benefit trends: health care cost-containment initiatives.

Author:Held, Justin

Health care spending in the United States is projected to increase by 5.3% to reach about $3.7 trillion this year. This would end an eight-year period in which health costs lagged behind economywide inflation, according to a recent report by the Centers for Medicare & Medicaid Services (CMS). In response to the cost escalation, plan sponsors in single employer, multiemployer and public employer environments are looking for ways to limit the growth of their health care expenditures.

The 2018 Employee Benefits Survey provides benchmarking data on the methods used to control escalating costs, including administration/data analysis, cost-sharing, plan design and utilization control initiatives. Nearly all of the 595 responding organizations (97.2%) offer health care benefits, most commonly through a preferred provider organization (PPO) (77.3%), a high-deductible health plan (HDHP) with a health savings account (HSA) (39.9%) or a health maintenance organization (HMO) (27.7%).

Administration/Data Analysis Initiatives

To target growing costs, respondents are using a number of administrative and data analysis initiatives. More than three in five (61.3%) responding organizations conduct health care claims utilization analyses, which include any number of initiatives used to control costs and eliminate both the over- and underuse of health care services. Less than one-half (48.4%) conduct health care claims audits to examine health provider records to determine whether services provided were necessary, properly administered and correctly billed. In addition, about one in three (31.2%) respondents utilizes predictive modeling, which uses data analysis techniques to forecast health care spending trends to determine the likelihood of future spending.

Cost-Sharing Initiatives

Responding organizations employ a range of cost-sharing initiatives to target escalating costs. Particularly, tiered cost-sharing plans are commonly offered. Tiered systems classify health care providers into tiers using a combination of cost and quality metrics. Participants pay a higher price to use the higher cost or less efficient providers in plan networks. These types of plan designs provide an incentive for participants to choose the most efficient and/or high-quality providers while motivating providers to become more efficient and/or improve the quality of their care. Two-tiered cost-sharing arrangements are the most common (38.4%), but three (22.7%), four (27.2%), and...

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