Rookie Year: Massachusetts Paid Family and Medical Leave

As seen in the New England Benefits Council (NEEBC) blog.

We are one year into eligible Massachusetts employees being able to apply for paid leave benefits under the Massachusetts Paid Family and Medical Leave (PFML) program.  Although stats for the MA PFML Rookie Year have not been released yet, the first six months were telling:Paid Family and Medical Leave

  • Over 53,000 applications, with 23% being denied
  • 58% of applications were related to medical leave and the remaining for bonding, given that care for a family member with a serious illness was not yet a covered reason
  • Only 18 applications for military exigency leave and 6 applications to care for a service member
  • Employees aged 30-39 submitted the most applications (35%) and more than twice as many women applied for leave, compared to men
  • Average weekly benefits were $705.98 for family leave and $699.00 for medical leave
  • Turnaround times, once the Department of Family and Medical Leave (DFML) received all data including employer responses, took a median of 12 days to make a claim determination
  • Average duration of leave was 53 days (57 days for medical leave and 51.5 days for family leave)
  • Total benefits paid was equal to about $168 million (about $92 million for medical and $76 million for family leave)

While we await data for season of 2021, let’s dissect the highs and lows and see if MA PFML has a shot at Rookie of the Year!

Let’s start with the highs:

  • The plan appears to be running at a sustainable level with sufficient funding, indicated by a reduction in contribution rates, which is good for residents of the Commonwealth.
  • Employers were able to successfully create private plans without significant hurdles in the process, allowing MA firms to continue their history of rich benefit designs without negatively impacting corporate plans.
  • Massachusetts has been a strong example of early and broad education of the program. Individuals in the state were told about benefits that may be available to them in plenty of time before the program went live, giving them the opportunity to ask questions and better understand what their experience might be in the case they need leave. The state hosted various webinars to different audiences, providing real time information and continuous updates on the status of the program’s launch. The website houses a multitude of helpful information and is continually updated. For questions not answered in these channels, individuals may also call the DFML for benefit questions or the Department of Revenue (DOR) for questions concerning private plans or contributions, and the state is typically always able to answer even in-depth questions.

While the state has had multiple home runs implementing a PFML program, just like evaluating Rookies of the Year like Jonathan India and Kyle Lewis, we need to think of the swing-and-a-miss situations as well.  The most significant strike for the MA PFML was their system:

  • The system for PFML administration continues to lag with the most significant unexpected deficiency likely related to their inability to handle intermittent leaves which are the most challenging and frustrating for employers.
  • Employer access was an obstacle, leaving employers without the ability to “monitor” claims or have insight into the status at a time when COVID claims and time away from work were skyrocketing.
  • Another systematic issue was linking contribution with plans. Since contributions are due at the close of the quarter, claims could be reported prior to contributions being paid. Unfortunately, those triggered denials as employers struggled to notify the state, register and swap from private plans to the state plan. Employees were given conflicting information as employers tried to resolve this gap in “coverage.”

Just like anyone’s first year in the pros, our first year with MA PFML threw us curveballs we did not expect, and as a result, we have learned some important lessons. The ever-evolving landscape of PFML laws has put pressure on employers with employees across the country, as they try to meet employee needs while balancing corporate responsibilities and equity. As we all become more seasoned players in this complex game of leave, Spring has outlined some best practices for employers handling PFML :

  • State plans should act as guidance for internal company policies. Mimicking a state plan could be restrictive as new programs emerge and existing programs evolve.
  • Have a clear understanding of the definition of eligible employees under each statutory and/or federal law. Someone considered an employee in Massachusetts may not be considered an employee in Connecticut (e.g., 1099 contractors).
  • All leave policies should be run concurrently, to the extent possible. The Federal Family and Medical Leave Act (FMLA) will generally run concurrently with MA PFML and other PFML laws when an employee meets the eligibility conditions of both plans.
  • Private plans offer the most flexibility with plan provisions and aligning leave with other corporate leaves, however state plans seem to be simpler administratively. Carefully weighing these pros and cons is key to developing an adaptive leave program.

