If you’re a business owner with a self-funded medical plan, you’ve likely recently noticed a significant rise in cost. Rest assured, it’s not just you. In 2023 alone, the average annual premium for employers increased by about 7% compared to the previous year. (KFF Files) (KFF).
The stakes attached to your employees’ health are both financially and emotionally high. Therefore, taking an active role in employee health outcomes makes sense not just from a business perspective but from a personal one as well. And one of the most effective ways to positively impact your workforce’s health and combat rising costs is through the use of data-driven population health management. This is the best way to achieve positive results.
Healthcare organizations play a crucial role in implementing population health management strategies to help ensure better health for employees and control costs.
If you’re unfamiliar, below let’s review how this works by examining:
-
Why medical insurance costs are rising for businesses.
-
What is population health management and data analytics?
-
How population health data analytics can assist businesses in managing healthcare expenses and improving overall patient outcomes.
The Reason for Rising Benefits Costs
A variety of factors including population aging, disease prevalence, cost of care, and technology have been implicated as components that can increase health spending. In addition, the main culprit is the increased prevalence and cost of specialty drugs and high-cost medications.
The average American spends a considerable amount of money on healthcare each year. Premium increases, higher deductibles and copays, and soaring prescription drug prices in addition to creating barriers to member treatment result in spikes in total healthcare costs.
What are Specialty Drugs and Other Expensive Medications?
Although there is no standard healthcare industry definition for specialty drugs, generally speaking, they are high-cost prescription medications that typically require some form of professional administration (injection, infusions, etc.).
Specialty drugs and other expensive drugs are one of the main reasons for rising costs. In 1990, there were just 10 specialty drugs on the market, by 2008, that number had reached 200. Today specialty pharmacies manage over 400 drugs for 40 plus disease states. In recent years, more than half of the drugs approved by the Food and Drug Administration have been specialty drugs. And more are on the way. Two-thirds of the drugs in the pipeline are reportedly specialty. The average annual cost of a specialty drug is $84,000.
Some specialty drugs you may recognize are:
-
Stelara: Treats psoriasis and Crohn’s disease
-
Otezla: Treats psoriasis and psoriatic arthritis
-
Kesimpta: Treats multiple sclerosis
Some other expensive drugs, such as GLP-1s that are not considered “specialty”, yet drive up employers’ costs include:
-
Ozempic: Used with diet and exercise to treat type 2 diabetes
-
Mounjaro: Injectable medication to treat type 2 diabetes
-
Wegovy: Injectable medicine used with a reduced calorie diet and increased physical activity to reduce the risk of major cardiovascular events
The Rise of Specialty and High-Cost Drugs
While in the past specialty drugs and other expensive medications were only used to cure very rare illnesses, in recent years, pharmaceutical companies have developed many new drugs that are effective at treating more common conditions, such as rheumatoid arthritis, Crohn’s disease, cancer and diabetes. This development means these medications are now prescribed more often and have replaced medical care and become the standard of patient care for many common illnesses.
According to RX Benefits, the first and leading pharmacy benefits plan optimizer (PBO), 2% of a plan’s drug claims will account for 50% of pharmacy benefits plan costs.
The Role of Pharmacy Benefit Managers (PBMs), Pharmacy Benefit Plan Optimizers, Insurance Companies, Healthcare Providers, and Drug Manufacturers
A Pharmacy Benefit Manager (PBM) is a third-party administrator of prescription drug programs for healthcare plans and employers. They negotiate the price of drugs with the drug manufacturers, manage drug formularies, and process prescription drug claims.
Pharmacy Benefit Plan Optimizers (PBO) are organizations that work to maximize the value of the pharmacy benefit rearrangements. PBOs focus on improving the effectiveness and value of pharmacy benefits by emphasizing cost-effectiveness and operational efficiency.
PBMs, as well as insurance carriers, are often incentivized by drug manufacturers to prescribe specialty and other expensive drugs through substantial rebates that lower the cost on their end. These rebates, while profitable for the PBM and the carriers, are often undisclosed and little if any passed on to business owners.
Drug manufacturers also incentivize employees to use these drugs by offering them co-pay assist cards or manufacturer discount cards that drastically lower or eliminate the out-of-pocket costs employees pay.
