Medical Cost Trend: Behind the numbers 2020
PwC Health Research Institute (HRI)
Condensed and presented by Advanced Plan for Health
The Advanced Plan for Health team regularly scans the health market for trends, analysis and insight. In our research, we found The PwC HRI Medical Cost Trend: Behind the Numbers 2020 report to be full of valuable healthcare market information and thought our readers would benefit from the report findings. We decided to condense and present the PwC HRI report in a bi-weekly blog series to highlight what we found to be most pertinent to our readers and to better understand factors that could potentially affect the 2020 medical cost trend. Below is Session #8 Employers will help their employees maximize their benefit packages, per the PwC Health Research Institute (HRI) report.
Session #8 Employers will help their employees maximize their benefit packages
A growing number of employers have taken an a la carte approach to their health benefits and network strategy – carving services out of the traditional health plan, adding on services and in some cases directly contracting for services, all in hopes of reducing costs and better managing utilization. The approach creates a menu of options for employees, who sometimes may not realize all that is available or how to use them to the fullest effect. Take the experience of a patient told by his doctor that he needs to lose weight. The doctor may not be aware of a weight loss program offered by the patient’s employer at little to no cost, and therefore does not recommend the program to the patient. Now, employers are looking to better coordinate and communicate why these special programs are offered to help employees maximize the benefits for all parties, by making cost-informed and quality-informed decisions about their care. HRI expects this integration to deflate medical cost trend in 2020.
The approach seems welcomed: 85% of consumers with employer-based insurance said they would be interested in having a “menu” of options that balances in-person and virtual care.103 In theory, a menu of care options gives employees choice and the ability to shop for the care best suited to them at the right price for them. In reality, less than 32% of individuals with employer-based insurance have shopped for any care in the past two years, with primary care being the most commonly shopped for type of care.104 Of those who shopped for care, nearly 30% said it was difficult to do so, with the biggest barrier noted across all types of care as a lack of cost transparency (see Figure 14).
“Point-of-service shopping for healthcare by consumers is not possible,” said Micah Weinberg, CEO of the nonprofit California Forward, in an interview with HRI. “Most of the time consumers don’t know what they are looking for or how to shop for it. Employers should be creating different networks so that employees shop for care during open enrollment, picking the network of providers and services that works best for them, rather than trying to shop for individual services.”
More employers are looking to take more of the work off employees by exploring high-performance networks – those with a limited set of providers showing better outcomes at a lower cost than a broad network of providers.105 Direct contracting with providers and commercial accountable care organizations (ACOs), groups of healthcare providers who come together to provide high-quality, coordinated care to patients, are growing strategies among employers.106 Both aim to reduce the prices paid by employers for services and better manage utilization through some form of risk sharing with those providers. In most cases, the direct contracts or ACOs offer integrated care from the start – typically directed by a primary care physician.
Beyond direct contracting, others are making it easier to navigate the options themselves. Genentech uses its onsite health clinic at its South San Francisco headquarters as a healthcare hub to help educate employees on physical and virtual services available at the clinic and outside of the clinic.107
Even carve-out vendors are joining the effort to make it easier for employees to navigate their benefits. Carrum Health, a company that creates centers of excellence for certain surgeries using bundled payment arrangements with top-quality regional healthcare providers that it then sells to self-insured employers, takes an inventory of the health benefits its clients offer and the vendors they use.108 The South San Francisco-based company then develops and uses workflows that keep patients and information moving between the vendors, including establishing referral protocols for it to refer patients to its employer clients’ other vendors when appropriate.
Centivo, a health plan administrator designed for self-funded employers, sees its role as helping employers organize a health plan designed around high performance and value for them and their employees.109 One area of focus – referrals. An employer may offer special carve-out services, but if the employee is being referred elsewhere, it defeats the purpose. “We are making referrals data-driven and based on results,” said Ashok Subramanian, co-founder and CEO of Centivo, in an interview with HRI. Centivo also helps the employer play a more active role. “We help employers recognize it is their job to find, locate and help their employees get affordable, high-quality care. Once employers recognize this, we help them achieve it,” Subramanian said.
With all that is stated in this recap concerning expansive worksite clinics, each employer needs access to data that will allow them to determine the unique inflators and deflators that are driving their cost trend. In turn this will enable the development of strategies that provide a path to intervene at the point of risk and mitigate its impact, e.g. benefit design considerations, care management effectiveness, and others. To learn more about this research, feel free to contact us here.
PwC HRI Sources
(103) PwC Health Research Institute consumer survey, May 2018.
(104) PwC Health Research Institute consumer, spring 2019.
(105) PwC Health Research Institute, “Medical cost trend: Behind the numbers 2019.”
(106) Centers for Medicare and Medicaid Services, “Accountable Care Organizations (ACOs): General Information,” accessed May 10, 2019, https://innovation.cms.gov/initiatives/aco/.
(107) PwC Health Research Institute interview with Anne Marie Tsolinas, senior manager of health and wellness at Genentech, and Emily Fisher Moore, health and wellness principal program manager at Genentech, on May 3, 2019.
(108) PwC Health Research Institute interview with Brent Nicholson, COO, and Christoph Dankert, vice president of products at Carrum Health, on May 30, 2019.
(109) PwC Health Research Institute interview with Ashok Subramanian, co-founder and CEO at Centivo, on May 2, 2019.