The replay we are watching the most, however, is that COVID-19 significantly increased the complexity of such a program. The need for leave has been exacerbated. Difficulty hiring employees has affected employers who must keep up productivity while more employees are away from their jobs, and the state had to administer a new leave program under less-than-ideal conditions. In addition, the tremendous growth of remote work has made it difficult for employers to determine where an employee may be eligible for leave.

Overall, workforces are evolving and regulations at the local, state and federal level need to be continually monitored. As we see benefits become available under new programs, such as CT PFML, and other states pass bills to develop PFML programs, such as New Hampshire and Maine, employers will need to assess their strategies and evolve accordingly.

Teri’s Top 10 – December 2021

The holiday season is upon us which means we are all in a frazzled state trying to make our list and check it twice!  My mind – like yours – is not just full of work-related topics but also so many personal tasks.  Here are the top things taking up space in my brain (not all work related):

10:  Many of us have been running on some level of adrenaline over the last 22 months!  I have been listening to Unlocking Us (podcast by Brene Brown) and something she said really spoke to me: “After six to seven months of running on adrenaline, your surge capacity is maxed out and you need to find a new energy source.”  I’ve realized I don’t have a new energy source and I need to find it and that’s going to be a priority for me in 2022.

9. The status of federal paid leave within the Build Back Better plan is still unclear. I recently worked on a webinar that talked about how paid leave is an equity consideration.  That can be found here: http://resources.industrydive.com/why-americas-paid-leave-problem-is-a-diversity-equity

8. For those from the Constitution State…buckle your seat belt. Connecticut Paid Family Leave is ready to accept claims. Do not delay looking at your policies.  Make sure your internal programs are designed to run concurrently with paid statutory leaves whenever possible.  If you want access to Alera’s recent webinar, let me know!

7. The Kaiser Family Foundation (KFF) has released its 23rd annual Employer Health Benefits Survey (EHBS) and it indicates that average annual premiums for employer sponsored health insurance in 2021 were at $7,739 for singles and $22,221 for families. On average workers contribute 17% for single coverage and 28% for family coverage.  The full report is here:  https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/

6. Data from KFF validated that employers across the board took many steps to help their members deal with mental and behavioral health benefits. Sixteen (16%) percent of employers developed new resources for employees, 31% expanded telehealth services and an estimated 4% waived or reduced cost sharing in this area.

5. There was a lot of discussion in 2021 about flexible time off (FTO) programs. If you are ending the year paying out or carrying over significant PTO liability…think about what you can do differently in 2022 to reduce that liability through policy changes and by encouraging use of time off.  Many employees are burnt out and need time away to recharge and be the best version of themselves for their co-workers and their families.

4. Employers are facing yet another round of COVID-related decision making. From vaccination mandates, benefits premiums, remote work and more, we are bringing you our survey results here on how businesses are tackling these issues.

3. Pharmacy costs continue to climb with a lot of attention on high-cost gene therapies that may have up to a $2.125M annual price tag per year. For self-insured employers, you need to be very thoughtful about how you handle these costs. More funding solutions are entering the market, but you need to think holistically.  For fully insured employers, make sure your renewals consider spreading these large claims (typically through pooling point) so it’s a more accurate reflection of your ongoing experience.

2. The No Surprises Act certainly feels like it will be full of surprises. Although carriers and TPAs seem “ready” to comply but nobody is exactly sure how it will work just yet or what cost impact we can expect.  So…that’s stressing me out!

1. The last item, which might encompass my entire list in January, is workforce planning.  We need to dig deeper into this great resignation and figure out how we retain top talent, plan for succession of employees, and encourage retirement when appropriate.  More to come on that…

Teri’s Top 10 – November 2021

First edition (hopefully not the last)

Like many of you I spent most of 2020 building a cocoon around myself and my family.  Although I have fared very well compared to others, it has been a battle the last few months to dig myself out of the cocoon I started building in March 2020.  It felt like my regular routine – which never seemed like much of a burden before – was TOO MUCH.  During the down time I thought of countess things I should be doing…yet did very few of them.

