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1
Health Care Consumerism Issues and Key Dynamics
Presented to AMGA Best Practices Collaborative
November 13, 2008
2
One View of Consumerism
Employers andPlans Trying to
Increase Engagement and
Accountability
Patients as “Consumers”• Confused � Empowered � Aggressive
• Dis-Informed � Mis-Informed � Informed
• Can’t Pay � Won’t Pay � Pay Some � Cash
• Not Worried � Engaged � Worried Well
• …
3
Today’s Discussion
�A Common-Ground Perspective on Consumerism�Consumerism’s Environmental Context�Views Inside the Black Box
�Managed Care�Employers
�Understanding Dynamics in Your Market
4
75%
25%
By the Numbers
U.S. Deaths
133 million people in the U.S. have at least on chronic disease.
Chronic diseases account for more than 70% of deaths in the U.S.
Chronic Diseases
Chronic diseases are responsible for over 75% of medical costs in the U.S.
70%
30%
By the Numbers
5
Common Strategy
Reducing the Impact of Chronic Disease
Informed Decisions/Use of Resources
Preventionand
Protection
EarlyDiagnosisof Disease
Compliancewith Effective
Treatment
6
Examples of the Behavior Gap
Actual Behavior
� More than 50% of U.S. adults do not get enough physical activity to provide health benefits.1
� One-third of U.S. adults are obese.2
� One-fifth of U.S. adults smoke cigarettes.3
� In 2003, almost one-third of U.S. adults had not been screened for high cholesterol within five years.4
� Less than half of U.S. adults age 50 or older have had a recent colorectal cancer screening.5
Recommended Behavior
To reduce the risk of developing chronic disease, the U.S. Centers for Disease Control and Prevention recommend that people exercise, maintain a healthy weight, not smoke and maintain a healthy blood pressure (among other things).
The U.S. Preventive Services Task Force has established recommended guidelines to monitor health risks and detect serious diseases, such as colon or breast cancer.
*Gap*
Prevention/HealthProtection
Preventive Exams for Early Diagnosis
7
Examples of the Behavior Gap (cont.)
Actual Behavior
� Just half of those with coronary heart disease who are prescribed a lipid-lowering drug are still taking it six months later; after 12 months the rate falls to 30 - 40%.6
� Of those diagnosed with high blood pressure, only 34% are on medication and have the condition controlled.7
� 60% of employees report not seeing health care quality comparison information, and of those who have, more than half did not use it to select a plan or provider.8
Recommended Behavior
People who are diagnosed with a disease should comply with the treatment recommended by their doctor, including lifestyle changes, taking prescribed medications and receiving ongoing care.
People should make informed decisions about the insurance plan they choose and the care they receive.
*Gap*
Compliance with Effective Treatment
Informed Decisions and Use of Resources
8
Behavior Gap
Actual
Behavior
Recommended
Behavior Tactics
EducationCoaching/Consumerism
Web ResourcesDisease ManagementHealth Benefit Design
9
Bridging the Gap
Response to Consumerism TacticsStrategy Policymakers Individuals
CDHPs ⇑⇑⇑⇑ ⇔⇔⇔⇔TieredCost-Sharing
⇑⇑⇑⇑ ⇔⇔⇔⇔
Incentives ⇑⇑⇑⇑ ⇔⇔⇔⇔Wellness Management
⇑⇑⇑⇑ ⇔⇔⇔⇔
Disease Management
⇑⇑⇑⇑ ⇔⇔⇔⇔
Decision Support ⇑⇑⇑⇑ ⇑⇑⇑⇑
Health Education & Literacy
⇔⇔⇔⇔ ⇔⇔⇔⇔
National Survey of Employer-Sponsored Health Plans 2006. Mercer. Reducing Corporate Health Care Costs 2006 Survey. Deloitte.
10
Consumerism Environmental Context
Burning PlatformHealth Care Costs Threaten Corporate Competitiveness and National Sustainability
Market Solutions Restrained by Fundamental FlawsMisaligned Incentives � Lack of Information � Lack of Infrastructure
Enablers of ChangeHRA/HSA � HHS Cornerstones � Plan & Program Innovations
Spectrum of Consumerism StrategiesEconomic Incentives � Education & Support
Policymakers are experimenting with a range of strategies and tactics. Under the surface, fundamental forces predict that Consumerism—in whatever form—is n ot a health care fad, but a sustained trend.
11
Employers are Managing the Health Benefit Supply Chain
EmployersTier 3
Manufacturers and Marketers:
• Prescription Drugs
• Consumer Products
Tier 2
Providers:
• PCPs
• Specialists
• Retail Pharmacies
Tier 1
Intermediaries:
• Health Plans
• PBMs
• Specialty Drug Managers
Rx Benefit
•Employees•Dependents
•Retirees
Demand
12
Managed Care’s Perspectives
�Survey Research�Results from Responses Received 8/6/07 Through
8/18/07�169 Survey Invitations to Plans, Provider Groups and
PBMs with Responsibility Areas Including:�Pharmacy�Medical�Contracting, Industry Relations, Quality, Performance, Case
Management, Consumer Engagement
�68 Respondents (39% Response Rate)
13
How “Consumerism” is Defined
Consumerism is defined very broadly to include a variety of strategies and tactics to help consumers become more responsible and accountable for their own health, including, but not limited to: consumer-directed health plans (high deductible plans combined with health reimbursement accounts or health savings accounts), price and quality information transparency initiatives, health care decision support, compliance and persistency, and other programs to help consumers better manage their health and health care decisions.
