EXTREME MAKEOVER: HEALTH CARE EDITION. Reaping radical savings from innovative benefits strategies

Transcription

1 EXTREME MAKEOVER: HEALTH CARE EDITION Reaping radical savings from innovative benefits strategies

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3 WHAT IS EXTREME? 3

4 HOW DO YOU FEEL ABOUT HEALTH CARE IN 2014? Complete the following sentence I m feeling about the health care environment at this time. What issue would you most want to address with an extreme health care makeover for your company? 4

5 THE STATE OF HEALTH CARE EMPLOYER AND EMPLOYEE PERSPECTIVE

6 STATE OF HEALTH CARE FOR EMPLOYERS 6

7 COST AND RATE OF CHANGE BY EMPLOYER SIZE 7

8 COST SHARING USING DEDUCTIBLES 8

9 ANOTHER LOOK AT COSTS-FAMILY OF FOUR 2013 Milliman Medical Index 9

10 RATE OF INCREASE LAST FIVE YEARS 10

11 Cost shifting isn t going to win the race for TALENT? 11

12 INCREASE EXPECTED DUE TO ACA IN

13 INDIVIDUAL MANDATE 13

14 COMMUNITY RATING 14

15 EMPLOYERS THAT ARE VERY LIKELY OR LIKELY TO TERMINATE PLANS IN THE NEXT 5 YEARS 15

16 The BIG LOSER will be the one that exits healthcare altogether! Cost shifting isn t going to win the race for TALENT? 16

17 BEFORE THE MAKEOVER REVIEW OF THE BASICS

18 BACK TO BASICS PxU=$ 18

19 PxU=$ [PRICE] Medical care costs Provider network contracts/discounts Administrative and insurance costs Adjunct service fees case management, employee help lines, brokers Selection of vendors TPA s / carriers Approach to funding and stop loss attachment points Eliminating waste/improve quality THE SYSTEM 19

20 PxU=$ [UTILIZATION] Employee Engagement and Empowerment Addressing Consumption Behaviors Physical Therapy vs. Surgery Generic Medication vs. Brand Name Urgent Care vs. Emergency Room Low Cost vs. High Cost Provider Maintaining Health Status / Wellness Compliance w/care Recommendations THE CONSUMER 20

21 WHERE DO YOU HAVE THE MOST INFLUENCE? OR THE SYSTEM THE CONSUMER 21

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23 D(PxU=$) [BENEFIT DESIGN CAN INFLUENCE BOTH PRICE AND UTILIZATION] 23

24 THE SYSTEMS PERSPECTIVE WHAT S HAPPENING BEHIND THE SCENES?

25 What s extreme is the amount of waste we re seeing in our health care system. 25

26 $992 billion Centers for Medicare & Medicaid Services How big is it?

27 $1.2 trillion according to PWC How big is it?

28 That s 33-52% of a total health care spend of $2.6 trillion How big is it?

29 WASTE IN THE US HEALTHCARE SYSTEM 29

30 WASTE IN THE US HEALTHCARE SYSTEM THE CONSUMER 30

31 WASTE IN THE US HEALTHCARE SYSTEM 31

32 WASTE IN THE US HEALTHCARE SYSTEM 32

33 WASTE IN THE US HEALTHCARE SYSTEM THE SYSTEM 33

34 WASTE IN THE US HEALTHCARE SYSTEM THE SYSTEM THE CONSUMER 34

35 OPPORTUNITY TO REDUCE WASTE Leverage Technology Involve Patients in Care Decisions Use Evidence Based Medicine Promote Coordination between Providers Pay Based upon Value Improve Transparency for Quality, Price, Cost, and Outcomes Institute of Medicine Best Care at Lower Costs 35

36 THE MAKEOVER BEGINS. TOOLS, TECHNIQUES AND EXPECTED OUTCOMES

37 MAKEOVER COMPONENTS FOR DISCUSSION Accountable Care Organizations (ACOs) Direct Primary Care Telemedicine Private Exchanges Health Incentive Accounts Captives 37

38 ACCOUNTABLE CARE ORGANIZATIONS RAPIDLY EXPANDING OPPORUNITIES

39 ACCOUNTABLE CARE ORGANIZATIONS DEFINITION Health care providers who work together collaboratively and accept collective accountability for cost and quality. 39

