Health care spending in Alaska reached $7.5 billion in 2010, according to Commonwealth North. The public policy organization hosted a forum in Anchorage on July 26 to offer some ideas on ways the private sector can step in to help bring that number down. Here’s a summary of their presentations:
Alyeska Pipeline Service Co.
Tim Adamczak, compensation and benefits manager at Alyeska Pipeline Service Co., described the consumer-driven health care program, or CDHP, that his company has used to help prevent health care costs from getting too high. CDHP is a high deductible plan in which the company funds the first part of that deductible. That means medical bills are completely covered until that prepaid deductible is used up.
Adamczak said the idea behind this program was to try to drive participants, both active and retired, to search and evaluate the costs between providers.
“Try to go out there and have a limited number of dollars. Try to go out and find the best value that you can find for the quality you’re looking for,” he said.
Adamczak said there’s been a growth of people entering into this CDHP program. He said these people that took on CDHP typically didn’t have many medical expenses and could stay within the $1,000 that Alyeska pays.
Alyeska originally implemented this program along with its traditional health care plan. However, as health care costs continued to rise, Alyeska moved everyone into the CDHP in 2010. With this plan, Alyeska handles the feedback, claims and appeals internally.
Adamczak said that one issue that does arise with this plan is that customers can find difficulty in asking doctors what the costs will be. He said there can be embarrassment or shyness issues that interfere with going to unfamiliar doctors for cost information.
“So that’s got Alyeska looking into employee advocacy programs,” he said.
These advocacy programs are relatively new, but Adamczak said they have had a significant effect. He said health care vendor reports indicate that customers are saving money by using employee advocacy.
He said these advocacy groups also specialize in cost-in-quality analyses, which are a crucial factor in reducing health care costs. He said these also help customers ask about medical costs.
Adamczak said advocates also generate administrative savings for Alyeska, which has reduced man-hours.
“We don’t force people to choose the lowest cost, but what we’re trying to do is make wise consumers,” Adamczak said.
Another new development in the program is to automatically refer three preferred Seattle-based providers for major surgeries and procedures so people can get information about health care cost differences.
Adamczak said nurse navigators have also generated a lot of savings by helping coordinate customers with providers.
Providence Health and Services
Tom Hunt, physician chief executive at Providence Health and Services, said the hospital spends between $30 million and $35 million per year on health care costs, which is a 10.5 percent rise over the last decade. He said employee absenteeism is another factor of health care costs that can be overlooked.
Interventions to prevent this include a nurse practitioner-run urgent care clinic that started a few years ago. This provides care for acute issues, which Hunt said slowly bled into some primary care services. He said these on-site primary care services are no charge for now.
Hunt said most employees still prefer their individual primary care providers.
Another cost-savings measure is a wellness program. This includes a biometric/health risk assessment process. Hunt said this analysis led employees to get lower premiums on their health care insurance.
Other wellness program services include health coaching, care coordination services, weight loss program, diabetes and nutrition consultations and other wraparound services to help cope with illnesses.
Providence also provides employees with a free gym.
Hunt said another new policy that helps is to only hire non-smokers.
Hunt said the results are promising as body metrics like weight, blood pressure and body mass index are all improving from 2009 to 2011.
“We saw good, maybe not statistically significant, but it’s certainly a good trend towards the decrease of all those numbers,” he said.
As for costs, Hunt said that the hospital would have expected a approximate 22 percent rise in direct care costs during those three years but kept it to 6.6 percent.
“Just in the last year on the order of about $340 per person,” Hunt said.
He said the reduced absenteeism has also helped save costs.
Hunt said this is a break-even program because the cost of it is roughly equal to the cost-avoidance of work loss plus the value of that care that would have been sought in the community instead on in-house.
Providence has more changes. Like Alyeska, Providence is changing the health plan to a CDHP. Hunt said this will be a “radically different paradigm” for the employees. The health plan is also being reviewed for utilization review and better case management for high-cost employees.
GCI’s current employee health care costs rose 103 percent between 2003 and 2011. The company has looked at a number of solutions for its employees over the last several years.
GCI Vice President Kathy Carr said systemic inefficiencies like higher administrative costs, complicated billing systems, and two-to-one ratios of specialists to primary care physicians all contribute to higher health care costs, which she said are expected to double in the next five years.
“We can’t just do nothing and think those costs are going to remain the same or go down,” she said. “We’ve got to do interventions.”
GCI has implemented health plan and administrative changes along with new programs to help combat this.
Carr said 55 percent of the health claims exceed $25,000. This is why GCI has introduced programs to introduce healthy behaviors to help reduce costly chronic conditions.
GCI has offered employee health fairs and weekly benefit messages. In January, the company implemented new risk assessments, biometric screenings, disease/condition management coaching and telephonic health improvement coaching. Other new programs include centers of excellence and financial incentives. These prioritize prevention over illness to help reduce costs.
“So we were focused on the results-based payments rather than just participation,” she said.
GCI is now also offering a results-based voluntary healthy futures wellness program. Through this program, the company asks employees if needed to participate in coaching sessions based on online health assessments and biometric screenings. These are to aid in possible plan restructuring.
Carr said there has been great participation in these sessions, and a lot of that is due to senior management getting behind them.
“Employees really, at the end of the day, I think appreciated that opportunity,” she said.
GCI also offers rebates on 2012 premiums to employees who participate in the program. Employees can receive up to $108 per month as health care contribution credits if they participate in all three: risk assessment, biometric screening and coaching if needed.
Kevin Thomas, NANA vice president and chief financial officer, said Alaska’s higher costs, lower discounts and networks and fewer number of providers compared to the rest of the country contribute to higher health car costs here. He said NANA, the Alaska Native regional corporation for Northwest Alaska, has in-state health care costs per employee that are more than double those for out-of-state employees.
Some of the company’s specific costs drivers are claims data, governance and oversight of plans, employee bases and group sizes available, risk profiles, demographics and employee lifestyles.
“Understanding your medical costs and how they’re being spent is probably the most critical thing,” he said.
NANA has implemented some targeted improvements, such as dialysis management programs and chronic disease management programs. Thomas said these have resulted in significant savings.
He said lower costs in governance areas must come from company-wide commitments.
“Information and education for both the executive group and the employees is critical, but there needs to be enterprise-wide buy-in,” he said.
NANA does this through a benefits committee that consists of employees who are impacted by these decisions.
Thomas recommended combining as many employees as possible into the same group to help spread risks across the larger group to help negotiate with insurance carriers and administrative services providers.
He said employers must decide if they want to buy rack insurance, which does not tolerate any risk and so must rely on insurance companies’ needs for business. The other option is assuming more risk and self-insurance the majority of medical claims while putting in appropriate stop-loss levels for individual and aggregate claims.
Thomas said employers need to understand an contain costs, consolidate employee groups, determine appropriate risks for a company and try new things in order to fend off rising health care costs. He said being constant with a company’s core values is just as vital.
“We have to all accept that health care costs in Alaska will be a challenge,” he said.