Call Girls From Pari Chowk Greater Noida ❤️8448577510 ⊹Best Escorts Service I...
Snook -Tying strategy and benefit design
1. HR Florida 2011
Tying Strategy and
Benefit Design
Learning to Look Forward
Matthew L. Snook, Partner
matthew.snook@mercer.com
813 207 6312
Services provided by Mercer Health & Benefits LLC.
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
2. Today’s Topic and Its Component Parts
The problem
The concept
The process
– Context
– “Guiding Principles”
– The pathway
Relevant input factors
The results – a case study
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 1
3. The Problem
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
4. The Problem
….with decisions relating to
how benefit programs are
designed, and how benefit
dollars are spent.
Too seldom do HR leaders
connect corporate needs,
driven by C-Suite
guidance,…..
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 3
5. The Concept
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
6. The Concept
Corporate
HR
Total Rewards
Benefits
Health Plan
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 5
7. The Concept
Start high and let things “trickle down”
Corporate Goal Revenue growth
HR Goal High level of employee engagement
Total Rewards Ties between revenue growth and
Goal rewards opportunities/results
Benefits Goal Incorporation of “success-sharing”
aspects in program design
Health Plan Direct link between revenue growth and
Goal health plan delivery
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 6
8. The Concept
Goals lead to strategies which lead to tactics
Health Plan Direct link between revenue growth and health
Goal plan delivery
Health Plan Tie health plan “value” to varying levels of
Strategy corporate revenue growth
Health Plan Vary employee contribution rates based on
Tactics prior year revenue growth success
Tie FSA/HRA/HSA account contribution to
prior quarter revenue growth success
Tie key cost sharing provisions (copays,
deductible, etc.) to prior year revenue growth
success
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 7
9. The Concept – The Foundations for Health Care Strategy Development
Organization Culture Platform
Taking care of OUR PEOPLE allows them to take care of our customers,
without distraction.
Taking care of OUR CUSTOMERS guarantees OUR SUCCESS as a company.
These are our goals, in this order.
Total Rewards Strategy
• Base Pay will be market and industry competitive
• Benefits will be above market competitive (60th to 75th percentile)
• Variable Pay will allow for above-market total cash compensation (60th
percentile)
• Long-Term Incentives will allow those eligible to achieve total compensation
at the 75th percentile or higher
• The ABC Work Experience will enhance the Associates’ lives
Components of Total Rewards
Compensation
Long-Term The ABC Work
(Base and Benefits
Incentives Experience
Variable Pay)
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 8
10. The Concept – The Foundations for Health Care Strategy Development
Total rewards viewpoint
Benefits
• Ahead of market in “key”
benefits areas
• At market in non-key areas
• Never a reason why an
Associate would leave ABC
Components of Total Rewards
Compensation
Long-Term The ABC Work
(Base and
Incentives Experience
Variable Pay)
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 9
11. The Process
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
12. The Process
Mercer’s five-step consultative / strategy process
Understand context
1 Where are we, and where Implement, manage
do we want to go? 4 and measure
External environment Build and run
Market position Measure
Business context Improve
Financial drivers
HR objectives
Strategize / Analyze
2 What are the rules that Refresh
dictate how we accomplish 5 Performance to
our goals? expected
Stakeholder input Use of data to drive
Guiding principles process
Define measurement Roadmap adjustment
parameters
Design
3 What is the pathway by
which we will get there?
Consider innovations and
alternatives
Assess impact of solutions
Design and integrate
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 11
13. The Process – Context 1
Goals that might contribute to determination of direction
Revenue Growth (M&A, Organic Maximize Profitability
Growth)
Determine ROI of Various Aspects
Brand Awareness/Improvement of Total Rewards
Diversification or Focus on “Core Employee Value/Satisfaction
Values” Improvement
Turnover Control Employee Engagement/Motivation
Culture Development Cost/Value Realignment
Expense Management/Reduction Participant Education
Respond to Aging Workforce Population Health Improvement
Issues
Consumer Engagement
Establish Appropriate Competitive
Administrative Simplification
Positioning
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 12
14. Components to Consider in the Context Discussion 1
Where are we today?
