industry insights 2018: a guide to innovative benefits ...€¦ · boomers—have never heard of an...

A Guide to Innovative Benefits Trends for Today’s Modern Workplace

INDUSTRY INSIGHTS 2018:

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onedigital.com | Power Your People with Exceptional Benefits and HR2

Exceptional Employee Benefits and HR Solutions that Drive Growth

OneDigital Health and Benefits, the nation’s largest company focused exclusively on employee benefits, combines people and technology to deliver the new generation of health and benefits. Serving companies of all sizes, OneDigital offers employers a sophisticated combination of strategic advisory services, analytics, compliance support, human resource management tools and comprehensive insurance offerings.

Headquartered in Atlanta, OneDigital has over 1,100 employees throughout the country, serves 35,000 companies and manages nearly $4.5 billion in premiums. OneDigital has been named to the Inc. 5000 List of America’s fastest-growing companies every year since the honor’s inception in 2007. Currently listed as 13th in EBA’s Top 50 Brokers in the Large Employer Group, OneDigital’s experience offers a fresh thinking and strategic perspective that will improve all aspects of plan design and performance. For more information, please visit www.onedigital.com.

Disclaimer

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. This article is made available by OneDigital for educational purposes only. Please consult with a professional on appropriate advice for your specific situation.

CONTENTS

Introduction 3

Change in Healthcare Delivery 4

Lack of Transparency 8

Rising Prevalence of Chronic Conditions 11

Skyrocketing Pharmaceutical Cost 14

Changing Customer Preference 17

Disruption 20

Conclusion 22


INTRODUCTION

Disruption. Confusion. Frustration. Optimism.

We are in a current state of change when it comes to healthcare and its delivery.

Systematically there continues to be a lack of transparency and focus on patient outcomes.

There is a provider supply demand inequity. Chronic disease prevalence continues to rise,

attributing to skyrocketing pharmaceutical cost and affecting overall employee well-being.

As if this wasn’t enough, employee mindsets and preferences are changing while disruption

innately forces employers to strategically think about next steps in cost control.

OneDigital experts created this guide to explore the current complexities of the U.S.

healthcare system, dig into why people find it more and more difficult to navigate, and

what employers can do to help mitigate cost while still fostering a positive experience

for employees and their dependents. The guide captures six key factors that are driving

employers to take the next step in cost control. It also includes a fresh thinking approach to

answering large employers’ questions around how to strategically combat these factors:

1 Change in Healthcare Delivery

What can employers do to combat industry trends beyond their control?

2 Lack of Transparency

How can employers empower employees and their dependents to

navigate a smoke and mirrors healthcare environment?

3 Rising Prevalence of Chronic Conditions

What can employers do to help employees and their dependents manage

their health?

4 Skyrocketing Pharmaceutical Cost

How can employers effectively manage pharmacy spend?

5 Changing Customer Preference

Who is driving change and why is it important for an employer to address?

6 Disruption

How can employers remain nimble and flourish in an era of disruption?


We are seeing a significant shift in the healthcare system—consolidation.

KEY FACTOR #1: CHANGE IN HEALTHCARE DELIVERY


1We are seeing a significant shift in the

healthcare system—consolidation—

predominantly seen in the form of larger

systems purchasing a string of smaller

standalone facilities. Often misconstrued,

healthcare consolidation doesn’t

necessarily result in money-saving

efficiencies for employers and patients. In

fact, it reduces competitive market forces

needed to keep costs low.

In addition, there is a provider supply

demand inequity that is fueling change

in delivery. With a shortage in primary

care physicians (PCPs) and an increase in

consumer demand, employers are seeing

a rise in incorrect care setting.

According to the Association of American

Medical Colleges (AAMC) “The United

States continues to face a projected

physician shortage over the next decade,

creating a real risk to patient care. The

latest projections continue to align with

previous estimates, showing a projected

shortage of between 40,800 and 104,900

doctors.”1 AAMC modeling evaluated

a wide range of healthcare and policy

scenarios, such as “payment and delivery

reform, increased use of advanced

practice nurses and physician assistants,

and delays in physician retirements.” It

is important to note that in the report,

the AAMC extended the date of the

1 The Association of American Medical Colleges: New Research Reaffirms Physician Shortage https://news.aamc.org/press-releases/article/workforce_projections_03142017/

projections by five years, from 2025 to

2030, to account for the time needed to

train a physician who would start medical

school in 2017.

