Benefits Management Must Transition To Benefits Optimization

Like the seasons, job descriptions change over time. In a June 4, 2014 article, totaljobs highlighted specific jobs and industries that have seen their respective roles and duties change over the years. From teachers to the music industry, certain jobs and industries have been forced to adapt (for good or bad) over time to keep up with trends and demands. The role of the Benefits Manager is no different. So, what is the role of the Benefits Manager you ask? According to the Bureau of Labor Statistics, duties of a Benefits Manager include, but are not limited to:

• Choose and manage outside parties, such as benefits vendors, insurance brokers, and investment managers.
• Oversee the distribution of pay and benefits information to the organization's employees.
• Prepare a program budget and keep operations within the budget.

The description appears pretty straight-forward; manage the day-to-day benefits programs, keep employees happy, and stay within the budget. However, as healthcare costs continue to wreak havoc on the employer landscape, Benefits Managers find themselves managing a financial storm. By keeping the focus on benefits management, this financial storm continues to grow. If we're going to stand a chance at winning the battle with the healthcare beast the role of the Benefits Manager must transition to benefits optimization.

So, why do Benefits Managers continue finding themselves managing a growing financial mess? For the answer, look no further than the first bullet point above. One of the main duties of a Benefits Manager is choosing and managing outside parties which include brokers and insurance companies. In reality, one is hired to manage the other as Benefits Managers often lean on the broker to manage the insurance company supply chain. This makes sense, however, there are several reasons why this can present a problem.

First, misaligned incentives permeate the health insurance industry where bonus programs and carrier "overrides" often outweigh finding the best solution. I've heard stories of brokers who were chastised by leadership for trying to move a client to a higher-performing plan administrator because they were placing the firm's bonus "at risk". One long-standing tradition of the Benefits Manager/Broker relationship enabling this behavior is the coordination of a process known as the RFP. By definition, the RFP stands for "Request For Proposal" and is used to vet insurance companies and other benefits vendors. However, for most employers, it's nothing more than "Really Fricken' Pointless" as insurance companies and vendors are often chosen based on the aforementioned bonuses and overrides and the Benefits Manager leaves satisfied after the broker provides industry benchmarks indicating that the Benefits Manager's under-performing health plan is running "less poorly" than other under-performing health plans. At the end of the day, the RFP allows an employer to feel like it's checked the due-diligence box for the benefits year but does nothing to enhance the quality of the health plan.

Second, the focus of many Benefits Managers continues to be on the health insurance companies supplying the plan coverage which only contributes to this growing financial storm. Let's think about the health benefit most employers provide to the workforce today. Is it really a benefit after all? At one time, the health plan did what it was supposed to do. It helped protect the consumer from a catastrophic loss that would inevitably lead to financial ruin for the consumer. However, that's no longer the case as medical bills continue to be the leading cause of personal bankruptcies in America. To make matters worse, most employees are provided with a health plan that requires them to self-navigate a healthcare system where misdiagnosis and over-treatment seem to be more prevalent than successful outcomes. Not only are costs out of control, the experience sucks! The only thing getting managed is employee stress and frustration. By performing to the job duties listed above, Benefits Managers aren't addressing the real problem allowing stress, frustration, and insurance costs to continue growing.

Third, there are no rewards for the Benefits Manager who is able to effectively reduce health insurance costs so why do it?. How many employers monetarily reward their Benefits Managers when cost reductions are achieved? When I pose this question to an audience of employers, nary a hand goes up. In fact, there are employers out there who reward decreased health insurance costs by reducing the budget they provide to their Benefits Managers. Really?!? When you see this behavior, it becomes pretty clear why our country's health insurance crisis continues to grow. Employers continue trying to win this battle using the same "best practice" strategies that got us in this mess in the first place and continue hiring brokers who are willing to comply with the organization's ill-fated benefit philosophies. As Jim Rohn said, "For things to change, you need to change." Employers must be the driving force of change and the Benefits Managers hired to implement strategy must change the way they think about the health plan. Folks, the insurance companies aren't changing any time soon. They require profit and they're using your health plan as a means to generate a large amount of it. Change will only occur when benefits management transitions to benefits optimization.

Benefits optimization occurs when we shift the focus from managing the insurance companies to managing the healthcare suppliers. Hands down, the decisions employees make inside the healthcare system drive health insurance costs. Benefits Managers must focus their attention on the employee interaction with the healthcare system if they want to make cost containment a reality.

Effective healthcare supply-chain management starts with value-based primary care. Today, the vast majority of the workforce gets access to primary care (if they're accessing it all) through the standard fee-for-service world where long waits and short visits often promote "doing more" to the patient instead of creating better outcomes. Value-based care brings primary care back to its roots. There was a time when primary care was more about the relationship than the transaction. Value-based primary care re-establishes a true relationship between physician and patient leading to more accurate diagnosis and more effective treatment plans.

Next Benefits Managers must focus their efforts on the musculoskeletal (MSK) conditions inside the health plan. It is here where unnecessary and ineffective treatments and procedures send health insurance costs into the stratosphere. A 2009 Good Housekeeping article revealed that 5% of the 56 million Americans suffering from back pain require surgery. Yet, our healthcare system spends more than $86 billion a year (2009 statistics) treating back conditions. Remember this. Surgeons get paid to perform surgery and your health plan has become a great source of revenue for the alarming number of surgeries performed in the United States ever year. Today, MSK claims make up a large chunk of an employer's healthcare spending. True optimization requires Benefits Managers to develop health plans that grant access to 2nd opinions and centers of excellence leading to reduced healthcare "waste" and better outcomes for the workforce.

Last but certainly not least, an optimized health plan requires Benefits Managers to rethink the way prescription drugs are administered inside the health plan. Traditionally, the pharmacy benefits manager (PBM) has been relied upon to handle all things related to drugs. However, the fox guarding the hen house is only getting fatter and pharmacy claims continue to skyrocket. Benefits Managers must focus on how and where employees purchase their medications. It's makes sense to have the PBM handle all pharmacy claims, from generics to specialty drugs, but this strategy has also contributed to the unfathomable rise in pharmacy costs. It's not about eliminating medications from the health plan. It's about helping employees access prescriptions from different channels where costs can be reduced by 50% or more and there are PBMs who do this effectively. Remember, the goal is effective supply-chain management.

These are but a few of the shifts that must occur for Benefits Managers to successfully transition to Benefits Optimizers. Is it hard work? Absolutely. However, optimization is worthwhile and attainable when employers begin rewarding the Benefit Optimizer who is able to eliminate financial waste from the health plan. Instead of shifting unused budget dollars to other departments, employers must provide the Benefits Optimizer with a pay raise and additional resources so he/she can continue reducing unnecessary spending from the health plan. Much like social media has replaced the typewriter in the field of journalism, healthcare supply-chain management must replace the traditional strategies in the field of benefits management. When the healthcare supply chain is effectively managed, the health plan becomes a benefit, employees become raving fans, and Benefits Managers become Benefit Optimizers.