BHCG Monitor: Focus on Health Care Benefits

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The New Health Care Imperative – Driving Performance, Connecting to Value

On June 24 Janet Lucas-Taylor and Steve Riedl of Towers Watson presented highlights of the 19th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care to the Business Health Care Group’s Benefits Subcommittee. The 2014 report, titled, The New Health Care Imperative – Driving Performance, Connecting to Value, identified the actions of the best-performing employers as well as current trends in health care benefit programs of U.S. employers with at least 1,000 employees, across a variety of industries. The survey was completed by 595 employers between November 2013 and January 2014.  Survey respondents collectively employ 11.3 million full-time employees and expected to spend approximately $98 billion on health care in 2014.

The following conclusion from the report is reprinted courtesy of Towers Watson. To review and download the complete report, click here.

Conclusion: Driving Value in Health Benefit Programs Is More Critical Than Ever

As responses to this year’s Towers Watson/NBGH Survey show, employers continue to take steps to derive the most value from their health benefit programs. In the current financial and competitive environment, these actions are more important than ever. Best performers are more assertive than other employers in taking steps to both improve their health cost trend and help employees manage their well-being. The best performers’ health cost trend of 1.6% in 2013 was driven by several critical actions. In general, best performers:

  • Design health plans that emphasize high performance
  • Establish favorable contracts with pharmacy benefit managers and drive members to use generic drugs
  • Understand and respond to the underlying population health risks of their employees
  • Contract with highly effective partners (health plans, pharmacy benefit managers and providers) and aggressively negotiate financial terms with a growing focus on VBDs
  • Establish coverage tiers based on the number of covered dependents

In our view — which is borne out by best performers’ actions — employers that want their health plans to remain viable over the long term must take a holistic approach that focuses on five areas:

  • Benefit delivery channel optimization including improvements to self-managed programs and exploration of alternatives such as private exchanges or hybrid arrangements
  • Benefit restructuring including new plan options, benefit redesign, a recalibrated contribution strategy and tier structures, and a link between HSA strategy and the company’s retiree health benefit approach
  • Network optimization and value-based contracting including reductions in unit costs and improvements in efficiency, quality and outcomes, as well as risk transfer arrangements to providers
  • Population health management including chronic condition management improvements, risk factor reduction and care-gap improvement

Employee accountability and engagement including use of quality and transparency tools, point-of-care cost-sharing designs, ABHPs and incentive approaches.


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BHCG Monitor: Focus on Health Care Benefits - April 2012