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7 considerations for resetting employee benefits priorities

Health and Benefits|Benefits Administration and Outsourcing|Integrated Wellbeing
COVID 19 Coronavirus

By Mark Hope | July 27, 2020

Review plan metrics and set strategic guideposts to lead your organization out of the current health and economic crisis.

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About our Hit Reset on Health and Group Benefits series

This series will cover opportunities for employers to evolve their employee benefits strategies as we emerge from the COVID-19 crisis. Our experts will provide recommendations on actions employers can take as they re-evaluate benefits priorities, financing and employee needs.

We have reached many inflection points over the last 20 years in health care ranging from the Medicare Modernization Act to the Great Recession, followed closely by the Affordable Care Act (ACA) and the many iterative changes that ensued. Each event brought with it a significant change in health care benefits — from the reinvigoration of Medicare Advantage plans to the inception of health savings accounts (HSAs), to the creation of individual market health insurance exchanges and the proliferation of point solutions. However, the COVID-19 pandemic presents a challenge that goes well beyond the watershed moments that came before and a great opportunity to reinvent how health care is delivered to employees. So how do we get there?

Financial needs and strategic reset

COVID-19 has had many profound effects on the health care system that will remain with us for the near future. This is not just the direct cost of COVID-19 testing and treatment, but more so the high level of deferred care over the last several months due to stay-at-home orders and health care providers closing their offices to reduce further spread of the virus and a shift to virtual care.

Hit Reset on Health and Group Benefits: Plan and financial management

Mark Hope shares three key areas employers need to address to reset employee benefits

While the spread of COVID-19 has slowed down in many of the early hot spots, the spread has recently spiked in new parts of the U.S., indicating that it is unlikely we can safely say the worst is behind us. The effect of COVID-19 on industry segments has been varied with significant impacts to travel, entertainment and hospitality, among others. It is important to note however, that across all industries it’s still unclear how long it will take the national and global economy to recover, when deferred care will return to the system and what the long-term impact will be of necessary care that was foregone during the pandemic.

Considering these developments, there are several actions that organizations should take now to set the stage for resetting benefit priorities:

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  1. 01

    Reassess plan and financial management considering internal and external economic pressures.

    The rapid changes we have experienced over the last several months necessitate a review of key benchmarks and utilization data pre-COVID-19, during the COVID-19 pandemic period and after the pandemic period to evaluate impact to your program. This should be done in conjunction with developing an understanding of the geographic impact of COVID-19 on your population and local health systems.

    The analysis should include an understanding of pre- and post-COVID workforce changes and short-term benefit changes due to COVID-19. These insights can be assessed in the context of the broader economic impact to your company and industry segment. Developing a clearer financial picture of your current state is critical to setting the stage to model future impacts to your business.

  2. 02

    Assess your vendor performance and approach.

    Pressed to react quickly to changes brought about by COVID-19, medical carriers and pharmacy benefit managers (PBMs) shifted many of their resources to a virtual environment, rapidly expanded virtual care capabilities and realigned resources to manage call volumes. Prudent plan management practices call for a review of operations, including performance guarantee metrics with a focus on member services volume and call category content, along with carrier appeal and grievance activity.

    In addition, a review of programs and solutions for ongoing effectiveness should be an integral part of assessing vendor performance. It should include:

    • Reevaluating network configuration to assess the quality and cost efficiency of your current network and the next best alternative
    • Reviewing utilization and outcomes data to develop a better understanding of plan and program performance
    • Using those analyses to determine if you are currently offering the right solutions to your employees at the right price
    • Reallocating health care budget to areas of greater need and discontinuing programs that have demonstrated little to no value
  3. 03

    Review your pre- and post-COVID approach, then create possible scenarios to test alternatives.

    A deeper understanding of financials and a thorough review of vendor performance and programs will lead to defining areas of opportunity to reset your program. These insights, paired with cost containment requirements or financial objectives for plan and/or employee costs, can help you conduct informed scenario planning. Scenarios should be developed that factor in various degrees and timing of economic recovery as well as the return of deferred care.

  4. 04

    Actively reset the “new fundamentals” of your health plan.

    As we begin to look toward 2021 and beyond, we should be putting stakes in the ground in several key areas when creating sustainable health care programs. Although affordable health care options, virtual care and mental health have been pressing issues for years, the pandemic has exposed these three areas as needing far more attention — and reframed them. These “new fundamentals” are now critical features health plans should address to better meet the needs of peoples’ daily lives and to manage the risk of future adverse events.

