Best Practices in Health Care Employer Survey - The 24th Annual Willis Towers Watson - Willis Towers ...
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Table of contents Executive summary............................................................................................................... 3 Identifying the best performers................................................................................. 5 About the survey....................................................................................................................6 Findings at a glance....................................................................................................... 7 Highlights..................................................................................................................................9 Chapter 1: Health benefit strategy................................................................................. 12 Chapter 2: Improve access to quality, affordable health care............................. 18 Subsidization and plan design.................................................................................. 18 Health care network and delivery solutions....................................................... 23 Pharmacy management............................................................................................. 28 Chapter 3: Enhance wellbeing........................................................................................ 30 Chapter 4: Delivering a high-tech, high-touch employee experience..............37 Chapter 5: Data analytics: measuring impact............................................................ 41 How your organization can become a best performer.......................................... 43 willistowerswatson.com 2
Executive summary In today’s full-employment economy, employers increasing health care affordability for employees Improving access to cost-efficient quality care. are under pressure to offer competitive health care while controlling costs for the organization is the top Although two-thirds of employers say they've made benefits even as health care costs continue to rise. priority for almost all employers (93%) and the most progress in containing health care costs and improving According to the 24th Annual Willis Towers Watson challenging priority for almost two-thirds of employers affordability over the past three years, work remains Best Practices in Health Care Employer Survey, (63%) over the next three years. to be done. To tackle the cost and affordability issue, health care costs are projected to climb 4.9% in companies are focusing on the following levers: 2020 compared with 4.0% in 2019. Despite this Employers are increasingly putting employees at cost increase, employers believe they will continue the center of their health and wellbeing strategies. Implementing value-based designs to steer to sponsor health benefits over the next decade. They’re focusing on understanding employee needs employees toward proven services that produce Nearly all employers (95%) are very confident their and expectations in order to shape health and positive health outcomes at a lower price tag (U.S. organization will continue to sponsor health care wellbeing programs that will give them a competitive health care costs are largely reflective of high unit benefits in five years.1 edge in a tight labor market. In addition, employers prices, and there is often little correlation between recognize the financial struggles some employees unit price and quality) Looking at the longer term, employers’ confidence in face. Consequently, they are adding choice and Focusing on clinical conditions — including mental/ sponsoring these benefits in 10 years grew to 74% — customizing benefits in order to more efficiently deliver behavioral health, metabolic syndrome/diabetes, up from 69% in 2018 — reaching the highest level in value to employees. With a focus on what employees musculoskeletal and cancer to improve outcomes the past decade.2 These employers plan to continue to value, companies are also better positioned to and reduce costs through such interventions as provide health care benefits to support employees to engage employees in programs that promote healthy vendor point solutions, steerage to high-quality be physically and mentally healthy, and thrive on the job. behaviors and support employees in their health care providers and centers of excellence (COEs), and decision making. Their three key priorities are: programs aimed at reducing wasteful or harmful care As cost pressures continue, employers recognize the challenges employees face in covering both their 1. Improving access to cost-efficient quality care Expanding use of onsite and near-site health clinics payroll deductions and out-of-pocket costs for health to gain greater control over costs 2. Enhancing wellbeing care benefits. In fact, 89% of employers believe Encouraging greater use of virtual care models, 3. Delivering an employee experience that blends high rising health care costs are a significant source of telebehavioral health services, COEs, tech with high touch financial stress for their employees. Consequently, high-performance networks and expert medical opinion programs to help ensure cost-effective, appropriate, quality care Influencing site of care for specialty drugs and promoting use of biosimilars, when available, to manage specialty drug costs 1 Sample: Companies with at least 1,000 employees 2 Ibid., 1. willistowerswatson.com 3
Enhancing wellbeing. Employers remain committed Delivering an employee experience that blends To understand their employees’ perspective regarding to wellbeing programs and are pivoting toward high tech with high touch. Facing many competing these issues and better meet their needs, employers more holistic programs that address physical as priorities, employers have often overlooked the plan to use a range of feedback channels, including well as financial, emotional and social wellbeing. need for a strategic approach to designing their surveys, focus groups and town hall meetings. And They recognize that employees who are physically employee experience. But, in the next few years, they will focus on technology solutions to address thriving, financially secure, emotionally balanced and more companies expect to create an employee these issues and deliver an improved employee socially connected are more engaged and drive better experience strategy that is differentiated from that of experience throughout the health care journey. These business outcomes. their competitors and customized to meet the needs solutions include decision support tools to provide of critical employee segments. And they plan to use enrollment recommendations and to support treatment However, wellbeing remains a challenging priority organizational analytics to assess the effectiveness of decisions. In this way, companies provide a high-tech, given traditional low engagement levels. Because the their strategy. high-touch employee experience. use of financial incentives in wellbeing programs is leveling off, employers are placing a greater emphasis To improve the employee