Amid expectations that health care costs will continue to rise well ahead of inflation in the coming years, employers report that they plan to ramp up their efforts to manage costs by, for example, taking advantage of emerging health care delivery solutions and improving their patient navigation and health engagement strategies, the findings of a recent survey by human resources consultancy Willis Towers Watson indicated.

The annual survey was completed by 678 U.S. employers between June and July 2017, and reflects respondents’ 2017 health program decisions and strategies. The survey found that employers expect health care costs to rise by 5.5% in 2018, up from a 4.6% increase in 2017. The findings also revealed that despite uncertainty about the future of health care legislation, employer confidence in offering employee health care benefits has reached its highest level since the passage of the Affordable Care Act in 2010, with 92% of employers saying they are very confident their organization will still sponsor a health plan in five years.

In addition, the survey found that employers are pursuing a wider range of approaches to reduce health care costs and risks than in the past, including encouraging patients to use preferred health care delivery options: 44% of employers said they currently use centers of excellence within health plans, with another 33% saying they plan to or are considering using these centers by 2019; and 78% of respondents said they currently use telemedicine consultations as a supplement to office visits, with another 16% saying they plan to or are considering offering these consultations by 2019.

The survey also showed that the main criteria employers use when selecting carriers and vendors are the competitiveness of negotiated provider discounts (94%), the competitiveness of a vendor’s network access (94%), and the competitiveness of a vendor’s total cost of care (92%).

The results suggested, however, that in selecting partners, employers are emphasizing better outcomes as well as cost savings, especially for high-priority clinical conditions like diabetes, musculoskeletal health, and mental health.

The findings further revealed that employers are taking steps to control pharmacy costs and utilization: 62% of employers reported they are currently evaluating pharmacy benefit contract terms, with another 32% saying they plan to or are considering doing so by 2019; while 60% of employers said they have recently adopted new coverage or utilization restrictions as part of specialty pharmacy strategy, with another 24% saying they plan to or are thinking about doing so by 2019.

The results also indicated that employers are seeking to raise employee health engagement levels by offering workers expanded choice and a more personalized experience. Two-thirds (66%) of employers said they currently add choice in benefit types by offering voluntary benefits, with another 20% saying they plan to or are considering adding such choices by 2019. Meanwhile, 24% of employers reported that they create a virtual shopping experience at the time of enrollment, with another 26% indicating they plan to or are thinking about offering virtual shopping by 2019.

In addition, the survey asked employers what healthcare technology tools they offer their employees. The results showed that 55% of employers currently provide decision-support tools for health navigation, with another 26% saying they plan to or are considering offering such tools by 2019; 19% of employers currently encourage employees to use mobile apps for condition management or health risk reduction, with another 28% indicating they are planning to or considering doing so by 2019; and 26% of employers currently promote the use of wearable devices for tracking physical activity, with another 18% saying they are planning to or considering doing so by 2019.

From Benefit Trends Newsletter, Volume 60, Issue 9

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.