi ts News, March 2005, http://www.benefi tnews.com/pfv.cfm?id=7245 (accessed 21 June 2005); Rothacker, Rick, “Wachovia Turns to New Benefi ts Pricing Systems for Employees,” The Charlotte Observer, 11 November 2004; Hammers, Maryanne, “Sliding-Scale Plans Seeing a Renaissance,” Workforce Management, January 2005, http://www.workforce.com/archive/article/23/91/76.php (accessed 21 June 2005); Benefi ts Roundtable research.

* Illustrative insurance premium levels.


Considerations

High-rate payers must fully compensate for low-rate payers

Wachovia Salary Tiers

Pricing and Design

• Through salary-tiered premiums, existing costs are reallocated among employees (overall costs are unlikely to decrease)

Salary BandMonthly Premium—Single*

Pre-Tiering Post-Tiering

< $30,000 $50 $45

$30,000—$49,000 $50 $55

$50,000—$100,000 $50 $75

$100,000+ $50 $100


Doughnut-Hole Insurance Intentional coverage gaps promote preventive medicine and encourage consumerism

In order to promote preventive care and encourage consumerism among employees, employers are considering doughnut-hole insurance to provide more targeted coverage. A typical scheme includes complete coverage up to a nominal dollar amount after which there is a “hole” of little or no coverage. After that “hole,” however, coverage resumes. This tactic maintains coverage for routine and preventive medicine as well as catastrophic illness but forces employees to carefully consume health care between those extremes. This tactic is employed in the Medicare Part D Prescription Drug Coverage.

• Although doughnut-hole insurance may be actuarially equivalent to a high-deductible plan, it poses more risk to plan participants

• In order to maximize cost savings for self-funded plans, the mean annual expenditure of plan participants may be placed in the middle of the “hole”

• The doughnut hole may be used for specifi c procedures or illnesses

• A large hole in coverage may discourage plan participants from seeking necessary short-term treatment, causing an increase in long-term costs for certain procedures

• Generally, a doughnut-hole tactic ensures that a maximum number of plan participants see a tangible point-of-service benefi t by covering initial and preventive expenditures at or near 100% coverage

• Reduction in overall costs

• Increase in employees’ consumerism orientation

Source: Perry, Nick, “Doughnut Health Insurance Reigns in Costs,” The Seattle Times, 4 April 2005; Perry, Nick, “Health Care with Hole,” Calgary Herald, 4 April 2005; Benefi ts Roundtable research.


Considerations

Example of Doughnut-Hole Plan

100% 0%

100% Coverage• Preventive medicine• Prescription drugs• Hospital cost

No Coverage• The “hole”

$1,200$600

30% Employee PaidEmployer pays 70% of medical costs beyond $1,200

Pricing and Design

Driver Rank





• Net Premiums 14

Impact on Employee Coverage

70%/30%


HRA-Tiered PremiumsTiered health insurance premiums provide rewards

for individual health care responsibility

In order to gather population risk data, more effectively target at-risk populations, and motivate employees to engage in healthier behaviors, King County in Washington state will require its employees to divulge their height, weight, dietary habits, exercise levels, and other information regarding personal health through a health assessment. Those who complete the assessment will be grouped into three insurance premium levels, with each level having a different premium.

• Incentives may be needed to encourage participation in a health risk assessment

• Assessments that rely on the honor system may be relatively less accurate

• To be determined, but expected to achieve employee segmentation for targeted health promotion

• Penalties/incentives are expected to cost employees hundreds of dollars per year

Source: Author Unknown, “King County to Raise Insurance Cost for Unhealthy Workers,” The Columbian, 9 June 2005; Author Unknown, “Health-Conscious Workers May Get Break, Sims Says,” The Seattle Times, 22 March 2005; Benefi ts Roundtable research.


Considerations

Health Risk Assessment

T Heart Rate

T Blood Pressure

T Dietary Habits

T Exercise Habits

Premium

Did Not Complete $100/$300

High-Risk Result $100/$300

Moderate-Risk Result $75/$300

Low-Risk Result $50/$300

Pricing and Design

Driver Rank





Motivate employees to

move from high risk to

low risk


Stop-Loss CoverageStop-loss coverage protects against catastrophic expenses

In order to minimize the risk of potential catastrophic health expenses in a self-funded health plan, some employers purchase stop-loss coverage for any health expenses that exceed a certain level. Specifi c and aggregate coverage can protect the employer from individual catastrophic claims as well as aggregate costs that run over budget. The cost of stop-loss insurance depends on the number of employees and the amount of protection purchased.

• Choosing the correct level of stop-loss insurance may require predictive modeling of the employee population

• Individual claim stop-loss insurance covers an employee’s claim after exceeding a predetermined amount

• Aggregate stop-loss insurance covers the fi rmwide health care costs after exceeding a certain amount

Source: Sosnin, Betty, “Getting Personal,” HR Magazine, June 2005; Benefi ts Roundtable research.


Considerations

Stop-Loss Illustration

Cost ofHealth Care

($)Unlimited Risk

Pricing and Design

Driver Rank

• Net Premiums 14

• Limit potential catastrophic costs

Potential cost with stop-loss coverage

Potential cost without stop-loss coverage

Deductible• Employee paid

Self-Insured Design• Employer-/employee-

paid combination


Funded Family AccountsFamily accounts help employees budget health care spend

In response to double-digit health care cost increases, Oshkosh Truck Corporation introduced a pilot program with a two-prong approach. Under a new consumer-driven health plan, all preventive tests are fully covered. Workers and their families also receive a $1,000 annual health care expense account. Beyond this account, workers are fully responsible for the next $1,500 of medical expenses, and the company pays for 90% of expenses after that. Any unspent portion of the employee account can be rolled into the next plan year.

• Preventive tests may include preventive measures for costly diseases such as cancer

• The coverage gap is intended to discourage irresponsible health spending while ensuring coverage for serious illness

• This tactic is similar to a “doughnut-hole” insurance approach as it leaves employees with an area of little or no coverage

• Preliminary results indicate health care costs are rising in the high single digits, less than the double-digit increases of the company’s recent past

Source: Author Unknown, “Health Costs: Good News at Last,” http://www.businessweek.com/magazine/content/05, 30 May 2005 (accessed 1 August 2005); Benefi ts Roundtable research.


Considerations

$1,000+

Preventive

$200+

$1,000Preventive

=$800Medical

Expenses−

Year 1 Year 2

Pricing and Design

Driver Rank






Tiered Hospital PricingCreating hospital tiers drives effi ciency and quality in health care

In a system similar to tiered prescription-drug allocation and pricing, Boeing separated its hospitals into quality-based tiers and simultaneously addressed hospital costs as well as quality concerns. Employees are given fi nancial incentives to select hospitals in the high-quality tier, giving higher-quality hospitals a larger market share of the Boeing employee population. Employees choosing quality-compliant hospitals receive a 100% initial benefi t for a hospital stay, and the plan is administered through a self-funded PPO arrangement.

