Our recent articles, Will healthcare costs continue to rise even if widespread inflation eases? and Will general inflation spread to healthcare costs?, highlighted many reasons why we can expect healthcare costs to remain stubbornly high for the next year or two. Cost shifting is not a tenable option as employee out-of-pocket costs and affordability become significant concerns. Cost management is a critical component of a plan sponsor’s strategy, and innovations in healthcare delivery can help to address these issues. What are the best options to shrink total healthcare costs?
There are two ways to influence care in the U.S. healthcare system: at the point of care (when members use their benefits to address a healthcare need) or at the point of enrollment (when employees (and any dependents they cover) first elect coverage at open enrollment). Both are important in designing a healthcare strategy, with the goal to lower costs, improve quality and enhance the member experience. How an employer approaches the overall strategy is influenced by cost drivers, demographics, philosophy, and geography.
What is the right option for me?
As an employer, you need to think about two potential strategies: a curated broad-network strategy and a high-performance network strategy:
A curated-broad-network strategy is built on a broad network paired with a high-deductible design and targeted programs and interventions that drive effective decision making. Members are guided at the point of care using creative solutions such as COEs, concierge/navigation services, clinics, and virtual care. This strategy is geared to the low-utilizers or the high earners looking for the HSA account tax benefits. This strategy is also critical in rural markets or urban markets where health system competition is limited. Linking the broad network to a higher deductible and a higher out-of-pocket maximum is important to incentivize members to seek more efficient care.
A high-performance network strategy is the point-of-enrollment solution. Paired with a lower deductible and affordable co-pays, it is designed for the higher utilizers and those with less disposable income. Costs can be more predictable for the member and the higher risk population is enrolled in a high quality and integrated health system, often paired with a high-value primary care focus. This solution utilizes an enclosed, clinically integrated network, with no out-of-network benefit and ideally a primary-care physician relationship. Often described as the “managed-care” plan, the health system is ideally held accountable for the care delivered through defined risk-sharing arrangements.
Employers have the leverage to drive change and to drive the conversation. Disruption should no longer be considered to have a negative connotation and should be seen as clearly necessary for improvements. The status quo is the riskier choice for employers in the current environment. Without change, employers stand to bear the brunt of increasing costs and declining quality. Select large employers are beginning to act and others are sure to follow.
Author
