2022 Best Practices in Healthcare Survey

Identifying opportunities to control costs and make healthcare affordable

To address cost management challenges, more than half of employers (52%) will implement programs or switch to vendors that will reduce total costs. But only one in four (24%) will shift costs to employees through higher premium contributions.

With limited budgets, many employers have increased their budgets to reflect anticipated increased medical costs. Of the four-fifths of organizations that have a three-year budget plan, more than four in 10 (41%) have adjusted their plans while almost half (47%) are discussing changes.

Employers are also taking a variety of other actions to rein in healthcare costs:

• Implementing a defined contribution strategy. Four in 10 employers (41%) indicate they are using a defined contribution strategy with a fixed dollar amount provided to all employees that differs by plan tier (Figure 1). By 2024, over half (52%) could be using such an approach. Spousal surcharges are becoming more common. In 2022, about three in 10 employers (31%) imposed a surcharge on employees with spouses who have access to their own employer-sponsored health insurance, up from 26% in 2021. By 2024, this figure could reach 40%.

• Planning for 2023: 3%
• Considering for 2024: 8%

Figure 1. Employers use a defined contributionstrategy to control costs

• Managing medical plans costs. Employers are pursuing a range of measures to improve their management of medical plan costs.
  • Concierge navigation. Two in 10 employers (21%) offer plan concierge navigation even if it required changing from a full-service health plan to a third-party administrator. This approach appears to be gaining in popularity, as another 25% are planning or considering offering concierge navigation by 2024.

• Travel benefits. Over half of employers (55%) provide domestic travel benefits for medical services, while another 11% are planning or considering doing so in the next two years.
• Fraud, waste and abuse. A quarter of respondents (27%) added or enhanced programs to combat fraud, waste and abuse. Another 22% are looking to do so by 2024.
• Out-of-pocket costs. Nearly a quarter of employers (23%) implemented higher out-of-pocket costs for use of less efficient services or site of service, such as use of non-preferred labs, high-cost facilities for imaging or failure to use mandated centers of excellence. Another 19% are planning or considering doing so in the next two years.
• Addressing employee affordability. To make healthcare benefits more affordable, employers are taking the following steps:

  • Structuring employee contributions for targeted groups or by job class. More than a quarter of employers (28%) structured payroll contributions to reduce costs for targeted groups, such as low-wage employees, or by job class. Another 13% are planning or considering doing so in the next two years.

    Employers are increasingly structuring employee contributions based or pay on job class to reduce employee costs (Figure 2). While roughly three in 10 (31%) take this approach today, this figure could jump to 46% in two years.

    

    • 2017: 24%
    • 2019: 25%
    • 2021: 23%
    • 2022: 31%
    • 2023*: 36%
    • 2024^: 46%

    Figure 2. Contribution banding

    Structure employee contributions based on employee pay levels or job grades
    Note: *Planning, ^Considering.
    Sample: Companies with at least 1,000 employees.
    Source: WTW 2017, 2019, 2021 and 2022 Best Practices in Healthcare Survey.

• Increasing healthcare plan budget. Two in10 employers (20%) added dollars to their healthcare plan without reallocating funds from other benefits or pay. Another 30% expect to do so by 2024.
• Offering a low-deductible plan. Approximately three out of 10 employers (32%) offered a plan with low member cost sharing (e.g., no more than a $500 deductible for a single preferred provider organization plan) in 2022; another 7% are planning or considering doing so in the next two years.
• Providing voluntary benefits. Over a third of respondents (35%) added or enhanced voluntary benefits (e.g., critical illness, group accident, pet insurance, ID theft coverage) and vendor solutions. Another 27% are planning or considering doing so by 2024.
• Evaluating employee contributions by income. While only 13% of employers currently examine employee health payroll contributions as a percentage of total compensation (or income) as a basis for plan/benefit design decisions, this figure is expected to climb to 32% in the next two years.