40 ACCOUNTABLE CARE ORGANIZATIONS EXAMPLE On-Site Nurse Navigator Care Management Team 40

41 ACCOUNTABLE CARE ORGANIZATIONS EVIDENCE Market Movement -260 Medicare ACOs covering 4M patients -240 private commercial ACOs covering 14M-23M patients For Employees For Employers Patients leave hospital sooner than expected. Chronic conditions are wellcontrolled (ex: high blood pressure, diabetes). Reduction in initial cost projections Lower rate of increase in costs over time Healthier, more productive workers 41

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43 TRUCKING FIRM WITH 70 EMPLOYEES THE SITUATION: Intolerable rate increase under traditional broad network model THE STRATEGY: Didn t want to stick employees with the bill Chose ACO delivery system to reduce cost shift THE RESULTS: 19.9% reduction in premium with no plan design changes No change in health insurance carrier Savings per EE of $1,794 annually shared 75/25 with employees

44 DIRECT PRIMARY CARE (DPC) RAPIDLY EXPANDING OPPORUNITIES

45 DIRECT PRIMARY CARE DEFINITION It s retainer primary care practice. Basically, you get a company doctor, and your employees are VIPs (very important patients). 45

46 DIRECT PRIMARY CARE EXAMPLE Characteristic Traditional Practice Direct Primary Care Practice Panel size 2,000-3,000 < 500 Provider incentive Volume-based Quality-based PT access to MD Through call center 24/7 access to MD cell phone/ PT appointment scheduling Weeks out Same day/next day guaranteed Appointment length Appointment times < 10 min Appointment times > 30 min Waiting room times Often > 1 hour No waiting Annual exam Brief, it at all Comprehensive with lab work Care Location MD office MD office, patient home, workplace, cell phone/ Care coordination Minimal Complete 46

47 DIRECT PRIMARY CARE EVIDENCE For Employees 24/7 access to doctor via cell phone/ . Appointment times >30 minutes. No waiting! And same day/next day guarantee for appointments. Coordination of other medical care, including prevention and wellness. For Employers 100% substitution of primary care costs 40-60% reduction in specialty care costs 70-80% reduction in ER/urgent care 20-30% reduction in in-patient hospitalization 47

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49 MANUFACTURER WITH 550 EMPLOYEES THE SITUATION: Innovator in highly competitive industry making continual efforts to cut costs Upcoming labor negotiation requires repositioning of health care offering THE STRATEGY: Emphasize importance of healthy lifestyles to maintain high benefit levels Develop model to better connect people to primary care physician Phase-in identical model for non-union prior to beginning negotiations THE RESULTS: 9.2% reduction in first year health care costs Direct ROI of $1.40 for every $1.00 spent Reductions in Urgent Care (-67%), Specialist Visits (-14%) and Acute Hospitalizations (-57%) Very high employee satisfaction rates

50 TELEMEDICINE RAPIDLY EXPANDING OPPORUNITIES

51 TELEMEDICINE DEFINITION Sharing medical info electronically to diagnose, monitor, and treat health conditions. 51

52 TELEMEDICINE EXAMPLE 52

53 teledoc 2 minutes 53

54 TELEMEDICINE EVIDENCE For Employees Transportation and location (ex: rural) issues disappear. Avoid unnecessary trips to the doctor/er. Improved communication between doctor and patient. For Employers 40% reduction ED 70% reduction in office visits 10% reduction in prescriptions Become an early adopter and win big! Immediate access! 54

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56 DISTRIBUTOR WITH 2300 EMPLOYEES THE SITUATION: Multi-site employer was experiencing escalating and unsustainable health care costs THE STRATEGY: Emphasis on keeping health care costs low while expanding access to quality health care for employees Save employees time and money, while keeping employees happy and healthy THE RESULTS: Savings of more than $200,000 in health care expenses and productivity-loss avoidance in one year 400% Return on Investment.

57 PRIVATE EXCHANGES RAPIDLY EXPANDING OPPORUNITIES

58 PRIVATE EXCHANGE DEFINITION An employer sponsored marketplace (usually online) where employees purchase benefits to suit their individual needs. 58

59 PRIVATE EXCHANGE EXAMPLE Employer Choose products and options to offer Determine contribution amounts and funds employee s account Decision Support Engine Medical Dental Employee uses funds to purchase benefits Online or via call center Generates tailored list of recommendations Vision Other Products / Services Employee purchases Products / Services which align with personal needs

60 PRIVATE EXCHANGE EVIDENCE 54% of employees elected HSA eligible plans versus 9% nationwide Plan premiums are 22% less than national average and payroll deductions are 13% less Families enrolled in high-deductible plans spend 14% less than similar families in conventional plans 79% of members who spoke to an advisor found it helpful 66% of employee chose lower cost plans, while 11% chose richer plans Source: Bloom book of business data as of 2/29/12 National benchmark data comes from the Kaiser Family Foundation's 2011 Employer Health Benefits Survey. Utilization statistics for HDHP members comes from a RAND Study