experience, employers will Companies understand that in order to put employees on health culture as a way to boost engagement. focus on several key priorities: at the center of their health care strategy, they will They are shaping a healthy work environment and need to sharpen their understanding of employees’ building wellbeing programs into their employee value Enhancing the enrollment experience diverse needs and use the resulting insights to craft proposition. This involves emphasizing workplace Integrating wellbeing vendors to provide a more solutions that drive greater engagement and improved dignity, which is key to building trust with employees unified experience across physical, financial, health care decision making. By refining program and successfully engaging employees in their emotional and social dimensions design and delivery solutions, and offering wellbeing wellbeing. Some of the initiatives employers are programs and a more relevant, personalized employee using to support a healthy work environment include: Adding more choice in all benefits experience, employers will unlock opportunities to paid parental leave beyond what is required by law, Offering care advocacy/navigation services improve affordability for employees while controlling programs that focus on stress and resiliency, financial costs for the organization. management tools and the use of human-centered design in wellbeing programs. A growing number of employers are measuring the impact of wellbeing programs using a variety of financial and nonfinancial metrics. Known as value on investment, this approach enables employers to move beyond ROI metrics and evaluate such factors as employee satisfaction, participation, productivity and mitigation of health risks. Such an approach provides a more complete assessment of program impact. willistowerswatson.com 4
Identifying the best performers Our research identified 44 companies that We selected best performers from the qualify as best performers based on their ability 454 companies that completed the 2019 to manage cost trends and efficiency (see page Willis Towers Watson Financial Benchmarks 16). Best-performing companies exhibited the Survey and the 2019 Willis Towers Watson Best following two characteristics: Practices in Health Care Employer Survey with sufficient health care cost trend and efficiency Efficiency: efficiency in 2019 that is 5% or information. These best performers gain greater (roughly 60th percentile and above) significant competitive advantage by creating and Cost trend: two-year average trend after plan leveraging best practices that improve access to changes (2017/2018 and 2018/2019) that is at cost-efficient quality care, enhance wellbeing and or below the national norm (4%) and two-year improve the employee experience. average trend before plan changes (2017/2018 and 2018/2019) that is at or below the national norm (5%) willistowerswatson.com 5
About the survey The 24th Annual Willis Towers Watson Best Practices in Health Care Employer Survey was completed by U.S. employers between June and July 2019, and reflects respondents' 2019 health program decisions and strategies, and expected changes for 2020 and 2021. Respondents collectively employ 11.3 million employees and operate in all major industry sectors. Results provided are based on 610 employers with at least 100 employees (Figure 1). Figure 1. About the 24th Annual Best Practices in Health Care Employer Survey 610 employers Employer size Industry (with at least 100 employees) responded to the survey 11.3M+ employees at responding organizations 46% For profit, publicly traded 100 to 999100 to 999 Energyand Utilities Energy and Utilities 1,000 to 4,999 1,000 to 4,999 Financial Services Financial Services 36% For profit, private 5,000 to 9,999 5,000 to 9,999 10,000to10,000 24,999to 24,999 GeneralServices Health General Services Care Health Care 25,000+ 25,000+ IT and Telecom IT and Telecom Manufacturing 16% Nonprofit/Government Manufacturing Public Sector Publicand Education Sector and Education Wholesale and Retailand Retail Wholesale Note: Percentages may not add up to 100% due to rounding. willistowerswatson.com 6
Findings at a glance Confidence rising Top clinical condition 74% 66% will emphasize are confident mental/behavioral health that the organization will continue over the next three years to sponsor health care benefits in 10 years, an increase of 5% over 20183 Capture the potential 65% Focus on wellbeing will enhance navigation to of telebehavioral health 50% services to improve mental/ 89% behavioral health during this period have made progress on enhancing employees’ are expected to offer coverage for telebehavioral total wellbeing over the past three years health services by 2021, up from 72% today 83% Tackling affordability and costs think it’s important to enhance employees’ total wellbeing in the next three years, but… Cost increases remain steady at 5% before plan changes Only 41% 68% 93% 63% agree that their wellbeing programs meet employees’ needs have made progress say affordability and costs indicate that continued over the past three for the business and progress will be their years members is a top priority over the next three years, biggest difficulty over the next three years Only 30% say their programs inspire employees to but… achieve their personal goals 3 Ibid, 1 willistowerswatson.com 7
Findings at a glance Top wellbeing actions by 2021 Prioritize technology to support employee wellbeing Physical Financial Actions by 2021 85% 44% sponsor programs track metrics and or pilots that target objectives for use of specific conditions programs at pivotal 55% or high-cost cases decision points and have a formal technology strategy to segments most at risk support wellbeing programs and goals Social Emotional 70% offer apps and connected devices for 68% 74% condition management or reducing health risks use workforce data and redesign employee analytics to develop a 78% assistance program to strategy for improving better address emotional diversity and inclusion and financial wellbeing integrate wellbeing vendors and employee experience across physical, financial, social and emotional wellbeing willistowerswatson.com 8
