A new article in Employee Benefit News looks at the notion of employer “pay-or-play” provisions and examines what kinds of employer-sponsored benefits provide a return on investment. There continues to be some question whether certain programs sponsored by employers do in fact return value. Here is an excerpt from the article:
Health management programs are not without their critics. Research by the Centers for Medicare & Medicaid Services shows some health management programs don’t live up to their promises of reducing health care expenses.
“As an actuary, I run the formulas of disease management companies on large databases and understand why they can show an ROI increase in their formulas and what the flaws are within those formulas,” said Bruce Pyenson, a principal and consulting actuary with Milliman, a New York-based actuarial and consulting firm.
Pyenson pointed out that Americans are living longer, disability rates are lower and events associated with some chronic conditions are at an all-time low. “Americans are healthier than ever, despite the obesity epidemic,” Pyenson contended….Pyenson explained that the idea “you spend more money now in order to save more money later is an idea that does not work.”
Health care reform puts the spotlight on “some bad behaviors that employers have gotten into with benefit plans designs. Now is the time to sweep out some of that trash that accumulated over the years in benefits plans,” asserted Pyenson.
For example, employers can save money by dropping disease management and employee assistance programs, and value-based insurance designs. “It’s been proven that the stuff doesn’t work,” Pyenson said. Employers instead should aim for tighter formularies on prescription drugs benefits and challenge the commissions of brokers and consultants.
According to Pyenson, employers also can earn substantial dollar savings by moving to a limited network, tightening medical management, limiting out-of-network benefits or offering no out-of-network benefits.