Consumer-Driven Health Care: Medtronic’s Health Insurance
Options
Harvard Business School
Authors: Reginae E. Herzlinger, John E. Hurwich, Seth Bokser
Professor: Soe-Tsyr (Daphne) Yuan
Presenter: Sally
Outline
• Insurance Type
• Explanation of terms
• The case
• Application in iEnjorange
Insurance Type
• HMO (Health Maintenance Organization)
• PPO (Preferred Provider Organization)
• POS (Point of Service)
• CDH (Consumer-Driven Health)
HMO
• Health Maintenance Organization
• Primary care physician
• In-network (preferred)
• no out-of-pocket money
• co-payment
PPO
• Preferred Provider Organization
• in-network (preferred)
• out-of-network (non-preferred)
POS
• Point of Service
• Between HMO and PPO
• Need PCP like HMO
• out-of-network: also called self-referrel like PPO
Explanation of Terms
• Deductible
• Co-insurance
• Annual out-of-pocket limit
• Co-payment
example
Deductible
• Is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses.
Deductible
Co-insurance
• Is a cost-sharing requirement where you are responsible for paying a certain percentage and the insurance company will pay the remaining percentage of the covered medical expenses after your deductible is met
Co-insurance
Annual out-of-pocket limit
• The out-of-pocket limit is the maximum amount you will pay out of your own pocket for medical expenses in a given year.
Annual out-of-pocket limit
Co-payment
• Is a specific flat fee you pay for each medical service, such as $30 for an office visit, after which the insurance company often pays the remainder of the covered charges.
Co-payment
Main role
• Dave Ness – vice president of Compensation and Benefits of Minneapolis-based Medtronic
• DECISION MAKING: health care insurance choices offered to employees next year
• He had launched Definity Health
Definity Health
• A new program, two years ago
• Founded to offer a new kind of CDH plan (CDH)
• Consistent with Medtronic’s human resource and business strategy of encouraging CDH care
CDH
• Consumer-Driven Health Care
• Enabled employees to choose from a larger and more diverse menu of plan options, thus restoring their autonomy, and controlled cost through their direct management of health care expenditures.
• The impetus for CDHC was the growing power of health care consumers who searched the Internet for health care information and spent more than $80 billion out of their own pockets for alternative health care services, such as acupuncture.
• Direct, flexible management and coverage for preventive health care.
Definity Health’s plan consisted of 3 elements
• A personal care account (PCA) = health reimbursement account (HRA)• Employers contributed to the account
• Employees used the money to pay for health care expenses from their chosen provider.
• Preventive care was 100% paid for and was not charged against the wmployee’s HRA balance.
• Comprehensive health coverage• The plan had three levels of deductibles from which employees could choose
• Health tools and resources• A broad array of resources to support member health and wellness decision-
making available online and by phone.
Buyers Health Care Action Group (BHCAG)
• Essentially disintermediated the insurers to strengthen the connection between providers and their patients. It contracted directly with integrated networks of physicians and enabled consumers to choose providers, with the help of readily accessible out-of-pocket price and satisfaction information
Decision making: Health care insurance choices offered to employees
next year
• Also wondered what additional metrics he should use to measure the plan’s success or failure.
• He also wanted to revisit the decision not to include BHCAG among Medtronic’s offerings.
in iEnjorange
• We are one part of health tools and resources (one of three elements in Definity Health’s plan) to provide some preventive information or some recommendation lift-style to users.
• In Taiwan, CDH concept is not used so far. According to the trend, insurance company should adopt this type of insurance and we may provide some mechanism to let the users choose their own activity through their direct management in order to their future health.
• If we want to suggest insurance company to adopt the plan we provide, we should do the metrics analysis to measure our plan.
Thanks for listening