Highlights Access, quality and affordability Strong interest in plan design and Rethinking ABHPs but expanding HSAs Focus on vendor and network strategies value-based designs Account-based health plan (ABHP) sponsorship has Evaluating vendors best positioned to help deliver on Almost 90% of employers (87%) are making it a priority leveled off, with the number of employers offering their organization's strategy is a top priority for 79% to align plan design with the organization's business ABHPs expected to grow a mere 1%, from 84% today of employers over the next three years. As part of this and workforce strategies over the next three years. to 85% by 2020.4 About 20% of employers eliminated effort, organizations are looking to improve specific a total replacement strategy in recent years in favor of high-cost clinical conditions. Organizations are also focusing on value-based providing more options. Of those still offering ABHPs designs to reduce out-of-pocket costs for the use of as a total replacement, 25% plan to eliminate this To encourage use of high-performance networks, high-value services and increase out-of-pocket costs strategy by 2021.4 employers are reducing employees' share of premiums for specific overused services. or point-of-care costs for high-performance network While there is still a compelling rationale for ABHPs, plans. As part of this effort, organizations are looking concerns around affordability at the point of service to improve the delivery of health care for employees have led more companies to diversify plan design with specific clinical conditions prevalent among their options. New plan options, many with value-based population. designs, offer other alternatives. Controlling pharmacy costs Health savings account (HSA) offerings continue to expand significantly. Ninety-seven percent of ABHP Over the next three years, companies will prioritize sponsors4 are expected to offer HSA-based plans by pursuing cost-effective options to manage overall 2021. Today, most companies that offer an HSA4 also pharmacy spend and, specifically, specialty drug costs. contribute funds to the accounts (87%); the majority But pharmacy costs rank among the most difficult do so by simply seeding the account (84%), while areas to improve. 25% link contributions to wellbeing participation and 7% use matching designs. With rising concerns about Among the top strategies planned or under affordability, employers are providing choices to meet consideration to address rising pharmacy spend are the needs of a diverse workforce, and HSA-eligible evaluating and addressing specialty drug costs and plans continue to be an important option. utilization performance, promoting use of lower-cost biosimilars and adopting point-of-sale rebates. 4 Ibid, 1 willistowerswatson.com 9
Integrated wellbeing Strong commitment to wellbeing — Incorporating inclusion and diversity with more work to do More employers are incorporating inclusion and Employer commitment to and prioritization of wellbeing diversity priorities into their wellbeing program design are stronger than ever. As organizations continue to with an expected 62% planning to take action by focus on total wellbeing, looking beyond the physical 2021. And while more employers are highlighting or to include financial, emotional and social aspects, they plan to highlight for employees the benefit changes also recognize that enhancing wellbeing requires an addressing inclusion and diversity, over half (52%) integrated approach focused on moments that matter have not done so. to the individual employee. Opportunity to improve data and metrics Health culture becomes a top priority While only 37% of employers say they've made Employers are placing a greater emphasis on health progress over the past three years in using data and culture, creating a workplace environment supported metrics to evaluate the performance of their health by managers/leaders that encourages employees to care and wellbeing programs, 78% are making it a live healthier lives and, therefore, to thrive at work. priority over the next three years. While only 35% of employers reported making The resulting 41% gap indicates that much work progress in health culture in the past few years, 73% remains to be done. say they will make health culture a top priority over the next three years. Yet companies rank health culture as among the most difficult areas to improve. willistowerswatson.com 10
Employee experience Understanding employees' wants and needs Growing use of decision support tools Employers are increasingly using surveys, focus groups More employers plan to offer recommendation tools or town hall meetings to identify employees' wants and that support enrollment decisions. While 46% say they needs when designing programs or making changes. use these tools today, this percentage is expected to To develop a sharper focus on employees' desires grow to 77% by 2021. In addition, 36% of organizations and requirements, organizations are also applying are offering treatment decision support tools, a human-centered design to wellbeing programs. number anticipated to increase to 65% by 2021. The number of employers using human-centered Improving advocacy and navigation design as well as tools such as surveys and focus groups to understand employee wants and needs is Employers are enhancing the employee experience anticipated to grow to 61% by 2021. by improving health care advocacy and navigation services, with 69% expecting to do so by 2021. Increasingly organizations are offering services to Building an employee experience strategy guide employees and their families to providers based While nearly half of employers don't have an employee on high-quality data. experience strategy today, they expect to catch up quickly. Over the next three years, 73% will make it a priority to develop a differentiated employee experience customized for different workforce segments. willistowerswatson.com 11
Chapter 1 Health benefit strategy: focus on controlling health care costs and making health care affordable Cost and risk Health care cost trends after plan changes continue Respondents to our annual survey expect total health The relentless increases in health care costs along to be well above the rate of inflation. With no end in care costs (employer and employee) to rise 4.9% in with the sustained cost shifting to employees over the sight to the persistent rise in health care costs, U.S. 2020 after plan design changes, up nearly a full point past 14 years make affordability a challenge for many employers are focused on controlling costs while also from 4.0% in 2019 (Figure 2).5 According to findings employees, particularly low-wage workers. Employees making health care more affordable for employees. from our Financial Benchmarks Survey, the average paid, on average, 23% of total premium costs in cost of health care is $13,087 per employee per year 2019. In paycheck deductions, this translates into an (PEPY) in 2019 and is expected to rise to $13,728 in average annual employee contribution of $3,031 in 2020. By point of comparison, the U.S. inflation rate is 2019, which would rise to nearly $3,180 in 2020 under expected to average 1.8% in 2019 and to increase to current plan designs. 2.0% in 2020. Without plan changes, cost trend would be 5.0% in both 2019 and 2020.6 Figure 2. Health care costs before and after plan changes 14.7% Health care cost trends after plan changes 13.0% are well above the rate of inflation. 11.3% 10.3% 9.0% 9.2% 8.0% 8.0% 8.0% 8.0% 8.3% 6.8% 6.8% 6.8% 6.0% 6.0% 6.0% 6.4% 5.0% 5.0% 5.0% 5.0% 5.0% 5.3% 5.5% 5.5% 4.9% 4.9% 4.2% 4.4% 4.0% 4.0% 4.0% 4.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019^ 2020* Health care trend after plan changes (total plan costs) Health care trend before plan changes Note: Percentages of health care trend are median numbers. ^Expected; *Projected CPI-U Sample: Companies with at least 1,000 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey 5 Ibid., 1. 6 Ibid., 1. willistowerswatson.com 12
