Prognosis: Negative

Rising health-care premiums have companies shifting costs, pushing "wellness," and punishing unhealthy behavior.

It has become increasingly common, for instance, for employers to conduct an eligibility audit to make sure that everyone who is carried is actually entitled to coverage. Companies generally alert employees about six months ahead of time so that they can track down any documentation they might need to stay enrolled. By updating that information, companies may find family members who have divorced, dependents who exceed the age requirements for full-time-student status, or domestic partners who have no paperwork to back up their claim of a civil union. “People bend the rules,” says Edward Kaplan, national health practice leader at The Segal Co. In this climate, more companies are bending them back.

Kaplan says that a number of his clients also conduct claims audits every year, making sure that the insurer is requiring the right co-pays and deductibles, for instance, and checking for any administrative errors. “It’s usually not fraud, just computer or implementation mix-ups,” Kaplan notes. As for serious medical errors — avoidable mistakes that should not happen, otherwise known as “never events” — they can now become the hospital’s financial burden, rather than costing patients and their insurers. As of October, Medicare identified eight such events (such as wrong-side surgeries) for which it would no longer provide reimbursement.

Within the plan itself, employers can tease out savings by tinkering with areas that don’t affect most employees — raising the ER co-pay from $25 to $50, for instance, or doubling the out-of-pocket maximum (which affects only those who have catastrophic claims) to $5,000. In consultation with their pharmacy benefit managers, companies may also want to push employees to substitute generics for brand-name drugs. The generic version of stomach-soothing Protonix, for example, has recently hit the market and costs about one-fifth as much as the name brand.

Most companies will settle for whatever “innovation around the edges” they can apply to cut health-care costs, according to Kaplan. Others go to extremes, setting up their own health-care facilities (see “Sites for Sore Eyes” at the end of this article). Ripperger says he is no longer surprised when an executive suggests that employees who don’t see fit to get fit — as the company defines it — simply pay for their own health insurance. “They’ve reached a point where they feel they are not getting through to their employees and all they want to say is, ‘Do this, or you will pay,’” says Ripperger. “These are people who are frustrated by the whole situation.”

There is plenty of frustration to go around, of course, as employees come to regard the constant increase in their contributions, combined with scaled-back services and other measures, as tantamount to a pay cut, and in some cases one that leaves their health or bank accounts vulnerable to catastrophe. It’s no wonder that the whole subject brings the temperatures of both employees and employers to a boil. If they need to cool down — hey, that’s what the gym is for.

Josh Hyatt is a contributing editor at CFO.

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