Cost-Containment Tools

When it comes to controlling the cost of employer-sponsored health plans, those who make the actual purchasing decisions have the greatest impact on plan costs. Their success at containing the costs will depend largely on their willingness to implement all forms of cost-containment tools.  One set of tools involves using plan designs to either induce or require participants to make better and more informed healthcare choices, as well as using external resources to oversee benefit and pharmacy utilization, to assist participants with controlling chronic diseases, and to provide participants with advocacy, information and guidance.

The only way plan sponsors can truly control or lower the cost of providing healthcare coverage is to address the actual quality/appropriateness, as well as the cost, of services being rendered.  This cost-containment approach is diametric to the concept of ”cost shifting“ which merely passes through increased premium or plan costs to the employees in the form of lower benefits or increased financial responsibility for the plan costs.

Further, a plan sponsor must be willing to make investments into programs that will reduce the cost of claims or services by providing guidance to participants, reviewing what participants and service providers are or are not doing, and analyzing utilization of services to detect areas of abuse or overutilization.

The following are some cost-containment plan design features that plan sponsors may want to consider:

Disease Management Programs.  Treating chronic diseases is expensive and is directly tied to a large majority of a plan’s overall health care spend.  There are many quality disease-management programs available that provide information, coaching and guidance to people afflicted by chronic diseases.  Using plan design to encourage these patients to take advantage of these informational resources can result in better health outcomes and lower the cost of treating chronic diseases.

Prescription Drugs. Encouraging the use of generic drugs with a smaller co-pay and mandatory mail order purchasing for maintenance drugs can significantly lower pharmaceutical costs associated with your plan.  One part of a plan’s Prescription Program might be to charge an even smaller – or zero – co-payment for maintenance medications for a chronic disease if the participant participates in a disease management program.  A strong Pharmacy Benefit Manager will afford a plan sponsor many cost-containment programs that provide protective oversight when prescriptions are filled, as well as how participants may be abusing or over-utilizing medication.  Many of these programs cost nothing and the others clearly pay for themselves many times over.

Positive Re-enrollments.  All groups should conduct periodic, positive re-enrollments to verify that everyone listed on an employee’s enrollment card is legitimately an eligible dependent.  Statistics suggest that five to 15 percent of enrolled dependents may not be eligible for coverage.  The costs associated with such ineligible dependents are extensive and unnecessarily increases overall funding costs for everyone.

Dental Benefits.  Many dental programs contain various categories of providers, some of which are predicated on the range of their fees.  A plan sponsor can use its plan design to provide incentives to participants to utilize the lower-charging providers.  An example would be to impose little or no deductible and a higher level of co-insurance to those categories of providers.

Vision Benefits.  It should be noted that some vision plans now offer disease management and other programs over and above the routine eye exam and glasses services, usually at no – or a nominal – extra charge.  These programs may provide the early detection and reporting of medical disease indications from within the eyes.

24-hour Nurse Hotline.  Making a nurse available to consult by telephone can prevent unnecessary and expensive hospital ER visits as well as urgent care and/or doctor office visits.  Urgent and emergency care for non-emergent conditions is the most expensive type of care available.  Consulting with a nurse prior to heading to the emergency room can facilitate better consumer healthcare choices and significantly lower plan costs.

Health Care Coalitions.  Belonging to and supporting a statewide coalition, such as the California Health Care Coalition, can help to lower the cost of healthcare to plan sponsors by increasing the membership base that is communicating directly with the largest health plans and service provider networks regarding the need to improve both the quality and appropriateness of services as a means to improve outcomes, save lives and reduce costs.

These tools are intended as alternatives to reducing benefits or passing more of the overall cost of coverage through to the employees as a primary means of reducing or controlling costs.  Purchasers can achieve effective cost-containment by establishing opportunities and avenues for participants to access quality service providers who are willing to provide their services at the lowest cost possible to the plan, as well as strategically designing the plan to promote wellness, prevention and well-managed utilization.