Plan Design
1 2 3 4 5
Rich program with Some consumerist Account-based plan Account-based plan has Design supports
very little features and/or as option and highest enrollment competitive position; plan
employee cost- promoted design promotes
incentives in some Eliminate all first dollar
sharing
plans coverage behavior change
Health Management
1 2 3 4 5
Case management Isolated programs Integrated programs Integrated programs Integrated programs
only program covering parts of health covering part of health covering full health risk cover full health risk
provided risk spectrum; little risk spectrum; partial spectrum; entire spectrum; highly
communication population; well population; not highly communicated with
communicated communicated incentives offered
Employee Incentives
1 2 3 4 5
No incentives for Offer raffles and other Offer significant Offer incentives for Connect incentives to
any consumer or nominal incentives for incentives (~$100) for various health plan design, payroll
wellness-related health fair participation or HRA participation or management activities contributions or
actions certain employee actions other activities throughout the year contributions to an
account
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 13
15. Components to Consider in the Context Discussion 1
Where are we today? (cont’d)
Consumer Education & Participation
1 2 3 4 5
Basic tools and Enhanced tools Enhanced tools Tools targeted to Personalized tools and
communication provided by health provided to all support necessary communication
provided by health plans; not highly membership; solid behavior change; highly integrated with program
plans communicated communication communicated offerings
Leadership Engagement
1 2 3 4 5
Little awareness of Leadership engaged in Leadership sets strategy, Leadership engaged in Leadership visibly
health care strategy strictly cost control but does not provide setting strategy and supports and promotes a
direction or resources for provides support for health & wellness
enacting strategy engagement activities “campaign”
Program Measurement
1 2 3 4 5
Manage year-to- Monitor financial budgets Document program Complete “dashboard” Understand cost drivers
year financial proactively; measure expectations and of key performance in program; design
budgets only administrative measure results of metrics and share with interventions to support
performance vendor and plan business partners strategy
performance
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 14
16. The Process – Guiding Principles 2
Guiding Principles:
– Are the basis for developing the proposed strategy
– Are used to test whether the strategy still “fits” as
decisions and adjustments are made
Guiding Principles often address the following:
– Needs indicated by the business environment
– Goals of offering the benefits program
– Comfort with being on the leading edge
– Desired positioning relative to peer groups
– Split of employer and employee responsibility
– Absolute “musts” of “must not” be touched/
jeopardized (“sacred cows”)
Guiding Principles should be developed based on
the information gathered from leadership and/or
project team input.
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 15
17. Sample Guiding Principles 2
One-page, little detail
Benefits targeted at market median with fewer, more
meaningful choices
Company cost growth to be managed proactively while
continuing to provide a safety net for employees
Maintain commitment to employees but reduce subsidies
for dependents
More cost shift through plan design while maintaining
protection for catastrophic events
Create a culture of health with visible leadership support
Manage health care costs through greater focus on
health improvement and appropriate use of health care
services for employees and their families
Offer wide provider networks but encourage use of the
most effective providers
Develop and broadly share dashboard of key program
metrics on a regular basis
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 16
18. Sample Guiding Principals 2
Much more detailed version
Guiding principles Current state Objectives/future state
Market position Benefits are important but details of the Maintain competitive position for hourly
programs are not a critical driver of employees
attraction/retention (A/R) for most Ensure better employee understanding and
hourly employees satisfaction through improved employee
Benefits are competitive for hourly communications
population, less so for salaried Explore option of maintaining separate
associates hourly/salaried programs to ensure ongoing
competitiveness of salaried benefits
Company budget/cost-sharing Control of cost growth is critical, but Proactively manage company cost growth due
there is no burning platform to reduce to pressures including rising transit costs
company cost levels Manage health care costs through greater focus
Cost sharing (payroll deductions) with on condition management and health
salaried employees seen as improvement
uncompetitive Minimize or negate impact of Health Care
Reform (HCR)
Improve salaried employee cost share
percentage
Program eligibility Eligibility is 35 hours/week Shift PT employees with <35 hours to <30 hours
Market is changing to reflect HCR by 2014, as dictated by HCR
changes and requirements Vary eligibility by business unit as A/R needs
Benefits are not a significant A/R issue dictate
for employees under 35 hours
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 17
19. Sample Guiding Principals 2
Much more detailed version (cont’d)
Guiding principles Current state Objectives/future state
Employee choice and Three medical plan choices are Continue to offer choice among plans, including
responsibility (plan design) offered, including one catastrophic a catastrophic option
design, with varying enrollment Promoting personal responsibility is culturally
consistent and should be a part of design. More
exploration of receptivity to CDH is needed, but
of interest.
