2015 High Performance Insights
Best Practices in Health Care Survey
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Today’s speakers
Randall Abbott
 Senior Consulting Leader, Health and Benefits
 Willis Towers Watson
Steve Nyce, Ph.D.
 Director, Research and Innovation Center
 Willis Towers Watson
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson client use only.
2
Downloading Slides and Asking Questions
Slides available online at:
http://www.businessgrouphealth.org/e
vents/index.cfm
To ask a question at any time during
the presentation:
(1) Click on the Q&A tab
(2) Type your question
(3) Click “Send to All Panelists”
3
About the 20th Annual Survey
487 15.1M
Employers
(with at least 1,000
employees) responded
12M
Respondents employ
15.1 million
full-time employees
Respondents have 12 million
employees enrolled in their
health care programs
 Survey data collected between June and July 2015
Number of full-time workers
employed by respondents
Industry groups
1,000 to 2,500
13%
28%
2,500 to 5,000
17%
Financial Services
9% 8%
General Services
18%
13%
5,000 to 10,000
28%
5%
Energy and Utilities
26%
10%
10,000 to 25,000
Health Care
IT and Telecom
Manufacturing
11%
13%
Public Sector and Education
25,000+
Wholesale and Retail
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
4
Executive Summary
1
Cost trends remain at historically low levels
2
Companies continue to aggressively manage costs
3
Adoption of Account Based Health Plans nears saturation
4
Employers need to rethink incentive strategy,
address lifestyle risks and create healthy workplace
5
Best performers create a financial advantage
Source: 2015 Wills Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
5
Health care cost trend remains lowest in 15 years
Health care cost trends after plan changes
are well above the rate of inflation.
14.7%
13.0%
11.3%
10.3%
9.2%
9.0%
8.3%
8.0%
6.4%
8.0%
8.0%
6.8%
6.8%
8.0%
6.8%
6.0%
5.5%
5.3%
6.0%
5.5%
2002
2003
2004
2005
2006
2007
2008
Health care trend after plan changes (total plan costs)
2009
2010
2011
2012
2013
6.0%
5.0%
4.9%
4.2%
2001
5.7%
4.1%
2014
Health care trend before plan changes
2015 2016*
CPI-U
*Projected.
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
6
Wide variance of costs across industries
$20,000
$18,000
Per employee, per
year costs (PEPY)
$17,703
$17,752
$16,655
$16,777
$14,649
$14,756
$14,330
$16,000
$15,016
$14,000
$14,053
$11,469
$11,515
$10,123
$10,277
$10,292
$8,000
$12,405
$12,637
$12,041
$11,355
$10,657
$10,543
$9,406
$8,854
$12,687
$12,469
$11,628
$13,633
$13,289
$12,762
$10,000
$14,937
$13,913
$13,294
$12,000
$15,440
$15,033
$9,186
$8,706
$10,218
$9,559
$8,706
$7,726
$6,884
$6,000
$4,000
Retail
Manufacturing
10th Percentile
Financial
Service
Health
Services
25th Percentile
Technology
Average
Energy/
Utilities
75th Percentile
Pharmaceuticals
Total
Database
90th Percentile
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
7
What’s driving variability in health care costs?
Vendor Partner Strategy
Determine entities best positioned to
help you deliver on your strategy
Health Care Delivery
Employee and dependent participation
Single most significant predictor
of per employee health costs
Participation
Efficiency
Maximize purchasing value
of health care services
Workforce Health
Identify and effectively manage
population health risks
Engagement and Consumerism
Increase participant engagement
through shared accountability
Pharmacy
Manage specialty drug costs and
leverage cost-effective options
Program design value and subsidy level
Define financial commitments based
on overall program value
Subsidization
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
8
Top health care priorities over the next 3 years
Evaluate health and pharmacy plan design strategy 5% 15%
Increase focus on employee well-being, including health,
5%
financial and workplace experience
Develop/Enhance a workplace culture where employees are
responsible for their health
Evaluate vendor/network strategy
80%
23%
73%
22%
72%
6%
11%
29%
60%
Make changes to avoid the excise tax ceiling
18%
25%
Adopt/Expand the use of financial incentives to encourage
healthy behaviors
16%
30%
Evaluate care management programs for chronic and
acutely ill members
14%
Review health care benefits in a total rewards context
15%
Develop/Enhance a health technology strategy including
employee engagement and delivery of care
1 — Not at all / 2
58%
54%
36%
18%
51%
35%
34%
