When You Want Your Employees to Get a New Drug...

Note: When I start talking about medical plan design, you should care.  Still not convinced? Just dream this post will make you seem all cultured the next time someone you know wants to drone on (in support of or against, doesn't really matter) about Obamacare....

It's almost July, and that means the uber-organized among you have your project management software set up to consider the design of your Medical Plan for 2011.

If you're continuing to get slammed by medical costs, you're not alone - either now or in the past couple of years.  Your choices to control medical plan expense and stay cost-neutral on the same plan are pretty simple:

A. You can pass along costs to your employees by increasing employee contributions to premiums (impacts all employees),

B. You can alter the design of your medical plan to ensure that those who use the plan the most pay the most (impacts those who use the plan extensively), or

C. You can do a combo of A and B to control your cost line.

A smart thing to do if you're faced with cost increases is to focus on the top 5 plan design changes you could make that would save you the most money.

Example from the street last week.  A friend of mine made a change to the Rx plan at his company.  This company had your standard 3-tier Prescription program, with generic/preferred/non-preferred tiers coming in at a $10/$30/$45 co-pay respectively.

They changed the co-pay cost of preferred to $35, and changed non-preferred to $100.  The result on cost projections was, let's just say, shocking.

Taking the more aggressive stance on non-preferred drugs saved the plan 5.1% in total cost based on last year's medical utilization (how much the plan was used).

5.1% on the total cost front!!  That's more than pocket change.  That's a real number, and in the spirit of who should bear the costs, the increase in cost is passed along to those who use the plan the most.

The moral?  Ask your broker for the top 5 things you can do from a plan design perspective to save costs.  If they don't talk top tier on the Rx plan, make them talk about it.

Comments

[Interviewer]

Careful there - those kinds of changes will cause the plan to lose grandfathered status.

[Jared Hooste]

The insurance companies want us to have higher premiums because it means more money for them. If they wanted us to save they would've created analytics to show us where are insurance dollars are going and how it effects next years premiums.
A simple pie chart showing pay out cost to on the different levels generic, prefered, and non-prefered. In-network, Out of Network. Emergency Room, Urgent Care, Doctors Office. These charts would show that the most expensive options are being used when a cheaper options would give just as good if not better results. These charts would give the consumer the knowledge needed to make better decisions and hopefully cut down some of their costs in the future.
We need to have benefits training classes and not benefits information classes.

[Brian M]

I was also going to suggest that your friend watch out for the grandfathered status rules. Based on our interpretation that change would be problematic if they intend to stay grandfathered.

[Chris]

Grandfathered status is going to be unrealistic to retain. Make the changes.

[evilcatbert]

Another option to consider include:
Increase your deductible along with providing an HRA (Health Reimbursement plan). This allowed us to offer our employees 80% coverage from the first dollar of claims at a less expensive rate than if we'd covered the same amount through the insurance company.
Under this plan you can also eliminate office visit copays and in most instances employees paid less than the copay would have been when they visit their doctor.
With a minor change this year we should be able to drop our renewal from an 18% increase down to less than 2%.