confidential property of aon consulting. do not reproduce or re-distribute without the express...

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

2. Confidential property of Aon Consulting. Do not reproduce or re-distribute without the express written consent of Aon Consulting.

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:


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


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


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


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


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%


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


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:


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


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


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


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


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


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

[email protected]

confidential property of aon consulting. do not reproduce or re-distribute without the express...

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