Facing their own rising costs, employers will continue These include: Confidence continues to rise to look for ways to mitigate the impact of cost Encouraging use of network and delivery solutions, In a tight labor market, employers report they are increases. While many employers have implemented such as telebehavioral health services, centers highly likely to continue to sponsor health care account-based health plans (ABHPs), a quarter of of excellence (COEs) within health plans, onsite/ benefits over the next decade. In fact, nearly all companies that offered ABHPs exclusively in 2019 worksite health promotion activities, onsite and near- employers (95%) are confident that they will offer intend to reintroduce plans with lower point-of-care site health clinics, and high-performance networks health care benefits in five years, up one point over costs by 2021.7 With the maturation of ABHPs along (HPNs) 2018. This confidence extends over the longer with the greater emphasis on affordability, and the term, with 74% of employers indicating that they need to attract and retain talent in a competitive Proactively managing pharmacy benefit costs with are confident they will offer health care benefits in environment, employers are more focused on a particular emphasis on specialty drug costs and 10 years, an increase of five percentage points over implementing a range of strategies that improve plan utilization 2018 and a new 10-year high (Figure 3).8 Offering efficiency and offer a better employee experience. Evaluating vendors best positioned to help deliver on health care benefits is an important part of the reward their organization's strategy package for employees of all ages, and it drives improved health, wellbeing and productivity — the keys to business success. However, the cost of health care has become so high that if an alternative source of coverage were to become available, it’s quite possible for some employers to move in that direction. Figure 3. Employer confidence in sponsoring health care benefits over the next 10 years continues to grow How confident are you that your organization will continue to sponsor health care benefits to active employees in 10 years? (% of “Very confident”) +5 73% 74% 69% 65% 62% 59% 57% 54% 43% 44% 38% 26% 25% 23% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sample: Companies with at least 1,000 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey 7 Ibid., 1. 8 Ibid., 1. willistowerswatson.com 13
Identifying the key priorities Figure 4. Employers value measurement and health culture over the next three years As employers look to improve the health experience and health outcomes, they are focused on the Use data/metrics to evaluate the performance of following key priorities (Figure 4): 1 Measurement your health care and wellbeing programs 37% 78% +41 Measurement. Employers indicate a strong interest in using data and metrics to evaluate their health Design systems and create a workplace environment supported by managers/leaders that and wellbeing programs, with 78% reporting they will prioritize measurement in the next three years. In 2 Health culture encourages employees to live healthy lives and 35% 73% +38 thrive on the job particular, there’s growing interest in using a Adopt connected devices, enhanced enrollment, value-on-investment approach, which involves Health and integrated platforms and processes to leveraging a variety of financial and nonfinancial metrics to assess program impact. However, 3 technology solutions improve delivery of care, navigation, health 30% 65% +35 analytics and the consumer experience employers have much work to do in the measurement area, reflected in the 41-point gap between progress Enhance employees' total wellbeing in the areas Employee made in the past three years and priority. 4 wellbeing of physical, emotional, financial and/or social wellbeing 50% 83% +33 Affordability and Achieve health program costs that are affordable 5 costs for members and for the organization 68% 93% +25 Examine and leverage cost-effective options to 6 Pharmacy manage overall pharmacy spend and specifically specialty drug costs 63% 87% +24 Network Adopt health care delivery strategies to maximize 7 strategy the purchasing value of health care services 40% 64% +24 Align overall health program design with the 8 Plan design organization's business and workforce strategy 68% 87% +19 Vendor/Carrier Evaluate vendors best positioned to help deliver 9 strategy on your organization's strategy 70% 79% +9 Note: Percentage indicates “To a very great extent” or “To a great extent”. Progress made over the past three years Sample: Companies with at least 100 employees Priority over the next three years Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey willistowerswatson.com 14
Health culture. Employers are committed to Employee wellbeing. Employers recognize the Figure 5. Most challenging priorities to address cover creating a workplace environment that encourages importance of enhancing employee wellbeing, which the span of wellbeing, pharmacy and affordability employees to live healthy lives and thrive at work. drives productivity and performance. Wellbeing is Even though they are using various means to a top priority for over four-fifths of organizations promote a healthy workplace environment, such as (83%), and half report making progress in their Which areas do you expect to be wellbeing programs, employers find it challenging to wellbeing programs in the past three years, yet the most difficult to improve over make progress in this area. In fact, 45% indicate that fewer than half (41%) think their programs meet the next three years? health culture will be most difficult to improve over employees’ needs. Employers also ranked wellbeing the next three years, second only to affordability and as one of the most difficult priorities to address, costs (Figure 5). perhaps reflecting the challenge of addressing all aspects of wellbeing: physical, financial, emotional 1 Affordability and costs 63% Health technology solutions. Over the next three years, almost two-thirds of companies (65%) will and social. It is critical for employers to recognize prioritize health technology solutions. Employers the scope of this challenge as only 40% of 2 Health culture 45% are especially interested in helping employees make employees think that the initiatives and resources offered by their employer to support their health and optimal decisions during enrollment and throughout their health care journey using a range of tools for wellbeing meet their needs, according to 2019/2020 3 Pharmacy 39% decision support, health management, treatment Global Benefits Attitude Survey. decisions and price transparency. In turn, these tools will improve the overall employee experience. But These priorities are essential to building a sustainable 4 Employee wellbeing 37% health benefit strategy and putting employees at slightly less than a third of employers (30%) report the center of that strategy. Approaching wellbeing making progress in this area in the past three years. from a more holistic perspective helps employers 5 Health technology solutions 35% address the needs and preferences of today’s diverse, multigenerational workforce that can vary across Network strategy 25% physical, financial, emotional and social dimensions. Technology solutions supporting improved navigation Measurement 21% and delivery of care along with a culture that prioritizes Plan design 21% health and wellbeing contribute to an enhanced employee experience. And ongoing measurement Vendor/carrier strategy 13% helps ensure the continuous improvement of health and wellbeing programs essential to an engaged and Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer productive workforce. Survey willistowerswatson.com 15