3 — To a moderate extent
49%
48%
4 / 5 — To a great extent
Survey data collected between June and July 2015.
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
9
Participation
Efficiency
Adoption of Account-based health plans nears universal use
Subsidization
And full-replacement ABHP continues to grow
100%
82%
80%
Percentage offer an ABHP
60%
47%
40%
51%
53%
54%
by 2016
66%
59%
43.0%
39%
33%
34.0%
25.0%
20%
73%
86%
26.0%
20.0%
15.0%
14.0%
12.0%
10.0%
8.0%
7.6%
5.4%
5.4%
5.0%
4.9%
12.5%
10.7%
21.3%
23.9%
15.4%
0%
2006
2007
2008
2009
Median ABHP enrollment
2010
2011
2012
2013
2014
2015
Percentage with 100% enrollment
Note: Enrollment rates are based on companies that offer an ABHP in various years. 2006 is based on the 12th Annual Willis
Towers Watson/National Business Group on Health survey; 2007 is based on the 13th annual survey, etc.
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
10
Participation
Efficiency
Many employees see changes to their contribution structure
Subsidization
Changes in contribution structure for active employees
Structure employee contributions based on employees
taking specific steps (e.g., completing health assessment,
biometric screening)
39%
Include greater choice and variety by offering voluntary
benefits and services (e.g., critical illness insurance,
accidental life insurance)
Structure employee contributions based on employee
compensation levels
4%
34%
10%
23%
27%
1% 4%
26%
Use a defined contribution arrangement (i.e., structure
employer contributions based on a flat dollar amount
across plans)
20%
Action taken/Tactic used in 2015
Planning for 2016
2%
17%
Considering for 2017 or 2018
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
11
Efficiency
Participation
Companies are taking steps to manage dependent
participation
Subsidization
Redefine financial commitment to spouses
Increase employee contributions in tiers, with spouses
more than employees with single coverage
56%
Increase employee contributions in tiers, with children
more than employees with single coverage
Use spousal surcharges (when other coverage is
available)
46%
27%
6%
8%
17%
4% 11%
23%
1%
Structure contributions on a per dependent covered
5% 10%
basis
Eliminate/Don’t offer subsidy for spousal coverage
3%10%
(provide access only)
Action taken/Tactic used in 2015
Planning for 2016
Considering for 2017 or 2018
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
12
Efficiency
Participation
Employers are proactively managing pharmacy benefit costs
Subsidization
With particular emphasis on specialty pharmacy utilization
Implement step therapy programs to drive use of generics
67%
60%
Evaluate pharmacy benefit contract terms
Adopt new coverage restrictions as part of specialty
pharmacy strategy
Evaluate specialty drug cost and utilization through
medical benefit
14%
39%
Greater promotion of mail order/90 day plans
35%
30%
In place in 2015
11%
9%
15%
26%
12%
18%
53%
Exclude compound drugs
Conduct audit of PBM
9%
21%
Planning for 2016
13%
18%
13%
19%
23%
32%
Considering for 2017/2018
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
13
Efficiency
Participation
Employers embrace telemedicine
Subsidization
Almost half offer telemedicine, yet utilization remains low despite an
investment in employee communication and incentives
46
%
Currently offer
telemedicine services
to employees
compared to 28% in
2014
24
%
Plan to add in 2016 and
another 20% are
considering by 2018
31
%
Of employers provide
lower copayments or
charges for
telemedicine
consultations with
another 44% expected
to by 2018
7
%
Less than 10% of
employees use
telemedicine
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
14
Efficiency
Participation
The transition to value-based payment gains momentum
Subsidization
Emerging trends in provider management
Contract with health plan for services at COE
37%
Implement high performance or narrow networks
11%
Offer medical tourism and cover employee expenses
11%
8%
5%
20%
42%
3% 11%
Engage a third party to secure improved pricing on
medical services
7% 2% 13%
Contract directly with providers for services of ACO
7% 2% 13%
Contract directly with provider(s) for services at COE 5% 1% 12%
In place in 2015
Planned for 2016
Considering for 2017 or 2018
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
15
Efficiency
Participation
Employers use many factors to select a health plan vendor
Subsidization
Factors in selecting a health plan vendor
