Purchaser Symposium Workshop Secrets of high-performing plans Doug Smith Senior Vice President February 24, 2011
Overview Context Trend control strategies that work Questions 2
Average annual cost for health care benefits per employee Single coverage $16,000 $16,000 Family coverage $14,000 $14,000 $12,000 $10,000 $12,000 $10,000 35% 26% $8,000 $8,000 $6,000 $4,000 17% 18% $6,000 $4,000 65% 74% $2,000 83% 82% $2,000 $- Small companies (3 to 199 employees) Large companies (200+ employees) $- Small companies (3 to 199 employees) Large companies (200+ employees) Employer contribution Employee contribution Employer contribution Employee contribution Source: Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits Survey, 2010 3
Average annual cost for health care benefits per employee 2009 2010 $12,000 $10,000 Total cost - $7,700 Employer - $6,160 Employee - $1,540 $12,000 $10,000 Total cost - $7,975 Employer - $6,300 Employee - $1,675 $8,000 $8,000 $6,000 $6,000 $4,000 $4,000 $2,000 $2,000 $- Percentile 10th 25th 50th 75th 90th $- Percentile 10th 25th 50th 75th 90th Employer share Employee share Employer share Employee share Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 4
Average cost trend 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 11.0% 10.0% 10.5% 10.5% 8.0% 8.0% 6.0% 7.0% 6.0% 6.5% 6.2% 5.8% 2.6% 1.9% 2.5% 1.2% 1.0% 2.5% 0.5% 0.3% 2005-2006 2006-2007 2007-2008 2008-2009 Best performers Average performers Poor performers Median of all companies Consistent performers Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 5
Obstacles to business expansion Global competition 5% Lack of demand for goods/services 6% Funding (public agencies) 6% Taxes 7% Access to investment funding 9% Economy 11% Government regulations 12% Affordable health care 21% 0% 5% 10% 15% 20% 25% Source: HealthPartners, Minnesota/Wisconsin Employer Health Benefits Survey, February 2010 6
Employers views on health care reform 100% 90% 89% 88% 87% 80% 76% 70% 60% 56% 50% 40% 30% 20% 10% 0% Believe more individuals will be covered Plan to "play" to avoid penalties in 2014 Think group health plan costs will increase Think administrative costs for maintaining the plan will be higher Expect access to care to improve Source: Willis North America, The Health Care Reform Survey, 2010; Towers Watson, Health Care Reform, May 2010 7
Expected changes due to health care reform 90% 80% 85% 79% 70% 60% 62% 50% 40% 30% 20% 10% 0% Increase employee contributions Increase spousal and/or dependent contribution Reduce medical benefits or purchase lower-cost package Source: Willis North America, The Health Care Reform Survey, 2010 8
Trend control strategies that work 1. Appropriate financial incentives 2. Effective communication 3. Metrics and evidence 4. Quality care 5. Maximizing health and productivity programs Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 9
Appropriate financial incentives 10
Strategies to increase employee cost-sharing 70% 60% 50% 40% 30% 2009 2010 2011 20% 10% 0% Employee paid percentage of premium Out-of-pocket maximums In-network deductibles Out-of-network deductibles Copay/coinsurance for specialty care Copay/coinsurance for primary care Source: NBGH, Large Employers 2011 Health Plan Design Challenges, August 2010 11
Employees enrolled in a plan with a deductible of $1,000+ 50% 46% 45% 40% 35% 30% 25% 20% 15% 10% 5% 16% 10% 6% 21% 12% 8% 35% 18% 9% 40% 22% 13% 27% 17% 0% 2006 2007 2008 2009 2010 Small companies (3 to 199 employees) Large companies (200+ employees) All companies Source: Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits Survey, 2010 12
Rising enrollment in consumer-directed health plans HealthPartners enrollment grew 16 percent in 2010 Comprises 16 percent of HealthPartners commercial membership 9.2 percent of individuals on private insurance in Minnesota are on a HSA/HDHP Increases in CDHP enrollment linked to lower median trend Sources: AHIP, 2010 HSA/HDHP Census, May 2010, NBGH & Towers Watson, Raising the Bar on Health Care, 2010 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 8% 10% 12% 14% 15% 2006 2007 2008 2009 2010 Median CDHP enrollment Percentage with enrollment over 20 percent Percentage with 100 percent enrollment 13
Percent of employers with a high-deductible health plan 40% 35% 30% 25% 20% 15% 10% 5% 0% 2005 2006 2007 2008 2009 2010 3 to 199 employees 200 to 999 employees 1,000 or more employees Source: Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits Survey, 2010 14
Factors driving health care costs Lack of information about quality of services 39% Use of medically unnecessary services 58% Lack of information about cost of services 60% Aging workforce 65% Understanding services covered 66% Poor health habits 72% Source: HealthPartners, Minnesota/Wisconsin Employer Health Benefits Survey, February 2010 0% 10% 20% 30% 40% 50% 60% 70% 80% 15
