Access Exclusive, Trusted HR News & Resources >>> New Professional Members Save $20 Today
We asked HR professionals to tell us about their time in HR. Here are their stories.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Set yourself up for success with virtual SHRM-CP/SHRM-SCP Certification Prep Seminars.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
With health costs still rising, employers are adopting aggressive approaches to involve employees in managing their own health.
The rate of increase in health coverage expenses has eased a bit lately as employers have shifted costs to employees and reduced benefits. But experts warn that these efforts have gone about as far as they can go, and employers will have to search for other ways to reach long-term cost-containment success.
“Employers cannot keep shifting costs indefinitely” to employees, says Blaine Bos, a Minneapolis-based principal with Mercer Human Resource Consulting. “Salaries just aren’t keeping pace with this, and low- and even mid-level employees can’t afford the out-of-pocket expenses.”
As a result, longer-term strategies for managing costs are coming to the forefront, Bos continues, and employers are taking “a more aggressive approach in managing their health plans.” In many instances, the new approach draws employees into the process of cutting health costs by having them take on more responsibility for their health.
For instance, some employers are asking their health providers to identify and proactively try to improve the health prospects of employees who stand a good chance of running up large health bills over time. That approach, which often involves offering employees incentives to volunteer personal health and lifestyle information, typically is carried out with third-party providers, although it can be done in-house if the process is kept strictly confidential.
Other employers are relying more on sophisticated analyses of current health claims to find employees on the brink of incurring major health expenses if their conditions are not handled effectively.
“We’ve found that about 15 percent of a group’s population accounts for 80 percent of [the group’s] health care costs,” says Cynthia Donohoe, vice president of marketing and product development at Great-West Healthcare, a national employee benefits provider headquartered in Greenwood Village, Colo. “So it’s important to identify these people and intervene early on.”
Donohoe maintains that if companies “are not focusing on their high-spending group, they’re unlikely to succeed” at containing health care costs.
Bos agrees and adds that this approach has advantages. “While raising the deductible affects everyone, identifying and managing high-risk individuals affects only a select group and does not negatively impact employee morale. And homing in on this group typically yields a higher return over a longer period than cost shifting.”
Yet another proactive approach that emphasizes early medical involvement and active management of employees’ health is the growing practice of placing physicians on-site. Such physicians not only help employees obtain fast, convenient preventive care but also can help them better manage ongoing medical conditions.
All of these strategies—surveying employees, analyzing claims, providing on-site physicians—are yielding positive financial results for employers and getting good responses from employees.
Creating a Culture of Wellness
One of the methods of targeting employees with health risks is based on personal health inventories that third-party providers or in-house wellness centers obtain directly from employees.
Employees fill out annual health-risk assessments, in which they acknowledge troublesome lifestyle issues, existing medical conditions or risk factors that may indicate looming problems. In many instances, the health inventories are combined with annual physical exams and lab tests that track factors such as blood pressure, body mass index, cholesterol, blood sugar and other health benchmarks.
This information-gathering method is typically part of a process often called predictive modeling, in which employees are categorized according to their chances of needing expensive care in the following six to 12 months. The health provider then intervenes by offering wellness or disease management programs designed to pre-empt acute and costly health crises.
One approach to predictive modeling—developed by Professor Brenda Lyon of the Indiana University School of Nursing and used by the Haelan Group, an Indianapolis-based health services firm—takes into account each individual employee’s emotions and their sense of how they feel. Analysis of such self-reported information from employees can produce highly reliable forecasts of who will become major users of health care, according to Julie A. Meek, founder and CEO of the Haelan Group.
Gathering and interpreting such data must be carried out with strict confidentiality and adherence to federal privacy-protection rules, Meek adds, and employees’ participation must be voluntary. Data can be released only on a need-to-know basis—to an employee’s health coach, for example—and can never be used to discriminate against any employee.
A program based on the general themes of predictive modeling was adopted by University Health Care System, a hospital in Augusta, Ga., after health care claims in 2003 exceeded budget by more than $2 million. The reasons for the overruns, according to University, were employees’ above-average illness rates and the rising age of its workforce.
“We completely revamped our benefits structure to focus on wellness and early detection of disease,” says Peggy Sease, PHR, University’s director of human resources. An in-house committee developed a program, Wellness Works, in two months with a first-year budget of $200,000.
