August 2022
The Importance of a Population Health Management Approach in Health Care Benefits Packages
In 2021, nationwide drug spend grew 7.7% to $576.9 billion and is expected to increase another 4% to 6% in 2022. Despite the rise in drug spend, the United States continues to rank last in access to health care, equity, and outcomes among high-income countries. (See Figure 1: Health Care System Performance Compared to Spending.)
These statistics prove that the increased spend on health care does not equate to better health outcomes. Clearly, a new approach to clinical and care management is needed. With 49% of health care coverage and 83% of U.S. health care costs being employer-sponsored, employers can leverage their buying power to improve employee health via quality health care benefits packages. At the center of care quality is a population health management approach tailored to an employee population.
Figure 1 Source: Eric C. Schneider et al., Mirror, Mirror 2021 — “Reflecting Poorly: Health Care in the U.S. Compared to Other High-Income Countries” (Commonwealth Fund, Aug. 2021).
What Is a Population Health Management Approach?
Improving health begins with a deep understanding of the employer’s population: Who and what are the drivers of risk in the membership? Population health management stratifies health risks of a group of individuals, allows for predictive modeling, and determines the appropriate clinical and care strategies to improve health outcomes. It examines the whole person’s health, not just the dominant health condition, and includes racial and socioeconomic factors to provide deeper insights into underlying risks. This holistic view of the patient facilitates better care management and closes gaps in care. Additionally, population health management reduces costs by eliminating wasteful prescribing and finding the right medication at the right dosage for the patient. It also drives down costs with a much larger return on investment by targeting costlier subgroups that have greater care needs.
As an example, in any given year, a small portion of the U.S. population is responsible for a significant percentage of total health spending. An analysis found that 5% of the population drives 50% of health care costs, meaning these subgroups are in need of more care and more drug spend than other populations. That manifests itself in every employer’s population as well. A population health management approach with an effective complex care management strategy identifies and creates care models that specifically address higher-risk patients with health care complexity.
This “whole-health” approach can be found in a value-based model in pharmacy benefits management, one that uses a patient-centered approach to health care to achieve cost savings. On the other hand, the industry-standard approach is the volume-based model, one that offers drug volume discounts and large rebates on high-cost drugs to achieve cost savings. The model is incentivized to pump more drugs into the population—health care being an afterthought. As the cited metrics show, this industry-standard model has not proven effective in improving health or financial outcomes. (See Figure 2: Average Annual Worker and Employer Premium Contributions for Single and Family Coverage, by Plan Type.)
*Estimate is statistically different from All Plans estimate within coverage type (p <.05)
Source: KFF Employer Health Benefits Survey, 2021 Summary of Findings – 9805 | KFF
What follows are three reasons that HR professionals should apply a population health management approach to their healthcare benefits packages.
1. It provides a solution to the standard, “one-size-fits all” approach to health care benefits. No employee population is the same, and every employee has unique health care needs. What makes a population health management approach different from the conventional model is that it assesses the risk factors in a population, identifies those at medium-high clinical risk, then looks at the whole health of an individual patient to identify areas where providers can improve care and deliver better health outcomes. This includes non-clinical risk factors, social determinants of health, and other potential care-related inequities. This gives each individual within an employee population the ability to receive care that is tailored to them. Consider, for example, the following real-life case study outlining a population health management approach.
2. It minimizes costs for employers and employees. As shown in the mini case study, the significant annual savings was a result of eliminating clinically inappropriate prescribing and less costly medications. A population health management approach in pharmacy benefits uses a “less is more” model to determine the care needed and what prescribing may be unnecessary for a specific employee population. Population health management done right drives value, rather than volume, and provides a savings guarantee for its customers. The savings guarantee is set by analyzing incumbent claims data to find the wasteful prescribing and drug spend within a population, which are opportunities for better clinical and drug mix management. A successful population health management strategy can guarantee savings because of this focus on identifying clinically appropriate, lower-cost drug selections; better health in a population equates to lower overall costs.
Rather than green-lighting prescription drug dispensing in high volume to drive rebates, a population health management approach is laser-focused on precise prescribing and drug mix optimization, which will ultimately bring costs down and keep them down for both employers and employees. Proactive health management is rewarded, and PBMs are no longer incentivized to increase the volume of drugs. Instead, they are driven to achieve defined clinical and financial outcomes.
3. It boosts employee satisfaction and retention. HR professionals strive to keep employees satisfied, and recent studies have found that benefits are significant to existing and prospective employees. Nearly 80% of employees reported being more likely to stay in their current roles if the benefits are attractive, and 40% of employees said a company becomes more attractive if their benefits packages are tailored to them. Adding health care benefits in job advertisements also significantly increases application rate.
These numbers show that health care benefits packages tailored to the health care needs of employees offer a competitive advantage to a company who is hiring, and just as important, help maintain employee satisfaction and retention among existing employees.
Key Takeaway
A population health management approach is a solution tailored to the health care needs of your employee population. A whole-person health approach can improve health outcomes among your population, minimize costs, and improve employee satisfaction and retention. HR professionals can look toward a broker to discuss the population health management approach component found in a value-based pharmacy benefits manager.
09 August 2022
Category
HR News Article