It might seem counterintuitive, but there are ways employers can cut costs that result in better quality. This is according to Randy Abbott, a leader and senior strategist in Towers Watson’s North American Health and Group Benefits practice.

Abbott notes that most employers want to achieve better patient outcomes at a lower cost per patient. He points to two value-based strategies as examples of especially effective pathways for getting there:

  1. Employers can build and “curate” medical service provider networks that leverage all available delivery channels to ensure that care is being provided appropriately and affordably.
  1. Employers can add value-based contracting to traditional fee-for-service reimbursement arrangements, which requires providers to focus on outcomes and not just cost.

Three trends make pursuing these strategies appealing:

Consolidation among health care providers. Consolidation typically results in higher prices because it eliminates competition. However, consolidation among health care providers creates the potential of upside economic advantage for all parties. That’s because larger providers can leverage capital expenses over a larger community while patients and their sponsoring employers benefit from care being delivered in optimal venues.

Physician shortage opens up new channels for delivery. A shortage of primary care physicians is being mitigated in several ways. These include telemedicine, smartphone-based health applications – which can enable remote monitoring of chronic conditions, among other activities – and empowering other health care professionals to assume some of the activities that have been reserved for physicians.

Health reform shifting focus to outcomes. By challenging providers to deliver more than a good price, the Patient Protection and Affordable Care Act has changed the way reimbursement works — forcing providers to manage quality, efficiency and outcomes in addition to cost.

In a recent article on this topic in IndustryWeek, Abbott wrote, “Consolidation of health care providers, the emergence of new channels for accessing health care, and the addition of payment systems that reward outcomes create the ability for employers to develop curated networks and integrate numerous payment models to achieve optimal value. These are strategies that all employers seeking quality at a lower cost should consider.”

To read the entire article, which goes into more detail on these opportunities for employer, visit

Cobb County in Georgia and the Alameda County Employees’ Retirement Association (ACERA) in California are public retirement systems that sought new ways to provide affordable, comprehensive health plans for their retirees in the face of high costs and growing concerns over the long-term liability of offering the benefit. Both turned to Towers Watson’s OneExchange for a Medicare solution.

OneExchange helped in several ways, including by offering a wide variety of plan options, providing one-on-one enrollment support to retirees, and delivering a suite of communication tools to educate retirees.

In fact, well-thought-out plans for communicating to retirees were a common theme in the success of both organizations. Communications are a key success factor for all employers transitioning retirees to a private Medicare exchange, regardless of whether they are public sector organizations or private companies.

Among the best practices for communications cited by the two counties include:

  • Educate staff. Medicare exchanges offer individual Medicare supplemental and Medicare Advantage plans, and most retirees are used to traditional group health plans. Staff must be equipped to help retirees understand the differences and what it means to them.
  • Prepare retirees. In addition to getting information on how the Medicare plans offered will change, retirees need specifics on how to enroll, where they can get help with decision-making and the timeline for the transition.
  • Allow plenty of time. Retirees might be geographically dispersed and some might not use email. Because most communication will go through regular mail, employers need to leave enough time in their transition plan to ensure that everyone is ready by the start of the enrollment period.
  • Leverage existing tools. Existing communications formats such as company newsletters or customized mailers have the added benefit of being familiar to retirees.

Although these suggestions are broadly applicable, it also is important to develop communication strategies that take into account the specific attributes of the region, industry, and organization.

To learn more about Cobb County and ACERA’s private Medicare exchange transitions, see the case study in Governing magazine.

According to the latest numbers from the Social Security Administration, 10,000 people in America are enrolling in Medicare every day. With more than 76 million baby boomers, this surge in enrollment likely will continue for the next 15 years.

Called the silver tsunami by some analysts, the aging of America is a cause of potential concern for Medicare, as it must be ready to accommodate the increased numbers in the program. But for employers who sponsor health insurance for their employees and retirees, it’s a reminder of an opportunity. Transitioning Medicare-eligible retirees to individual Medigap or Medicare Advantage plans is a strategy for keeping growth in the cost of providing health benefits down.

Employers have several options for making this transition. After their employees or retirees sign up for basic Medicare, employers can facilitate access to Medicare supplemental plans either through a private exchange or directly to health insurers that offer these plans. Either way, purchases of supplemental plans can be subsidized by employers through tax-advantaged health savings accounts.

Happy 50th Birthday, Medicare

September 7, 2015

On July 30, 2015, Medicare turned 50. In 1965, before Medicare was passed, nearly half of the elderly in the United States lacked health insurance. Today, just 2% of people over the age of 65 are uninsured.

In fact, approximately 55 million Americans were covered by Medicare in fiscal year 2014 at a cost of $505 billion. That’s a lot of money — and there are those who worry that the high cost of Medicare cannot be sustained.

