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A Workbook for Developing a Vision and Roadmap to 2 nd + Generation Healthcare Consumerism. Ronald Bachman, FSA, MAAA President & CEO Healthcare Visions, Inc. Senior Fellow, Center for Health Transformation RonBachman@gingrichgroup.com 404-697-7376. Table of Contents. - PowerPoint PPT Presentation
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Ronald Bachman, FSA, MAAAPresident & CEO
Healthcare Visions, Inc.
Senior Fellow, Center for Health TransformationRonBachman@gingrichgroup.com
404-697-7376
A Workbook for
Developing a Vision and Roadmap
to 2nd+ Generation
Healthcare Consumerism
2
Table of ContentsPage # Topic . 2 Agenda 3 Scope of Work 4 Background Info 5 Task #1 – Setting Principles for Change 8 Task #2 – Vision Statement Development
11 Task #3 – Identification of Acceptable Stategies 14 Change Formula 18 Actuarial Issues 20 Consumerism 40 Task #4 – Personal Care Accounts
65 Task #5 – Wellness, Prevention, & Early Intervention 78 Task #6 – Disease Management 93 Task #7 – Decision Support Tools 102 Task #8 – Incentives & Rewards 111 Task #9 – Viewing Consumerism by Generations
145 Task #10 – Create Consumerism Plans 154 Task #11 – Setting Time Frame for Implementation 158 Integrated Health Management 161 Potential Savings from Healthcare Consumerism 164 Actual Industry Experience Results
170 Task #12 (summary) – Potential Savings 171 Consumer-driven Healthcare Surveys of Growth
3
AgendaDay# Goal1 Morning Agenda, Scope of Work, Background, (T1-3),
Change Formula, Actuarial Issues, Consumerism,Building Blocks (T4), Building Blocks (T5)
1 Afternoon Building Blocks T(6-8), Multi-generational Issues (T9),Create MSFT Plans (T10), Time Frame for
Implementation (T11)
2 Review Decisions from Tasks 1-11, Financials Task 12, Final Input to Roadmap
Tasks To Be Completed During 1.5 Day “Extreme” Consumerism1. Principles 7. Decision Support Tools2. Consumerism Vision Statement 8. Incentives & Rewards3. Strategies 9. Viewing by Generations4. Personal Care Accounts 10. Create Consumerism
Plans5. Wellness 11. Time Frames6. Disease Management 12. Financial Analysis
4
Scope of Work for Developing the Roadmap and Beyond
Diagnostic
and Readiness Assessment
Perform Financial
& Actuarial Analysis
(set metrics)
Design Benefits
and Contrib. Strategy
(The Road Map)
Evaluate, Select,
Implement Vendors
Developand
Implement Education,
Comm., Training,
etc.
Monitor and
Evaluate
•Evaluate current plans
•Interview •stakeholders
•Identify Basic Principles for Change
•Create Consumer Vision Stmt
•Select Strategies
•Develop Obj. & scope, set timeframe
•Match HR/business plan
•Est. Rel. Value of Components
•HDHP & Accts
•Wellness & DM
•Transition strategy
•Optional Coverages
•Carve-out Programs•Support services•Health vs. Healthcare•Debit/Credit Cards•Incentive Programs
•Develop baseline costs
•Co.& Ee contrib. level
•Model options
•Evaluate cost impact and revise
•Develop measures of success
•Communication Strategy
•Web-based Training, education
•Print, video, other media uses
• Internal vs. External Services
•Vendors
•Technology
•Services
•Performance
•Accountability
•Reliability
•Periodic reevaluation of baseline metrics
•Consumer scorecards
•Survey, measure success, acceptance
•Vendor/supplier audits
•Reassess & modify as appropriate
5
Background & Issues
Current Benefits, Design Issues, Service Issues, General Concerns, Anti-selection Reasons for Change, Interests in Consumerism, Driving Forces for Change, Perceptions of Employee Satisfaction, Dissatisfaction Other Problems and Positives with Current Plans
6
Task #1 – Setting Principles for Change Important…Not Important1. Have the Right Vision & Vision Stmt 1 2 3 4 52. Have a 3-5 Year Roadmap/Strategic Plan 1 2 3 4 53. Consider Other Related Corporate Initiatives 1 2 3 4 54. Create plan as part of Employer of Choice 1 2 3 4 55. Consider other HR metrics impacted by Healthcare 1 2 3 4 5
6. Provide Information on Rx Costs & Alternatives 1 2 3 4 57. Provide Information on Dr. & Medical Service Costs 1 2 3 4 58. Provide Information on Hospital Costs 1 2 3 4 59. Provide Information on the Quality of Dr. Care 1 2 3 4 510. Provide Information on the Quality of Hospital Care 1 2 3 4 5
11. Focus on Discretionary Costs (Rx and OV) 1 2 3 4 512. Focus on High Cost Claims & Claimants 1 2 3 4 513. Focus on Wellness and Preventive Care 1 2 3 4 5 14. Focus on an Individual Behavior Changes 1 2 3 4 515. Focus on Group Behavior Changes 1 2 3 4 5
7
Task # 1 – Setting Principles for Change Important…Not Important16. Use Incentives and Compliance Rewards 1 2 3 4 517. Increase Costsharing to Change Behaviors 1 2 3 4 518. Increase Employee Contributions to Offset Costs 1 2 3 4 519. Focus on Overall Plan Cost Reduction 1 2 3 4 520. Set the Right Measurements for Monitoring Progress 1 2 3 4 5
21. Build Broad Employee Agreement for Change 1 2 3 4 522. Minimize Change from Current Plans 1 2 3 4 523. Make Choices and Plan Options available 1 2 3 4 524. Improve Access to Care 1 2 3 4 525. Maintain Existing Network of Providers 1 2 3 4 5
26. Provide $ for post-65 retirement healthcare 1 2 3 4 527. Provide $ for pre-65 retirement healthcare 1 2 3 4 528. Provide $ for non-plan medical 1 2 3 4 529. Provide $ for terminated ee’s healthcare 1 2 3 4 530. Provide $ for non-healthcare expenses 1 2 3 4 5
31. Alternative to cutting benefits or initiating contributions 1 2 3 4 5
8
Sample Vision Statement: Create health and healthcare program options valued by employees that adapt effectively to
environmental trends that increase the quality of services,
improve access to care, and lower costs.
Task #2 – Sample Vision StatementPositioning to Balance Cost, Quality, and Access
AccessAccess
CostCost
QualityQualityConsumer
Valued Quality
Consumer Involvement & Transparency
Demand Driven Controls
Uncertain, Clinically Oriented
Third Party
Reimbursement
Supply Driven Controls
9
Task #2 – Create a Consumerism Vision Statement
Sample Vision Statements:
1. Providing high performing highly educated employees and their families with the security of comprehensive health and healthcare coverage that meets their diverse needs and rewards their personal involvement and responsibility as wise users of services to optimize their individual health status and functionality.
2. Affect employee behavior change towards healthier lifestyles and greater consumerism through the use of rewards and incentives.
3. Make employees better consumers of healthcare services by providing them with the necessary health education, decision support tools and useful information including provider cost and quality data.
4. Encourage greater employee awareness and involvement in healthcare and financial decision making, as a building block towards a defined contribution strategy for healthcare in the future.
10
Task #2 - Key Words / Phrases for Consumerism Vision Statement or Addition to Guiding Principles
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
11
Task #3 - Identification of Acceptable Strategies
High Priority...Low Priority1.Create Transparency – support “employee’s right to know,” minimize distortions of third-party reimbursement system, create transparency in costs, provide education/ training on healthcare costs, use decision support programs. 1 2 3 4 5
2.Create Personal Involvement – establish greater financial involvement through HDHPs, HRAs or HSAs, reward good behavior, offer valued options, provide long term incentives, provide immediate feedback. 1 2 3 4 5
3. Be Bold and Creative - Shift from supply-side controls to demand-side control designs. Be an early adopter/fast follower, consider out-of-the box ideas. 1 2 3 4 5
4. Focus on High Cost “Pareto” Population - Provide financial protection to families in need due to high unexpected medical costs and/or chronic conditions 1 2 3 4 5
12
Task #3 - Identification of Acceptable StrategiesContinued
Important…Not Important5. Focus on Saving Lives and Improving Health – Focus on improving the health of the entire population regardless of plan design selected. Implement prevention & wellness for long term savings and DM for immediate impact. 1 2 3 4 5
6. Focus on Preventive Care – Create incentiveprograms that change behaviors towards acceptance and compliance with wellness and early intervention, including pre-natal, non-smoking, diet, exercise, and safety 1 2 3 4 5 7. Minimize Impact of Cost Shifting – Use consumerismas an alternative to increased cost shifting or highercontributions. 1 2 3 4 5
8. Implement Optional Consumerism – Provide new programs and plan options on a voluntary basis. 1 2 3 4 5
13
Task #3 - Identification of Acceptable StrategiesContinued
High Priority…Low Priority9. Implement Change on a Multi-Year Program – Establish a consumer-centric program with a pre-determined multi-year introduction of options and use of accumulated HRAs and/or options. 1 2 3 4 5
10. Focus on Information Sharing Only– Provide eeswith decision support systems and information sources w/o accounts or incentives to reward behavioural change. 1 2 3 4 5
11. Use Packaged Programs – use full integration of plan design, information, disease management, and decision support systems from single vendor. 1 2 3 4 5
12. Use Existing Vendors – develop consumerist programs through current vendor relationships only. 1 2 3 4 5
13. Use “Best of Class” Programs – use selected vendors thatMay overlay core benefit designs as long as integration is Non-disruptive and transparent to members 1 2 3 4 5
14
A Reason To Consider Change
The Definition of Insanity:The Definition of Insanity:
““Endlessly repeating the same process, Endlessly repeating the same process, hoping for a different result.”hoping for a different result.”