• Quality-compliant hospitals should be as physically accessible to employees, in terms of location, as noncompliant hospitals

• Determination of quality metrics may involve vendors, hospitals, and quality assurance organizations

• Physicians may also be separated into quality tiers in the same manner

• Savings from better patient outcomes for Boeing employees

• Boeing employees know what to expect in terms of care and treatment

Source: Adler, David, “Pilot Program Underway: Hospital Tiering at Boeing Shows Promise,” Employee Benefi t News, May 2005; Benefi ts Roundtable research.


Considerations

Tier 3

Tier 2

Tier 1

Pricing and Design

Driver Rank

• Quality 5


Hospital Price Tiers

High Co-Pay or Coinsurance

Coinsurance

100% Benefi t• In Network• Quality Compliant

• In Network• Non–Quality Compliant

• Out of Network


Defi ned Contribution Health PlansEmployee accounts promote responsibility in health care consumption

In order to reduce the fi nancial burden of health care costs on the employer, companies such as IBM, Carlson, Xerox, and Ingersoll-Rand implement a defi ned-contribution health plan that shifts some costs to employees. The employer places an annual fi xed amount of money into a health care account, such as a health savings account. Employees can allocate and use these funds toward health care purposes, promoting employee responsibility for allocating money toward health care expenditures. After exhausting the funds, the organization’s insurance plan may become active or move to a different scheme.

• To ensure the employer does not lose money on this model, the amount of money placed into employee accounts may be lower than an employee’s average annual spending

• Employees may supplement their health care account with out-of-pocket funds or payroll deductions

• Supplement insurance offerings may complement the defi ned-contribution health plan model

• Heightened employee awareness of health care costs and allocation

• Lower overall health care costs for the employer

Source: Walker, Vivette, “Keep Your Eyes on Defi ned Contribution Plans,” Nursing Management, 1 September 2004; Benefi ts Roundtable research.


Considerations

$Deposit Expensed

Doctor visit

Lab tests

Hospital stay

Surgery

Employee Health Care Costs

Employee Health Savings AccountEmployer

Funds Used

Funds Exhausted:

Coinsurance Applies

Pricing and Design

Driver Rank

• Rx Drugs 1





Custom Health PlansOnline tools allow employees to choose levels of coverage

To customize health care coverage for employees, Dell computers adopted a health plan enrollment that allows workers to custom design their co-pays, deductibles, drug coverage, and out-of-pocket maximums. For example, employees can choose deductibles ranging from $300 to $2,500. Using online registration tools, employees can view how their choices would affect their monthly premiums. Typically, there is a 30% price difference between the most and least robust offerings.


• Overall savings due to customized coverage; employees will presumably choose only the amount of coverage they feel they need

• Custom health plans provide employees the fl exibility to choose the coverage attributes most important to them

• Custom health plans force employees to consider their potential health care consumption, thereby encouraging consumerism

• Online registration for custom health plans may require an initial investment in Web site development and plan design options

Considerations

Plan Attribute Menu• Deductible

– $100– $250– $500– $1,000– $2,000

• Co-Pay/Coinsurance – $15,10%– $20,15%– $40,20%– $50,30%


Pricing and Design


Driver Rank

• Rx Drugs 1




• Employees choose their levels of coverage.

• The monthly premium is adjusted accordingly.


Total Tobacco BanBan smoking at home and in the workplace

In response to company smokers’ health care costs rising well above the average, Weyco, Inc., a small Michigan-based health benefi ts management company, banned employee smoking at home and in the workplace, effective January 2005. Enforced through urine tests, employees must make a trade-off between their job and cigarettes. If employees fail the test, employment is terminated. Weyco moved toward a total tobacco ban by fi rst implementing a health care premium smoker surcharge and sponsoring smoking cessation programs.

Employee Tobacco Test

FailedTest

Pending

LeftCompany

74%Quit

Smoking

Opportunity for Cost Reduction

• Some states prevent tobacco-based discrimination

• Employees’ union status may prevent the implementation of this tactic

• Drafting a total tobacco ban policy may require legal assistance

• 74% stopped smoking

Source: Shultz, Marisa, et al., “Workers Fume As Firms Ban Smoking,” The Detroit News, 1 May 2005, http://www.detnews.com/2005/health (accessed 13 May 2005); Benefi ts Roundtable research.


Considerations

Driver Rank




Statistics on SmokingAdditional Health Cost per Smoker

$1,600

Economic Cost per Smoker$3,400

Smoking-Related lllness/Chronic$75 Billion

National Economic Cost$157 Billion


Healthier Vending MachinesHealthier food in vending machines encourages healthy eating habits

To help encourage healthy behaviors and reduce chronic illness, American Standard replaced 15% of its vending machine foods in 291 machines with low-calorie, low-fat options. Requirements for the healthier items include a limit of 260 calories and seven grams of fat. American Standard is considering future replacements that include fresh or canned fruit, nuts, water, and skim milk. Company snack machines are separate from commercial snack machines, which contain the relatively unhealthier options.

• Some organizations use color-coding to signify healthy and unhealthy foods in vending machines

• Some organizations price unhealthy foods higher, which subsidizes lower prices for healthy foods

• Employee recognition of new options

• More convenient healthy food source for employees

Nutritional Standards for Healthy Vending Programs

Beverages Foods

• Water • Maximum 35% calories from fat

• Coffee/tea • Maximum 10% calories from saturated fat

• Reduced fat milk • Little or no trans fat

• 100% fruit juice • Maximum 35% weight from sugar

• Non-caloric beverages (diet drinks) • Low sodium


Considerations

Source: Anderson, Tom, “New Breed of Vending Machines Encourage Healthier Snacking,” Employee Benefi t News, 1 June 2005, http://www.benefi tnews.com/health (accessed 20 June 2005); Gerencher, Kristen, “Healthful Vending Machine Items Help Productivity,” Bradenton Herald, 22 August 2004; Muller, Mark, “Color-Coding to Lend a Touch of Health to Vending Machine,” Star-Ledger Staff, 14 January 2005; Benefi ts Roundtable research.

Driver Rank






Free (Healthy) FoodEmployer-provided healthy food encourages healthy eating

To encourage healthy behaviors among its employees, Computer Electronics Association provides daily distribution of fresh fruit to all employees. This fruit is part of a larger wellness program encompassing nutritional counseling, strength training, and an in-house exercise room.

• This tactic should be incorporated into a broader health promotion program

• 6% annual increase in health care premiums over the past four years

• Attraction of top talent (based on a broader wellness program)

Source: Porter, Margo Vanover, “Wellness at Work,” Association Management, 57, no. 4 (April 2005); Benefi ts Roundtable research.


