News & Information

 

FEATURE PRODUCTS

The U.S. Master Pension Guide reflects the latest regulations, rulings and cases for qualified retirement plans, surveying the different type of plans from which an employer may choose, and describing the procedures for obtaining plan qualification.

Learn More »

CCH® BENEFITS — 5/14/08

Employer Focus Shifts In 2008 To Health Promotion And Wellness, Illness Prevention

From Spencer's Benefits Reports: Prevention and wellness are among the key benefits priorities, along with reducing the cost of benefits and value-based benefits design, for employers responding to the Midwest Business Group on Health’s (MBGH) 2008 Readiness to Change Survey. The survey, distributed in March and April through more than 60 business coalitions, received responses from 114 employers across varied industries, nearly three-fourths (72%) of which had more than 1,000 employees. One-third of the responding employers were in manufacturing and most were based in the East and Midwest regions.

The survey was developed to assess employer understanding, use of, and readiness to adopt value-based benefit design strategies. Value-based benefit design bases coverage for certain costly medical treatments on documented, reliable scientific evidence. Drugmaker Glaxo Smith Kline funded and provided research support for the study.

The greatest proportion of the employer respondents (41%) had cost increases ranging from 6% to 10% from 2005 to 2007, while approximately one-third (34%) had an increase of less than 5%. The great majority of employers (83%) continue to agree that health care benefits are a necessary cost of doing business, and three-fourths (76%) view health care benefits as an investment in human capital with a measurable outcome, and they are highly supportive of improving employee health. More than three-fourths (77%) of employers think that they should not have to pay hospitals or be billed for services resulting from preventable medical errors or infections that are not related to the patient’s admission.

“We’ve found that employers are shifting their view of health benefits from that of a necessary expense to a critical investment in the health management of their employees,” said Larry Boress, MBGH president and chief executive officer. “There is a growing trend toward the use of value-based benefit strategies, such as providing financial incentives to motivate healthy behavior changes and improving access to proven, clinically beneficial care.” Employers are relying less on cost shifting to employees and focusing more on preventive care and incentives to promote employee engagement in their care, Mr. Boress noted.

Wellness Incentives

More employers (41%) are offering incentives, such as reduced cost sharing, to employees who participate in wellness and disease management and adherence programs, and another 31% plan to do so in the next couple of years, the MBGH found. Nearly half (46%) already offer their employees incentives to complete a health risk assessment, and another 24% plan to do this in the next couple of years. More than three-fifths (62%) of employers said that they will waive member copayments or reduce costs for drugs that are proven effective for prevalent conditions, and 72% of respondents agree that use of those drugs will reduce use of other services for the targeted condition.

More than two-thirds (68% and the largest proportion by far) of employers think that the incentive amount can be less than $50 to steer a member to an available generic drug option. Increasing employee engagement in maintaining their own health and improving chronic disease management are the top two priorities and strategies for employers, while reducing the cost of benefits fell from second place to third place.

Quality information, of increasing importance to employers and consumers, still is not available: 85% of employers want health care plans to provide members the costs of medical services, and a majority agree that the necessary information for consumers to make informed choices is unavailable for quality of physicians (64%), effectiveness of drugs (56%), and quality and safety of hospitals (54%). Some three-fifths (59%) of employers believe that members would change to better-performing providers if they understood how quality varies and affects outcomes. More than three-fifths (61%) of respondents said that they were interested in “high-performance” networks with only providers who are identified as “quality” and efficient, while nearly half (48%) are interested in a network with only “quality” providers. The term “quality” was not defined in the study.

Few Collect Productivity Data

Although employers recognize the value of collecting productivity data, few are doing so. Two-thirds of employers agree on the value of polling employees on the effect of their health on their work performance, but only 12% collect productivity data and 64% of these do so through a health risk assessment. In light of these findings, company data and experience are the top influences on benefit design strategy for nearly all (95%) of employers. More than two-fifths of employers (45%) said that they integrate data received from all of their vendors, but 37% said that they do not and 21% do not know if they do so.

Fewer employers this year than last year identified themselves as “leading edge” in terms of benefit design philosophy (18% versus 21%), while the number that considered themselves “careful watchers” and “conservative” rose by 9% and 6%, respectively, to 63% and 19%.

To assist employers in developing and communicating benefits programs, the MBGH plans to study how employees view and react to various value-based benefits. The strategy includes conducting focus groups among workers to determine their understanding and perception of value-based health benefit programs. The MBGH plans to release the results of this study later this year.

For more information, visit http://www.mbgh.org/templates/UserFiles/2008/Benchmarking/MBGH_Employer_Survey_May2008.pdf.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

Visit our News Library to read more news stories.