- Albert Einstein- Albert Einstein
15
Employee Perceptions
Lead to a sense of entitlement…Employees underestimate total premium cost
Employees overestimate their share of cost
Source: Watson Wyatt
63%Underestimate
16%Close
21% Overestimate
20%Underestimate
11% Close
69% Overestimate
16
Requirements &Stages of Change
Desire forChange
Vision Process Change
Requirements for Change
Sta
ges o
f C
hange Comfort Level
Cautious Doing
CHANGE
Threshhold
Gather Info
Pros & Cons
Awareness
No No
CCHHAANNGGEE
No No
CCHHAANNGGEE
NO CHANGEWithout Desire – “Back Burner”
Without Vision – False StartsWithout Process – Frustration
++ ++ ==
- - - - - - - Alignment - - - - - - --
CHANGE
Awareness
Pros & Cons
Gather Info
Threshold
CHANGE
17
The Formula for Making Change Happen
Desire for Change
+Vision /
Roadmap+
Process for Change
=POSITIVECHANGE
Desire for Change
+Vision /
Roadmap+
Process for Change
=Put on Back
Burner
Desire for Change
+Vision /
Roadmap+
Process for Change
=Expensive False Starts
Desire for Change
+Vision /
Roadmap+
Process for Change
=Frustration
Set by Mgmt’s Set by Mgmt’s DirectionDirection
Task at HandTask at Hand Later - Next StepsLater - Next Steps ResultsResults
18
Preliminary Actuarial Work & Issues(NOT performed by CHT)
1. Data Collection and Population Profiling
2. Distribution of claims (low-medium-high-catastrophic claims)
3. Types and Analysis of Chronic & Persistent Conditions
4. Review of Industry Data on Consumerism
5. Use of Actuarial Pricing Model
6. Behavioral Modification Recognition
7. Cost Impact of Strategies and Plan Designs Selected
19
Purpose of Actuarial Work
Perform the actuarial and financial analysis to determine the impact of options available under a Consumerism Plan.
Determine Potential:
Plan designs
Savings Elements / HRA, HSA, & Account Credits
Combinations and interactions of “Building Blocks”
Costsharing structure
Contribution strategies
Participation
20
Consumerism
Supply Controls vs. Demand Controls “Them” or “You”
Reform is Not Enough, Transformation is Required
21
Supply Controls or Demand Controls
Plan Sponsors and Members have two basic choices to control costs:
1. Managed care & HMOs - The “supply of care” is limited by a third party who controls the access to medical services (e.g. utilization reviews, medical necessity, gatekeepers, formularies, scheduling, types of services allowed), or
2. Healthcare Consumerism - The member controls their “demand for care” because of a direct and significant financial involvement in the cost of care, rewards for compliance, and the information to make wise health and healthcare value driven decisions.
22
High Healthcare Costs Climbing Higher
Patients have lost control of their own healthcare, and are not truly engaged in the process of managing their health
Patients are frustrated with managed care “rules” and the impact on time and productivity
Patients don’t understand healthcare costs – costs are not transparent
“Every System is perfectly designed for the results achieved.”
Supply Controls Are Failing
23
Mega Trends Leading to Demand Control
1. Personal Responsibility
2. Self-Help, Self-Care
3. Individual Ownership
4. Portability
5. Transparency (the Right to Know)
6. Consumerism (Empowerment)
Healthcare Consumerism is about transforming an employer’s health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants.
It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors.
24
Healthcare Consumerism - Defined
““The job of a leader is to create the possible” – The job of a leader is to create the possible” – Condi Rice Condi Rice
25
Consumerism – Saving Lives & Saving Money
The Moral Imperative for Consumerism:
Increasing the Quality of Care, Better Health,
and Improving Lives
The Economic Imperative for Consumerism:
Saving Money (Lower Product Prices and More Jobs)
26
Objectives Of Consumerism
Change participant health and healthcare purchasing behaviors
Narrow market cost and quality variations using patient decisions• Increase transparency of healthcare costs to plan participants• Give plan participants more control over and “shared responsibility” for
managing own healthcare and related costs• Supply participants with the tools to act as better informed healthcare
consumers
Reduce costs for “discretionary care” through informed purchasing & incentives
Reduce long term costs with added incentives for “good health”
Reduce costs of Chronic Conditions through improved compliance with treatments and disease management programs
Reduce Acute Care costs with incentive hospital tiering based upon cost and quality
27
Basic Requirements for Successful Healthcare Consumerism
Must work for the sickest members, as well as the healthy
Must work for those not wanting to get involved in decision-making, as well as those that do
28
The Core of Consumerism
The Unifying Theme for a
Health and Healthcare Strategy is:
Behavioral ChangeBehavioral Change“Implement only if it supports
behavioral change consistent with the strategy”
29
Healthcare ConsumerismRoles & Responsibilities / Implications
Employers Facilitators of change Provide increased information and decision making tools Improved employee morale with choice and access Link to productivity, absenteeism, disability, turnover, etc. Consumerism can improve costs/budgeting (current & future)
Payers (Self-Insured Employers) Focus on high cost case mgmt/disease mgmt/population mgmt Will become responsible for more communications, training,
education direct to consumers Value added services may change, including transactions and
asset management Diminished role of managed care for routine care
30
Healthcare ConsumerismRoles & Responsibilities / Implications
Employees Increased responsibility for own health & healthcare Involved in own treatment and medical necessity decisions Improved access to care Involved in financial costs of health & healthcare (P4C)
Providers More direct involvement with patients and treatment Service and quality will be determined by consumers Pricing will become more flexible and visible (P4P)
Overall implications Roles will change for all players The picture change quickly - your strategy must prepare you for
rapid market changes
31
Consumerism Choices Involve Options for Behavioral Change
Consumerism Choices:
WellnessPreventive careEarly InterventionLifestyle Options (diet, exercise, smoking, safety)Self-help, self careDiscretionary Expenses (e.g. OV, ER, Rx)Value purchasing (e.g. DXL, o/p vs. in/p)Participation in Disease Management ProgramsCompliance with Evidence Based Medicine Treatment Plans
32
Consumerism – Much Broader than HDHP & Consumer-Driven Healthcare
Consumerism is Consumerism is A StrategyA Strategy
************************************It’s about moving from a It’s about moving from a
“benefit” to an “accumulating “benefit” to an “accumulating asset.”asset.”
33
Evolution of Healthcare Consumerism
Focus Impact Choices
First Generation
High Deductible Plans with HRAs or HSAs, Decision Support Tools
Discretionary Expenses: Rx, ER, OV, D-X-L
Initial Level and Type of Accounts with CDHC / HDHP Designs, Information and Decision Support Services
Second Generation
Behavior Change Through Rewards
Chronic and Persistent Conditions, Pre-natal, Preventive Care
Covered Benefits, Type and Level of Matching Funds and P4C / P4P Incentives for Prevention, Wellness, and Disease Management Programs
Third Generation
Health and Performance
Organizational Health, Turnover, Absenteeism, Productivity, Disability, and Presenteeism
Group rewards, Importance and Impact on non-health Corporate metrics
Fourth Generation
Personalized Health and Lifestyle Needs
Personalized Health and Performance Outcomes, Genetic Predispositions
Lifecycle Needs, Culturally Sensitive DM, Holistic Care, Information Therapy
34
The Evolution of Healthcare ConsumerismFuture Generations of Healthcare Consumerism
Behavioral Change and Cost Management Potential
Low Impact ---- ---- ---- ---- ---- ---- ---- ---- ---- High Impact
Traditional
Planswith
ConsumerInformation
2nd Generation Consumerism
Focus onBehaviorChanges
TraditionalPlans
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
/CDHC
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
35
The Promises of Consumerism
Personal CarePersonal CareAccountsAccounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease and Case Disease and Case ManagementManagement
InformationInformation
Decision SupportDecision Support
The Promise of Demand Control & Savings
The Promise of Wellness
The Promise of Shared Savings
The Promise of Transparency
The Promise of Health
It is the creative development,
efficient delivery, efficacy, and successful
integration of these elements that will
prove the success or failure of
consumerism.
Major Building Blocks of Consumerism
36
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
37
Creating Healthcare Consumerism Plans
Understand Basic Consumerism Plan Designs Including Consumerism in All Plan Options
Building Blocks 1. Understanding HRAs/HSAs to Create Personal Care Accts as a
Basis for Health “Asset Accumulation”
2. Include Wellness Programs that Encourage Healthy Habits
3. Include Disease Management Programs that Encourage Compliance
4. Include Decision Support Tools for All Plans
5. Include Incentives/Disincentives to Change Behavior
38
Basic Plan Design Options & Healthcare Consumerism
Personal AccountsPersonal Accounts
Incentives &Incentives &
RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
Case ManagementCase Management
HMOHMO&&
FSAsFSAs
HRAs?HRAs?
PPOPPO&&
FSAsFSAs
HRAs?HRAs?
PPOPPO& &
FSAsFSAswithwith
HRAsHRAs
HDHPHDHPPPOPPO
& &
LtdLtdFSAsFSAs
& & HSAsHSAs
HDHPHDHPPPOPPO
&&
Ltd Ltd FSAsFSAs
&&HSAsHSAs
&&LtdLtd
HRAsHRAs
Most Healthcare Most Healthcare Consumerism Plan DesignsConsumerism Plan Designs
Must Meet HSA / Must Meet HSA / HDHP Legal HDHP Legal
DefinitionDefinition
InformationInformation
Decision SupportDecision Support
TypicalTypicalCDHPCDHP
Traditional Traditional Health PlansHealth Plans
39
Potential Use of PCAs to Support Consumerism Plan Designs
Personal AccountsPersonal Accounts
Incentives & RewardsIncentives & Rewards
Wellness/Prevention Wellness/Prevention
Early InterventionEarly Intervention
Disease and Case Disease and Case ManagementManagement
HMOHMO PPOPPO
PPOPPO
HDHPHDHPPPOPPO
HDHPHDHPPPOPPO
Most Healthcare Most Healthcare Consumerism Plan DesignsConsumerism Plan Designs
Must Meet HSA / HDHP Must Meet HSA / HDHP Legal DefinitionLegal Definition
InformationInformation
Decision SupportDecision Support
TypicalTypicalCDHPCDHP
Minimum Minimum Co-Payment Co-Payment
DesignsDesigns High Ded & Co-Insurance High Ded & Co-Insurance DesignsDesigns
Health Health Incentive Incentive
Accounts?Accounts?
InitialInitial$500-$500-$1000$1000HRAHRAwithwith
IncentiveIncentiveHRAsHRAs
Initial Er HSAInitial Er HSAContributionContribution
Initial Er HSA Initial Er HSA ContributionContribution
With With HRAHRA
MatchMatch&&
Incentive Incentive HRAs &HRAs &HSAsHSAs
Traditional Traditional Health PlansHealth Plans
40
PPO/HRA and PPO/HSA High Deductible Health Plans
Four components that work together to improve quality, outcomes, and lower cost.
