BENEFITS, ADMINISTRATION, OUTSOURCING, Rising, Cost, Healthcare

Benefits Administration Outsourcing

14 Oct 2008 | (Case Study)

For the better part of three decades, we’ve been caught in a perfect storm of rising healthcare costs. Many factors have contributed to this perfect storm, as large employers have witnessed significant annual increases in the costs of their healthcare programs – increases that often outpace growth rates in general inflation and in business revenues. Adding to the problem is the fact that employees have been largely insulated from the cost of their healthcare. Limited co-pays and fixed deductibles have often capped member exposure to rising costs.

For more than 30 years, managed care focused mostly on providers – managing how they delivered care and charged for their services. Over time, however, this system of building tight networks, "gatekeepers" and discounts has evolved into one of expanding networks to provide greater healthcare access. The result has been the elimination of gatekeepers in favor of "open access" physicians and undifferentiated discount levels among health plans. However, throughout these changes, participants have not been encouraged to actively manage their health and their personal lifestyles in order to promote good health. The good news is that the trend is definitely shifting, and innovative plans and technologies are beginning to focus on helping plan members manage their own health, with results that suggest the perfect storm of healthcare cost increases may be subsiding.

This change is due in no small measure to companies’ more aggressive use of benefits administration outsourcing – the contracting of specific business tasks to third-party service providers. Benefits outsourcing has enabled the following:

• HR departments to focus on high-value, strategic activities to engage participants in managing their own health
• Employees to access information and providers through integrated technology tools and convenient Web-portal access
• Providers and health plans to interface more effectively with participants and patients to ensure optimal care delivery
• The building of a central repository of eligibility and claims data by third parties that can help employers understand • chronic condition prevalence in their populations and design the best programs to support employee needs

This paper takes a broad look at the challenges employers face in managing their health benefits, which strategies are delivering results, and how technology and outsourcing can support effective ongoing program management.

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