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 Today in HR: Why 2012 is an Excellent Year for Managing Benefit Costs (585 hits)
As a human resources professional, one of the biggest challenges you’ll face this year is managing your health benefits costs. Unfortunately, as you probably know, this is easier said than done.

Most indications suggest that 2012 will be a punishing year for benefits managers. Rising costs from PPACA (federal health care reform legislation) will take effect this year, combined with a weak economy that could impact your organization’s total rewards budget and also make your employees more sensitive to changes in their benefit costs.

Despite a dismal outlook for plan year 2012, you can expect at least one bright point – a rare opportunity to significantly decrease your organization’s pharmacy benefit costs.

Your checklist for benefits cost containment this year probably consists of the following:

  • Plan design changes – adjusting deductibles, coinsurance, and employee cost share


  • Implementing or expanding Wellness & Disease Management


  • Implementing or expanding CDHP and High Deductible Plans


  • Re-negotiating or rebidding your vendor contracts


  • Considering MCOs (Managed Care Organizations) or ACOs (Accountable Care Organizations)



Consider adding this to your agenda – it’s effective, easy to implement, and very inexpensive.

In 2012, the twenty-year patents for a majority of top-selling prescription drugs will expire, and will become available in generic form. As a result, your employees will now have the option to choose generics, saving money for themselves and your organization. Informing employees when generic alternatives become available will have an immediate impact on your bottom line.

Generic drugs are chemically identical to their brand-name counterparts, and are held to the same manufacturing and quality standards. There is no difference in effectiveness, but the cost of a generic drug can be a fraction of the brand drug. In fact, over 2/3 of prescriptions written are for generics. It’s the remaining 1/3 that is driving up your pharmacy benefit claims.

Chances are, your PBM already offers the tools you’ll need to educate your employee population on how to save money by using generic and formulary drugs.


These are some steps you’ll want to take as a benefits administrator:

1. Request that your PBM provide data to identify what portion of your claims activity is for expiring-patent drugs, such as Lipitor, Plavix, Actos, Symbicort, and Crestor. This information is easily available from your PBM.

2. Educate your employee population on the cost savings offered by your PBM’s mail order program for maintenance medications. In many cases, this can reduce the employee’s out of pocket cost up to 2/3 or more.

3. Use your company’s Intranet, newsletter, and social media channels to let your employees know when frequently-used medications are available as generics. Encourage your employees to ask their doctor for generics, when available. Reinforce that they are safe, reliable, and less expensive.

4. If your health vendor offers a disease management program, use it as a channel to reach employees with conditions such as hypertension, diabetes, and cardiovascular disease who are likely to use brand prescriptions.


These simple strategies can yield an immediate and noticeable difference in your prescription claims expenses, especially if you are self-insured.

In an environment where health & welfare plan expenses are continually on the rise, this is an easy opportunity to be a hero in your organization and create measurable savings in your annual benefit costs.


About Jonathan Carter

Jonathan Carter is a human resources professional specializing in health and welfare benefits plan administration in both public and private sector organizations. As a HR subject matter expert, Jonathan's publications focus on emerging issues in employee benefits such as health plan design, cost containment, benefits compliance, and healthcare industry trends. Jonathan also offers expertise in a wide range of topics in human capital management, including recruitment and retention, employment law, employee relations, SAP & PeopleSoft HRIS administration, and HR project management.

Posted By: Jonathan Carter
Monday, May 16th 2011 at 8:34PM

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