Health Accounts (HRAs or HSAs)
“Benefit dollars” topay for healthcare
expenses.
1.
PersonalizedHealthCare
Web- and Phone-Based Tools
Health Toolsand Resources
Wellness, Condition care Programs, Information and Decision Support Tools and
Resources.
3.
4.
HRA – ER provided $s
HSA - ER and/or EE Provided $s
HRA/HSA – Individual & Group
Reward $s
Incentives and Rewards
Additional Health Coverage beyond the HRA/
HSA.
2.
Health Account (HRA/HSA)
Deductible Gap
PPO
Preventive 100%Coverage
41
Task #4 - Personal Care Accounts
The Promise of Demand Control & Savings
HSAs, HRAs, FSAs, FHSAs
“Of the 5 building blocks, the greatest among them is the Personal Care Account”
42
HSAs and HRAs - Two Very Different Accounts to Support Consumerism
HSA (2003 MMA) - A law, with specific requirements and benefit design
requirements. - Most TAX ADVANTAGED vehicle ever created
HRAs (6/26/2002) - A regulatory creation based upon an IRS ruling - Most FLEXIBLE vehicle ever created
43
Health Savings Accounts – Advantage Employees
Tax-free savings vehicles for medical expenses, no use-it-or-lose-it rule
Effective January 1, 2004
Eligibility: must be covered under high deductible health plan (HDHP)
Portable
44
Health Savings Accounts
Individual accounts
To permit saving for qualified medical and retiree health expenses on a tax-free basis
Must be offered in conjunction with a legally defined HDHP - “High Deductible Health Plan”
Portable
An HSA is owned by the individual, similar to IRAs, and transfers if the employee changes jobs
Held in a trust or custodial account; trustees – banks, insurance companies, approved non-bank trustees
45
Health Savings Accounts: Contributions
Contribution limits determined monthly based on status, eligibility, HDHP coverage as of first day of month (offset by other HSA contributions)
2005 Monthly limit – 1/12th of lesser of deductible or $2,650 (self-only), $5,250 (family), indexed
Catch-up contributions, age 55 to 64, $600 in 2005, phased up to $1,000 annually in 2009
46
HSAs – Real Dollars, Portable, Vested
Can be used or taken in cash at anytime, even when no longer eligible to make contributions
Tax-free if used to pay for qualified medical expenses (IRC Section 213(d))
For other purposes, subject to income tax and 10% penalty - 10% penalty waived in case of death or disability - 10% penalty waived for distributions after age 65 or older
HSA can be transferred tax-free to spouse on death; otherwise taxable to estate or beneficiary
Transfers upon divorce, nontaxable, becomes spouse’s HSA
47
HSA Eligible HDHPHigh Deductible Health Plan – By Law
Self-only: a deductible of at least $1,000; maximum HSA is $2,650; no more than $5,100 maximum out-of pocket expenses (incl. Ded.)
Family coverage: a deductible of at least $2,000; maximum HSA is $5250; no more than $10,200 on out-of pocket expenses (incl. Ded.)
2005 Age 55 and over catch up amount of $600
Preventive services are not subject to the deductible
OK for out of network costs to exceed maximum out-of pocket limits
THE ABOVE 2005 AMOUNTS ARE SUBJECT TO ANNUAL INDEXING
48
HRAs- Advantage EmployersNational Accounts, Er Controlled Rules
Employer does not fund and has cash flow value
Employer can determine rules for HRA usage; they are subject to forfeiture; they are not portable, but can be subject to vesting
HRAs are more flexible in plan design, can tailor scope of reimbursements, are less costly for employer
Employer decides if HRA can used for (1) medical plan expenses not otherwise reimbursed, (2) non-plan QME 213(d), and/or (3) insurance premiums
49
Important Differences between Use of HRAs and HSAs for Supporting Behavioral Change
Generation 1
Initial Account Only
Generation 2
Activity & Compliance Rewards
Generation 3
Indiv. & Group Corporate Metric Rewards
Generation 4Specialized Accts,Matching HRAs,Expanded QME
1. Any Amount 2. Notional Acct 3. Employer Determined 4. Employer Only Contributions
1. Flexible Activity & Compliance Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare
1. Flexible Indiv & Group Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare
1. Specialized Notional Accts, 2. Can terminate by employer rules 3. Potential IRS Expanded QME
Health Savings Health Savings AccountsAccounts
1. Amounts Set by law 2. Real Dollars in Acct 3. Er or Ee Contrib 4. Contributions up to
plan deductible of $1000-2650 Single
$2000-5250 Family 5. Non-substantiation
1. Ltd Potential – (But For Rule) 2. Must give Cash Option 3. Awards must be same $ amt or same % of deductible 3. HSA can be used (with 10% penalty) for non- healthcare expenses
1. Ltd Potential – (But For Rule) 2. All participants must receive same amount or same % of deductible 3. Difficult to use for Group Incentives
1. Ltd Potential – (But For Rule) 2. 100% Vested & Portable 3. Can use matching HRAs, 4. Potential IRS Expanded QME
Health Health Reimbursement Reimbursement ArrangementsArrangements
Personal Care
Accounts
50
Er-Based with HSA HSA ContributionsContributions
HRAs – Best for Larger Groups?HSAs – Best for Individuals and Small Groups?
Current State
HRAs HSAs
Employer-based
Healthcare with Individual Accountability
Individual-based Healthcare
FSAs
Employer-based
Healthcare
Traditional (Ltd Carry-over)
Special Purpose Non-
Plan
Combination Accounts
Employer-based
healthcare
Special Purpose Accounts
Incentive Matching
Employer-basedDefined
Contribution Developments
51
Are HSAs the right vehicle for large employer groups?
Yes, If………..
Or
No, Because…….
Need to Understand the Consumer Movement, Federal Health Policies, &
the Market Transformation that is Underway
52
Are HSAs the Wave of the Future?Which Direction will Legislation Take?
Yes, if…. … we recognize the HSA legislation and regulations as a good start and another building
block for consumerism and behavioral change. …Er’s and Ee’s recognize current limitation and optimize available uses …there is additional legislation/regulation to support large Er interests in providing HSAs
(use for healthcare only, Rx coverage problem, combination accounts). …there is legislative support for the common use of FSAs for targeted needs, HSAs as
true “Health Savings Accounts” and HRAs as true “Health Reimbursement Arrangements.
No, because…. … they were not legislated/regulated with large employers in mind. … of a desire to promote individual insurance over individual ownership (under employer
and individual policies) … they are just a tool to cost shift to employees, they can not reward behavior change … they are only desirable to the young, healthy, and wealthy
53
Summary - PCA Comparisons
54
Summary - PCA Comparisons (cont)
55
The Fundamental Federal Policy Question
Will Legislation/Regulation Use HSAs to
… mainly promote portable Individual & Small Group Insurance,
OR
… expand Personal Care Account ownership through in both an employer-based and individual-based healthcare system thru HSAs, HRAs, and FSAs.
56
- The Answer - Flexible Health Savings Accounts (FHSAs)
FHSAs would have the tax advantages of HSAs and the key flexibilities of HRAs.
Basic Principles:
1. Retain personal responsibility goal of HSA/HDHPs
2. Focus on Behavior Change
3. Recognize value of Pay for Compliance as a driver for behavior change and shared savings with personal responsibility
4. Expand adoption and funding of HSAs by large employers
57
Flexible Health Savings Accounts (FHSAs)The Next Generation
Four needs that would allow FHSAs the flexibility to:
1. Provide financial Rewards and Incentives for Behavioral Change.
2. Encourage Employer/Carrier FHSA contributions towards healthcare
3. Be provided with plan designs other than HDHPs
4. Address FHSA/HSA Technical Issues
58
FHSA Flexibilty to Provide Financial Rewards and Incentives for Behavioral Change
1. Allow for compliance incentives under disease management programs (e.g. diabetes, asthma, CHF) and wellness initiatives (e.g. wellness assessments, smoking cessation, etc.).
2. Change Comparability Rule to mean all members under a given program of care or treatment, such as, a disease management or wellness program.
3. Rewards and/or incentives should not be limited by the deductible limit, but should be consistent with expected savings from programs for which participation is being rewarded.
59
FHSA Flexibility to Encourage Employer Contributions to Healthcare
1. Allow employers/carriers to voluntarily contract with employees to require employer/carrier funded FHSAs to be used only for healthcare expenses while employed and covered under the plan.
2. Remove cap on employer/carrier funded FHSA contributions or expand to at least the plan’s Maximum Out-Of-Pocket total exposure in a given calendar year.
60
FHSAs Flexibility to be Provided with Plan Designs Other than HDHPs
1. Preventive drugs include maintenance drugs. Drugs now defined as preventive by the Treasury Dept. can be covered below the deductible, while the cost of maintenance drugs is now included in the deductible.
2. Allow Rx to exist as carve out benefits at least for prescription drugs associated with chronic and persistent disease states
3. Allow “incentive only based” FHSAs for employer/carrier only funding under non-HDHPs (i.e. no initial FHSA funding or employee funding)
4. Allow some mental health and substance abuse benefits (besides EAPs) to be included under preventive care.
5. Allow use of HSA to pay for pre-65 Retiree and Individual Healthcare premiums
61
FHSA Flexibility - Technical Issues
1. Allow FHSA/HSAs to go into effect on the first day of coverage is effective.
2. Allow FHSA/HSA contributions for a full calendar year regardless of when a plan is effective.
3. Allow FHSA/HSAs to be used to pay for health coverage premiums (other than current limited use for (1) Premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), and (2) premiums for HDHP coverage for those who receive federal or state unemployment compensation).
4. Allow Flexibility to "post-date" the FHSA/HSA effective date so that FHSA/HSA dollars can cover expenses incurred before the account was established. Allow the account to be opened under a "provisional status" until the necessary paperwork is filed, at which time the account becomes active.
62
Growth of Personal Care Accounts
HRAs HSAs2000* None None2001* 19,000 None2002* 53,000 None2003* 394,000 None
2004(est) 1-1.5M 400,0002005(est) 3.2M 1,000,0002006(est) 6.0+M ???2007(est) 12-15M ???* Deliotte Consulting
63
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
64
Task #4 - Discussion on Type(s) and Use of Personal Care Accounts
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
65
Task #5 - Wellness, Prevention, and Early Intervention
The Promise of Wellness
66
Wellness - Defined
Wellness is a proactive organized program providing lifestyle and medical/clinical assistance to employees and their family members in maintaining good health.
