As employers struggle with decisions regarding how to insure their employees in the changing health care landscape, brokers are using newly accessible data to help employers assess their options.
With the release late last year of Centers for Medicare & Medicaid Services (CMS) data on health care charges, the status quo is changing. Comprehensive claims and utilization data, which can supplement internal data collected by an employer, is much more accessible today. Brokers can greatly enhance the service they offer their clients by introducing these data in order to help employers benchmark their own plan experience against local market averages.
Brokers know that the determination of the best plan design for a particular employee group goes beyond just premium cost. Choosing a plan requires an understanding of where and how dollars are being spent, as well as where the risks lie for employers and, ultimately, their employees.
Understand where and how dollars are spent,
as well as where risks lie for the employer and,
ultimately, its employees.
By fully understanding the needs of an employee population, brokers can guide their employer clients and help them to identify the most affordable solutions—whether it is a low-benefit plan or narrower network—that will still provide employees with the coverage they require. This information can also help brokers advise clients as to how best to communicate about benefits to their employees during open enrollment and throughout the year.
Three key data categories that can provide support in assessing the adequacy of health benefit plan options are utilization rates, reimbursement risk and costs per capita.
Utilization rate analysis can offer valuable insights regarding how health care is accessed by employees and their dependents: What are the services that a particular employee group is using and how does this differ from the experience of other groups?
Information regarding health care utilization can be accessed from an employer’s insurer or from external data sources, such as the not-for-profit FAIR Health , that capture a larger cohort of individuals and provide comprehensive health care charge and utilization data by geographic region.
Ideally, by collecting both employee utilization data and broader market data, comparisons can be made to help understand how a client’s employee population differs from, or compares to, the norm. Therein lies the opportunity for plan customization, cost savings and, potentially, evaluation of other benefits such as wellness or disease management programs that may address issues that data analysis brings to light.
Utilization rates provide a window into disease prevalence, employee preferences for alternative treatments and procedures, common avenues for accessing care and other important insights. For example, understanding the use of hospital emergency rooms can help employers assess the composition or adequacy of an insurer’s network (e.g., such data may suggest that employees are using emergency department because they lack primary care options that are either geographically closer or have more convenient hours of operation). Likewise, data regarding emergency-room visits may encourage employers to provide education about less expensive options in nonemergency situations, such as urgent care facilities.
The comparison of utilization data from the broader population to specific employee data can also help to pinpoint health needs that are unique to a company’s employee population. For example, where work routines require repetitive tasks, it would be prudent to compare the utilization of carpal tunnel surgeries in the employee population to overall regional data. If there is a significant difference, brokers may consider counseling their clients to both ensure that therapies and procedures related to carpal tunnel syndrome are covered as well as to suggest the addition of educational and preventive services to reduce injuries in the future.
Increasingly, many employers are making the decision to self-insure, either partially or fully. The Affordable Care Act (ACA) includes a range of exemptions for self-insurers, and many employers see this as an opportunity to take greater control of the cost of employee health benefits.
In order to effectively guide employers facing this decision, it is necessary to have a clear understanding of the risks associated with self-insurance. While costs can be lower, the bar is higher to predict and manage employee health costs.
As the health care system experiments with new reimbursement models, it is more important than ever for brokers to help their employer clients understand how each model works and the potential resulting costs. Using reliable market data, employers can model reimbursement risk under a variety of reimbursement arrangements, such as accountable care organizations (ACOs), bundled payments and patient-centered medical homes.
Looking closely at how charges are billed for common procedures under each reimbursement model is a key tool to fully understanding the risks associated with those models. For example, this analysis can demonstrate what a self-insured employer would ultimately be required to reimburse for standard care under an ACO model as compared to paying for a hospital-based specialist through standard negotiated rates.
The demographics of companies that self-insure are changing as companies with much smaller employee populations are making the transition. Understanding the nuances of reimbursement risk is especially important for small companies considering taking on greater financial risk through self-insurance.
Costs Per Capita
Understanding annual health care expenditures per employee for various categories of medical services, information that can be gathered from that employer’s insurer, can help to highlight important trends in health care costs for employers. Such analyses can identify potential cost trigger points and pinpoint opportunities for savings.
Did an employer-sponsored wellness program ultimately reduce expenditures? Did the flu season one year result in higher per capita costs? By identifying these fluctuation points, brokers can work with employers to apply this information to enhance benefit design and develop education programs to help employees control their out-of-pocket costs.
It is also important to look closely at employee premium information. By understanding the year-over-year trend in employee costs and juxtaposing this information against the employer per capita expenditure, brokers can better understand how changes in employer actions—plan design, wellness programs, etc.—ultimately affect employee out-of-pocket spending.
By helping employers effectively use historical cost data, brokers can support their clients in maintaining initiatives that are cost-effective as well as plan for potential trigger points that result in increased costs. With employers’ ongoing interest in understanding how money invested in employee health care coverage is being spent, a comprehensive understanding of the costs for which they have been responsible to date can help provide context for better decision-making regarding optimal plan designs.
The insights garnered from analysis of internal and external claims data are essential to helping employers choose the right plan offerings for their employees. But, without ensuring that employers are also providing their employees with sufficient education about their benefit plans, these attempts at cost control may be in vain. Brokers can provide added value to their clients by helping them educate plan members on how to make the most economical use of health care coverage (e.g., by staying in-network) and how to best communicate plan elements that change from year-to-year (e.g., provisions regarding the reimbursement of out-of-network services). To help with this task, brokers can point employers to a variety of online educational tools.
Claims data offer a new opportunity for brokers to support better decision-making by their employer clients. As all stakeholders in the health care system navigate the challenging landscape of cost-control, ACA compliance and expanded health benefit offerings, linking clients to new decision support resources can further solidify the important broker-employer relationship.
Robin Gelburd is president of FAIR Health Inc., a national independent, not-for-profit corporation whose mission is to bring transparency to health care costs and health insurance information.
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