The rising cost of healthcare was dramatically affecting Redstone Presbyterian SeniorCare—our organization had been receiving double-digit increases in healthcare insurance premiums over previous years. In July 2002, Redstone experienced a 44% increase in premiums that received the full attention of senior management, who determined that the time had come to develop a strategy to address rising healthcare costs.
Redstone is a not-for-profit continuing care retirement organization located approximately 40 miles east of Pittsburgh. It has three facilities in Westmoreland County and more than 300 employees. As with many similar organizations, one of our key challenges is providing quality health insurance coverage to employees at a reasonable cost.
The first steps in the process were to step back, take ownership of the situation, analyze, and assess. What were we doing right? What could we do better? During the decision process, our leadership eliminated the option of passing the increased cost on to employees. This might have been the easiest solution and fully justifiable, but we were determined to find another way. Another option was to seek alternative insurance carriers but, considering Redstone's use, finding a more affordable carrier was doubtful. Specifics on utilization are not available because of confidentiality; however, an example of a claim we have encountered is gastric bypass surgery—two employees who had the procedure left after the surgery was completed, and a third couldn't return to work because of serious complications that involved high recovery costs. The most sensible alternative was to negotiate with our current carrier, Highmark Blue Cross Blue Shield.
Following several meetings and numerous telephone conversations with Highmark representatives, Redstone initiated changes to address the increased insurance use that was a driving force behind the annual cost increases. A partnership was developed between Redstone and Highmark with a unified mission to continue to provide quality health insurance coverage while controlling premiums for participants.
Health plan changes included eliminating the “free” concept of the traditional plan and adopting plans with deductibles, out-of-pocket maximums, coinsurance reimbursements, and some larger copayments. Under our old plan, prospective employees would apply to Redstone, knowing it offered a health insurance plan that had no deductibles or out-of-pocket maximums. Then, after being hired, employees were having expensive surgical procedures and then resigning. To prevent prospective employees from “shopping for insurance,” a plan covering the first 12 months of employment was initiated that contained higher deductibles and out-of-pocket maximums. Under this plan, after completing 12-months of employment, employees are enrolled in the enhanced plan that has lower deductibles and out-of-pocket maximums. Based on recent expense information provided by Highmark, the medical cost associated with the 12-month employee is considerably lower since the implementation of the new program.
Leadership had concerns about the plan changes. Would the changes make recruitment more challenging, especially for nursing personnel? Would the changes eliminate shopping for coverage? Could/would new employees survive the 12-month period until the enhanced program became available? How would employees respond to the new plans?
While there was some initial resistance, as this was a major modification from the traditional health plan, we soon discovered that the new benefit structure did not affect recruitment, it eliminated the “shopping” concept, and staff did not experience significant difficulty during the initial employment period.
Implementing the Wellness Plan
Employees had to take ownership of the situation by becoming educated consumers to improve their health, well-being, and knowledge about healthcare choices. To that end, the enhanced program requires staff to complete three annual requirements to maintain the coverage. Each year, an employee is asked to have a physical examination by his or her personal physician, have a personal wellness screening provided by Highmark, and participate in one wellness program (see sidebar, “Wellness Programs Available Through Highmark Blue Cross Blue Shield”). If an employee does not meet these requirements, his or her coverage is returned to the higher deductible plan until the requirements have been completed.