Employers focus on chronic ailments

Hoping to slow rising healthcare costs, a small but growing number of employers are reducing or eliminating drug copayments for workers with chronic ailments, offering medical screenings at work, and helping employees with catastrophic diseases access clinical trials.

With employers' health insurance premiums expected to increase by 9.9 percent this year, companies say their goal is to encourage workers to take their medications and get regular checkups to reduce the likelihood of expensive hospital admissions and disability payments. In all, 38 percent of employers have instituted targeted incentives or say they plan to, up from 20 percent in 2001, according to Camille Haltom, national practice leader for managed health at Hewitt Associates, a benefits consulting firm.

Companies offering targeted incentives are trying to control expenses among a small group of employees whose chronic illnesses make up the bulk of the firms' healthcare costs, said Sylvester J. Scheiber, US director of benefits consulting at Watson Wyatt Worldwide, an international benefits consulting firm.

An estimated 4 percent of insured employees with serious health conditions account for almost half of their employers' annual healthcare spending, according to a Watson Wyatt report released last week. That group, says Scheiber, rarely chooses high-deductible healthcare plans or health savings accounts.

''Those who are not as sick, the roughly 25 percent of participants in the early stages of chronic conditions or with acute health episodes account for 40 percent of spending," said Scheiber. ''By contrast, the healthiest employees, about 72 percent of a firm's employees, account for only 11 percent of healthcare costs each year."

Concerned about escalating health insurance premiums, Marriott International Inc. began eliminating copayments on generic drugs for workers with chronic conditions such as asthma, diabetes, and heart disease last year. The benefit, for 75,000 US employees and their dependents, includes a 50 percent cut in copayments for brand-name drugs.

According to Jill Berger, vice president of health and welfare and planned management design at Marriott, the company's health insurance premiums were increasing by more than 10 percent per year before it instituted the benefits. This year, however, the firm's health insurance premiums went up only 6 percent.

''Once you increase compliance among employees, you see savings for emergency rooms and hospitalizations," Berger said.

Hewitt's Haltom said the trend toward targeted benefits will likely increase.

''These programs are very new for a lot of employers," she said. ''But we are seeing more and more companies putting these incentives in place, including the reduction or total elimination of copayments. A smaller group is providing incentives for things like participation in health-risk surveys or questionnaires, medical prescreenings" and smoking cessation programs.

At AstraZeneca in Westborough, a skin cancer screening at work prompted Mary Kay Matale, a 42-year-old paralegal, to get treated for a precancerous mole. Matale was referred to a dermatologist who removed the growth as well as two others.

The company screens at its worksite for breast, cervical, colon, and other forms of cancer, and it offers a $50 monthly discount on health insurance premiums to workers who take a health assessment, said Tony Zook, chief executive of US operations.

AstraZeneca has been conducting the health-risk assessment for two years. It began offering the discount to participants last year. The company, which began cancer screenings in 1991, says the exams have detected 30 early-stage cancers in employees.

''We spend well over $100 million on benefit programs for employees and their healthcare," said Zook. ''The cost of doing screenings for breast, cervical, or colorectal cancer is inexpensive, but the treatment of one person for cancer can cost as much as $83,000 per year."

AstraZeneca is among five pharmaceutical companies working with the American Cancer Society to prevent, detect, and treat cancer among workers and their dependents. The drug companies, which include Johnson & Johnson, Novartis AG, and GlaxoSmithKline PLC, also help insured employees who are not responding to standard medical treatments access clinical trials.

Medical expenses for employees with cancer are five times higher than costs for healthier workers, reports the American Cancer Society. Additionally, US firms lose $17.5 billion per year due to absenteeism and lost productivity resulting from cancer.

Dr. Mark Fendrick, director of University of Michigan's Center for Value Based Insurance Design, said incentives are more effective than higher deductible plans.

''Right now, this country's number-one approach to the high cost of healthcare is to make employees pay more," said Fendrick. ''But cost sharing is a blunt instrument and the evidence actually shows that if you make people with chronic illnesses pay more, they stop buying the lifesaving things they need and companies wind up paying more."

Diane E. Lewis can be reached at dlewis@globe.com.