Wellness programs encourage voluntary behavior changes and support compliance with proven approaches to maintain health, reduce health risks and enhance their individual productivity.
67
Wellness – The Need
For every 100 members:
23-30% smoke (70% want to quit, 35% try each year) 29% have high blood pressure 30% have cardiovascular disease 80% do not exercise regularly 55% or more are overweight or obese 30% are prone to low back pain (many linked to obesity) 6-9% have diabetes 10% are depressed 35% are under significant stress 50% do not wear their seat belts
68
Wellness – The Desire for Change
For every 100 members:
47% are trying to improve their diet 37% plan to undergo some health screening 30% state they exercise regularly Only 23% are aware of the health promotion and wellness programs offered by their employer sponsored health plans 76% of employers with over 11,000 employees offer health management programs
Kaiser Family Foundation Survey, 9/03
69
Wellness - How Does It Impact Employees and Family Members?
Well
e.g., Low Risk, Good Nutrition, Active
Lifestyle
At-Risk / Acute Conditione.g., Inactivity, High Stress,
Overweight, High Blood Pressure, Smoking
Chronically-Ille.g., Diabetes, Musculoskeletal, Heart Disease, Asthma, MH/SA
Catastrophice.g., Cancer, Rare
Diseases, Head Trauma
No Claims GenerallyHealthy
O/P (Low) In/P (High)
Maternity O/P (Low) In/P (High) In/P (High)
% Ee 15% 48% 14%
3% 3% 12% 4% 1%
% $
0%
12%
15%
12% 5%
21%
20%
15%
% Ee 63% 20% 17%
% $ 12% 32% 56%
PreventionWellness – Lifestyle Wellness - Lifestyle
Minimize Acute Episodes Minimize Complications
Maximize Recoveries Maximize Stabilization
Early InterventionEarly Intervention
Wellness - ClinicalWellness - Clinical
Wellness - ClinicalWellness - Clinical
Traditional Wellness ProgramsTraditional Wellness Programs
70
Wellness – Examples for Employer Sponsored Programs
Common Programs Weight Management Fitness/exercise/health clubs Smoking cessation
Employer Support Communication and awareness (newsletters, health fair, posters) Screening (health awareness profiles, blood pressure check, blood tests, body fat analysis) Education (seminars/classes, self help kits, group discussions, lunch and learn) Behavioral Change (on-site fitness center, flu shots, lunchtime walks, yoga classes)
71
Wellness – Working within Consumerism
Traditional Plans Cover selected wellness in benefit plan at 100% Supplement with non-plan wellness and work-site programs Other: same * as below PPO/HRA incentives
PPO/HRA Include Employer defined wellness/prevention benefits at 100%
* Include HRA Incentive for Wellness Appraisal* Include HRA Incentives for personal wellness activities* Include HRA Incentives for work-site wellness participation
PPO/HSA Include IRS defined Preventive Care benefits at 100% Benefits contingent upon HSA contribution? Wellness Appraisal Other: same * as above with PPO/HRA incentives
72
Consumerism - Programs and ServicesPrescription Drugs Information
Evidence Based Medicine Medical Care Guidelines Health Library
Disease Management Condition Specific Assessment
Tools Chronic & Persistent Wellness Voluntary Participation Voluntary & Incentive Based Mandatory Participation Mandatory & Incentive Based
Self Care Management Information
On-Line Health Risk Assessment
Personal and Family Tracking
Health & Performance Population Management Case Management Cost & Quality Management
Stress Management Assessment Tools Self Help Tools
Depression Screening
Preventive Care – Lifestyle
Lifestyle Nutrition Fitness Personal Health Management
Preventive Care – Clinical Immunizations Hypertension Screening Cholesterol Testing Mammograms Pap Smears Blood Pressure Checks Colorectal Cancer Testing Diabetes Testing Osteoporosis Testing Chlamydia Tests
Early Prevention
Wellness
Online News
Safety
Pre-Natal
Well Baby Care
New Mom Programs
Medical Services Support
FAQ, Preparation for In/P
End of Life Care
Provider Cost/Quality Incentives
Regional Centers of Excellence
73
Wellness & Preventive Care for HSAs
Preventive care includes, but is not limited to, the following:
Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. Routine prenatal and well-child care. Child and adult immunizations. Tobacco cessation programs. Obesity weight- loss programs. Screening services
However, preventive care does not generally include any service or benefit intended to treat an existing illness, injury, or condition.
74
HSA Safe Harbor Preventive Care Screening Services
Cancer ScreeningBreast Cancer (e.g., Mammogram)Cervical Cancer (e.g., Pap Smear)Colorectal CancerProstate Cancer (e.g., PSA Test)Skin CancerOral CancerOvarian CancerTesticular CancerThyroid Cancer
Heart and Vascular Diseases ScreeningAbdominal Aortic AneurysmCarotid Artery StenosisCoronary Heart DiseaseHemoglobinopathiesHypertensionLipid Disorders
Infectious Disease Screening• Bacteriuria• Chlamydial Infection• Gonorrhea• Hepatitis B Virus Infection• Hepatitis C• Human Immunodeficiency Virus (HIV)• Syphilis• Tuberculosis Infection
Mental Health/Subst. Abuse Screening• Dementia• Depression• Drug Abuse• Problem Drinking• Suicide Risk• Family Violence
75
Wellness – Planning
Will the wellness program be for employees only, or employees and dependents?
Will you purchase from vendor, internally developed, or a combination
Consider in conjunction with plan covered wellness benefits (immunizations, mammograms, screening, EAP, physical exams, pre-natal care, well child care, etc.)
Consider in conjunction with worksite programs (safety, ergonomics, work-life programs, etc.)
Incentives/rewards provided for compliance
76
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
77
Task #5 - Discussion on Type(s) and Use of Wellness and Prevention
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
78
Task #6 - Disease Management Programs
The Promise of Health
The “Holy Grail” of Cost and Quality Improvements
79
Disease or Condition Management – the Holy Grail of Potential Savings
Primary cost drivers are chronic disease and serious acute conditions.
The direct impact on productivity is comparable to the direct cost of health care
80% of
costs
20% of claimants
Driven by
For a typical employer, 15-30% of costs are driven by controllable health risks
50% of
costs
Have a behavioral root cause
(CDC 1999)
80
Disease Management PotentialFocus on Hi-Volume / Hi-Cost Users
Cost Curve
% Members % Costs
1% -> 20%
15% -> 68%
50% -> 95%
EBRI -Stakeholders in Consumer-Driven Health Care
81
Disease Management - Defined
Disease Management is an proactive organized program providing lifestyle and medical/clinical assistance to employees and their family members with chronic and persistent conditions.
Disease Management programs encourage voluntary behavior changes and support compliance with proven medical practices which stabilize conditions, reduce health risks and enhance their individual productivity.
82
Disease Management – The Need
60+% of an employer’s total medical costs come from chronic and persistent diseases such as, diabetes, asthma, congestive heart failure, back pain, and depression.
45% of Americans live with at least one chronic disease. 14% live with two or more chronic diseases.
76% of hospitalizations, 72% of physician visits, and 88% of Rx is due to chronic conditions
The average cost of health care for a diabetic is $13,200/yr compared to $2,600/yr for a non-diabetic.
61 million Americans live with cardiovascular disease
50% of chronic disease deaths are traced to cardiovascular disease.
Coronary artery disease is a leading cause of premature permanent disability.
Obesity is becoming the #1 preventable cause of death
83
Today’s Health Care Environment and Trends
Determinants of Health
0%
10%
20%
30%
40%
50%
60%
Determinants 10% 20% 20% 50%
Access to Care
Genetics Environment Behavior
Source: IFTF, Centers or Disease Control and Prevention
84
Disease Management – The Desire for Change
Very Little under Traditional System:
50% do not follow recommended standards of care 33% will high blood pressure do not know 33% of diabetics do not know it Patient’s lack of knowledge and information Patients without financial incentives to change health and healthcare behaviors Distortions of current 3rd party reimbursement medical financing system. Plans pay for treatments not prevention or compliance Physicians without incentives to take time and effort to deal effectively with chronic conditions
85
Disease Management – Elements for a Successful Program
There are four elements of a successful disease management:
1. A delivery system of health care professionals and organizations closely coordinating to provide medical care and support the patient’s compliance throughout the course of a disease.
2. A process that monitors the compliance and describes outcome-based care guidelines for targeted patients.
3. A process for continuous improvement that measures clinical behavior, refines treatment standards, and improves the quality of care provided.
4. Incentive awards that support the disease management medical and clinical care services
86
20 Priority Areas per the Institute of Medicine
1. Asthma, supporting and treating those with chronic conditions.
2. Care coordination for patients with multiple chronic conditions.
3. Children with special health and care needs, particularly those with chronic conditions.
4. Diabetes, which can lead to high blood pressure, heart disease, blindness and other complications.
5. End-of-life care for people with advanced organ failures, concentrating on reducing symptoms.
6. Frailty - preventing accidents, treating bedsores and improving advanced care.
7. High blood pressure - left untreated it can lead to heart attack, stroke and kidney failure.
8. Immunization.
9. Evidence-based cancer screening, which can reduce death rates for many cancers, including colorectal and cervical.
10. Ischemic heart disease, also known as coronary heart disease. Efforts should focus on prevention.
87
11. Major depression, which currently has a much lower treatment rate that other major diseases.
12. Medication management to prevent errors.
13. Noscomal infections. These are infections acquired in the hospital and kill an estimated 90,000 Americans annually.
14. Obesity, which is blamed for as many as 300,000 deaths annually in the United States.
15. Pain control in advanced cancer.
16. Pregnancy and childbirth, especially improving the quality of prenatal care.
17. Self-management and health literacy, using public and private organizations to increase the level of health education.
18. Severe and persistent mental illness; improving mental health care in the public sector, including state hospitals and community centers.
19. Stroke, the third highest cause of death in America.
20. Tobacco-dependence treatment for adults.
20 Priority Areas per the Institute of Medicine
88
Disease Mgmt - How Does It Impact Employees and Family Members?
