Employers using various strategies to contain healthcare costs
Tiered networks, value-based formularies and direct contracting with providers were correlated with lower costs.
Photo: katleho Seisa/Getty Images
While premiums for employer-sponsored health insurance continue to rise each year, employers who have been engaged in novel strategies – such as value-based drug formularies and tiered provider networks based on price and quality – experienced lower-than-average healthcare costs, finds a new survey from the National Alliance of Healthcare Purchaser Coalitions.
The Pulse of the Purchaser study gauged concerns and approaches of employers to address the workforce environment, women's health, obesity management, mental health, equity, pharmaceutical drug and hospital prices, high-cost claims, fiduciary strategies and potential health reforms.
The study uncovered a number of strategies that were correlated to lower costs. For example, employers who use a value-based formulary as opposed to a rebate-driven formulary are nearly three times more likely to have lower spending than average.
Employers who drive patients to higher-quality and lower-cost providers through tiered networks are twice as likely to experience lower costs, the survey found. And employers who eliminate the middleman by direct contracting with providers are 50% more likely to experience lower-than-average costs.
WHAT'S THE IMPACT
The online poll of 188 employers, each a member of coalitions affiliated with the National Alliance, was conducted in September and October, with organizations representing manufacturing, educational services, public administration, finance and insurance, and healthcare and social assistance institutions.
The percentage of employers strongly agreeing that rising healthcare costs impact their ability to compete has steadily increased each year from 35% in 2022 to 48% in 2024.
Consistent with surveys over the last four years, more than 8 out of 10 employers consider drug prices, high-cost claims and hospital prices to be the biggest threats to affordability, with almost 100% noting drug prices as a significant threat.
The survey found that employers are increasingly supportive of policy reforms that can improve transparency and fair pricing, with almost 90% saying PBM reforms would be very or somewhat helpful, while 87% support hospital price transparency.
More than half of employers (52%) are considering changing their pharmacy benefit manager in the next one to three years, while 48% indicated they are not planning to change. The fastest-growing PBM strategies include confirming transparent revenue disclosure (61% considering), comprehensive rebate definition (58% considering) and flexibility to customize formulary (50% considering).
While 46% of employers said they cover branded GLP-1s for obesity management, only 21% are considering coverage in the next one to three years. Of the two-thirds of employers that are currently or considering coverage of GLP-1s, most are looking for strategies to mitigate their costs, such as limiting access to specific populations (91%) and tying access to beneficiary lifestyle change (86%).
Meanwhile, women's health benefits are broadening beyond coverage for reproductive and fertility care to include menopause (up 14%) and mental health support, with 44% currently offering coverage and 40% considering doing so. For mental health, 48% of employers have established vendor accountability metrics.
When addressing health equity, 40% are focused on analyzing health claims and outcomes data by gender (40%) and location (37%), with a growing number considering including income levels (41%) and race/ethnicity (40%) over the next one to three years.
THE LARGER TREND
A September Mercer survey found total health benefit cost per employee is expected to rise 5.8% on average in 2025, even after accounting for planned cost-reduction measures.
Smaller employers (those with 50-499 employees), which typically have fully insured health plans, have been hit the hardest. They reported that cost would rise by about 9% on average if they took no action.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