Rick Roche, University’s vice president of human resources, says the program’s budget provides for a wellness health coach and a wellness case manager, educational seminars, various in-house fitness and yoga classes, free memberships at the organization’s wellness center, a walking track around the hospital, and cafeteria options consistent with South Beach Diet and Weight Watchers programs.
In addition, University now pays the total cost—no deductibles or co-pays—for age-appropriate health screenings such as mammograms and colonoscopies. These benefits currently apply only to covered employees; spouses and dependents may be added to the program later.
The program is centered on detailed employee health-risk assessments, individual health goals, and annual physicals that track an employee’s blood pressure, cholesterol levels, body mass index and glucose tolerance. All the information is kept confidential, as required under federal regulations on the privacy of health data, and is collected and maintained through the in-house Employee Wellness Center, which keeps employee health files separate from HR’s employee records.
Although employees’ own physicians do not have automatic access to the health files, they can coordinate through the employee to obtain certain information from the wellness center. For example, an employee’s physician can recommend—based on an individual’s health history—that the wellness center perform particular tests on the employee, who can then request that the results be sent to the physician.
Translating the Results
Using the information gathered from the health-risk assessments, University’s Employee Wellness Center personnel place each employee in one of three categories:
At the beginning of the program, all employees were placed in a 70/30 plan—meaning University pays 70 percent of health costs after a deductible has been met and the employee pays 30 percent. As an incentive to participate in Wellness Works, those who join and complete their health-risk assessments and physicals are moved to a 90/10 arrangement.
Although the program is optional, all but 14 of the company’s covered employees have signed on.
Employees in categories 2 and 3 set individual health goals, which are “very achievable,” says Roche. “Someone who is obese has to lose only 5 percent of his or her body weight in the first year.” Employees who don’t meet their health goals are placed back in the 70/30 plan for 12 months.
The program’s purposes are to hold health costs at their current level plus inflation for the next three to five years and to improve employees’ health status. “We want to keep people in category 1 healthy, move people from category 2 to category 1, and keep category 3 employees as healthy as possible,” Sease says.
Employees’ First Impressions
HR communicated the changes in University’s health benefits approach through a kick-off session, letters from the CEO, posters, fliers, intranet announcements, employee meetings and employee publications. “At first, most employees had a wait-and-see attitude, and there was a small group of resisters,” says Roche. “But most people are responding positively now.”
Although the program was officially launched only at the start of this year, many employees began making lifestyle changes after completing their health-risk assessments last fall.
One such early participant is Schevella Nicholes, a secretary in University’s print shop. “I had tried fad diets and cutting back, but nothing seemed to help,” she says. “Wellness Works gave me all the tools I needed to get serious. I’ve lost 60 pounds, and when I have health questions, I just call the health coach.”
Roche says the program has proved popular with new employees and “will be a good recruitment tool and a long-term success.”
Spotting Problems Quickly
Another route open to companies that want their employees’ health issues addressed proactively is to contract with third-party administrators (TPAs) for help with preventive measures and claims management.
One company that has adopted that approach is Health Enterprises of Iowa, a 66-employee firm in Cedar Rapids that offers services such as diagnostic procedures and therapy to hospitals and other health care providers. “We are looking more and more at preventive care,” says Kylene Dunham, PHR, director of human resources. “We pay for our employees’ physicals and pay for home exercise equipment or gym membership.” (For more information on company-sponsored exercise arrangements, see “Exercise Options”.)
But the company, which has a self-funded health plan, depends largely on Auxiant, a TPA in Cedar Rapids, for help in identifying and managing potentially high-cost cases. Auxiant in turn has partnered with Innovative Health Strategies (IHS), a medical management firm in Augusta, Ga., that offers disease management programs, a nationwide provider network, large-case management and other services. But at the core of its offerings is its claims, pre-certification and prescription surveillance software. The software program can identify potentially costly cases before claims are paid, enabling physicians to verify diagnoses, manage care and review billing.
Auxiant contracts with IHS to securely download Auxiant’s groups’ claims data, prescriptions and pre-certification records and scan them against a database of more than 60,000 physician-written clinical algorithms. The aim is to detect, through the claims, conditions that are likely to become catastrophic—sometimes on the basis of a claim as small as $30.
