Midsize Employers in Kansas City Think and Act Big on Benefits; Will Others Follow Suit?

By Brian Schilling

To benefits managers at small and midsize companies, their large corporate counterparts must seem like a fortunate bunch as they indulge in luxuries like negotiating with vendors from a position of strength, dabbling in special projects designed to boost health care quality and—gasp—thinking ahead more than a single year. Even a straightforward effort to customize wellness programs to an employer's population seems daunting: Who will collect the data? Who will analyze it? How do we start to change employee behavior? And where do we find the money for all this?

But at least one group of benefits managers in Kansas City has found a viable workaround: collaboration. For the past three years, 16 area employers have worked together with their local business coalition to do something typically reserved for large employers—digging through reams of data and using the results to customize their individual benefits programs to conform to the principles of value-based benefit design (VBBD). The effort has already saved millions of dollars, and is now serving as the model for other employers.

The project, dubbed the Kansas City Collaborative (KC²), was spearheaded by the Mid-America Coalition on Health Care (MACHC), which launched the effort with support from Pfizer and the National Business Coalition on Health (NBCH) as a way to demonstrate that smaller employers could profit from tailoring benefits and wellness strategies to their unique populations. Participating employers represented diverse industries: health care, financial services, manufacturing, even greeting cards. The median size was approximately 4,000 employees; one employer had just 375. None had previously attempted the sort of analysis envisioned by KC²'s chief architect Bill Bruning, who was then president of MACHC.

"To do value-based benefit design right is fairly daunting," said Bruning. "The whole idea is to create a completely customized benefits strategy based on the needs of your covered population. That's why large employers are the only ones doing it—they have the resources."

Project Origins

MACHC, one of the oldest employer-driven health coalitions in the country, has a long history of hands-on involvement in a variety of quality improvement efforts. In 2000, the organization recruited 14 area employers to collaborate on an effort to destigmatize depression, encourage those suffering to get help, and improve the range and quality of available care. The effort is frequently cited as a model intervention. During the course of developing it, employers became intrigued about the possibility of collaborating on other shared health issues. Five years later, many of the same participants regrouped to focus their attention on cardiovascular disease. The chief frustration among participants was unexpected—vendors either couldn't or wouldn't give them their own data.

"You'd be surprised how often vendors told us that they couldn't supply the data we wanted," said Bruning. "It often felt like we were the first ones ever to ask for it."

That experience led the MACHC staff and membership to collectively ask whether there was a better way to design their benefits programs so they could get the data necessary to actively manage the health of their employees. At about the same time, Bruning was developing an appreciation for VBBD, which involves structuring benefits in a way that encourages employees to make choices among treatments, tests, and physicians based on value. Typically, high-value care costs less, while low-value care costs more. For instance, flu shots might be free, but an MRI for a routine backache might carry a large copay.

Bruning was convinced that the MACHC membership was ideally suited to conducting a large-scale, collaborative, data-driven VBBD demonstration project. He began actively recruiting employers for the KC² effort in 2008. In 2009, Pfizer agreed to offer financial support and technical assistance, especially in regard to analyzing data. NBCH signed on in 2009, as well, with an eye toward turning the KC² experience into a replicable national model.

Data Gathering and Analysis

For the 16 employers participating in the KC² initiative, the first phase of the effort involved a long, careful look in the mirror.

"Most employers in the country have an incomplete or even an inaccurate picture of their specific health challenges," explains Bruning. "We wanted to correct that up front by analyzing any and all available data so we could better focus our wellness efforts on workforce-specific health risks and have a baseline for comparison later."

Often, employers had to go looking for key data.

KC² identified more than 19 different types of data as potentially worthy of analysis (Exhibit 1). Claims and pharmacy data were typically available, but data from other sources such as employee assistance programs and disease management vendors were rarely accessible. In some cases, employers found that they didn't technically own even aggregated data about their own employees.

"We had some employers work for six months or more just to pull together enough data to do a meaningful analysis," said Bruning. "The first question people often ask about their own health care data is 'Where is it?'"

Bruning says that the process of working with employers to get their data was a lot like teaching them to fish—after some basic instruction and coaching, they improved quickly and became self-sufficient. In addition, vendors became more adept at providing raw data or regular reports as requested by their employer clients.

Data—including baseline health surveys, biometric screening efforts, and past claim archives—began pouring in. Much of it was used to populate a KC²-developed tool called an employer data tracker—a spreadsheet that helps employers better understand the relative significance of the various health issues they face.

