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Employers save more than 40 percent of healthcare cost

When the appropriate time and effort have been invested, these exceptional results have been achieved by employers

It requires time effort, expertise and a commitment of 4 to 5 years to achieve these exceptional results. Partnering with CareMoat is the best way to achieve these exceptional results without investing in additional resources and taking away from managements focus on the business.

CareMoat works with our employer partner to aggressively implement the below listed best practices over a four-year period achieving above the average result of the best performing employers.

CareMoat: We take care – You take control.


Willis Towers Watson's 23rd Annual Best Practices in Health Care Employer Survey found that companies that use best-in-class health care benefit strategies will annually spend $3,548 less per employee on health care compared with other companies. the average annual [plan] premium for employer-based family coverage was $19,616, and for single coverage, premiums were $6,896, according to the National Conference of State Legislatures.

$3,548 / $19,616 = 18% savings on average for employers who make the effort.


Five practices of best-performing companies:

1. Ensure quality of care through value-based designs.

Best performers tie doctor and hospital payments to evidence-based, high-quality patient outcomes. "This model aligns the patient's and provider's incentives toward efficient and effective care, preventing reoccurrence of illness and reducing complications, or—when treatment is needed—getting the patient the right care and the right site of service, sooner,"

In addition, 17 percent of best performers use bundled-payment approaches in their medical plans. Bundled payments are a form of contracting that combines pre- and post-procedural care into one negotiated price that can deliver savings and simplify billing for organizations and employees.

2. Emphasize pharmacy strategies to cut overall costs.

As pharmacy benefit costs continue to climb, employers are finding ways to decrease drug expenses, such as more closely evaluating their spending on expensive specialty drugs, such as biologics that are injected or infused. Employers are encouraging the use of biosimilars as lower-cost, clinically effective options. To curb the cost of specialty drugs, 37 percent of best performers are changing their coverage to steer care away from hospitals and toward a doctor's office (or, if practical, self-administered at home).

3. Offer integrated well-being programs.

As Generation Z enters the workforce and Millennials continue to advance in their careers, workers are seeking employers that encourage a healthy physical, emotional, social and financial lifestyle. For example, programs that help employees meet their short- and long-term financial goals and support a healthy, physically active lifestyle can help employees be more productive and engaged at work.

Forty-eight percent of best performers offer holistic well-being programs.

4. Empower employees to make informed benefit decisions.

Best performers identify what the workforce needs and understand that each employee has a unique health care journey. By offering meaningful choice with a variety of benefit options, employees can personalize their benefit selection. To meet the varied needs of employees, best performers offer tools that support personalized enrollment decisions (59 percent).

5. Mine workforce data to ensure health care strategies work.

Best performers know how to evaluate their programs to improve future benefits: 53 percent of best-performing companies are using data to analyze benefit results. For instance, they may conduct multiyear evaluations of claims data and employee feedback to see if their initiatives improved employees' health and well-being.


"As a company's health care program becomes an increasingly integral component of its culture, the need for C-suite support is paramount," Stone said. "Many employers have already adopted bits and pieces of these best practices, but to compete and succeed, top executives must design a vision for how their company—and its health care and benefit strategy—will evolve for the future."

[SHRM members-only toolkit: Managing Health Care Costs]


A recent report from the International Foundation of Employee Benefit Plans (IFEBP), an association of benefit plan sponsors, examined the prevalence of U.S. employers' cost-management techniques. Per this report techniques best in class employers are using to control rising health care costs are:

1. Case management services to identify barriers that may prevent people from getting the best care (used by 71 percent of respondents).

2. Nurse advice lines that provide a 24-hour resource for employees to get answers to their health-related questions (68 percent).

3. Prior authorization requirements to determine if a treatment is medically necessary (65 percent).

4. Health care claims utilization analysis to pinpoint the top health concerns of the workforce and address those concerns (61 percent).

5. Telemedicine, which allows health care professionals to evaluate, diagnose and treat patients online or over the phone (63 percent).

Other common techniques included dependent eligibility audits (43 percent), four coverage tiers (40 percent), price transparency/comparison tools (38 percent), health care claims audits (37 percent) and health care consumer education (36 percent).


  • The ultimate savings and improvements in health plans is when the employer takes full control and established a self-funded plan.

A recent Hub report, The Employee Benefits Cost Management Challenge: Proven Strategies to Spend Less and Become More Competitive, recommends five cost-saving strategies specifically for self-funded plans which can further reduce an employer's health care spending by 4 percent to 10 percent annually, Hub found.


1. Self-fund and take control. Self-funding increases an employer's financial control, plan design flexibility and plan management options. Once strictly a big-business strategy, self-funding is now seen as an option for companies with as few as 10 employees

2. Join a stop-loss captive to reduce risk. Employers that self-fund health care costs typically buy stop-loss coverage to insure against extremely large claims. Instead of traditional stop-loss coverage, employers can join together in a group medical stop-loss captive, which allows each participating employer to maintain its own self-funded health benefits plan separate from that of the other member employers. More employers with 50 to 300 employees are looking for risk-sharing arrangements such as stop-loss captives, Hub noted.

3. Carve out a drug plan from medical insurance and re-evaluate pharmacy benefits every year. Putting a contract out to bid for pharmacy benefits can secure better terms—especially for costly specialty drugs.

4. Cap costs with reference-based pricing. Some routine health care services have widely different prices depending on the provider. Capping reimbursement at a percentage above Medicare's standard pricing, known as reference-based pricing, can encourage employees to avoid doctors and facilities that charge above-average prices for nonemergency services.

5. Offer clinical care management for chronic illnesses. Chronic conditions, such as diabetes, musculoskeletal pain and heart disease, continue to be the largest single contributor to employers' health care spending. Offering wellness programs reduces instances of chronic illnesses, while disease management programs can help employees control their conditions. Unmanaged diabetes, for instance, is responsible for 44 percent of kidney failure, Hub reported.

References / further research:

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