According to a recent International Foundation survey report, health care costs are expected to increase by 7% between 2022 and 2023. In response to the cost escalation, health care plan sponsors are looking for ways to limit the growth of their health care expenditures while continuing to provide high-quality coverage to their participants. The 2022 Employee Benefits Survey from the International Foundation of Employee Benefit Plans provides benchmarking data on the methods that plan sponsors are using to control escalating costs in their health plans. Some of these strategies are articulated below.
Health Care Strategies
Administration/Data Analysis Initiatives
Respondents use a number of administrative and data analysis initiatives to target growing costs.
- Three in five (60%) responding organizations conduct health care claims utilization analyses, which include any number of initiatives used to control costs and eliminate both the over- and underuse of health care services.
- More than one in three (37%) conduct health care claims audits to examine health provider records to determine whether services provided were necessary, properly administered and correctly billed.
- More than one in four (28%) respondents use predictive modeling, which employs data analysis techniques to forecast health care spending trends and determine the likelihood of future spending.
Cost-Sharing Initiatives
Responding organizations employ a range of cost-sharing initiatives to target escalating costs. Tiered systems classify health care providers into tiers using a combination of cost and quality metrics. Participants pay a higher price to use the higher cost or less efficient providers in plan networks.
- Two-tiered cost-sharing arrangements are common (29%), while three (19%), four (39%) and even five or more (3%) tiers are often employed by responding organizations.
Plan Design/Program Initiatives
Survey respondents also incorporate several plan design initiatives to save costs and sustain coverage.
- About one in three (33%) uses dependent eligibility audits to verify the eligibility of dependents—including spouses, children, stepchildren, disabled adult dependents and wards—enrolled in health plans.
- More than one in eight (13%) employ spousal surcharges, which reduce the coverage available to a worker’s spouse if the spouse has coverage through their own employer.
- Similarly, 12% use opt-out incentives, typically a lump sum or monthly payout offered by an employer to workers who decline participation in a health care plan.
- About 8% of responding organizations go a step further and institute spousal carve-outs, in which spouses with coverage elsewhere are denied coverage.
Purchasing/Provider Initiatives
Initiatives aimed at the purchase point of health care also are becoming more prevalent among responding organizations.
- About four in five (78%) offer telemedicine services.
- A similar proportion (37%) provides price transparency or comparison tools, which allow plan participants to make more informed health care decisions.
- One in three (31%) responding organizations has access to centers of excellence, which are programs within health care institutions that supply high concentrations of resources to specific medical areas to achieve comprehensive and targeted outcomes.
- About one in four (23%) uses health care advocates/navigators to help workers traverse the complicated health care system, while 14% are members of health care coalitions or purchasing groups.
Utilization Control Initiatives
Responding organizations continue to offer cost-saving initiatives aimed at controlling the utilization rate of health care services.
- About seven in ten (69%) use case management, a care model that focuses on coordinating services needed by patients. These services may include checking for available benefits, negotiating provider fees, arranging for special services, coordinating referrals, coordinating claims among benefit plans and providing postcare follow-up.
- A similar proportion of plans (69%) uses prior authorization/utilization management, which requires the participant to obtain authorization from a health plan or insurer for care prior to receiving the care. In these cases, failure to obtain prior authorization may result in a financial penalty to either the plan member or provider.
- About two in three (65%) offer disease management initiatives, which are used to improve the health of participants with chronic conditions such as diabetes, cancer and heart disease.
- Three in five (60%) organizations offer nurse advice lines that employ registered nurses to answer health care questions over the telephone. This service often includes counseling and patient education, guidance in obtaining services and referrals to service providers.
- About one in three (33%) responding organizations offers education materials, such as medical self-care guides, directly to health care consumers.
- About two in nine (22%) responding organizations offer second-opinion services in their health plan. These services allow reviews of recommended medical procedures and allow organizations to look for more effective alternatives.
Justin Held, CEBS
Senior Research Analyst at the International Foundation
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