Best performers create their own financial We selected best performers from the 454 companies About efficiency advantage that completed the 2019 Willis Towers Watson Willis Towers Watson adjusts the national benchmark Financial Benchmarks Survey and the 2019 to reflect differences between the PEPY costs of an Employers continue to show dramatic differences in Willis Towers Watson Best Practices in Health Care organization and the database for each of these four their ability to manage their health care cost trends. Employer Survey. The 44 best performers represent key criteria: Our research identified 44 companies that qualify as 10% of eligible companies reporting both favorable best performers based on their ability to manage cost efficiency and cost trends before and after plan Age/Gender: The age/gender profile of the trends and efficiency. Best-performing companies changes at or below the national average. We estimate population (Cost is directly correlated with age. The must exhibit the following two characteristics: best performers will pay $1,373 PEPY less than the impact of gender on expected cost varies with age.) typical company in our national survey ($11,887 in 2019 Family size: The estimated number of members Efficiency: efficiency in 2019 that is 5% or greater compared with the national average of $13,260 — an (roughly 60th percentile and above) (Read “About covered per employee, expressed in terms of adult annual savings of more than $6.8 million at a company cost equivalent (Larger-than-average family size efficiency” at right.) of 5,000 employees). They also maintain a two-year usually increases costs per employee.) Cost trend: two-year average trend after plan average cost trend after plan changes of 0.9% — 3.1 changes (2017/2018 and 2018/2019) that is at percentage points lower than the national average Geography: The underlying cost for basic health or below the national norm (4%) and two-year (4.0%). While plan design changes have helped to care services in an area (Provider competition and average trend before plan changes (2017/2018 and mitigate their cost increases, best performers also more prevalent managed care plans may reduce 2018/2019) that is at or below the national norm (5%) maintain a two-year average gross trend (before plan costs in some areas. More enrollments in design changes) that is 3.1 percentage points lower higher-cost areas usually increase costs.) than the national norm (1.9% versus 5.0%). Plan value: The level of benefits covered under the medical plan (Plans reimbursing a higher percentage of medical expenses than the database average usually increase costs.) The result of these adjustments is a benchmark that is customized to each company’s population. The custom benchmark is the database cost if the database looked like that company’s population with its plan designs. Efficiency represents the percentage that a company’s PEPY costs are above or below the custom benchmark with the most efficient plans reporting costs significantly below the adjusted national norm. willistowerswatson.com 16
What can we learn from best performers? Best-performing companies lead the way in developing high-performing health programs that manage costs and add value, in part by implementing superior network and provider strategies. Throughout the rest of this report, we identify specific strategies and tactics that best-performing companies use much more than the national average or other organizations — best practices focused on three core areas: Participation Employee and dependent Subsidization Program design value and subsidy level Efficiency Vendor partner strategies Health care delivery Pharmacy management Workforce health Engagement and consumerism While many factors can explain the reasons for best performers holding the line on costs, these activities are likely an important part of their recent success, Measuring total plan costs: Where do we get our data? and many are emerging trends that could position them — and those that emulate them — for success in the future. While best performers are leading the Total plan costs for this study are based on Willis Towers Watson’s annual Financial Benchmarks Survey, way, there is significant opportunity for all companies which includes detailed medical plan cost values on 2,168 companies with more than 10.4 million enrollees and to take actions to rein in costs and improve the total costs of over $132.3 billion. By incorporating the use of this deep and broad database in our annual performance of their health care programs. Willis Towers Watson Best Practices in Health Care Employer Survey, we enhance our ability to provide detailed annual plan costs for over 20 industry groups. For fully insured medical and pharmacy plans, the costs presented reflect premium rates. For self- insured plans, the costs reflect premium equivalencies, which include company contributions to medical accounts such as health reimbursement arrangements (HRAs) and health savings accounts (HSAs), health management program costs and program participation incentives paid by the plan, and administration costs. In total, nearly 75% of respondents to the Willis Towers Watson Best Practices in Health Care Employer Survey participated in the Willis Towers Watson Financial Benchmarks Survey. willistowerswatson.com 17
Chapter 2 Improve access to quality, affordable health care: plan design, network and delivery solutions, and pharmacy cost management Subsidization and Figure 6. Employers are considering a variety of value-based designs Which specific value-based designs or activities does your organization have in place or plan to have in the plan design next few years? Value-based design: steering 17% 4% 25% employees toward highest- 26% 3% 14% quality affordable care 7% 3% 24% As health care costs continue to rise at a faster pace than wages or inflation, employers face the challenge 12% 3% 17% of changing plan design to control company costs while keeping health care premiums and out-of-pocket costs affordable for employees. 13% 3% 15% More employers continue to make stepwise changes in 12% 2% 12% implementing value-based designs. By applying design features or incentives, employers are striving to nudge their employees toward higher value and efficient care, 7% 2% 17% and away from potentially wasteful services. Today while 17% of employers reduce out-of-pocket 11% 2% 11% costs for the use of high-value services supported by evidence, they expect this figure to nearly triple (growing to 46%) by 2021 (Figure 6). At the same 3% 1% 11% time, only 7% currently increase out-of-pocket costs for use of low-value services that are commonly 1% 1% 9% overused, but in the next two years 34% plan to adopt such penalties. 2%1% 7% Employers are also actively reviewing out-of-network coverage and costs. The number of Action taken/Tactic used in 2019 Planning for 2020 Considering for 2021 companies reducing out-of-network reimbursements Sample: Companies with at least 100 employees or eliminating non-emergency out-of-network Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey coverage could more than double by 2021. willistowerswatson.com 18
