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Head off rising costs: Explore reasons for high claims

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in Employee Benefits Program,Human Resources

You can look forward to smaller increases in health-plan costs for 2007, even though medical and prescription drug-plan costs are still expected to run at more than twice the rate of general inflation, according to the 2007 Segal Health Plan Cost Trend Survey.

For the first time in several years, costs for prescription drug coverage are projected to increase in 2007 at levels that are close to the trend for medical coverage. Expect most medical and drug-plan coverage to rise in the 11 percent to 12 percent range (see chart below).

The survey cautioned that the increasing problem of widespread obesity and an aging work force will continue to drive up the demand for health services and costs.

Employers who've had the greatest success at keeping health costs under control have gone beyond across-the-board cost shifting to employees.

Those "winners" in the health care game have taken major steps to understand the causes for their high costs, the study noted. Their advice:

• Follow the money. Study health data to determine which employee groups and what diseases, conditions, facilities and treatments are driving your cost increases. Then address those issues head-on.

• Manage your plan. Adopt cost-effective cost-sharing strategies that channel patients to the appropriate providers and treatment options. Establish percentage-based co-insurance, as opposed to fixed-dollar co-pays. Invest in treatments that avoid catastrophic health events.

• Manage your vendors. Seek out vendors and innovative contract terms that keep costs in check and offer competitive pricing and superior service. More employers are pushing vendors for cost-increase caps.

• Manage your employees' health. Use data mining and predictive modeling to identify high-risk or at-risk employees. Provide real incentives to participate in wellness programs.

To read the Segal report, go to www.segalco.com/publications/surveysandstudies/2007trendsurvey.pdf.

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