Data gathering led to analysis and report writing. Eight months into the process, KC² employers got to see a clear picture of their specific health challenges for the first time.

"Data are the best antidote to preconceived notions about what an employers' key health issues are," said Bruning. "The health data tracker is a scorecard that tells a company it needs to focus on health issue X instead of on issue Y. Each company's employer data tracker tells a different and very nuanced story."

Narrowing the Focus

The baseline assessments found some common ground. Across all employers, 28 percent of employees had high blood pressure, about a quarter self-reported poor nutrition and inadequate physical activity, and more than half were obese or overweight. The findings suggested that heart disease was a shared issue.

As a group, KC² participants decided to focus their efforts on reducing cardio-metabolic risks. Then, based on their specific needs, each employer narrowed its particular focus to one or more of the following health issues:

• obesity;
• high blood pressure;
• high cholesterol;
• high blood sugar; and
• smoking.

Employers also chose interventions and set goals related to identifying employees with these conditions, preventing illness, and improving adherence to related treatment regimens.

Interventions

The interventions varied considerably. Some common themes emerged, of course—every employer modified its benefits plan according to the principles of VBBD—but each intervention was specific to the employer and the chosen health issues. For example:

H&R Block: In addressing weight management, high cholesterol, and high blood pressure, this financial services company opted to engage employees by offering premium credit and cash in exchange for participation in wellness programs. It also gave employees access to an online plan cost estimator to help them better understand the out-of-pocket costs of available plan options.
JE Dunn Construction Company: This 2,200-employee construction firm set its sights on lowering tobacco use by designating its headquarters and work sites as tobacco-free. Employees and family members were also offered free smoking-cessation classes and full coverage for tobacco-cessation medications. Smokers who didn't participate were hit with a monthly premium surcharge.
Kansas City Blue Cross and Blue Shield (KCBCBS): With the broad goal of making its workforce healthier, KCBCBS established a free onsite fitness center, banned smoking on campus, worked with vendors to make healthy food available in the cafeteria, and offered to pay 50 percent of employees' fees in Weight Watchers. The company also designated October as Health and Wellness Month, which featured access to an electronic health risk assessment and free telephonic health screening.

Results

In April of 2011, MACHC reported that the participating employer companies had collectively avoided about $11 million in health care costs as a result of the wellness efforts resulting from the KC² collaboration. Though substantial, that first-year savings figure is probably less impressive than what actually happened on the ground at specific companies. For instance:

• At H&R Block, health risk assessment screening participation rates jumped 178 percent from the 2009 baseline. The percentage of employees in the high-risk category for future health issues dropped from 16 percent to 9 percent.
• At JE Dunn, the prevalence of tobacco use dropped from 17 percent in 2007 to 11 percent in 2010.
• KCBCBS saw a 20 percent increase in employees in the lowest-risk health category and a 5 percentage point overall increase in the aggregate employee wellness score.

Other employers reported similar results after the interventions had been in place for only one year.

Bruning expects to see the positive trends continue as KC² employers continue to collaborate through MACHC even now that the initiative has ended. "They're seeing a real return on the investment," he says, "and that's before capturing things like reduced expenses around recruitment and retention, absenteeism, presenteeism (i.e., attending work while sick), productivity, and training. Human resource executives should ask for these factors to be weighed to get a more complete picture of the value and to compute a 'fully loaded' return from their efforts."

The American Health Strategy Project
The KC² project has led to similar efforts across the country. In 2010, NBCH and Pfizer used the lessons, tools, surveys, and metrics developed as part of the KC² effort to launch the American Health Strategy Project (AHSP) through five additional coalitions:

• the Dallas-Fort Worth Business Group on Health;
• the Midwest Business Group on Health;
• the Oregon Coalition of Health Care Purchasers;
• the Pittsburgh Business Group on Health; and
• the Virginia Business Coalition on Health.

Efforts in all five locations appear promising and are building new partnerships between coalitions and their employer members. Bruning is optimistic that the employers and the coalitions involved in the project will see substantial value in the effort almost immediately. "Benefits aren't a one-size-fits-all kind of thing," he says. "Every company has a unique employee population with its own specific needs; AHSP is going to show many participating employers what those needs are for the very first time."

The five participating coalitions will benefit too, says Bruning. "For MACHC it was an opportunity to be in almost daily contact with our members' human resources staff—working on data problems, helping guide analyses, suggesting solutions. We helped make a real difference. This kind of initiative is why coalitions exist."