So, starting this month, I’m going to attempt to do at least one of the things I talked about…craft a top ten list for my HR colleagues.  I want this to be digestible, as I know we all have a lot of emails and other materials to read, so I will include 5 meaty topics and 5 quick hits.

#10:  We ended October thinking we would know soon if 12 weeks of federal paid leave will finally become law. My prediction was that although momentum was gained within the Build Back Better infrastructure package and things were advanced in the House, the simmer in the Senate will be like my pasta sauce on a busy Sunday…well-intentioned but burnt on the bottom. Some legislators are hoping the private sector will pick up the tab through some type of mandate, others are hoping that a smaller duration benefit (i.e. 4 weeks) would be more palatable.  At this point it’s hard to know if my pasta sauce will be on the menu this week or burnt to a crisp.

#9:  If you have been living under a rock you probably still heard the FDA advisory panel has OKed COVID-19 vaccines for children ages 5-11.  The Kaiser Family Foundation research indicates that 1 in 3 parents say their child will get the vaccine right away once eligible. Employers should be prepared for potential time off requests for not only the vaccine but also if any additional care is required.  Here are some additional insights from KFF.

#8:  If you aren’t aware of GISThealthcare, it’s one of my favorites. They recently shared an infographic about the burden of mental health on emergency room departments.  It’s very insightful and reminds me how important behavioral solutions are for employers. Here is the content that grabbed me.

#7:  Diversity, equity and inclusion is and should be a priority for all employers. That cannot exist without health equity. When folks ask me where to start, I suggest beginning by giving it a definition, setting tangible short-term goals and at a minimum start gathering data. The basic tenants of health equity from a 2017 Robert Wood Johnson Foundation still resonate and are the core tenants of the work we do:

  • Identity important health disparities
  • Change and implement policies to remove those unfair practices
  • Evaluate and monitor your efforts with short- and long-term measures
  • Reflect and plan next steps

#6:  We continue to support employers as they review their absence policies to ensure they are compliant and in line with peer for the best attraction and retention. We recently produced a white paper related to parental and family leave.  You can find it here.

#5:  MA PFML has increased in benefits in 2022 and decreased contributions. MA employers should notify their workforce of the changes (employee acknowledgments are not required with this update; but you should continue to track acknowledgement for new hires).

#4:  CT PFL goes live January 2022. The State of Connecticut announced in July that Aflac has been selected as claims administrator for the paid leave program. Spring/Alera will have another webinar to help support any final implementation questions, stay tuned for details.

#3:  My colleague and friend Gretchen Day was quoted in the NYTimes about financial stress.  In short, she advocates employers to think more holistically about employee issues.  Give it a read.

#2:  Was delighted to collaborate with Aimee Gindin at Torchlight for a piece around Biden’s paid FMLA program.  We talk about juggling the 3Cs – Cost, Compliance and Culture.  Check it out here.

#1:  As HR professionals, I know you put your blood, sweat and tears into open enrollment.  It pains us that so many employees wait until the last minute or may not pay attention or understand the plans even though we have taken great care to make information accessible. My reminder to my HR friends and colleagues is for many employees, choice related to benefits is a burden. What we view as a comprehensive suite of thoughtful offerings is a chore on their to do list. They know how important it is but sometimes that makes it even harder to commit. Try to be patient with them!

 

Until next month!

Teri

Business, Interrupted: Post-Pandemic Policy Lessons

A recap of a presentation by Peter Johnson of Spring, Deyna Feng of Cummins, and Melissa Updike of KMRRG at the VCIA 2021 annual conference.

 

Black Swan Events and Market Capacityblack swan events

Over the last year and a half, the world as we know it has been flipped on its head. Not only did everyone’s day-to-day processes change completely, but the COVID-19 pandemic also stressed the insurance system significantly and resulted in a number of changes across various lines. “Black Swan” events are those that are unexpected, severe and affect a large number of companies and individuals which is exactly what happened with the COVID-19 pandemic. While the healthcare industry faced increasing premiums and alterations to mental health coverage, the property-casualty (P&C) market also was affected in an unpredictable way.

