BenefitsEmployee Engagement

The CDHP Revolution Continues

Leading experts sound off on the newest data and trends in consumer-driven healthcare

by HROT Staff


Dr. Amit Gupta

President and COO, CareGain

Doug Kronenberg

Chairman, Consumer Driven Health Care Association & Chief Strategy Officer, Lumenos

David Merritt

Center for Health Transformation

Kyle Rolfing

President, Definity Health, a United Health Group Company


HRO Today: Is there evidence that CDHP programs are changing consumer behaviors?


AG: To clarify, CareGain does not work with employers directly; it works with carriers to help launch CDHP products. So we talk to employers about their needs from carrier partners, then we go to a company like Cigna or others who work on CareGain platforms. In mid 2004, Aetna and UH [United Health] released the data they had on behavior change and utilization trends related to CDHP products. UH compared 20,000 CDHP members to 25,000 managed care members at the end of one year, and found that the cost trend for CDHP was only about 1 percent. That means costs only increased 1 percent on the CDHP group versus managed care, where you see a trend upwards of 10 percent. Also, there were fewer claims, fewer visits to the ER and specialists, and lower usage of outpatient, radiology, and lab services. Aetna drilled down even further to see what type of services were being used and their impact on 13,500 health members (including their own employees), and found that among CDHP users, preventative care increased by 23 percent, whereas managed care plan users saw only an 8 percent increase. This indicates that CDHPs are somehow encouraging people to use more preventative care. We see a lot of carriers seeing a 3 to 5 percent cost trend with a CDHP versus a 15 to 20 percent trend with other plans. Other changes in service usage by CDHP users included a decrease in primary care office visits by 11 percent but an increase in specialist visits by 3 percent. ER visits were down by 3 percent, and inpatient visits down by 5 percent. When Logan Aluminum adopted a full CDHP plan, they saw a medical cost drop of 11 percent between January 2003 and January 2004.


DM: We’ve seen some of the newest data, which shows that the savings that these members saw in their first year were sustained in their second year.


AG: The most recent report we’ve seen is a McKinsey survey that they did regarding satisfaction with CDHP plans. On the pharmacy side, there was a 5 percent decrease in costs overall, with an increase in generic utilization. But some elements are hard to track, which is a point that we make with carriers when talking about plan design–it’s easy to detect when someone switches from a brand drug to generic, but you can’t detect if they never use them at all. So it’s important to make CDHPs more flexible in order to collect that data and encourage the public to take drugs and use services when they need them.


DM: Plans such as HSAs and high-deductible health plans are showing that consumers are changing their behavior. They are still getting the healthcare they need, it just might not be the healthcare they want. Lumenos has data on members who have worked toward improved health by signing up with a personal health trainer. Aetna shows increases in generic drug utilization. Were seeing a change in consumer behavior. When people start shopping for data or price, and when the market is allowed to work in healthcare, it does bring down cost. As far as utilization, people who enroll are still getting the healthcare they need. If they are diabetic or suffer from heart failure, they are still seeing the physicians they need to. But this may not be what they want. Look at the old adage, “If you’re paying for dinner, I’m having filet mignon.” If they have skin in the game, so to speak, they may be less likely to pay for extras. For example, if I have a sniffle and am paying for it myself, I may skip the doctor. But if someone else is picking up tab, I may go. People who enroll in these CDHP programs are still getting the healthcare they need. They are not cutting pills in half, they are not skipping visits to doctor, they are just being more discriminating about when they go.


KR: We have had people enrolled in CDHP plans since 2000, and now have one million plus members. We’ve done several studies on both populations [Definity was acquired by UH in 2004], and we’ve seen utilization decreases, cost trends lower than the marketplace, and appropriate increases in preventative care. Outpatient services decreased 6 to 9 percent, ER decreased 15 to 18 percent, but preventive services are about 8 percent higher than more traditional health plans. There is an interesting connection in addition to those trends. We see about two times the number of calls to healthcare coaches/nurse lines, but decreases in office visits, decreases in ER visits, and decreases in prescriptions. People are asking the questions, “Do I need this? Should I seek advice prior to opening up my wallet and spending my money?” It’s about getting good advice rather than rushing immediately to the doctor or ER–having consultations and making good usage decisions.


DK: At Lumenos, we conduct an annual survey of our consumers, and those results give us a good picture of how the plans are changing their behaviors. For example, nearly half say they have more knowledge about managing their health. And of those, more than one in four say they’re more actively involved in health-related behaviors, like a better diet or increased exercise. On the claims side, employers typically see a reduction in overall ambulatory care visits, but a two-fold increase in preventive care visits, which is a result of our preventive care call-in. And our consumers substitute generics instead of brand-name prescriptions well over 90 percent of the time. Consumers are also using the personalized services we offer–40 percent of the consumers with ongoing health conditions who enroll in our Personal Health Coach Program are self-referrals.