Employees and their dependents are

turning to higher cost care options

like emergency rooms and urgent care

facilities to seek care. As a result, costs

associated with care are rising, but not

necessarily increasing quality.

What can employers do to combat industry trends beyond their control?

Employers have embraced Consumer

Driven Health Plans (CDHPs); now

let’s pivot our attention to healthcare

providers. Challenge the provider status

quo by evaluating alternative payment

models and delivery like reference-based

“The United States continues to face a projected physician shortage over the next decade, creating a real risk to patient care...”

CHANGE IN HEALTHCARE DELIVERY


pricing, Accountable Care Organizations

(ACOs), high-performance networks or

centers of excellence (COE).

X With reference-based pricing,

employers leverage Medicare Fee

Schedules and/or Cost Data to

determine the prevailing price of

medical services.

X An ACO is a group of providers—

that can include both physicians and

hospitals—who work together to treat

an individual across care settings.

They accept joint responsibility

for health care spending and are

tied to achieving cost, quality and

satisfaction targets. A small number

of mostly very large employers have

contracted directly with providers to

form an ACO.

X High-performance networks—also

known as “narrow networks”—are a

limited number of high-value health

care providers covered in-network by

a health plan as a way to keep costs

in check.

X Centers of excellence (COEs) are

patient-centric organizations that

excel through leveraging data to

foster high-quality care, efficiencies

and standardization. Employers are

also using COEs to change how

health care is paid for; think bundled

payments instead of traditional fee-

for-service models.

Employers should also evaluate

enhancing care options by providing

employees with 24/7 provider access.

Next generation care is likely to take

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

On-site health centers

Centers of excellence

High-performance networks

Accountable care organizations (ACOs)

Telemedicine

Telebehavioral health

75%

70%

68%

58%

57%

47%

76% of all consumers—and 82% ofBoomers—have never heard of an ACO.

Emerging Millennials are morereceptive than Boomers to every option—particularly ACOs (71% vs. 47%)high-performance networks (82% vs. 59%),and centers of excellence (78% vs. 64%).

I Would Consider These New Ways to Get the Best Health Outcomes*

*Figures represent those indicating “definitely” or “probably” to this question: “Employers and health plans are considering new ways to most effectively deliver high-quality patient outcomes at appropriate costs. For each, please indicate whether you would consider using these options.”


place outside of hospitals. Video-based

consults show a potential for avoiding

costly fees, reducing absenteeism and

driving down hospital readmissions due

to complications. Additional options

could include nurse lines, on-site clinics

and remote monitoring providers as a

way to provide choice.

A recent multi-generational consumer

mindset study conducted by National

Business Group on Health & Aon Hewitt

asked consumers if they would be

receptive to new ways of getting better

health outcomes. The illustration on page

six reinforces receptiveness of employees

to adopt the above mentioned methods.2

2 AON, NBGH & Kantar, Consumer Health Mindset Study 2017

Next generation care is likely to take place outside of hospitals.


Consumerism has pushed employees to take a more active role in their healthcare.

KEY FACTOR #2: LACK OF TRANSPARENCY


2Consumerism has pushed employees

to take a more active role in their

healthcare. Employers have introduced

innovative plan designs and incentives,

but still struggle to actively engage

employees on how they access care.

Providers remain evasive when it comes

to health outcomes and cost. A majority

of patients rarely know the cost of care

upfront and don’t realize how much they

will need to pay until after they have

received it. They lack understanding

around the mechanics of CDHPs, true

out-of-pocket (OOP) expenses and the

resulting impacts on both quality and

cost.

In a recent consumer mindset study

conducted by National Business Group

on Health and Aon Hewitt they highlight

that when “comparing 2017 to 2016,

fewer consumers are taking actions like

comparing the cost of services. Nearly

a third say living a truly healthy life

requires more resources than they’re

willing to spend. The impact is that

they’re making decisions they regret and

avoiding medical care they need.” In

the figure below, the study evaluates

actions consumers take at least once

before or after a medical visit or when

making health care decisions. For the

LACK OF TRANSPARENCY

*Figures represent the percentage citing “once” or “more than once” on a 3-point scale.

