Companies get creative to deal with health care costs
It was shaping up to be a bad year for medical claims for Blevins Inc. in June, so the chief financial officer tried to keep it from getting worse.
For the first time, Tim Kentner sent letters to employees at home, asking people to switch to generics when they could and urging visits to urgent care clinics instead of emergency rooms, if appropriate.
It didn't work.
"We're having an epic, unpleasant year," he said. "We're having a tough claims year, and I want everyone to be aware of it."
There were more claims than usual — a good many in the $10,000-30,000 range. Four were high enough to trigger the Nashville-based company's stop-loss insurance this year. Two is the average.
"Normally, I don't send them a communication on health insurance because it's just one of those things that no one wants to think about unless you have to," said Kentner.
The 300 employees of the self-insured company will see changes in their plans and premiums next year as a result. The difficult year dried up the company's reserves.
Health care costs are a significant expense for employers. At 1 percent of revenue, it's the fifth largest expense at Blevins, which is a typical budget item.
As many outside factors begin to increase costs, CFOs and human resource directors are looking for ways to educate workers to change behavior.
Companies have a limited arsenal of tools. They can't be Big Brother — nor do they want to be — and people need the care that they need. The companies turn to consultants to evaluate claim costs and what causes them.
Tracey Sender, compensation and benefits director for LP Building Products in Nashville, has been using an online tool, BlueInsights, from BlueCross BlueShield of Tennessee that has filters such as costs and utilization, or how people are using medical care, because she wanted information from the "experts on their medical data."
Sender uses the cost portal most, but it was the utilization data that raised a red flag for her earlier this year.
She saw emergency room usage was higher than projected and with additional research found that one paper mill had four or five undisclosed employees turning to the ER for care when other clinics might be a better option. They sent a list of clinics in the area and worked to educate employees about the options.
“That actually really helped. We still have a couple of people who, when they need help, they need it right now so they are still going to the ER,” she said.
Nashville health care costs outpace wages � and that's important
Health care costs have been increasing moderately in recent years, but there is beginning to be an uptick, in part from expensive new prescriptions called specialty pharmaceuticals. One specialty treatment can be $100,000, and biosimilars, akin to generics, may not be that much cheaper, said Mike Thompson, principal at PwC.
The prescription trend concerns Sender. LP's projected growth rate for prescription costs is in the double digits.
"It used to be we wouldn't think about high amount claims being affiliated with a specialty drug," said Thompson.
To control the costs, companies are moving to narrower provider networks, drug management plans and high deductible plans.
Obama mourns passing of Saudi king
LP only offers a consumer-driven plan in which employees are expected to do more research than before. It's trying to change the culture of the company to promote health and wellness, as well as educate employees about preventative care and issues, such as cancer screenings, that arise from the data. It has a 9-year-old wellness program that is beginning to generate excitement in the corporate office.
It's important for employees to know that health care decisions can make dents in their wallets, as well as the company budget.
The spouse of one Nashville employee compared two hospitals' quality ratings and costs for a colonoscopy. One was significantly higher although they had the same quality score, so they went to the less expensive option.
"These are good lessons for our people (since we're) self-insured," said Sender. "Higher costs are going to equate higher premiums for you next year."
Blevins is offering three plans in 2016, and costs are growing $30-50 a month depending on the plan. Deductibles are higher, too.
Companies work to make healthier living a priority
Employees, though, get a $50-a-month discount if they reach a certain level of engagement in a wellness program, which is in its first year.
The wellness program promotes healthy living and getting preventative care, such as physicals. Half of the employees have so far hit the level to get the discount.
"The whole thing is to make you think, 'hey, you know, I need to get out and do some walking today,'" said Kentner.
The savings will be harder, perhaps even impossible to calculate.
"It feels like a good thing. It's going to help us — we'll just never know how much it saves us," said Kentner.
Reach Holly Fletcher at 615-259-8287 and on Twitter @hollyfletcher.