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UltraLink - FOCUS...on benefits
March 2005
Understanding the Value of Benefits Key to Employee Satisfaction, Retention
A recent Watson Wyatt survey suggests that employees who have an accurate idea of the value of their benefits are more satisfied and less likely to leave their company than those who underestimate the value of their benefits. This appears to be the case even when benefits are less rich: companies with rich benefits but poor communication experience higher turnover of "top performers" than companies with less rich benefits but effective communication related to benefits.
The study, Watson Wyatt's Work USA 2004, indicates that effective communication about the value of benefits becomes even more important as health benefits costs increase and replace salary as a percent of total compensation. In companies spending more than 14% of total compensation on health benefits, turnover rates for "top performers" was found to be 12.5%, while in those companies spending 10% or less turnover was 8.8%. On average, companies surveyed spent 11% of total compensation on health benefits.
In a related study, MetLife reports that only 27% of employees accurately estimate the amount their employer spend on benefits, with 49% estimating that employers contribute $2000 or less for health benefits (actual national averages are $3137 for single coverage and $7289 for family coverage, per the Kaiser Family Foundation). Only 31% of employees surveyed gave their employers high ratings on benefits communications, and over half reported spending 30 minutes or less making benefit decisions during open enrollment.
Effective benefits communication also appears to be associated with overall job satisfaction. The MetLife study found that employees highly satisfied with their benefits reported job satisfaction that was 3 times that of those less satisfied with their benefits.
Sources: Watson Wyatt press release: Communication Plays Critical Role in Improving Retention Power of Health Benefits, February 23, 2005; MetLife press release: Employers' Under-Communication Yields Under-Appreciation, February 28, 2005.
CDHP Growth, Concerns
Consumer-driven health plans, currently representing 2% of the health insurance market with 2.7 million members, are expected to reach 7% of the market, or 12 million members, by 2007 according to Forrester Research.
Offerings of the plans to the small business market will expand on May 1st, when both Aetna and CIGNA will introduce products for small businesses. Aetna's HealthFund HSA will be available to those with 50 or fewer employees in 16 states and the District of Columbia, while CIGNA's Choice Fund HSA will be offered to those companies with 51 - 200 workers in 7 states initially and nationwide by the end of 2005.
Meanwhile, the Commonwealth Fund cautions that CDHPs are likely to impose financial hardship on those with low incomes or chronic conditions. Their 2003 health insurance survey found that 49% of adults in high deductible plans had a "bill problem or outstanding debt," compared to 32% of those in lower deductible plans. These findings are supported by results of a 2004 survey of Californians sponsored by the California HealthCare Foundation, which found that one in seven adults in the general population, and 20% of those with chronic illnesses, reported instances in which they did not obtain care due to cost in the past year.
Sources: The Adviser, Employee Benefits News, February 2, 2005; The California HealthCare Foundation, Press Release, February 2, 2005
Health Advocates Help Employees Fully Utilize Medical Coverage
As employees are being asked to bear increased responsibility for healthcare costs, there is widespread agreement that information will be key to their decision making. Yet little data is available on the costs or quality of health providers and alternative treatments and few employees know how to find information on complex medical conditions or how to negotiate claims disputes with insurance companies. One approach to providing information support is through the use of health advocates.
Health advocacy organizations typically employ nurses, hospital administrators and those with experience in insurance companies to help employees of client companies navigate the health care and health insurance systems. Health advocates will negotiate disputed medical claims, research hospital outcomes and physician credentials, help find subspecialists for unusual conditions, call insurers to clarify coverage issues and so on. One of the key advantages of engaging a health advocacy organization is that it keeps employers "out of the loop" regarding their employees' health conditions, thereby avoiding HIPAA violations and discrimination issues. Fees reportedly range from $1 to $4 per employee per year for the services, with return on investment estimated at 3-to-one.
Source: Workforce Week Management, February 13-19, 2005
Performance PPO, Meant to Promote Quality and Efficiency, Draws Fire
A pilot program in the St. Louis area aimed at steering General Motors employees to high-quality, efficient physicians has generated anger and confusion, and illustrates the difficulties inherent in measuring physician performance.
General Motors, with the authorization of the United Auto Workers, and United HealthCare are piloting the "performance PPO" in Missouri and 12 other states. Using claims data, surgeons and other hospital-based physicians are evaluated on their complication rates, while office-based physicians are scored on their adherence to evidence-based guidelines developed by specialty medical associations. Physicians who passed the initial quality review are then evaluated for efficiency, using an episode-of-care approach (i.e., considering the cost of all services--office visits, x-rays, laboratory tests, etc--used to treat a single a single diagnosis, such as pneumonia). For a visit to a "performance star'" physician, the plan pays 50% of the cost of the visit and 100% of additional office services. For a visit to any other physician the employee pays the full cost of the office visit and the plan pays 80% of additional services. Pharmacy and hospital benefits remain the same regardless of physician seen. The plan is only open to union members and retirees.
One of the key complaints voiced by both employees and physicians thus far (the program was initiated February 1) is that only 27% of Missouri physicians are considered "performance stars." Many doctors--about 40% of the state's total number--were eliminated from the program at the outset because of insufficient data, since a physician must have had at least 15 complete episodes of care in United's claims database to be eligible for the efficiency review. Another subset of physicians in select specialties (dermatology, gastroenterology and pediatrics) were ineligible for the quality review because, according to United, no professional quality standards have been developed. But consumers are not told why a physician is not in the performance network, so differences between insufficient data and true quality or efficiency issues cannot be determined.
Despite the fact that coverage is still available for visits to non-performance network physicians, albeit at a lower rate, and that UAW members have a choice between the performance PPO and straight indemnity insurance, employees charge that the plan "severs longstanding relationships with trusted physicians." Physicians charge that the plan disrupts established referral relationships and "defames" physicians not on the list. Meetings between United HealthCare medical directors and local physicians are taking place to address concerns.
Source: The St. Louis Post-Dispatch, February 13, 2005
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