Well
e.g., Low Risk, Good Nutrition, Active Lifestyle
At-Risk / Acute Condition e.g., Inactivity, High Stress,
Overweight, High Blood Pressure, Smoking
Chronically-Ille.g., Diabetes, Musculoskeletal, Heart Disease, Asthma, MH/SA
Catastrophice.g., Cancer, Rare
Diseases, Head Trauma
No Claims GenerallyHealthy
O/P (Low) In/P (High)
Maternity O/P (Low) In/P (High) In/P (High)
% Ee 15% 48% 14%
3% 3% 12% 4% 1%
% $
0%
12%
15%
12% 5%
21%
20%
15%
% Ee 63% 20% 17%
% $ 12% 32% 56%
Prevention Wellness – Lifestyle Wellness - Lifestyle
Minimize Acute Episodes Minimize Complications
Maximize Recoveries Maximize Stabilization
Early InterventionEarly Intervention
Wellness - ClinicalWellness - ClinicalWellness - ClinicalWellness - Clinical
Disease Management ProgramDisease Management Program
89
Passive Assertive Aggressive Program Type: Phone and mail
out- reach, no incentives
Incentives (i.e., waiving Rx copays)
Incentives (i.e, waiving Rx copays,
premium differential
DM vendor pricing method
Per employee per month, all
employees
Low PEPM on all ees plus hourly or per
case rate on participants only (rate
varies based on participant risk
status)
Low PEPM on all ees plus hourly or per case rate on participants only (rate varies based on participant risk
status)
Percentage of chronic diseased participating in program
10% 50% 75%
Return on investment of disease management programs
0 - .5 1.5 - 2 1.5 - 3
Disease Management ProgramsDesigned and Financially Aligned for Success
90
Disease Management Program Planning
Identify key populations Focus on Compliance Manage expectations Respect privacy Follow Best practices (EBM, Outcomes Based Medicine) Integrate demand management, disease management and utilization management Give patients their own data Align Incentives for patients, providers, and Employer
91
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
92
Task #6 - Discussion on Type(s) and Use of Disease Management Programs
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
93
Task #7 - Decision Support Tools
The Promise of Transparency
&
The “Right to Know”
94
Healthcare Consumerism – Already Active Consumers
Consumers Search Internet for Medical Content
Consumers Ask Physiciansfor Genetic Testing
Consumers Work with Providerson Personalized Health Plans
Consumers Monitor and TrackTheir Own Medical Status Regularly
Consumers and Providers Coordinate Care and Understanding through Integrated Clinical and
Information Therapies
95
Decision Support ToolsSurvey of Attitudes
Employer Role:
Recognize the “consumer-preference spectrum”
Provide consumer-focused decision support tools for:Choice of Health PlanChoice of ProviderChoice of TreatmentCurrent and Future Financial Considerations
Patient decision making preferences
“INFORMED” PARENTAL
INTERMEDIATE SHARED DECISION MAKING
PATIENT AS DECISION-MAKER
4.8%17.1% 45% 11% 22.5%
96
Decision Support Tools for Consumerism
Basic Design Information Provider Selection SupportHRA Fund Accounting Physician Quality Comparison
Underlying PPO Plan Design Physician Cost ComparisonDisease and/or Medical Management Hospital Quality ComparisonHSA Fund Accounting Hospital Cost ComparisonDebit/Credit Card
Personal Benefit Support Care SupportPlan Comparison Cost Estimator On-line Provider DirectoryAccount Balance Provider SchedulingOn-line Claim Inquiry On-line Rx ComparisonsSPD On-line Patient Decision Support
24/7 Nurse Line Personal Health Management
Health Risk AppraisalHealth & Wellness InformationTargeted Health ContentMedical Record, HistoryHealth Coach
97
Decision Support ToolsEmployer Considerations
• Employee Readiness Sophistication and orientation Internet competency and access
• Due Diligence Accuracy Usability Independence Stability Integration issues
• Targeted Clinical Support: Value-based Evidence Based Medicine Personalized Chronic Care Management Tools Consumer-Focused Stress Management
98
Consumerism – a new force
Consumerism
can be a force to address
quality and cost variations
in a given market
99
Align Strategy with the “Value
Purchasing”
Awareness Pay for
Performance Tiered
Networks Regional
Centers of Excellence
CostEfficiency
Quality
Variation in Cost & QualityHospitals – CABG*
Fewer Adverse Affects Lower Complication Rates Lower Mortality
Lower LOS Lower Cost Episodes of Care
* Healthshare/SelectQualityCare weighted averages
Decision Support Tools for Cost & Quality Information
100
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
101
Task #7 - Discussion on Type(s) and Use of Decision Support Tools
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
102
Task #8 - Incentives, Rewards,
The Promise of Shared Savings
Pay for Compliance&
Pay for Performance
“Two sides of the same coin”
103
Consumerism Incentives – Participation Based
Incentives must be participation and activity-based rather than outcomes-based. HIPAA laws prevent rewards based on health standards. The law allows incentive designs if the following requirements are met: Limit the reward to a specified amount (not to exceed between 10%-20% of the cost of employee-only coverage). Be reasonably designed to promote health or prevent disease. Be available to all similarly situated individuals. There must be a feasible alternative for those that cannot reach the health standard because of a medical condition. Inform employees that individual accommodations and alternatives are available.
104
Wellness Incentives – Outcomes Based
While HIPAA generally prohibits plans from differentiating benefits or premiums based on health status, employers can still design and implement wellness programs with financial incentives. Only a "bona fide wellness program" can provide a reward based on a health standard or health outcome (i.e., a low cholesterol level). To be a "bona fide wellness program," the law specifies that the program must meet four requirements:
1. Limit the reward to a specified amount (not to exceed between 10%-20% of the cost of employee-only coverage).
2. Be reasonably designed to promote health or prevent disease.
3. Be available to all similarly situated individuals. There must be a feasible alternative for those that cannot reach the health standard because of a medical condition.
4. Inform employees that individual accommodations and alternatives are available.
- National Business Group on Health- National Business Group on Health
105
Wellness Incentives – Participation Based
All wellness programs that are based on participation rather than outcomes are permitted.
For example, financial incentives or premium discounts for participating in a health fair, joining a health club, or attending smoking cessation program, regardless of the health outcomes or results, are allowed.
- National Business Group on Health- National Business Group on Health
106
Rewards & Incentives for Smoking Cessation
The NGBH conducted a Quick Survey in December 2003 on "Smoking Cessation Incentives/Disincentives." The results from 26 respondents showed:
69% of the respondents offered discounts on annual health care premiums/contributions for non-smokers, and 15% offered another type of benefit enhancement.
Similarly, 45% of the respondents offered premium discounts for employees that participated in smoking cessation/wellness programs.
57% included smoking cessation as part of a broader wellness initiative/incentives at the worksite.
- National Business Group on Health- National Business Group on Health
107
Incentive Awards - Three Very Different Personal Care Accounts
1. Flexible Spending Accounts (FSAs) – Traditional Group Plans with Use-it-or-Lose-it
2. Health Reimbursements Arrangements (HRAs) – Employers’ choice for cash flow flexible incentive based medical plan benefit designs (best suited for self-insured groups)
3. Health Savings Accounts (HSAs) – Employees’ choice for funded portable triple tax advantaged with “High Deductible Health Plans” (best suited for individuals and small groups)
4. Combination Accounts – creative but confusing
108
Using Information & Incentives To Address Wellness & Disease Management
Behavioral Changes
Low Users Medium
Users
High
Users
Very High Users
No Claims
Generally Healthy
Acute Episodic Conditions
O/P, Low In/P, High Maternity
Chronic & ersistent . Conditions .
O/P, Low In/P,High
Catastrophic
% Mem 15% 48% 14%
3% 3% 12% 4% 1%
% Dollars
0%
12% 15% 12% 5% 21%
20%
15%
% Mem 63% 32% 17%
% Dollars 12% 32% 56%
PreventionPrevention Wellness - LifestyleWellness - Lifestyle
Minimize
Early InterventionEarly Intervention
Wellness - ClinicalWellness - Clinical
Maximize
Minimize
Maximize
Wellness - LifestyleWellness - Lifestyle
Wellness - ClinicalWellness - Clinical
109
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
110
Task #8 - Discussion on Type(s) and Use of Incentives & Rewards
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
111
Review of
Plan Design Concepts
by
Generation
Task #9 – Viewing Healthcare Consumerism by Generations
112
1st Generation Healthcare Consumerism
Focus on Plan Design and implementation of HRAs and/or HSAs and basic decision support tools.
Impact: Discretionary Expenses
Choices: Level and Type of Accounts with Plan Designs, information and Decision Support Services
113
Preventive Care (Insurance)
Health Reimbursement Arrangement
Deductible Gap
S.M.M.Insurance
• Ensures good health
• Neutralizes “hoarding”
• Part of the Insurance Plan
• Employer Funds Only
• Notional Account
• Section 105 Plan
• Balance rolls over year to year
• Employer controls growth %
• Employer controls exit rules• Vesting• COBRA• Retiree medical• Qualified long-term care
• Participant responsibility
• Can fund thru Section 125 plan
1st Generation HRA Prototype
Education and Decision-Support Tools
• Consumer education• Chronic disease
management• Health Promotion• Online tools• Telephonic support
114
Preventive Care (Insurance)
Health Savings Account
Deductible Gap
S.M.M.Insurance
• Ensures good health
• Neutralizes “hoarding”
• Part of the Insurance Plan
• Defined by IRS
• Employer HSA &/or Ee Contributions
• Interest earning Real Dollars in Real Accounts
• Legally Defined by 2003 MMA
• Balance rolls over year to year
• 100% Vested at Point of Contribution by Er
• 10% Penalty and Taxable Income for W/D for Non-health if <65
• Non-substantiation W/Ds
• Participant responsibility
• Can funded thru Employee Tax Advantaged HSA Contributions
• Can Not be Funded by FSA, HRA or other Insurance
1st Generation HSA/HDHP Prototype
Education and Decision-Support Tools
• Consumer education• Chronic disease
management• Health Promotion• Online tools• Telephonic support
115
Year 2: Employee elects $$ Option, maintaining $1,000 risk corridor.
Employee has $1,000 in claims, allowing Personal Account to carry over $1,000.
Personal Acct$1,500
Deductible$1000
Ins.
Personal Acct$1,500
Deductible$1500
Ins.
Personal Acct$1500
Deductible$2,000
Ins.
Year 1
$$$ Option
$$ Option
$ Option
Year 1
Year 3
Personal Acct$1,500 + $500
Deductible$1,500
Ins.
Personal Acct$1500 +$1,000
Deductible
$2,000
Ins.
Year 1: Employee elects $$$ Option with $1,000 risk corridor. Employee
has $1,000 in claims, allowing Personal Account to carry $500
over.