Program/vendor management • All health coverages - medical, Rx, Evaluate vendors for best discounts, best fit,
health management, EAP, dental - are lowest net cost to ABC
with one vendor Ensure all vendors meet employee needs for
• Communications materials not used by quality and access
employees, not effective at reaching Ensure medical vendor can support
them, and not engaging them consumerism needs with or without CDH
Employees have multiple access points to
program information and understand how to
access it
Health management Health management programs are a Cost drivers are better understood
function performed by the medical plan Offer care/disease management programs that
vendor are specific to ABC’s needs
Little encouragement for employees to Motivate employees to understand and improve
understand or improve health status their health through variety of programs and
Little understanding of health care incentives
drivers or impact of existing programs
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 18
20. The Process – Developing the Pathway 3
High-level strategic roadmap
The final step in developing a strategy should
be developing the strategic roadmap
The roadmap will help you evolve from the
current state to where you optimally want to
be across all aspects represented in the
Guiding Principles
This will allow you to come to an
understanding as to how the details of the
strategy will be created and implemented and
when/how results will be measured
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 19
21. Strategic Roadmap – Key Ingredients 3
Strategy elements, levers and outcomes measurement
Strategy Elements Success
Levers
Measures
Plan Health improvement Education and
Element 1 Plan administration Measure 1
design/pricing and care delivery communication
Plan Health improvement Education and
Element 2 Plan administration Measure 2
design/pricing and care delivery communication
Plan Health improvement Education and Measure 3
Element 3 Plan administration
design/pricing and care delivery communication
Plan Health improvement Education and
Element 4 Plan administration Measure 4
design/pricing and care delivery communication
Plan Health improvement Education and Measure 5
Element 5 and care delivery communication
Plan administration
design/pricing
Lever of lesser impact for this goal
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 20
22. Sample Plan Evolution Approach 1 3
Change over time
2011 2012 2013 2014 2015
Current Plan 1
Current Plan 1
Evolved
Current Current Plan Hybrid Plan
Hybrid Evolved
Plans Current Plan 2
Current Plan 2
Evolved
New Plan End-State
Evolved Plan 1
New New Plan
Plans New Plan 2 End-State
Plan 2
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 21
23. Sample Plan Evolution Approach 2 3
More aggressive implementation approach
2011 2012
Current Plan 1
Current
End-State Plan 1*
Plans
Current Plan 2
New End-State Plan 2
Plans
* Hybrid of current plans 1 and 2.