  5. 05

    Offer affordable health care coverage.

    The ACA brought with it the proliferation of high-deductible health plans and HSAs. These will continue to be valuable tools for employers and employees for the foreseeable future based on the value and the potential of the HSA. However, health care has become increasingly unaffordable for many individuals as deductibles and out-of-pocket values have increased along with payroll contributions — especially in cases where individuals need to make decisions between 401(k) contributions, HSA contributions and basic living expenses.

    Addressing affordability as we recover from the economic downturn caused by the pandemic will provide tremendous value to attraction and retention of employees who help drive the economy. Start by modeling your health care affordability, including both point-of-care cost sharing and payroll contributions in conjunction with varying health care needs and utilization. What percent of take-home pay are your workers contributing to health care expenses? How does this vary when an employee has a baby or receives a critical diagnosis? Is it equitable among roles, locations and wage bands?

    There are several alternatives for consideration including wage-based plan designs and payroll contributions, value-based plan designs and network considerations. Having a clear vision of what is fair and equitable will help shape the strategy on how to achieve affordability in your program.

  1. 06

    Embrace digital health and virtual care.

    Out of necessity, COVID-19 has generated a significant leap forward in the adoption of virtual care. The capability has been there for years, but plan sponsors and health plans have struggled with broad adoption by employees.

    In the past, usage has generally been for a somewhat narrow set of symptoms such as upper respiratory infections. The COVID-19 pandemic has been the spark that led to a significant increase in the use of virtual health, most notably telehealth and virtual visits for chronic disease management and prenatal maternity check-ins.

    Now more than ever is the time for employers to take steps to clearly define their digital health strategies and, specifically, the role of virtual care in the benefit portfolio. With clear direction and purpose, virtual care can play a key role as deferred care returns to the system with triage, care redirection, connection to high-quality cost-effective providers when the system does need to be accessed physically and ongoing monitoring of chronic conditions.

    Beyond those benefits, a robust strategy for virtual care will help ensure access regardless of geographic location or, in the event of further disruption to in-person care, it can lead to greater adherence to ongoing care.

  2. 07

    Sharpen focus on mental health coverage.

    Employers and employees have grappled with a lack of adequate resources to address the wide array of mental health concerns. The pandemic has only exacerbated those issues as individuals may not be able to access care, forego care or choose to increase use of narcotics or alcohol as a coping mechanism. The system won’t change unless there is a significant and persistent push for improved access, better care and improved outcomes.

    There is an even greater need to provide emotional support and access to affordable high-quality mental health services as employees begin to return to the worksite and children return to school during uncertain times. It will be imperative to segment the needs of your population between those who need to maintain current emotional health, those in need of enhancing emotional wellbeing, those needing ongoing treatment of an existing condition and those in extreme distress.

    This level of segmentation will provide a clearer picture of where existing gaps need to be filled and where focus should be in the near-term. This will require your carrier partners to audit their networks to ensure adequate access, to innovate with you on plan design, and for you to fully explore the market of specialized mental health solutions to find the right mix of high tech and high touch to fit the needs of your employees.

  3. 1. Reassess plan and financial management; 2. Assess your performance and approach; 3. Review COVID approach and test alternatives; 4. Reset now fundamentals; 5. Offer affordable health care coverage; 6. Embrace digital health and virtual care; 7. Sharpen focus on mental health coverage
    7 actions employers can take to reset employee benefit priorities

     

    Action steps for each initiative

    As you implement your reset initiative, be sure to:

    • Develop a clear strategy and point of view
    • Conduct a current state assessment
    • Identify targeted solutions based on identified areas of need
    • Optimize existing programs by either fixing persistent issues or scanning the market for a better fit
    • Evaluate new partners and solutions
    • Communicate

    We have reached a time when value-based trade-offs that drive quality and lower cost may be well worth the effort to install. This is the topic of a forthcoming installment of our “Hit Reset on Health and Group Benefits” series: Health care delivery. That article will dive deeper into what value-based solutions look like and how to use specific data and tools to select the best approaches for your population.

    In closing

    Now is the time to review your key plan metrics and to set strategic guideposts to lead your organization out of the current health and economic crisis and into a future where health care benefits are accessible, affordable and meaningful to all employees.

Author

Mark Hope
Senior Director of Health & Benefits Consulting

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