Rethinking network and provider strategies

Employers are using various network and provider strategies to rethink how and where healthcare is delivered in order to improve access to cost-efficient care.

Among the most common of these strategies is the use of centers of excellence within health plans. About half of employers (47%) offer centers of excellence, while another 22% are planning or considering doing so in the next two years. Slightly more than half (51%) also offer onsite/worksite health promotion activities, with another 16% looking to do so by 2024.

Additionally, employers are offering navigation services, including expert medical opinion and concierge services with integrated care management programs (Figure 3).

• 35% in place in 2021 or 2022
• 3% planning for 2023
• 9% considering for 2024

Offer access to concierge services with integrated care management programs

• 29% in place in 2021 or 2022
• 5% planning for 2023
• 17% considering for 2024

Figure 3. Navigation services

 

Other common strategies include using direct-to-consumer Rx delivery or discount programs for select drugs and offering a narrow network of higher-quality and/or lower-cost providers.

Targeting clinical areas to improve member health and reduce costs

Companies are focusing on key clinical conditions to improve health outcomes and bring down costs (Figure 4). As was the case in 2021, employers reported focusing on mental/behavioral health as the leading clinical condition to prioritize followed by metabolic syndrome/diabetes. Maternity/fertility has moved up in importance from number six in 2021 to number three, as employers strive to meet the needs of diverse employees, including individuals having children later in life and LGBT+ employees. Looking ahead to 2024, cancer/oncology ranks highest as a clinical area of focus.

• Metabolic syndrome/Diabetes: 45%*, 10%^, 15%**
• Maternity/Infertility – 37%*, 17%^, 19%**
• Obesity and weight management: 35%*, 10%^, 19%**
• Musculoskeletal: 30%*, 18%^, 21%**
• Cancer/Oncology: 29%*, 11%^, 23%**
• Transgender support (including navigaation support): 28%*, 13%^, 14%**

^*Action taken/Tactic used in 2022, ^Planning for 2023, ^**Considering for 2024

Figure 4. Clinical areas employers are targeting to improve member health

 

Employers also ranked obesity and weight management as a key clinical condition. Effective weight management initiatives can help improve health outcomes and employee productivity and reduce healthcare costs.

Transgender support continues to be an area of increasing focus. This includes providing navigation services to help improve access and coordination of care in a cost-effective manner.

Managing pharmacy plan costs

To manage pharmacy costs over the next two years, employers will focus on specialty drugs and deploy a range of actions in other target areas.

Half of employers (50%) already evaluate and address specialty drug costs and utilization paid through the medical benefit, and roughly another quarter (26%) are planning or considering doing so by 2024 (Figure 5).

• Do not apply third-party coupons/copay assistance toward deductible or out-of pocket minimum: 35%*, 3%^, 5%**
• Offer programs to maximize specialty copay assistance/optimization: 33%*, 11%^, 10%**
• Implement coverage changes to influcent site of care for specialty pharmacy (e.g., moving from outpatient hospital setting to lower-cost settings): 25%*, 6%^, 15%**

^*In place in 2021 or 2022, ^Planning for 2023, ^**Considering for 2024

Figure 5. Employers act to control the costs of specialty drugs

Over the next two years, employers are also looking to offer programs that maximize copay assistance for specialty drugs and to implement coverage changes to influence site of care for specialty pharmacy, such as moving from an outpatient hospital setting to lower-cost settings.

Regarding biosimilar drug strategy, 26% of employers currently offer members lower cost sharing for the use of biosimilars compared with name brand biologic medications, and another 20% are planning or considering taking this action in the next two years. Roughly a third of employers (34%) are waiting to decide on plan design strategy for biosimilar promotion until additional financial details are shared by vendors.

Other key actions to control pharmacy plan costs include offering programs to maximize specialty copay assistance and issuing a formal RFP for pharmacy benefit management (PBM).

Enhancing employee mental health and DEI initiatives

In addition to focusing on issues related to health plan and financial management, respondents are taking action to enhance employee programs in the areas of mental health and DEI.

