Discussions on benefits cost trends quickly turn to big-ticket items such as prescription drug and disability coverage, as these typically make up the largest portion of benefits claims and are a natural focus for managing costs. What’s not on the radar for many plan sponsors—yet growing in use and overall cost—are paramedical benefits.
Buck Consultants’ 2010 Canadian Health Care Trend Survey reported that pharmaceuticals are the fastest-climbing expense, with an expected increase of 15.8% in 2010. But paramedical services aren’t far behind at 13.5%. And, as provincial plans reduce coverage or delist services, private plans are bearing increased costs.
Service providers help to drive some of this increased usage: they offer promotions encouraging customers to use benefits coverage like a rebate or offer free merchandise when the insured service is purchased. There are also promotions targeting specific potential customers, such as advertising massage therapy to factory employees.
Paramedical benefits can be an important component to ensuring the overall health and productivity of a company’s workforce, and employees clearly value and use these services. In the 2010 sanofi-aventis Healthcare Survey, these services were ranked in the top three benefits.
But, as with all offered benefits, paramedical ones need to be managed properly. Here are a few questions to consider to help keep these costs down.
How do your utilization patterns compare to others? – Most insurance providers offer reports that show the percentage value for each paramedical service relative to total health claims. Comparing your utilization pattern with benchmark data for similar industries or geographic areas provides additional insight on your plan’s experience. Reviewing your experience over a few years can identify changes in pattern or specific benefits that may have become vulnerable to misuse.
Does your plan design take cost/benefit into account with newer services and items? – At Manulife Financial, a recent analysis of utilization determined that paramedical claims account for more than 60% of total non-drug claims. Lower in overall cost but growing quickly are claims for alternative-care benefits (e.g., acupuncture). There’s also an above-average growth in claims for items such as hearing aids and orthotic shoes.
How do changes support your business and staffing strategies? – Just reducing or eliminating benefits coverage isn’t the best or only answer. Benefits build employee satisfaction and can boost staff retention. In fact, in the sanofi-aventis survey, 67% of plan members agree that they think more positively of their employer because of their benefits plan, and 66% agree that their plan is a strong incentive to stay with their employer.
Are your employees informed benefits consumers? – Make sure your benefits provider has the right controls in place to pay for only those claims and costs that should be covered under your plan. That includes preventing and detecting any potential fraud and monitoring practitioners who use overzealous promotions to sell their services. Raise plan members’ awareness about, and educate them on, healthcare options and risks.
Embracing Change
Once you understand your plan’s experience and what your employees value, talk to your plan advisor about changes that will help you manage costs but ensure value for everyone. Plan member engagement is an important control—some plan design options can influence the member’s behaviour in seeking value that benefits both the member and the plan. Include the following in your advisor discussions:
• inner maximums by benefit and/or by visit to control inflationary costs;
• an overall upper limit through combined maximums instead of removing services;
• a reduced overall limit offered in combination with a healthcare spending account;
• preferred provider networks; and
• wellness programs that focus on prevention.
There are plenty of ways to keep your plan affordable but still competitive with other employers. By putting paramedical benefits on your radar, you’ll be taking an important first step in managing the cost of your benefits plan. BC
Marilee Mark is vice-president, marketing, group benefits, with Manulife Financial.
marilee_mark@manulife.com
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© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the July/August 2010 edition of BENEFITS CANADA magazine.