Thursday, January 5, 2012

Anthem Blue Cross Blue Shield: ERC

ERC Health

Anthem has recently rolled out with a new product in Central Ohio.  This product, at least initially, is a closed group – meaning only select Insurance Brokers can utilize.
The Anthem ERC (Employer Resource Council) is a program with certain Wellness criteria baked in.
Participating groups must agree to conduct biometric screenings and hold a health fair once per year, both of which are paid for by Anthem.
In return, members are assured that they will be part of a “healthy” pool of groups, which will ultimately help stabilize and reduce renewal increases, certainly over time.
In fact, over the past five years, 20% of ERC groups received no increase to their medical renewal, while 75% received a renewal increase of 10% or less.

Prescription Drug Patents Ending

In the next five years, there are many high-cost Brand Name prescription drugs that are coming off patent.

This is a positive development, but it is also important to note that in the first several months, or even first few years, the new generic may be expensive compared to the net cost of a brand or other alternatives. 
In fact, 50% of these generics continue to remain high cost after 18 months!

Annual Sales
$ 20 Billion
$32.5 Billion
$8.6 Billion
$ 16 Billion
$7.5 Billion
§  Caduet
§  Levaquin
§  Lipitor
§  Patanol
§  Tricor
§  Xalatan
§  Zyprexa
§  Actos
§  Avandia
§  Avapro
§  Detrol LA
§  Diovan
§  Geodon
§  Lexapro
§  Plavix
§  Provigil
§  Seroquel
§  Singulair
§  Viagra
§  AcipHex
§  Avodart
§  Cymbalta
§  Niaspan
§  OxyContin
§  Propecia
§  Sustiva
§   Actonel
§  Arthrotec
§  Asacol
§  Avelox
§  Celebrex
§  Evista
§  LoEstrin FE
§  Lunesta
§  Nexium
§  Yasmin
§  Abilify
§  Aggrenox
§  Androgel
§  Avodart
§  Axert
§  Gleevec
§  Namenda
§  Ortho Evra
§  Ortho TriCylen Lo
§  Sustiva
§  Welchol

This would be a good time to examine the alternatives with your Insurance Carrier and/or Pharmacy Benefit Manager.  It may also be a good time to structure your Rx program accordingly.

One Approach to Reducing Healthcare Costs: Benton County, Arkansas

Benton County, Arkansas realized that their healthcare costs were getting out of control, and they implemented some programs to address the issue.
Although not very popular at first with employees, the County went from $500,000 in the red to $1,000,000 in the black in just 17 months.
This CBS Evening News video is only 3 minutes long and worth the viewing.
Covenant – the vendor that helped implement the program - is a vendor of Preferred Benefits.


Wellness Return on Investment: Harvard Business Review

For many years, our industry has had a difficult time actually correlating ROI from the use of wellness dollars.
It looks like this is changing.
One of the best articles I have seen with regards to hard ROI from wellness programs comes from the Harvard Business Review. 
To summarize, the ROI on comprehensive, well-run employee wellness programs can be as high as 6-1.
For a copy of this article, please contact me directly.

Sobering Statistics: We Face a Wellness Crisis

Let’s face it.  Certain health conditions happen with every company, no matter how big or how small your organization is.  There is little that can be done to prevent a Premature Baby or a hereditary bone disorder, but many of the large claims that we see are preventable.

Let’s explore some of the staggering statistics on just two of the major contributors of health insurance claims – Obesity and Smoking:

  • More than half of all Americans live with one or more chronic condition.
  • Most adults will be overweight or obese by 2030, costing $950+ billion.
  • Productivity losses related to personal and family health problems cost US Employers $1,685 per employee per year, or $225.8 billion annually.
  • This loss in productivity represents roughly 20% of the payroll.

  • Obese workers files twice as many workers compensation claims as non-obese employees.
  • Obese employees had seven times the medical costs for these claims, averaging $51,019 per 100 workers compared to $7,504 per 100 workers for people with normal BMI.
  • Obese employees lost 13 times as many days per 100 workers compared to 14 days per 100 workers for people with normal BMI.

  • Businesses pay an average of $2,189 in workers compensation costs for smokers, compared to $176 for nonsmokers.
  • Each employee who smokes costs employers $1,897 in lost productivity each year.
  • On average, smokers miss 6.16 days of work per year due to sickness (including smoking related acute and chronic conditions), compared to nonsmokers, who miss 3.86 days of work per year.
  • Employees who take four 10-minute smoking breaks per day actually work one month less per year than workers who don’t take smoking breaks.
  • Construction and maintenance costs are 7% higher in buildings that allow smoking than in buildings that are smoke-free.