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62 PROFESSIONAL SERVICES FIRM WITH 100 EMPLOYEES THE SITUATION: 1 traditional and 1 HSA plan at main location in locations with very different plans and subsidies across plans THE STRATEGY: Defined Contribution to normalize cost with increased transparency Give people the power to choose the plan that works best for them Automate as much of the process as possible! THE RESULTS: 6 plan options with each enrolling 5+ employees after 2 years Only 24% stayed in similar plans in year 1; 33% changed again in year 2 70%+ elected an HSA-qualified plan during each years Flat costs for employer w/reduced payroll cost for almost every employee Significant reduction in paperwork for HR staff

63 INCENTIVE HEALTH ACCOUNTS RAPIDLY EXPANDING OPPORUNITIES

64 HEALTH INCENTIVE ACCOUNTS DEFINITION Tax-favored accounts (FSA, HRA, HSA) that are funded based on participation in certain health activities or attainment of specific health improvement results. 64

65 HEALTH INCENTIVE ACCOUNTS EXAMPLE 65

66 HEALTH INCENTIVE ACCOUNTS EVIDENCE Plan costs are 17% lower than traditional plan models 66

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68 NON-PROFIT RETAILER WITH 400 EMPLOYEES THE SITUATION: Largely low wage workforce whose everyday reality includes life challenges Traditional wellness programs don t help a family struggling to buy groceries Client needed to UP IT S GAME to live up to mantra of putting people first THE STRATEGY: Develop holistic wellness program incorporating emotional, spiritual & safety Highly accessible support resources that help empower people and promote personal accountability (without heavy incentives or intrusive programming) Low cost access to high value health care while allowing people to save for future needs THE RESULTS: 4 years running with 0% increase in health care budget (PEPM) with no material change in plan design or employee premiums. 74% of team members have $500 or more in accrued HRA funds to use when future needs arise.

69 CAPTIVES (AND SELF-FUNDING) RAPIDLY EXPANDING OPPORUNITIES

70 CAPTIVE DEFINITION Insures the risks of its owners and returns underwriting profits and investment income to them in the form of dividends. 70

71 CAPTIVE EXAMPLE $500,000 $25,000 Captive Risk Premium Captive Risk Premium $241,924 Reinsurance Costs $124,468 Captive Loss Fund Employer Aggregate Attachment Point $945, % Maximum Cost Group Captive = $1,435,278 Collateral Collateral $33,601 $258,684 $43,114 Employer Attachment Point $1,142,518 Reinsurance Costs $122,156 Captive Loss Fund $301,798 Specific and Aggregate Reinsurance Collateral Captive s Loss Fund Employer Deductible Frequency Policy Aggregate Stop Loss Captive Aggregate Stop Loss Losses to Individual Employer above deductible and below group specific reinsurance paid on a pro rata basis. This pooling reduces Individual Employer s economic impact/volatility from large claims. 71

72 CAPTIVE EVIDENCE 130% 120% 110% 100% 90% 80% 70% 60% 50% CAPTIVE CELL RESULTS Maximum Cost Expected Cost 40% Actual 30% PARTICPANTS PARTICIPANTS On average, client experience was 20% better than the expected cost numbers and 35% better than the maximum cost 72

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74 GROCERY RETAILER WITH 35 EMPLOYEES THE SITUATION: 48% increase at renewal - largely from ACA required changes & taxes. Traditional insurance markets not competitive even though group was generally young and healthy. THE STRATEGY: Stay in the health care game to support its people Take long-term view with self-funded model coupled with stop loss through captive program. THE RESULTS: Reduced renewal pricing down to +15% ($1,967/EE/year less) Maintained broad network with no change in plan design. Opportunity to reap return on claims fund up to $80,000 annually.

