Employee Engagement:

Your Tool for Tackling Health Care Costs

June 26-29, 2011

Las Vegas, Nevada

Topics we will cover

Health Care Cost Drivers Complex Marketplace strategies Informed Decision Making/Value Based

Purchasing/Advocacy Employee Engagement

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Objectives for Today

Provide ideas for you to:Engage your employeesMove market share to value based providers Improve responsibility and accountability of stakeholders

You will laugh at least twice You will contribute to the discussion You will learn something from another attendee

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Health Care Costs

What two things drive health care costs?Utilization – Number of servicesCost per unit of service

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Where do we spend money?

Who Are Stakeholders?

Your Employees and their families Your Company

HR/Benefits teamManagement team and CEOShareholders

Provider Community Payer

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Health Care Costs

At the heart of health care costs – every expense – is a consumer… with an enormous influence

You hand your employees a blank checkbook and you fund the checks that they write

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Reducing health care costs

We have to teach employees – and their families – about the consequences of their choices – and make those consequences immediate and personal.

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Health Care Costs

7.3% increase in 2011 lowest in recent year as a percentage, but increase in dollars is highest

90% of cost increase stemmed from higher costs per unit of service

Changing the trend:Employers with at least 50% of workers enrolled in CDHP

have a two year cost trend that is 25% lower than non CDHP sponsors*

*Watson Wyatt and NBGH

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Health Care Costs Continue to Rise

Milliman Medical Index reports following based on standard PPO plan:A family of 4 spent $3,634 on health care in 2002In 2011, this same family will spend $8,008Increase of $364 per month – employees premium contribution as well as out-of-pocket expenses

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Employers as Stakeholders

Employers are the Primary Stakeholder in the Health Care Business

“If you can’t get something good out of trouble, then all you’ve got is trouble” John Hiatt/Musician/Treme’

A buffet table of choices and options for employers – all guaranteed to taste good

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Complexity of Plans

Narrow Networks – out of pocket benefits for members reflect choices by membersWho manages?What criteria are used to select the providers?

Deductibles and co-insurance increasing and based on type of service providedWho determines place of service?What is “service is not available”?

Premium contributions or health plan participation tied to HRA and biometric screening

Must understand and plan for consequences!13

Indiana Client

90 employees New local carrier is a Catholic System comprised of 4

local hospital groups Primary Care physician assigns network Specialists attached to PCP Not all PCPs work in all 4 hospitals Provides advocacy and value based purchasing

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Wisconsin Client

National manufacturer – 5,000 employee lives Self funded – salaried and union Two plans – one high deductible with HAS Union plan includes cost sharing for first time Health risk assessment and related wellness programs Advocacy and value based purchasing offered Extensive employee communication and engagement

program for all employees

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Colorado Client

78 Employees High deductible health plan CMM network with internal facilities Cofinity network – formerly Sloans No coverage out of network Bridge Health Mandatory use of Patient Care cost and quality

research

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Observations

Money changes behavior Administration of these plans is very difficult and

specialized Participants have difficulty understanding complexity

and decisions Providers have no clue – no connectivity to each other

or to claims payment How to measure true impact on claim dollars?

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Plan Design Decisions

What is your company’s strategy regarding consumerism?

What is your company’s strategy regarding defined benefit versus defined contribution?

What is your company’s strategy regarding linking healthy lifestyles and premium contributions?

What is your company’s strategy regarding incentives and disincentives?

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Pro-active versus Re-active

A successful cost containment strategy, simple or complex, requires a communication strategy – which takes planning and focused execution by you

Using a variety of mediums is a critical component – people learn differently

The communication must be ongoing

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Idea #1

Create a series of simple communication pieces that employees can read quickly and remember

Put them everywhere Get them into the hands of spouses

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Value Based Purchasing

Treatment decision support that targets procedures with high variation in frequency without corresponding benefit Back Surgery Hip Replacement Knee Replacement C Section Hysterectomy

Success with this strategy requires integration between physicians and payer

Measurement of this strategy requires knowledge of the initial decision of the participant/patient.

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System Challenges

My doctor never has enough time for me and I don’t know what to ask him/her

How do I find the “best” doctor? My husband is about to be discharged from the hospital

and I have no idea what to do once he gets home. I have a job.

I just got a bill from the hospital for $3,500. I have no idea why they are billing me. I have insurance.

