SAN DIEGO—Partnering with employees to control health care costs can lead to dramatic success, as was demonstrated by Jill A. Kopanis, SPHR, corporate director of HR at Dynamic Dies Inc. in Holland, Ohio, during her session, “Talk Your Way into a Million Dollars” at the 2010 SHRM Annual Conference.
Kopanis explained how, despite being told by consultants and other “experts” that it could never be done, she saved almost $2 million in medical costs compared to the national cost trend. She accomplished this while improving benefits by partnering with the 136 employees at her firm participating in medical benefits—and their spouses.
“Cost shifting isn’t cost control,” Kopanis explained. She believes employees should have “skin in the game” but that much more is needed. Her “winning plan” is built around what Kopanis calls the four “ates” of controlling medical costs: evaluate, educate, communicate and motivate.
“Understand your cost drivers,” Kopanis urged, to find out what your employees don’t understand. Conduct a claims analysis. “You’re the client, so demand that this aggregate information be provided by your insurer, broker or third-party administrator,” she said.
Analyzing claims data, she found coding errors that employees never questioned (a man’s claim for a gynecologist visit and mammogram, for instance). Other findings included:
- The use of a prescription for aspirin, and prescriptions for cough medicine and other remedies likely to be found in the home medicine cabinet (or that have near over-the-counter equivalents).
- Non-formulary prescriptions that ignored comparable treatments on the formulary.
- A home-schooling mom with four children making weekly visits to the pediatrician as a social activity.
Keep an eye out for suspicious claims (multiple charges on the same date) and repetitive dollar charges, as well as changes in usage trends and high-dollar claims, she advised. Usage trends, for instance, led her to discover that an employee was promoting his “great”—but out-of-network—chiropractor to his co-workers, substantially driving up costs.
“Employees don’t understand—and don’t read—EOBs, those ‘strange things that come from insurance companies,’ ” Kopanis pointed out, referring to Explanation of Benefits statements. That’s one reason “employees also tend to view their benefits as a one-price, all-you-can-eat buffet.” Many believe that “if I don’t spend it, some insurance company is going to get rich off of me,” she related. The education process Kopanis created included:
- Meetings with employees by department. Educate them on how their usage affects premiums (Annual Costs + Projected Increases = Your Premium Cost Next Year), how to read and understand EOB statements, the importance of in-network utilization and the likely program changes (more cost shifting) that will become necessary if the company doesn’t better control its medical costs.
- Involving spouses by mailing information specifically to them and by inviting them to general—and spouse-specific—health benefits meetings.
In addition, urge employees to ask their doctors for samples of a newly prescribed medication before filling those prescriptions, to see if they can tolerate it. This avoids having the firm “pay $300 for a subscription that doesn’t work for the employee, and then $300 for another prescription.”
“Keep the data and numbers in front of employees and their spouses,” Kopanis urged. Incorporate education as part of new-employee orientation, provide updates on dollars spent at quarterly meetings and hold annual “state of the insurance” meetings separate from open enrollment (to avoid “information overload”).
Rewarding results works, Kopanis said. She promised no premium increase if she saw health improvements and wiser spending choices, a promise she has been able to keep for five years. And she has been able to provide employees a one-month premium reprieve annually in November, as a holiday bonus of sorts, just as it’s most needed and valued.
How Cost-Conscious Decision-Making=Savings
Research shows that if covered employees have a deductible of over $1,000, they are 60 percent more likely to ask about the cost and quality of health care services before they make a health care decision, said Jane Cooper, president and CEO of Patient Care, a patient advocacy and care information provider based in Milwaukee, Wisc., citing Patient Care data.
"Health care costs are impacted one person at a time and one decision at time," Cooper said during her 2010 SHRM Annual Conference session, "Proven Strategies for Tackling Health Care Costs." A key point to address with employees regarding unnecessary overutilization, appropriate procedures and generics vs. prescriptions, she stated, is "Do we question our doctor or just follow orders?" Among her tips:
• Offer a plan design with sufficient out of pocket cost sharing to provide enrolled employees with "skin in the game."
• Repeatedly communicate the business case for managing health care costs—and results. Messages should be quick, snappy and meaningful.
Example: A poster of a stretched dollar with the message, "When you need a colonoscopy, mammorgram or other preventive screening, compare the costs for doctors and facilities. Remember, these are YOUR health care dollars. Choosing a lower cost provider can save you hundreds!"
• Build incentives into the plan design so that employees use available tools to access cost/quality information about medical service providers for specific procedures (as in this example). Pay policyholders $250 to $3,000, depending on the cost of the procedure, if they access this information and select a high-value provider.
• Develop and promote quarterly education/communication meetings wtih participants that cover benefits cost and quality issues (i.e., "How do you as a patient define health care quality?" "Do you know what procedures should cost and what choices you have for your procedure?"). Make these meetings fun—and make them mandatory.
Cooper noted that even after applying available discounts, the cost of a routine colonoscopy in one region ranged from $1,066 at an endoscopy center to $4,875 at a hospital surgery center. For plans with a $500 deductible and 20 percent member co-insurance, the cost to the employee would be either $613 or $1,375, while the employer's cost would be either $453 or $3,500.
"We have to teach employees—and their families—about the consequences of their choices, and make those consequences immediate and personal," Cooper advised.
Stephen Miller is an online editor/manager for SHRM.
Increased Health Care Cost Shifting Expected in 2011, SHRM Online Benefits Discipline, June 2010
Design Levers Used to Promote Healthy, Cost-Effective Behaviors, SHRM Online Benefits Discipline, June 2010
Employers Consider Their Health Care Reform Options, SHRM Online Benefits Discipline, June 2010