Bracing for Impact
Deferred care is sending a ripple effect through businesses of all sizes.
Employer healthcare spending declined during the pandemic for the first time in decades, but it is picking back up as employees seek the care they deferred over the past year and a half.
Creating affordable, data-driven, personalized benefit programs is challenging on its own. Now, layer in the impact of deferred care on employees’ health outcomes and employers’ budgets. The result? Brokers and consultants are doubling down on benefits engagement strategies and simplifying the overall experience for employees.
Leader’s Edge maps out the latest employer trends broken down by market segment.
Small Employers
To navigate the financial burden of higher premiums and the administrative burden of more robust employee benefits, brokers and their employer clients are turning to non-traditional cost-containment and administrative outsourcing solutions.
The growth of healthcare costs is also fueled by the mergers and acquisitions that continue to consolidate providers. Large employers with 5,000 to 10,000 employees may have the resources to improve pricing and quality by negotiating direct contracts with providers, but most companies do not have the size or scale to counterbalance providers’ market clout. To solve for that lack of leverage, some employers pool their employees and contract with local providers in an effort to re-capture market power. Peak Health Alliance in Colorado and The Alliance in Wisconsin are good examples of this purchasing power at work.
An alternative solution that is gaining steam among smaller businesses is partnering with customizable Professional Employer Organizations (PEOs). On June 15, Thrive HR Consulting announced the launch of its “mini PEO” solution, which operates like a conventional PEO except scaled to fit the bespoke needs of small business clients, with services including payroll, recruitment, diversity and inclusion, and compliance.
Some of the top priorities for PEOs in 2021 include finding better ways to identify high-risk and high-utilizing individuals and improving methods for small group underwriting. The speed in which PEOs can get brokers and their employer clients a medical insurance proposal usually makes or breaks the partnership, so finding ways to expedite the underwriting process is a high priority as well. Many PEOs are incorporating predictive modeling and risk scoring to meet these needs and support employers that have generally been unable to keep up with the demand for data. Predictive modeling improves the underwriting process by reducing loss ratios, developing discounting strategies, and expediting the process.
Medium-Sized Employers
Within the middle market, employee communication and engagement are more important than ever as the hybrid workplace resets a work revolution.
Mental health is a top point of concern, considering depression and anxiety disorders are leading to $1 trillion in lost productivity globally each year. With the Biden Administration signaling that mental health parity enforcement is a priority, employers are assessing their mental health benefit design and addressing why mental health benefits are underutilized.
Existing and new market players serving the employer-sponsored healthcare space are increasingly focusing on breaking away from point solution fatigue and annual sales cycles of underutilized services that have been major challenges to driving true engagement and outcomes.
The need to provide comprehensive behavioral health resources while acknowledging that offering a multitude of point solutions may be too difficult or overwhelming to navigate is prompting a new kind of streamlined mental healthcare solution.
Platforms like Transcarent, which just raised a $58M Series B on a $500M valuation, offer the potential to bring together various applications focused on the spectrum of mental health needs—from mindfulness all the way to serious mental illness care—enabling people to choose the type of solution they need in real-time.
Lyra Health, which is now valued at $4.6 billion following a recent $200 million funding round, is expanding its end-to-end mental health benefits program that focuses on screening for, treating, and coordinating care for employees suffering from mental health issues. Lyra provides customers a network of high-quality virtual and in-person mental health providers that aim to more efficiently treat patients through methods like cognitive behavioral therapy (CBT).
Companies like Transcarent and Lyra are jumping into the mental health benefits space to tighten the disconnect between employees and employers around mental health needs. The biggest hurdles employers must overcome are lack of coverage, lack of knowledge about available resources, difficulty finding providers, and long wait times. In addressing these barriers to care, employers are taking careful consideration of the unique needs and preferences of different groups of employees.
Large-Sized Employers
Transformational market shifts are creating incentives for large employers to adopt high-performance networks.
A 2020 Willis Towers Watson survey found that 73% of large employers plan to adopt alternative care delivery models over the year three years. This survey also found that 34% of employers offer health delivery solutions tailored to regional markets based on availability and needs of the workforce in their respective areas.
As employer experimentation with the non-traditional increases, benefits consultants are going to be challenged to build more networks and will need to pay special attention to identifying high-value local providers and the ability to standardize quality metrics.
Large employer purchasing coalitions are increasingly experimenting with custom-build network models with non-traditional carriers/TPAs, such as the Business Health Care Group (BHCG). BHCG Wisconsin recently announced a partnership with Centivo, an innovative health plan solution that delivers an affordable alternative to traditional health plans. Centivo has developed a high-performance network in direct partnership with health systems and providers in eastern Wisconsin, which can be positioned as a sole health plan or as an add-on to other coverage options.
At a time when demands for pricing transparency are gaining momentum, these types of customizable, geographically-targeted solutions may gain an edge over competitors if they share their negotiated prices with health systems and providers.