Year 3: Employee elects $ Option, again maintaining $1,000 risk corridor.
Employee no longer has a need for the $$$ Option.
HRA/HSA Healthcare Consumerism – Multiple Options
Year 2
116
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
117
2nd Generation Healthcare Consumerism
Focus on Behavior Changes. How to use plan design to effectively change health and healthcare purchasing behaviors with individual and group incentives/rewards.
Impact: Chronic & Persistent Conditions, Pre-Natal, Wellness & Preventive care.
Choices: Covered Benefits, Type and Level of Matching Funds and Incentives for Prevention, Wellness, and Disease Management Programs
118
2nd Generation Healthcare Consumerismwith Focus on Behavioral Changes
Healthcare Consumerism models require a shift in responsibility from the employer to the employee in the
purchase and use of health and healthcare. Communication, information, and education along with the reward system drives
this change.
Passive Users of
Health Care Services
Educated, Engaged, and Empowered Health Care Consumers
Basic Health Care Information
Benefit Education
Consumerism Behavior Support
Access to Information &
Decision Support
119
2nd Generation Behavioral Change a Key Determinant of Health
Today’s Health Care Environment and Trends
Determinants of Health
0%
10%
20%
30%
40%
50%
60%
Determinants 10% 20% 20% 50%
Access to Care
Genetics Environment Behavior
Source: IFTF, Centers or Disease Control and Prevention
120
Healthcare ConsumerismDrives New Behaviors from All Participants
Employee Active & EmpoweredPatient/Consumer, P4C
Passive Participant
Employer Plan Facilitator Financial Contributor
Primary Purchaser
Health Plan Enabler / Education & Information
Barrier
ProviderClinical and Service Standards, Care Manager, P4P
Contracted Supplier
121
Consumer Behavioral Changes
1. Focus on Preventive Care
2. Live Healthy & Safely
3. Use Nurse Line for Common Issues
4. Treatment Compliance for Chronic Persistent Problems
5. Consider Health and Healthcare Issues Together
6. Use Lower Cost / Higher Quality Alternatives
122
Consumer Behavioral Changes
7. Choose Rx Substitutions
8. Talk to Doctors as Informed Consumers
9. Be Compliance with Disease Mgmt Treatment Plans
10. Learn About Diagnosis/Condition
11. Act Like a Consumer - Demand Value and Service
12. Consider Plan as an Accumulated Asset rather than a Time Limited Benefit
123
Health Promotion Health Management
Chronic Disease Management
High Cost Case Management
Website Wellness AppraisalPatient Identification
and enrollment
Targeted Behavior
Modification
Care Coordination
Practice Guidelines
Healthy Lifestyle Promotion
Physical Activity Campaign
Address Comorbid Conditions
Integrated Services, Communications, Measurement and EvaluationIntegrated Services, Communications, Measurement and Evaluation
2nd GenerationPrograms to Change Behaviors
Acute Conditionse.g., Infections, Respiratory, Lacerations
Navigational Support
Patient Advocacy
Care Coordination
Address Comorbid Conditions
At Risk / Acute Condition
e.g., Inactivity, High Stress, Overweight, High Blood Pressure,
Lacerations, Infections
Chronic Conditions
e.g., Diabetes, Depression, Heart Disease, Asthma,
MS/SA
Catastrophic Conditions
e.g., Cancer, Hepatitis C, Head
Trauma
Well
e.g., Low Risk, Good Nutrition, Active
Lifestyle
124
2nd Generation Consumerism – Improving Health and Lowering Costs with Behavioral Changes
Low Users Medium Users
High Users
Very High Users
No Claims
Generally Healthy
Acute Episodic . Conditions .
O/P, Low In/P, High Maternity
Chronic & Persistent . Conditions . O/P, Low In/P, High
Catastrophic
% Mem 11% 29% 17%
9% 4% 18% 11% 1%
% Dollars
0%
2% 11% 17% 3% 18% 35%
14%
% Mem 40% 30% 30%
% Dollars 2% 31% 67%
Sample Impact Areas: Rx Rx Rx Rx Rx Rx Rx Office Visits Office Visits Hosp Admits Hosp Admits OfficeVisits Hosp Admits Hosp Admits DXL DXL, ER ER ER Specialists Specialists High Tech
Disease Management
Discretionary Expenses
Safety Programs, Regional
Centers of Excellence
Pre-Natal care
Evidence Based
Medicine
Evidence Based
Medicine
Stress Management / Health & Performance
125
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
126
3rd Generation Healthcare Consumerism
Focus on Health & Performance. How healthcare consumerism plan design and behavior change affects work performance and the corporate bottom line.
Impact: Manageable Costs - Organizational health, turnover, absenteeism, productivity, disability, and presenteeism
127
What are “Manageable Employment Costs”?
1. Health care: the dollars spent on health care whether self-insured or insured.
2. Turnover: the direct hiring costs, temporary replacement costs, learning curve costs, and lost productivity costs.
3. Presenteeism: the time an employee is at work and assumed to be productive, but is not productive.
4. Disability: the direct costs associated with workers’ compensation and non-occupational disability.
5. Unscheduled Manageable Absence: the cost of absence that could be positively influenced with proactive intervention.
Five components of “Manageable Employment Costs”:
128
3rd Generation Health & Performance Strategy
Health & Performance is a benefits strategy that is designed to balance the rising costs of health care while optimizing employee health & performance
through targeted, strategic, and value-added interventions.
Targeted, Strategic, Value-added Interventions
Better Health Employee Performance
129
3rd Generation –Incentives and Rewards
•
•Holistic Health & Productivity Focus • Culture of Health & Wellbeing
• Seamless Population Management• Shared Responsibility/Accountability• Organizational Alignment & Support
• Data Driven Process Excellence
Wel
lnes
s
Prev
entio
n
Dem
and
Man
agem
ent/
EAP
Dis
ease
Man
agem
ent
Cas
e M
anag
emen
t
Abs
ence
Man
agem
ent
Optimizing Individual and Organizational Health & Performance
3rd Generation “Account Based” Benefits and Incentives Platform
130
3rd Generation Health & Performance ROI
Health & Performance ROI will be measured by: Reduced unscheduled sick days Reduced paid time off Fewer disability claims, more and faster recoveries Reduced turnover Improved survey results on teaming, creativity, staff moral
Resulting in: More productive employees More effective employees Increased teaming, creativity, moral, workplace conflicts Better bottom line results
131
3rd Generation Creating the Health & Performance ROI
Keep in mind:
This is a multi-year strategy that results in cumulative savings over time
ROI estimates are based on static number of members
• expect more to enroll each year which will increase savings
Estimates assume the same benefit levels
• changes to the plan design could increase the ROI in the shorter term
132
Example of 3rd Generation Concept Consumerism Stress Management
Consumerism Stress Management is a process improvement methodology designed to quickly improve bottom line saving and progresses into a business strategy that optimizes a company’s human capital an innovation efforts.
Consumerism Stress Management emphasizes employee participation, the inclusion of corporate and operational performance metrics, and the power of the Internet to achieve savings by quantifying and positively influencing stress-related “Manageable Employment Costs”.
133
3rd Generation – Stress Management and Corporate Impact
21.5% of total health care costs
40% of the primary reasons that employees leave a company
50% of presenteeism is a function of stress
33% of all disability and workers’ compensation costs
50% of the primary reasons that employees take unscheduled absence days
Research suggests that stress has been directly attributed to:
134
Related / Imbedded Health Costs From Stress
Source of Demand Major Body Systems And Pressure Affected by Stress
Job Muscular System Family Digestive System Personal Cardiovascular Social Emotional Financial Endocrine, Immune Environment Cognitive
135
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
136
4th Generation Healthcare Consumerism
Focus on Lifestyle, Lifecycle, and Personal Health needs. How healthcare consumerism plan design and behavior change affects personal health and healthcare based on lifestyle and personalized needs.
Impact: Lifecycle needs, Personal health, genetic pre-dispositions, predictive modeling, healthy habits, and wellness.
137
4th generation – Individual Ownership and Portability
1. Ownership, security, and portability of the PCA.
2. Access to accounts post-employment.
3. Vesting will be important to employees to secure the value of the accounts.
4. Compared to HSAs, employees may ultimately expect “notional interest” on HRAs.
5. Demand for more immediate use of the funds for non-plan QMEs and use of HRAs for paying health premiums.
138
4th generation – Individual Ownership and Portability (cont.)
6. Added HRA credits from unused vacation or sick leave.
7. PCA will need to accommodate personal lifestyle expenses items such as, alternative medicines and acupuncture.
8. Ability to use debit/credit cards to cover internet purchases and cyber-office visits.
9. The IRS will have pressure to expand the definition of QME to cosmetic surgery and other personal care services.
139
4th Generation –Personalized Health and Healthcare
Based on genomics, predictive modeling, and push technology.
Preventive care will include both lifestyle and clinical factors.
Treatments will include culturally sensitive care and guidance
Cyber-health Aides - decision support systems and wireless connections that link each person to a personalized health and healthcare cyber-support system (e.g. diabetes phone).
Personalized Internet Search engines based upon individual profile health and healthcare needs. Cyber-support systems built to profile activity and anticipate areas of interest (e.g. TIVO/Travelocity)
Connected to services through monitors that will provide real time feedback on health status, lifestyle, and health concerns. (e.g. Health Buddy)
140
4th generation – Decision Support tools and Individual needs
“Arrive in time” information and services at critical moments for care.
“Information therapy” is the active use of patient oriented information with clinical evidence based medicine. Information needs to be embedded into the process of clinical care—as information therapy.
Potential areas for Information Therapy: Prostate surgery Back surgery ACL surgery Coronary artery bypass surgery Medication for depression End-of-life care Prescription of beta-blockers following heart attacks Early-stage breast cancer testing Colon cancer screenings Immunizations and eye test reminders for diabetics
141
Nondiscrimination Rules
Health plans may not discriminate against similarly situated individuals on the basis of a health status-related factor with respect to 1) eligibility for the plan, or 2) premiums for the plan.
Health plans may not charge an individual a higher premium than applies to similarly situated individuals because of health status-related factors.
However, health plans are allowed to make enrollment in the plan, or receipt of particular benefits, contingent on regular completion of health awareness or promotion activities that do not require individuals to satisfy a particular health standard. Moreover, employers are allowed to provide any kind of financial incentive to plan enrollees who provide documentation of completion of such activities.
