Successful Implementation of the Consumer-Driven Health Plan (CDHP) John Young

Transcription

1 Successful Implementation of the Consumer-Driven Health Plan (CDHP) John Young Vice President, Consumerism CIGNA HealthCare May 8,

2 Flight attendant Industry Observations Successful Implementation Plan Design Communication Post Enrollment Engagement The Holy Grail 2

3 Different º.Not Difficult! Out-of- Pocket Maximum $? Health Coverage After Deductible Health Coverage After Deductible HRA or HSA $? Deductible Deductible 100% Preventive Care 90%/70%? 80%/60%? 100%/80%? Treatment of RX? 3

4 Integrated Components Out-of- Pocket Maximum $ 2,500 Health Coverage After Deductible Health Coverage After Deductible HRA or HSA $ 1,500 Deductible Member Responsibility 100% Preventive Care 90% / 70% 4

5 Ownership in the plan design $2,500 Out-of-Pocket Maximum 90/70% Health Coverage $1,500 Deductible $750 Member Responsibility $750 Employer Funded HRA or HSA 100% Preventive Care 5

6 Consumer Experience Example #1 The Smith Family s Consumer Driven Health Plan Deductible $2,500 90/70 Health plan $1,000 Member Share $1,500 HRA 100% Preventive Care 6

7 Smith Family»s 1st Year Experience Preventive 2 Adult Physicals Child Immunizations Total Medical Expenses 4 Doctors Visits 6 Prescriptions 1 X-ray Chiropractic Care Total $500 $100 $600 $240 $390 $100 $190 $920 90/70 Health plan $1,000 Member Share P R E V E N T I V E Paid by HRA $920 $1,500 HRA 600 7

8 Smith Family»s 1st Year Experience Preventive 2 Adult Physicals Child Immunizations Total Medical Expenses 4 Doctors Visits 6 Prescriptions 1 Xray Chiropractic Care Total $500 $100 $600 $240 $390 $100 $190 $920 Roll-over Balance $580 Paid by HRA $920 HRA $1,500 90/70 Health plan $1,000 Member Share $580 Rollover $920 Expenses P R E V E N T I V E 600 8

9 Smith Family»s 2nd Year Experience Deductible $2,500 90/70 Health plan $ 420 Member Member Share Share 580 Rollover $2,080 HRA New $1,500 HRA P R E V E N T I V E 9

10 Smith Family»s 2nd Year Experience Preventive 2 Adult Physicals Pediatric Exam Total Medical Expenses 4 Doctors Visits 8 Prescriptions Lab Work Chiropractic Care Total $500 $150 $650 $280 $420 $210 $290 $1200 Paid by HRA 1,200 Deductible $2,500 90/70 Health plan $ 420 Member Share $2,080 HRA P R E V E N T I V E

11 Smith Family»s 2nd Year Experience Preventive 2 Adult Physicals Pediatric Exam Total Medical Expenses 4 Doctors Visits 8 Prescriptions Lab Work Chiropractic Care Total $500 $150 $650 $280 $420 $120 $380 $1200 Roll-over Balance $880 Paid by HRA $1200 Deductible $ 2,500 90/70 Health plan $ 420 Member Share $ 880 Rollover $1,200 Expenses P R E V E N T I V E $650 11

12 Options $2,500 $ /70 P R E Member Share $120 Rollover $880 New HRA $1500 V E N T A T I V E $3,000 $ /70 P R Member Share $620 Rollover $880 New HRA $1500 E V E N T A T I V E $$ $ 12

13 Sandy s Experience Sandy: 50 years old Type II Diabetes Hypertension High Cholesterol Deductible $1,500 90/70 Healthplan $ 750 Member Share $ 750 HRA P R E V E N T I V E 13

14 Sandy s Experience Sandy: 50 years old Type II Diabetes Hypertension High Cholesterol Hospitalized (abnormally high blood pressure). Deductible $1,500 90/70 Healthplan $ 750 Member Share $ 750 HRA P R E V E N T I V E 14