Lastly, since many patients are familiar with specialty medications through incessant media advertisements, they will ask their healthcare services providers to subscribe them, which physicians often do. Physicians can also be incentivized by the drug manufacturer for prescribing these drugs.
The result is a system in which specialty and expensive drugs have become extremely popular and increasingly cheap for everyone but you, the employer.
Increased Financial Burden on Employers
Unlike medical care where the member has the treatment or surgery and is cured, specialty drugs are a long-term investment. The patient will continue to take the medication as long as it is working or they are on your health plan. This results in high-claimants carrying over year after year.
Take the case of an employee with rheumatoid arthritis. In the past, because there was no treatment, an employee would simply suffer with this condition until their joints wore out. They would then undergo surgery for joint replacement, which would cost somewhere around $60,000. Nowadays, that same employee will not need to suffer without treatment, and they can avoid painful joint replacement surgery. However, the cost of this one-time surgery would now be replaced by a single specialty drug that might cost $18,000 a month.
If these high-claimant employees cause you to hit your stop-loss limit (the specified amount at which your insurance starts covering all your claims), you could be subject to premium increases of 20-30% the following year, exacerbating the problem.
While these drugs have undoubtedly been a benefit for the quality of life of employees, the financial burden has become borderline unsustainable for many employers. We have personally witnessed one specialty drug costing an organization $49,000 every 2 weeks (Acthar). Then there’s Zolgensma, a gene therapy for spinal muscular atrophy in infants and toddlers that comes with a price tag of more than $2 million for a one-time dose.
Understanding Population Health Management and Data Analytics
Since many specialty and other expensive drugs are now the standard of care, denying or limiting them is not feasible. Instead, what savvy organizations can do to take back some control is take an active role in their employees’ health through programs like health management driven by population health analytics.
What is Population Health Management?
Population health (a.k.a. pop health) focuses on the results of a specific group by addressing and managing the various factors that influence their health. In a business setting, this translates to developing health strategies and programs that support the well-being of your entire workforce. In essence, a population health management program keeps a watchful eye to help make sure your employees have all the resources to manage and improve their conditions, ensuring everyone benefits from improved personal wellness and better patient health outcomes.
What is Healthcare Analytics?
The engine that drives population health programs, data analytics, is the process of examining your employees’ medical history and claims data to uncover patterns, make correlations, and gain insight into their well-being. Data analysis helps identify your current employees-at-risk and those who are already costing your company unnecessary dollars due to exacerbation of their chronic condition(s). In addition, it helps to identify those with less than optimal health and are at risk to develop chronic illnesses, and therefore drive your claims up in the future. By being aware of your population, promoting health management programs and incentivizing members to participate, you can curb your employee benefits costs. We like to think instead of giving you pictures of the “train wreck” your health plan may be, with data analytics we help get that train back on the track towards a healthier health plan!
Population Health and Data Analytics as a Solution
These two practices combine to give you a consistent overview of where your employee population stands health-wise and an active way to help them avoid or manage illnesses as you identify them. Some of the main ways a program like this can help are:
Educating Business Owners and Employees about Effective Population Health Management Programs
Many insurance carriers offer medical management programs that can provide quite a benefit to your company.
Some of the beneficial services offered through these programs are:
-
Case Management: Case management is used for members with acute health care conditions (severe and sudden onset and usually develop quickly and last a short time). The nurse case manager coordinates care for the employee between different healthcare providers to streamline and improve treatment and recovery thereby reducing potential unnecessary cost.
-
Disease Management: Disease management is a system of coordinated healthcare intervention and communication that help patients with certain conditions manage their disease and prevent complications. The goal is a focus on employees with chronic conditions to assist with regular monitoring, education, and interventions to manage symptoms and prevent complications
-
Health Coaching: It aims to provide tools to employees to help them prevent diseases by promoting healthy behaviors, such as quitting smoking, among at-risk individuals.
Participation in Medical Management Programs is a Challenge
Whether it’s because of a lack of awareness, understanding, or trust, medical management services are often underutilized and suffer from a lack of participation from employers and employees alike.
Your pop health program can solve this problem by investigating which services are available from your healthcare insurance company, identifying candidates for these programs, and educating you and your employees about all the resources already available within your medical plans.
