Providing Value Through HRO Research

HRO service providers can derive significant value from producing and sharing research information. Vendors can show thought leadership, establish service and subject matter creditability, and reinforce brand differentiation, even as they gain a source of marketing materials and a lead-in to client discussions, as well as some free public relations coverage.

Much HRO research is designed to directly reinforce the need for the services and consulting offered by the service provider. A recent article by Ceridian discusses whether U.S. employers will drop employee health care plans when the Patient Protection and Affordable Care Act (PPACA) coverage requirements become effective in 2013. After providing some PPACA information, Ceridian moves to support services it offers, specifically consumer driven-health plans and health saving accounts.

When providers are not conducting primary research, it is important to reference other reputable resources. In this case, Ceridian quotes America’s Health Insurance Plans (AHIP), which recently reported that enrollment in Health Savings Accounts (HSAs) had reached 11.4m people in January 2011, a more than 14% increase over 2010. According to the AHIP, HSA enrollments have nearly doubled in the last three years and large group coverage was up 26% last year. Ceridian also quoted its executives, one of its own statistics, and ended with links to its web pages on CDHCs.

This is a solid, but perhaps overly focused on service offerings and marketing, communication designed to help it further tap a market where only 11m of a potential 160m are currently enrolled in an HSA.

A second example comes from a Mercer press release about the impact of automatic enrollment on defined contribution savings rates. It also directly supports Mercer services and it additionally offers information that is a bit more consultative.

Mercer used its own database of its 1.2m DC plan participants to show the positive impact of automatic enrollment and automatic increases on contribution rates. Participants who were automatically enrolled in their plan and use the automatic contribution increase have a 25% higher contribution rate (4.4%) than those who do not use the feature (3.5%).  Even better savings rate results come from self-enrolled participants (7.4%), and those who do self-directed increases, had the highest rate of all (8.5%). Company executives are used to further the messaging by commenting that those who self-enroll and set their own contribution rate contribute nearly two and half times more than those who are automatically enrolled.

With a bit more subtle communication, Mercer is establishing that it is a major player in DC by sharing information on what its 1.2m participants are actually doing that can help employers make policy decisions, support additional consulting, and reinforce the need to keep up proactive employee communications programs (which is a brand differentiator for Mercer) to support maximum effectiveness of the offered benefits of a DC plan.

Do you look at your vendor as a trusted and value-added source of information?

Linda Merritt, Research Analyst, HRO, NelsonHall

Benefits Administration Outsourcing – Driving Business Value

Managing the annual benefits enrollment process is a core value of benefits administration outsourcing (BAO) and for years large companies have taken advantage of its cost and convenience. According to Towers Watson’s Annual Benefit Enrollment 2011 survey, 78% of large companies outsource enrollment, while almost half of midsized companies still insource. The scale will continue to tip towards outsourcing as three fourths of the responding midsized employers that currently insource indicated plans to outsource enrollment.

What is causing this tipping point? I think it is the addition of complexity to the healthcare equation for both the employer and the employee. Start with the ever rising healthcare costs driving increasing use of consumer driven health plans and healthcare savings accounts, add in the U.S. healthcare reform changes, and the options and implications start to multiply exponentially.

Even with the success of web-based enrollment, now at 89% according to Aon Hewitt’s 2011 Annual Enrollment Insights, calls to service centers are still in demand. Change and uncertainty increase the need to talk to someone as helping employees understand new plan features and any changes in pricing create communication challenges. Service providers see increasing use of decision support tools (DSTs) to help employees. For those using BAO, Towers Watson reports 69% DST usage compared to 44% that insource.

BAO also makes the process of accommodating changes for healthcare reform a bit easier. Aon Hewitt saw a jump in enrollment of 15% in the number of covered dependents as participants added children between 19-25 who are now eligible for coverage under one of the first major reform changes. Even a change that is relatively simple to implement has broader implications including increased employer interest in ongoing dependent eligibility rather than just as an audit, and some are moving to per child pricing over family pricing.

New best practices will emerge in response to benefit changes.  Service providers highlight the importance of incorporating a participant’s actual health claims data into decision support tools. Aon Hewitt has already seen that 48% of participants using advanced DSTs changed their elections. This is another opportunity to strengthen the value of BAO as Towers Watson indicates that 83% of the survey respondents have not yet integrated claim data.

Another emerging best practice is incorporating wellness communications into the enrollment tools and process stream. One reason for this is pure practicality as enrollment is a prime time to think about wellness. Another reason is that more employers are making completing assessments or participating in condition management plans a requirement to receive incentives or participate in premium benefit levels.

The BAO sale can be made on cost, convenience, and complexity. With a crowded market of quality providers, the differentiating theme that should run throughout the year is how to drive behavior change that creates business value.  Does your benefits service provider add business value?

Linda Merritt, Research Director, HRO, NelsonHall