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Consumer Driven HealthcareSuccess Factors

August 30, 2010

C. William Sharon, CEBSNational CDH Practice Leader

Aon Consulting

Leah MartoranaBenefits and Compensation

Administrator Fowler White Boggs P.A.

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Agenda

• Aon’s Perspective on CDH Success Factors

• Case Study: Fowler White Boggs P.A.

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Aon CDH Experience

CDH Breakdown (By Type Plan) Expertise

• 350 CDH Clients• HRA and HSA plans• Total replacement and slice

– 279 “slice” offerings– 71 full replacements

• All major CDH vendors– Aetna– Anthem– BlueCross– CIGNA– Humana– United Healthcare

• Aon’s plan in place 10 years

39%

11%

36%

2%

7%

HRA = 137HSA = 127HRA full replacement = 38HSA full replacement = 26HRA and HSA = 15HRA and HSA full replacement = 7

4%

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#1: Consumer Engagement….Not a Plan

• 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

Account BasedHealth Plan

ConsumerismTools

Wellness Incentives

DM Incentives

Four key building blocks for an effective program:

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Use preventive benefitsComplete health assessmentReduce weightStop smokingManage stressGet biometric screeningsUse online health coach

Ask price of serviceConsider alternativesResearch doctor and hospital qualityUse generic RxUrgent care vs. EROutpatient vs. inpatientOnline consultationRetail health clinics

Value PurchasingUse disease management programFollow evidence based guidelinesUse a premium doctorMaintain personal medical recordUse medical homeUse center of excellence

Behavior Change in Three Areas

Improved Health Manage Chronic

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#2: Design CDH Plan Right

• Employees don’t want a “High Deductible Health Plan”

• Actuarially equivalent CDH plan

• Meaningful employer provided account value

• 100% preventive services

• No copays

• Attractive out-of-pocket maximum

• The greater the CDH plan enrollment the better the savings

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Employee Employee + 1 Family

Deductible $1,500 $3,000 $4,500

20% in-network40% out-of-network

Employee Contribution Wellness Incentive to complete health assessment, comply with DM program, no tobacco usage, etc.

Employer Account

$750 $1,500 $2,250

Member Responsibility $750 $1,500 $2,250

Employee CoinsuranceOut-of-Pocket

Maximum $2,000 in$4,000 out

$4,000 in$8,000 out

$6,000 in$12,000 out

Prev

entiv

e C

are

cove

red

at 1

00%

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#3: Long Term Strategy

• Consumer behavior change does not happen overnight

• 30+ years of managed care to overcome

• Requires senior management commitment

• Measure consumer engagement metrics

• Modify plan design, wellness/DM incentives and employee communications every year or two based on consumer engagement metrics

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Managed Care Consumerism

Health plan and provider control utilization

Pre-paid health plan; low copays

Plan restrictions such as pre-authorization and step

therapy

Minimal DM and wellness;no incentives

Large provider network

Participant and provider manage care

More “skin in the game”; health insurance to protect

against risk

More participant control

Strong DM and wellness programs with strong

incentives

Large network but encouraged to use premium

providers

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• $ for completing a health assessment

• $ for enrolling in a chronic disease management program

• $ for completing an online or telephonic wellness program

• $ for participation in biometric screening

Less intrusiveUndefined/lower ROI

Most aggressiveMeasurable/high ROI

Wellness Financial Incentives Continuum

• Waived co-pays on diabetes medication

• $ for colonoscopies • 100% benefit for

compliance with EBM care

• 100% benefit for preventive care

• $ to maintain low cholesterol

• $ to reduce cholesterol 10 points

• $ to stop smoking• $ to maintain BMI below

25• $ to hit biometric

screening results• Reduced copays for use

of high quality providers

• Lower premium for non-smokers

• $ to maintain a target BMI for 12 months

• $ to maintain low blood pressure for 12 months

Reward forAdherence

Reward forAchievement

Reward BasedOn Risk

Reward forActivity

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#4: Consumer Friendly

• Simple plan design

• Single “sign on” for all consumerism tools– Account, medical, Rx, wellness, and DM

• Integrated administrative platform– Account, medical, Rx, wellness, and DM integrated

• Visible and understandable wellness incentives

• Easily accessible wellness and DM programs

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#5: Employee Communications

• Requires comprehensive employee communications campaign

• Small group employee meetings work best– Led by trusted, credible meeting leaders

• Management support necessary

• Employees will be skeptical of the new program

• Key employee communication tactics:– Claim examples

– Online plan selector tool

– What’s in it for the plan participant?

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Potential CDH Program Results

• Reduce health care cost trend rate without cost shifting to employee

• Reduce utilization of unnecessary services– Fewer office visits, fewer scripts

• Lower cost treatment setting– Generic Rx instead of brand

– Urgent care instead of ER

– Outpatient hospital instead of inpatient

• Increase in preventive services usage

• Improved wellness and DM participation

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Potential CDH Program Results

$$$$$$$$

CD

H E

nrol

lmen

tC

DH

Enr

ollm

ent

5%5%

10%10%

20%20%

40%40%

60%60%

80%80%

100%100%

PreventivePreventiveBenefitsBenefits

HAHA WebWebToolsTools

DMDM GenericsGenerics PHRPHR

Consumer EngagementConsumer Engagement

Consumerism Savings

Consumerism Savings

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What is Current CDH State?