Figure 7. Has ABHP sponsorship peaked? Best practices: value-based design +20% One-fifth of companies are expected to only offer employees ABHPs by 2020, compared with 3% a decade ago. Lower out-of-pocket costs for proven high-value services and raise out-of-pocket 85% 82% 82% 84% costs for low-value or wasteful services. Percentage offering or planning to offer an ABHP 81% 65% 62% 77% 63% 65% Proactively address workplace opioid abuse 73% 60% 57% by offering medication-assisted treatment to 66% 57% employees with opioid use disorder. 59% 54% 54% 53% Reduce out-of-network reimbursements. 51% 52% 47% 50% 48% 48% 39% 45% Account-based health plans 33% 36% Adoption of ABHPs matures 31% Following the steady rise in the use of ABHPs in the past decade, sponsorship rates appear to be peaking. 20% 20% 19% 21% 19% 21% Over four-fifths of employers (84%) currently offer an 16% 12% ABHP, up from 54% in 2010 (Figure 7)9 with only a few 3% 4% 5% 7% 2% 3% 2% more companies planning to add ABHPs for the first 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* time in 2020 (1%), which suggests we have reached a Total replacement ABHP ABHP as option mature state of ABHP adoption after about 20 years since their inception. However, many companies are Note: Based on companies with at least 1,000 employees with or without an ABHP. Years 2007 – 2014 are based on prior years of the Towers Watson survey. *Includes companies indicating “Planned for 2020.” still migrating employees into these programs. Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey 9 Ibid., 1. willistowerswatson.com 19
Rethinking total replacement Figure 8. Over one-quarter of employers that intended to move to full replacement have decided to maintain plans with At the same time, employers are stepping back from low point-of-care costs total replacement. Currently, 19% of employers offer A quarter of employers that had full their employees only ABHPs, a figure that is expected 52 replacement in place in 2019 intend to increase a modest two percentage points in 2020.10 (18%) to reintroduce plans with low 52 17% In fact, the percentage of employers exclusively (18%) point-of-care 55 17%costs in 2020 – 2021 offering ABHPs has hovered in the 20% range 52 55 (19%) since 2015. Employers are proceeding cautiously (18%) (19%) 17% 8% 25% and rethinking their ABHP strategies. Over a third 55 8% 25% 289 (19%) of employers (37%) that had intended to move to 289 8% 25% full replacement have decided to continue offering 289 plans with low point-of-care costs (Figure 8). Among employers that were offering only ABHPs in 2019, a quarter plan to reintroduce plans with low point-of-care costs in 2020 to 2021.11 MaintainingfullMaintaining replacement full replacement Planned to move toPlanned total to move to total Eliminated Eliminated this this Eliminated this Eliminated this Maintaining Intend to eliminatefull fullreplacement replacement in 2020 Planned to move to totalreplacementEliminated as of 2017 this strategy in 2018 Eliminated this in 2019 strategy Intend to eliminate full replacement in 2020 Overall this reassessment of total replacement replacement as of 2017 strategy in 2018 strategy in 2019 Intend to eliminate Intend full replacement to eliminate in 2021 full replacement in 2020 Intend to eliminate full replacement in 2021 replacement as of 2017 strategy in 2018 strategy in 2019 Intend to eliminate full replacement in 2021 suggests employers are attempting to address affordability issues for workers who may be struggling to afford high deductibles. In doing so, they are putting Figure 9. HSA offerings continue to expand, and most companies offering HRAs today plan to continue employee needs and preferences at the center of their Does your organization have an ABHP with an HRA or an ABHP with an HSA? health care strategy. Employers are also recognizing that a tight labor market imposes limits on cost shifting. 49% 41% 55% 59% 61% 59% 60% 65% 69% 68% 67% 70% 74% HSAs continue to grow Ninety-five percent of employers offered an HSA with their ABHP in 2019 (including 21% that offered both an HSA and HRA), an increase of 2% over the prior 20% year (Figure 9).12 By comparison, 26% of employers 15% with ABHPs offered HRAs in 2019, down from 29% in 18% 39% 16% 15% 22% 21% 2018.13 HRA use may change in the future with the new 36% 21% 19% 22% 23% individual coverage HRA (ICHRA) that employers will 27% 25% 23% 21% 24% be able to offer starting in 2020. 20% 20% 13% 12% 10% 9% 6% 5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 HSA only Offer both HRA only Note: Years 2007 – 2014 are based on prior years of the Towers Watson survey. Sample: Companies with at least 1,000 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey 10 Ibid., 1. 11 Ibid., 1. 12 Ibid., 1. 13 Ibid., 1. willistowerswatson.com 20
Employers cite two key reasons for offering an ABHP Figure 10. Education is the primary way to encourage employee contributions with an HRA: to cover specific pharmacy benefits (40%) and to better support their low-income What steps has your organization taken to encourage more employee contributions to the HSA? population (38%). In addition, slightly over a third of employers (36%) indicate that they offer an ABHP with 49% an HRA because this allows for lower deductibles. HSAs help employees save for health care 49% expenses on a pretax basis. Employers provide HSA contributions to help defray point-of-care costs. Over four-fifths of employers (83%) provide these 43% contributions by seeding money into the accounts. To help employees understand how HSAs work and to 31% encourage them to contribute to an HSA, employers are providing year-round education on HSAs through seminars and counseling (49%), and they are 19% educating employees on how HSA funds can serve as a source of emergency savings (49%) (Figure 10). 14% Best practices: ABHPs 9% Offer an HSA and provide ongoing 4% education on the value of HSAs. Carefully evaluate HSA vendors. Sample: Based on companies with at least 100 employees that offer total replacement ABHPs Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey Best performer advantage: Offer an ABHP as the default plan Best High-cost Best performers companies performers’ lead 41% 20% +21% Best performer advantage: Contribute funds to an HSA Best High-cost Best performers companies performers’ lead 75% 61% +14% willistowerswatson.com 21
