Chronic conditions such as cancer are increasingly managed as long-term care due to medical advances. Employers persistently face higher annual claims from metastatic colon or breast cancer. At the same time, extreme cases of neonatal intensive care unit (NICU) admissions have seen costs surge, escalating liabilities for employer health plans.
According to Christine Hale, chief medical officer, US Benefits at Gallagher, "Relying solely on your administrator and pharmacy benefits manager (PBM) to manage costs is no longer sufficient to address rising claims. Employers need deep, data-driven insights and concrete action steps to address a variety of clinical and cost levers, make better risk financing decisions, and avoid unpleasant surprises."
While treatments such as GLP 1s and emerging gene therapies promise life changing outcomes, specialty drugs and hospital markups add another layer of pressure. Additionally, as provider inflation accelerates, advanced technologies — including AI — are used to maximize coding accuracy and identify and reduce waste. However, advanced technologies have cost implications too.
Stop-loss insurance is trying to tackle rising costs by using conditional lasering as a strategic tool, particularly for cases like congenital heart disease surgeries. Once considered a rare tactic, lasering is now a necessity for carriers facing unsustainable loss ratios.
As a result, employers are increasingly encountering situations where specific high-cost individuals are assigned higher deductibles or even excluded from coverage altogether.
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Relying solely on your administrator and PBM to manage costs is no longer sufficient to address rising claims. Employers need deep, data driven insights and concrete action steps to address a variety of clinical and cost levers, make better risk financing decisions, and avoid unpleasant surprises.
Christine Hale, chief medical officer, US Benefits, Gallagher.
Balancing budgets and wellbeing through data transparency
May is the golden window for shaping benefits strategy — during May, employers still have enough time to influence renewal outcomes, but also enough data from the first quarter to spot emerging trends. It's essential for employers to evaluate structural changes, such as site-of-care optimization and stop-loss vendor shifts, to ensure long term stability in benefits planning.
Proactive planning during this time requires more than reviewing funding options or actuarial models. It demands true data transparency in medical benefits, which is critical for effective cost management and renewal negotiations.
Jon Taylor, US chief growth officer, US Benefits at Gallagher, says: "The key is doing more work during the year to make the renewal less of an event. Employers need to create clear and easy paths for their employees to access the best providers, considering quality and cost to sustain a resilient and engaged workforce."
Have you considered these new levers for cost and care?
- Data warehouses can analyze claims, identify trends and categorize preventive care gaps by gender and age. These data-driven insights enable earlier screenings, lower acuity level and reduce overall costs.
- Predictive analytics help with forecasting claims and cost surges. This information can help leaders take actionable strategies to manage liabilities before they escalate.
- Collaborating with clinical analysts can close care gaps and provide recommendations of targeted vendor solutions for conditions like diabetes or musculoskeletal issues, thus reducing costs while improving employee engagement and retention.
Strategic cost management can be successful when paired with a commitment to employee wellbeing.
Employers who commit to early renewal planning, combining a detailed timeline approach with a continuous look at claims performance, will be best positioned to navigate rising costs.
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The key is doing more work during the year to make the renewal less of an event. Employers need to create clear and easy paths for their employees to access the best providers considering quality and cost to sustain a resilient and engaged workforce.
Jon Taylor, US chief growth officer, US Benefits, Gallagher.
| Recommendation |
Top takeaway |
| Shifting care to cost effective settings, such as at home or via centers of excellence, can generate substantial savings while simultaneously improving the member experience. |
You can offer care in a more affordable and convenient manner without depending on high cost hospital environments. |
| Employers can choose bundled payment options that make costs predictable and incentivize quality outcomes. |
Care given in centers of excellence under bundled arrangements offers reduced variability and improves transparency. |
| Ensuring access to high-quality providers outside of hospital settings requires careful network design. |
Proactively address care gaps to avoid uninterrupted treatments. Without this infrastructure, site of care optimization can look uneven or inaccessible. |
Actionable playbook: Top 3 priorities for employers
To stabilize benefits budgets and prepare for the future, employers can focus on three structural priorities to redefine and manage healthcare costs.
