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CCH® BENEFITS — 08/25/11

Health Care Organizations Expect Health Care Reform Measures To Boost Costs, Access, And Care Quality

from Spencer’s Benefits Reports: Most health care organizations expect health care reform to boost costs significantly, while increasing access to care and improving quality through a renewed focus on organizational effectiveness, according to a new survey of more than 200 health care professionals.

In Buck Consultants’ Health Care Organizations Health Care Reform Readiness Survey, many health care organizations anticipate that patients will benefit the most from the Patient Protection and Affordable Care Act (ACA), while employer health plans and the hospital system itself will experience challenges (70% of respondents indicated that these groups will be worse off). Respondents were evenly split on whether or not patients will be better off under the ACA–44% said yes and 45% said no. But most (60%) think that the nation will be worse off with the ACA, and 72% think it will adversely affect employer health plans.

The majority of survey respondents (75%) believe health care costs will rise as a result of the ACA, with 43% expecting a significant increase. To offset increased costs in their own plans, more than 90% of respondents anticipate passing some or all of these additional costs on to their employees through higher employee contributions or reduced coverage. Some employers (48%) plan to facilitate improvements in employee health by increasing their wellness initiatives. Virtually none of the respondents expect to reduce wellness programs.

As other surveys have shown, most employers (57%) remain committed to retaining their employees' health plans, with 46% of these indicating dropping their employee health benefits would make their company uncompetitive in hiring and retaining workers. However, 28% of the Buck survey respondents said they would consider eliminating health care benefits because of the ACA.

More than half (57%) of the respondents lost grandfathered status for some or all plans in 2011, primarily (65%) due to plan design changes implemented with plan savings exceeding the additional cost of complying with the health care reform requirements. “This is consistent with broader employer actions, and we anticipate that nearly all employer plans will lose grandfathering by 2014,” Buck noted.

Some three-fourths of respondents also thought that the requirement to extend dependent coverage to employees’ young adult children up to age 26 will increase plan costs, but only 30% raised the contribution levels for dependents, and even fewer changed the number of contribution tiers. More than half (55%) of respondents have either conducted a dependent eligibility audit or are planning one. Furthermore, more than two-thirds of employers who offer dental and vision coverage also extended eligibility for those benefits to dependents up to age 26. As a result of this requirement, the largest proportion of respondents (41%) reported young adult enrollment rose by 1% to 2%. Another 17% reported no increase.

About one-third (34%) of the respondents did not know what the effect the tax on “Cadillac” (expensive) plans will have on their health plans, 23% said it would have no effect, and 20% said their plans would be affected and that they likely would cut benefits in response.

Organizational Changes

Most respondents indicated that the ACA will likely prompt them to make organizational changes, create new management and leadership initiatives, and focus on efficiency and quality efforts.

“Health care employers especially should be on the forefront of this changing health care delivery market to reinforce new and emerging strategies and manage costs,” said Sheryl Grey, a principal with Buck Consultants. “Implementing plan changes aligned with quality and wellness initiatives, and the use of telemedicine, social media and smart phones allow employers to improve care.”

Health care organizations will probably adapt to the ACA within the next three years by taking the following initiatives::

• Assessing information technology requirements (82%);
• Structuring quality measures with their physicians (69%);
• Developing an integrated care network (60%); and
• Developing medical home services (41%);

Respondents expect these business changes to increase the efficiency and quality of care. Two-thirds (66%) of survey respondents believe that the ACA will boost access to care by some extent. Health care organizations are either currently implementing or planning to implement additional changes to improve care within the next three years:

• Increasing focus on cooperation and collaboration on patient care (84%);
• Taking steps to reduce patient readmissions (74%);
• Using electronic health records (85%);
• Using evidence-based or predictive-modeling technology tools (66%); and
• Creating an accountable care organization (43%).

A clear majority of the organizations surveyed believe that the quality of health care over the next five years will improve or stay the same, and many are implementing these changes to ensure that efficiency is increased and that the overall quality of care improves within their own health care system, Buck reported.

For more information, visit http://www.buckconsultants.com.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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