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Cost Mitigation Strategies as Health Care Costs Continue to Rise

In 2023, organizations face the difficult task of reining in rising costs and keeping employee coverage affordable while trying to remain attractive to current and prospective talent despite their shrinking budgets. Industry experts project a 6% to 8% increase in employers’ health care costs in 2023. Employers may see a greater increase should they fail to take effective action to curb rising costs, such as expanding telemedicine options and digital health care resources. These efforts are further complicated by record-high inflation, marketplace consolidation and ongoing labor market issues. As employers brace for further health care cost hikes in 2023, they are desperately searching for solutions to manage their growing costs and address the long-term impacts of these increases on their organizations. 

There are several reasons why employers’ health care costs are increasing. While most employers experienced reduced claim costs during the COVID-19 pandemic, medical plan costs have begun returning to pre-pandemic levels as health care utilization rebounds, outplacing inflation and wage increases. Utilization has especially increased for employees dealing with severe chronic diseases and late-stage cancer due to missed or delayed care during the pandemic. Further, some employees are facing long COVID-19. Even employees who recovered from COVID-19 are experiencing cardiovascular and neurological diseases, causing employers’ health care costs to increase. In addition, rising expenses among medical providers and specialty and novel prescription drugs are exacerbating employers’ health care costs. The projected annual costs trend for outpatient prescription drugs is expected to approach double-digit levels—the highest rate since 2015— due to price increases and new specialty drugs.

Inflation is also causing health care costs to rise, and it will likely drive up costs moving forward. Additionally, there’s been an increase in hospital closures, physician retirements and health care worker quits. In fact, 3% of health care workers quit each month of 2022, according to the U.S. Bureau of Labor Statistics. The recent trend of consolidation among hospitals, physician practices and commercial insurers is also triggering higher health care prices for private insurance. Altogether, these developments are putting further pressure on the health care system and causing costs to increase.

Planning is critical for employers to develop cost-saving strategies in 2023. Traditionally, many employers have addressed rising health care costs by shifting a greater share of costs onto their employees. While some employers plan to stick with this strategy, savvy employers will recognize the potential chilling effect this can have on recruiting efforts due to the state of the labor market. Employers should understand that employees are already financially strained due to inflationary pressures. However, employers’ budgets may be limited, so increased health care spending will likely restrict spending elsewhere. In 2023, employers should be open-minded regarding strategies that could help manage their health care costs while attempting to improve affordability for employees, such as investing in telemedicine or incentivizing employees to seek cost-effective care options. Some organizations are negotiating with providers, as some carriers are currently offering discounts and reduced management fees. Other cost mitigation strategies include:

– Modifying health plan designs—Rising health care costs are causing employers to reevaluate their health care plan designs and offerings to include cost-reducing features. Some employers might even consider shifting to self-funded or partially self-funded plans in search of cost effectiveness. Additionally, employers are using health reimbursement arrangements and/or health savings accounts to incentivize employees to make cost-effective health care choices. Many organizations are also implementing wellness programs to improve the overall wellbeing of their workforce by encouraging individuals to exercise daily, eat a balanced diet, reduce stress and visit the doctor as needed. 

-Incorporating health care analytics—Employers are increasingly relying on health care data to understand potential cost drivers and underlying claims. These data analysis initiatives include claims audits, utilization analysis, data warehousing and predictive modeling. Many employers are using claims and diagnostic information to establish and measure workforce wellness initiatives in an effort to control health care costs. By gathering data and using it to predict where and when increased costs may occur, employers can determine the best strategies to address growing health care costs. 

-Improving employees’ health care literacy—Health care literacy initiatives are leading employers’ cost-saving strategies in 2023. Improving employees’ health care knowledge is vital to building a healthy and resilient workforce and reining in overall health care costs. More informed employees are increasingly likely to reduce health care costs by making better care choices. For example, employers are guiding employees to in-network providers so they can avoid unnecessary out-of-network care, thus reducing overall medical expenses for both parties. Many employers are also creating user-friendly benefits portals to educate employees and provide them with critical information, such as health plan options, forms, enrollment calendars and links to additional health care resources.

 Rapidly increasing health care costs will likely continue to impact employers for the foreseeable future. Savvy employers will look to implement effective strategies now to rein in these costs and keep employees healthy. Employers who proactively implement strategies to address rising health care costs will be better positioned to meet their employees’ needs and find long-term solutions to mitigate costs. 

© 2023 Zywave, Inc. All rights reserved.

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Consociate Health names Mike Castleberry as Chief Growth Officer

Castleberry has proven track record of building strategic partnerships to drive results for clients.

Decatur, IL., – Consociate Health, a national Third-Party Administrator of employee benefit plans, announced today that Mike Castleberry has been named Chief Growth Officer (CGO). Castleberry will be responsible for leading the company’s corporate development efforts to grow revenue and expand market channels and market share.

Castleberry brings 30 years of industry experience in leadership, growth, strategy, and product development. His diverse corporate exposure at Prudential, Aetna, WellPoint Anthem, HealthSCOPE Benefits and most recently at Pareto Captive Services, will strengthen Consociate Health’s leadership team and its strategic partnerships with consultants across the nation.

“Over the last several years, Consociate has achieved pivotal growth and success, and the company enjoys excellent relationships with its clients, consultant partners and its employees,” says Castleberry. “I look forward to building on this success and working with the team as we execute new growth initiatives and corporate strategy.”

