美世 - Consumer Driven Health Care Pricing and Design

Consumer Driven Health Care Pricing and Design Session 51 The Conference and Academy 2004 Annual Meeting October 20, 2004 Tom Tomczyk Sander Domaszewicz Eric Blumberg 2 Economics & Change “Nobody spends somebody elses money as carefully as they spend their own.” - Milton Friedman We always over estimate the change that will happen in two years and under estimate the change that will happen in ten. - Bill Gates Healthcare is a failed marketplace today because the person paying the bill isnt the one choosing the service. - Howard Wizig, Vivius I am convinced that if the rate of change within an organization is less than the rate of change outside, the end of the company is in sight. - Jack Welch Mercer Human Resource Consulting 3 Consumerism What is it? A benefit plan design (CDHP) A silver bullet Fundamental “change” A “holistic” strategy Greater accountability and control for employees An essential element for health care program strategy Critical to transforming the health care system A sustainable market based solution for containing costs and improving quality True False Consumerism is: Mercer Human Resource Consulting 4 Employer Characteristics What employer characteristics make adoption of consumer strategies easier? Well-educated, self-sufficient employees Existing meaningful employee contribution to health care costs High overall employer health care cost Low union membership Corporate culture and support of independent employee choice Employee dissatisfaction with current options Good intranet infrastructure and high internet use among employees Self-funded health plan Large cost increases with existing plans (to create the incentive to move) Mercer Human Resource Consulting 5 CDHP Basic coverage for routine and preventive services Support services for people with chronic illnesses Accounts for discretionary medical spending (HRA/HSA) Coverage for catastrophic coverage Member cost sharing features Mercer Human Resource Consulting 6 Health Reimbursement Account (employer funded) Member Responsibility Out-of-Network Insurance Health Care FSA In-Network Insurance Annual Insurance Deductible 100% After Out-of-Pocket Maximum Preventive Care (100%) CDHP One Approach to Consumerist Design Mercer Human Resource Consulting 7 Consumer Directed Health Plans Multi-year Results-driven Program Design 8 Account-Based Plans Accelerating Mid 2004 2005 (Projected) Members Groups Members Groups Definity 320,000+ 80+ 500,000+ Lumenos 165,000 80+ Aetna 191,000 238 Uniprise 100,000 40 300,000 Humana 14,000 Great West 46,000 370 CIGNA 6,000 10 50 First Health 96,000 5 HealthMarket 40,000 2,600 Destiny Health 40,000 1,500 PacifiCare 60,000+ Medica 1,775 25 Mutual of Omaha 6,390 3 Assurant 113,869 Vested Health 7,500 150 Others (Blues, TPAs): 75,000+ 300,000+ Totals 1,282,534+ 2-3M+ Source: 9/24/2004 Inside Consumer-Directed Care and Mercer Mercer Human Resource Consulting 9 CDHP Designs Evolving Account Amounts & Incentives S i n g l e T w o - P a r t y F a m i l y$1k$0$2k$3k$4k$5k$500I n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t$750$ 1 , 0 0 0$ 1 , 0 0 0 A c c o u n t$ 1 , 5 0 0 A c c o u n t$ 2 , 0 0 0 A c c o u n tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t$ 7 5 0 H R AS i n g l e T w o - P a r t y F a m i l y$1k$0$2k$3k$4k$5k$ 1 , 5 0 0 H R A$ 1 , 1 2 5 H R A$ 7 5 0 G a p80%in - n e t w o r k60%out - of - n e t w o r k$ 1 , 1 2 5 G a p80%in - n e t w o r k60%out - of - n e t w o r k$ 1 , 5 0 0 G a p80%in - n e t w o r k60%out - of - n e t w o r kEarly Industry Standard HRA Current Industry Standard HRA Adding Behavior Incentives Expanding Behavior Incentives Participating in DM programs Graduating from DM/care management programs Receiving preventive care Using tools and support Complying with chronic illness regimen (Rx) S i n g l e T w o - P art y F ami l y$1k$0$2k$3k$4k$5k$700 GapI nsurance :80% I n - net60% ou t - ne t$1,050 G ap$1,400 G ap$700 Accoun t$1,050 A ccoun t$1,400 A ccoun tI nsurance :80% I n - net60% ou t - ne tI nsurance :80% I n - net60% ou t - ne t$ 1 0 0 r isk asse ssmen t$ 1 5 0 r isk asse ssmen t$ 2 0 0 r isk asse ssmen tMercer Human Resource Consulting 10 CDHP Designs Get More Complex Cost Sharing S i n g l e T w o - P a r t y F a m i l y$1k$0$2k$3k$4k$5k$500I n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t$750$ 1 , 0 0 0$800A c c t$ 1 , 2 0 0A c c t$ 1 , 6 0 0A c c tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t20%to$ 2 0 020%to$ 3 0 020%t o $ 4 0 0S i n g l e T w o - P a r t y F a m i l y$1k$0$2k$3k$4k$5k$ 5 0 0 B r i d g eI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t$ 7 5 0 B r i d g e$ 1 , 0 0 0 B r i d g e$ 8 0 0 A c c o u n t$ 1 , 2 0 0 A c c o u n t$ 1 , 6 0 0 A c c o u n tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e tI n s u r a n c e :9 0 % I n - net7 0 % o