15 Sandy s Year One Consumer Experience Preventive Complete Physical Total Medical and Rx Expenses 4 Doctors Visits Prescriptions Lab Work Inpatient Care Total Payment HRA Pays Member Share Member Coinsurance $300 $300 $620 $3,208 $450 $8,175 $12,453 $750 $750 $1,095 $ /70 $ 750 Member Share $ 750 HRA P R E V E N T I V E Health Plan Pays $9,

16 Out-of of-pocket Cost Comparison for Sandy Preventive Complete Physical $300 $2,827 Total $300 $2,225 $600 Medical and Rx Expenses 4 Specialist MD Visits Prescriptions Lab Work Inpatient Care Total $620 $3208 $450 $8175 $12453 $380 $1,845 $2,207 Paycheck Contributions $0 $20 CDHP PPO 16

17 Sandy s Year Two Consumer Experience Preventive Complete Physical Total Medical and Rx Expenses 2 Doctors Visits Prescriptions Lab Work Inpatient Care Total Payment HRA Pays Member Share Member Coinsurance $300 $300 $350 $800 $150 $0 $1,300 $750 $550 $0 90/70 $ 750 Member Share $ 750 HRA P R E V E N T I V E

18 Sandy s Year Three Consumer Experience Preventive Complete Physical Total Medical and Rx Expenses 2 Doctors Visits Prescriptions Lab Work Inpatient Care Total Payment HRA Pays Member Share Roll-Over $350 $350 $170 $250 $50 $0 $470 $470 $0 $280 90/70 $ 750 Member Share $ 750 HRA P R E V E N T I V E

19 Forrester/EBN Benefit Decisions Impact Study More than half of US employers either currently offer a CDHP or plan to offer one within the next two years. More prevalence among: Small (<250) & very large (>3,000) companies. Midwest Currently Offer Plan to Offer in next two years Do not offer, no plans either 19

20 Watson Wyatt Health Care Trends Study 453 companies providing benefits to over 8 million individuals Survey conducted from November 2007 to January

21 CDHPs Adoption of CDHPs is steadily climbing 60% 50% 40% 33% 39% 47% 54% 30% 20% 10% 0% 21% 11% 2% 5% * Note: * Indicates planned for

22 CDHPs CDHP enrollment rates are on the rise 50% 40% 35.1% 41.5% 30% 27.2% 20% 15.0% 10% 8.0% 4.9% 10.0% 5.4% 5.9% 0% Median CDHP enrollment Percentage with enrollment > 20% Percentage with 100% enrollment Note: 2006 data is based on the 12th Annual National Business Group on Health/Watson Wyatt Survey. 22

23 CDHPs Median trend significantly declines for companies with higher CDHP enrollment 8% 7% 6% 5% 4% 3% 2% 1% 0% 7.0% 6.5% 5.3% 5.0% 3.6% No CDHP Less than 10% 10 to 20% 20 to 50% 50% or more CDHP Enrollment Rates 23

24 Employers save money with CDHPs Average cost per employee $5,770 $5,970 $6,616 $7,120 $6,932 $7,352 $6,937 $7, CDHP/+3.5% HMO/+7.6% PPO/+6.1% POS/+11.2% Mercer 24

25 Employee reaction to HRA-based CDHP Large CDHP sponsors characterize the response of employees enrolled in the plan Evenly mixed between positive and negative 23% More negative than positive/ Strongly negative 8% Strongly positive 21% More positive than negative 48% Mercer 25

26 Employee reaction to HSA-based CDHP Large HSA sponsors characterize the response of employees enrolled in the plan More negative than positive/strongly negative 7% Strongly positive 8% Evenly mixed between positive and negative 32% More positive than negative 53% Mercer 26

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30 Key #1 the right plan design 30

31 HSA Single Coverage Design #1 $1,100 Annual Deductible 100% Health Coverage Annual HSA Deductible Fully Funded by Employer Preventive Care 100%

32 HSA Single Coverage Design #2 $5,600 Annual Deductible 100% Health Coverage HSA Annual No funding Deductible by Employer Preventive Care 100%