• 18 to 20 million CDH members– 500,000 CDH members in 2003

• Growing 20-30% per year– Increase in full replacement CDH

• 45% of Fortune 500 have a CDH plan

• Four drivers of CDH growth:– Consumerism “tipping point”– Double digit health care costs– Down economy– National health reform limits cost shifting and

eligibility exclusions

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Next Generation Consumerism

• Expanded wellness/DM incentives

• Medical home– Holistic primary care

• Onsite clinics with wellness/DM focus

• High performing networks– Steering members to best cost and quality

• Medical tourism (domestic and international)

• Centers of excellence for specialty services such as bariatric surgery, transplants, cancer, etc.

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Fowler White Boggs P.A.CDH Case Study

Leah MartoranaBenefits Administrator

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Why Consumer Driven Health in 2006?

• 450 employees– White collar, professional, busy, minimal “self-service”

• Traditional HMO and PPO plans with 50/50 enrollment

• Costs increasing 14% per year from 2002 to 2005

• Low consumer engagement– Low usage of preventive services, online health assessment,

web tools, etc.

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Consumerism at Fowler White

•2006: Implemented Consumer Driven Health Plan•2008: Eliminated HMO•2009: Introduced Healthy Pledge Premium Differential•2010: Added New HRA plan•2011: Elimination of POS Plan

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New HRA Plan in 2006

• Plan design actuarially equivalent to HMO– Rich by competitive standards

• 100% preventive services

• High HRA fund of $1,000/2,000/3,000

• 100% coverage after deductible

• Slightly lower employee contributions made the HRA plan the “best deal”

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HRA Plus Plan HRA Basic Plan (NEW for 2010)

Benefit

In-Network In-NetworkFund (firm pays) $1,000/2,000/3,000 $500/1,000/1,500

Deductible (before fund) $2,500/5,000/7,500 $2,000/4,000/6,000

Out of Pocket Max (before fund) $2,500/5,000/ 7,500 $3,000/6,000/ 9,000

Physician Visit 0% AD 20% AD

Hospital Inpatient 0% AD 20% AD

Hospital Outpatient 0% AD 20% AD

Urgent Care 0% AD 20% AD

Emergency Room 0% AD 20% AD

Preventive Care 0% 0%

Rx Retail 0% AD 20% AD

Rx Mail 0% AD 20% AD

HRA Plus vs. HRA Basic

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Post 2006 Changes• No changes to HRA plan in five years

• Eliminated HMO and changed to Aetna in 2008

• Added wellness incentive in 2009– (1) health assessment, (2) no tobacco, and (3) DM– $9/14/20 bi-weekly contribution differential

• In 2010:– Added second “low option” HRA Basic plan– Increased wellness incentive to $20/30/40– Added spousal surcharge– Liberalized 100% preventive service guidelines

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Integrating Consumerism and Wellness

• Wellness shown to yield $3 return for each $1 invested*

• Ongoing Wellness Events/Programs at Fowler White:– Boot Camp– Yoga– Start! Walking Program (over 50% participation)– Biometric screenings– Lunch and Learns– Health & Benefits Fair– Smoking Cessation Program– Healthy Pledge Premium Differential– Wellness Committee Meetings– Executive Physical

Reference: Adapted from WELCOA. (2006). Planning wellness: Getting off to a good start, Part I. Absolute Advantage (5)4, p. 1-92.

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Fowler White Successes

• CDH enrollment has increased each year since inception

• Recipient of American Heart Fit Friendly designation (‘07, ‘08, ‘09, ‘10)

• Winner of Jacksonville’s Healthiest 100 Award

• Named one of 15 Fittest Companies in America by MensFitness in ‘08

• Tampa Bay Business Journal’s Healthiest Employer contest finalist

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Financial and Engagement Results

• Before CDH/wellness program– 14% per year cost increase average from 2002 to 2005

• After CDH/wellness program– 6% per year cost increase average from 2005 to 2009 with

minimal plan design reductions– Current PEPM ($760.04 as of 7/10) is less than PEPM

three years ago ($774.76 as of 7/07)– Increase in web tools usage– Increase in preventive services usage– Increase in generic Rx usage– Increase in wellness pledge (76% of participants)– Increase in wellness program participation

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Fowler White Learnings

• Culture can’t be changed overnight

• Senior management support is a must

• Enthusiasm for Wellness Program is contagious!

• Communication is key- Employee Presentations- Emails & Pre-Enrollment Newsletters- One-on-Ones- Post Enrollment follow up Q&A

• New Hire on-boarding is critical

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Questions?