75% 73%62% 65%

Looked for information that tells me about my symptoms before a visit

Asked a provider or insurance

company about costs or looked up

costs for any medical services recommended

for me

Asked whether a type of

treatment or prescription drug I heard

about might be right for me

Brought along a friend or family

member with me for my visit as

my advocate or for support

Broughtinformation Ifound (on a

website or othersource) to a

visit to discuss

Compared costsfor any

recommendedmedical services

from differentproviders or

facilities to findbest value

Brought a list of questions

to a visit

0%

20%

40%

60%

80%

100%

54% 56% 54% 57%46% 49%

38%44%

36%42%

2017 2018Actions I’ve Taken Before or After a Medical Visit or When Making Decisions*

A majority of patients rarely know the cost of care upfront and don’t realize how much they will need to pay until after they have received it.


most part all surveyed behaviors have

declines, with the exception of looking

up symptom information prior to a

medical visit. This downward shift doesn’t

necessarily demonstrate the beginning

of a downward trend, but caution and

action should be taken to mitigate

further downward trend.3

How can employers empower employees and dependents to navigate a smoke and mirrors healthcare environment?

Educate and empower employees with

tools to help efficiently navigate the

healthcare continuum. Employees need

access to robust, real-time, price, quality

and clinical effectiveness information

about their medical care and prescription

drugs. Consider offering concierge

support and price/transparency tools

that guide employees to do just that.

Companies such as Castlight Health,

Compass and Healthcare Bluebook

amongst others have focused their

business on providing just that—

transparency—fostering benefits

integration and increasing timely

employee engagement.

To exemplify the value of these solutions,

Healthcare Bluebook reported employer

savings range from 4-12% of total

3 AON, NBGH & Kantar, Consumer Health Mindset Study 2017

medical spend based on choice of

solutions. Variables in solutions could

include items such as referenced-

based pricing, incentive structures,

communication strategy and PreCare

outreach.

Steer employees to understanding key

questions like:

X Where can I get the best care at a fair

cost?

X How do my options stack up against

each other?

X Are there alternatives of equal quality

that offer a better value?

X What will my true out-of-pocket costs

be?

X What are the overall costs of my plan?

Transparency is essential to providing

high quality, affordable healthcare and

gives the employer an opportunity to

enhance the entire experience for their

employees.

What is the fair price?

The Fair Price is the reasonable amount you should pay for a medical service. It’s calculated from a nationwide database of medical payment

data and customized to your geographic area.

MRI Cost

$330 $2,470+

$572Fair Price

When prices for the same in-network procedure can vary by over 500%, chances are you’re paying way

more than you have to.

Same Procedure. Different Price.


Approximately 71% of the total healthcare spending in the U.S. is associated with care for the individuals with more than one chronic condition.

KEY FACTOR #3: RISING PREVALENCE OF CHRONIC CONDITIONS


3According to the Center for Disease

Control (CDC), approximately 71% of the

total healthcare spending in the United

States is associated with care for the

individuals with more than one chronic

condition. One in four Americans suffer

from a chronic disease; that number

rises to three in four when they are 65+

and increases likelihood multiple chronic

conditions.4

In a consumer mindset study conducted

by National Business Group on Health

& Aon Hewitt, they reported 77% of

consumers “regretting a health decision”

that led to getting the wrong care or

care that cost them more than necessary.

A key factor attributing to regret was

4 Chronic Disease Prevention and Health Promotion: Multiple Chronic Conditions https://www.cdc.gov/chronicdisease/about/multiple-chronic.htm

jumping into treatment without asking

the right questions, lacking diagnoses

knowledge and tools to help them

navigate next steps in care.

Additionally, diabetes, cancer,

musculoskeletal and high-risk maternities

are some of the chronic conditions

employers are seeing trend in their claims

data. Costs of conditions include direct

treatment costs and indirect costs related

to illness and mortality. Direct costs

can readily be measured through claims

data; however, indirect cost such as

reduced productivity, absenteeism and

mental wellbeing impact can be more

challenging for employers to quantify.