Rewinding back to prior to March 2020, the P&C market was experiencing an all-time high surplus, and was in a 10-year trend of suppressed rates. Therefore, when the “Black Swan” event of a pandemic hit, insurance companies were forced to significantly reduce capacity to mitigate social inflation and high-cost claim issues. In some cases this drop down insured limits by 75 percent or more of their prior year policy limits. This was evident particularly for cyber liability and umbrella coverage. Additionally, rates across lines were seeing double and triple previous years’ numbers.

On the other hand, some P&C lines actually saw improvement in their combined ratio during 2020. This means that where some lines saw increases in cost, other lines saw a drop in utilization, which “evened out” the overall market. This improvement can be seen in commercial and personal lines auto lines over the last year. The auto industry saw a dramatic downturn in utilization due to reoccurring “Stay at Home” executive orders hindering travel as well as other related changes to the industry.

Needless to say, this all yielded a difficult environment for employees and employers. In order to appropriately mitigate these new or changed risks, companies have been turning to policy exclusions as well as captive financing to better protect themselves and their employees from high-cost claims.

 

Policy Exclusions and How They Impact Your Business

During the pandemic, no insurance company or insured was truly prepared for the changes that were to come, and many insureds were faced with unexpected coverage exclusions and were left with potentially catastrophic payments. Some examples of policy exclusions include pandemic situations, interrupted business, long-term care, and others. However, employers who had a captive insurance company set up were sometimes safeguarded from policy exclusions, and companies without a captive increasingly flocked to establish one.insurance policy exclusions

To illustrate the advantages, one captive held their policy exclusions to the standard of COVID-19 claims and were able to mitigate those costs through their reinsurance retention. As another example, the Kentuckiana Medical Reciprocal Risk Retention Group (KMRRG), a captive, was able to flip their exclusion around long-term care, a move which, although it was only a small component of their business, significantly minimized costly losses. The framing of this exclusion allows employers to wrap reinsurance around this risk, specifically if they utilize a captive funding vehicle.

Captives offer more flexibility around policy language and terms, which can be adjusted according to the specific risks of the parent company. It is generally the responsibility of the brokers to let their insureds know which reinsurance renewals were at risk during the pandemic. Most commonly these lines were workers compensation, healthcare programs, and other P&C lines, which can be written into a captive or an RRG solution. Note RRG’s cannot write workers’ comp and can only insure liability lines.

 

Maximizing Captive/RRG Solutions

Captive insurance is not a new concept; however, it is often overlooked as a method for employers to protect themselves against risk. Captives not only better reflect underwriting records but also allow insureds to recoup investment incomes that would normally have been lost to insurance companies.

Captives support the parent company’s risk management overall and provide financial protection and long-term savings, both necessary for any business in ordinary and extraordinary times. Generally, our team sees that, for every $1 of premium that a client converts from a commercial reinsurer to a captive, 10 percent to 40 percent of long-term savings in the form of investment income and underwriting profits are yielded.

captive insurance solution

A captive can step in to help when commercial market rates are unreasonable, such as the 200 percent to 300 percent rate increases, we have seen recently, which of course are impossible for CFOs to plan for. This happened with many insureds’ umbrella coverage. Many companies over the last 20 months were forced to significantly lower their limits and increase their retention levels simultaneously. With changing premiums (mainly increasing) on top of this reduced market capacity, more and more often companies are utilizing captives to get control over these types of high costs and expand coverage.

Additional benefits of a captive or RRG solution include transparency and improved claims management. For example, if COVID-19 claims do develop, with a captive you can react with a very specific claims management strategy instead of relying on a commercial carrier to do so. This allows you to hand select your partners such as attorneys and other advisors. You can also be sure that your discovery responses are consistent. Additionally, group aggregates have hardened even more in the market which has forced captive managers to become more creative than before. An illustration of that creativity can be seen in the example below.

Hospital Professional Liability in a Captive: Many entities were trying to get their mitigation placed, and by increasing primary levels they were able to provide some protection and increase their claims control.