“Consociate has been fortunate to experience significant growth because of our focus on results for our clients and our culture that supports that mantra. They are an outstanding group of individuals, dedicated to our mission of improving the lives of our customers and those in the communities we serve. We are excited to welcome Mike to our team. He is highly respected across the industry and brings incredible expertise in growth strategy and best-in-class processes to manage this planned growth,” said Consociate Health President Darren Reynolds.

About Consociate Health

For more than 40 years, Consociate Health has partnered with consultants and employers of all sizes to deliver employee benefit program administrative services. As a Third-Party Administrator (TPA), Consociate has built a reputation for delivering results to its clients, leveraging innovation through cost containment, technology and direct-to-employer network development while providing empathic customer service with a focus on helping those we serve.

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Workplace Wellness

Creating an Incentive Program

A well-crafted incentive program motivates your employees to take steps toward improving their health—resulting in a positive return on investment (ROI) for you. To design an effective wellness incentive, consider the following steps.

  1. Determine what employee actions you want to increase or decrease with the use of an incentive. To determine which incentives to use, consider the behaviors that you want to encourage and the incentive values that have the greatest potential for driving those behaviors.
  2. Determine what may be preventing the adoption of the desired actions, behaviors or modifications.
  3. Select the rewards that you want to offer. They should be feasible based on your existing wellness program, while also producing the greatest behavioral change among your employees.
    • Incentives should be consistent with your work culture and appeal to a
      wide audience.
    • Employees should value your incentives.
    • Awards must be large enough to motivate employees to act.
  4. Develop guidelines for achieving incentives—exactly what must an employee do to earn a particular award?
  5. Create a communication plan to introduce and promote your incentive program.
    • The rules of the incentives must be clear and easy to understand.
    • Senior management should strongly endorse the program by participating themselves and encouraging others to do the same.
    • Remind employees of the incentives through frequent, ongoing communication.
  6. Put your incentive program into action and evaluate its effectiveness at least annually. Based on the results, revise your program as necessary.

*Keep in mind there are a number of legal compliance issues involved in designing a wellness program, including the type of incentives that can be offered under a wellness program. To avoid noncompliance, employers should have legal counsel review their wellness programs before they are rolled out to employees.

Possible Wellness Program Components

Stress Management

The following incentives can increase the number of employees completing stress management training:

  • Hold training sessions on company time.
  • Offer a “door prize” for session attendees with a drawing held at the end of the session.
  • Provide an additional 20 minutes of lunchtime for attendees.

Tobacco Cessation

The incentives below can promote smoking cessation:

  • Restrict smoking and tobacco usage at your worksite.
  • Offer a “performance-based” bonus for quitting smoking.
  • Offer a seminar on the health effects of smoking and using tobacco products.
  • Provide a prize for employees who abstain from smoking for a year after joining the program (extra day of vacation, discount on health premiums, etc.).

Healthy Weight Management

The following incentives can encourage participation in weight management programs:

  • Provide a food diary to employees where they can keep track of cravings, triggers and daily caloric intake.
  • Offer a seminar on the health advantages of a well-balanced diet.
  • Keep track of the small victories, such as exercising five days per week or eating five or more servings of fruits and vegetables daily. Provide small weekly rewards or accumulate “points” toward a larger reward.

Hypertension Screenings

Use the incentives below to encourage employees to participate in blood pressure screenings:

  • Provide on-site screenings on company time.
  • Invite employees’ spouses to get screenings at no cost.
  • Provide gift certificates to employees who participate in the screenings.
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Mental Health Matters

Your mental health plays a large role in your overall well-being. In the midst of the coronavirus pandemic, many Americans have reported a decline in their mental health. According to the World Health Organization (WHO), 45% of U.S. adults have reported distress during these times.

Mental well-being includes mental health, but goes far beyond treating mental illness. For example, you could go through a period of poor mental health but not necessarily have a diagnosable mental illness. And your mental health can change over time, depending on factors such as your workload, stress and work-life balance.

What is mental illness?

Mental illness refers to a variety of conditions that affect your mood or behavior, feelings or thinking. Mental illnesses can occur occasionally, while others are chronic and long-lasting. Common mental illnesses include anxiety, depression, schizophrenia and bipolar disorder. Mental illness is more prevalent than you might think. According to the Centers for Disease Control and Prevention, 1 in 5 U.S. adults will experience a mental illness in any given year, and more than 50% will experience mental illness at some point in their life.

Why is mental well-being important?

Your mental well-being is tied directly to your physical health. Individuals with mental health issues or untreated mental illness are at risk of developing many chronic conditions like Type 2 diabetes, stroke, heart disease and obesity. Poor mental health can also cause negative effects in your work life as well as in your social life. If you have poor mental health, you may experience productivity issues at work and may experience withdrawal or feelings of loneliness.

How can you improve your mental well-being?

Because it’s such a crucial component of your health, it’s important to focus on maintaining or improving your mental health. Here are three simple ways to do so every day:

  1. Express gratitude. Taking five minutes a day to write down the things that you are grateful for has been proven to lower stress levels and can help you change your mindset from negative to positive.
  2. Get exercise. You probably hear all the time how beneficial exercise is to your overall health, but it’s true. Exercising can improve brain function, reduce anxiety and improve your self-image.
  3. Get a good night’s sleep. Strive for seven to eight hours of sleep a night to improve your mental health.
  4. Find out if your company offers an Employee Assistance Program. You can receive assistance ranging from urgent responses for onsite traumatic incidents to helpful well-being content, such as videos, podcasts and interactive programs, to consume at your own preferred pace. EAP’s can make it possible for you to receive the guidance you need in a confidential setting.
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