Employers have become frustrated with the rising cost of providing health insurance benefits (understandably so).  If you’re a self-insured employer in Wisconsin your healthcare costs per employee exceed the national average of $7,089 by more than $2000. As a result, many of Wisconsin’s self-insured employers have reduced or dropped employee health benefits altogether, hoping reforms will transfer responsibility for health insurance to individuals or the government.  But according to David Kwasny, President of Milwaukee-based RESTAT, one of the nation’s largest Pharmacy Benefit Managers (PBM), employers should remember that choosing to drop healthcare may be a very costly decision down the road.

Recently I read an Op-Ed article written by Harvard Professor Michael Porter on the subject.  He cites recent studies that estimate that employers spend 200-300 percent more on the indirect costs of poor health than they do on health benefits due to an increase in sick days, absenteeism, reduced productivity, and early retirements of valuable contributors. It’s important to remember that employers that choose to disengage with their employees’ health care coverage lose much of their ability to influence the resulting costs of their employees’ poor health.

So how can employers reduce the cost of their health benefits spend? I’ve outlined four ways I consider most important:

1. An Ounce of Prevention – It may be hard to quantify at first, but prevention, screening and wellness programs really can dramatically decrease costs and improve value for you and your employees. Wellness programs that target long term health issues such as hypertension or obesity, and smoking cessation programs can greatly reduce healthcare costs.  Ongoing disease management also helps prevent disease recurrences and setbacks.
2. You get what you measure  – Work with your healthcare benefit managers to get regional and national benchmark information on the cost and quality attributes of the average healthcare benefit. Compare your costs and quality outcomes to those benchmarks and track progress to your goals. Hold your healthcare benefit partners accountable to a result.
3. Hire an expert – Make sure that the partners you select to manage your healthcare benefit have the  experience, teams and facilities to achieve excellent results. Verify that their interests are aligned with your priorities.
4. Heighten Employee Awareness – Make sure your healthcare partners (insurers, PBMS) provide tools to help your employees make wise health care decisions.  For example, RESTAT’s website provides health education and prescription pricing information for its members and we’re working on more advanced programs and tools to further improve consumer awareness of how they can impact their own healthcare spend.

Your health care partners are also responsible for doing what they can do to control health care costs.  We’re helping our clients better manage escalating prescription costs in innovative ways like our new Align program.  With the help of some large retail chains like Wal-Mart, Target and Kmart, we’ve been able to change the PBM pricing paradigm from a complex system of tiered discounts and rebates to one that’s based on the pharmacy’s actual drug cost making it easier to track Rx spend and compare prices.
This program has helped large self insured employers like Caterpillar Inc. reduce their healthcare spend without relinquishing a quality outcome for their employees. According to a recently released Claims Analysis, our Align members save $22.30 per prescription for brand drugs and $5.75 per prescription for generics compared to the average cost per claim.
We didn’t make this change because the government required us to do so; we made this change because our customers asked for it.  All companies involved in providing healthcare products and services bear a responsibility for finding ways to make healthcare an affordable benefit for self-insured employers and their employees.

About The Author

David Kwasny was promoted to President of RESTAT in April 2009. As RESTAT’s Vice President of Sales and Marketing since 1997, David drove more than a decade of unprecedented growth for the company, consistently delivering double-digit increases in revenue and earnings, and making RESTAT one of the nation’s largest prescription benefit managers. Today, David’s proven leadership skills are focused on advancing RESTAT’s strategic mission to simplify the purchase and use of health care services through independent benefits management.

A licensed pharmacist with extensive experience in all aspects of community pharmacy, David spent his years before joining RESTAT in sales leadership and operational pharmacy management with a focus on prescription benefits. He served as Regional Sales Director for ProVantage, Script Card and Health Care Pharmacy Providers, and also worked for the Kmart Corporation’s AmeriKind Pharmacy Network as a Pharmacy District Manager and Key Account Manager. David graduated from Temple University School of Pharmacy in Philadelphia, PA and was inducted into the school’s Gallery of Success in 2007.  In April, 2010, the University’s School of Pharmacy bestowed its highest honor – the certificate of honor – to Kwasny.

About Restat: A member of the Dohmen family of companies, Restat simplifies the purchase and use of healthcare services through independent health benefits management. As the largest independent PBM, Restat has no ownership ties to drug manufacturers or distribution channels, making it uniquely positioned to provide customers with unbiased benefit management solutions. This year, following a one-year pilot program with Caterpillar Inc. and WalMart, Restat launched Align, a cost- a Cost-Plus, Fee for Service Pharmacy Benefits Pricing (PBM) Model as a proven way for self insured employers to reduce the cost of their pharmacy benefit. Kwasny said Restat’s new cost-plus pricing model, is reducing costs while changing the industry paradigm. “Align’s target audience (self-insured employers) can anticipate an average savings of $22.30 per prescription for brand drugs and $5.75 per prescription for generics compared to the average cost per claim.”

Today, more than 4,200 companies, ranging in size from the Fortune 50 to small managed care organizations rely on Restat to manage the prescription benefit for over 12.2 million people nationwide. Restat services include but are not limited to: Customer Service, Clinical, IT & Reporting, Formulary, Benefit Plan and Pharmacy Network Management, Claims processing, Specialty Pharmacy and Mail Service. To learn more, visit www.restat.com or call 800.926.5858.