Influencing Health Care Strategy and Costs in 2023: Key Insights from September 14 Benchmarking Discussion Call

This benchmarking call discussed recent survey findings and gathered additional feedback from employer members on their approaches to tackling challenges and in forging the path ahead.

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October 13, 2022

Many employers are facing headwinds from rising health care costs in an ever-evolving health care landscape. To keep up with the trends, employers are ardently monitoring rapid developments in health care, from virtual health and advanced primary care to mental health delivery and the prescription drug pipeline.

On September 14, 2022, Business Group on Health hosted a benchmarking discussion call across all industry benchmarking groups to share insights and discuss member reactions to 2023 Large Employers’ Health Care Strategy and Plan Design Survey results. The call focused on the following key points.

1| Changes to HR/Benefits’ Role and Implications for Workforce Strategy

For many companies, the pandemic ushered in a period of heightened visibility to the work of their health and well-being teams, along with a shift in goals and larger workload/scope of work. According to the 2023 survey, most employers agreed or strongly agreed that the pandemic brought an increased workload for team members responsible for health and well-being and increased visibility for their company’s health and well-being initiatives.

  • Increased focus on mental health support: One employer observed that the pandemic pushed the organization to focus on meeting employee mental health needs, resulting in numerous changes to the roles of their well-being teams. In addition, this employer claims there has been more attention/investment given to resources and programs to support plan members’ mental health needs—which were exacerbated during the pandemic.
  • Heightened visibility and influence: Another employer did not change its HR/Benefits model too much in the U.S. this past year as it already had strong well-being offerings. This employer did, however, change up its mental health provider after getting buy-in from its executive leadership group. The result was a massive uptick in engagement. Given the company’s success gaining visibility and stakeholder support, the HR/Benefits team is being further tapped by employee resource groups (ERGs) for strategic advice outside the U.S.

2| Health Care Trend and Cost Drivers

In comparison to 2020, when health care trend was flat, surveyed employers’ health care cost trend increased significantly (8.2%) in 2021 and are anticipated to increase by 6.0% after plan design changes in 2023. These costs are largely being driven by high-cost conditions. Other factors affecting costs include longer hospital stays, deferred care/preventive screenings and specialty drugs/pharmacy care.

  • High-cost conditions: Employers on the call shared the top conditions driving their current costs. Some of the top high-cost conditions mentioned were cancer, musculoskeletal (MSK) and diabetes.
    • Trend remained flat: For the beginning portion of 2022, one employer on the call indicated their trend remained flat, and in terms of utilization, they had not had any catastrophic claims.
    • Preventive care: One participant is seeing an increase in childbirths and a return to routine care—a good sign for employers. This uptick may mean that the downstream cost burdens tied to delayed routine and preventive screenings seen during the pandemic could be abating.

3| Health Care Delivery

The pandemic sparked a reconfiguration of the health care delivery system, and employer-sponsored plans had to react swiftly to ensure that employees and their dependents had access to the care they needed virtually. Most large employers surveyed believe virtual health will have a lasting impact on how care is delivered, but that number has slightly declined from the height of the pandemic.

  • Virtual health: Employers continue to offer more virtual health options year-over-year, with all roads pointing to them becoming a mainstay component in large employers’ health and well-being offerings. Employers are thoughtfully planning, considering and rolling out various new virtual solutions that center on ensuring data integration and a satisfactory patient experience.
    • Aligned vendor partnerships: One employer on the call brought together virtual health vendors and then mandated that they become familiar with their internal ecosystem and report on cross-transfers and coordination between the data. This employer acknowledged that it may have more leverage to drive this kind of change due to its workforce size.
    • Pilot program: One company is looking to pilot with a virtual health vendor that it had already worked with for its on-site clinics. This employer is trying to see if there is one vendor who can fill all their needs and also provide for efficient data transfer whether employees go to a community-based health center or another virtual provider.
    • Expanding the virtual care ecosystem: A participant on the call shared that its benefits team adopted virtual physical therapy (PT) solutions and is focused on building out its virtual care ecosystem.
  • Advanced primary care strategies: Employer interest in advanced primary care strategies is growing—particularly when it comes to virtual primary care services. According to the 2023 survey, 60% of large-employer members will have at least one advanced primary care strategy in place in 2023. Along with a virtual-first approach, other strategies to deliver primary care services in a higher-value setting include steerage to physician-based Accountable Care Organizations (ACOs)/Health Plan Networks (HPNs), patient-centered medical home (PCMH), leveraging on-site/near-site health clinics as a primary care site, expanding primary care provider reimbursement levels for virtual visits and applying direct primary care models in certain markets.
    • Virtual-first model: During the call, one member shared that the company is talking with a health plan with an expertise in virtual solutions and considering options, including a virtual-first primary care model. Moreover, this employer already has three high-deductible health plans (HDHPs) and is assessing different ways to provide a virtual primary care solution to employees.
    • Multipronged approach: When considering the current primary care shortage, cost pressures and other factors impacting employee access to primary care, a couple employers on the call underscored the need for a multipronged primary care approach that leverages on-site clinics, virtual health and other delivery models.
  • Mental health focus areas: Most large employers during the call stated they are focused primarily on mental health stigma, access and burnout. In efforts to improve the delivery of mental health services and address these issues, employers are working on various initiatives to expand access/engagement and enhance their mental health offerings.
    • Mental health offering enhancement approaches: A few employer members shared they are working on enhancements to their virtual mental health offerings through strategic communication and vendor outreach. For example, one employer is preparing to launch a multichannel (e.g., webinar, lunch-and-learn events, fliers, emails) communications campaign plan in an effort to increase employee engagement with its current virtual mental health solution. Part of the plan involves sending targeted messaging as a way to mitigate any existing disparities in employee utilization/engagement with its available mental health offerings. An example of a tailored messaging approach includes explicitly communicating diversity of providers available in their virtual mental health solution. Another employer conducted a team member satisfaction survey that revealed a desire for more on-site mental health services. To better meet such employee preferences, this employer is talking with its current virtual mental health support vendor and pushing the vendor to increase in-person mental health care/number of on-site counselors to meet employee preferences/needs.
    • Train-the-trainer programs: Several different employers on the line are implementing train-the-trainer programs utilizing either internal resources or third-party vendors in a campaign to “smash the stigma” of mental health in the workplace.

