Much has been written over the last 36 months with respect to programs that have been implemented to help contain and manage drug plan costs. Carriers, claims processors, benefits consultants and plan advisors have all invested significant resources into building out solutions for plan sponsors in this area. The wave of investment and focus was long overdue and is great to see. It’s also encouraging to see that plan sponsors and the key stakeholders who service them recognize that this golden age of flat trends in healthcare costs for plans will be short-lived as both utilization and cost pressures rise in unison.
There’s no question that proper drug plan design focused on the best possible health outcomes for the least amount of total cost remains a vital part of drug plan management. There’s no other area within the spectrum of employee health benefits where creativity, and a focus on executing basic plan design fundamentals, can have as big an impact on containing costs to free up resources for reinvestment in higher-value areas.
However, one key area that continues to lag is the area of data integration—bringing together multiple claims lines such as drug and disability—because the data sources in the Canadian market are often quite disparate. Most plan sponsors are unaware of what data exists and how it can be linked to look at the organization in a more strategic fashion.
Using integrated data to measure total benefits plan performance and return on investment will become more important with each passing month because the cost pressures on individual lines within benefits plans will continue to grow. Similarly, decision-makers within the plan sponsor stakeholder group will need more sophisticated information to make important decisions for organizational level strategies.
Let’s look at a relatively straightforward case of a national plan sponsor with an educated and sophisticated workforce. Looking at individual lines of the benefits experience is important but in isolation do not describe and quantify the big picture. Through data integration of drug plan and short-term disability (STD) data, the following insights emerged in the area of depression.
- Amazingly, one out of every five employees on STD due to depression was not taking any antidepressant drug therapy. One would think that if the depression were severe enough to require an STD claim, the member would be a candidate for both drug and non-drug therapies to help get through the difficult period and prepare for returning to work. Recognizing this fact has already led to changes in the disability management process for this plan, which is very encouraging to see.
- The plan spent 2.2 times more on the direct salary cost of missed work for the employees on STD for depression than it did on antidepressant therapies for the entire employee population during the same year (i.e., both employees on STD and those not on STD). Imagine that: 2.2 times more just for the salary cost of time lost by these employees. That doesn’t include other direct costs such as replacement labour, overtime pay, etc.
- The average length of an STD claim for depression was almost 70 days in its most recent year. The average length of a depression claim was not significantly different from STD claims for employees treating cancer. What is interesting here is that the average length of an STD claim for depression was not that far off the 90-day threshold for LTD.
Let’s consider this from another perspective. If this plan sponsor implemented solutions that reduced the average length of duration of these STD claims for depression by approximately 45%, the salary savings alone would pay for all of the antidepressants claimed taken by the entire employee population. How does this understanding shape the strategy by which this group moves forward with plan design changes? How does it shape the approach to integrating absence and disability data with drug claims data moving forward?
This is where there are enormous opportunities for both plan sponsors and the stakeholders who service them. Is there significant waste and inefficiency within the drug plan benefits of most Canadian plan sponsors? Absolutely. The resources that can be recovered here and reinvested elsewhere to produce greater returns is substantial.
Are there even greater opportunities to reduce unnecessary costs to plan sponsors by looking at the bigger employee health and wellness picture? The answer is yes, but with a caveat: a plan sponsor needs to be able to access the disparate data sets needed to create the big picture. The exciting thing here is that we are talking about opportunities that have a potential for savings that exceed the entire cost of drug claims for a given therapeutic area.
These savings would provide an annuity that could fund leading-edge solutions that deliver optimal health outcomes for members and plan sponsors, and free up resources to invest in other areas of the total benefits and compensation package without having to take anything away. It almost sounds too good to be true, but when we consider what suboptimal health and plan management cost a plan sponsor in Canada every year, it’s little surprise there are enormous opportunities here.