Considerations

Healthy Behaviors

H

HH

H

J J J J

H Employer Premium (National)

J CEA Premium

Employer Health Care Cost IncreasesPercentage

15.0%

7.5%

2001 2002 2003 2004

10.9

12.913.9

11.2

6 6 6 6

Distribution of Fruit

Year


Driver Rank




0.0%


All-Inclusive Paid Time OffCombine vacation, sick, and personal days to encourage responsibility

To encourage employees to more prudently allocate their sick and vacation days, Inova Health System implemented a paid-time-off policy fi ve years ago, giving employees 23 days off per year in their PTO bank. The bank grows with employee tenure and offers a 10-day extension in the event of extended illness. Inova also uses this system to remain competitive with other area hospitals.

• PTO banks are fl exible for employers to include or exclude types of time off

• PTO banks may encourage “presenteeism” when employees work when ill in order to conserve their paid time off

• Employers may offer the option to buy, sell, or donate paid time off

• 70% reduction in unscheduled sick days

• Saved money on fewer part-time replacement workers

Source: Anderson, Tania, “Firms Scrap Vacation, Sick Days for Paid Time Off,” Business First, 5 April 2005, http://www.bizjournals.com/columbus/stories/2004/04/18 (accessed 1 August 2005); Benefi ts Roundtable research.


Considerations


• No health care cost drivers are directly impacted. However, positive outcomes include

– Productivity of employees– Predictability of employee absence


Unavoidable Employee ExerciseCompany campus and building designs force employees into exercise

To incorporate more exercise into employees’ daily routines, Sprint placed its buildings a half mile away from the nearest parking lot. In addition, its building elevators run excessively slow to encourage employees to take the stairs, and there are no roads on the 240-acre campus, forcing employees to walk between buildings. Covered walkways link all 21 buildings and the conference rooms and cafeterias are spread across the campus.

• Higher productivity

• Lower absenteeism

• “ Ninety-nine percent of employees are fi ne with it.” – Sprint Vice President

• Employers should provide alternate methods of intracampus transport for disabled and injured employees

Source: Author Unknown, “Health Considered in Companies’ Building Designs,” http://www.cnn.com, 27 July 2004 (accessed 2 August 2005); Benefi ts Roundtable research.

Considerations

50 yards

100 yards

100 yards

CAFE



Corporate Campus SpreadIllustrative

Building A

Building B

Cafeteria

Driver Rank



Most employees cannot avoid the extra exercise a large campus requires.


Non-Smoker HiringHiring only non-smokers prevents smoking costs

To prevent smokers from contributing to health care cost increases and after realizing that new hire smoking rates were higher than those in their existing population, Union Pacifi c started refraining from hiring smokers. There is a question on the job application that asks about smoking and must be answered—smokers are identifi ed based on the honor system. This hiring ban is applied by Union Pacifi c in states that allow tobacco-based discrimination and in which the applicant pools are suffi ciently deep.

• Percentage of smokers in workforce fell to 27% from 40% over 13 years

• 35% reduction in smoking-related health care claims over 11 years

• Increased productivity

• Some states prevent tobacco-based discrimination

• Employers should make any non-smoking requirement clear to applicants

Source: Gunn, Eileen, “No Ifs Ands or Butts: Smokers Need Not Apply,” CareerJournal, 14 December 2004; Benefi ts Roundtable research.

Considerations



Driver Rank




In-House PharmacyIn-house pharmacies push generic drug sales and lower overall drug costs

In order to stem rising pharmacy costs and provide more convenience, Caesars Entertainment, Inc., opened a work-site pharmacy to dispense generic drugs at no charge to about 8,000 employees and dependents. Caesars offers a two- and three-tier drug program with lower or no co-pays for generic drugs, and the company waives the co-pay for prescriptions fi lled at the on-site pharmacy. With implementation time under one year, Caesars negotiates directly with PBMs to reduce generic purchase expenditures.

• An in-house pharmacy may be most benefi cial for organizations with many employees concentrated in few locations

• Aggressive negotiations with a PBM are required to obtain large discounts on generic drugs; alternatively, with suffi cient volume, an organization may choose to buy drugs directly from a wholesaler

• The break-even point for an in-house pharmacy is close to 30,000 prescriptions per year

• With an average person fi lling 15 prescriptions per year (including recurring prescriptions), roughly 2,000 people need to use the pharmacy for it to break even

• 46% reduction in generic drug costs

• Increased employee productivity

Source: Roberts, Sally, “Caesars Betting On-Site Pharmacy Will Yield Savings,” Business Insurance, 3 May 2004, http://www.workforce.com/archive/article/23/72/80.php (accessed 15 June 2005); Benefi ts Roundtable research.


Considerations

Offi ce In-House Pharmacy Retail Pharmacy

$0 Co-Pay $25 Co-Pay

= ≠

Insourcing Service

Driver Rank




On-Site Pharmacy*

On-site pharmacies provide convenience and lower prescription drug costs

In order to stem rising health care costs and increase convenience in obtaining prescription drugs, Toyota Motor Manufacturing plans to place a licensed pharmacy inside their plant in Gibson County, Ind. in the fall of 2005. This on-site pharmacy, operated by a third-party administrator, will provide some prescriptions at one-third the present cost while also selling over-the-counter medicine. It is one of several on-site pharmacies already in use by Toyota in various locations, collectively serving 14,000 employees and dependents.

• An on-site pharmacy may be most benefi cial for self-insured organizations that generate at least 15,000 prescriptions per year

• 66% reduction in some prescription costs

• Increased productivity due to convenient access to prescriptions

• Toyota hopes to achieve the following prescription fi ll allocation:

– 40% through on-site pharmacies

– 35% through mail-order pharmacies

– 25% through retail pharmacies

Source: Alexander, Antoinette, “Toyota Revs Up On-Site Pharmacy, Bucking Local Indies,” Drug Store News, 2 May 2005; Raithel, Tom, “On-Site Pharmacy Serves Employees at Toyota,” The Evansville Courier, 22 January 2005; Benefi ts Roundtable research.

Key Affected Drivers Expected Results

Considerations

On-Site Pharmacy

Operated by a Third Party

* On-site pharmacies differ from in-house pharmacies; an on-site pharmacy may be managed, staffed, and stocked by a third-party administrator.

Insourcing Service

Driver Rank




On-Site Health CenterAn on-site health center yields long-term cost savings

To make healthy behaviors more convenient and encourage employee wellness, SCANA, Inc., opened a 2,000-square-foot wellness center at its headquarters in July 2005. The center includes educational materials, computers with benefi ts software and links to disease education Web sites, blood pressure monitors, and a pharmacy. SCANA hopes this center will provide long-term savings in areas such as prescription drugs and chronic disease.