The total impact of illness is crucial in

RISING PREVALENCE OF CHRONIC CONDITIONS

*Figures represent percentage of those who regretted a decision.

• Not going through my primary care physician (19%)• Taking advice from someone other than a health professional (17%)

Other Factors That Led to Regret

I did not check costs atvarious facilities

I jumped into treatment withoutasking the right questions

I got bad advice from a healthcare professional

0% 20% 40% 60% 80% 100%

33%

38%

34%

29%

26%

32%

27%

19%

25%

27%

25%

24%

High users of health care (31%) are more likely to jump into treatmentwithout asking the right questions.

All Millennials Gen Xers BoomersWhat Led Me Down a Path to a Health Decision I Regretted*


understanding a holistic impact to the

employer and employee.

What can employers do to help employees and their dependents manage their health?

Employers need to get to the root of

the cause, helping employees manage

their health. Health assessments, disease

management and lifestyle coaching

have become mainstays of employee

health and well-being programs.5

Second opinion services are growing

as an employer sponsored benefit with

a means to provide the employee with

expert medical advice when faced with

a tough medical diagnosis or treatment

plan. Best Doctors, a second opinion

service provider, states that on average

there is a savings of $36k per expert

review. Based on 100,000+ clinical

5 Plansponsor: Study Reveals Employer Innovations in Health Coverage https://www.plansponsor.com/study-reveals-employer-innovations-health-coverage/

6 Teladoc: Best Doctors, Expert Second Opinion https://www.teladoc.com/businesses/expert-second-opinion/

evaluations, they found that on average

45% of original diagnoses are modified

and 72% of originally outlined treatments

are modified.6

Larger employers are increasingly

becoming more receptive to the idea

of remote monitoring and leveraging

the power of technology as a way to

manage conditions. Companies like

Livongo, Maven and Hinge Health have

made a claim to fame in the areas of

diabetes management, fertility/maternity

management and overcoming chronic

musculoskeletal pain respectively. Mine

your data, know what is driving claims

and ask employees how as an employer

you can support them in their healthcare

journey.

from over 100,000 clinical evaluationsaround the world

Expert Second Opinion Results

Diagnoses modified

45%

Treatments modified

72%

Although challenging to quantify, the total impact of illness is crucial in understanding a holistic impact to the employer and employee.


Prescription drugs are essential to help prevent and treat acute and chronic conditions, however 50% are not taken as directed, contributing to excess waste and spending.

KEY FACTOR #4: SKYROCKETING PHARMACEUTICAL COST


4Prescription drugs are essential to help

prevent and treat acute and chronic

conditions—they can help patients

avoid expensive medical problems and

unnecessary treatments. Unfortunately,

up to 50% of prescribed medications are

not taken as directed, contributing to

excess waste and spending. The Centers

for Medicare and Medicaid Services

(CMS) predicts a continued annual

spending increase of more than 6% from

now until 2025, which means more than

half a trillion dollars would be spent

annually on prescription drugs by 2022.

Prescription drug manufacturers have

developed a perfect system to allow

the pass-through of brand name drug

price increases directly to plan sponsors

7 Dafny, L., Ody, C., & Schmitt, M. (2016). When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization.

(employers) via copay coupons, which

effectively undermines insurer copays.

The copay coupon is an offer from the

manufacturer to pay all or part of the

consumer’s copay for the brand name

drug. The mechanics of who pays what to

whom is a tangled web designed to take

advantage of the patient’s desire to save

money at the employer’s expense.

In a recent paper written for the New

England Journal of Medicine by three

professors from Harvard, UCLA, and

Northwestern7 empirical evidence shows

that coupons are the catalyst for faster

branded price growth and utilization,

while generic efficiency is driven down.

The study proved that copay coupons

reduced generic efficiency from 95% to

SKYROCKETING PHARMACEUTICAL COST

National Spending on Prescription MedicationsProjected to Exceed Half a Trillion Dollars by 2022

Source: U.S. Centers for Medicare & Medicaid Services, National Health Expenditures Data, Accessed February 22, 2017

Tota

l Ret

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resc

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n Dr

ugs E

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ditu

res

(in b

illio

ns)

Actual Projected

$0

$100

$200

$300

$400

$500

$600

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022


92%, which increased branded sales from

5% to 8%. The study results also showed

a 60% increase in brand utilization and

increased spending of $30 to $120 million

per drug.