However, the 2015 report of Medicare’s trustees shows that Medicare costs have levelled off, attributable at least in part to the passage of health care reform, suggesting those fears are unfounded.

One sign of Medicare’s sustainability is that spending has seen slower growth than other forms of insurance. According to Kaiser Family Foundation data, the annual growth rate for total Medicare spending dropped from 9 percent (2000-2010) to 4.1 percent (2010-2014).

This growth has been lower than what was projected primarily because of changes in the health system brought about by health care reform. The changes include payment and delivery system reforms that emphasize coordinated care, especially for people with multiple chronic conditions, incentives that reduce the rate of hospital readmissions, and a slowdown in payments to hospitals and private Medicare plans.

In addition to slower growth in spending, the trustees’ report also indicated that Medicare’s solvency has greatly improved since passage of health care reform. Medicare’s Hospital Insurance trust fund, which is one of the two trust funds specifically allocated by the U.S. Treasury to fund Medicare, will have a surplus of about $2 billion in 2015. Trust fund surpluses are expected to continue for another 8 years, or until the year 2023 — and the fund will remain solvent (that is, able to pay 100 percent of the costs of the hospital insurance coverage that Medicare provides) through 2030.

That’s good news for Medicare-eligible retirees — and for their former employers who have sponsored their health care coverage.

For the full 2015 Medicare trustees’ report, click here.

Time Inc.’s Executive Vice President and Chief Human Resources Officer Greg Giangrande is the recipient of the 2015 Benefits Leadership in Health Care Award by Employee Benefit News (EBN). The annual award recognizes excellence in the employee benefits/human resources field.


Greg Giangrande, on embracing a workplace culture of wellness with OneExchange [video]

EBA noted that, following its June 2014 spinoff from the Time Warner media conglomerate and under his leadership Time Inc. implemented “bold new health and wellness programs” for about 5,000 U.S. employees and their eligible dependents.

In particular, Giangrande oversaw a six-month transition to Towers Watson’s OneExchange, which gave employees more choice of plans and carriers as well as new choices in voluntary benefits such as dental, legal services and identity theft protection. Moving to a defined contribution model, Time Inc. also offered employees new options in tax-advantaged health savings accounts

Said Giangrande, “The more you take an interest in helping employees, the more engaged they become with your company. And the higher the engagement level with the employer, the better productivity you get, the better discretionary effort you get, the better loyalty you get.”

According to Jim Foreman, managing director of Exchange Solutions, throughout the transition Giangrande had “a clear vision and passion for what he wanted to deliver, and it was well executed.”

For more information on the details of the transition and Time Inc.’s commitment to empowering its employees, read the entire article in EBA.

Erin Tatar, national leader of Towers Watson’s health management practice, believes that Employee Assistance Programs (EAPs) are chronically underutilized by employees, and given most employers’ goal of retaining their top talent, that can be a problem.

In a recent interview with Human Resource Executive, Tatar said, “In this talent market, especially for knowledge workers, the cost of one high performer walking out the door is enormous… and so many people report stress as the reason that they are leaving their job.”

According to a 2013-2014 study jointly sponsored by Towers Watson and the National Business Group on Health, just 5% of employees reported making use of EAP services for stress. In fact, when employees were asked where they go for help managing stress, “employer-provided EAP wasn’t even in the top 5 of the list,” said Tatar.

Tatar notes that obstacles to using EAP services include stigma associated with seeking help with mental health issues, as well as fear of repercussions for missing work. However, employers, and specifically, Human Resource professionals, can help employees by identifying the sources of stress for employees, developing an action plan, embracing technology, and adequately communicating the program so employees are aware of what it offers. While these changes are not unique to EAP, this area of benefits has the most to gain from them.

Looking ahead, Tatar says there are three areas poised to improve the use of EAP services:

  • Digital/mobile access. Anytime, anywhere access to services reduces barriers, and addresses privacy and security concerns, allowing employees to “opt in” to reporting their issues.
  • Telemedicine: Telemedicine is increasingly being used by employers to help their employees address behavioral health issues. In many cases, it is more cost effective for employers, and for employees, reduces the stigma and increases convenience.
  • Wellness/wellbeing programs: With stress as the #1 lifestyle risk globally, wellness and wellbeing programs are becoming part of the broader employee value proposition (EVP). Many employers are redefining wellness to encompasses emotional — not just physical — wellbeing.

To see the entire article in Human Resource Executive, click here.

Sherri Bockhorst, who most recently led the launch of the private exchange solution offered by Buck Consultants at Xerox, has rejoined Towers Watson as a managing director of the company’s Group Exchange business. Bockhorst worked at Towers Watson from 2001 to 2010.