33 Design starts with an objective Benefit Neutral Employee Cost Share is equivalent to current plan offered. Total Costs are Lower = Same Value at Lower Cost Cost Neutral Employer Cost is equivalent. Employee Cost share is improved = Better Value at Same Cost Financial Target $ Per Employee Per Year 33

34 HRAs and HSAs How do They Compare? Feature HRA HSA 1. Who Contributes 2. Account Funded 3. Account Ownership 4. Balances for Terminated Employees 5. Eligible Expenses 6. High Deductible Plan Required 7. Out-of-pocket Limits 8. Roll Over Limits 9. Can offer FSA 10. Claim Adjudication 11. Use Account for Non-Medical Employer No Employer Return to employer Employer Defines Yes for HRA, No for HRA incentive plans added to PPO No Yes employer discretion Yes Required No Employer and/or employee Yes Employee Stays with employee All 213 expenses Yes CIGNA Forum Yes No No (limited only) Not for HSA, required for HDHP Yes; taxable

35 Customized Consumerism Analysis PEPY Cost $17,000 $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 Traditional Plan CDHP Plan $10,100 $9,000 $11,312 $9,780 $12,669 $10,638 $14,190 $11,582 $15,893 CIGNA Forum $12,620 Year 1 Year 2 Year 3 Year 4 Year 5

36 Plan Design Rules of Thumb Higher Deductibles and Larger Accounts = Better Consumerism Consider Incentives (more funds for Health Risk Appraisal or Biometric screening completion) Employer should partially fund the HSA. Consider up front funding. Start with Benefit Neutral Design Targeting equivalent value and OOP equivalency Collective Deductibles lower the cost of insurance freeing dollars for account funding. RX to be part of deductible in HRA plans. Consideration - RX changed to separate coinsurance design after deductible or treat RX like any other medical expense? Part of Co-insurance after the deductible? $20/$40/$60 Rx copays = 42% average member share 30%/40%/50% Rx coinsurance = 42% average member share 36

37 Three Critical Components 1. Plan Design Benefits are a clear driver. Consumers will not enroll in a plan that has no meaningful value We advocate a benefit neutral starting point to plan design. Larger fund amounts partnered with larger deductibles drive more engagement and this drives better savings. 37

38 2. Contribution Strategy Price to the employee is the biggest driver of enrollment decisions Percentage based contribution strategies dampen price differences across product choices to the consumer. We advocate a flat dollar approach. True price relativity across other choices is preserved. 38

39 3. Communication Disruption changing or replacing current designs helps overcome powerful inertia. Creating an active enrollment environment - requiring employees to sign up new for benefits. Our communication roadmap - best communication practices learned from many Choice Fund customers. 39

40 Key #2 - Communication 40

41 $2,500 Out-of-Pocket Maximum 90/70% Health Coverage $1,500 Deductible $750 Member Responsibility $750 Employer Funded HRA or HSA 100% Preventive Care 41

42 Perception - My employees will not understand this new plan 42

43 Key #3: Getting to the Hearts and Minds of Consumers 43

44 Consumer Activation Requires The capacity to communicate persuasively and credibly and motivate needed behavior change and compliance - to get the person to take ownership of their health. 44

45 The Goal of Consumer Engagement Moving the individual from a passive role to an informed and active participant Engage Consumer Quality of life Change Behavior Improve Quality of Life and Productivity Lower Cost 45

46 Forrester/EBN Benefit Decisions Impact Study Employers scramble to cut costs, run out of options Leading cost-cutting strategies: Promote preventive health benefits and healthy behaviors (27%). Increase disease management efforts (27%). Offer a consumer-directed health plan (26%). 46