HRO Today: How have CDHP programs changed the nature of patient outcomes so far?


AG: I think it’s still too early to tell outcomes. I don’t think CDHP plans designed to date have been focused on determining outcomes. The plan designs with HSAs or HRAs with a high deductible plan on top still don’t address outcomes for chronic care patients, because most often, the chronic patient is going to opt out. What is needed is more flexible types of account structures, like a chronic disease management account, for example an HRA where you carve out some dollars for disease based on risk status. The carved out dollars could be put into a maintenance account, and the remaining dollars in an account for other healthcare needs; then you could put an incentive program in place that would encourage users to follow steps in the program. Once you start having claim data tracking services, reward individuals, and get people engaged in healthcare much more closely, you’re moving towards more outcomes-based medicine. Some healthcare plans are taking this a step further–tying physician payment into it so that physicians will be rewarded for outcomes that are achieved.


DM: I don’t think it’s too early to tell what the data on CDHPs is going to show. For example, Aetnas first-year clients have seen ER visits decline by 16 percent. This doesn’t mean that people are skipping out on the ER when they need it. It means they are healthier and don’t need the ER. Aetna has shown no detriment for chronic illnesses like diabetics, cardiac problems, hypertension, or asthma, and no difference between traditional healthcare plans and CDHP plans. I think patient outcomes with CDHP users will either be at par or possibly even better than traditional healthcare plan users.


KR: I agree it’s not too early to measure outcomes. But first, I think we need to take a step back. CDHPs aren’t just about plan design, although it’s a big component. CDHPs are about asking people to take more accountability and responsibility. We need to give them the tools, information, and support to make sure they are armed with everything they need. We looked at 200,000 continuously enrolled CDHP members in 2003 and 2004 and looked at measures of care like diabetes, asthma, and childhood immunization. The baseline in 2003 was better than the managed care population and increased over time with a 12 percent increase; for asthmatics, there was a 40 percent reduction in flare- ups; there was a 25 percent reduction in ER visits; we saw a 10 percent increase in pharmacy scripts filled; and there was a slight improvement in childhood immunization rates during that period. It is important that we measure this. Some of these plans have been in place since 2000; we need to make sure were measuring and showing improvements to help people understand the types of care available and give them the information they need to hold themselves accountable.


DK: I think it’s too early to say precisely how much we’ve changed patient outcomes because that’s a long-term goal; there’s simply not enough data to track that yet. What I can say is that nearly half of our consumers say they’re more knowledgeable about their health. And the fact that were seeing increased use of preventive care services, and services like our personal health Coach program, will almost certainly result in better health outcomes over time.


HRO Today: What is the ratio between HSA and HRA usage? Is there a difference in adoption rates among small and large groups?


AG: For any large employer looking at HSAs over HRAs, HRAs are more flexible and controllable. HRAs give employers much more control over the dollars. I think it’s very unlikely that HSAs will take over the market in the next few years, unless HSAs offer debit cards, a checking account, or online accessibility to improve adoption and make HSAs and payments out of HSAs more convenient. A consumer-driven market report published by Bill Boyle estimates there will be 2.9 million enrollments in HRAs by 2006, while HSAs will be only half of that. But there is a growing interest in HSAs. In a Mercer study on offerings in the large employer market, an estimated 26 percent surveyed planned to offer both HSA and HRA type products in 2006, as opposed to 14 percent in 2005, and only 4 percent in 2004.


DM: I agree that large employers are being cautious with HSAs versus HRAs. They do control the funds in an HRA more closely. Employers cannot touch HSAs once the money goes in, and employers are afraid of that. Few employers are jumping in and putting in a lump sum for fear that employees will leave and take the money with them. But HSAs are growing with both large and small employers. Blue Cross expects HSAs to expand from 39 states to 49 states next year. Hewitt thinks that more than 25 percent of companies will be offering them in a little more than a year and a half–that’s a good clip. AHAF reports 16 percent of small employers are now offering HSAs who didn’t offer any healthcare coverage before. Combine that with in-house plans, and that would create a national insurance market. There is promise across the board with these plans.


KR: Were seeing similar types of dynamics. Of the one million members enrolled in our plans, 675,000 are in HRA plans. The remaining 325,000 are in HSAs. But the HSA has experienced the most growth with a recently added 100,000 since January 1–most of them primarily small and mid-sized companies. We are seeing an up-tick in each of these plan types for both market segments and would agree that the HSA is primarily for small to mid size and most HRA growth is with larger employers.