 

Bracing for the Future

In order to be properly prepared for the next “Black Swan” event, employers and employees should consider the major lessons learned from the past year:Captive insurance pandemic

  • Risk Diversification—This is not unique to a pandemic situation. When leveraging a captive, it is imperative to have a wide range of exposures. Our actuaries know that, in line with the law of large numbers, the more risks and more exposures, adverse financial outcomes become less likely and more manageable. Considering the correlation between the risks is equally critical as one risk could lead to a domino effect of triggering another high-cost risk. A general rule of thumb for captives is adding low correlating risk to a captive will lead to more stable year-to-year financial results.
  • Speed to Market—What is your process to quickly adapt to changing market conditions?
  • Analyze Current Structure—Can you withstand another “black swan” event? What are the coverage improvements that can be made internally?
  • Financials—What is your cots of risk and risk tolerance? Do you need an improved insurance/reinsurance strategy?
  • Supply Chain—Has an appropriate strategy been considered?
  • Other—Do you have uninsured/underinsured risks? Is there sufficient market capacity for your exposure?

If there is a positive we can take from COVID-19, it should be that we learned important lessons and won’t be as blind sighted in the future. Looking ahead, companies should ascertain whether they have the right tools in place to better manage risk and financial losses. In addition to the risk structures and their advantages outlined above, considering cross exposures and diversified risks is the best and easiest way for companies to protect themselves and their employees in the event of another “Black Swan” event. Lastly, having an aggregate view of risks across the organization often leads to creating the most efficient and cost effective risk funding programs.

In a World of Uncertainty, a Captive Can Be Your Constant

As seen in the Captive Review Group Captive Report, September 2021.

With the rapid spread of the Delta variant, the Covid-19 pandemic continues to leave employers with a series of unpredictable risks directly related to the pandemic. Among these risks is the potential higher cost of healthcare benefits offered to employees, a factor which must be built into any long-term risk management or cost-containment strategy. Covid-19’s impact on healthcare costs Based on tracking data across multiple employers, the future impact of Covid-19 on high cost claims will directly impact health insurance. Key factors include:Healthcare cost management

  • Direct costs related to Covid-19: Costs associated with testing, treatment and vaccines remain a primary source of plan costs. The most direct impact on captives is the high cost treatment tied to severe hospitalizations, particularly due to potent strains of Covid-19 like the Delta variant. There may also be ongoing health needs for members who recover from Covid-19 or are long-haulers.
  • Deferral of care: Plan members have chosen to defer elective treatments. While some of this care was eventually incurred over the course of the last year, many plan members continue to hold back on care, whether because of discomfort in a hospital setting or difficulty in finding care due to bandwidth issues. This influences future costs, particularly with unpredictable costly surgeries.
  • Missed preventative care: Client data across industries also showed a significant reduction in preventative care visits, and lower test numbers in areas such as labs, CT scans and MRIs. As a result, many employers are concerned because if certain health issues are not identified and treated early, the severity of the case and corresponding cost of care may be higher down the road.
  • Behavioral health: Covid-19 propelled behavioral health issues into crisis levels. While it may seem indirectly related to broader healthcare, consider this: the national Alliance on Mental Illness reports that cardiometabolic disease rates are twice as high in adults with serious mental illness, and that depression and anxiety disorders cost the global economy $1 trillion annually in lost productivity. We are sure to see the repercussions of this in claims costs to come.

Health insurer risk premium margins built into insurance pricing have been increasing in light of all this uncertainty, as well as broader trends such increased prevalence of high cost specialty drugs and increasing hospital costs. In fact, the most prevalent specialty medications are increasing in price at 10%-15% annually, further contributing to unpredictability of future claims.

Employer Considerations

During the pandemic, employers have needed to confront their organizational philosophy on the employee value proposition and balancing the investment in employee benefits with the impact on the company’s stakeholders. The impact of Covid-19 has made employers more acutely aware of the need for sufficient healthcare coverage for employees and their families.

In order to provide attractive benefits in an environment of rising costs and volatility, employers must rethink the programs they offer and how they are funded. Many organizations have also revisited benefit program governance structures, how decisions are made, and how programs are monitored.

