But,there is a better way to reverse this trend–it’s called healthcare performance management (HPM). If health plans were managed better, the constantly rising employee tab - now 19% of the  premium–could be stopped in its tracks.  Tools are available to reverse  employee cost sharing by holding  health plan costs in check. Companies around the country are using proven performance management technology to save millions.

-George Pantos, WellNet Healthcare Senior Advisor

-George Pantos, HPM Institute Executive Director

With Obamacare currently working on dumping 34 million Americans into the healthcare system, it’s clear my previous statements should be taken tongue-in-cheek. This government report also acknowledged that the cost-controlling initiatives that were within the 2,500 pages of reform will not start to effectuate change until 2020. Richard S. Foster, Medicare’s chief actuary, was quoted as saying, “During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage.”

Ask any employer who provides benefits what their biggest concern is for the company over the next few years and surely “controlling healthcare costs” will be mentioned.  Now economic forecasters have come out publicly to state what most of us already knew – reform did nothing to help curb rising costs.

Is everyone expected to wait until 2019? We need a solution – sooner rather than later.

By empowering employers and employees with the knowledge and access needed to manage their healthcare costs on a day-to-day basis, costs will undoubtedly begin to trend downward. Imagine knowing how many people in your organization who are at serious risk of having a catastrophic claim (de-indentified and HIPAA-compliant, of course), then having a third party reach out to those employees to help them take steps to practicing healthier behaviors and bettering their overall health. Proactive outreach intuitively leads to healthier employees who have reduced absenteeism, increased productivity all the while lowering healthcare costs.

This is the concept of HPM (Healthcare Performance Management), using data and analytics to connect every aspect within the healthcare space, a true end-to-end solution.

Without a true understanding of the costs within the plan, how can one be expected to effectively manage the plan, nonetheless reduce costs?

“A trillion dollars gets spent, and it’s no surprise — health care costs are going to go up,” said Rep. Dave Camp. Action needs to be taken immediately to reduce healthcare costs because who really knows where we will be a decade into the future.

HPM delivers savings now, not ten years from now.

-Tom DeLellis, WellNet Healthcare

Healthcare Performance Management (HPM) is based on the principle that unless you use business intelligence tools, with available claims data, to identify and proactively manage your plan in real-time, you are destined to do nothing more than react to rising costs through cost shifting or total benefit reductions. Many of our clients tell us that they never even knew that there data could be transformed into real-time, usable intelligence much like financial sales projections.

Using new technology, organizations are achieving new levels of savings and control over their benefit plans without shifting cost or reducing benefits. Plan sponsors are now able to create action plans focused on the areas of risk within their own plan and provide services and incentives to lower risk employee segments. As a result, better plan member health is being attained and better financial outcomes are emerging for the plan sponsors.

After evaluating real-time data, companies can address their plan’s high-risk employee population using incentive programs and services to educate them on becoming the best and healthiest consumers of healthcare. These proactive efforts help to lower catastrophic or acute costs while helping to increase overall productivity. Brian is right on when speaking to the needs of the 200-5,000 life market that is undeservedly and improperly counseled by brokers and carriers on the programs and technology available.

After all of the hoopla from the healthcare debate over the last two years, and the corresponding legislation that followed, it is now time for organizations to take control of their own costs and not leave it up to the government to find a costly and inefficient solution that ignores the realities of what is really driving runaway costs.

Brian’s examples and success stories further validate that HPM is here to stay. It is truly making a big difference to all who embrace this new model.

Chris Kaiser, WellNet Healthcare

2010 is somewhat of a “normal” year, meaning increases are in-line with the annual increases that have occurred, to the tune of 131%, during the last decade, according to an annual survey of nearly 3,200 firms regarding employer-sponsored health premiums by the Kaiser Family Foundation and the Health Research & Educational Trust.

What borders on the ridiculous is that these increases are levied with very little explanation.  With every other type vendor invoice, businesses demand detailed accounts of services to understand how the costs accrue. Would you pay for a 15% increase from the vendor you lease your copy machine from without details on how many copies were made? Adding complexity to the already complex, most companies rely on outside individuals to advise on health care benefits and these individuals make money off your renewal.

The baffling part is that most businesses have come to accept this annual exercise in futility as a norm and most feel ill-equipped to do anything about it – forcing the decision to either incur the cots, defer the costs to employees or do away with healthcare benefit options altogether. It’s a lose, lose, lose situation.

Beyond 2010, new industry fees associated with Healthcare Reform bill will add significant costs to health plan coverage, according to a report by Pricewaterhouse Coopers. The finding is consistent with the judgement expressed by Douglas Elmendorf, director of the non-partisan Congressional Budget Office (CBO) who recently said “that piece of the health reform bill would raise insurance premiums by roughly the amount of the revenue collected.”

