If you’re like many self-insured employers, benefits cost savings is on your mind in 2020. The coronavirus pandemic, loss of productivity, and shutdowns have caused hardship at many large organizations. Benefits advisors and professionals are not only trying to help employees cope with COVID-19 (not to mention mental health impacts), but they also need to help their organizations find cost savings.
The best way to save on benefits costs is to find “overspending,” or areas where your benefits dollars are going to waste. We recently shared some tips to help tackle overspending with healthcare analytics tools. Another popular cost savings strategy is to prevent overspending in the first place. Today, we’ll explore two tips for cost savings that take a preventative approach: direct contracting and preventive visits. Let’s dive in.
If you love attending benefits industry conferences and events, you’re probably familiar with the benefits of direct contracting. Direct contracting is a partnership between a health system or hospital group and an employer where they agree on costs, transparency, and data sharing. Essentially, direct contracting cuts out the middleman of a health insurance carrier’s network and allows employees and their families to seek care anywhere within a given provider system.
There are a number of services that health systems provide as part of their partnership efforts with employers:
Here’s an example of how direct contracting can work for employers. We can all agree that pharmacy benefits are a huge cost driver for employers. If they were to contract with a large hospital system in their headquarters’ region, they’d get the benefit of hospital research and data. The provider system would make recommendations for new drugs to include on their plans, track the success of research studies on chronic condition medications, and recommend more affordable alternatives to name-brand or pricey prescriptions.
Additionally, benefits teams would be able to better predict benefits spending year over year thanks to agreed-upon costs for common procedures like knee replacements, appendectomies, or imaging services. While self-insured employers and healthcare providers may not feel like they’re “playing on the same team,” they actually share a common goal: better patient health. They want to improve the lives of their population, get better outcomes, and ensure patient/member satisfaction. Direct contracting can lead to significant cost savings for employers while also helping members access quality providers.
Dental benefits have gone from “nice to have” to a standard feature of most self-insured employers’ benefits plans. According to a WebMD survey, 90% of employers with 500 or more employees offer dental benefits. Dental policies can cover preventative care, restorative care and some minor surgeries. While it may seem like a benefit that adds costs to a benefits plan, voluntary benefits like dental and vision can often help catch disease early. They also are correlated with better health overall.
Benefits and wellness experts know the importance of dental hygiene and how it affects their population’s overall health. Poor dental hygiene can increase the risk of cardiovascular disease and infections. The American Academy of Periodontology also suggests that periodontal disease can negatively impact a person with diabetes because it makes it difficult for the body to regulate sugar and can expose a diabetic to chronic complications. Those with these high-cost conditions may benefit from regular preventive dental visits as part of your overall care management strategy.
Our sample data shows that the vast majority of dental claims for this population are actually preventive care visits:
That’s a good sign for an employer. Benefits experts suggest promoting preventive care visits as part of your Open Enrollment strategy. You want members to utilize these benefits regularly as a means of early diagnosis and prevention.
Vision benefits function in much the same way. Annual eye exams help minimize unwanted healthcare bills because they detect eye disease or injury before the patient suffers vision loss or permanent damage. Vision loss could lead to short-term or long-term disability, which is disruptive not only to the employee’s job and productivity, but also to the organization. A disability claim is far more expensive than a yearly eye exam.
Dental and vision preventive visits are just one example of how cost savings can be achieved with preventive care. The same is true for many medical diagnoses; catching a condition early can lead to better patient outcomes, lower costs, and better overall health.
We hope these tips help you stop benefits overspending before it starts. As always, the key is working closely with benefits advisors to tap into healthcare and benefits data. It’s a crucial step to cutting benefits costs while still offering great programs for employees.