• On-site wellness centers are most useful for organizations with many employees near a single location

• Staff of the wellness center may or may not be on the company payroll, depending on sourcing arrangement

• On-site wellness centers may be outsourced to a third-party administrator

• Launched July 2005

• Promotion of healthier behaviors

• Expected decreases in prescription drug and chronic disease expenditure

Source: Wojcik, Joanne, “On-Site Resource Centers Aim to Prevent Employee Illness,” Business Insurance, 20 June 2005; Benefi ts Roundtable research.


Considerations

HealthInformation

On-Site Wellness Center

Insourcing Service

On-Site Health Center

Driver Rank



• Quality 5



Beyond the Gym (On Site)Fun games encourage exercise and boost employee morale

To encourage employee exercise, Network Appliances, Inc., not only promotes “traditional” individual exercise but also encourages group activities such as beach volleyball and on-site golf practice. Network Appliances installed a putting green and a beach volleyball court and celebrates good quarterly results by engaging in large tugs-of-war and tricycle races. Employees may use these facilities during all times of the day for exercise, recreation, and stress relief.



• Improved employee health

• Group activities may be located at a relatively far distance from the offi ce building to encourage employees to increase exercise (walk)

• Employer should consider activities in which all ages and physical conditions can participate

Source: Saranow, Jennifer, “Anybody Want to Take a Nap?,” The Wall Street Journal, 24 January 2005; Benefi ts Roundtable research.

Considerations

6

Insourcing Service


Group activities increase employee exercise.

Driver Rank




One-on-One CoachingPersonal attention encourages employees to engage in healthy behaviors

• Roundtable research fi nds that a $200 cash incentive level most signifi cantly boosts health-risk assessment participation

• Employee education should be linked to an existing communication strategy

• 16% of employees (8,000) work with a health coach

• Personal weight loss reported up to 47 lbs per person

Source: Author Unknown, “Health Costs: Good News at Last,” http://www.businessweek.com/magazine/content/05, 30 May 2005 (accessed 1 August 2005); Benefi ts Roundtable research.


Considerations

Goals


In order to encourage healthy behaviors among its employee population, PepsiCo launched a program to identify workers at high risk for health problems and urge them to change behavior. PepsiCo offered $100 to employees who fi lled out a health appraisal, collecting diverse information including cholesterol level and family medical history. An external consultant reviewed the appraisals to evaluate chances of developing heart disease and other illnesses. High-risk employees had the option to use a health care coach paid for by PepsiCo. A typical health coach in the PepsiCo program made monthly calls to offer advice and encouragement along with tips on diet and exercise. PepsiCo participants also received daily e-mail messages from Web sites linked to the program.

Driver Rank






Proactive WellnessProactive wellness helps identify illness for long-term cost savings

To improve health and wellness with an emphasis on prevention, Caesars Entertainment uses an on-site health and wellness center. Three main focuses of the center are wellness education (including prevention), rehabilitation, and physical therapy. The center includes an information technology hub linked to benefi ts portals along with weight and exercise machines. Employees using the center are treated for immediate ailments, and incremental conditions, and they are educated about preventing future illness. Identifi cation and treatment of incremental conditions helps reduce potential long-term costs for those conditions.

• Prevention and preventive medicine spending represents increased short-term health care costs but can yield high returns in the medium and long terms

• Preventive medicine must be considered with a long-term time frame

• Since inception of the wellness center, the trend rate for Caesars’ global health and life expenses dropped 5.3%


Source: Wojcik, Joanne, “On-Site Resource Centers Aim to Prevent Employee Illness,” Business Insurance, 20 June 2005; Benefi ts Roundtable research.


Considerations


Wellness Center Patient RecordIllustrative

Patient Record

• Complaint: Knee InjuryTreatment: Knee brace and advice

• Incremental Condition: OverweightTreatment: Suggested diet

• Incremental Condition: Blood PressureTreatment: Increased exercise suggested

Driver Rank





On-Site Wellness

• Workout Area

• IT Hub

• Pharmacy

• Physical Therapy

• Treatment/Advice

• Education


Tier 3Nonpreferred Brand

Tier 1All Generic Drugs and Brand Names for:

• Diabetes• Hypertension• Asthma

Tier 2Preferred BrandTier 3

Nonpreferred Brand• Diabetes• Asthma• Hypertension• Other conditions

Tier 2Preferred Brand

• Diabetes• Hypertension• Asthma• Other conditions

Tier 1All Generic Drugs

Optimized Care for Chronic IllnessThose with chronic diseases pay lower coinsurance to encourage treatment

To encourage diabetic and asthmatic employees’ compliance with their prescription drug regimens, Pitney Bowes lowered the 2004 coinsurance for those conditions to 10%. Diabetes and asthma were identifi ed as the most costly risk areas through predictive modeling. This lower coinsurance applied to employees who fi lled their monthly supply of pills or inhalers nine times or less. Pitney Bowes aimed to reduce long-term demand for health care services by increasing short-term demand for maintenance and preventive medication.

• Predictive modeling may analyze factors such as medical claims, pharmacy benefi ts, behavioral health, disability, and workers’ compensation

• Reducing co-pays or coinsurance on certain drugs may require movement of drugs between tiers, which may require approval from a health plan administrator or the PBM

• Due to movement of drugs between tiers, an employer may be forced to forfeit rebates or make up the difference in co-pays or price

• 6% decrease in employer diabetes cost; 15% decrease in employer asthma cost

• 7% decrease in pharmacy cost for diabetes

• 19% decrease in pharmacy cost for asthma

• 50% decrease in hospital admissions among asthmatics

• 25% decrease in emergency room visits among diabetics

Source: Shutan, Bruce, “Pitney Bowes Hits Paydirt with Rx Compliance Program for Chronic Illness,” Employee Benefi ts News, 24 May 2005; Hom, David,

“Targeted Removal of Barriers to Care,” Pitney Bowes, Inc., 15 March 2005; Benefi ts Roundtable research.


Considerations

DiabeticRx Costs

AsthmaticRx Costs

19%

7%

Traditional Benefi t New Benefi t

Driver Rank







“Broader” Disease ManagementRelatively rare events provide high returns for disease management initiatives

To reduce the cost of relatively uncommon conditions such as pregnancy complications, the Toledo Electrical Welfare Fund, a self-insured health and welfare fund covering 65,000 lives, includes relatively uncommon conditions in disease management programs. For example, employees in a pregnancy management program receive counseling on ways to minimize risk factors that could complicate a delivery. Since a premature delivery can cost more than $50,000, the cost of the program is justifi ed for the fund.

