With the increasing costs of health care in the US, what are the steps being taken by organisations to save these costs as regards their employees? Responding to this poser, Venkat Tadanki, CEO, Secova, US (http://bit.ly/F4TTadanki) – a player in the HRO (human resource outsourcing) space – discusses the long-term, short-term, and ongoing initiatives in organisations, during the course of a recent email interaction with Business Line .
Excerpts from the interview.
On the long-term initiatives.
These initiatives have focused on reducing health care costs through wellness programmes, implementing care/ case managers for high-risk groups or individuals and the design of plans that focus on rewarding healthier lifestyles. A review of the initiatives data thus far has proven beyond doubt that such programmes do help organisations reduce healthcare costs over time.
On the short-term initiatives.
Despite the long-term initiatives, planned to help contain costs over a longer time horizon, given the current state of economy, the impact of increased costs are being felt dramatically on a year-on-year basis. This has led organisations to focus on the near-term strategies like never before, with the objective of generating immediate savings.
Two very popular strategies undertaken today centre around: claims audits (ensuring that claims are being adjudicated and paid properly), and dependant eligibility audits (ensuring that each enrolled dependant meets the eligibility requirements).
Organisations are today able to identify and realise substantial and immediate savings (typically up to 8 per cent of their total annual costs in 6 months), by undertaking such audit programmes. It has been observed that organisations which initiated audit projects, have managed to realise savings of 4 to 15 per cent of their benefit costs.
On the regular initiatives.
Organisations are continuously looking at the impact of administrative costs incurred on communicating, supporting and managing health benefits for their participant population. These costs include internal costs to the employer for communicating plan information, supporting and enrolling employees, and managing all the surrounding data (payroll interfaces, carrier interfaces, premium billing and reconciliation, etc.) as well as compliance costs, which have been growing significantly.
The trend has been to try and push as much as possible to a ‘self-service’ mode, where the employee/ participant takes on more responsibility, thus helping the employer to reduce the costs of administration.
Clearly, such a direction requires organisations to find partners who can provide the complete solution, both by way of technology and people, so as to result in lowering the cost of delivering, while continuing to remain employee-friendly. The results are evident in the fact that HRO firms are continuing to grow at a much higher rate than the economy at large.