142
Individuals & Health Status Factors
Health status-related factors include diagnosis of overweight, obesity, results of cholesterol tests and a history of overweight or eating disorders. They are defined in a variety of ways, as follows:
• Health status• Medical condition (including both physical and mental
illnesses)• Claims experience• Receipt of health care• Medical history• Genetic information• Evidence of insurability• Disability
143
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Personal AccountsPersonal Accounts
Incentives & Incentives & RewardsRewards
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease ManagementDisease Management
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive Care
Web-based behavior change support
programs
Worksite wellness,safety, stress & error
reduction
Genomics, predictive modeling push
technology
Information, health coach
Compliance Awards, disease
specific allowances
Population Mgmt, IHM, Integrated Back-to-
Work
Wireless cyber –support, cultural DM,
Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets,Trinkets
Health Incentive Accounts, activity based incentives
Non-health corporate metric driven incentives
Personal development plan incentives, health
status related
The Consumerism
Grid
144
Task #9 - Additional Considerations for Building Blocks of Healthcare Consumerism
PCAs ______________________________________________________________ ________________________________________________________________________________________________________________________________________
Wellness____________________________________________________________________________________________________________________________________________________________________________________________________
Disease Management _________________________________________________ ________________________________________________________________________________________________________________________________________
Decision Support ____________________________________________________ ________________________________________________________________________________________________________________________________________
Incentives _________________________________________________________ ________________________________________________________________________________________________________________________________________
145
Task #10 – Create/Design Basic Framework of
MSFT Consumerism Options
Design: Deductibles, Copays, Coinsurance, Max OOP, Fund Balances, Wellness, Disease Mgmt, Incentives, Carve-outs, etc.
Traditional PPO Plan
PPO with HRA
PPO with HSA
Other
146
Potential Anti-Selection from Consumerism on an Optional Basis
Introduction of Consumerism on an optional basis will limit the cost reduction. In particular, with HDHP’s fewer members will be
impacted and are those selecting HDHP’s are likely to have an existing favorable health status (anti-selection). Companies and
members can benefit most by introducing consumerism with both a HDHP option and consumerism features for current plans.
Example - Selection in An Option Environment
OPTION # 1 OPTION # 2
% MembersParticipating
Clms/Part.Mbr. Vs Clms/All Mbrs.
RemainingMembers
Clms/Part.Mbr. Vs Clms/All Mbrs.
10% 75% 90% 103%
30% 85% 70% 106%
50% 100% 50% 100%
147
Design a PPO Plan
Preventive
Deductible
20% Coins to a Maximum OOP
100% Coverage100% Coverage
PPO 80% Coverage
In-Network
Traditional PPO
Preventive
Deductible
20% Coins to a Maximum OOP
100% Coverage100% Coverage
PPO 80% Coverage
In-Network
DesirablePPO
What would you Include?What would you Include?Any Coinsurance?Any Coinsurance?
How large of a Deductible?How large of a Deductible?
In-Network Coins?In-Network Coins?In-Network Max OOP?In-Network Max OOP?
OON Coins?OON Coins?OON Max OOP?OON Max OOP?
Plan Maximum?Plan Maximum?
Other: Other: Carve-out Vision, Dental?Carve-out Vision, Dental?
148
Design a High Deductible PPO/HRA Option
PPO 80% Coverage
In-Network
What would you Include?What would you Include?Any Coinsurance?Any Coinsurance?
How Large of a How Large of a Deductible Gap?Deductible Gap?
In-Network Coins?In-Network Coins?In-Network Max OOP?In-Network Max OOP?
OON Coins?OON Coins?OON Max OOP?OON Max OOP?
Plan Maximum?Plan Maximum?
Other: Other: Carve-out or Incl.?: Rx, MH & SA, Carve-out or Incl.?: Rx, MH & SA, Vision, DentalVision, Dental
Preventive
HRA ($500-$1000) Deductible Gap ($500-1000)
20% Coins to a Maximum OOP $2-5,000
100% Coverage100% Coverage
PPO 80% Coverage
In Network
PPO / HRA
Preventive
HRA
Deductible Gap
100% Coverage100% Coverage
PPO __% Coverage In
Network OOP of $______
Sample PPO / HRA
How Much in Initial HRA?How Much in Initial HRA?
HRA Incentives?HRA Incentives?Wellness, DM. Other?Wellness, DM. Other?
__% Coins to a Maximum OOP of $_______
149
Design a High Deductible PPO/HSA Option
Preventive
HSA=($1000=2600)
20% Coins to a Maximum OOP $5000 (incl deductible)
100% Coverage100% Coverage
PPO 80% Coverage
In Network
PPO / HSA
Preventive
HSA = _____
___% Coins to a Maximum OOP _______
100% Coverage100% Coverage
PPO __% Coverage
In Network
Sample PPO / HSA What would you Include?What would you Include?
Any Coinsurance?Any Coinsurance?
In-Network Coins?In-Network Coins?In-Network Max OOP?In-Network Max OOP?
OON Coins?OON Coins?OON Max OOP?OON Max OOP?
Plan Maximum?Plan Maximum?
Other: Other: Carve-out or Incl.?: Rx, MH & SA, Carve-out or Incl.?: Rx, MH & SA, Vision, DentalVision, Dental
How Much in Initial HSA?How Much in Initial HSA?
HSA Incentives?HSA Incentives?HRA Incentive?HRA Incentive?Wellness, DM. Other?Wellness, DM. Other?
150
A Unified Theory of Plan Design
All Medical Plans can be view as catastrophic plans with first dollar benefits funded by:
1. Post-tax self pay – Pure high deductible
2. Insurance – traditional HMO, EPO, POS, PPO, or Indemnity
3. Health Reimbursement Accounts (HRAs) - HRA with Deductible Gap
4. Health Savings Accounts (HSAs) – Legally defined High Deductible Health Plan (HDHP)
5. Flexible Spending Accounts (FSAs)
6. Combinations of the above
151
PPO Plans Differ Mainly in the Way Initial Dollars are financed
Preventive
HSA
20% Coins to a Maximum OOP
100% Coverage100% Coverage
PPO 80% Coverage
Preventive
HRA
Deductible Gap
20% Coins to a Maximum OOP
100% Coverage100% Coverage
PPO 80% Coverage
Preventive
Deductible
20% Coins to a Maximum OOP
100% Coverage100% Coverage
PPO 80% Coverage
Traditional PPO Insurance Funding of Early Expenses
PPO with HRA Funding ofEarly Expenses
PPO with HSA Funding of Early Expenses
Similar Catastrophic ProtectionSimilar Catastrophic Protection
152
Sample Consumerism PPO Plan Designs Traditional PPO
Insurance Funding of Early Expenses
PPO with Er HRA Funding of
Early Expenses
PPO with Voluntary Ee HSA Funding of
Early Expenses and Er HRA Match
Preventive 100% coverage
Voluntary Ee Funded HSA up to $1000
$1000 HRA Er Match to HSA to cover part of:
20% Coins to a Maximum OOP of $4,000
100% Coverage100% Coverage
PPO 80% Coverage
Preventive 100% coverage
Er HRA $1000
Deductible Gap $1,000
20% Coins to a Maximum OOP of $4,000
100% Coverage100% Coverage
PPO 80% Coverage
Preventive 100% coverage
Deductible $250
20% Coins to a Maximum OOP of $4,750
100% Coverage100% Coverage
PPO 80% Coverage
Max OOP = $5000Max OOP = $5000
Max Ee Cost = $5000+PremMax Ee Cost = $5000+Prem
Max OOP = $5000Max OOP = $5000
Max Ee Cost = $5000+Max Ee Cost = $5000+Lower PremLower Prem
Max OOP = $5000Max OOP = $5000Min OOP = $4000 w/ HRA MatchMin OOP = $4000 w/ HRA Match
Max Ee Cost = OOP+Max Ee Cost = OOP++HSA+Lowest Premium+HSA+Lowest Premium
Incentive HRAs from Initial Incentive HRAs from Initial “$0” Balance“$0” Balance
Incentive HRAs from Initial Incentive HRAs from Initial $1000 Balance$1000 Balance
Incentive HRAs for Incentive HRAs for CY Co-Insurance OnlyCY Co-Insurance Only
153
Task #10 – Create/Design Basic Framework of
Healthcare Consumerism OptionsPPO PPO/HRA PPO/HSA Other
Preventive Care Benefits
Front-end Deductible
Beginning Account Balance
Deductible Gap
PPO Coinsurance – In/Net
PPO Coins Max OOP-InNet
PPO OON Coinsurance
PPO OON Coins Max OOP
Carve-out Programs: Rx, Vision, Dental
Incentives - DM
Incentives - Preventive Care
Matching Er HRA to Ee HSA
Other Decision Support Tools
154
Task #11 – Implementation Planning & Time Frames
The Challenges and
A framework for Implementation
155
Consumerism
Pay-for-Performance
Focus on High Cost / High Volume Users
Standardize IT Platforms
CollaborationBuilding the
Future Employer Benefits Program
Lower Costs,
Increased Employee Satisfaction,
Quality/Value Driven Healthcare,
Improved Access to Care
Healthcare ConsumerismDemand-Driven Healthcare
Employer Challenges in Developing a Healthcare Consumerism Strategy
Enterprise-wide Impact of Health & Healthcare
156
Communication Milestones
Employee Decision-Making Cycle
Awareness
Education
PracticalApplication
Acceptance
What is it?
How does it work?
What does it mean to me?