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 22
24. Sample Roadmap 3
Current year Year 1 Year 2 Year 3 Year 4
D Add employee D Improve preventive health (with D Incent retail clinic usage ($0 co- D Raise deductible on PPO to D Eliminate PPO
assistance program incentive of $10/service into FSA pay for 6 months, then $10) build in incentive offset D Offer only two CDHPs
D Adjust contributions or premium reduction/holiday) D Eliminate EPO D Add second CDHP D Deliver all incentives through
D Add voluntary D Unbundle dental/vision D Add CDHP (HRA/HSA) H Continue health campaign and tax-advantaged accounts; increase
benefits D Modify PPO and EPO Rx co- D Further align PPO with champion activity amount “at risk” to $500
H Conduct health pays to coinsurance consumerism and CDHP H Promote use of personal health H Continue health campaign and
assessment with D Adjust contributions to align with H Continue health campaign and record champion activity
incentive ($100 to FSA) value of plans champion activity H Continue health assessment,
H Add health advocate H Add targeted behavior biometrics and targeted behavioral
H Add health campaign with modification program with modifications with significant
champion support incentives (TBD, “health” day time incentives as appropriate
H Update employee health off)
assessment and add biometric H Promote employee and spouse
screenings, both with incentives health assessment and biometric
($50/$50 to FSA) screenings ($50/$50 to
FSA/CDHP)
Success metrics: Success metrics: Success metrics: Success metrics:
Employees understand Employees make informed value- Spouses are further engaged in Employees further engaged,
employer’s interest in based choices on Rx their own health risks involved and informed around their
their health Employees value flexibility in Action plan for behavior health and use of health care
Employees understand benefit choices modification services
their own health risks Increased usage of preventive Promoting choice for best Better choices, better health
Employees recognize health services Culture of health reinforced
greater benefit choices Employees with chronic Change to “culture where health
and services conditions and health issues have matters” begins
access to enhanced support
Employees see their peers
participating D = Design H = Health
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 23
25. Summary Document – The Strategic Placemat
Environment Guiding principles Strategy Actions Barriers Success measures
ABC population Benefits targeted at Provide more Eliminate redundant plan Employee resistance A successful program at
8,000 active and 20,000 market median with meaningful options over a two year to plan eliminations ABC would have:
retired employees fewer, more benefit choices, period High levels of program
meaningful choices with limited Cooperation, data
Business environment participation
design changes Develop integrated set of sharing and
Excellent business outlook Company cost care management integration across Employees see the value of
Need to attract / retain (up growth to be Engage programs encompassing vendors managing their health and
to 5,000 new employees managed employees and wellness, risk reduction are willing to do their part
over next 3– 5 years) to proactively, while their spouses to and chronic care Culture: employees
are very driven and Health improvements shown
meet production goals; continuing to actively manage management
focusing on health through:
aging workforce, growing provide a safety net their health
need for seasoned for employees Build programs off existing may be a challenge – increased use of
supervisors Leverage vendor partnerships, add only preventive screening
Create a culture of partner programs where needed HR reps need to allow
HealthCare at ABC employees to take – increased productivity
health with visible as well as other
Limited ability for plan leadership support programs Develop ongoing ownership and – decrease and better
design and contribution adopted by ABC leadership engagement accountability management of
changes – need to focus on Manage health campaign
Remote geographic chronic conditions
behavior change care costs through Provide ongoing,
Have implemented health greater focus on targeted Develop targeted education locations limit access High health care compliance
fairs, industrial trainers, health improvement education and and communications to health care and outcomes resulting in
biometric screening. Good and appropriate communication to campaign with ongoing cost savings and reduced
events throughout the year Geographic health
participation and use of health care employees and liability
habits and influences
acceptance services for spouses Reward employees and ABC perceived as not only a
Multiple programs available employees and their dependents for Lack of surrounding safe company, but healthy
their families Recognize and community support
through current vendors, but reward effective participation in health as well
lack of participation and management programs and community
Develop and health activities Achieve health care trend
integration
broadly share management Develop data collection below the benchmark – be
Health care cost trend dashboard of key Management ROI the benchmark
approximately 8%; cardiac Actively manage and dashboard tools for
program metrics on ongoing program expectations – having
and diabetes are significant a regular basis health care and to spend in order to
cost drivers vendor costs measurement
save
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 24
26. Relevant Input Factors
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
27. Relevant Input Factors
Market conditions impact employer benefit decisions
The economy Legislative agenda
Emerging from recession Addressing reform
Emerging from the recession, Employers are anticipating both
employers and employees face tactical and strategic
uncertainties about the future. implications of the health reform
Although careful management law. Compliance with eligibility
held trend down in 2009, trend and benefit mandates is a short-
increased in 2010 and employers term concern. More complex
will continue to face health trends challenges may come from cost
that require innovative ideas about shifting and ERISA challenges.