Perhaps your remote workforce has different needs than they did in 2019, or the pandemic has triggered new problem areas that can be addressed through wellness solutions or advocacy tools.

No matter your path, employers seeking to ensure that they offer comprehensive healthcare benefits to employees at an affordable cost need to consider the financial management benefit of potential long-term cost savings and mitigation of volatility associated with captive structures.

Captive Arrangements for Employee Benefits

As employers look at the impact of the pandemic, organizational planning requires balancing the increasing cost of healthcare with the risk associated with solutions that reduce the total cost of the program. At its simplest form, health insurance can be expensive if a fully insured program is purchased, as organizations pay a risk margin, often 20% to 40%, for transfer of the risk to an insurer. Small to mid-sized organizations typically mitigate this cost by self-insuring a portion of their healthcare risk with medical stop-loss to cover higher cost claims. However, the higher risk premiums required by health insurance, including stop-loss insurance, lead to steep healthcare plan costs and/or, in some cases, being forced to take on higher-than-optimal risk.

A captive arrangement is a strategic way for employers to benefit from self-insurance while creating a sustainable solution to partner with commercial markets. Captives provide substantial competitive advantages over traditional self-insurance, such as:captive insurance

  • Reduced total cost of insurance: Insurance carriers develop premiums by heavily weighing on industry averages, state rates and, to some degree, on an employer’s individual loss experience. This may lead to pricing that may not accurately reflect an organization’s actual loss experience. Insurance carriers usually price to include substantial overheads, including risk and profit margins. A captive provides employers an opportunity to recapture premiums from the commercial market and build a sustainable long-term model for their insurance needs.
  • Insulation from market fluctuations: Conventional commercial insurance is vulnerable to market fluctuations. This has never been more evident than today, with hard insurance markets and premiums that are increasing substantially with almost no change in coverage level. As a member in a captive program, employers are less susceptible to unpredictable rising costs imposed by conventional insurers every renewal season, as a balanced funding approach can smooth the cyclical volatility of the commercial insurance markets.
  • Protection from cashflow volatility: Leveraging a captive to fund medical stop loss can lower the cashflow volatility often faced by self-insured programs on a monthly basis. Having a captive cover claims at a substantially lower stop-loss level allows employers to smooth out plan funding and mitigate cashflow risk to the company.

For employers that may not have their own captive or the resources to form one, there are a variety of group captive solutions in the medical stop-loss space. These solutions are turnkey in nature and simple to implement. Most well-structured group captive programs aim for a seamless transition for employers where there is almost no disruption. In other words, from an employee’s perspective, the claims process is entirely the same. With group captives in particular, all the mechanical aspects are handled by the group captive management team, with minimal effort required for an employer.

There are several group captive arrangements that employers can tap into. In selecting the most appropriate arrangement, you need to consider factors such as the upfront cost of the program, the extent to which customization will be available, the flexibility you will have for your organization within the group captive model, and how renewals will work.

Looking Beyond the Pandemic

As we look forward beyond the pandemic, employers should consider ongoing healthcare program effectiveness. Healthcare costs will continue to increase and become a larger portion of organizational budgets, but it is not too late to start leveraging innovative solutions to mitigate these costs. You can proactively adjust your tactics today and be better prepared for tomorrow, and with a captive you are truly in the driver’s seat.

Tackling employee benefits and third party risks

As seen in Captive International

The “new normal”, whether it feels normal or not, is not on the horizon, but at your doorstep. Cutting-edge businesses are taking a modern approach to address the challenging market conditions while still providing competitive benefits, retaining and attracting talent, and being risk-smart and mindful of their bottom lines.

Thinking holistically and reframing your strategy around medical stop-loss, life and disability, and voluntary benefits are just a few of the ways you can use your captive to stay ahead.

 

Spring Team Member Named DMEC Emerging Leader

We are delighted to announce that Lai-Sahn Hackett, Spring’s Director of Market Research, was recently recognized by the Disability Management Employer Coalition (DMEC) as one of two recipients of their Emerging Leader Award for 2021. Lai-Sahn has been a self-starter since she started with Spring as a Consulting Analyst.