• Higher quality of care

• Minimized risk of a $50,000+ delivery

• $13,000 savings per pregnancy on premature deliveries (vendor reported)

• Pregnancy management programs may be part of an employee assistance program

• Other alternative targets for disease management include depression, back pain, and optimal ergonomic behavior

Considerations

Source: Carlson, Leah, “Pregnancy Is Latest Front for Disease Management,” Employee Benefi t News, 1 May 2005; Benefi ts Roundtable research.


• Asthma

• Obesity

• High Blood Pressure

• High Cholesterol

• Back Pain

• Pregnancy Complications

• Depression

• Ergonomic Behavior

Common Disease Management Targets

Alternative Disease Management Targets


Driver Rank






Driver Rank





Health Savings AccountsHealth Savings Accounts help defray cost for employees

To help lower its $40 million health care cost expenditure, Zions Bancorporation encourages employee enrollment in Health Savings Accounts to accompany their two HSA-based PPO plans. Zions, a self-insured organization, sets monthly premiums for one of the HSA-based plans at $94/$248 for single/family coverage, 30% lower than the non-HSA options. This lower premium is combined with an aggressive communications campaign including more than 90 employee meetings and benefi ts presentations on DVD.

• HSAs are offered alongside high deductible health plans

• HSAs are portable and funded either by the employee or employer on a tax-deductible basis

• Payroll deduction options may increase participation in HSAs

• To qualify for an HSA, a health plan must have a deductible of $1,000/$2,000 (single/family)

• 33% enrollment in HSA-based plans

• 25% selected highest deductible plan

Source: Author Unknown, “1,839 Bank Employees Enroll in HSA-Based Plan; 25% Select Highest-Deductible Option,” Inside Consumer Directed Care, 3 December 2004. ; Benefi ts Roundtable research.


Considerations

More Guidance Requested

DVD Communication Employee Meetings

+



Free Medical SuppliesFree medical supplies provide big returns on small investments

To decrease the lost productivity from Type I and Type II diabetes among its employees, Bank One provided free glucose monitors and lab tests at lunchtime seminars. The seminars, presented by a nurse, were aimed at improving employee knowledge for managing their diabetes. With better knowledge, employees are expected to more effectively manage their conditions

• 18% decrease in health care costs for participants

• Free medical supplies should complement any existing disease management or health promotion initiative

• Free medical supplies can be used as an incentive to increase employee knowledge regarding their conditions and treatments

Source: “Bank One’s Wellness Program Offers Benefi t Managers Model for Success,” Managing Benefi ts Plans (June 2002); Benefi ts Roundtable research.

Considerations

• Disease Management Tips

• Supplies



Education/Free Supplies Seminar

Employees are attracted by free supplies, but they also learn about their conditions.

Driver Rank





Section IIITraditional Tactics

57


Nontraditional Tactics by Category and Group

The Roundtable uses the eight categories to distinguish traditional and nontraditional tactics


Category Traditional Page


• Drive Toward Consumerism

• Limited Health Plan

74

74

Insourcing Service

Prospective Targeting • Predictive Modeling• Preventive Health Incentive

6970


• Supplemental Insurance Benefi t

• Patient Advocacy Service• Nurse Advocacy Program

71

7273

Category Traditional Page

Communication • Self-Care Guide• General Disease

Management

5974

Coverage Restriction • Prior Authorization—Specifi c Drug Target

• Retiree Health Insurance

75 75


• Ensuring Hospital Quality• Hospital Quality Assurance• Coalition Purchasing• Claims Audits• Mandatory Mail-Order• Association-Sponsored

Plans (ASPs)

606162636475

Pricing and Design • Smoker Surcharge• Dependent and Spouse

Surcharge• Health Plan Consolidation• Self-Insured Model

6566

6768$

Section III: Traditional Tactics 59

Self-Care GuideEmployee self-care promotes healthier behaviors and lowers cost

In order to promote healthier lifestyles and educate employees about health issues, Berk-Tec, a manufacturing fi rm in Lancaster, Pa., used a self-care guide. This guide promoted smart medical decisions with regard to seeking treatment for different illnesses. The self-care guide helped reduce doctor visits, emergency room visits, and other health care service use. For example, the guide contained suggested treatments for common conditions that do not require a doctor visit.

• Self-care guides may contain information on common illnesses or those that are identifi ed as most costly to an organization

• Guides may be made available through an online health tool

• Saved $39 per employee

• Overall fi rm health care costs decreased 24.3% from previous year

Source: Author Unknown, “Well Workplace—Cost Benefi ts,” Wellness Council of America, http://www.welcoa.org/worksite_cost_benefi ts.html (accessed 29 July 2005); Willson, Shelley, “Coached Self-Care a Real Money Saver,” Calgary Herald, 18 February 2005; Author Unknown, “Pharmacy Business: Self-Care and Pharmacy,” Community Pharmacy, 12 May 2005; Benefi ts Roundtable research.


Considerations

Self-Care

Symptom #1 Page 2

Symptom #2 Page 5

Symptom #3 Page 8

Symptom #4 Page 12

$0 $100

Doctor’s VisitEmployee

Communication

Driver Rank





What should I do?

?


Ensuring Hospital QualityReward quality in hospitals through increased market share

To ensure and reward hospital quality, Boeing employs a pilot program in which hospital choice is directed at the consumer. Employees are given fi nancial incentives to select quality-compliant hospitals and are educated about the importance of health care quality. Boeing hopes the program will make employees more aware of hospital performance and drive performance improvement in hospitals.

Source: Adler, David, “Pilot Program Underway: Hospital Tiering at Boeing Shows Promise,” Employee Benefi ts News, 1 May 2005; Benefi ts Roundtable research.

Considerations

Non-Quality- Compliant Hospital

Quality- Compliant Hospital

Boeing Employee Information Retention

100%84%

63%

All Employees

Read Material

Recall Receiving Materials

• 84% of employees remember receiving enrollment materials

• 75% of those who received enrollment materials reported reading them

• 87% of employees still considered their physician’s recommendation to be very important

• 80% of those recently hospitalized said the hospital’s reputation was very important


• To maximize impact, this tactic involves a plan design component (employee fi nancial incentives) and a communication component (employee education)

• Directing incentives at employees (and not the hospitals) also encourages employees to make more of their health care decisions and can therefore be part of a broader consumer-driven strategy

• Because quality information is hard to fi nd, setting performance quality standards for hospitals may be diffi cult, even when working with specialized groups such as Leapfrog

Percentage of Employees in Program

(Less Business) (More Business)


Driver Rank






Hospital Quality AssurancePerformance reports raise awareness of quality

In order to minimize the cost of medical mistakes and maximize the effectiveness of routine care, employers are reviewing hospital performance reports to elicit better outcomes for employees. Employers may direct employees to the performance reports to drive the choice toward better hospitals. These reports are publicly available through various Web sites and quality associations. Some examples of these Web sites include www.leapfroggroup.org, www.hospitalcompare.hhs.gov, and www.healthgrades.com.

