Increasingly, employers’ efforts to manage their health care costs are focused on getting employees to become better health care consumers. However, “employers have realized that they just can't encourage workers to be better consumers,” said Devon M. Herrick, senior fellow at the National Center for Policy Analysis in Dallas. “They have to give employees the tools and an incentive to become better consumers.”
For a growing number of companies, the answer to greater health care consumerism is multifaceted. “Health care consumerism means that employees are making healthy choices throughout their daily life—eating right, exercising, not smoking, monitoring their health numbers and doing everything they can to change those numbers if they are out of line,” said Joann Hall Swenson, health engagement best practice leader for consultancy Aon Hewitt in Minneapolis.
In addition, it means that when employees do use health care, they are aware of its cost and have an incentive to reduce the cost of that care. “It all comes down to plan design, incentives, a communication strategy and facilitating right behaviors,” Swenson said.
Adopting Consumer-Directed Plans
On the plan design side, a growing number of companies are adopting consumer-directed health plans (CDHPs) with health savings accounts (HSAs) or health reimbursement arrangements (HRAs). (To learn more about these account-based plans and how they differ, see the SHRM Online article “Consumer-Driven Decision: Weighing HSAs vs. HRAs.”)
Vail Resorts in Broomfield, Colo., with 4,500 employees, shifted its focus to health care consumerism after it launched a full replacement CDHP with an HRA in August 2011. The goal of this shift was to get employees to pay attention to their health care rather than just seeing it as an entitlement. The company now offers two plans, both linked to an employer-funded HRA. One has a lower deductible but more out-of-pocket costs when employees receive health services. “We wanted people to choose a plan based on their own risk tolerance,” said Rebecca Shipley, the company’s director of total rewards. “We are really trying to run a health plan, not a sick plan.”
Giving Employees a Reason to Care
Employers are getting the message when it comes to offering incentives for stronger health care consumerism. “You can’t expect an employee to do something that benefits the employer if it is difficult,” Herrick said. “Employers need to give them tools to become better consumers and a reason to use those tools.”
Providing tools to become better consumers—
and a reason to use those tools.
For example, education can help employees make better choices when it comes to pharmacy benefits. Drug prices vary. Physicians often provide samples of more expensive drugs that can lead individuals to forgo similar but less-pricey options such as generic versions of brand-name prescriptions.
Explaining to employees how smarter pharmacy shopping can benefit them financially by saving HSA or HRA funds can be effective. “If someone takes a certain drug to treat allergies and realizes that his out-of-pocket cost will use up his entire HSA balance, that employee has an incentive to look for a cheaper alternative, such as an available generic or an over-the-counter drug,” Herrick said.
In many ways, efforts to move employees toward greater health care consumerism are similar to the efforts employers have made to get employees to save for retirement using 401(k) and other defined contribution plans. In both cases, more responsibility has been shifted to employees, and employers are using incentives to reward desired behavior. Just as 401(k) plans provide matching contributions to reward retirement plan participation, employers are using incentives, such as contributions to HSAs and HRAs, to spur greater employee engagement in their health care decision-making.
A 2011 survey of mid-size and large U.S. companies conducted by Towers Watson and the National Business Group on Health found that 54 percent of these employers offered financial rewards to employees who participated in health management programs and activities, while 80 percent expect to offer such incentives in the near future.
Even as incentives become more common, these employers increasingly are adding penalties to the mix. The survey found that a growing number of employers have started to impose higher premiums on employees who do not complete or participate in health management/wellness programs and activities. In 2011, 19 percent of the surveyed companies used these penalties, but twice that percentage (38 percent) expect to add them in 2012.
If health care consumerism is to flourish, employers need to track their efforts to see if employees are changing their behaviors. To track plan activity and results, Vail Resorts developed a dashboard of metrics that it reviews at least monthly.
The dashboard shows how employees have progressed toward earning their incentives and how many have interacted with the health plan concierges located throughout company’s worksites. When the plan was rolled out, 2,100 individuals participated in a company-offered health fair and underwent biometric screenings, while 800 of these individuals completed an online health risk assessment. The dashboard showed that the health care concierge team fielded 1,800 calls in the first two months following the plan’s rollout.
Vail Resorts plans to review claims data to gauge how the health plan and its communication and education programs are working. For example, because pregnant women who live at high altitudes are at higher risk of premature birth, the company is working with local providers to increase awareness and support women covered by the health plan throughout their pregnancy. Claims data will show whether these efforts are having a positive impact.
“We use all of this information to decide where to push communication,” Shipley said. “If you just roll out a CDHP and wash your hands of it, then it's not going to be as effective as it could be. You have to constantly watch it and monitor it.”
Swenson predicts that more companies will spread out their communications budget to provide ongoing communication activities rather than investing so heavily during open enrollment season. “Companies need to continually engage employees because the real results of consumerism happen on a day-to-day basis,” she said.
Joanne Sammer is a New Jersey-based freelance writer.
Price Transparency: GAO Finds Hurdles—and Successes
In September 2011, the U.S. Government Accountability Office (GAO) released its report Health Care Price Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care.
The GAO found that several hurdles make it difficult for consumers to obtain price information for the health care services they receive, particularly estimates of what their complete costs will be. These included the difficulty of predicting health care services in advance, billing from multiple providers and the variety of insurance benefit structures. When the GAO contacted physicians’ offices to obtain information on the price of a diabetes screening, several representatives said the patient needed to be seen by a physician before the physician could determine which screening tests the patient would need.
Legal hurdles that impeded obtaining price information included contractual obligations between insurers and health providers that prevented the disclosure of negotiated rates as well as concerns over antitrust law violations if negotiated rates are shared.
Countering these hurdles, the GAO examined several public and private price transparency initiatives showing encouraging results. The price information made available by the selected initiatives ranged from hospitals’ billed charges, which are the amounts hospitals bill for services before any discounts are applied, to prices based on claims data that reported payments made to a provider for that service. The price information varied, in large part because of limits reported by the initiatives on their ability to collect certain price data.
The GAO found that two of the initiatives—one publicly available with information for a particular state and one available to members of a health insurance plan—were able to provide an estimate of a consumer’s complete cost.
In addition to price information, most of the selected initiatives provided a variety of nonprice information, such as quality data on providers, for consumers to consider along with price when making decisions about a provider.
—SHRM Online staff
Employers Accelerate Efforts to Control Health Costs, SHRM Online Benefits Discipline, November 2011
Consumer-Driven Decision: Weighing HSAs vs. HRAs, SHRM Online Benefits Discipline, May 2011
Sweeping Health Plan Design Changes on Tap, SHRM Online Benefits Discipline, March 2011
Aetna Study: CDHPs Saved Employers Millions of Dollars, SHRM Online Benefits Discipline, February 2011
A Pollster's Insights for Effective Health Care Communications, SHRM Online Benefits Discipline, October 2010
Communicating CDH Plan Designs, SHRM Online Benefits Discipline, March 2006
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page