The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


Controlling Costs to Avoid the Cadillac Tax

By Truven Staff
Marie Bowker imageThe International Foundation of Employee Benefit Plans (IFEBP) recently released its  report, examining how the Affordable Care Act (ACA) is affecting single-employer plans.  Consistent with the results of other similar surveys, the major

Not surprisingly, with that “play” strategy in mind, employers are now considering ways to avoid the 2018 excise tax (i.e., the “Cadillac tax”) by lowering the cost/spend of their plans.  According to the IFEBP survey, 27% of employers have conducted or plan to conduct in the next 12 months healthcare claims utilization analysis.  With regard to auditing, 25% have conducted or plan to conduct a dependent eligibility audit and 17% have conducted or plan to conduct healthcare claims audits to identify and eliminate unnecessary spending.

There is a limit to the amount of cost employers can shift to employees without jeopardizing their ability to attract and retain talented employees.  Therefore, it makes sense to focus instead on cutting waste and ineffective spending from the healthcare system to reduce overall costs—for both employers and employees.  And there is plenty of low-hanging fruit with which to start.  For example, our research estimates that the U.S. healthcare system wastes $125-175 billion annually on claims associated with fraud and abuse.

While there is a perception that fraudulent claims are confined to Medicare and Medicaid, our analysis shows it is widespread in employer-sponsored healthcare plans as well.  We recently analyzed the healthcare claims in our Truven Health MarketScan® Commercial Database and identified $122.6 million in overpayments in a single year—nearly $820,000 for each of the 150 organizations in the study—from just 6 of our fraud detection algorithms.  When looking at diabetic supplies for patients without diabetes, for example, we found claims totaling $450,000 for a single patient/provider combination for the year.  Did you know there is a “black market” for diabetic test supplies?

The key to avoiding fraud, waste, and abuse in your plan is meticulous attention to payment integrity issues.  That is, making sure that the correct payment is made for the correct member for the correct service to the correct provider.  Eliminating unnecessary spending from your plan is the first step to reducing your overall costs.

For more information on improving payment accuracy and reducing cost trends, download the .


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