• Although some information is available, reliable quality information is still hard to fi nd given that quality initiatives are relatively new

• When quality information is available, it is important to check the date from which the rating was given

• Higher employee/patient satisfaction

• Better patient outcomes

• Higher quality of care

• More educated employee decisions

Source: Wlazelek, Ann, “Quality Health Care Paying Off,” The Morning Call, Tribune Business News, 6 June 2005; Benefi ts Roundtable research.


Considerations

Which hospital should I choose?

In-Network Hospital

SurgeryRanking

A 3

B 6

C 24

D 13


Driver Rank





Quality Assurance

Health and Human Services“Hospital Compare” Web site

(http://www.hospitalcompare.hhs.gov)

?


Coalition PurchasingCoalitions provide negotiation leverage for employers

In response to rising health care costs, several large employers in South Florida, including Lockheed Martin, Walt Disney, Siemens Westinghouse, and Florida Power and Light Group, formed a coalition—the Florida Health Care Coalition (FHCC). The FHCC partnered with the Employer’s Health Purchasing Corporation of Ohio (EHPCO) and the Corporate United Purchasing Group to procure PBM services and purchase prescription drugs at a discount. The group contracted with Medco, which is required to provide full transparency with regard to administrative fees, rebates, and any other PBM fees. The coalition has the right to audit Medco’s contracts to verify dispensing fees and purchase prices.

• Purchasing coalitions can affect the price point of health care services but not the use of health care

• Purchasing coalitions for obtaining local care providers such as doctors and hospitals is most benefi cial to organizations with many employees in a few central locations

• In addition to discounts, purchasing coalitions may demand quality improvements and institute other indirect cost-saving measures

• Quality Guarantees: Medco will provide a $10 per employee guarantee if implementation is not satisfactory and another $10 per employee performance guarantee if service falls below an agreed upon annual performance level

• Savings average 5% of total cost

• $2 per prescription administrative fee in exchange for full transparency

• Medco provides an $8 per employee allowance for switching to Medco

Source: Florida Power and Light Group; Florida Health Care Coalition; Benefi ts Roundtable research.


Considerations


Driver Rank




Claims AuditsAuditing health insurance claims may catch errors

• Claims audits may be most benefi cial to large organizations that are self-insured

• Claims audits may be directed toward the population that does not participate in payroll deductions, such as a retiree population

• Claims audits may uncover mistakes made by third-party administrators and can also be used to study performance guarantees of health plan vendors

Source: Craver, Martha, “Health Care Claims Audits Can Pay Off Handsomely,” Kiplinger Forecasts, 30 April 2004; Kabler, Phil, “Statehouse Beat: Audit Catches $9 Million Oversight,” Charleston Gazette, 23 May 2005; Benefi ts Roundtable research.


Considerations


Example 1: In order to delay an insurance premium hike of more than $5 million, the Public Employees Insurance Agency (PEIA) audited its claims for the past seven years. The audit looked for uncollected premiums and erroneous medical and prescription drug claims. Some erroneous claims were submitted by ineligible participants while others came from retirees who never paid premiums.

Example 2: In order to evaluate its $7 billion Medicare program expenditure, the state of Michigan audited its claims over a two-year period. The audit looked for overpayments due to paperwork errors and patients who retroactively enrolled in the health plans.

• PEIA

– Found $3 million in erroneous prescription drug and medical charges for retirees

– Found $6 million in unpaid premiums among retirees

• Michigan

– Found $6 million–$8 million in erroneous payments

≠

• Fewer people in a health plan reduces overall use of health care and therefore affects all drivers

Payment

Amount Collected:

$325

Invoice

Amount Billed:

$300


Mandatory Mail-OrderMail-order pharmacies provide discounts on high volume

To save money on prescription drugs, General Motors, the nation’s largest purchaser of private health care, implemented a mandatory prescription drug mail-order requirement. Beginning in 2004, all GM employees, retirees, and dependents use mail-order pharmacies to fi ll prescriptions for long-term treatment of chronic diseases such as asthma, diabetes, and high blood pressure. GM’s health plan members contribute a $9 co-pay for a 90-day supply. Members not using mail-order pharmacies pay 100% of drug costs at retail pharmacies.

• $80 million savings since 2004

• Minimal “push back” from employees

• 8–10% typical savings over retail pharmacies

• A mail-order requirement may not save money on all prescription drugs

• A mail-order requirement may be applied to specifi c drugs only

• Mail-order pharmacies may provide discounts despite low volume

• A typical PBM may offer a mail-order option to its purchasers

Source: Anderson, Tom, “Debate Heats Up Over Mail-Order Versus Retail Drugs,” Employee Benefi ts News, 1 August 2005; Benefi ts Roundtable research.

Considerations



• 90-day supply• $9 co-pay

• 30-day or 90-day supply• 100% employee paid

Mail-Order Pharmacy Retail Pharmacy

Driver Rank



Smoker SurchargeSmokers pay higher premiums to cover the increased cost of medical claims

To reduce claims in their health plan, particularly among the at-risk smoker population, Northwestern Mutual plans to require an additional $25 per month in health premiums from employees who smoke. Starting in January 2006, this surcharge applies when a family member/dependent smokes even if the employee does not. Employee smoking status is reported through a voluntary online health assessment and relies on the honor system. Northwestern Mutual communicated the need for truthful responses to union employees through the offi cial union bargaining unit. Northwestern Mutual also offers smoking-cessation clinics to support employees in reducing smoking.

• Self-reporting on health assessments may be less accurate than medical record data

• Monetary incentives to complete a health risk assessment are usually between $50 and $200*

Source: Gores, Paul, “Employees Who Smoke Face Surcharge,” The Milwaukee Journal Sentinel, 19 March 2005; Author Unknown, “Employers, MCO’s Refi ne Incentive Programs to Encourage Enrollees’ Health Behaviors,” Managed Care Weekly, 23 May 2005; Benefi ts Roundtable research.


• Program to begin in 2006

• Goal: Curb 30% discrepancy in smoker/non-smoker costs

Considerations

Smoker Non-SmokerNon-Smoker Smoker

$x

$.7x

Smoker Versus Non-Smoker Health CostsOverall Health Cost

Smoker Versus Non-Smoker Health PremiumDollars

$75

$50

* Based on Roundtable research, a $200 incentive is optimal to drive participation.

