Tom's Take | April 25th, 2019

What can employers do to be part of the solution in addressing health care waste within their benefit plans?

Tom’s Take: It’s been reported that health care waste carries a price tag of $750 billion in the U.S. each year. That’s an outrageously expensive problem, isn’t it? And while employers who offer health plans across all industries seem to be aware of the issue, there’s not a lot being done to fix it.


Here’s proof: the National Alliance of Healthcare Purchasers Coalition and Benfield completed a widely publicized survey in 2018 and found that employers aren’t actively managing the waste issue. They reported that 59% of business leaders aren’t collecting or analyzing data related to waste while 57% felt that a quarter or more of the treatments their members and dependents receive are wasteful.


So that brings us back to the original question of what employers can be doing to address waste within their own health plans.


For starters, tracking is a must. Where is the waste coming from and how much is occurring? Is it a result of things like unnecessary imaging/lab tests, name-brand prescriptions vs. generics, etc.? In a self-funded plan, vendor partners can be extremely helpful with this tracking effort. Consider collaborating with Centers of Excellence or other highly regarded vendors who will be proactive about sharing data related to waste and implementing measures to avoid it.


Another consideration is health claim review. We talk a lot here on the blog about how critical it is to scrutinize claims for inflated charges, unnecessary services or fraudulent entries. All of these things contribute to health care waste, and many can be avoided by dedicating the appropriate resources to claims analysis.


On top of that, one of the reasons the reference-based pricing (RBP) and other alternative payment models are becoming so popular is because they set a fair price by procedure to help avoid the often-inflated costs of health care. This can be another helpful way for employers to have some control over reducing waste.


For as big of a problem as health care waste has become, there are many ways for employers to get involved in addressing it. Start by identifying where waste may be occurring within your own health plan and go from there to implement some tactics to help prevent it.


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