Implementing effective disease prevention strategies can help mitigate some of these rising costs and improve the health of your members.
Leveraging Data Analytics to Improve Health Outcomes
Data analytics can also provide you with consistent, year-round monitoring of the health of your health plan and your employees. The analytics show you where there are mitigatable risk.
This data can also give you insight into what programs are working best and track which employees are responding and making progress or which might not be following clinical best practices, ultimately helping to achieve positive health outcomes.
Identifying Currently Low- and Future High-Risk Employees to Refer to Medical Management
Even though insurance companies offer these programs, they often might let lower-risk patients slip through the cracks. This is because insurance carriers only tend to become aware that employees need help when they are diagnosed with a severe illness or become a high-claimant above a certain dollar amount.
Pop health programs allow you to give all your employees the voice to request assistance from medical management professionals. By identifying lower-risk employees with newly diagnosed or non-severe conditions that medical management might not prioritize, you can offer them a level of assistance they wouldn’t otherwise receive. This allows you to intervene and significantly reduce the chances they will become high-cost claimants down the line, benefitting both you and your employees’ long-term health.
Incentivizing Employee Medical Compliance
Pop health programs can help design and implement employee incentive programs that reward medical management participation.
Examples of incentives might include payroll incentives for agreeing to participate in medical management programs or wellness rewards that offer additional paid time off for employees who achieve health milestones.
In our experience, incentive programs like these can significantly increase participation rates from 20-40% to well over 90%.
Destigmatizing the Medical Management Process
One pitfall we’ve witnessed is employees being skeptical when nurses from medical management programs contact them. Their innate mistrust of the insurance carriers leads them to believe check-ins and interventions are designed to deny them care rather than support them.
Pop health facilitators can reduce this uneasiness by educating employees on the benefits of participation and introducing employees to nurses and coaches in a supportive manner.
To overcome, it is important to educate members as to the value of these services. If possible, work with your insurance carrier to assign one nurse to your entire population – your dedicated nurse! Then introduce that nurse to your employees.
These nurses provide invaluable services to help alleviate the concern of individual patients by assisting them with copay-assist cards to lower their cost of medication, assisting them with necessary prior authorizations for treatment, provide education for new diagnoses, or just be there to handhold during difficult situations, which ultimately will also increase patient satisfaction.
Organizational Impact
Our experience demonstrates that when employers adopt and promote these programs within their entire populations, they achieve significant benefits, such as favorable medical benefits renewal terms or, at the very least, maintain static benefits for employees. This stability helps prevent increases in premiums and deductibles, which often can become further barriers to care for employees.
The preventive nature of these programs can also help companies intervene to avoid potential health disasters that would otherwise lead to substantial costs.
However, in the long run, the decision to engage in pop health management is not just about protecting your bottom line.
As they spend years of their lives at your company, your employees are likely making grand plans for retirement that include extra family time, travel plans, and aspirational lifestyles. But what they may not have considered is that unmanaged chronic health conditions put all those dreams in danger.
If your employees are saving for one day but not planning for it health-wise, they, sadly, may end up physically unable to live out the wonderful retirement they’ve planned for. By adding a population health management program to your company, you offer your employees a powerful resource that encourages them to recognize that their health is not something to waste and that their dreams for the future are only possible if they can reach retirement age with their health intact.
How Hilb Group Can Help You
Our team of data analysts and registered nurses, who are also certified case managers provides clinical management oversight and coordination to help your company manage healthcare costs.
We analyze your employees’ healthcare data to uncover high-risk and emerging-risk employees in your member population. Then, we’ll engage with these employees to connect them with your health insurance company’s medical management team, who provide case management, disease management and coaching. We’ll of course, continue to monitor your carrier’s services to keep your employees in the program.
Our goal is to ensure your employees receive the best care which will in turn help control claims and benefit plan rate increases.
Leveraging our proprietary health data analytics, we also help you design a proactive wellness plan that can improve your employees’ health and reduce your organization’s healthcare insurance costs.
If you need help launching a proactive wellness plan or engage your employees in a population health management program, please don’t hesitate to contact Danielle Herndon, National Practice Leader of Population Health and Wellness at dherndon@hilbgroup.com.