Employers can increase savings by lowering workers' out-of-pocket costs for prescription drugs and by measuring the effectiveness of wellness programs, according to two new studies.

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Employers can save by gauging Rx co-pays, wellness efforts

January 11th, 2011

NEW YORK – Employers can increase savings by lowering workers' out-of-pocket costs for prescription drugs and by measuring the effectiveness of wellness programs, according to two new studies.

A three-year study commissioned by the Florida Health Care Coalition (FHCC) found that companies can cut health care costs for themselves and their employees by lowering co-payments on prescriptions while promoting disease management.

FHCC said the study, reported this month in the journal Health Affairs, breaks ground by showing the direct cost benefits to companies that implement "value-based insurance design" and combine it with a disease management program that promotes and educates employees about preventive health care. Through lower co-payments, companies can earn a return on investment of $1.33 for every dollar spent up front on medication during a three-year follow-up period, the study found.

"Amid soaring health care costs, this validates that old saying that an ounce of prevention is worth a pound of cure, and that's especially true where it often hurts most, in our pocketbooks," stated Becky Cherney, president and chief executive officer of FHCC, which commissioned the study with support provided by Merck & Co.

The study examined the effects of value-based insurance design plus disease management on people with diabetes. FHCC said previous studies have found similar improvements in medication adherence attributable to lower co-pays but noted that its study reveals that companies can save money as well. By overcoming a primary obstacle to taking medication — patients' high out-of-pocket costs – and engaging in a disease management program, patients avoid more involved and costly care down the road, the study found.

"This study demonstrates how the synergy of value-based insurance and disease management not only greatly improves compliance with medical guidelines, but it also reduces the direct medical costs associated, in this case, with diabetes," commented Dr. John Mahoney, medical director of FHCC. "We found that we were able to achieve savings in the entire outpatient arena."

The study evaluated the effects of a pharmacy program that lowered out-of-pocket costs to 10% for diabetes medications. The analysis focused on two groups of plan participants: 1,876 employees and dependents who participated in a disease management program and had value-based insurance, and a matched control group that did not have value-based insurance. The benefits of lower co-payments was evident after just the first year, with the use of diabetes medication 3.8 percentage points higher among those who participated in both value-based insurance and disease management, compared with those only in the disease management program. After three years, the gap rose to 6.5 percentage points.

"Not only were the effects on prescription drug use and adherence to guidelines sustained over time, they also grew over time," according to the FHCC study.

Meanwhile, a study by Buck Consultants, a Xerox company, found that despite spending more on employee wellness programs in 2010, only 37% of U.S. employers actually measure their program's effectiveness.

Titled "Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies," the study revealed that employers spent 35% more — about $220 — on each employee who participated in a wellness program compared with 2009.

The results were part of Buck's fourth annual global wellness survey, which analyzed responses from more than 1,200 organizations in 47 nations representing more than 13 million employees.

"Organizations that measure the impact of their wellness programs are more successful at improving their employees' health and overall wellness," stated Barry Hall, a Buck principal who directed the survey. "However, many simply don't know how to measure their results, or they don't have the resources to do so."

Wellness programs continued to gain momentum this year among U.S.-based organizations as a key strategy to reduce the cost of providing health care, improve worker productivity and reduce absenteeism, according to Buck. Among U.S. respondents, 40% of companies have measured how wellness programs affect the cost of providing health care benefits to their employees. Of those, 45% report success in slowing health care cost increases, with a typical reduction of two to five percentage points per year.

Among other key findings, 11% of U.S. respondents spend more than $500 per employee per year on wellness rewards, with the largest rewards reported at $3,000 per employee. Also, the fastest-growing components of wellness programs are technology-driven tools. In three years, employers around the world expect a sixfold increase in their use of mobile technology, such as smartphones, to support employee wellness initiatives.

Buck's survey was conducted in association with Pfizer, Cigna, Wolf Kirsten International Health Consulting and WorldatWork.