Boosting mental health

Nearly all respondents (88%) indicate they have taken action to address workforce mental health and emotional wellbeing needs over the past year. Three in 10 report they have taken extensive action.

Going forward, respondents expect to focus on the following areas:

• Digital support. Employers are looking to increase access to virtual and digital mental health solutions. Their key strategy to address mental health challenges is telebehavioral health. The vast majority of employers (83%) offer coverage via telebehavioral health services, and another 9% are planning or considering offering these services by 2024.
• More than two-thirds (68%) are already providing their employees access to digital behavioral support — for example, using apps — while another 16% are looking to do so in the next two years.

• Employee assistance program (EAP) support and other resources. Approximately seven in 10 employers (69%) provide dedicated onsite or virtual EAP resources, and 12% are planning or considering doing so in the next two years. Moreover, one in four employers (24%) plans to increase its EAP benefits by 2024.
• Treatment management. Almost four in 10 (38%) employers integrate behavioral health patient management with medical case management, and 20% are planning or considering taking action in this area by 2024.
• Mental health days. The number of employers offering designated mental health days could triple in the next two years from 9% currently to 30%.

Strengthening DEI initiatives

The number of employers indicating that DEI is a high priority in their health and wellbeing strategy is set to almost double from 25% in the past three years to 48% in the next three years (Figure 6).

Next three years: 32% moderate priority, 48% high priority

Figure 6. DEI is a growing priority for employers

How important a priority has DEI been to your organization's health and wellbeing strategy over the past three years, and how important will it be over the next three years?
Note: Percentages may not sum up to 100% due to rounding.

More than half of employers (54%) have already developed DEI goals and objectives, and another 30% are looking to do so in the next two years. Other focus areas include developing specific benefit strategies for unique employee populations and conducting a DEI benefit review. Approximately three in 10 employers have taken action in these areas, and another 39% are planning or considering doing so by 2024.

Employers’ key focus in the next two years will be developing strategies and taking actions to address the most prevalent social determinants of health factors. More than four in 10 employers (44%) are planning or considering taking action in this area, up from 12% in 2022.

Shaping the employee experience for health and wellbeing benefits

The employee experience is the critical component that engages employees in these enhanced programs and promotes desired behaviors essential for employee wellbeing and productivity.

The overwhelming majority of employers (83%) report they are already taking steps to support the employee experience by advancing diversity. This involves considering the impact of changes in program offerings on various employee groups.

In addition, employers are taking specific actions to improve the employee experience with health and wellbeing benefits (Figure 7 - 9).

Employer actions to improve the employee experience include the following:

• Attraction and retention. A recent WTW employee survey revealed that health benefits are a key factor in deciding to move to a new job or stay with an employer.¹ This finding is all the more significant given today’s challenging labor market. Employers understand this, as more than three-quarters (77%) have made health and wellbeing programs a key part of their attraction and retention strategy. Another 17% expect to do so over the next two years.
• Digital support. Employers recognize the importance of providing easy-to-access healthcare benefit information and supporting employees’ ongoing health and wellbeing education. Seven in 10 employers already provide a digital hub that serves as a one-stop source of healthcare information and education, while 19% expect to offer such a hub by 2024.
• Listening strategy. While fewer than half of employers currently have an ongoing listening strategy in place to gather insights on the employee experience for health and wellbeing programs, this will be a key focus area in the future. Approximately a third of employers (33%) are planning or considering developing such a listening strategy over the next two years.