How can employers effectively manage pharmacy spend?

For larger or self-funded employers,

levers do exist. The focus will be on

incentives, appropriate use, cost share,

and provider negotiations. However, this

system is complex by design. The first-

pass obvious levers will impact trends

and significant further impact can be

realized in the analysis and redrafting

of the carrier or PBM contract. Over the

last nine years OneDigital’s proprietary

auditing solution recovered $42,856,528

over 363 audits, averaging $118,062.06

per audit. This approach imposes

transparency on PBMs which ensures the

highest financial impact for the employer.

At the retail point of sale (local

pharmacy), hope is the employer’s

only option. Because pharmacists are

incented by the drug manufacturers

to encourage brand utilization either

via coupons or pre-paid drug debit

cards supplied by the drug companies,

employees would need to refuse the

incentives and insist on paying their

share of the cost. A more significant

opportunity for real impact lies in

reevaluating your company’s prescription

drug plan, with a typical savings of 10%

in doing so.


Employees are demanding more from their employer with a shift from wellness to well-being.

KEY FACTOR #5: CHANGING CUSTOMER PREFERENCE


5Employees are demanding more from

their employer with a shift from wellness

to well-being. Termed well-being—

versus wellness—the “wholistic” model

provides opportunities to drill down to

more specific employee health concerns.

They are asking for solutions that address

specific health issues, such as sleep

disorders, tools to better manage mental

health or help employees better manage

stress. A “wholistic” program looks

to focus on the root of the stress and

offers programs to help your employees

address those areas for improved self-

care.

A recent article published by TechCrunch

highlights that millennials “may be a

bit obsessed with self-care—and it’s

beginning to pay off for the makers of

self-care and digital well-being apps.”8

8 TechCrunch: Self-care apps are booming https://techcrunch.com/2018/04/02/self-care-apps-are-booming/

In the first quarter of 2018, the top 10

grossing self-care apps in the U.S. earned

$15 million in combined iOS and Android

revenue, and $27 million in worldwide

revenue, according to Sensor Tower.

Apple, for example, pegged self-care as

one of its top four breakout trends for

2017, saying “never before have we seen

such a surge in apps focused specifically

on mental health, mindfulness and stress

reduction.”

Who is driving change and why is it important for an employer to address?

The next-generation workforce is driving

change, and a traditional one-size-fits-

all approach no longer works. Develop

a strategic and comprehensive benefits

package that provides choice and meets

CHANGING CUSTOMER PREFERENCE

2014

2015

2016

2017

2018 (Projected)

0 500 1,000 1,500 2,000 2,500 3,000 3,500

634 1109

728 1096

1251 1621

965 2229

804 2640

Self-Care Apps Added to App Stores iOS Android


employees at their stage of life. Broadly,

recommendations included a low-cost

health plan with HSA for Millennials and

Gen Xers, and consideration for more

traditional health insurance coverage

for Baby Boomers. In addition, it was

suggested the company should offer

dental and vision coverage

to appeal to all employees.

Long-term care and retirement

benefits would appeal to the

Boomers – and some Gen X

members. To provide additional

enticements for the oldest

members of the workforce to

remain employed, OneDigital

also recommends offering cancer

insurance and the option to work

a reduced number of hours.

To enhance the workplace for

Millennials, offer flextime, self-

care resources, student loan

financing and as well as accident

insurance.

The underpinning of successful

engagement is communication.

