Did you know that exploring how a traditional “drug” plan can be integrated to a broader health and wellness plan is a growing trend? Have you heard that this trend is growing based on research that integrated health and wellness plans can lead to increased employee satisfaction and lower plan costs? This article explores traditional benefit plan design in relations to this trend and let’s you discover the facts from real research data.
When the goal of a benefit plan is to assist in attracting and retaining quality employees, and assist those employees in achieving and maintaining a high level of overall health, a different look at the drug versus Paramedical/wellness spend might be well worthwhile. With group plans, there is an intriguing paradox between how drug spending versus paramedical spending (and Wellness spending in general) is sometimes perceived. In a typical group plan, prescription drug claims will represent 60-80% of total health spend and paramedicals (like physio and massage therapy) will represent 10-20% of overall health spend. Most plans spend virtually nothing on wellness initiatives such as smoking cessation, weight loss, healthy eating and exercise.
In general, our society condones the use of drugs and views the use of other treatment modalities that can be just as therapeutic in a much less favourable light. All drugs have side effects; some are good and some are not. There are few side effects from counselling or physiotherapy other than improved wellbeing, increased mobility and functionality and decrease in pain, which in turns increases productivity.
From a benefit plan design perspective, spending money on drugs is often acceptable. Spending money on paramedicals is much less acceptable. Traditional group plans that have no annual or lifetime limit on the drug reimbursement amount are the norm. For example, if an employee is being prescribed Soliris, and the plan design says 100% reimbursement, the employee pays zero and the entire $600,000+ annual cost of that drug is paid by the plan. Comparatively, an employee who needs regular massage therapy for a back condition to maintain their ability to work will in most plan designs be limited to $500 per year reimbursement most employers in our experience seem to be comfortable with their employee’s drug spend (state source or note it’s from your experience). We know that prescription drugs are necessary, and can potentially change the course of a disease. We also know that spending money on paramedical practitioners and other wellness initiatives can significantly change the course of a disease and accelerate an employee’s recovery from injuries. However, the perception seems to be that a small amount spent on paramedicals and wellness is OK, but much more than $500 per year gets into the “abuse” range, while prescription drug spend of thousands per year is considered average and acceptable.
Of note, recent studies including Greenshields Canada 2013 drug study indicate that patient adherence to a prescribed drug treatment plan for many chronic conditions such as high blood pressure and diabetes is in many situations less than 50%, which results in huge unnecessary costs and poor patient outcomes.
Some employees (and their families) require medications to keep them at work, and prevent diseases from getting worse. Some individuals have minimal drug expenditures but place a high value and receive a high benefit from paramedical practitioners and wellness initiatives that promote health and wellness.
Initial data from the ongoing Wellness Return on Investment study being performed by Sun Life and the Ivey Business School shows that employee wellness programs save about 1.5 to 1.7 days in absenteeism per worker over 12 months, or an estimated $251 per employee per year.
There is a great opportunity to explore how a traditional “drug” plan can be moved towards a “health and wellness” plan over time, increasing employee satisfaction, lowering costs and raising the bar! In practical terms it will always be very difficult and generally not recommended to actually reduce the annual per employee drug maximum, especially not to $500. However, new benefit dollars can and should in our opinion be directed more towards non-drug items that can positively impact an employee’s health.
Mark Bajus
- CEBS, CLU, CFP - is the Director, Group Benefits for BF Partners. Learn more about Mark.
