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Employers Adopting Payment Strategies to Improve Efficiencies in Health Benefits

Plan to attend MBGH's August 29th Annual Conference "Follow the Money: You Get What You Pay For" to learn more about new payment approaches and how those are beginning to play out in Memphis and TN! Register here.

Aon Hewitt Research Shows Employers Increasingly Adopting Payment Strategies to Improve Efficiencies in the U.S. Health Care SystemJun 6, 2013

LINCOLNSHIRE, Ill., June 6, 2013 /PRNewswire/ -- To mitigate rising health care costs, an increasing number of companies are considering adopting strategies that will improve the way they pay for health care services in the future, according to new survey data by Aon Hewitt, the global talent, retirement and health solutions business of Aon plc(NYSE: AON).

According to Aon Hewitt's survey of nearly 800 large and mid-size U.S. employers covering more than 7 million employees, 53 percent said that moving toward provider payment models that promote cost effective, high quality health care results will be a part of their future health care strategy, and one in five identified it as one of their three highest priorities.

"As health care costs continue to rise, a growing number of employers want to ensure that the health care services they are paying for are actually leading to improved patient outcomes," said Jim Winkler, chief innovation officer for Health at Aon Hewitt. "Just as employers are being more requiring of their employees to take control of their health, employers are seeking to hold providers more accountable. They are beginning to work directly with health plans to embrace more aggressive techniques to reduce unnecessary expenses and create more efficiency in the way they purchase health care."

According to Aon Hewitt's survey, the ever-shifting health care landscape has created a broad array of tactics that employers are considering:

Increasing Focus on Pay for Performance Models: Thirty-one percent of employers said they decrease or increase health care vendor compensation based on specific performance targets, and another 44 percent are considering doing so in the next three-to-five years. Additionally, while just 14 percent of employers currently use integrated delivery models, including patient-centered medical homes, to improve primary care effectiveness, another 61 percent plan to do so in the next few years.

"Vendor accountability models are moving beyond process-based metrics, such as customer service call answering speed, and shifting to ones that focus on fees at risk for clinical health risk improvement and overall medical spending increases," said Tim Nimmer, chief health actuary for Aon Hewitt.

Growing Interest in Reference-Based and Value-Based Pricing Models: While utilization is low today, Aon Hewitt's survey revealed a growing number of employers also are interested in adopting reference-based and value-based pricing models in the next three-to-five years. While just 8 percent of companies today limit plan reimbursements to a set dollar amount for certain medical services where wide cost variation exists, almost two-thirds (62 percent) are considering adopting this type of reference-based pricing model in the future. 

According to Aon Hewitt, this type of approach has been commonplace for prescription drug coverage, with many employers requiring participants to pay the full cost difference between a brand name drug and its generic substitute.

Fifty-nine percent of employers plan to steer participants—through plan design or lower cost—to high-quality hospitals or physicians for specific procedures or conditions.Thirty-eight percent of companies plan to participate in cooperative purchasing efforts with other employers or groups (coalition-based pricing). Twenty-one percent do so today.

"Employers are increasingly gaining comfort with the notion that they do not need to pay for the wide cost and quality variations that exist in today's health care system," said Winkler. "Their efforts to reduce inefficiency and shift the payment focus toward services and providers that produce higher quality outcomes is only just getting started. It is a shift that our health care system certainly needs."

Posted by Cristie Travis at 8:23 AM

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