47 Change The Holy Grail 47

48 Obesity Trends Among U.S. Adults 1985 No Data <10% 10% 14% 48

49 Obesity Trends Among U.S. Adults 1986 No Data <10% 10% 14% 49

50 Obesity Trends Among U.S. Adults 1987 No Data <10% 10% 14% 50

51 Obesity Trends Among U.S. Adults 1988 No Data <10% 10% 14% 51

52 Obesity Trends Among U.S. Adults 1989 No Data <10% 10% 14% 52

53 Obesity Trends Among U.S. Adults 1990 No Data <10% 10% 14% 53

54 Obesity Trends Among U.S. Adults 1991 No Data <10% 10% 14% 15% 19% 54

55 Obesity Trends Among U.S. Adults 1992 No Data <10% 10% 14% 15% 19% 55

56 Obesity Trends Among U.S. Adults 1993 No Data <10% 10% 14% 15% 19% 56

57 Obesity Trends Among U.S. Adults 1994 No Data <10% 10% 14% 15% 19% 57

58 Obesity Trends Among U.S. Adults 1995 No Data <10% 10% 14% 15% 19% 58

59 Obesity Trends Among U.S. Adults 1996 No Data <10% 10% 14% 15% 19% 59

60 Obesity Trends Among U.S. Adults 1997 No Data <10% 10% 14% 15% 19% 20 60

61 Obesity Trends Among U.S. Adults 1998 No Data <10% 10% 14% 15% 19% 20 61

62 Obesity Trends Among U.S. Adults 1999 No Data <10% 10% 14% 15% 19% 20 62

63 Obesity Trends Among U.S. Adults 2000 No Data <10% 10% 14% 15% 19% 20 63

64 Obesity Trends Among U.S. Adults 2001 No Data <10% 10% 14% 15% 19% 20% 24% 25% 64

65 Obesity Trends Among U.S. Adults 2002 (*BMI 30, or ~ 30 lbs overweight for 5 4 person) No Data <10% 10% 14% 15% 19% 20% 24% 25% 65

66 Obesity Trends Among U.S. Adults 2003 No Data <10% 10% 14% 15% 19% 20% 24% 25% 66

67 Obesity Trends Among U.S. Adults 2004 No Data <10% 10% 14% 15% 19% 20% 24% 25% 67

68 Obesity Trends Among U.S. Adults 2005 No Data <10% 10% 14% 15% 19% 20% 24% 25% 29% 30% 68

69 Obesity Trends Among U.S. Adults 2006 No Data <10% 10% 14% 15% 19% 20% 24% 25% 29% 30% 69

70 Source: The Economist, 13 Dec

71 Percent of adults who are overweight or obese by country US 74% Percent Russia 50% India 16% WHO, 2007

72 Excess Body Weight and Reduction of Lifespan US Mean Overweight Obese Males Females Ann Intern Med. 2003;138:24-32

73 National prevalence of health risks 80% 70% 67% 78% 80% 60% 50% 40% 30% 20% 21% 30% 30% 10% 0% smoke high cholesterol high BP over wt/obese inactive poor diet CDC, BRFSS, 2002

74 Percent of Chronic Diseases That Are Caused by Poor Lifestyle 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 91% 82% 71% 70% Cancers Stroke Heart Disease Diabetes Sources: Stampfer, 2000; Platz, 2000; Hu,

75 Diabetes Among Adults in the U.S., 2001 No Data <4% 4%-6% 6%-8% 8%-10% >10% 75

76 Diabetes and Reduction in Lifespan US Mean Diabetic at 40 Males Females JAMA 2003;290:

77 The Bottom Line Unhealthy behaviors Health risks Chronic disease Health care costs 77

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79 Eat off smaller plates Skip Seconds Pace the sidelines at kid s athletic games 79

80 Key to Successful Implementation Commitment and Leadership Involvement Plan Design Contribution Strategy Recognize the significance of the change Communicate early and often Use multiple communication channels Select the right Consumerism partner 80

81 Don»ts Don t ignore it Don t let lack of provider quality data stop you Don t look at CDH as a Short Term Cost Reducer Don t skimp on Communications Don t skimp on Employee Facing Tools Don t believe disease management or wellness is enough Don t forget leadership 81

82 The New Role of the Broker More Strategic Less support of overrides Leadership into the future vs. renewal orientation Shift from fixed costs and discounts orientation to utilization reduction and employee engagement focus. HRA only, HSA only, HRA and HSA strategy. The Advisors who becomes expert in CDHP will own the town. 82

83 John Young office mobile 83