There is a dramatic difference in how employers tackle health cost trends. Some are doing "everything possible to control costs and improve workers' health, while others have not been willing or able to do it as aggressively," Helen Darling, president and CEO of the National Business Group on Health told attendees at the Health Benefits 9-1-1: Heightened Urgency to Control Cost and Improve Health conference.

Held in March, the Washington, D.C., event is where Towers Watson and NGBH released findings from their 16th annual Employer Survey on Purchasing Value in Health Care. The research reflects the responses of 588 companies that employ 9.2 million full-time workers. Of those workers, 7.8 million were enrolled in health care programs.

In 2010, survey participants allocated, on average, $10,387 per employee on health care, representing a collective $81 billion in total health care expenditures, NBGH and Towers Watson experts calculate.

Employers' anxiety over the cost of implementing the Patient Protection and Affordable Care Act raises questions about whether they are going to be in the business of offering benefits.


Follow the 'consistent performers'

Analysts behind the study have pinpointed 225 companies, labeled "consistent performers," that have reported, from 2007 to 2010, an annual cost trend at or below (1.8%) the median population (6.3%).

"In the last couple of years, we have started to pay more attention to the consistent performers - all of which have participated in the study for consecutive and multiple years, so we have a lot of data on them," Theodore Nussbaum, senior consultant at Towers Watson, said during the presentation of the research.

Consistent performers are able to yield such strong results because they work across several dimensions, including health improvement and engagement, accountability, linking provider strategies, technology and a healthy environment, Nussbaum said. He added that the best and consistent performers will focus on specific tactics within those dimensions and implement a combination of tactics across each dimension. Yet, wrapped around those dimensions is data.

"Consistent and best performers use data to drive decisions, so they build data warehouses and then use data to focus on programs they implement, instead of implementing wide and broad-based programs that don't necessarily fit their population," Nussbaum said.

"When you have costs trends in the 1.8% range, compared to a 6% cost trend, then you might have confidence you can continue to sustain your health benefits programs, especially if you follow the strategies and tactics of the consistent performers," Nussbaum explained.

In analyzing the plan designs of the consistent performers, Nussbaum and his team found that their low health cost trend stemmed from "renegotiating financial arrangements with their current pharmacy benefit manager, changing plan options, rewarding enrollment in healthy lifestyle activities or penalizing nonenrollment, and imposing tougher restrictions on receiving financial incentives."

While many employers are content in rewarding employees for merely participating in health promotion programs, consistent performers take it a step further by only rewarding those who completed the programs. Moreover, the organizations are twice as likely to use valued-based benefits design, compared to the rest of the population. What's more, consistent performers are likely to "invest in enhancements to case management for serious conditions and participate in a community-based pilot program, such as patient-centered medical home or an accountable care organization," the research concludes.

The cost difference between consistent performers and low performers was more than $2,000 per employee, while the difference between high performers and low performers was $1,745 per employee. "For a consistent performer with 10,000 employees, this adds up to a $20 million cost advantage over a low-performing competitor," researchers note.

"It's important to try to understand why consistent performers are producing the results that they are, so we all can learn lessons and tailor our programs and tactics toward the approaches they take," Nussbaum explained.


Top 12 tactics planned for 2012 by consistent performers 1. Differentiate cost sharing for use of high-performance networks or centers of excellence.

2. Reward based on biometric outcomes other than smoker, tobacco-use status.

3. Change plan options.

4. Use value-based benefit designs.

5. Reward or penalize based on smoker, tobacco-use status.

6. Audit of medical claim payments.

7. Provide employees with information on provider and/or hospital quality.

8. Use centers of excellence for treatments other than transplants.

9. Reward only those who complete requirements of a healthy lifestyle activity.

10. Require employees to complete the health risk appraisal and/or biometric screening to be eligible for other financial incentives for healthy activities.

11. Reward enrollment in healthy lifestyle activities.

12.Use hard-dollar return-on-investment calculations to support future decisions.

Source: 16th annual National Business Group on Health and Towers Watson Employer Survey on Purchasing Value in Health Care.

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