Zak Holdsworth, cofounder & CEO at Hint Health.
Heading into open enrollment, benefits managers are faced with even higher healthcare costs estimated for 2023. And they are charged with delivering more robust benefit packages to retain employees, all while also managing costs in the midst of high inflation and a looming recession. Add to that, there is now a legal responsibility created under the Consolidated Appropriations Act of 2021 for plan disclosures and employer fiduciary duties to provide plans with more value, so it is critical to pursue more innovative benefit strategies that tackle the root cause of rising healthcare costs.
Nearly 155 million Americans are covered by employer-sponsored health insurance, and last year, as employees and their families resumed care delayed by the pandemic, these plans experienced the highest annual increase in per-employee costs since 2010 at 6.3%.
As cofounder and CEO of a company that’s focused on powering the direct primary care movement, my team works closely with health benefits leaders who are using innovative solutions to tackle rising healthcare costs. Historically, many employers have looked to high-deductible plans to manage costs, but research from the Kaiser Family Foundation shows a downward trend over the past two years as employers are looking to offer other options for employees. Alternative approaches include defined contribution plans, which allow employees to buy their own health insurance to meet their specific health needs, but these have not yet seen widespread adoption.
Proven Cost-Saving Solutions
The last few years have amplified the need to rebuild, or forgo entirely, the current fee-for-service model. For example, patients want more access to virtual care, but the fee-for-service model often makes virtual care unappealing to providers, who may receive a fraction of the reimbursement for virtual visits than they do for in-person visits.
We see from the employers we work with that there is a growing movement to more directly manage their health benefits in ways that provide better value, align with their organization’s values and goals and drive down overall healthcare spend.
It may seem daunting to try to take an alternative approach to manage healthcare benefits, but it’s an uphill battle to keep settling for rising insurance costs that don’t deliver better quality for your employees. Here are three strategies that benefits leaders can use to circumvent ever-rising insurance costs while still offering competitive healthcare benefits to employees.
1. Partner With Forward-Thinking Benefits Advisors
Many employers are not aware that their benefits brokers and advisors are often paid commissions by health plans and pharmacy benefits managers for selling their products. These advisors may be caught between doing what’s in the best interest of their employer clients and recommending plans that earn them higher commissions.
This is why I recommend seeking out fee-based benefits advisors who are willing to examine every aspect of an employer’s benefits plan to cut out bloated administrative costs and low value-add programs. Some benefit advisors charge a flat fee, which can help align their incentives with your goal of providing higher value and better quality offerings.
2. Put Primary Care At The Center Of Your Benefit Offering
Access to quality primary care can improve health outcomes and decrease the overall cost of care. Yet the U.S. spends only 6% to 8% of overall healthcare dollars on primary care.
The future looks bright, though. In 2021, companies focused on primary carebet-billions-on-medicine-s-worst-paying-specialty” target=”_blank” class=”color-link” title=”https://www.bloomberg.com/news/features/2022-02-10/primary-care-health-investors-bet-billions-on-medicine-s-worst-paying-specialty” rel=”nofollow noopener noreferrer” data-ga-track=”ExternalLink:https://www.bloomberg.com/news/features/2022-02-10/primary-care-health-investors-bet-billions-on-medicine-s-worst-paying-specialty” aria-label=”raised $16 billion”> raised $16 billion from investors. Public markets are taking notice, as seen by CVS Health launching a virtual primary care solution and, of course, Amazon’s acquisition of primary care startup One Medical.
These various players all aim to address the pitfalls of primary care and be the front door to a patient’s healthcare journey. However, benefits leaders should seek out vendors who are building meaningful relationships and trust between the provider and member rather than solely replacing that relationship with technology. There are myriad reasons why a declining number of Americans have a primary care physician, but one root cause is the deterioration of the patient-provider relationship. And in the fee-for-service model, physicians often aren’t incentivized to spend time building trusting relationships with their patients.
3. Consider Alternative Payment Models
Concern over cost is a primary reason why many people don’t access health care services. More than one in four people said they avoid medical treatment because they are unsure about their healthcare coverage.
According to an analysis published in the Journal of the American Medical Association, the U.S. healthcare system wastes as much as $935 billion each year due to factors including administrative complexities and lack of coordinated care. The opportunity to make an impact is enormous, and this is why alternative payment models can be a good option for employers.
Innovative approaches like membership-based primary care models aim to address the costly waste in healthcare by realigning provider incentives toward quality outcomes and delivering value-based care. The two types of membership models are concierge medicine and direct primary care. The former was developed as an alternative to volume-based care models to give physicians more time with patients. Concierge medicine can be cost-prohibitive for some populations, though, since a patient generally pays a membership fee to the practice as well as insurance copays. With direct primary care, physicians are paid directly by the patient or their employer, eliminating the need for using insurance for primary care services. Both models increase the time a patient has with their provider in order to put more focus on disease prevention. Each model also often includes a virtual care element that enables higher-touch patient care.
As employers balance both fiduciary pressures to reduce costs and a tight talent market, now is the time to rethink benefits strategies and invest in more innovative solutions.