Most effective steps to control cost Pharmacy benefit design changes Disease/condition management Increase employee cost-sharing Wellness initiatives Consumer-directed health plan 0% 10% 20% 30% 40% 50% 60% Most effective tactic Second most effective tactic Third most effective tactic Source: NBGH, Large Employers 2011 Health Plan Design Challenges, August 2010 16
Appropriate financial incentives 1. Selection and use of a primary care physician 2. Provide coverage for convenience care 3. Deductible of $1,000+ for most prevalent plan 4. Implement mandatory programs for generic medicines 5. Incent health management programs Adult health exam Health coaching Participation and/or completion of health engagement activities Smoking cessation Health assessment Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 17
Common incentives and penalties Other wellness programs Disease and/or care management Healthy lifestyles Tobacco cessation Other financial incentives (cash, gift cards, etc.) Other incentives related to health plan Premium surcharge for nonparticipation Premium discount for participation Health assessment 0% 10% 20% 30% 40% 50% Source: NBGH, Large Employers 2011 Health Plan Design Challenges, August 2010 18
Incentives for healthy lifestyles and wellness programs Employee Average: $386 Median: $250 Minimum: $50 Maximum: $1,200 Dependent Average: $271 Median: $203 Minimum: $50 Maximum: $980 Employers offering incentives for participation in health care programs 17% 34% 7% 42% No incentive Employee only Entire family Employee and spouse Sources: NBGH, Large Employers 2011 Health Plan Design Challenges, August 2010 Hewitt, The Road Ahead: Under Construction with Increasing Tolls, 2010 19
Consumer views on financial incentives Most appealing incentive Appeal of incentive amounts 8% 17% 22% 40% 34% 9% 30% 24% 16% Less than $50 $50 to $99 $100 to $149 $150 or more Cash Premium reduction/holiday Copay/coinsurance reduction Other Don't know 20 Source: Trizetto, IHM Constituent Survey, 2009
Effective communications 21
Effective communications 1. Integrate information from different sources to improve delivery to employees 2. Healthier options in cafeteria/vending machines 3. Local wellness champions/advocates 4. Personalized reminders for preventive procedures 5. Manage carrier-prepared communication/education 6. Provide tools to consumers to manage their health and health care 7. Senior leadership supports importance of a healthy work environment 8. Educating employees to become informed/active consumers of health care Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 22
Link between communications and happy employees Job satisfaction 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 77% Effective communications about benefits 30% Ineffective communications about benefits Loyalty to employer 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 78% Effective communications about benefits 31% Ineffective communications about benefits Source: MetLife, Study of Employee Benefits Trends, 2010 23
Metrics and evidence 24
Metrics and evidence 1. Integrate the following data with health plan data: Workers compensation Disability Participation in wellness programs 2. Use and base decisions on health assessment metrics 3. Base decisions on employee satisfaction in health care and health management programs 4. Base decision on independent estimates of savings and return on investment 5. Base decision on predictive modeling Note: Eligibility audits and review of plan enrollment is a fast-growing action being taken by employers to control costs Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 25
Quality care 26
Decision-making obstacles for employees Already believe they are making informed decisions 41% Do not want to make financial sacrifices for health care 50% Health care information is too difficult to understand 53% Lack of employee awareness 56% Trust their doctors to make decisions 67% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: Hewitt, The Road Ahead: Under Construction with Increasing Tolls, 2010 27
Quality care 1. Add more selective networks based on provide quality and/or efficiency 2. Offer high-performance network(s) 3. Replace ineffective medical plan administrators 4. Provide employees with health care service unit price information 5. Provide education on health care costs and ways to manage those costs 6. Encourage plans and providers to provide patients access to online medical information 7. Provide employees with information on provider and/or hospital quality Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 28
