Group PMI is getting ever more costly. Rachel Riley outlines the long-term strategies to add sustainability into the mix
Decisions regarding corporate private healthcare provision are all too often made for the short-term win, the unbelievably low renewal price which proves too attractive to ignore, the quick hit of introducing an excess which drops expected costs by a magical 10%, moving to a new insurer renewal after renewal in search of better claims cost management. However, quick fixes are just that and by choosing such a strategy companies continue to sit upon an out-dated, expensive, unsophisticated dodo.
So what to do? In a climate where budgets are being squeezed and the pressure on purchasers is to get the best possible deal without compromising the value of the benefit, it is increasingly challenging. Where the group has a good Employee Benefits Consultant, they will, of course, discuss the latest developments in the marketplace – but how many of these are simply ‘stuff and nonsense’ wrapped up in a fancy package of words and flowcharts?
WPA ran a seminar last year on sustainability of healthcare schemes and the options groups have in order to control their scheme specific medical inflation. Focusing on the healthcare scheme in isolation for the time being, the options which produce an identifiable and relatively quick win include the following:
Covering cancer up to diagnosis only
An emotive subject certainly, however, the fact is that the NHS provides extremely good cancer care. The healthcare scheme is there to provide that initial fast track to diagnosis which alleviates anxiety, patients are then transitioned into an NHS treatment plan. Of course there is still the potential issue of an Advanced Therapeutic not being available on the NHS.
Some groups choose to provide an NHS Top-Up style plan, which would then provide benefit for cancer drugs which are licensed by the EMEA but not yet approved by NICE. A good backstop to have. Key to making this option work is clear communication – both within the scheme literature and by the Helpdesk when handling the calls. Schemes have been running this option successfully for many years and have seen long-term savings of some 20% of claims fund.
Underwriting new entrants
Medical History Disregarded is a legacy no one wants to be the first to change, however, it is an expensive weight around the neck of corporate expenditure. Without wishing to upset the applecart too much, companies can simply make new entrants join on an underwritten basis. Depending on employee turnover within the company this will ‘wash through’ the group and reduce expenditure into the long term. It is also a relatively easy sell to the new employee who then has a ticket to most other insurers in the land on a ‘no worse terms’ basis should they leave.
While continuation MHD options are available, they are priced to reflect the unmitigated, ageing risk such group leavers represent. A diluted option for the more faint-hearted is to underwrite new dependants only. As an indicator, a scheme which is entirely medically underwritten should see claims at 25% under that of an MHD scheme.
Introducing Shared Responsibility
A co-insurance option (Shared Responsibility) is an intelligent excess which gives fairer access to members and offers greater value. It does not penalise those members who require a consultation only – with an excess they would end up paying for all of the cost of this whereas with Shared Responsibility they pay only a percentage of the cost up to a total annual maximum. For those who require some form of treatment, reconnecting the user with the payer can change their mindset significantly.
For example, if someone has had eight sessions of physiotherapy authorised but feels absolutely fine after five they may choose not to take up the final three sessions as it would cost them say £10 per session. A small change but one which, when repeated many times throughout the scheme, can have a notable impact. Clearly, Shared Responsibility will not have an impact on the large cost claims such as cancer or cardiac, but it is not intended to. Depending on the level of Shared Responsibility which is chosen, schemes can save from 5% to 20% per year.
Widening the focus from just looking at the healthcare scheme and ‘wellbeing’ is the buzz word of the moment, though in far too many cases this potentially useful concept is mistranslated into a pick and mix basket of healthcare services (any of: PMI, EAP, Occupational Health, Absence Management, Health Assessments) where the easy option is to choose one provider for all in the hope that they will provide a seamless solution resulting in proven return on investment and true synergy.
Arguably this is the easy option but does it really work? Common sense would say no. How many buy their insurances from the same insurer? If one provider truly was the best option for each of these elements then the rest of the market would simply not exist. Furthermore, such a rigid approach does not give the flexibility and independence normally required by large employers when buying benefits on behalf of their employees.
A ‘best of breed’ approach allows Employee Benefits Consultants the freedom to use their experience and knowledge to recommend/advise on a healthcare solution which works for each group client they have, picking specialist providers in each area who have the ability and the motivation to work together effectively and efficiently. The key to it all is establishing true integration, utilising technology wherever possible.
Key steps to making the integrated health model work
Define the strategic health objectives: why is the company choosing to offer a healthcare or wellness programme to its employees and their dependants? What does the employer hope to achieve from it? What do the employees want to get out of the scheme? Do the requirements of employees vary across locations, work functions, age groups?
Agree the component elements within the model: There are a wide ranging group of benefits which fit with varying degrees of tightness within an overall health and wellbeing strategy. Often core elements include absence management, PMI, Occupational Health, PHI and an EAP but there are peripheral benefits such as Health Assessments and Bike to Work schemes which may sit better within a voluntary framework.
Choose providers
Select ‘best in breed’ providers for each separate element, however, such providers must be able to understand and evidence integration with others. Ideally, providers should demonstrate a good cultural fit and an understanding of the group’s requirements as this will assist in meeting the strategic health objectives.
Membership database
Technology is key to making a true integrated health model work. One provider (we suggest the private medical insurer) should hold the master database of all employees and which benefits they have access to. This is simple to keep updated using Extranet technology for automatically passing data between the group customer and the insurer.
Establish a clear and efficient process flow or technological solution to facilitate referral and signposting: Taking the not insignificant Data Protection issues upfront, the Health Forum (comprising key members from each core benefit provider) should agree where signposting or referrals need to take place and how they should happen. Technology should be used wherever possible to ensure a smooth process for the member and integrated databases and management reporting. Web portals for named third party authorisations are vital.
Clear communications
Support the integrated health model with clear and effective communications to all potential end users and stakeholders: employees, line managers, health benefit account managers, the group co-ordinator and the EBC as independent, expert advisers.
Evaluation: Regularly and thoroughly review, evaluate and update as necessary the integrated health model. This needs to encompass each individual element on a stand alone basis and also the holistic solution.
As with all such initiatives, measuring the success is key. Return on investment is a difficult one to calculate, especially in the short term, plus it takes no qualitative data into account. The solution is to create a balanced scorecard where the strategic health objectives in turn define the measures of success – qualitative and quantitative. Specific criteria should be set together with benchmark levels to review against on an annual and five-year period.
The future of healthcare schemes is changing and some tough decisions need to be made now with a three-, five- and 10-year plan in mind in order to ensure their survival into the future. Is your healthcare provider delivering?
Rachel Riley is commercial director at WPA Protocol