14
56%34%
6%4%
High
Mid-High
Mid-Low
Low
Interest in Learning More About Health Care Consume rism
Customer Interest in Consumerism
n = 68
15
Consumerism Trends
70%
28%
2%
Increasing
Staying the same
Decreasing
Trend of Health Care Consumerism Within Your Market
n = 61
National
16
Consumerism Influencers
38%
21%
14%
10%
7%
3%
0%
3%
21%
38%
10%
4%
7%
7%
7%
3%
3%3%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Large Employers
Health Plans
Health Benefit Brokers
Government Policies
Employee Benefit Consultants
Other
Patient Advocacy Groups
Employer Coalitions
Unions/Employees
Rank 1 Rank 2
n = 29* Other – small and mid size employers and providers of care
Notes: Asked of respondents who ranked the impact on the overall market as 6 out of 10 or above, where 10 = extremely high impact.
Perceived Consumerism Influencers Among Respondents Who Think Consumerism is Impacting the Market
17
41%
22%
14%
16%
6%
29%
23%
22%
18%
7%
2%
2%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Meet Demands ofCustomers
Capitalize on PerceivedOpportunity
Keep Up With KeyCompetitors
Differentiate OurOrganization
Mitigate Potential Risk
Other *
Motivation for Interest in Consumerism
TOP TWO Reasons Your Organization is Interested in H ealth Care Consumerism
* Other – Improve health care quality, market convergence, and change required to keep health care moving forward n = 56
Rank 1 Rank 2
18
16%
72%
12%
High
Medium
Low
n = 61
Knowledge of Impact on Patients/Members
Knowledge of Consumerism’s Impact on Organizations’ Patients/Members
19
18%
75%
7%
High
Medium
Low
n = 61
Knowledge of Impact on Organization
Knowledge of Consumerism’s Impact on Organization
20
How Employers Define Value
Employer Perspective: The Total Value Equation
© 2008 Health Strategies Group, and The Benfield Group,
Totalvalue =
Reduction in direct medical costs and positive effe cts on efficacy, satisfaction, absence, presenteeism, disability, an d safety
Price
TotalValue =
Reduction in direct medical costs and positive effe cts on efficacy, satisfaction, absence, presenteeism, disability and safety
Price
21
Employers’ Health Management Philosophy
52% 51%45%
49% 48%
17%
31%
4% 3%
2006 (n=90) 2007 (n=138) 2008 (n=143)
Proactive management to improve employee
health and productivity
Provision of catastrophic coverage only
Provision of benefits for prevention and management
of health conditions
Employers’ Health Management Philosophy
© 2008 Health Strategies Group, and The Benfield Group,
22
Impact of Consumerism on Benefit Decisions (Rx)�For the third year, consumerism is identified as one of the
three most influential trends.
n=143
Consumerism
Transparency inprescription purchasing
Value-based pharmacybenefit design
CDHP growth
Total-value measurementfor benefit decisions
Health IT adoption
Quality initiatives
Increasing role of governmentin private healthcare system
Medicare Part D implementation
Consumerism
Transparency inprescription purchasing
Value-based pharmacybenefit design
CDHP growth
Total-value measurementfor benefit decisions
Health IT adoption
Quality initiatives
Increasing role of governmentin private healthcare system
Medicare Part D implementation
39%
20%
10%
10%
6%
7%
3%
15%
20%
19%
17%
14%
6%
5%
13%
10%
15%
11%
15%
13%
8%
10%
67%
50%
45%
38%
35%
26%
16%
15%
8%
2%
1%
3%
2%
3%
Most important
Second most important
Third most important
Trends with Greatest Impact on Pharmacy Benefits in Next 12 to 18 months(Percentage of employers ranking each as a top 3 tr end)
© 2008 Health Strategies Group, and The Benfield Group,
23
Stages of Employer Consumerism Approaches
*Arrows indicate percentage movement of jumbo employers from one stage to the next within 2 years.