Pricing and Design

Driver Rank




• Net Premiums 14

= 30% = 25%


Dependent and Spouse SurchargeA switch from co-pay to coinsurance shifts the burden of responsibility and cost

In response to rising health care costs among spouses and dependents, The E.W. Scripps Company implemented a spousal surcharge program in 2002. The surcharge, which began at $50 per month, now stands at $100 per month and applies where spouses can be covered under their own employer’s plan. Scripps employees are asked to provide verifi cation of the lack of other coverage to obtain a waiver from the automatic surcharge requirement.

• The spousal surcharge may extend to dependents who are over 18 and not enrolled as full-time students

• Between 5% and 16% of employers currently use a spousal surcharge; spousal surcharges average $156 and range from $18 to $464

• Employers need to determine if the amount of the surcharge will be administered post-tax or pre-tax

• 33% of employees changed coverage to avoid spousal surcharge

• 67% of employees eligible for the surcharge paid the surcharge

• 20% of spousal coverage population saw positive cost impact

Source: Peters, Hudson A., “Spousal Surcharge Programs—An Overview,” Benefi ts Quarterly, First Quarter 2005; Medland, Mary E., “Shaving Health Costs,” HR Magazine, June 2005; Benefi ts Roundtable research.

Considerations

• Opt out to avoid surcharge (33%)

• Pay surcharge —$100/month

• Verify lack of other coverage —avoid surcharge

Dependent Surcharge

All Employees with Dependents

Driver Rank




Pricing and Design

ResultsKey Affected Drivers


Health Plan ConsolidationConsolidation of health plans creates administration and delivery effi ciency

In response to the health plan administration and management challenge of acquiring 16 companies with 400 health plans combined, Northrop Grumman consolidated all health plans into “One Northrop Grumman” plan. Northrop introduced uniform benefi ts to hundreds of locations across the United States, leveraging employees to help communicate the changes. Northrop Grumman used customizable templates to tailor plan change communications to each business unit or location.

• Consolidating health plans may require detailed communications surrounding plan changes

• Roundtable research indicates that senior management buy-in for plan consolidation is critical to success

• Internal administrative savings with minimal employee “push back,” as measured by incoming employee benefi ts inquiries

• More effi cient health plan management

• In addition, administrative benefi ts function costs are likely to be reduced

Source: Northrop Grumman Corporation; Benefi ts Roundtable research.


Considerations

Pricing and Design

Northrop Grumman Benefi ts OfferingsIllustrative

“One Northrop Grumman” Benefi ts Enrollment MaterialsHealth Care OptionsPPO • HMO • CDHP • HSA

Retirement Options401(k) Plans

Business Units Distinct Benefi ts PlansNewport News

Ship SystemsIntegrated SystemsInformation TechnologyElectronic SystemsSpace TechnologyMission Systems

More than 400 different benefi ts plans across the organization

Driver Rank

• Net Premiums 14


Self-Insured ModelSelf-funded plans may offer savings

In response to rising health insurance premiums and in order to build opportunities for cost savings, some employers have moved to self-funding their health plans. While the employer may control the fi nancial aspects of a self-funded plan, they are often managed and administered by a third party. Self-funded arrangements allow employers to pay the exact amount of the medical claims instead of a fl at employee premium, which can result in overpayment.

• Employers that self-fund have more fl exibility in their plan design and the benefi ts they offer

• Self-insured employers can more easily monitor health expenditures

• Prospective modeling/targeting is complementary to a self-insured tactic as it informs plan design

• Self-funding may be more benefi cial to large employers with a large number of employees who can more easily spread risk across their employee population

Source: Author Unknown, “Is a Self-Funded Plan Right for You?” Employee Benefi ts Plan Review, April 2003; Benefi ts Roundtable research.

• Long-term savings, improved cash fl ow

• 2–3% tax savings (waived state health insurance premium tax)

• Lower administration costs


Considerations

Pricing and Design

Driver Rank

• Net Premiums 14


Predictive ModelingTarget the healthy before they become the unhealthy

In response to health care claims reaching $2 million over budget in 2003, University Health Care System, a hospital in Georgia, instituted a wellness program based on predictive modeling. Gathering information through a detailed health-risk assessment, the university collected personal health goals, blood pressure, cholesterol level, body mass index, and glucose tolerance. Employee responses were grouped into three categories based on health risks. Incentive for completing the health-risk assessment included a migration from 30% employee-paid health insurance costs to 10% employee-paid.

• Prospective modeling may be achieved through third-party administrator services

• HIPAA requires that all employee health data remain confi dential and separate from employer information systems

• Communication to at-risk populations may differ from communications to relatively healthier populations

• 97% of employees completed the health-risk assessment

Source: Sosnin, Betty, “Getting Personal,” HR Magazine, June 2005; Benefi ts Roundtable research.


Considerations

Health Risk Assessment

T Heart Rate

T Blood Pressure

T Dietary Habits

T Exercise Habits

Data Mining


Flow of Prospective Modeling

Potential Risks to Target

• Hypertension• Diabetes

Driver Rank



• Quality 5



Preventive Health IncentiveFind the at-risk population before they pose a risk

In order to proactively target employees who may become unhealthier in the future, DTE Energy offers its employees $50 gift certifi cates to take a health-risk assessment that focuses on unhealthy behaviors. In addition, DTE gives employees another $75 to participate in a wellness program.

• Prospectively targeting healthy populations involves a relatively long-term view of a healthier workforce

• Roundtable research identifi es discounts and cash incentives greater than $200 to drive employee exercise

• Employers should ensure that incentives to spur participation do not outweigh savings

• 27% of DTE employees signed up for the wellness program

Source: Griffi n, Kawanza, “Cultural Bias Can Create Unhealthy Barriers,” The Milwaukee Journal Sentinel, 1 September 2004; Author Unknown, “Primary Care Practice: Blacks and Latinos Are More Satisfi ed with Physicians of Same Race,” Managed Care Weekly Digest, 18 April 2005; Benefi ts Roundtable research.


HRA$50

Wellness Program Enrollment

$75

$125for

Employee Healthier Employees= ++

Driver Rank





HRA/Wellness Incentives


Considerations


Supplemental Insurance Benefi tSupplemental benefi ts offset out-of-pocket costs for employees

In order to provide additional coverage to employees with little or no cost to the organization, Wal-Mart offers supplemental policies through a third-party administrator for conditions such as cancer or disability. Most supplemental policies are structured to give employees the option to fi ll gaps left in the employer-sponsored coverage. The offering of supplemental insurance is also a seen as a counter balance to cost sharing.

• Offerings of supplemental insurance products may be kept to a minimum to include only gaps in original coverage

• Supplemental insurance offerings may provide alternatives to additional employer-paid offerings

• Supplemental benefi ts can range from long-term disability coverage to small medical claims; they may also be a companion to an HSA

Source: Shutan, Bruce, “Signifi cant Others: Supplemental Medical Plans Serve As Antidote to High Costs, Complexity,” Employee Benefi ts News, 15 September 2004; Shutan, Bruce, “UnumProvident: Health Care Cost Shifting Makes Supplemental Health Plans Essential,” http://www.benefi tnews.com/detail.cfm?id=7478 (accessed 20 June 2005); Benefi ts Roundtable research.