4| Affordability

The affordability of health care continues to be a top concern for employers. To address the issue in their plan design, employers are considering and executing a number of efforts and strategic initiatives.

  • Plan design changes and benefits communication strategy: In 2022, one company held medical plan contributions steady and considered doing so in 2023 but decided to raise them a small amount. Instead, this employer is going back to its 2021 formulary list to help reduce employee costs. In reaching this decision, the employer assessed implications for employees and determined that mostly high-paid employee premiums were affected. Up until this point, the employer had not changed its plan design for deductibles or co-insurance in the past 4 years. To communicate these changes, this company has a call center that can handle one-on-one communication. This employer noted that the rolling out of benefits communication will likely be separate from total rewards communications.
  • Utilization management (UM) strategy: To address affordability, one employer member carved out specialty prescription drugs for a more robust UM process. Though there was some disruption in the first couple months among members, ultimately this change made a significant difference in the overall specialty drug cost trend.

5| Health Equity

Employers are continuing to engage in a wide range of activities to target health inequities and address social determinants of health (SDOH). According to recent 2023 Business Group survey findings, health care (61%) and finances/income (56%) are currently addressed most by employers; food access and childcare are expected to garner additional efforts in coming years.

  • Tactically leverage ERGs: Many employer members are meeting with and soliciting feedback from ERGs and Business Resource Groups (BRGs) about solutions to support health equity initiatives. At the same time, from an HR perspective, it is hard to thoughtfully implement the plethora of good ideas and inputs shared by their various ERGs, so intentionality is a must.
    • Prioritizing suggestions: Understanding this dilemma, one employer meets with its BRGs twice a year and makes changes to benefits plan with their feedback in mind. Much of the feedback reportedly gathered was realistic and well-thought-out, but given the sheer volume, it was not feasible to implement every suggestion. After listening to feedback from the BRGs, the employer then made a couple of changes to the health plan based on their input to ameliorate health inequities (e.g., increasing the adoption assistance from $3,000 to $10,000).
  • Inclusive framework: To strategically identify and prioritize health equity ideas, one member built an inclusivity framework. This framework looked at a few different variables such as tenure, rehires and other potential considerations for certain employee populations.
  • Lifestyle spending accounts (LSAs): One company shared that it is currently considering creating LSAs that employees can spend on whatever well-being expenses they want. Part of the reason this company is purportedly considering offering LSAs is that it wants to avoid creating a variety of incentives and to ensure that offerings are fair for all employee populations.

Looking Ahead: Employer Aspirations for 2023

In wrapping up, employers were asked to share what they hope to achieve in 2023. Answers included continuing to work to expand the number of locations with on-site employee assistance program (EAP) services/counselors and conducting a comprehensive medical/prescription drug request for proposal (RFP) to achieve cost savings for 2024 —without eroding the employee experience. All in all, the discussion reaffirmed Business Group 2023 survey findings and highlights members’ shared commitment to driving better value from their vendor partners without forgoing important considerations such as cost, quality and experience.

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TABLE OF CONTENTS

  1. Changes to HR/Benefits’ Role and Implications for Workforce Strategy
  2. Health Care Trend and Cost Drivers
  3. Health Care Delivery
  4. Affordability
  5. Health Equity
  6. Looking Ahead: Employer Aspirations for 2023