75 COMPREHENSIVE MAKEOVER MODELS SEVERAL PLAN DESIGN VARIATIONS THAT ALL CAN USE

76 OPPORTUNITY TO REDUCE WASTE ACO Direct Primary Care Telehealth Private Exchange Leverage technology x x x Health Incentive Accounts Self Insured or Captive Model Involve Patients in Care Decisions Use Evidence Based Medicine x x x x Promote Coordination between Providers x x x x Pay Based On Value x x x x x x Improve Transparency x x x x x x 76

77 CLEAN SLATE PLAN CLEAN SLATE PLAN 1) Physician Care Direct Primary Care model Coordinated Advocacy High copays for Specialists & Urgent Care

78 CLEAN SLATE PLAN CLEAN SLATE PLAN 2) Prescription Drugs VBID model with no copays for high efficacy prescriptions used to treat chronic conditions Low copays for tier 1 drugs Deductible/Coinsurance for all other retail dispensing Specialty medication dispensed from Specialty Pharmacy Network with high copay

79 CLEAN SLATE PLAN CLEAN SLATE PLAN 3) Common Procedures & Tests Reference Based Pricing or Domestic Tourism Incentive

80 CLEAN SLATE PLAN CLEAN SLATE PLAN 4) Complex Cases Mandatory use of Centers of Excellence or requires Treatment Review for approval

81 CLEAN SLATE PLAN CLEAN SLATE PLAN 5) Other Cost Sharing Provisions Deductibles can be varied should choice be desired Out-of-Pocket Maximums should be set at highest level across the board

82 CLEAN SLATE PLAN CLEAN SLATE PLAN 6) Additional Components Health Incentive Account (tied to Annual Physical requirement) Advocacy Overlay or embedded in direct primary care delivery Telemedicine (available with moderate copays unless embedded in direct primary care service)

83 OTHER MAKEOVER STRUCTURES Direct Primary Care with Insured Medical Plan Pair with lowest value QHDHP plan Offer option of HSA contribution or DPC benefit based on equal value DPC plan disqualifies availability to establish HSA contributions Consider optional or funded Accident and/or Critical Illness plans

84 OTHER MAKEOVER STRUCTURES Direct Primary Care w/optional or funded Accident or Critical Illness plans Can be offered standalone for groups with less than 50 employees (not subject to shared responsibility provisions) Can be offered alongside 60% Bronze plan (insured or selfinsured) to cover employer shared responsibility requirement as long as employee premiums in 60% plan not greater than 9.5% of income

85 OTHER MAKEOVER STRUCTURES Preventive Only Plans MEC Qualified Preventive Only plan addresses individual mandate requirement for individuals Add unlimited visit Telemedicine plan Consider optional or funded Accident and/or Critical Illness plans Can be offered standalone for groups with less than 50 employees (not subject to shared responsibility provisions) Can be offered alongside 60% Bronze plan (insured or self-insured) to cover employer shared responsibility requirement as long as employee premium in 60% plan not greater than 9.5% of income

86 AVAILABILITY BY EMPLOYER SIZE ACO Direct Primary Care Telehealth Private Exchange Health Incentive Accounts Self Insured or Captive Model Small (<50) x x x Limited x Limited Mid-Sized (50-99) x x x x x x Larger (100+) x x x x x x 86

87 AVAILABILITY BY PLAN FUNDING METHOD ACO Direct Primary Care Telehealth Private Exchange Health Incentive Accounts Self Insured or Captive Model Insured x Limited x x x n/a Self-Insured x x x x x x 87

88 CLOSING COMMENTS/Q&A

89 WHERE DO YOU HAVE THE MOST INFLUENCE? OR THE SYSTEM THE CONSUMER 89

90 REMEMBER THE COSTS FOR A FAMILY OF FOUR? 2013 Milliman Medical Index 90

91 and the Waste Pie? That s 33-52% of a total health care spend of $2.6 trillion

92 WHAT COULD YOU DO WITH EXTREME SAVINGS? Employee Out-of- Pocket $3,600 16% $5,544 25% Employee Payroll Contribution $12,886 58% Employer Premium Contribution 92

93 WHAT COULD YOU DO WITH EXTREME SAVINGS? Employee Out-of- Pocket $3,600 $5,544 Employee Payroll Contribution Waste Reduction 17% $9,141 (from $12,886) Improve the Bottom Line! Employer Premium Contribution 93

94 WHAT COULD YOU DO WITH EXTREME SAVINGS? Employee Payroll Employee Out-of- $3,600 $1,799 (from 5,544) Contribution Pocket Waste Reduction 17% $12,886 Increase Take Home Pay or Enhance Plan Employer Premium Contribution 94

95 WHAT COULD YOU DO WITH EXTREME SAVINGS? Employee Out-of- Pocket $2,988 (from $3,600) $4,601 (from $5,544) Employee Payroll Contribution Share it Equally! $10,695 (from $12,886) Employer Premium Contribution 95

96 You can WIN the race for TALENT! 96

97 READY FOR YOUR MAKEOVER?

98 Q&A Visit us at hni.com