The current economic situation is empowering employers to delve into benefits plans in an effort to save money, according to Wendy Poirier, managing principal with global consulting firm Towers Perrin.
“Clients are far more open today to making the hard design-type changes,” says Poirier, who is based in Calgary.
While most employers aren’t chopping benefits entirely, many are putting them under the microscope, scaling back some services and looking for preventive measures that help reduce costs.
But where should employers begin? The logical starting point is reviewing available data from the vendor, such as usage history, and deciding what other information may be helpful, says Poirier. After that, companies will have an easier time formulating a strategy for savings, she says.
“A lot of clients don’t think, or spend enough time thinking, about what they want to get out of the data,” says Poirier.
And many don’t have a measurement strategy and, therefore, aren’t sure what kind of reporting they need, she says.
Once they have done a review of the data, employers shouldn’t “let it sit there,” says Poirier.
Depending on the service provider, companies can access information online and through direct requests. A two-pronged approach to information gathering is a good idea, says Poirier.
First, employers can analyse the data from a broad perspective, examining what they are spending year over year and identifying the top 10 drugs used by employees.
Those categories can provide companies with insight into utilization trends and high-ranking health conditions, she says.
Second, the broad information can lead to a “deeper dive” into the plan where employers can “compare apples to apples” at a transactional level. If the employer is looking into drug usage, for example, the transactional information can provide perspective on generic drug costs versus brand-name drug costs.
“We’ve let drug plans be fairly open and now I think employers are starting to look at it not just as a one-hit wonder but ‘How can we turn this into something more strategic?’” she says.
Those strategies could involve educating employees on the brand of drug they are using and pushing them towards a less expensive option by changing the plan to include more generic drugs, she says.
Some plans also still include medications that can be purchased over-the-counter, which employers only realize once they’ve analysed the data.
Employers can identify high users — while respecting confidentiality — and reach out to them anonymously through education, says Poirier.
There is also a high amount of narcotic misuse many employers only discover when analysing their plans, she says.
As an example, a case in Calgary saw an individual charged with narcotic fraud. The suspect took imprints of people’s health-plan cards and purchased narcotics through business drug plans.
“You have to get at that by imposing limitations,” she says. “The issue with the insurer is they are taking their lead from getting written prescriptions from a pharmacist. There are ways people learn to use the system.”
More employers looking at drug plan use
While companies have delved into drug plans to examine the use of generic and name-brand drugs in the past, they are doing it a lot more now, says Wayne Lloyd, Waterloo, Ont.-based assistant vice-president of group benefits, product and marketing services, at group benefits provider Manulife Financial.
Companies are achieving savings by either modifying benefits plans or shifting more of the cost, such as deductibles, to employees, he says.
Lloyd provides two examples of how companies can scale back a service without cutting it altogether.
The first deals with the costs incurred through regular dental visits. The usual plan for dental involves coverage for checkups every six months. Instead, employers can extend that to nine months, he said. When staff do visit a dentist, the services provided can also be examined. For example, if there are 16 scalings included in a plan, employers can choose to reduce that to 10.
Second, instead of providing unlimited paramedical benefits, such as masseurs or chiropractors, companies can implement a dollar or visit maximum.
Insight into future problems
While it is important for employers to focus on immediate cost-saving measures, the statistics they receive from group benefits providers can also provide insight into health problems staff may face in the future.
Benefits provider Sun Life Financial has reported a significant increase in the use of drugs for cholesterol and diabetes over the past eight years. In fact, cholesterol drugs ranked number one in 2008, says Sue Brown, director of Sun Life Financial’s HealthyRETURNS.
Hosting a blood-glucose testing session, for example, can give companies a sense of how many employees are at risk for diabetes, she says. Once employers have that information, they can begin implementing preventative programs that will help save costs in the long term.
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