I accept thechanges
Co
mm
un
icat
ion
s P
roce
ss
Accept Health Plan as an Accumulating
Asset Rather than a Short Term Benefit
157
2nd Generation Consumerism
Focus on BehaviorChanges
3rd Generation Consumerism
Integrated Health &Performance
1st Generation Consumerism
Focus onDiscretionarySpending
4th Generation Consumerism
Personalized Health & Healthcare
Personal Care Personal Care AccountsAccounts
Wellness/PreventionWellness/Prevention
Early InterventionEarly Intervention
Disease and Case Disease and Case ManagementManagement
InformationInformation
Decision SupportDecision Support
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive
Care
Web-based behavior change
support programs
Worksite wellness,safety, stress & error reduction
Genomics, predictive
modeling push technology
Information, health coach
Compliance Awards, disease specific allowances
Integrated Hlth Mgmt, Population Mgmt, Integrated
Back-to-Work
Wireless cyber –support, cultural DM, Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health work data
Arrive in time info and services, information
Therapy
Cash, tickets, Trinkets
Health Incentive Accts, activity
based incentives
Non-health corporate metric driven incentives
Personal dev. plan incentives, health
status related
Time Frame for Implementation of Consumerism (may
be Dependent UponVendor Capabilities)
Yr__- __ Yr__-__ Yr__-__ Yr__-__
Incentives & Incentives & RewardsRewards
158
2nd Generation Consumerism
Focus onBehaviorChanges
3rd Generation Consumerism
IntegratedHealth &
Performance
1st Generation Consumerism
Focus on Discretionary
Spending
4th Generation Consumerism
Personalized Health & Healthcare
Initial Account Only
Activity & Compliance
Rewards
Indiv. & Group Corporate Metric
Rewards
Specialized Accts,Matching HRAs,Expanded QME
100% Basic Preventive
Care
Web-based behavior change
support programs
Worksite wellness,safety, stress & error reduction
Genomics, predictive
modeling push technology
Information, health coach
Compliance Awards, disease
specific allowances
Integrated Hlth Mgmt, Population Mgmt, Integrated
Back-to-Work
Wireless cyber –support, cultural DM, Holistic care
Passive Info Discretionary
Expenses
Personal health mgmt, info with
incentives to access
Health & performance info, integrated health
work data
Arrive in time info and services,
information therapy
Cash, tickets, Trinkets
Zero balance acct, activity
based incentives
Non-health corporate metric driven incentives
Personal dev. plan incentives, health
status related
Integrated Health Management
A Logical Stake in the Ground ?
Personal Care Accounts
Wellness / Prevention Early Intervention
Disease Mgmt & Case Management
Information & Decision Support Tools
Incentives & Rewards
159
Education
Communication
Acute Case Mgmt
Utilization and Case Management
NETWORK A / TPA A NETWORK B / TPA B
Wellness
Prevention
Demand Management
Disease Mgmt Programs
Integrated Absence Mgmt
The secret is cooperation and synergy between
components supporting the corporate strategies
Integrated Health Management ProgramImplementation Option for Multiple Generations
General ManagerPersonal Care Accts.
FSAs, HRAs, HSAs
Process Integration &
Disciplined Im
provement C
ompa
ny D
ata
War
ehou
se &
Met
rics
160
Potential Savings & Actual Industry Results from Early Generation Implementations
More than just Theory and Promises
““To achieve transformation to a 21To achieve transformation to a 21stst Century Century Intelligent Health System, all participants Intelligent Health System, all participants must advance in a consistent way to the must advance in a consistent way to the
future model.”future model.”
161
The Value Proposition
5-8% Savings over 5 years with 2% lower trends
Low Range of Savings5% x 5 years + 2% x 5 years = 35%
High Range of Savings8% x 5 years + 2% x 5 years = 50%
20-35% lower Rx costsLow Range: 20% x 20% = 4%High Range: 35% x 20% = 7%
162
Potential Savings from Full Implementation of ConsumerismAchievement of savings and improved outcomes is dependent upon both
the Type and Effectiveness of the programs implemented.
Gross* Savings as % of Total Plan Costs(Programs Applicable to All Members)
EffectivePrograms
Implemented
Traditional plans
Consumerism Plans
Passive 1st Generation 2nd Generation 3rd Gen & Future
Basic 2% 3% 7% 10%
Expanded 3-4% 5-8% 12-15.0% 20.0+%
Complete 4% 7% 17% 25%
Comprehensive (Future) 5% 10% 20% 30%
*Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs
163
Healthcare Consumerism
Experience Results
164
Aetna Health Fund (AHF)Product Type:HRA with high deductible PPOStudy by: AetnaStudy Basis: 13,800 members (19 groups) enrolled in AHF vs. “randomly selected similar
population” in traditional PPOComparison of Jan-Sept, 2003 to Jan-Sept, 2002 experienceReleased March, 2004
Results - 2003 Experience vs. 2002 Experience for Members Enrolled in AHF in 2003
1. 30% increase in preventive care office visits vs. 14% for traditional group2. 1.5% medical cost increase per employee per month vs. 15.7% for traditional group3. 5.1% decrease in ER visits, 10.3% decrease in outpatient visits, and 14.5% decrease in inpatient admits4. 51% with HRA balances left over5. 31% of total HRA dollars rolled over6. 48%+ more use (than traditional group) of consumer health info (e.g. Intellihealth)7. 100% more use (than traditional group) of pharmacy price and generic substitution information8. 13%+ more use (than traditional group) of online provider directories
Results - One Group with Integrated Pharmacy in the High Deductible Plan
11.1% decrease in prescriptions per 1000 for AHF members vs. 1.8% increase for traditional plans34-44% increase (2002 to 2003) in generic usage for AHF vs. 40-45% increase for traditional plans
165
United Healthcare
Product Type: HRA with high deductible PPOStudy by: United HealthcareStudy Basis: Two years experience for 20,000 members enrolled in traditional plan year one
and in iPlan year two Two years experience for 25,000 members enrolled in traditional plans for two years Released June, 2004
Results for iPlan Members
1. Higher registration rate on myuch.com than non-iPlan members2. Higher use of preventive services than non-iPlan members3. Decrease in total emergency room visits; indication of more selective, responsible use
of emergency services after enrollment in AHF (in year two)4. Reductions in the use of specialists, outpatient procedures, and radiology and lab in
year two5. Less than 1% (per member/per month) year-over-year cost increase when iPlan was a
full replacement6. Most iPlan members carried an HRA balance into 2004 7. In-network utilization was in the 90th percentile8. Satisfaction ratings greater than 90% with customer service and decision-support tools
166
HumanaProduct Type:SmartSuite Multi-Option plansStudy by: HumanaStudy Basis: 10,000 Humana employees in 2001-2002; 5.6% enrolled in consumerism plan
(SmartSuite), remainder in traditional HMO/PPO Released December, 2002Results
1. 5.6% enrollment in SmartSuite (consumerism) products2. Early adopters of consumerism were “super-healthy”, of average age, and of higher average salary
than non-adopters3. More SmartSuite enrollees waived dependent coverage4. Apparent “spillover” of behavioral changes to traditional products due to communications and tools
resulted in a 4.9% cost increase for 2003 for entire group (10,000 employees) vs. 19.2% projected trend
Plan Option PMPM: 7/1/01 – 6/30/02 Expected (Trended)
PMPM: 7/1/01 – 6/30/02 Actual
HMO $127 $139
Tiered PPO $163 $141
PPO Standard $101 $110
SmartSuite Option 1 $64 $39
SmartSuite Option 2 $78 $51
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Definity Health (Now United Health Care)Product Type:HRA or HSA with high deductible PPOStudy by: Galen Institute Briefing on Consumer Choice Health CareStudy Basis: 85 self-insured clients with 300,000 consumer-driven members, experience for Jan-
Nov, 2003Released February, 2004
Results1. 10% enrollment average for first year clients where Definity is an option2. Enrollment from a broad demographic cross-section of the population, no apparent favorable
demographic selection3. Large claim (> $50K)incidence rate of 4.6 per 1,000 members compared to standard claim
distribution incidence rate of about 2.3 per 1,000 members4. 95% re-enrollment rate5. 90% member satisfaction6. Overall renewal increase over Definity book of business of 0% in 2003 and 3.2% in 20047. Average pharmacy utilization rate for groups range from .57 to .69 prescriptions per member
per month (12% below the low industry benchmark and 34% below the high industry benchmark)
8. Generic drug substitution rate of 95%, compared to “norm” of 85%9. Hospital admits of 44.3 per 1000 vs. “norm” of 59.0 per 100010. Hospital days of 162.1 per 1000 vs. “norm” of 200.0 per 1000
168
Actual Published Consumerism Experience
In 2004, Aetna consumerism plans showed cost increases of only 1.5% versus increases of more than 10% for traditional health plans. Employers that offered only consumerism plans had an average decrease in premiums of 2.9%.
In 2004, United Health Care showed average cost increases of less than 1% for consumerism plans. Humana, Blue Cross Blue Shield, and other health insurers are finding similar results from their new consumerism products.
Forrester Research predicts 24% of Americans will be covered under such plans by 2010.
169
Task #12 (Summary) - Medical Plan Costs and Potential Consumerism Savings Worksheet
Well
e.g., Low Risk, Good Nutrition, Active Lifestyle
At-Risk e.g., Inactivity, High Stress,
Overweight, High Blood Pressure, Smoking
Chronically-Ill
e.g., Diabetes, Musculoskeletal, Heart Disease
Catas-trophice.g., Cancer, Rare Diseases
No Claims GenerallyHealthy
O/P (Low) In/P (High) Maternity O/P (Low) In/P (High) In/P (High)
Distribution of MSFT Med Costs
___% ___% ___% ___% ___% ___% ___% ___%
Avg $ Cost (000’s) $0 $____
$____
$____ $____ $______ $_____ $______
Est. CDHCSavings Pct.
0% 15% 12.5% 8% 5% 15% 20% 8%
$ CDHC Savings (000’s)
$0 $____ $____ $____ $_____ $______ $______ $______
Incremental HRA Costs
$____ $____ $____ $____ $_____ $______ $______ $______
AmountAmount Pct.Pct.
Est. CDHC Savings $_______ _____%
Incremental HRA Costs $_______ _____%
Net Annual Savings $_______ _____%
170
Consumer-Driven Healthcare Surveys
A Fad or Exponential Growth ?
171
Milliman 10/2004 CDHC Survey
89% of those responding expect to offer a CDHC plan to employers within the next year, up from 29% in last year's survey. Specifically, these 89% currently offer or plan to offer within the next year a high deductible plan with an integrated employee account (i.e., HRA or HSA).
Milliman Group Health Insurance Survey CDHC Available Currently or Within 2005
Offer a Tiered Offer a High Offer a % Prem
Provider Network Deductible Plan CDHC Plan From CDHC2004 Survey 42% 96% 89% 7.8% (in 2005)2003 Survey 17% 48% 29% 3.4% (in 2004)
Percentage of Respondents
172
Survey Information on CDHC
Mercer 4/2004
Nearly three-quarters (73%) of employers asked by Mercer Human Resource Consulting said they were likely to offer the new accounts to their workers by 2006, according to a survey to be released this week.
"We're looking at a major market change," says Linda Havlin, Mercer's Midwest health care practice leader, noting that a 73% interest in adopting a new program within two years "is unprecedented.“
Forrester Research 9/2003
173
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