© 2008 Health Strategies Group, and The Benfield Group,
Health educationHealth and wellness
programsDisease management
Health educationHealth and wellness
programsDisease managementPlan selection toolsLimited cost and
quality informationDecision support tools
Health educationHealth and wellness
programsDisease managementCost and quality
informationDecision support tools
Provide educationand support
Support all andprovide choice
Full speed ahead
• Employees basehealthcare decisions and purchasing on cost and quality data
• Employees are not ready to assume responsibility, but education will increase their involvement
• Employees take increased responsibility for health decisions and purchasing
HMO/PPO/POS/indemnity
HMO/PPO/POS/indemnity and CDHP
CDHP only
Insu
ranc
e m
odel
Em
ploy
er
offe
rsE
mpl
oyer
ph
iloso
phy
Stage 1Pre-consumerism
Stage 2Consumer wake-up
Stage 3Consumer empowerment
55% 39% 6%Percentageof jumboemployers
34%* 6%*
Health educationHealth and wellness
programsDisease management
Health educationHealth and wellness
programsDisease managementPlan selection toolsLimited cost and
quality informationDecision support tools
Health educationHealth and wellness
programsDisease managementCost and quality
informationDecision support tools
Provide educationand support
Support all andprovide choice
Full speed ahead
• Employees basehealthcare decisions and purchasing on cost and quality data
• Employees are not ready to assume responsibility, but education will increase their involvement
• Employees take increased responsibility for health decisions and purchasing
HMO/PPO/POS/indemnity
HMO/PPO/POS/indemnity and CDHP
CDHP only
Insu
ranc
e m
odel
Em
ploy
er
offe
rsE
mpl
oyer
ph
iloso
phy
Stage 1Pre-consumerism
Stage 2Consumer wake-up
Stage 3Consumer empowerment
55% 39% 6%Percentageof jumboemployers
34%* 6%*
24
Employers Currently Offering CDHPs
58%62%
34%
45%
Currently In two years
2007 (n=138) 2008 (n=143)
Employers Offering CDHPs(Percentage of employers)
© 2008 Health Strategies Group, and The Benfield Group,
25
Barriers to CDHP Growth
n=52
50%
21% 15% 13%
17%
38%
17% 19%
8%
19%
12%
23%
10%
87%
71% 69%
56%
17%
37%
Lack of evidencethey will save
money
Lack of informationemployees need
Lack of employeeinterest
Concern aboutemployee
satisfaction
Concern about effecton employeeproductivity
Most important Second most important Third most important
Barriers Preventing Employers from Offering CDHPs (Percentage of employers with CDHP designs)
© 2008 Health Strategies Group, and The Benfield Group,
26
Understanding Your Market
�Adoption/Readiness Segmentation
Market Infrastructure Readiness for Consumerism
ReadyNotReady
Ado
ptio
n of
Con
sum
eris
mB
enef
it D
esig
nsHigh
Low
Collaborationand
Innovation
Dormant Poised
forGrowth
Chaos/Needfor Leadership
27
Understanding Your Market (cont.)
�Determining Adoption�Observation—Mix of Own Patients/Plan Designs�Talk with Key Opinion Leaders about Status and Trends
• Talk to:– Coalition Leader– Major Benefit Consultants and Brokers– Major Employers (Benefits, Corporate Medical Departments)
• Ask about:– Benefit Design Trends– Other Program/Support Trends (to Bridge the Gap)– Opportunities for Collaboration
28
Understanding Your Market (cont.)
�Determining Readiness�Look for/Ask KOLs about Key “Cornerstones”
• Information Technology Adoption• Quality Information Transparency• Price Information Transparency
�Assess Competitive Market• Hospitals Competing on Quality?• Hospitals Competing on Price?• Employer Direct Contracting with Medical Groups or Hospitals?
�Assess Overall Balance of Power and Power Shifts• Employers vs. Plans vs. Hospitals
29
References
1. Centers for Disease Control. Physical Activity and Good Nutrition Essential Elements to Prevent
Chronic Diseases and Obesity 2008. http://www.cdc.gov/nccdphp/publications/aag/dnpa.htm Published February 2008. Accessed July 8, 2008.
2. Centers for Disease Control. Physical Activity and Good Nutrition Essential Elements to Prevent
Chronic Diseases and Obesity 2008. http://www.cdc.gov/nccdphp/publications/aag/dnpa.htm Published February 2008. Accessed July 8, 2008.
3. Centers for Disease Control. Adult Cigarette Smoking in the United States: Current Estimates. http://www.cdc.gov/tobacco/data_statistics/Factsheets/adult_cig_smoking.htm. Updated November 2007. Accessed July 8, 2008.
4. Centers for Disease Control. Trends in Cholesterol Screening and Awareness of High Blood Cholesterol --- United States, 1991—2003. MMWR. http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5435a2.htm. Published September 9, 2005. Accessed July 8, 2008.
5. American Cancer Society. Colorectal Cancer Facts & Figures Special Edition 2005. Atlanta: American Cancer Society,2005. Page 11.
6. American Heart Association. Heart Disease and Stroke Statistics — 2005 Update. Dallas, Texas.: American Heart Association; 2005. http://www.americanheart.org/downloadable/heart/1105390918119HDSStats2005Update.pdf. Page 36.
7. American Heart Association. Heart Disease and Stroke Statistics — 2005 Update. Dallas, Texas.: American Heart Association; 2005. http://www.americanheart.org/downloadable/heart/1105390918119HDSStats2005Update.pdf. Page 21
8. Marlo, K. Employees and Healthcare Decision Making—Supplemental Report Findings from The National Business Group on Health Survey of Employees. NBGH. http://www.wbgh.org/members/secureDocument.cfm?docID=1108 Published January 2008. Accessed July 8, 2008.