Building a sustainable benefits plan

1. Is the plan design fair to both the plan members and the sponsor?
2. What means, methods and assurances can the service provider share with to ensure the plan design playbook will be executed to the letter and deliver the promised savings?
3. How can the plan be effectively communicated to members to make sure they understand the plan and their roles in to control costs?

Cost control
Ensuring the design of your benefits program answers these questions will help in creating a plan that is sustainable in the long term. But of course, sustainability and cost are tightly linked.

In my last article, I discussed making use of several clinical services tools to help control costs rather than rely on simple increases in contribution levels or cuts to service levels. Let’s dig a bit deeper into some of these cost-control features.

Formulary management
This is a first line solution in balancing cost with the most appropriate levels of healthcare for members. Formulary management serves as a flexible protocol that determines a hierarchy of drugs and treatments to ensure high-cost products are used only when lower-cost alternatives have been tried first. Typically, a more tightly defined plan and formulary can result in annual plan savings of as much as 5% when compared to the industry average.

Special authorization process
These protocols are implemented to control the use of higher cost drugs or in cases where certain drugs may be used for purposes not currently included in the formulary. An application process is required where the member’s physician must specify why this particular treatment is needed. This process provides protection from a higher-cost product being used where existing therapies may be able to get the job done at lower cost to the plan.

Specialty drug programs
These are created to make sure high priced drugs (those in excess of $10,000 annually) and biologics are used only after a complete understanding of the member’s condition has been secured. A thorough review to ensure the less expensive, but equally effective drugs, are used first and coordination with available government programs will provide important savings to plan sponsors.

Drug utilization reviews
A complete review of drug prescription and dispensing patterns will help determine areas where cost cutting can be made. In many cases, recommendations may be based on observing under-utilization of generic products and days-of-supply that seem too short. If members can be encouraged to ask for 90-day fills on maintenance drugs where their treatment protocol has achieved some confirmed levels of stability, the plan may be in a position of saving $20 to $25 per calendar quarter per individual by simply minimizing dispensing fees. Small numbers add up, particularly across mid- to larger-sized companies.

Many more programs exist to help plan sponsors control their costs without increasing costs to plan members or impacting their health negatively.

Proof of performance
Once the plan has been designed and the claims start coming in, what assurances does the sponsor receive to show their hard initial set-up work is being honored?

Most carriers and adjudication firms measure their performance to key performance indicator (KPI) targets. A select few might submit their books of business for evaluation to an independent third party to prove their success in achieving cost savings. If so—what information can they share that provides proof that their systems are delivering the results that sponsors crave?

Evaluation proving lower than industry average drug costs per claimant might suggest a service-provider’s ability to deliver a more sustainable level of service for sponsors and members alike. This review may reveal stats showing longer days of supply, higher numbers of drugs included on special authorization lists and a sophisticated approach to formulary management. It could be argued that service providers with these characteristics are in a position to deliver superior value.

As a plan sponsor, you should ask to see some kind of documentation that serves to prove the service provider’s performance levels and ability to deliver performance as promised. This information is usually highly sensitive, so it may not always be possible to get a hard copy but the information should be provided for your review on request.

Solidifying member understanding
What tools and procedures will the service provider bring to make sure members understand the plan?

Beyond the customary welcome package and plan booklets, members have come to expect instant access to information. Service providers that introduce high-function smart phone applications and online tools that interface with plan design and current and historical claims processing are becoming increasingly valued in today’s information-crazed society.

Smart phone based tools (currently available from several of the industry’s leading service providers) can help members learn about coverage levels and claims history. Additional programs can help members find information about the drugs they are being prescribed and locations of the lowest cost supplier of these drugs. This highly interactive level of service will become indispensible to members and differentiate one service provider from another.

Plan sponsors and advisors need to consider many more variables than price alone when selecting a plan services provider. Greater attention must be paid to plan design and the methods by which the chosen claims adjudicator will help sponsors control their costs and engage their members. Members must understand the role they play to help ensure the sustainability of their benefits plan. Without all the players working together, the resulting house of cards will certainly fall.