Without an effective strategy or the right tools to reduce costs, brokers and employers continue to embrace cost shifting through payroll contributions and changes to deductibles and coinsurance to manage rising healthcare cost. However, there are resources that can help employers effectively measure the success of a wellness plan, while incorporating specific cost-saving strategies.

Effective wellness plans improve the health status of members. When planning a population health management strategy, it’s important to focus on driving down costs associated with emergency room visits, inpatient hospital stays and claims associated with heart disease, diabetes and some highly curable cancers.

See also: Why it’s time to shift the wellness ROI conversation

The following is a case study that is based on information from a reporting tool known as the CORE Health Report. This reporting tool specifically measures the effectiveness of population health management strategy and lays out a three-year strategic plan to improve claims utilization, reduce cost drivers and ultimately improve the health status of its members.

Claims utilization

In reviewing the claims data of a client, the population health management team discovered a number of metrics that were out-of-norm with other employer of similar size and industry in the claims database. For example, the company’s medical and pharmacy claims cost per employee for the year were $9,627 in 2013 and $9,351 in 2014, compared to a norm of $7,746 in the database. (In specific areas, measurements are calculated on a per 1,000 basis and compared to the statistical norm in the USI database.)

When individuals do not have a primary care physician, their usual care frequently becomes the emergency room or an urgent care facility. As such, companies should aim to have 1,000 preventive visits per 1,000 members. This employer, however, experienced preventive care visits of 285 in 2013 and 310 in 2014. This lower rate of preventive care visits explains why emergency room visits were 413 in 2013 and 422 in 2014, compared to the norm of 260.

A deeper dive into the claims data identified three major cost drivers; diabetes, high blood pressure and high cholesterol. For example, the prevalence of diabetes per 1,000 employees – was 109.6 and 119.3 in 2013 and 2014 respectively. The norm is 58.2 per 1,000. Meanwhile, the number of members with high blood pressure increased from 138.5 in 2013 to 166 in 2014 – compared to a norm of 100.1.

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The prevalence of high cholesterol among members (normalized to 1,000) was 64.8 in 2014, the only data point that was lower than the norm of 66.4. On the surface this appears to be a positive finding, but the lower incident rate could be indicative of a high number of undiagnosed individuals who have not seen their primary care physician during the last three years.

Setting measurable goals

When working with this employer, the team set targets in the second and third year of the health strategy plan to ensure the wellness plan would yield a positive return on investment. These goals were set around the number of members that are connected to a primary care physician on an annual basis, and targets for compliance of care including completion of mammography, colonoscopy and cervical cancer screenings. The goals were designed to help the employer outperform the norm.

In this case study, a goal was set to reduce the percentage of individuals unscreened for both mammography and cervical cancer screenings, to less than 20 percent by 2018, compared to 42 percent for mammography screening and 50 percent for cervical cancer screening in 2014. A target was also set to reduce emergency room visits to 150 by 2018, down from 422.

Financial impact

Unmanaged diabetics cost an average of $7,000-$10,000 more than those appropriately managing their disease. This employer saw 26 individuals participate in the secondary care program, for an estimated cost avoidance of over $180,000.

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The targeted reduction in emergency room visits would represent a cost avoidance of almost a quarter of a million dollars (272 avoided visits multiplied by the average cost of $900). Based on this, the team estimated an average cost avoidance of 5-7 percent on paid health care claims when the employer implements these solutions in conjunction with the health strategy.

Using such tools as the CORE Health Report and a health strategy plan with targets enables an employer to see the impact of what has been implemented in a simple, transparent way. Moreover, it becomes a powerful story that illustrates how population health management programs such as these are helping employers achieve tangible results with their corporate wellness plans.

Brian Ball is USI Insurance Services’ national vice president of employee benefits strategy and solutions

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