Considerations

Plan Payment SourceCancers/Long-Term Disability

70%

30%

Employer/Plan

Gap

Deductibles and Premiums—Employee/Employer

• Voluntary employee coverage

• Enhanced, more comprehensive options available


• Employee satisfaction is driven by the option for more coverage through another plan

90%

An employee can cover the gap with a supplemental plan.

90%


Patient Advocacy ServicePatient advocates relieve stress for employees and boost productivity

In order to help employees ensure that medical bills are properly paid by third-party health plan administrators, Bertelsmann Media Worldwide refers its employees to a health advocacy program. This program lifts the advocacy burden from the benefi ts function and places it on the health advocacy fi rm. Bertelsmann spends $1.25 per month per employee and $1.85 per month per retiree. The advocacy fi rm also eases HIPAA compliance concerns as the benefi ts function does not need to handle specifi c employee claims and payments.

• Patient advocacy fi rms offer varying services, some specializing in specifi c claim types; they can help identify incorrect billing and payment errors

• Patient advocacy services may also help employees fi nd physicians within the plan network and obtain mail-order drugs

• Patient advocacy can help improve productivity for benefi ts staff and employees

• HIPAA compliance

• Increased employee satisfaction and productivity

Source: Edelson, Harriet, “Patient Advocates Fit the Bill ; Contract with Firms to Help Employees Navigate Health System,” Crain’s New York Business, 25 October 2004; Leibowitz, Abbie, “Health Advocacy Helps Employers and Employees Cope with Health Care System,” Philadelphia SHRM (February 2004); Benefi ts Roundtable research.


Considerations

Hospital/insurance fi rm bills patient…

…health advocates review specifi c claims

upon request…

…employee is assisted with burden of paperwork

and stress


Advocacy Service

• Benefi ts function cost


Nurse Advocacy ProgramSimple follow-up advice provides higher-quality care

To help its employees avoid chronic disease and other expensive medical procedures, SRA International, Inc., implemented its award-winning Nurse Advocacy Program. The wide-ranging program includes employee care follow-ups, administration of fl u shots, lunchtime health education sessions, home visits for fi rst-time parents, and coordination of complex medical events during times of hardship. Nurses also proactively work with employees to help them manage health conditions.

• Single-digit health care cost increases for the past four years

• Higher employee loyalty and satisfaction

• An internal advocacy program must comply with all HIPAA regulations

• An internal advocacy program may be as simple as deliberate follow-ups with employees by doctors or nurses

Source: Brown, Steve, “Benny Awards—People First,” Employee Benefi t News, 15 September 2004; Author Unknown, “SRA Wins Workforce Optima Awards,” http://www.sra.com (accessed 11 July 2005); Benefi ts Roundtable research.

Considerations

Contact Hospital

Education Session

Flu Shots

Advocacy Program

Follow-Up

Home Visit



Driver Rank



• Quality 5



Additional Traditional Tactics

Drive Toward ConsumerismOwens Corning, General Motors, and Zions Bancorporation continue a strong move toward consumer-driven health plans (CDHPs) to facilitate each company’s cost-cutting efforts. For example, Owens Corning offered a CDHP and, expecting 20% enrollment, saw 71% enrollment in the fi rst year. Strong senior management buy-in, support from managers, and favorable pricing drove this robust uptake. Introduction of health savings accounts also aids CDHP acceptance.

General Disease ManagementDisease management program implementation grew from 46% of employers in 2004 to 69% in 2005. Promotion of healthy behavior grew from 20% to 40% within the same time frame. Although this trend correlates to a slowing in health care cost increases, employers still seek additional methods to lower health care expenditures. The best performing companies are typically those that are willing to actively try a variety of strategies. Essential components of any disease management strategy include providing employees with information, tools, and incentives to support behavioral change.

Limited Health PlanLimited medical plans attract the interest of employers who are trying to contain health care benefi t costs by retaining part-time and temporary workers. Several large insurers offer limited health plans to meet the needs of employers who wish to offer fewer options to certain employees or employee segments. This “trimmed” benefi ts package is expected to help with retention of part-time and temporary workers as well as retirees not yet eligible for Medicare. Since the cost of lower-wage replacement workers can surpass $1,500 per person, offering a limited health plan can save money for the employer as well as the employee.

Source: Shutan, Bruce, “Crossroads to Consumerism,” Plan Sponsor, 8 April 2005; Carlson, Leah, “Disease Management Has Become the Norm,” Employee Benefi t News, 5 May 2005; Lee, Karen, “Second Look,” Employee Benefi t News, May 2005; Benefi ts Roundtable research.


Additional Traditional Tactics

Retiree Health InsuranceEmployers are looking to reduce or eliminate costs related to retiree health insurance by limiting the extent to which they provide subsidized retiree health coverage. This trend is infl uencing the retirement behavior of the baby boomers (those age 50 to 64 eligible for retiree benefi ts) who would like the opportunity to retire now but cannot afford to do so without affordable health care coverage. According to the SHRM 2004 Benefi ts Survey Report, 33% of all employers surveyed offer some form of retiree medical benefi ts.

Association-Sponsored Plans (ASPs)Small employers are usually at a distinct disadvantage when purchasing group health insurance for a variety of reasons. Even when small employers make informed choices, their health insurance premiums are likely to be substantially higher for comparable coverage than the premiums paid by large employers. This disadvantage may be alleviated through Association-Sponsored Plans, where a small employer is able to purchase insurance through a business, trade, or professional association. These associations may be available through a local chamber of commerce or national organization such as the National Federation of Independent Businesses.

Prior Authorization—Specifi c Drug TargetPrior authorization is a commonly used tactic to combat the irresponsible use of common prescription drugs by requiring employees to obtain health plan authorization for those drugs’ usage. An example of this drug-specifi c prior authorization appears in the proton pump inhibitor (PPI) drug class. After one year of requiring prior authorization on PPIs, Georgia Medicaid saved $20.6 million in drug costs, according to their PBM. In the 12 months following implementation of the prior authorization program, the use of generic drugs jumped from 31% to 79%. This higher generic usage helped lower PPI drug expenditures by $30.9 million, a 70% reduction.

Source: Author Unknown, “Health Plans Attack Rising Cost, Use in PPI Class; Tactics Show Results,” Drug Benefi t News, 28 January 2005; Weatherly, Leslie A., “The Rising Cost of Health Care: Strategic and Societal Considerations for Employers,” HR Magazine, 1 September 2004; Benefi ts Roundtable research.


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