Participation Figure 11. Trends in health care contributions, premiums and benefit designs Employees continue to focus on wellbeing Which specific actions/programs does your organization have in place or plan to have in place for health care participation requirements. Roughly a third of contributions, premiums and benefit designs? employers (34%) will require employees to participate in other health and wellbeing activities in order to 2016 2017 2018 2019 2020* 2021^ receive reduced employee cost sharing, but by 2021 the prevalence of this practice is expected to jump to Require employees to participate in other 52% 52% 52% (Figure 11). health and wellbeing activities to receive 32% 38% 36% 34% 38% 38% 36% 34% 38% 32% reduced employee cost sharing To avert across-the-board increases, companies continue to pass the higher cost of family coverage on to employees. This is especially the case when Use spousal surcharges (when other employer 43% spouses have coverage from their own jobs. Roughly coverage is available) 31% 43% 28% 27% 27% 30% 28% 27% 31% 27% 30% a quarter of employers (27%) charge more to cover spouses when other employer coverage is available, with 43% planning to do so in two years.14 Structure employee contributions based on employee pay levels 24% 24% 26% 25% 27% 34% 24% 24% 26% 25% 27% 34% Best practices: participation *Planning for 2020 ^Considering in 2021 Use spousal surcharges when other Sample: Companies with at least 1,000 employees Source: 2016, 2017, 2018 and 2019 Willis Towers Watson Best Practices in Health Care Employer Survey employee coverage is available. Set contribution levels for employees with families higher than for single members. 14 Ibid., 1. willistowerswatson.com 22
Health care network and delivery solutions Encourage higher-value, lower-cost delivery options As employers confront the challenge of lowering the cost of health care while improving quality, they Figure 12. Competing organizational priorities is the Figure 13. Employers will focus on evaluating network increasingly embrace strategies that involve paying biggest barrier for network and provider strategies strategy, enhancing navigation and adopting vendor point solutions health care providers for outcomes or value rather than services. Groundbreaking developments across a What have been the biggest 16% range of areas from digital technology to analytics are barriers to your organization 32% creating opportunities to rethink how and where health acting upon the above network Mental/ 43% Behavioral 37% care is delivered, in the process achieving improved and provider strategies? health 37% results at a lower cost. But some employers are finding that competing organizational priorities (61%) and 14% Competing organizational administrative challenges (50%) are hindering their efforts to shift to a value-based health care delivery 1 priorities 61% Metabolic 17% 27% syndrome/ model (Figure 12). Addressing these obstacles will help Diabetes 40% employers make progress toward improved network and provider strategies. 2 Administrative challenges 50% 40% 9% Lack of internal resources 3 49% 21% Companies plan to focus on specific clinical to support the change Musculoskeletal 26% conditions — in particular, mental/behavioral health, 31% metabolic syndrome/diabetes, musculoskeletal Ongoing expenses 35% 50% and cancer — to improve member health and cost savings. To target these conditions, they will focus Initial start-up expenses 26% 6% on evaluating network strategy along with improving 20% Difficulty in working with 28% navigation and adopting vendor point solutions health plans to implement 22% Cancer/ 19% (Figure 13). Oncology 56% Lack of qualified vendors 15% 5% Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer 15% Survey 23% Cardiovasular 20% 60% 16% 14% Maternity/ 21% Infertility 23% 60% Revise medical benefits Evaluate network strategy Enhance navigation Adopt vendor point solutions None willistowerswatson.com 23
Employers are focused on a range of value-based Figure 14. Employers seek interventions across the delivery of care services across all stages of care delivery from prevention to return to work (Figure 14). Prevention Offer onsite/worksite health promotion activities 61% 9% 11% Offer an onsite health clinic 20% 2% 9% Offer a near-site or multiemployer health clinic 7% 2% 13% Network/Steerage Offer high-performance networks 16% 4% 33% Reduce employee share of premiums or point-of-care costs for high-performance network plans 9% 3% 25% Surgical care Use centers of excellence within the health plans 45% 5% 24% Offer an expert medical opinion program 22% 8% 21% Hire a third party to replace a carrier for concierge services with integrated care management programs 7% 4% 20% Use centers of excellence through a carve-out vendor 5% 2% 18% Return to work Design policies and programs to include stay at work and early return to work following disability 55% 7% 10% Action taken/Tactic used in 2019 Planning for 2020 Considering for 2021 Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey willistowerswatson.com 24
Onsite health promotion activities and health clinics. Recognizing the growing ranks of employees who chronic conditions to preventive screenings, without In an effort to encourage healthy behaviors, a majority have to balance caregiving and work responsibilities, having to take extensive time off from work. In a of employers (61%) offer onsite health promotion an increasing number of employers offer elder care competitive labor market, onsite and near-site clinics activities, a number that could grow to over 80% support services (24% today growing to over 40% give employers an edge in attracting and retaining by 2021. Over two-fifths of companies (41%) have a by 2021) and childcare support services (26% today top talent. These clinics benefit employers by giving national strategy for these activities while 38% employ growing to 39% by 2021). them greater control over costs, and helping avoid a narrower market-specific strategy in a single or a few unnecessary and costly emergency room visits. Onsite locations (Figure 15). In addition, over half of employers Employers are expanding their use of health clinics centers can also allow selective referral to (54%) provide onsite biometric screening and another both onsite (20% today growing to 31% by 2021) higher-value specialists. The majority of companies 11% are considering adding it in the next two years. and near-site (7% today growing to 22% by 2021). make targeted use of onsite (76%) and near-site Such clinics make it convenient for employees to clinics (78%), employing a market-specific strategy in get care, which can range from help managing a single or few locations. Figure 15. Employers report targeted use of onsite and near-site health clinics Near-site or Onsite/Worksite High-performance Centers of Onsite health multiemployer health health promotion networks excellence clinic clinic activities Offering rate in 2019 16% 46% 20% 7% 61% 76% 78% 71% 41% 38% 38% 36% 23% 19% 18% 12% 13% 12% 11% 4% 3% 3% 5% 6% 8% Have a national strategy Have a market-specific strategy in a single or few location(s) Have a market-specific strategy in many locations Other Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey willistowerswatson.com 25