Jim Foreman, managing director of Towers Watson’s Exchange Solutions business segment, said of Bockhorst, “From her long experience in the industry, she brings deep knowledge and expertise in employee benefit strategy, health care delivery and consumer engagement. She’s been a leader in the development of the exchange industry and will help us continue to expand the success of our exchange solutions for active employees.”

Click here for the full press release announcing her appointment.

Though the phrase “doc fix” was making headlines, many people are unfamiliar with other significant provisions of the legislation passed on April 16, 2015 — also known as the Medicare Access and CHIP Reauthorization Act (MACRA). The “doc fix” portion of the Act repealed the previous Medicare physician payment formula and replaced it with a new one focused on quality and value — but it did much more than that.

John Barkett, director of health policy affairs for exchange solutions at Towers Watson, recently wrote a detailed explanation for Employee Benefit News about why there is so much more to MACRA than what dominated the news. According to Barkett, MACRA touches on 29 different sections of Medicare law, making it the 15th broadest law passed since the creation of Medicare. Here are a few examples of what makes MACRA noteworthy beyond the doc fix:

  • It introduced the Merit-based Incentive Payment System (MIPS) to grade physicians on the quality of their care, reward them for improving patient outcomes, and penalize them if they don’t.
  • It rewarded doctors for caring for the chronically ill by introducing alternative payment models that better reward doctors providing that service.

To read Barkett’s full breakdown of MACRA’s benefits published June 29, 2015, click here.

On June 25th, the Supreme Court handed down a much-anticipated decision on the King v. Burwell case. The case, which concerned the status of subsidies for individuals purchasing plans under the Patient Protection and Affordable Care Act (ACA), would either reaffirm subsidies for plans on the federal exchange or eliminate them. The case was based on a small quirk in the language of the ACA, but was poised to undermine the entire Act if the Court had voted in favor of the plaintiffs.

The historic 6-3 decision in favor of allowing subsidies on both state and federal exchanges ensured that a key provision of the ACA — one that is largely responsible for the gains in insuring the uninsured — remains in place.

John Barkett, Director of Policy Affairs for Towers Watson’s Exchange Solutions, explained the impact of the ruling in a recent article for Managed Healthcare Magazine.

First, according to John, with subsidies allowed for purchases on both federally and state-run exchanges, all exchanges will continue to operate as they have over the past two years. Second, over time more states that have established their own exchanges will likely transition to the federally run exchange. (As prior evidence of this trend, Oregon, Nevada, and Hawaii all transitioned to the federal exchange in the last year.)

Conversely, had the Supreme Court ruled for the plaintiffs, an estimated 6.4 million people would have lost their tax credits and seen their monthly premiums increase an average of $263 per month, causing many individuals to no longer afford coverage and drop out. Healthy people in particular would likely drop coverage, leaving a larger percentage of sick people in the risk pool. These cascading effects could have effectively undermined the ACA.

The ruling, said Barkett, also is notable for what it won’t do. “The ruling won’t disrupt the individual insurance market. It won’t force millions of people off their plans. It won’t deprive managed care organizations of millions of customers. The Affordable Care Act is here to stay. Healthcare providers and purchasers should focus on how they can best leverage the ACA in their business strategies.”

Telemedicine is gaining ground, as more people get used to the idea of receiving health care via video or phone.

For employers, the main appeal of telemedicine is that it can reduce the time employees miss from work driving to and from appointments and sitting in doctors’ offices. But telemedicine consultations also can save money because they replace expensive emergency and urgent care visits. And, for employees in rural or remote areas, telemedicine enables employers to give them access to specialists and other care providers that might not be available to them in any other way.

However, legislative and legal hurdles exist that must be overcome before telemedicine can become commonplace.

For a recent article on the Society for Human Resource Management (SHRM) website, Dr. Allan Khoury, senior consultant at Towers Watson, explained these hurdles. Central among them is the problem of interstate licensure. Physicians currently must be licensed in each state where they practice and many states require that physicians be licensed in states where they provide telemedicine as well. This licensing issue would make telemedicine consultations impossible except when the physician and the patient are in the same state.

Another barrier is that some states require that an in-person visit precede telemedicine consultations. This defeats the purpose of telemedicine as a means to treat people who cannot get to a doctor’s office that would provide the care they need.

Telemedicine also raises questions about privacy and security law setting because of the sensitive nature of the personal health data generated, transmitted and stored.

Despite these issues, according Towers Watson research, 36% of employers already offer telemedicine as a part of health benefits; by 2017, that number could grow to two thirds.

As Dr. Khoury explains, “Telemedicine is a great triage service, has low costs and is an employee-pleaser.”

To read the complete article, click here.


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