Competitiveness of the negotiated insurer discounts
88%
11%
Vendor’s emphasis on adopting reimbursement methodology based on
cost, quality, improved efficiency and better outcomes
71%
23%
Willingness to partner with third parties
70%
22%
Employer reporting demonstrating results/effectiveness of new
contracting strategies
64%
Availability of centers of excellence (COEs) beyond traditional
transplant COEs
Availability of telehealth solutions integrated with health plan
Availability of accountable care organizations (ACO) and/or patient
centered medical homes (PCMH) with provider incentives and
penalties based on quality, efficiency and outcomes
26%
61%
31%
46%
36%
Very important
35%
38%
Somewhat important
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
16
Efficiency
Participation
Low participation in incentives causes companies to revisit their
incentive strategy
86
%
Offer some type of
wellness incentive to
encourage participation
$880
40
%
Employees earn no
incentives in a given year
Average
incentive dollar
opportunity
88
Subsidization
%
Plan to re-evaluate their
incentive strategy over the
next 3 years
$365
Average
actual
dollar payout
Employees leave money (and a lot of it) on the table
$880 average incentive offered - $365 average pay out
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
17
Efficiency
Participation
Majority of organizations will increase their focus on building
the health and well-being of the workplace
Subsidization
How would you characterize your organization’s primary strategy to encourage
healthy behaviors, and what do you expect it will be in 2018?
70%
51%
50%
64%
Today
In 2018
47%
40%
42%
34%
10%
3%
Focus primarily on plan
design
Focus primarily on direct
financial incentives
Rely primarily on providers, Focus primarily on strategies
medical professionals and to build the health and wellemerging delivery system being of the workplace and
models
culture
No strategy to encourage
healthy behaviors
Almost 2/3 of employers expect that building a culture of health will
be the primary strategy to promote healthy behavior by 2018
Source: 2015/2016 Global Staying@Work Survey, United States
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
18
Best performers create a financial advantage
Best performing employers saved on average $2,000 per employee per year and kept
cost trends below benchmark
Definition of Best Performers
Health Plan Efficiency
Cost Trends Before Changes
Two-year average efficiency that is 5%
or greater
Two-year average trend before plan
changes at or below the national norm
Financial Benchmarks Survey
Best Practices Survey
Unadjusted Total Costs PEPY
43
2014/15 Cost Trends
Best Performers
Before Plan
Changes
$10,258
2015
$12,264
Average Efficiency in 2015
17%
vs.
Best Performers
0%
What can we learn
from the Best
Performers?
Other Companies
After Plan
Changes
Best Performers
4.3%
6.9%
3.7%
5.0%
Other Companies
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
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Conclusions: What can we learn from best performers?
 Participation

Redefine financial commitment to families’ health care
 Subsidization


Make ABHP the only plan option with on-going communication and evaluation of member behaviors
Tie employee contributions to employees’ taking specific actions
 Vendor Partner Strategies


Strengthen partnership by involving vendors in strategic planning and require data to be shared for outreach
Choose partners whose reimbursement methodology is based on cost, quality and better outcomes
 Health Care Delivery


Use value-based designs like differentiating cost sharing for use of high-performance networks and COEs
Embrace new technologies like telemedicine and offer services at lower copayments or charges
 Pharmacy


Adopt high-performance formulary with limited brand coverage
Evaluate and take action to reduce the biggest cost drivers like speciality drugs and compound drugs
 Workforce Health and Engagement


Incentives alone don’t drive sustainable behavior change – re-examine strategy and refresh approaches annually
Leverage most important asset – the workplace – through changes to physical environment, links to broader
company strategy and EVP and tapping into the social networks
Source: 2015 Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
20
2015 High Performance Insights
Best Practices in Health Care Survey
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.