HR Policy Association’s new CHRO Guide to Leveraging Health Care Price Transparency includes practical steps and tools for CHROs and their teams to take full advantage of recent health care transparency changes to lower their health care spend while maintaining high-quality benefits for employees.
Why it matters: After payroll, health care is the second largest expense for most employers and annual health care cost increases of 5-20% have become the norm. While the opaque pricing nature of our health care system complicates efforts, lowering costs is not a lost cause for employers. Recent legislative and regulatory efforts that shine a light on health care prices provide ample opportunity for employers to improve their bottom line and the benefits their employees receive.
Increased fiduciary risk: As fiduciaries, employers must make sure they are paying fair prices for the health care services provided to employees. With increased transparency around prices, employers will see greater scrutiny of their health and welfare plans, as demonstrated by recent lawsuits.
The guide recommends four steps to take advantage of increased transparency:
- Establish a separate formal health and welfare benefits committee. Many companies have a benefits committee which oversees both retirement and health and welfare benefits. A risk of having a combined committee is that typically, most of the time is spent on retirement plans. While this was generally okay in the past when health and welfare benefits did not face fiduciary scrutiny, as more benefits lawsuits crop up, this is no longer the case.
- Amend contracts with vendors to make them contractually responsible for compliance with federal rules and law. The guide also provides sample contract language, with input from the Health Transformation Alliance (HTA).
- Use transparency data to better negotiate contracts. The increased availability of hospital price data gives employers an opportunity to compare prices across plans, services, hospitals, and Medicare. Analyzing claims data also provides years of pricing data and, when combined with current pricing data, allows employers to more accurately predict future spending.
- Promote health literacy among employees. Adults with low health literacy have four times higher health care costs and 6% more hospital stays than those with proficient health literacy. Ensure your communications surrounding health benefits are easy to understand and provided via multiple avenues (website, text, email, etc.) and that you take advantage of any concierge benefits/health navigators that can help employees make smarter decisions regarding where they receive care.
Read our full CHRO Guide to Leveraging Health Care Price Transparency here.