Once a “hit”—a potentially large case—is identified, the case is assigned to one of IHS’s more than 100 board-certified consulting physicians, who represent almost every medical specialty. The physician reviews the clinical and financial aspects of the case, often speaking with the attending physician. Then, together with the IHS staff, the IHS physician monitors the patient throughout the continuum of care, ensuring appropriateness of care, avoiding unnecessary treatment and negotiating pricing.
The IHS physician also reviews the medical billing line by line for possible errors and speaks peer-to-peer with the provider if problems are identified.
For Health Enterprises, the claims review approach has been a plus, according to Dunham. Savings for 10 months came to just over $40,000, she says.
The Doctor Is In—Again
Yet another approach for detecting health problems before they become more serious and expensive is to bring the doctor to the workplace. This can be especially helpful for workers who delay seeking preventive health care for various reasons, including cost, lack of transportation or too much unpaid time spent in doctors’ waiting rooms.
Among the growing number of companies restoring the role of the company doctor is American Retirement Corp. in Brentwood, Tenn. The company has 3,500 covered employees and operates 67 retirement communities in 14 states.
In 2002, when the company’s health claims came in a whopping $4 million over budget, American Retirement decided to make it easier for its employees to access care. The company opened on-site clinics at the two facilities that were most over budget—one in Tampa, Fla., and another in Peoria, Ariz. “We had been considering bringing physicians on-site, and when our budget exploded, we took action,” says Laurie Mathis, senior director of benefits.
American Retirement contracted with CareHere, a Franklin, Tenn., company that offers on-site medical care, to place board-certified family practice physicians in both facilities. CareHere physicians work with employees to complete health-risk assessments, conduct lab tests to identify risk factors and diseases, then coach employees and manage their care. As an outside consultant, CareHere can monitor the health of individual employees while maintaining confidentiality as required by federal and state laws.
Each facility now has a physician on-site for four hours two days a week. The doctors serving American Retirement perform physicals, provide primary care and monitor employees’ health conditions. Employees can schedule appointments online, via a toll-free number or directly through the clinic. “The doctors generally see 12 or 13 patients in a four-hour period,” says Mathis. The physicians’ hourly fees, paid by American Retirement, are $90 in Tampa and $100 in Peoria, and the physicians provide their own malpractice insurance.
To encourage employees to use the voluntary program, complete their health-risk assessments and undergo lab tests, American Retirement offers gift certificates for nearby retailers. “Response has been great,” says Mathis. “We’re finding people in the early stages of diabetes, hypertension, and other diseases and conditions.”
Like many of CareHere’s clients, American Retirement provides selected generic medications through the on-site physicians. About 20 such medications are dispensed without charge, “and we are analyzing whether it would be cost-effective to add an additional 129 drugs to the list,” Mathis says.
The costs of setting up the on-site approach last year—which involved arranging for physicians and other health specialists as well as supplies—came in $8,000 under the $100,000 that was budgeted, says Mathis. The company’s goal was to break even the first year and reap savings over time, but actual results are better than expected, Mathis says. “In Tampa, we were running $450,000 over budget [in total health care expenses] from January to June 2003. From July to December we reduced that to $50,000. Not all the savings came from the on-site clinic, but it definitely made a difference.”
Another plus to the system is that the in-house physicians assign diagnostic codes to each employee visit, allowing CareHere to paint an electronic picture of usage in the clinics and to compare expenses with the costs of comparable care in an outside facility. This also creates a database the company can use in predictive modeling and in structuring its benefits program.
“Employee surveys show that 95 percent of the employees are very pleased with having a doctor on-site,” Mathis says. “We think this has been good for employee morale and feel sure it will result in considerable cost savings downstream.”
Betty Sosnin is a freelance writer based in Augusta, Ga.
A Little Relief On Health Increases
Health benefits cost increases slowed for a second consecutive year in 2004, according to the National Survey of Employer-Sponsored Health Plans 2004 from Mercer Human Resource Consulting. Although average per-employee costs rose 7.5 percent--more than inflation, which was about 3.3 percent last year--it was the lowest rate of increase since 1999 and considerably below the previous year's 10.1 percent increase, Mercer reported.
Cost increases were steeper--9 percent for companies with 500 or more employees, according to the survey, but were lower 5.5 percent--for companies with 10 to 499 employees.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
HR Education in a City Near You
SHRM’s HR Vendor Directory contains over 3,200 companies