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Confidential property of Aon Consulting. Do not reproduce or re-distribute without the express written consent of Aon Consulting.
Consumer Driven Healthcare: Myth vs. Reality
2008 Health Care Forecast ConferenceUniversity of California, Irvine
February 22, 2008
C. William Sharon, CEBSNational Consumer Driven Healthcare Practice Leader
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Myth #1: CDH is an HDHP with an accountReality: The “heart” of CDH is consumer engagement
Consumerism
– a set of techniques designed to transform members to be more effective health care consumers
Consumer driven healthcare (CDH)
– consumerism using an account-based (HRA or HSA) plan design
ConsumerFinancial
Role
ConsumerismTools
Health Promotion
Chronic Condition
Management
Four key building blocks for an effective program:
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Myth #2: CDH savings are due to cost-shiftingReality: Savings come from changing consumer behavior
Well-designed CDH plans do not require cost shifting to save money
– CDH plan = similar cost share + lower utilization through improved consumer engagement
80% of employers fund account
– All HRA and 60% of HSA
The higher the CDH enrollment the higher the savings
– Full replacement CDH saves the most
Source: United Healthcare CDH Study, 5/07 and 2/08
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Employee Employee + 1 Family
Employer Account $1,000 $1,750 $2,500
Member Responsibility
$1,000 $1,750 $2,500
Deductible $2,000 $3,500 $5,000
Employee Coinsurance
0% in-network
30% out-of-networkOut-of-Pocket
Maximum $1,000 in
$2,000 out
$1,750 in
$3,500 out
$2,500 in
$5,000 out
$ Incentives Health risk questionnaire (HRQ) & chronic condition
management program completionPre
venti
ve C
are
covere
d a
t 100%
CDH Plan Design – With Employer Account
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Myth #3: CDH is a passing phaseReality: CDH market growth is strong
11 to 12 million CDH members (Aon est.)
– 500,000 CDH members in 2003
Growing 20-30% per year
46% of large employers*
10% of all employers
All industries and sizes
More in Central and Southeast
Many more in plans with “consumerism”
* eg. American Express, General Motors, John Deere, Owens Corning, Union Pacific, Wendy’s
Sources: Aon Consulting, 2007 UBA Health Plan Survey, 8/07, Tower Perrin “Account-Based Health Plans: What Works - and Why”, 1/08
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Good studies: Aetna, Cigna, McKinsey & UHC
CDH plan findings – Increase in consumer engagement
– Reductions in utilization
– More value-conscious purchasing decisions
– More engagement in wellness
McKinsey findings (2005)
– 50% more likely to ask about cost
– 33% more likely to ask about treatment options
– 25% more likely to engage in healthy behaviors
– 20% more likely to participate in wellness
– 30% more likely to get an annual checkup
– 20% more likely to treat a chronic condition
Myth #4: There’s not enough data to make decisions Reality: There’s plenty of data; it will never be perfect
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How Does CDH Change Utilization?
Sources: Aetna CDH Study (9/06 and 2/08), CIGNA CDH Study (10/07), United Healthcare CDH Study (5/07 and 2/08)
Reductions in: Increases in:
Overall utilization: 5-12% Preventive benefits: 5-20%
Inpatient hospital visits: 10-15% Immunizations: 8-12%
Outpatient hospital visits: 10-15% Physical exams: 5-15%
ER visits: 10-15% Online tools usage: 10-30%
PCP office visits: 5-10% Generic Rx usage: 10-15%
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77% enrollment in HRA plan (60% in 2004)
60% HRQ participation
70% web activation
No increase in healthcare costs from 2004 to 2007
Employee cost share (13%) lower than before
Results
Formed Insurance Committee of labor and management
Added HRA to HMO and PPO in 2004
Added HRQ in 2004
Aggressive employee communications
Onsite wellness coaches in 2007
Focus on nutrition
Fitness competitions
Actions
2,200 participants
Unions
$21 m health care cost in 2004
15% annual cost increases
Employer Situation
Case Study: Municipality Introduces CDH in 2004
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Myth #5: All we need is health promotionReality: Health promotion alone is not enough
Use preventive benefits
Understand treatment options
Evaluate price and quality
Make informed, shared decisions
Use generic drugs, pill-splitting or mail order
Comply with evidence-based medicine
Follow proper chronic condition management
Maintain personal health record
Complete health risk questionnaire (HRQ)
Participate in wellness programs
And, more
To be really engaged, consumers must:
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Sources: Aon Consulting client data; National Business Group on Health, Employees and Healthcare Decision Making, 1/08; United Healthcare Quality of Care Study, 4/07
Many employees like CDH plans – More employers with >50% CDH enrollment
– 95% CDH re-enrollment rates
CDH plan cost share may be lower than traditional plan
CDH members receive preventive care and evidence-based care equal to or better than traditional plan members
90% prefer to consult sources other than their doctor when making a treatment decision
Myth #6: My employees would not like itReality: Employees are more ready than you think
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CDH experience
Administration integration
Consumer engagement techniques
Online decision support tools
User-friendliness of website
Price and quality transparency data
Chronic condition management
Health promotion programs
Incentives administration
Myth #7: Every vendor is the sameReality: There is a vast difference in experience
New Evaluation Criteria
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Retail Clinics (CVS, Walgreens, Wal-Mart)
Medical tourism
Electronic medical records
Computerized Rx scripts
Online consultations (eg. Relay Health)
Evidence based medicine
Pay for performance
Concierge medicine
Hospital published pricing
Myth #8: The health care system does not support CDH Reality: The health care system is changing
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Initially, most employers add CDH as an option
Hard work to get high CDH enrollment
– Cost savings depend on enrollment
Consumer behavior change takes time
– Still learning how to engage consumers
– Overcoming 25+ years of managed care
Myth #9 CDH will cut medical costs once and for all Reality: CDH is a long term strategy
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Members are skeptical of change
– Members don’t know CDH can be a “win”
Members need to be taught to be an effective healthcare consumer
– Face-to-face works best
Communication must be ongoing and targeted
– Must come from a trusted source
Budget for the expense in advance – it’s a big, important piece
Myth #10: We don’t need costly communicationsReality: Member communication is critical to success
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The reality is that your health care costs will increase no matter what action you take – curbing the increases is the objective
There are more unhealthy and aging workers in the workforce every day – the trend is not reversing
You can’t ignore rising costs and you can’t just cost-shift
With careful planning, CDH can cost less with no cost shifting
Myth #11: We don’t have the money (time) to do CDH Reality: You don’t have the money not to
Confidential property of Aon Consulting. Do not reproduce or re-distribute without the express written consent of Aon Consulting.
For more about Aon’s CDH consulting servicesgo to www.aon.com/cdh
C. William SharonNational Consumer Driven Healthcare Practice Leader