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Healthcare

Hurdles and Help for Healthcare Costs

As healthcare benefit costs continue to rise, myriad strategies may help businesses reduce or stabilize them.

While employers can share the burden of chronically rising healthcare costs with their workers via increased premium contributions and higher employee deductibles and/or co-pays, additional cost-lowering considerations exist. This is all within a broader landscape in which the New Jersey Business & Industry Association’s (NJBIA) 2022 Business Outlook Survey found that 77% of employers anticipate their 2022 health benefit costs to increase. Additionally, 20% of respondents expect their 2022 health benefit costs to increase by 11% or more.

Employer cost-cutting strategies may consist of carefully choosing between fully insured or self-funded healthcare plans overall, and, separately, evaluating options for healthcare provider networks and health insurance plan designs.

Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) may also yield savings, as can other avenues including, but not limited to, pharmacy strategies, telemedicine and wellness programs.

MEWAs

Qualified health insurance brokers can guide small businesses in choosing healthcare plans, although they may not always be attuned to MEWAs (multiple employer welfare arrangements) such as Short Hills-based Association Member Trust (AMT), a not-for-profit healthcare trust that pools employers, quotes rates based on specific companies’ employee ages, and then uses Horizon Blue Cross Blue Shield of New Jersey for medical claims processing and stop loss protection. Employees can receive assistance with medical claims either from Horizon or AMT.

AMT is being offered to NJBIA member companies, and according to Harvey I. Mishkin, AMT’s chief operating officer, given AMT’s drive to reduce expenses, “our plan, in an apples-to-apples comparison, should cost less [than purchasing a plan from a carrier].”

While Mishkin stresses that each company’s scenario is different, he adds, “How much [are the savings]? It can vary. It might be small, at 3% or 4%, or it might be 10% or 12%.”

Other Plans

As its own entity, Horizon has a wide variety of plan options. These include Horizon Level Select plans, which are level-funded products for small employers that may yield lower costs, increased options for plan designs, and the ability to carve out certain state-mandated benefits because the programs are self-funded, according to Horizon’s Michael J. Considine, vice president for individual, small group and mid-sized markets. Horizon Level Select plans also offer stable monthly billing as well as opportunities to receive account refunds if groups have lower-than-anticipated costs.

Painting a picture of overall healthcare plan variety is Stephanie Colonna-Romano, chief operating officer at Cranbury-based Martin Insurance Group. She explains that a trend in the small group towards selecting level-funded products that are viewed as less risky than traditionally self-funded plans has been increasing for several years.

Overall, with self-funded plans, employers assume direct pay-as-you-go responsibility for their employees’ medical claims, while with level-funded plans, employers make set monthly payments to an insurer that keeps a claims reserve account; if claims are lower than anticipated, the insurer may refund the employer for surplus claims payments.

Colonna-Romano says level-funded plans are “not for everyone” since they have a medical underwriting component to them, which is different from the Affordable Care Act guaranteed-issue market.

Separately, Horizon’s Considine says, “We believe we offer best-in-class quoting for both our ACA small employer products and Horizon Level Select, so that employers can make the best decisions, based on their circumstances and goals.”

Plan Design / Networks

Colonna-Romano cites plan design and healthcare provider networks as two variables for pursuing health benefit cost savings

in the fully-insured small group market. With plan design, lower-cost health plans might have less upfront coverage, high deductibles and more out-of-pocket costs, but they can be paired with tax-preferred vehicles such as Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs).

“Those kinds of combinations can help save money,” Colonna-Romano stresses. She underscores the value of tried-and-true HSAs that allow employees to save money on a pre-tax basis to pay for medical expenses.

She adds, however: “[While high deductible plans] work great on paper – and you can show the financial model – it’s hard for [employees] to understand how much things are going to cost when they are using that coverage. [People say]: ‘Now I have this big deductible, and I don’t know what doctors’ visits and my prescriptions will cost.’”

While transparency is improving, Colonna-Romano says that it is “still kind of murky for a user, especially when you’re in the middle of a health situation and you’re probably kind of nervous.”

Leveraging Provider Networks

Colonna-Romano says there has been a trend toward tiered healthcare provider networks and/or different innovative structures that consider both doctors and geography. She says, “You may be able to save money by looking at something like Horizon’s OMNIA products, where they have a tiering structure based on the different kinds of providers.” The OMNIA portfolio uses a hospital and provider network within an overall value-based care approach that uses metrics, according to Horizon’s Considine.

Wellness Programs and Telemedicine

Wellness programs can also play a role in lowering healthcare costs. Colonna-Romano says that for level-funded plans, where premiums increases are based on specific employee-group experiences, employers may monitor certain claims trends and then address those through wellness programs (they can also promote lower-cost telemedicine care, when appropriate).

On the other hand, wellness programs might yield less direct benefits for fully insured plans.

“If you are in a fully insured environment and [have fewer than] 50 [employees], your premiums outlay isn’t specifically tied to your claims,” Colonna-Romano stresses. “[Therefore], it’s [difficult] to draw that ROI calculation for an employer [with a wellness program]. [In those cases], normally you can look at productivity, absenteeism and presenteeism to try to draw out that [ROI]. For some types of businesses, [wellness programs] might also spill into workers’ compensation savings if they’re have issues around safety and wellness.”

Horizon’s Considine touts the HorizonbFit program that provides all Horizon members with access to discounted gym memberships, as well as virtual health and wellness seminars – including virtual nurse chats – all aimed at wellness and healthy living/lifestyle.

Pharmacy Strategies

Prescription drug costs continue to challenge businesses as well, with AmeriHealth New Jersey Senior Medical Director Dr. Frank Urbano, MD, MBA, FACP, saying, “Drug prices continue to be one of the single greatest drivers of healthcare costs. We must ensure that healthcare premium dollars are being spent on safe, effective and appropriate care whenever medications are prescribed, which means identifying lower-cost, equally effective alternatives. Many doctors have tools that help them easily access information on how much a member would have to pay for a medication based on their specific health plan. The tools can also offer information on lower-cost alternatives when available for higher-cost medications, saving their offices time and effort.”

Horizon’s Considine touts the Rx Savings Solutions online tool that allows members to receive alerts for how to locate and fill lower-cost prescription medications, with Considine adding that people enrolled in the program annually saved an average of $439 on out-of-pocket prescriptions. PillPack by Amazon Pharmacy can also provide Horizon members with lower-cost prescription medications and convenience.

Conclusion

Within the extraordinarily complex world of high healthcare costs, companies have an array of options for lowering them. Colonna-Romano concludes, “The pandemic obviously incurred a lot of medical bills, so insurance rates are adjusting for that, whether it’s the cost of treatment, testing or vaccines. These have all created serious cost impacts for the carriers. We’re going to feel the adjustment of that through this year.”

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