Employment considerations of the H1N1 pandemicKeeping group benefits costs to a minimum is a challenge for all employers. But according to a survey by the International Foundation of Employee Benefit Plans (IFEBP) earlier this year, more and more plan sponsors are turning to wellness programs and cost-sharing measures to help.

The IFEBP survey uncovered the approaches plan sponsors currently use for managing the costs of group healthcare plans, changes that have occurred since its 2009 survey and promising strategies for the future. The IFEBP surveyed 665 individuals from corporate plans, multi-employer plans, public/governmental plans and professional firms serving the employee benefits industry.

Uptake and Options

The survey indicated that employers struggling with rising health plan costs are adopting additional measures, most notably wellness initiatives, to improve employees’ health and control costs. In fact, 78% of organizations offered wellness initiatives in 2010, up from 61% in 2009.

The most prevalent types of screening and treatment wellness initiatives include flu shot programs (71%), complementary and alternative medicine (52%) and smoking cessation

programs (48%). Between 2009 and 2010, there was a significant uptake in the adoption of complementary and alternative medicine as a wellness offering (29% and 52%, respectively). And the most prevalent fitness and nutrition initiatives include wellness competitions (37%), off-site fitness program subsidies (31%) and healthy food choices (26%).

Employers are also increasingly finding new ways to educate employees on plans and their costs, including email messages (64%), bulletin board messages (53%) and newsletters (52%). And non-cash incentives, such as prizes or raffles (49%), are the most common incentives used to encourage wellness plan participation, followed by gym or fitness membership discounts (38%) and gift cards or certificates (34%).

Nearly one in 10 plan sponsors offering wellness initiatives report that they measure the return on investment of their programs, and a clear majority (88%) find the results are positive.

The reasons organizations do not offer wellness programs include implementation and prohibitive costs and a general lack of employee interest. Nevertheless, nearly 20% that do not currently offer wellness initiatives say they will likely offer them in the future, and one of the two most commonly cited strategies to improve healthcare quality and reduce costs in the next two years is offering wellness programs (63%).

Strategies for Savings

As healthcare costs continue to rise, plan sponsors are most concerned about increases in usage due to the aging population. Most group healthcare cost-management initiatives centre on

modifying plans to include more participant cost-sharing measures.

Survey participants indicated that the top five strategies for cost savings included cost-sharing provisions (79%), setting reasonable and customary fee schedules (75%), reviewing reimbursement levels and maximums (75%), setting annual and/or lifetime maximum benefit limits (75%) and conducting healthcare claims/utilization analysis (69%).

Due to increased specialty drug use, government cost shifting and drug company profits, prescription drug costs are also rising. A number of employers have implemented cost-management techniques to specifically control these costs, including promoting the use of generic drugs (62%), requiring participant contributions (59%) and using drug formularies (56%). And nearly half of all employers (48%) are informing employees of the costs of filling prescriptions.

Compared to 2009, Canadian sponsors in 2010 are more apt to promote the use of generic drugs, place limits on specialty or biotech drugs and use high-amount claims pooling, lowest-cost alternatives, prior authorization or utilization management, pharmacy benefits managers and step therapy/therapeutic substitution.

For employers, the struggle of providing competitive benefits and meeting employee needs and wants while balancing the organizational budget is a tough one. But knowing all your options will make it a little easier. BC

Neil Mrkvicka is a research associate with the International Foundation of Employee Benefit Plans.