Evaluate multi-channel

experiences as they are still the best

way to reach employees. Build upon

traditional email communications by

leveraging mobile experiences. High

touch solutions that today’s consumer

expects will drive increased employee

engagement, both now and in the future. Generational Differences in the Workplace

www.onedigital.com

GENERATION X (1965-1980)Work Ethic: Efficient, self-reliantPreferred Work Environment: Flexible and funInteractive Style: EntrepreneurMotivated By: Freedom, removal of rules and time off

For HR manager, Generation X best respond to: • Casual informational sessions• Benefits offerings to help build a secure future• Information on retirement and employers matching 401(k) contributions amounts

MILLENNIAL (1981-1997)Work Ethic: Ambitious, multi-tasking, tenaciousPreferred Work Environment: Collaborative, creative and continuous feedbackInteractive Style: ParticipativeMotivated By: Autonomy, trust and time off

For HR manager, Millennial best respond to: • Frequent feedback on performance both good and bad• Open communication lines with HR & managers• Multi-platform employee-facing communications about benefits offering open enrollment, etc

GENERATION Z (1998+)Work Ethic: Intense, pragmatic, project-orientedPreferred Work Environment: Collaborative, fun, flexible and clearly defined chain of commandsInteractive Style: Entrepreneurial, face-to-face, teamworkMotivated By: Opportunity for advancement, participatory decision-making and being involved

For HR manager, Generation Z best respond to: • Honest and open communications from HR and managers• Expansive voluntary benefits offerings• Messages about how to plan for their financial and physical well-being

BABY BOOMERS (1946-1964)Work Ethic: Workaholics, competitivePreferred Work Environment: DemocraticInteractive Style: Team Player, loves meetingsMotivated By: Recognition, being valued and monetary rewards

For HR manager, Baby Boomers best respond to: • Honest, simple language on benefits programs and financial planning• Financial scenarios vs. conversations• Messages about how to conserve/pass on their wealth to the next generation

Today, people from several generations are working alongside each other, all trying to contribute to the same mission. Use this infographic to better understand your employees and to improve aspects of your organization like work environment,

management style, and employee productivity to attract high-performing individuals of all generations.


Consolidation and advances in technology, along with changing consumer preferences have led new entrants to the healthcare system.

KEY FACTOR #6: DISRUPTION


6Consolidation and advances in

technology, along with changing

consumer preferences have led new

entrants to the healthcare system.

Embracing disruption means remaining

nimble against constant changes in

an evolving system—with internal

stakeholders and external partners—to

the best advantage of employees and

employers.

Change is imminent. Recent industry

news includes potential carrier and

pharmacy benefit manager (PBM)

consolidations like Cigna and Express

Scripts, Aetna and CVS and other

similar alliances like Amazon, JPMorgan

Chase and Berkshire Hathaway are all

designed to improve employee health

benefits over the long term. In a time of

uncertainty and distractions employers

must remain focused on their multiyear

strategy and taking the next steps in cost

control.

How can employers remain nimble and flourish in an era of disruption?

The world of employee benefits and

HR is continuously evolving—and fast.

Attracting and retaining a talented,

committed workforce is imperative to

drive growth for your business.

Having a multi-year benefits strategy

in place will not only aid in offering

competitive benefits to your employees,

but will also free you up to tackle

strategic initiatives that drive your

business—and your people—forward.

Ensure you have a trusted benefits

consultant who is educated on the

emerging trends in the industry, who

can expertly educate you on the impact

and pros/cons of each, and who will

recommend a strategic path that will

balance the difficult equation of keeping

down costs while still offering the best

benefits to employees.

DISRUPTION

In a time of uncertainty and distractions, employers must remain focused on their multi-year strategy and taking next steps in cost control.


So what can employers do to take the next step in cost control?

Keeping attuned to key factors driving disruption and change in the health and benefits

industry is essential. Understanding how these factors strategically impact employers is what

will set good employers apart from exceptional ones. This guide evaluates how employers

can have an impact on their employee health and benefit programs by focusing on health

care delivery, pharmacy and technology. Emerging solutions such as ACOs and value-based

design have piqued employer interest. Employers and consultants alike should continue to

watch developments in the technology space, from leveraging the idea of remote monitoring

to disruptive ways of thinking about traditional payment models. New generation employers

are taking a fresh-thinking approach to evaluating methods of controlling healthcare costs,

improving outcomes and increasing satisfaction for their employees.

OneDigital offers a unique, strategic perspective that allows you to continuously improve

all aspects of your plan design and performance. Visit www.onedigital.com and let our

consultants help you and your people build an exceptional workplace and drive continued

growth for your business.

CONCLUSION


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industry insights 2018: a guide to innovative benefits ...€¦ · boomers—have never heard of an...

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