As you can see, not only are the bottom-line health insurance costs increase dramatically, but ancillary effects are felt as well.  Workers Compensation costs, lost productivity and absenteeism all affect the bottom line.
The good news is that these are two of the easiest “problems” to fix.

More on Wellness strategies in future blog entries.

High Performing Health Plans - A Summary

High Performing Health Plans have a distinct cost advantage over their non-performing counterparts:

  • High performers pay 18% less – roughly $2,000 per employee – for their health benefit programs than a low-performing competitor.
  • Employees at high-performing companies pay 20% less than their low-performing counterparts.
  • While 35% of low performers report double-digit rate increases, high performing companies are keeping trends well below national averages. Over 33% of these organizations have held their costs to 4% or less.
  • Additional aspects of the health dividend for high-performers include supporting/building the company reputation, attracting the needed workforce, maintaining productivity and supporting workforce well-being – all areas where high performers are roughly twice as likely as low-performers to report positive impact delivered by their health programs.
  • Investments in wellness programs, communication and measurement disciplines – hallmarks of the high performers – will be increasingly prevalent across all companies just three years from now.
  • As a final critical point, ongoing program performance could have significant implications for employees under healthcare reform.  Regardless of how the impact of reform unfolds, it’s clear that companies with efficient programs and a clear, forward-looking strategy for supporting workforce health will be the winners in the new environment.

What are you paying for?

I am often asked the following question: “How much should we be paying our insurance broker, and what should we expect in return?”
This is a tough question to answer without first looking at the dynamics of the Company/Broker relationship.

On the surface, your insurance broker/agent should be an extension of your HR Department.  Anything less than this and you are not getting your money’s worth. 

A good insurance broker is a valuable member of the team, and is resourced with helping with a variety of issues, from day-to-day service issues to strategic planning and predictive modeling to negotiating with the vendors for the best deal possible.

A good relationship goes much deeper than this though.

How does your insurance broker go about reducing your overhead and maximizing your profit margin? That’s the bottom line, isn’t it?  How much does your company pay for health insurance and employee benefits?  The numbers are staggering and are only getting worse.  So the underlying question should be, “What is your insurance broker doing to reduce costs, and how are they doing it?”

Let’s explore the compounding effect of a typical renewal increase over the past 5 years.  Medical trend has been averaging 14% over the past several years.  Assume that you currently pay $1,000,000 per year for your health insurance program(s).  At 14% per year, compounded over 5 years, you can expect to pay in the neighborhood of $1,925,000.  That is almost DOUBLE in just 5 years.
Now let’s assume that your average increase will be 8%.  You can expect to pay $1,469,000 after the same 5 year period – a savings of almost $500,000.

If your broker is able to accomplish this, are they worth their fee on this fact alone?  I imagine the answer would be a resounding YES!

So now the question becomes, how do we get from a 14% rate increase to an 8% rate increase?  There are many ways to accomplish this, and many of the Fortune 500 companies have mastered the process.

Future blog entries will address the many ways in which medical trend can be reduced, and in many instances, actually start bending it in the opposite direction.

Preferred Benefits Services Insurance Blog

I have assembled a brand new and exciting collection of blogs, interviews, white papers -and eventually podcasts and videos – to help the CEO, CFO, Controller and HR Management/Staff.

This “blog” is primarily focused on the ever changing world of Health Insurance and Employee Benefits.  It is, and will continue to be, full of influential and unique ideas to help my clients with the exact issues that they are bringing to my attention.

I will be updating the blog on a weekly basis – and am also bringing in industry leaders from the LOCAL level, to share their fascinating thought and expertise in this field. 

These industry leaders include:
·         Sales Representatives from the various insurance carriers discussing what is working for them and their clients,
·         Industry leaders with regards to Wellness, Data Analytics, Predictive Modeling, Forecasting, Risk & Compliance and Benchmarking to name a few,
·         Health Insurance Company Underwriters, discussing valuable renewal information and formularies, and
·         Healthcare Reform Legislation updates.

Human Capital is your company’s most important asset, and Health Insurance is your second largest expenditure behind payroll.  When you add these together, it is important to formulate a strategy to garner the largest return on your investment. 

Please note that I will not footnote statistical data on the blog, but will be happy to provide the resources upon request.