Enhancing the employee experience

As employers look to enhance the employee experience for health and wellbeing benefits, their three key priorities are:

• Increasing awareness of the benefit programs offered:69%
• Driving behavior change to encourage utilization, cost saving and health outcomes: 45%
• Developing a strategy to improve the employee experience:43%

Employers are deploying the following tactics to drive awareness, utilization and engagement to a great or very great extent:

• Targeted communication around “moments that matter,” such as benefits enrollment or key life events (e.g., birth of a child): 71%
• Frequent communication around wellbeing, including wellbeing tips: 69%
• Virtual solutions to reach remote employees and enable access to different resources and initiatives: 53%

A range of metrics can help employers assess the effectiveness of their employee experience. About six in 10 (61%) measure member satisfaction with health and wellbeing programs, the most commonly used metric. Fifty-seven percent gauge communication engagement, for example, by analyzing click-through and open rates. Slightly less than half (49%) measure behavior change associated with health and wellbeing programs.

Coming out of the pandemic, employees are looking for the security that retirement benefits and a thriving career can provide as well as the flexibility of new ways of working. For their part, employers are prioritizing employee behaviors that promote health and wellbeing critical to building a resilient, productive workforce.

An effective employee experience can help bridge this gap by addressing both employee and employer priorities. Employees able to manage their emotional and physical health will be well positioned to take advantage of key employer benefits — for example, saving for retirement, advancing in their career and contributing to increased productivity while working in flexible work arrangements.

The role of leave programs

Leave programs can help advance emotional wellbeing and DEI as well as provide a competitive advantage in attracting and retaining talent (Figure 10).

• Adoption leave (i.e., bonding with an adopted child): 79%*, 5%^, 5%** [Number of paid weeks mean/median – 7/6 weeks]
• Paternity leave: 79%*, 6%^, 6%** [Number of paid weeks mean/median – 7/6 weeks]
• Family care leave (i.e., care for loved one): 55%*, 5%^, 14%** [Number of paid weeks mean/median – 5/4 weeks]
• Sabbatical leave: 15%*, 2%^, 10%**

*In place in 2021 or 2022, ^ Planning for 2023, ** Considering for 2024

Figure 10. Employer leave trends

Does your organization have in place or plan to have in place any of the following leave benefits?
Note: Based on those who answered the question for the leave benefits.

A significant majority of employers provide maternity and paternity leave as well as adoption leave. Employers are looking to expand family care leave. Fifty-five percent currently have a family leave program in place, while another 19% are looking to offer this type of leave in the next two years.

Climate change is emerging as a future health and wellbeing priority

Roughly two-thirds of employers (64%) indicate that climate change will be a moderate to high priority in their health and wellbeing strategy over the next three years. In contrast, only half of employers ranked climate change as a moderate to high priority over the past three years.

Actions employers have taken to date to address climate change in their health and wellbeing strategy include offering emergency hardship funds, offering or enhancing mental health resources to deal with climate-related events, and sponsoring an employee resource group focused on climate sustainability.

Integrating climate change considerations in an organization’s health and wellbeing offerings can serve as a competitive advantage as more employees expect climate strategy to be part of the employee value proposition.

Take action to manage competing priorities

Employers find themselves managing competing priorities in the current challenging economic environment. Those who act now to mitigate rising healthcare costs while boosting affordability and enhancing support for employee programs will be better positioned to deliver positive outcomes for their workforce and the organization. The following measures can help you get started:

1. Work with your partners to develop strategies that balance employee affordability goals with the need to address rising costs, thereby helping avoid budget shortfalls.
2. Proactively discuss projected healthcare cost increases and potential budget challenges with leadership and finance; discuss the impact of potential cost mitigation opportunities on talent attraction and retention.
3. Commit to a change management strategy early, including targeted communications and improvements to the employee experience. Engage in employee listening to uncover the diverse needs of your workforce and evaluate coverage as it pertains to DEI.
4. Determine if your employees require better access to digital solutions and EAP support for mental health as well as whether your managers could benefit from training around mental health awareness.
5. Assess the effectiveness of your employee experience strategy for health and wellbeing benefits by measuring member satisfaction, communication engagement (analyzing click-through and open rates) and behavior change.
6. Evaluate the competitiveness of your leave benefits and take action to enhance these programs as necessary.

Footnote

¹ 2022 Global Benefits Attitude Survey