Panels comprised of local health care and electronic medical records executives gathered on May 14 to talk trends and cost control during IB’s first annual Health Care Summit, and if there was one consensus conviction among the speakers on both panels, it’s that forces are already in play that will compel employer-sponsored health care to evolve.
Held at the Madison Concourse Hotel and Governor’s Club, moderated by Dr. Frank Byrne, president emeritus of St. Mary’s Hospital, and broadcast live by WisconsinEye, the summit drew 140 attendees who received some welcome news about likely stabilization of the cost trend, which spiked to the 7% range in the plan years immediately after the COVID-19 pandemic. They also learned that health care isn’t necessarily expensive and that some employers have found ways to flatten the cost curve.
Cost drivers
Panelist Brian Meyer, director of analytics and underwriting for M3 Insurance, which produces an annual health care cost trends report, noted the elevated costs over the past two years. Whereas five years ago, employers saw annual increases in the 4.5% to 5.5% range with their health care premiums, they saw that cost trend start to tick up in 2023 when premiums rose upwards of 7% due to a variety of factors. Looking ahead to 2025, he and other panelists predicted costs will stabilize in the 6.5% to 7% range.
Meyer attributed the recent spike to higher pharmacy costs — specialty medications and the introduction of new medications to the market — higher care utilization post-COVID, more high-cost cancer claims, and health care inflation catching up to regular inflation. “Typically, health care inflation is going to lag regular inflation due to the multiyear contracts, and we’re seeing that come through now in 2024 and 2025,” he explained. “It’s putting a bit more pressure on cost, but we know it’s not sustainable to have 7% increases year over year.”
As a result, employers are looking for ways to be more innovative in controlling their costs. Cheryl DeMars, retiring CEO of The Alliance, an organization of self-funded employers, added an aging population to the list of factors — with age comes higher health care utilization — but she pointed out that some employers experience a 0% increase, not just for one “fluke year” but year after year because of some of the strategies they have put in place.
According to DeMars, who will be succeeded at The Alliance by NOVO Health’s Curt Kubiak, those strategies involve the use of data analytics to identify shoppable, schedulable care with physicians and hospitals that do a good job for less, and using benefit plan design to create financial incentives for employees to use those preferred providers. DeMars cited the variance in cost for an MRI, which can range from $500 at alternative providers to $3,400 or higher with some health systems. Creating visibility in the cost variation, and then using plan design to create financial incentives for employees to select lower-cost services, and continuously educating them about the availability of these resources, is having an immediate impact, she asserted.
“This isn’t five years away,” DeMars stated. “To get people to use the $500 MRI instead of the $3,400 MRI, you save that money today.”
Some self-funded employers also are utilizing a $0 copay to further incentivize employees to go where care costs less. “When you’re able to say to employees, ‘You will have no out-of-pocket costs for using these providers,’ it makes an impact,” DeMars said.
Directly social
Other employers are using direct primary care (DPC) providers to control costs, while some bring primary care on-site to establish workplace-based care that can be delivered at lower cost. Dr. Nicole Hemkes, owner and medical director of Advocate MD, a DPC practice, predicted that alternatives such as direct primary care, on-site/near-site clinics, and large corporate models such as One Medical, will take hold as more venture capital and private equity firms invest in the health care market. Under DPC, patients pay a flat monthly fee for care and physicians try to address as many patient needs as possible in the clinic setting.
Hemkes, who also noted the disparity in MRI costs, said people erroneously equate health insurance with health care when they are different concepts, and she asserted that most health care isn’t actually expensive, especially when it’s taken out of the hospital setting and placed in an outpatient setting. “Ninety percent of health care is actually very affordable,” Hemkes stated. “There are expensive things in health care — immunotherapy, specialized surgery — but the vast majority of health care is very affordable.”
Jami J. Berger, chief clinical officer for the medical insurance provider Quartz, pointed out that consumer choice does not necessarily mean the choice of where or how to receive care. It can mean preventive measures that are employer sponsored as part of their benefit structure — things that are related to the social aspects of health care. Echoing a point made by Kubiak, she predicted that we’ll start to see buckets of money that create an opportunity to carve out benefits like providing a certain dollar amount for things like clothes to work out in or allow employees to spend on things like their mental satisfaction.
Employers will provide flexibility so that individual employees have choices tailored to them. “That fits a big part of retention,” Berger added. “There are employees who take jobs because of that. There are employees who leave jobs because of that. So, it’s about how do you build a benefit structure that gives you the core things … but also the flexibility where they have an opportunity to make a decision about how they take care of themselves outside the traditional model of health care.”
Phil Lindemann, vice president of data and analytics informatics for Epic, the Verona-based electronic medical records maker, said that not only have certain employers figured out the cost curve, other societies have as well. “If we look at other countries like Finland, they live an average of four years longer than us and they pay about $7,000 less per person for health care,” Lindemann stated. “They have really figured something out.”
One of the things they have figured out is that employers need to pay attention to the social drivers of health care as they design benefit plans and think about what they offer. That includes “thinking about those things that would be classified as social health today,” Lindemann noted. “If we can broaden that and say these are the things that matter, that can be pretty powerful.”
Lindemann explained how a relative’s use of a $30 glucose monitor, which helps diabetics pay close attention to how various foods impact their glucose levels, can serve a preventive, cost-controlling purpose. “Those type of things, the not-going-to-the-doctor experiences, really have the potential to impact our health,” he stated. “I’m all for expanding some of these social aspects.”
For Moira Klos, chief people officer for WPS Health Solutions, one best practice — ongoing communication and education — doesn’t sound very exciting, but it can make a big difference and not just during open enrollment periods. Helping employees become savvy health care consumers is as simple as identifying the right, most cost-effective venue when it comes to a health care need, whether it’s telemedicine, in-person care, or urgent care. In 2023, she said WPS plan members were able to save themselves $25,000 and save the overall plan $90,000; however, had they used all the right settings that year, “we would have saved the employees over $150,000 and the plan over three quarters of a million dollars,” she stated.
Coming out of the pandemic, it was clear that “mental health is health,” Klos added. “We were able to increase our mental health care providers to 20,000 additional providers, and that’s not only for our employees, but also for our customers.” With more providers, wait times went from several weeks to 24 hours.
Meyer explained how M3 Insurance looked at cost from the standpoint of taking short-term, mid-term, and long-term costs out of the equation. In the short-term, this involved determining whether the right contracts were in place, reviewing purchasing, determining the value of on-site care, and reviewing population cost opportunities.
“Look at the cause of avoidable ER visits such as transportation issues or lack of a primary care physician,” Meyer advised. “Managing long-term risks pertains to whether various populations are taking advantage of preventive care screenings or managing their chronic conditions.”
Distilling data
Several panelists noted the challenge of taking reams of data, distilling it into information that really matters, and turning it into actionable intelligence on behalf of patients. Lindemann told summit attendees that Epic has tried to solve this problem with technology tools like Cosmos, which can help physicians pinpoint the best medication for a patient based on population health data and do so right at the point of care.
“That’s the type of stuff that’s now possible, where every [primary care] physician can learn what’s right for a patient just like you,” Lindemann explained. “That’s just coming out of the hopper right now.”
Searching for the summit
For the complete WisconsinEye broadcast of the 2024 Health Care Summit, visit this link: wiseye.org/2024/05/14/in-business-2024-health-care-summit.