DK: We have more groups offering HRAs, primarily because we’ve been offering HRAs for several more years. But were seeing growing interest in HSAs–nearly half of our current clients are considering adding HSA offerings. We’ve actually developed a transition plan that allows employees to move from an HRA to an HSA without losing any balance they had in the HRA. As far as the difference between large and small groups, I don’t believe we’ve seen any major differences. There’s a pretty consistent level of interest among all group sizes.


HRO Today: What was the predominant employer sentiment for open enrollment in late 2004/early 2005, and how do you see that differing from attitudes in 2006?


AG: Were finding more interest in CDHPs, without a doubt. What we see is that they’re afraid of cost-shifting to employees, so they don’t want to put undue administrative burden on the employees. Questions around ease of use of these plans are most important to employers. Employers were bothered by a process-based concern. In 2006, there’s more clarity about debit cards and how to use them for pharmaceuticals. Employers are becoming more sophisticated and taking more interest in incentive programs; there is even a conference about it. There’s growing interest in utilization. And trend reports show that employers and employees want to manage their own healthcare. Employers are taking a more proactive interest in how their employees are being managed under their programs.


DM: HSAs were very new and were just passed into law less than a year before. Many employers had a “wait and see” attitude, so they were not quick to take off. Since then, we’ve seen outstanding results by early adopters coupled with results from folks like Lumenos and Aetna. So were seeing more employers rolling this out in response to employee demand.


KR: In light of all the data talked about earlier, it’s clear that this is working, and we are moving beyond skepticism. The focus is less on “How do I get my toe in the water?” And more on, “How do I make sure were introducing this in a way that will work best for my organization?” People are concerned over whether they are effectively communicating and maximizing enrollment in plans, versus testing them against larger benefits package. Employers today are asking, “How do I make this the core of what I offer?


DK: The predominant sentiment is always the same: We want to offer our employees great healthcare, but we can’t keep increasing our budget by a double-digit amount each year. The difference is what strategy you choose, and of course, each year more employers are ready for CDHPs. The biggest change this year is probably more interest in HSAs. Last year at this time, they were still new. Now, there are a million people enrolled in them (see the Higgins article on the Health Savings Accounts Boom in The Washington Times), and nearly everyone has read about them or talked with their broker or consultant about them.


HRO Today: With regard to CDHPs, what advice would you give to HR leaders in mid-to-large organizations who are in charge of recommending health choices for their companies?


AG: First, believe in CDHPs as a strategy and the concept of consumerism. The plan design can be flexible enough to meet their needs and employee needs. CDHPs are no longer just for the young and healthy; they can address the needs of the chronically ill as well. The technology is available to make the member experience simpler and more seamless. Look beyond your options. Look at different payment options and product design. The decision support tools are now more integrated with an administrative system and processes so that they become more personalized to individuals to convey the information that is more pertinent.


DM: Engaging in education for employees is absolutely vital. I’ve seen companies use the approach where you get everyone in room, give them cookies and pop, and then give them a big folder to read. That sort of approach results in less than 5 percent enrollment. Be innovative in your education. Technology can be very effective in this way. Create a DVD so that employees can take it home and watch with their spouse. Marsh has had clients where employee enrollment is almost 50 percent, and this was directly a result of education for employees.


KR: Employers need to recognize that they are rolling out these programs, and asking employees to take on more responsibility and accountability for healthcare overall. This is a good thing, an appropriate thing. But the appropriate and responsible way to do that is to have support mechanisms in place to help employees to be good consumers. We haven’t addressed this to date. How can we help provide that to employees? We are looking at creative ways to help finance healthcare on behalf of employees and we need to be more proactive in our outreach. There is a lot of data that flows through health plans, such as claims data, Web hits, etc. We can use that data to help people with healthcare decisions. For example, look at prescription drugs–a person could work with their doctors to get a higher prescription (at a lower cost), then split the pill in half and save money. We need to assist employees in their roles as consumers. We also need to help create a healthcare marketplace–and this marketplace is very different from the type of marketplace that people normally interact with (such as when purchasing a car or groceries). We need to provide employees with better cost and quality information as it relates to purchasing healthcare. We are asking employees to be consumers of healthcare for the very first time. We need to make sure they have robust tools and mechanisms to help them.


DK: Look beyond just offering information to your employees to make them better healthcare consumers. We’ve had tremendous success with incentives built around improving health outcomes. For example, when we offer extra health dollars to consumers who complete an online health risk profile, about half of our consumers complete it. We offer similar incentives for participation in our personal health coach program, which gives personalized assistance to people with ongoing health conditions to teach them how to better manage their health. And were looking at new incentives built around smoking cessation and weight management.



Tags: Benefits, Engaged Workforce, HRO Today Global

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