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Provider cost/quality information

Costs among doctors, hospitals and outpatient centers vary significantly from provider to provider in the same market in the same network

How to determine and communicate “value”

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An employer with 1,000 employees “buys” 1,100 imaging procedures per year

If that employer could save $1,000 on each imaging procedure

Savings of $1,100,000 in claim costs

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Value Based Purchasing

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Arthroscopy

CPT Code – 29873

Surgical; with lateral release

Knee arthroscopy is a surgical procedure in which a small camera is used to examine tissues inside the knee joint. Additional instruments may be inserted to repair the knee

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Facility CostsMedical Provider Community

HospitalSt. Mary’s Hospital Waukesha

Memorial

Total Price $7,400.00 $14,350.00 $12,800.00

Discount Rate 10% 15% 11%

Actual Discount $740.00 $2152.50 $1408.00

Discounted Balance $6660.00 $12,197.50 $11,392.00

Applied to Deductible ($500)

$500.00 $500.00 $500.00

Member Co-insurance (20%)

$1232.00

$2338.90 $2178.40

Member Responsibility $1732.00 $2,838.90 $2,678.40

Employer Cost $4,928.00 $9,358.60 $8,713.60

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Colonoscopy

CPT Code – 45378

Routine Colonoscopy

Colonoscopy is a medical procedure where a long, flexible, tubular instrument called the colonoscope is used to view the entire inner lining of the colon (large intestine).

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Facility CostsMedical Provider Endoscopy Center Regional Hospital Hospital Surgery

Center

Total Price $1,640.00 $2,945.00 $7,500.00

Discount Rate 35% 35% 35%

Actual Discount $574.00 $1,030.75 $2,625.00

Discounted Balance $1,066.00 $1,914.25 $4,875.00

Applied to Deductible (500)

$500.00 $500.00 $500.00

Member Co-insurance (20%)

$113.20 $282.85 $875.00

Member Responsibility $613.20 $782.85 $1,375.00

Employer Cost $452.80 $1,131.40 $3,500.00

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Potential/Actual SavingsProcedure Providers Potential Savings Actual Savings

Colonoscopy Dr. Maltz – Mayfair Digestive Center; Dr. Guda – Center for Digestive Health; Dr. Kumar – St. Luke’s Hospital

$1,577 $0

Colonoscopy Dr. Kluiber – Northshore Surgical Center

Estimate Only Estimate Only

Hernia Repair Dr. Beckman – Community Memorial Hospital; Dr. Beckman – Froedtert Memorial Hospital; Dr. Armstrong – Wheaton Franciscan

$7,832 $7,832

Mammogram Aurora Medical Center; St. Joseph’s Hospital; St. Mary’s Hospital

$51 $51

MRI Center for Diagnostic Imaging; Open Advanced MRI; Smart Choice MRI

$886 $657

TOTAL $10,346 $8,540

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Cost Comparison Requirement

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Decisions by Members

After receiving and discussing the cost/quality information:78% moved to a lower cost providerAverage savings for employee of $531 per procedureAverage savings for employer of $608 per procedure

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Incentive and Disincentive Plans

Members as Stakeholders…. “You gotta do something to get something”

Behavior changes to reward:Lifestyle changesEngagement with programs such as wellness and

disease managementValue Based Purchasing

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Better Consumerism… Valued Based Purchasing

Publicly available data on provider cost and quality Employees making decisions based on that data Employees understanding the impact of lifestyle

choices on their health care and health care costs Employees understanding that their decisions impact

health care costs for the entire company Informed patients and physicians making decisions

together

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Idea #2

Develop and promote quarterly education/communication meetings with participants that cover topics like wellness, benefits cost and/or quality and make them fun and make them mandatory.

You have mandatory safety meetings, why not mandatory health care/insurance meetings?

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Sample meeting topics

Benefits quiz show – with prizes How to exercise effectively to lose weight How to find the doctor that you’ve always wanted Making wise health care choices – for you

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Successful Communication Plans

Year-round Communicate a goal and communicate progress

towards that goal Have a spousal component Involve senior management Use multiple mediums Keep them simple

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Beliefs drive Behaviors

Beliefs drive Behaviors

A doctor’s office visit costs $10.00

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Beliefs drive Behaviors

The insurance company is paying the bill

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Cost & Quality

CostOutpatient!Two numbers impact costs: billed charges and contracted

ratesPatients need specific procedure or revenue codesHow many variables to measure?Ranges are only marginally usefulHow current is publicly available data?The member needs help knowing how to use the

information – e.g. talking to their physician about changing facilities

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Cost & Quality

QualityThis is very difficultParticipants need help defining qualityPublic data relates to major illnesses and treatments, not

outpatient proceduresPublic data can b e in conflict, not current and debated by

the physician or hospitalCase mix adjusting, physician referral patterns and other

external factors can influence “quality data”

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Sources for Quality Data

www.leapfrog.com www.healthgrades.com www.docboard/org/aim www.vitals.com

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It’s a Long Journey

What we’ve learned at Patient Care Larger deductibles and increased out of pockets costs do

make employees more interested in cost comparisons Once an elective procedure has been recommended, people

typically do not want to change physicians The major opportunity to improve purchasing is in the

outpatient area More interest in cost than quality Technology tools provide limited data with which to make a

decision Choosing more expensive care has to cost consumers more

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Keys to Success

Boost consumers’ health literacy Develop a company goal and a strategy to support Identify benchmarks to measure success Communicate the goals and strategy to employees and

dependents Measure based on benchmarks Communicate results

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