Health care spending in Massachusetts continues to rise, faster than the state’s rate of inflation. According to the Henry J. Kaiser Family Foundation, national health care costs have also risen moderately over the past couple of years, partially because consumers are paying higher deductibles and co-pays and have fewer choices in providers, and also due to higher costs for services overall.
With more people getting access to health care and with prescription drug prices rising, reigning in the cost of health care for both employees and employers remains a challenge. These factors, along with the uncertainty of what will happen with the Affordable Care Act, underscore the need for all employers – including municipal governments – to work toward building a multi-year, rolling strategy for controlling costs. This can be accomplished by reviewing several areas of health care expenditures, exploring innovative solutions, and implementing a proactive plan to help mitigate costs.
Looking at how and where employees get care
A key part of getting a handle on costs is to understand the health care pricing system and relaying this information to employees. Clearly, the system is far more complicated than just going to any doctor, getting a bill in the mail and paying for whatever the appointment or procedure costs. Employers must educate employees so that they can make the best, informed choices about providers, location of services, prescription drug choices, etc. that will help them control their own costs – which in turn can help control employer costs.
One area where education can help is in how medical services and procedures are “tiered” in terms of pricing, and how these costs can vary greatly between medical facilities. Many employees may simply not be aware that there is a difference in cost from one facility to another, but the fact is in many cases these costs can differgreatly from place to place. For example, an MRI at Mass General could end up costing both the health plan and the patient far more than an MRI performed on the exact same machine at a regional medical facility. This type of tiered system, which has become more of a trend in MA over the past several years, is based on both cost measures and quality – and can benefit both the provider and the patient, as well as the employer sponsoring the plan. When employees understand the structure and cost differences, they are empowered to make better choices and potentially save money on their bills.
Emergency room (ER) usage should also be examined when looking to control costs. One recent study showed that more than 70 percent of ER visits could be avoided, with less than 30 percent requiring emergency care and being unpreventable. In many true non-emergency cases, going to a drug store in-house clinic can be a better option at a much lower cost. Some health plans are also rolling out tele-medicine programs, where the patient can see a physician face to face via an internet call and even get a prescription – without an appointment or referral, for minor and more routine issues. These programs offer a convenient and lower cost alternative, particularly when the doctor’s office is booked or the patient is contagious.
Other factors in addressing costs
While there are some factors that employers can directly impact – such as the utilization issues covered above – there are other areas that are more in the hands of health plans and the health care industry in general. For example, in Massachusetts our municipal health plans are allowed to make changes year to year based on the Group Insurance Commission’s (GIC’s) benchmark plan. So, when the GIC raises deductibles as part of its benchmark plan, other health plans may do the same. Because the costs for health care services typically rise each year, increasing deductibles and co-pays are one of the only ways health plans are able to lower premiums for employers and employees. Managing co-pays can also help us impact behavior; for example, if an MRI requires a $100 copay the employee could be more likely to explore other options first.
Health plans are also able to mitigate costs through offering limited network plans, such as one where employees may have access to one group of physicians working within the same hospital network. At MIIA, we piloted such a program last year in Central and Eastern MA, and plan to expand to other geographic areas in the state as early as this July. Limited network plans can significantly reduce costs for the employee, and also for the employer because premium costs are lower. We expect these plans to become more popular and more attractive to municipal entities and employees in the near future.
Another trend that could help control spending is prescription drug cost tiering. In recent years, most health plans have offered prescription drug prices set in a three-tier system: generic (tier one), preferred brand name drugs (tier two), and non-preferred brand name and specialty drugs (tier three). Many plans are beginning to separate out specialty drugs into a fourth tier, as the price for drugs to treat specialty conditions such as Rheumatoid Arthritis, Hepatitis C, and Parkinson’s can be much more costly than the other categories. Classifying this fourth tier with a higher deductible or different pricing structure may help reduce costs for those who do not use specialty medications.
In addition to educating employees about how their health plan works and how to best leverage benefits and control costs, employers can also become a positive influence on employees’ overall health through worksite wellness programs. Creating a culture of health in the workplace – through a well-planned out calendar of onsite programs focusing on wellness, fitness, and nutrition – is a key preventative measure in improving employee health. The best wellness programs include a variety of topics and make healthy habits accessible to everyone, whether they be regular exercisers, beginner exercisers, stressed out employees who need to find a work life balance, or smokers who need help quitting. In the long run, a robust employee wellness program can go a long way toward mitigating health care spending as well.
Three Keys to Creating a Wellness Culture