Unraveling the Myth: Does Data Truly Drive Strategy?

As part of Hylant’s employee benefits insights webinar series, Hylant Cost Containment Practice Leader Andria Herr and Hylant Chief Operating Officer – Employee Benefits Mark Nixon explored how using data leads to better benefits decisions. Watch the recording for the full discussion, or read this blog post for a partial summary.

Watch the Webinar Recording

Data Analytics Critical for Strategic Decisions

It’s no exaggeration to say that the employee benefits space is drowning in available data, but few plan managers are tapping into the insight lurking within that data. It’s not a lack of talent and interest; rather, it’s a lack of time to churn through everything. Fortunately, consultants and agencies now offer access to data analytics platforms that can turn that deluge of data into understandable information and guidance.

The most effective data analytics use historical information to assess current performance and predict future activity, enabling plan sponsors to make strategic decisions confidently. They also track a program’s success and hold vendors accountable.

Key Elements to Study

While nearly all plans watch spending closely, understanding your program’s spend involves more than simply looking at the bottom line. For example, we focus on several key elements to help clients drive their health strategies, among them:

• Medical spend by diagnosis, usually over the long term, to determine what’s contributing to claims and what might be addressed in other ways.
• Pharmacy categories by paid amount offer insight into specialty medications and major categories such as diabetes medications.
• Pharmacy categories by volume call attention to increasingly frequent diagnoses.
• Adherence metrics explain whether members are using preventive care and medications effectively.
• Chronic condition prevalence highlights treatments that might suggest underlying issues, such as high musculoskeletal spending for employees handling specific tasks.

The GLP-1 Data: A Current Concern

Today’s most well-known medications may be the GLP-1s, including Ozempic, Wegovy and Mounjaro. Data from one employer showed that spending on these drugs was up 38%. The move to Ozempic has already increased the monthly spend on members with diabetes from around $700 to as much as $1,800. The prescription of GLP-1s for weight loss also deserves closer examination. Some suggest the benefits of weight loss on future medical claims merit paying today’s costs, but data to support that concept doesn’t exist yet.

A company’s data may present evidence of the importance of implementing (or enforcing) prior authorization requirements. It may also suggest other ways to support employee health at lower costs, such as switching members with diabetes to a larger pen that contains more doses at a similar cost.

Identifying Major Diagnosis Chapters

Examining healthcare spend across the major diagnosis chapters and comparing that to benchmarks can provide valuable insight. For example, a higher incidence of musculoskeletal surgeries may point to issues with how tasks are performed, or it might reflect a tendency to hire many former athletes whose bodies are worn out.

Review and Implement Strategies

Strategies related to major diagnosis chapters aren’t designed to target members but rather to find ways to reduce the number of costly procedures. For example, some studies have suggested that as many as half of spinal surgeries may be unnecessary or inappropriate. Depending on the specifics, plans can consider strategies such as these:

• Second-opinion programs to confirm the necessity for the procedure
• Centers of excellence, so procedures are performed by doctors with better outcomes
• Virtual physical therapy, which tends to have higher compliance rates
• Existing carrier or TPA programs that members aren’t using

Data-Driven Strategies for Chronic Conditions

Data can also help you identify prevalent chronic conditions and determine which diagnoses can be addressed. One example is members with anxiety disorders being treated by physicians with drugs when talk therapy might produce better outcomes. Beyond the financial advantages, the objective of a benefit plan should be to improve members’ health and lives.

Compliance and Adherence Rates

Everyone knows preventive care options lead to faster treatment and better outcomes, but compliance rates with health screenings and treatment adherence rates often fall far short of expectations. Promoting screenings may boost claims in the short run by identifying more conditions, but getting treatment sooner will reduce costs over the long haul.

Transparency and Fiduciary Responsibilities and Data

While some carriers and TPAs suggest they can assume ERISA fiduciary responsibility, most attorneys will tell companies that if they are still exercising discretionary authority or control over the plan, they cannot transfer their fiduciary responsibility. As a fiduciary, your two essential duties can be summarized as loyalty and prudence: loyalty is acting in the best interest of plan participants, and prudence is acting with appropriate care, skill and diligence.

Using Price Transparency Data

Although price transparency data hasn’t been a ready source of useful information, newer data analytic approaches using machine-readable files are making data meaningful to plan sponsors. With some systems, you can objectively determine which carrier’s network would best serve your members.

As with retirement plans, the fiduciary responsibility is a reminder that your ultimate goal is ensuring you do the best job for your plan participants.

More Depth and Insight

The webinar explored the topics discussed in this post in significantly greater depth, with real-world examples to support the recommendations. View this webinar recording and other Hylant Insights Series webinar recordings here to make the most of your employee benefits program.

For help exploring cost containment strategies for your organization, contact a Hylant advisor.

Related Reading: Mastering Pharmacy Costs – The Power of Strategic Contracts

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.