30% 22% Telebehavioral health services. Employers are Figure 16. Growing attention among employers to offering high-performance and expert medical opinion programs increasing their focus on mental health by offering 2019 2020* 2020ˆ coverage for telebehavioral health services. While slightly more than half of companies (54%) offered Offer high-performace networks Use centers of excellence within the health plans this coverage in 2018, almost three-quarters (73%) 74% do so today, and this number is expected to rise to 89% by 2021.15 52% 50% Centers of excellence. COEs (growing from 45% 45% today to 74% by 2021) are reaching a critical mass 16% 20% of employees. Roughly three-quarters of employers (71%) employ a broad, national COE strategy. Most 2019 2020* 2020ˆ 2019 2020* 2020ˆ companies currently work with their health plans to establish COEs. While a small number of employers Offer an expert medical opinion program Reduce employee share of premiums or point-of-care (5%) contract with a carve-out provider for COEs, costs for high-performance network plans the prevalence of this practice is expected to jump to 25% by 2021. High-performance networks. Employers expect 51% that their use of HPNs, which provide access to 38% a narrow network of higher-value and lower-cost 30% 22% providers, will expand significantly from 16% today 9% 13% to 52% by 2021 (Figure 16). As the use of HPNs 2019 2020* 2020ˆ 2019 2020* 2020ˆ grows, more employers will reduce the employees’ share of premiums or point-of-care costs. Currently, Note: *“Planning for 2020”; ^“Considering in 2021” Use centers of excellence within the health plans a mere 9% of companies that offer HPNs reduce Sample: Companies with at least 100 employees Source: 2018 and 2019 Willis Towers Watson Best Practices in Health Care Employer Survey these premiums and costs, but by 2021 that figure 74% could rise to 38%. 50% No one approach to HPN strategy dominates, with 45% 38% of companies employing a national strategy and 36% a market-specific strategy in a single or a few locations. 2019 2020* 2020ˆ Expert medical opinion programs. Another growing trend is the use of expert medical opinion programs, Reduce employee share of premiums or point-of-care which helps ensure best-in-class care and better costs for high-performance network plans health outcomes. Less than a quarter of employers (22%) offer this service today, but its prevalence is expected to more than double in two years. 38% 9% 13% 15 Ibid., 1. 2019 2020* 2020ˆ willistowerswatson.com 26
Vendor/carrier strategy. Employers continue to Figure 17. Companies examine a broad set of priorities when selecting health insurance carriers select vendor partners, including insurance carriers, based on a broad set of priorities (Figure 17). Almost Offer an effective, high-end concierge service model all employers (95%) select carriers based on the 42% 58% competitiveness of their network access and of their negotiated provider discounts. Companies also Availability of high-performance networks value the effectiveness of the vendor's use of data, 53% 47% analytics and reporting as well as the integration Availability of centers of excellence of data, systems and/or customer service across 59% 41% medical, pharmacy and/or mental/behavioral health. Support for modernization of benefits to support your organization's diversity and inclusion agenda 60% 40% Best practices: health care delivery Extent vendor has incorporated reimbursement methodologies based on cost, quality, improved efficiency and better outcomes 65% 35% Use high-performance networks to deliver higher value at lower cost. Effectiveness of protecting members from surprise bills Offer onsite or near-site health clinics. 67% 33% Provide coverage for expert medical opinion Integration of data, systems and/or customer service across medical, pharmacy and/or behavioral health programs. 73% 27% Best performer advantage: Effectiveness of the vendor's use of data, analytics and reporting to manage the care, cost and wellbeing of members Use COEs within health plans 74% 26% Best High-cost Best performers companies performers’ lead Willingness to partner with other vendors 58% 38% +20% 77% 23% Effectiveness of the vendor's use of data, analytics and reporting to manage the care, cost and wellbeing of members Best performer advantage: 84% 16% Offer coverage for telebehavioral health service Best High-cost Best Competitiveness of the negotiated provider discounts performers companies performers’ lead 95% 5% 84% 66% +18% Competitiveness of the vendor's network access 95% 5% “Important” or “Extremely important” Planning for 2020 Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey willistowerswatson.com 27
Pharmacy management Targeting specialty drug costs and utilization Employers cite pharmacy costs as one of their most Figure 18. Employers proactively manage pharmacy benefit costs challenging priorities. Companies are proactively Evaluate and address specialty drug costs and utilization performance through the medical benefit examining and leveraging a range of options to 49% 17% 19% manage the relentless rise of pharmacy spend driven primarily by increased specialty drug costs. Evaluate plan design incentives/requirements to promote use of lower-cost biosimilars in your formulary or plan design, when available 30% 10% 30% The top strategies planned or under consideration to address rising specialty pharmacy spend include: Implement coverage changes to influence site of care for specialty pharmacy instead of through your medical benefit 21% 7% 26% Adopting more comprehensive solutions. Companies are looking to adopt a comprehensive Require mandatory mail for maintenance medications approach to address the high and rising costs 31% 6% 15% of specialty drugs, which are paid for both by pharmacy benefit administrators and health plans. Adopt a high-performance formulary with very limited brand coverage across the therapy classes Almost half of employers (49%) report they are 19% 5% 18% extending their evaluation and management of Adopt point-of-sale rebates through the pharmacy benefit manager (PBM) and pass them through to individual members at the time of purchase specialty drug costs and utilization performance 10% 6% 23% to drugs covered under the medical benefit, a figure that is anticipated to increase to 85% by Follow Institute for Clinical and Economic Review (ICER) recommendation regarding drug coverage based on cost-effectiveness 2021 (Figure 18). It remains to be seen how future 9% 2% 15% health care mergers that may combine a health insurance payer, pharmacy benefit manager (PBM) Implement a narrow retail network and national retail pharmacy network could impact 8% 2% 12% specialty drug cost management in the future. Have a contract with a PBM based on an acquisition cost-plus model 7% 2% 14% Engage in direct contracting with pharma, retail and/or specialty pharmacies to secure improved drug pricing 7% 2% 10% Carve out the utilization management review process to a third party other than the PBM 8% 2% 9% Consider a new form of PBM contracting that may include guaranteed fixed per-member per-year cost every year 1% 13% 2% Action taken/Tactic used in 2019 Planning for 2020 Considering for 2021 Sample: Companies with at least 100 employees Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey willistowerswatson.com 28
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