The Cure for Your Healthcare Headache

Recap of the 2011 Barnes Dennig - USI healthcare seminar

By Jaylynn Gray & Susan Kattmann, USI Insurance

Increasing healthcare costs and the uncertain state of healthcare reform have caused headaches in boardrooms across the country. Profits are down, morale is low, and the prognosis is unclear.

But some local executives have found relief. They took charge of their healthcare plans, kept costs in check and turned their pain into an employee retention tool. Their employees – and their bottom line – are healthier every day.

The following five executives discussed their companies’ healthcare initiatives August 24, 2011, in a seminar co-hosted by Barnes Dennig and USI Insurance. Below is a recap of their comments:

(For a recap of Craig Osterhues' presentation on the causes of healthcare inflation and how local leaders are trying to slow it, click here.)

Brian Busken, Senior Vice President, Busken Bakery

Busken has approximately 180 employees. The company offered a fully insured high-deductible health plan (HDHP) with a Health Reimbursement Account (HRA) in 2010. The most critical cost driver for Busken is the point of enrollment, so the enrollment process is closely managed at an individual level. Every employee meets with a Busken representative to discuss his or her health care needs. During these discussions, Busken introduces the Children’s Health Insurance Program (CHIP), a federal program which is available to provide health insurance to uninsured children and teens. This is often the best option for single parents. Busken has a large turnover and therefore is constantly managing the enrollment process and exploring ways to use its benefit plan to attract and retain key talent. Busken will continue to shop its rates yearly to see what is available; this has helped avoid drastic premium increases in the past. Busken also will continue to monitor the enrollment process to eliminate coverage for ineligible dependents and reduce costs where possible.

Robert Johnson, Director, The Center for Local Government

The Center consists of 52 member communities and provides multiple services to its members, including healthcare benefits for 15 communities, with 750 employees currently participating.  CLG had been fully insured until 2009, when it switched to self-insured. Johnson endorsed that model, saying, “Your claims are your claims.” The first year as a self-insured business was challenging. For 2011, CLG instituted initiatives such as requiring employees’ spouses to take coverage from their employer, the use of generic prescriptions for all plans, and establishing a relationship with ProScan for imaging needs. Johnson said employees are not mandated to use ProScan, but it is highly encouraged and has resulted in significant savings. By combining a Health Savings Account and a Health Reimbursement Account (and educating employees on the difference in cost between various services), CLG has encouraged employees to seek better and more cost-effective healthcare.  A third-party administrator performs random monthly audits to review dependent eligibility.

Scott Jones, Human Resources Director, Al. Neyer, Inc.

Al. Neyer, Inc. is a real estate developer with fewer than 100 employees, 65 percent male, with an average age of 45. The company was faced with catastrophic claims, and through the advice of its broker it offered a Health Reimbursement Account (HRA) to employees with a lower net deductible. The average increase would have been 25 percent, but with the HRA the organization was able to keep the increase to 8 percent. Company leaders considered other alternatives such as passing greater costs to their employees, but they settled on an HRA. The management team was prepared to do a lot of “pre-education” for employees, and education continues. “Real dollars have been saved - approximately $70,000 a year - so it’s worth it,” Jones said. Good actuarial data is needed with an HRA, and that data comes with the help of a third-party administrator (TPA) who can also handle claims, etc. In addition to the HRA, Al. Neyer will soon implement a spousal surcharge, and the company is working with a wellness coordinator to establish a three- to five-year wellness plan. “Our president, Dave Neyer, participates and believes in wellness and is a good example for our employees,” Jones said. “Ultimately, we want a healthier workforce.”

Martin Tierney, Vice President / Controller, Systecon, Inc.

Systecon is an HVAC engineering and manufacturing company with approximately 55 employees (tradespeople, field service, engineers). The organization experienced cancer claims and the possibility of a 40 percent premium increase, so it introduced an HRA in 2002 with the help of a TPA. Systecon also changed the employee deductible from $500 to $5,000 (with Systecon paying 70 percent of the premium) and experienced a first-year savings of $50,000. “Communication has been very important, as well as having a TPA,” Tierney said. To ensure employees use their HRA monies to pay for medical expenses, the TPA has instructed employees to submit an Explanation of Benefits (EOB) before any HRA money is allocated. Martin encouraged the audience to “ask for discounts from your provider.” He also stressed the importance of top-down support, especially for wellness. “We don’t have a budget for wellness yet, but we’ll do what we have to to fund a wellness program.”

Jeff Rinear, President, TCI Billing

TCI Billing provides business services to healthcare organizations, including billing, claims processing and provider credentialing. The company has 56 employees on its benefit plan (80 percent female). TCI offers an HSA and HRA. In researching TCI’s high costs, Rinear determined that his employees did not make cost-effective healthcare decisions because they had no incentive to do so. By instituting the HSA, TCI employees were in charge of their own money and suddenly had a vested interest in the costs of procedures. Rinear said employee engagement was low during the first year but increased significantly in the second year – for example, employees were much more willing to ask for generic equivalents or use online sources to research better pricing for MRIs. He said the company’s renewal two years ago was 4.8 percent. TCI offers a mini-wellness plan which requires employees to sign non-smoker affidavits and provide proof of physical exams to earn wellness credits. “Employees may feel that they’re being penalized, but we treat it as a wellness incentive,” Rinear said. “You will also need to have legal backup to keep up with HIPAA laws.”

If you have questions or would like an in-depth discussion of issues specific to your business, contact the USI Benefits Department at (513) 852-6300.

For information on employee benefit plan audits, click here or contact a Barnes Dennig representative at (513) 241-8313.