Lai-Sahn continuously takes on more to proactively become an expert in her field, making real contributions to not only our company and clients, but to the industry at large. Committed to professional development, Lai-Sahn helped create educational content for DMEC’s micro credentialing courses. She also plays a pivotal role in Spring’s industry-leading benchmarking and survey capabilities. She is adept at turning data into meaningful insights, cutting through the clutter so that organizations understand the areas of their programs that need action. Last year, Lai-Sahn was instrumental in launching a COVID-19 related benefits survey, gauging different reactionary measures taken by employers. She also took the findings of our annual healthcare benchmarking survey and created an innovative, digital benchmarking dashboard so that we can filter through client data in a range of ways for different comparisons.

Lai-Sahn is certainly deserving of the DMEC Emerging Leader Award and we couldn’t be more proud and lucky to have her on our team!

 

 

Can Health Advocacy Help Piece Together the Healthcare Puzzle?

Dazed and Confused

Think about your last visit to the doctor. Did you know what questions to ask? Did you leave with a clear picture of the next steps or alternative options? Did you know the cost of your appointment and treatment path before starting it, or what would be covered by your health insurance? If you answered “no” to any of these questions, you are certainly not alone.Health Advocacy Tools

Bend Financial[i] recently conducted a survey that showed that only 29% of people were completely confident in their ability to navigate the healthcare system, whereas 56% were entirely confused when it comes to health insurance. Unfortunately, an alarming subset of consumers opt to avoid healthcare completely, too defeated by the complexity.

Beyond health insurance, employees must navigate the suite of benefits offered to them by their employer. While these are meant to provide support, they can cause more confusion when employees are looking for assistance. Employers must consider how introducing a new program or benefit will fit into their overall strategy and integrate the resources, without adding to the complexity employees face.

Breaking Through the Fog

Advocacy tools have popped up as a response to the confusing environment. These tools offer a wide variety of clinical, educational and administrative resources, such as:

  • Helping members understand test results or treatment plans
  • Advocating for members with complicated conditions and managing their care
  • Coordinating care at inpatient facilities
  • Identifying top providers
  • Arranging second opinions
  • Providing information about alternative prescription options
  • Assisting employers to understand health risks through biometrics, claims and other data
  • Developing customized Employee Assistance Programs (EAPs) or other life coaching services
  • Reviewing medical bills and allowing for transparency of costs
  • Facilitating prescription drug delivery
  • Assisting with wellness goals
  • Accessing telemedicine
  • Booking appointments and sending reminders
  • Optimizing HSA, FSA and HRA accounts
  • Integrating with other vendors offered by the employer

The landscape for these platforms is robust and ever-changing. The spectrum of vendors include those that offer:

  1. A holistic approach. Major players may provide all of the above features in a one-stop shop model for employees.
  2. Preventive approach. Some vendors focus on prevention of common conditions, encouraging employees to get annual eye exams, diabetes screenings, cancer screenings, medication adherence, and more.
  3. Targeted approach. This last category of vendors specialize in support for employees with common chronic conditions including diabetes, hypertension and high cholesterol. While likely not the most costly conditions, the potential for savings and member support is significant when factoring in the volume at play. These vendors aim for condition management by giving members the tools to monitor and manage their conditions better on their own, hopefully necessitating less emergency care in the future.

    Comparatively, other tools focus only on the highest cost conditions and members, such as cancer diagnoses. Offering a specialized tool for members going through this difficult time enables them to procure the best and most cost-effective care, while also giving them access to resources related to nutrition, mental health, and more.

While available on a standalone basis, advocacy solutions may also be accessible to employers through their insurance carriers, Third-Party Administrators (TPAs), or Employee Assistance Programs (EAPs). Programs embedded with a carrier or TPA tend to focus on overall health management programs, disease management and wellness, as well as resolving billing issues and comparing costs of providers.