The report projects that the industry fees are an additional business cost that will be passed through to consumers in the form of higher prices. The fees on medical device and pharmaceutical manufacturers will impact the entire market, while the fees on health plans will impact premiums for insured plans.

I’d be curious to get feedback on how your company manages through the annual open enrollment period. Do you feel like you have a sense for why you see significant increases year-over-year? What, if anything, are you doing to uncover these costs?

- Keith Lemer

I was interested to read an article and subsequent blog post in the Wall Street Journal that discussed the scaling of insurance premiums based on age and the general premise that older individuals are more costly to the healthcare system than their younger counterparts.

For businesses, this is an important discussion. According to the U.S. Census Bureau, the average age of retirement is 62 and the national workplace average for the 65-to-74 age group was 23.2 percent in 2006, up nearly four percentage points from 19.6 percent in 2000.

As the workforce continues to become more and more stratified in age, businesses need to be more aware of how that dynamic impacts their specific health insurance costs.  Opportunities abound to work with employee population to proactively improve wellness and understand how it directly impacts the cost of their healthcare and their employer’s ability to provide affordable options.
- Keith Lemer

At the core of IBM’s ability to make this decision is its employee wellness program. The story cites:

“‘There is evidence that attention to employee wellness can pay dividends. IBM is putting an innovative spin on “value-based benefits design,’” a practice through which companies have eliminated the cost of a medical treatment as a way of lowering insurance claims within high-risk populations, said Paul Fronstin, director of the Employee Benefits Research Institute (EBRI) health research program.’”

 As a result of their preventative efforts, IBM is saving money, to the tune of  $191 Million between 2004-2007.

Stories, like IBMs are important at a time when Business Roundtable, an association of chief executive officers of leading U.S. companies, finds that “annual per employee health care costs will triple to nearly $29,000 over the next decade without significant marketplace reforms that reduce costs, expand coverage and improve delivery.”

And while IBM is not nearly the average business, they are representative of the power of employee benefits data, resulting wellness programs and how both drive down the overall cost of healthcare for businesses and employees.

This approach is scalable and can manifest itself in various models. Take Upper Merion Township in Pennsylvania for example. With 200 employees and 30 retirees, the Township needed to address costs that were draining its budget. After an assessment of strategy and cost containment options, they are currently executing on a data-driven, prevention-based approach to their healthcare strategy. Employees now have a stake in the game and are cost-sharing with the Township in a flat fee model. This new strategy is already controlling costs within the first year of implementation and based on these results, the expectation is to see a 4-1 return on this preventative approach.

The ability to take control is in healthcare data. What company stories are you aware of that exemplify the power of this approach?

- Keith Lemer
 

I’m constantly amazed and dismayed at the lack of discussion around businesses role in the healthcare equation. After all, for many, many Americans, it is their employer who enables access to benefits and it is the year-over-year cost to businesses that is a large determinant in their ability to provide healthcare benefits. Some businesses, like Cumulus Media have really seen the light in this regard.

What Americans and business should be enabled to calculate and graph is how the way they interact with their current benefits plan impacts costs today. Businesses should have access to the healthcare data that allows them to manage and proactively reduce costs. Employees should have access to proactive education and wellness programs that increase their awareness on how their personal use of healthcare benefits impacts their company’s, and ultimately their own premiums.

- Keith Lemer
 

Yesterday, the New York Times published an interview with Carol Bartz, chief executive of Yahoo, on leadership. The interview turned to the employee review process. Here’s what Bartz had to say:

“If I had my way, I wouldn’t do annual reviews, if I felt that everybody would be more honest about positive and negative feedback along the way. I think the annual review process is so antiquated. I almost would rather ask each employee to tell us if they’ve had a meaningful conversation with their manager this quarter. Yes or no. And if they say no, they ought to have one. I don’t even need to know what it is. But if you viewed it as meaningful, then that’s all that counts.”

The same type of traditional approach can be associated with how companies view their total healthcare costs. Businesses wait for the “annual review” with their insurance brokers or consultants, get slapped with double digit increases and more often than not shift expenses to employees or reduce benefits altogether, rather than getting to the root of the problem, which is “what is driving my healthcare cost and what opportunities do I have to manage these expenses?”

The annual procurement process of shopping for healthcare and placing vendors on a spreadsheet is not working. If you had the opportunity to head off or mitigate cost, wouldn’t you? Businesses need to take control of their healthcare plan and start managing healthcare on a regular basis, in the same way they do other aspects of their business and stop waiting for the annual procurement season to assess their benefits.

- Keith Lemer