Payment Trends

Are Employers Rethinking High-Deductible Plans?

August 8, 2018 8:57 am

Large employers say they still have significant questions about the potential of ACOs and other alternative payment models to reduce costs or improve quality.

Aug. 7—Employers that provide insurance for their workers are expressing an unusual degree of reluctance about high-deductible health plans (HDHPs).

That was among the findings of a new large-employer survey that identified a pullback from a reliance on HDHPs, which have had growing financial impacts on hospitals in recent years.

The share of large employers planning to offer only HDHPs declined for the first time in seven years, according to the annual large-business survey by the National Business Group on Health (NBGH). The share of employers expecting to offer only HDHPs in 2019 was 30 percent among the 170 companies surveyed, compared with 39 percent in 2018.

The change reflects “a move by employers to add back in more choice to the mix,” Brian Marcotte, president and CEO of NBGH, said at a news conference.

The share of large employers offering only HDHPs has increased almost every year since 2010, when 10 percent offered them as the only insurance option. The share offering HDHPs as one of multiple insurance options is projected to increase from 53 percent in 2010 to 61 percent next year. And HDHPs remain in a dominant role, as evidenced by the fact that 53 percent of employers named them as the plan type with the largest enrollment.

The large employers’ reconsideration of HDHPs echoed some other findings, including a 2017 Kaiser Family Foundation survey that concluded that the share of all companies using such plans decreased from 28 percent in 2016 to 24 percent in 2017. That survey found large companies were much more likely to use HDHPs than small companies.

A combination of factors appears to have produced a reassessment by large employers of the value of HDHPs as a mechanism to control costs and spur price-shopping behaviors.

One factor that drove the expanded use of HDHPs in recent years was the Affordable Care Act’s so-called Cadillac tax on high-cost health plans, Marcotte said. That tax was supposed to go into effect in 2018 but has been delayed, and employers think such delays will continue for the foreseeable future, he said.

Another possible factor in the pullback in HDHP utilization is a concern that employees are nearing a “tipping point” in terms of the healthcare cost burden that they are willing to share. Employees cover 30 percent of the estimated $14,099 per-employee cost of health care in 2018, the survey found.

Another factor that could have contributed is the historically low unemployment rate.

“So, is the war for talent playing into this, as well?” Marcotte said. “There are a number of factors that may be playing into bringing choice back in.” 

Value-Based Trends

Large employers are increasingly looking to value-based payment approaches to help them control their costs.

For instance, 35 percent are implementing alternative payment and delivery models, such as accountable care organizations (ACOs) and so-called high-performance provider networks (HPNs), according to the NBGH survey. Among that group, 11 percent were directly contracting with ACOs or HPNs, 24 percent were promoting such arrangements offered by their health plans, and another 23 percent were considering those approaches within the next two years.

However, significant questions remain among business leaders about the potential of ACOs and other alternative payment models (APMs) to reduce costs or improve quality.

Employers said they were waiting for better market-specific information on how such models improve the employee experience or reduce costs. They also seek assurance that the models would include highest-quality and cost-effective providers, even if that meant including only certain providers from the same health system.

Nearly half of employers (49 percent) said they are pushing for delivery system changes by either pursuing the development of APMs or circumventing established providers by pushing work-arounds, such as virtual care and concierge services.

Virtual Care

More than half of the employers (51 percent) planned to implement “virtual care solutions” in 2019. Virtual care was the top initiative among employers, and Marcotte said employers were trying to encourage its use by lowering the attendant out-of-pocket costs for employees. The share of employers cutting cost-sharing for the use of telehealth services is slated to increase from 18 percent in 2018 to 29 percent in 2019.

The availability of virtual care has proliferated across health plans offered by major employers. Ninety-five percent of those surveyed cover telehealth for “minor, non-urgent services,” and 65 percent cover mental health virtual services. And 52 percent of employers believe virtual care will have a significant impact on how care is delivered in the future.

Marcotte said virtual care initiatives are relatively new, and there is little comprehensive data about whether employees are using them or whether they improve health outcomes or lower costs. Twenty percent of employers reported that at least 8 percent of their employees are using covered virtual services.

However, Marcotte has seen examples of employer virtual care initiatives that have garnered good participation rates.

“One of the challenges that employers have is that there is a little bit of point solution fatigue,” Marcotte said about various virtual care vendor options. “There are so many of these solutions on the market, they don’t necessarily have the bandwidth to contract with them all—and even if they do, how do they integrate them with what they have?”

Virtual care initiatives that have produced good results include those used for diabetes management and “emotional well-being” approaches, he said.

To help the effort, the NBGH has launched the Health Innovations Forum, which connects employers with virtual care start-ups and pilots, tracks the results, and shares the results with other member companies.

Another provider-focused effort to control costs is seen in the increasing use of centers of excellence. The survey found 78 percent of the large employers use centers of excellence and another 7 percent are considering doing so within the next couple years.

“The growth in centers of excellence that you’re seeing is one of the ways employers are trying to get at some of these” costs, Marcotte said.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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