A commonality across platforms is the prioritization of the consumer experience – offering easy, self-service access in mobile apps or online portals. Members typically have a single point of contact at the advocacy company, so they know who to call and do not have to navigate being transferred or having an unfamiliar staff member pick up their case.

Overall, for employees, health advocacy platforms may:

  • Help them get the most out of their insurance plans and programs
  • Cut through the clutter of healthcare
  • Promote health and productivity
  • Increase preventive behavior

For employers, health advocacy tools can:

  • Cause an uptick in employee engagement and satisfaction
  • Increase health plan utilization.
  • Yield savings in healthcare costs by allowing employers to better understand cost drivers,
  • Facilitate the creation of more informed preventative and wellness programs and ultimately lead to a healthier population

Advocacy Adoption: Is It Right For You?

Ultimately, it is up to the employer to determine what programs would best support their employees. Based on the 2020 Integrated Disability Management (IDM) Employer Survey conducted by Spring Consulting Group, 61% of employers offer a health advocacy solution today, compared to only 41% in 2018. Determining which model and which vendor to select can be difficult as there are many players in the market. In assessing whether an advocacy tool would be a good fit for your organization, any decision around advocacy solutions should be tied to program objectives.

  • Are you primarily concerned with cost savings?
    • Health advocacy solutions can provide cost savings to employers or health plans, as they direct employees to access only necessary healthcare services, perhaps at a lower cost facility than they otherwise would have used. A tool like this should, in theory, help avoid bigger, high-cost problems down the road by assisting the employee with addressing issues early. Certain vendors may even offer a cost savings guarantee. However, it will take time to see a possible Return on Investment (ROI). On the flip side, an advocacy solution can encourage greater utilization, such as for behavioral health services. While a higher utilization rate may mean increased claims, giving employees tools to access the services they need can lead to less emergent or high-cost care down the road. As such, you should determine if you are looking for immediate or long-term results.
  • Are you looking for higher engagement in your health and benefits plans?
    • There is a lot of logic behind the argument that an advocacy tool will increase engagement. However, if an employer has had trouble engaging employees in the past, such as in wellness challenges, incentives, education, etc., nothing is guaranteed. Vendors claim that anywhere from 30% to 80% of employees will participate in their program, but this is highly variable based on different aspects of the program and the employer, such as program features or employer incentives.
  • Are you focused on population health management?
    • By equipping members with the necessary tools to make health care decisions based on value and outcomes, better outcomes are achieved. The plan data will guide your decision related to population health management. For example if you are struggling with diabetes specifically, you may want to consider a targeted point solution focused on diabetes management before committing to a more comprehensive program that tends to be more expensive.
  • Are you hoping to improve the employee experience?
    • With an advocacy tool, members have support to mitigate confusion around healthcare services, surprise billing, complex diagnoses…but it only works if members leverage the support. Programs should be communicated often and where possible linked to activity within the plan. We always recommend eliciting employee feedback before launching a program such as this, to ensure you are solving for problems that really exist for employees, instead of problems you think exist for employees. Sometimes our clients even roll out a smaller pilot program as a test before implementing the wider solution for the whole organization.

 

Most organizations will have a few different goals at play, which are not limited to those listed above, but typically there is a hierarchy to consider. Working with a trusted advisor can help to understand key differences and ensure programs are designed to work for the employer and their employees. At Spring, we routinely help employers vet solutions to find the one that is optimal for their goals and population.

Conclusion

Overall, health advocacy tools have risen in popularity for a reason. They address critical problems in our healthcare system – confusion, expenses, access, lack of trust – and serve as a different avenue for employers to limit the rising costs associated with healthcare. Advocacy helps ensure employees are understanding the care they receive and have greater visibility into actual costs. While results will vary by platform and organization, vendors are confident in their results; they report significantly lower healthcare trend for clients, compared to previous years when there was no advocacy program in place. With an ever-changing landscape, it is possible that health advocacy programs can bridge the gap between consumers and care, but only time will tell if they can make a long-term impact on the market.

[i] https://www.bendhsa.com/newsroom/more-than-half-of-americans-confused-by-health-insurance-including-hsas