Physician practices today face enormous hurdles as they attempt to navigate through the changing landscape of healthcare reform. From growing regulatory burdens to health insurance confusion, practices are constantly figuring out ways to control costs. Healthcare reform’s widespread impact ripples through all aspects of healthcare – and physician practices see all sides as payers, providers and patients.
The swarm of activity taking place in Central Florida’s Lake Nona and Medical City has shifted some attention from the area’s burgeoning hospitality sector to its growing medical sector where well-managed healthcare for employees is just as important for patients. But, there are just some challenges to overcome.
According to the Medicare Payment Advisory Commission, Medicare spending is projected to grow at a slower rate than in the past 10 years (3.3 percent annually compared with 6.1 percent annually). The lower projections for growth in spending per beneficiary are due in part to reduced updates of fee-for-service Medicare and lower payments to managed care plans and in part to the recent slowdown in use of services. As a result, costs are being pushed to third parties for reimbursement.
Healthcare reform has added additional taxes that insurers must pay, which translates to higher premiums on fully insured plans. The tax portion between patient-centered outcomes research (PCOR) fees, transitional reinsurance fees and the insurer fees add roughly 3 to 5 percent on top of the normal “trend” increase. The Patient Protection and Affordable Care Act (PPACA) mandated the maximum in out-of-pocket costs. Also, co-pays, which previously did not apply to the out-of-pocket costs, now do apply. Ultimately, this makes any benefit plan slightly or possibly significantly “richer.”
Depending on the current benefit design, we have seen insurers add anywhere from 2 to 7 percent to the premium cost to account for the richer benefit. That adds up to anywhere from a 5.5 to 11 percent increase in costs before any claims or trends are taken into account.
Insurance companies are highly motivated to control costs, which creates a difficult road ahead for physician groups. That’s why it’s critical for physician practices to consider alternative funding arrangements. Most carriers (CIGNA, UnitedHealthcare, Aetna) are moving forms of alternative funding arrangements down to small groups, which would typically be community rated. These arrangements reduce the premium tax burden, provide composite rates for a group that would have age-based or tiered rates, and provide actionable data to bring real ROI on wellness programs.
One thing to do now is to automate benefits administration. Not only is this great for the employer, it's great for employees. User-friendly tools engage and educate staff about benefits through an easy-to-use navigation portal. Now, a wealth of information is just a click away. Open enrollment and life event processing can be confusing and challenging for anyone. With an automated system, employees can learn, view and then elect benefits specific to their eligibility. All transactions can be seamlessly transmitted to payroll, ensuring accurate payroll deductions.
Physician groups should set aside time to educate employees to make them better consumers of healthcare. A well-designed campaign puts the responsibility of health and cost control in the employee’s hands. If an employee understands that premiums and the organization’s overall insurance rates are based on utilization and claims experience, there is more of an incentive to get engaged.
Who is better to educate their employees about healthcare than physicians? Effective wellness programs actually help shift the responsibility to the employee and reduce the employer’s healthcare costs overtime. Proactive disease management and prevention, including health risk assessments, biometric screenings and employee education, should be a standard practice for physician groups. Employees simply need to be smarter about their health decisions and physicians are perfectly aligned to be great educators.
Just as physicians see time and time again with patients in the exam room, lifestyle choices also impact employees in the workplace. Four behaviors identified by the Centers for Disease Control and Prevention (CDC)—inactivity, poor nutrition, tobacco use and frequent alcohol consumption—are primary causes of chronic disease in the United States. These behaviors lead to a higher prevalence of diabetes, heart disease, and chronic pulmonary conditions, according to the CDC.
The cost-reduction potential is large for employers with well-established strategies around health and wellness, telemedicine, and benefits administration. Ultimately though, to impact healthcare insurance premium costs, physician practices will have to look at managing their employees’ health risks like they would with workers’ compensation. In the end, this reduces controllable risks and provides the best way to reduce costs in the long run.
Corporate Synergies Benefits Consultant Jim Perry specializes in reducing the employer’s employee benefit costs through in-depth market research, strategic plan design, claims data analysis and diligent negotiations. He directs the strategic benefits process, monitors the business plan and ensures the delivery of exceptional client service. He has extensive experience in the Florida market and serves clients from the firm’s regional office in Orlando.