how to control cost and improve
workforce productivity.
Vendor market Health care
Uncertain future Quality
Health plans face increasing Assuming as much as 1/3 of
scrutiny about their practices as health care spending may be
legislators try to expand regulation. inappropriate or unnecessary,
In the short-term, rates are rising employers are testing innovative
due to unknown impact of health ways to improve quality. Ideas
reform and other issues. include behavior change
Conservative rates are likely to incentives for both patients and
continue as insurers evaluate their providers, new care management
future under increasing regulation. models, domestic tourism and
more evidence-based design.
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 26
28. Relevant Input Factors
Health benefit costs still rising at unsustainable levels
20.0% Workers' earnings
Annual change in total health benefit cost per employee
18.0% Overall inflation
17.1%
16.0%
14.7%
14.0%
12.0% 12.1%
11.2%
10.0% 10.1% 10.1%
8.0% 8.0% 8.1%
7.5% 6.9%
7.3% 6.3%
6.1% 6.1% 6.1% 6.4%*
6.0% 6.1%
5.5%
4.0%
2.5%
2.0% 2.1%
0.0% 0.2%
-1.1%
-2.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
*Projected
Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index,
U.S. City Average of Annual Inflation (April to April) 1990-2010; Bureau of Labor Statistics, Seasonally Adjusted Data from
the Current Employment Statistics Survey (April to April) 1990-2010.
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 27
29. Relevant Input Factors
Behaviors are key cost drivers
Determinants of Health Status
50%
40%
30%
20%
10%
0%
Access to
Genetics Environment Behavior
Care
Determinants 10% 20% 20% 50%
Source: IFTF, Center for Disease Control and Prevention
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 28
30. Case Study
Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s).
31. Mercer Case Study
Process, actions, results
Context Guiding Principles
1/3 of active employees in unions Educate employees on the costs of health care and
what they can do to impact them
Rising health care costs, utilization skyrocketing
Improve health management and improvement efforts,
Three health plans: one HMO, two PPOs, with high and link to medical design
employee satisfaction
Hold costs steady, reduce trend over time
No employee understanding of health costs
Help lower wage employees
Options priced poorly relative to actuarial value
Improve negative utilization trends
Strategic Plan Measurement Results
Full replacement of health plans, and implementation 47% of employees in HSA, 53% in HRA
of HRA and HSA plans
First year claims 17% under budget
Launch multi-media communication campaign focused
on employee education Employee satisfaction remained high
Use cost-estimator tool to educate employees on plan
value Utilization statistics changed drastically
Lower wage employees provided higher account – Reduction in specialist, laboratory and radiology,
funding levels and brand drug usage
– Increase in PCP, generic/mail order, and in-network
provider usage
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 30
32. Final Thoughts
Relevant facts for plan design decisions
Employees dislike change, especially with “security blanket” issues.
Employees like cost predictability (i.e., copayments).
Inertia is very powerful, even when not in the employee’s best interest.
No one spends someone else’s money the same way they spend their own.
Every American knows smoking is bad for you, yet 21% of us smoke.
People who eat chocolate cake, red meat, gravy on their potatoes and butter
on their biscuits do it because they like it!
Real Change is Hard –
Proceed with Caution
Mercer Proprietary & Confidential – Not to be reproduced and/or distributed; contents intended solely for use of intended recipient(s). 31