Consumers want access to personalized tools and transparency A tool to help evaluate treatment options Over 90 percent of consumers say this would be very valuable or somewhat valuable A personalized health improvement plan Over 85 percent of consumers say this would be very valuable or somewhat valuable The ability to know exactly how much you owe the doctor Over 80 percent of consumers say this would be very valuable or somewhat valuable Source: Trizetto, IHM Constituent Survey, 2009 29
Maximizing health and productivity programs 30
Obstacles to changing employee health behaviors Lack of employee engagement 58% Lack of sufficient financial incentives to encourage participation in programs 31% Lack of adequate budget to support effective health management programs 30% Too many other demands on employees 23% 0% 10% 20% 30% 40% 50% 60% 70% Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 31
Maximizing health and productivity programs 1. Consolidate health and productivity programs with health plan 2. Use employee s interactions with health management programs to promote using a primary care doctor 3. Managers and/or senior leaders get regular updates with program utilization metrics 4. Offer disease management programs purchaser separately through a specialty vendor 5. Offer lifestyle behavior change programs purchased through health plan(s) 6. Integrate health management program(s) into one vendor or with health plan 7. Offer weight management programs that focuses on reducing obesity 8. Offer smoking cessation program Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 32
More adoption of health and productivity programs Nurse advice line Health advocate services Behavior modification Disease management programs Health assessment 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2006 2009 Source: Mercer, National Survey of Employer-Sponsored Health Plans, 2009 33
Integration matters 1. Groups with both medical and pharmacy benefits from HealthPartners saved an average of 3.8 percent on their total cost of medical care. 2. Groups that carve-out pharmacy benefits had 7 percent higher inpatient admissions. 3. Groups with integrated medical and pharmacy benefits had a 38 percent higher identification rate for condition and care management programs. Similar findings from CIGNA (4.3 percent), Aetna, Highmark, Inc. Source: HealthPartners, Pharmacy Integration Study, 2010 34
An example: employer with 40,000 members in Minnesota In just one year, a self-insured employer achieved the following after engaging with us: Reduced high cost claimants, saving over $13.2 million Increased engagement in disease management programs by 30 percent, which equaled an estimated savings of $1.5 million Innovative programs helped this employer increase generic medication use to 75 percent, an increase of over 7 percent HealthPartners network discounts resulted in an estimated $9 million in savings. Source: HealthPartners, Measurable results for self-insured employers, January 2011 35
Trend control strategies that work Summary (so far) 1. Appropriate financial incentives Interested and engaged employees and dependents Limit the leveraging effect of inflation Balance - continue to attract/retain talent 2. Effective communication Wise consumption of health care More accurate value assessment (benefits and care) 3. Metrics and evidence Decisions based upon all available metrics and evidence (not just claims data) Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 36
Trend control strategies that work (Summary so far) 4. Quality care Variation in practice patterns vary significantly High cost does not equal high quality A primary provider relationship is a great thing to encourage 5. Maximizing health and productivity programs Well-designed programs pay for themselves many times over Having them in place is now the norm Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 37
Trend control strategies that work (Summary so far) AND 6. Take full advantage of all of your available HealthPartners resources We work collaboratively with your advisors (brokers and consultants) Challenge our team to help you achieve your goals Source: NBGH & Towers Watson, Raising the Bar on Health Care, 2010 38
Questions? 39
Sources AHIP, 2010 HSA/HDHP Census, May 2010 HealthPartners, Measurable results for self-insured employers, January 2011 HealthPartners, Minnesota/Wisconsin Employer Health Benefits Survey, February 2010 HealthPartners, Pharmacy Integration Study, 2010 Hewitt, The Road Ahead: Under Construction with Increasing Tolls, 2010 Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits Survey, 2010 Mercer, National Survey of Employer-Sponsored Health Plans, 2009 MetLife, Study of Employee Benefits Trends, 2010 NBGH, Large Employers 2011 Health Plan Design Challenges, August 2010 NBGH & Towers Watson, Raising the Bar on Health Care, 2010 Towers Watson, Health Care Reform, May 2010 Trizetto, IHM Constituent Survey, 2009 Willis North America, The Health Care Reform Survey, 2010 40