u t - n e t$ 2 0 0 D e d u c t i b l e $ 3 0 0 D e d u c t i b l e$ 4 0 0 D e d u c t i b l eCoinsurance Along Side HRA Mostly smaller employers exploring innovative cost-sharing designs that include account Many administrators and insurers cant handle this complexity If offered along side traditional plans, very tough to sell advantages of CDH Communication becomes more involved As CDH full replacements expand, so will a variety of cost-sharing designs Reinserting the Upfront Deductible ? ? Mercer Human Resource Consulting 11 CDHP Designs Get More Complex Multiple Designs $ 1 , 0 0 0 H R AS i n g l e T w o - P a r t y F a m i l y$1k$0$2k$3k$4k$5k$6k$7kP P O $1k$1,750$3,500Gap100/80%PPO100/80%PPO100/80%PPO100/80%PPO$1,500$3,000Gap$5,000Gap100/80%PPO$ 2 , 0 0 0 H R A$ 1 , 5 0 0 H R A$500$1,250$2kGap100/80%PPO100/80%PPO100/80%PPO$1k$1,750$3,500Gap100/80%PPO100/80%PPO100/80%PPO100/80%PPO$1,500$3,000Gap$5,000Gap100/80%PPO$1,250$2kGap100/80%PPO100/80%PPO100/80%PPOS i n g l e T w o - P a r t y F a m i l y$ 0 . 5 k$0$1k$ 1 . 5 k$2k$ 2 . 5 k$3k$ 3 . 5 k$600$650$700$7509 0 % i n - n e t w o r k6 0 % o u t - of - net$900$1,000$1,100$1,2009 0 % i n - n e t w o r k6 0 % o u t - of - net$1,200$1,350$1,500$1,6509 0 % i n - n e t w o r k6 0 % o u t - of - netUnder$8/ hr$8-$11.99/hr$12-$24.99/hrOver$25/hr$ 7 5 0 H R A$ 1 , 2 0 0 H R A$ 1 , 5 5 0 H R A$600$650$700$750$900$1,000$1,100$1,200$1,200$1,350$1,500$1,650Under$8/ hr$8-$11.99/hr$12-$24.99/hrOver$25/hrMultiple Plans for Employee Choice Many employers begin offering more than one CDH plan to employees (especially full replacements) Multiple plans show commitment to CDH from employer and allow for greater employee choice Salary-tiered design smooth out affordability factors and low paid worker concerns, but add significant administration and communication complexity Single CDH Plan, Various Designs by Salary ? Mercer Human Resource Consulting 12 Along Come Health Savings Accounts HRA or HSA: Decisions, Decisions Mercer has worked with approaching 60 organizations to offer an account-based CDHPs effective 2004 and earlier All but one of these was HRA-based (1 HSA-based program effective 9/1/2004) Mercer is working with approaching 50 additional organizations to add an account-based CDHP (HRA or HSA) offering effective in 2005. Over 1/2 of these clients will be using HRAs as their funding vehicle for their CDHP Many more organizations are planning for 1/1/06 and beyond to offer HSAs As they evaluated HSAs in their typical large group planning cycle (January 2004 through June 2004), they found the administration and regulatory guidance to still lacking Mercer Human Resource Consulting 13 employer funded (example: 60%) In-Network Insurance (example: 80%) Member Responsibility Preventive Care Pharmacy(integratedonly)Out-of-Network Insurance 100% After Out-of-Pocket Maximum In - Network Insurance (example: 80%) (employer funded) (example: $500) Health Reimbursement Account employer funded Member Responsibility Out - of - Out-of-NetworkInsurance (example: 60%) In-Network Insurance (example: 80%) Preventive Care Pharmacy(integratedornon-integrated) 100% After Out-of-Pocket Maximum $150 ( 30%) $1,000 Deductible $ 500 $ 500 $1,000 Deductible $ 350 $ 650 Health Savings Account CDHP HRA HSA with: The HSA Dilemma Optics of Employee & Employer Risk Mercer Human Resource Consulting 14 Case Study: Generic Company Pathways to Consumerism Basic Characteristics About 7,500 US employees Geographically disperse workforce in US Non-unionized, no/low unionization potential 82% 401k participation (7% average deferral rate); 17% FSA participation Average salary $53,000; Average age 43 $6,600/pepy average spend on medical; No retiree medical Desired Results Company costs at least flat compared to status quo in year one 3 to 5% company savings over 2-3 years due to consumerism, additional savings through traditional efforts No negative attraction & retention from medical redesign would like this to be a + if possible Higher satisfaction rating of medical plan as benefit currently 72% satisfied Mercer Human Resource Consulting 15 G E N E R I C E M P L O Y E R2 0 0 4 M e d i c a l P l a n D e s i g n sW a i v e P P O A P P O B H M On e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r kA n n u a l D e d u c t i b l eI n d i v i d u a l N o $200 $400 $500 $800 N o n eF a m i l y c o v e r a g e $400 $800 $ 1 , 0 0 0 $ 1 , 6 0 0 N o n eC o i n s u r a n c e 90% 70% 80% 60% 100% 0%O u t - o f - P o c k e t M a x i m u mI n d i v i d u a l $ 1 , 5 0 0 $ 3 , 0 0 0 $ 2 , 5 0 0 $ 3 , 5 0 0 $ 1 , 0 0 0 N / AF a m i l y $ 4 , 0 0 0 $ 8 , 0 0 0 $ 5 , 0 0 0 $ 8 , 5 0 0 $ 3 , 0 0 0 N / AO f f i c e V i s i t 90% 70% 80% 60% $10 N / AE m e r g e n c y R o o m $ 5 0 t h e n 9 0 % $ 5 0 t h e n 7 0 % $ 5 0 t h e n 8 0 % $ 5 0 t h e n 6 0 % $50 N / AP r e v e n t i v e C a r e 1 0 0 % t o $ 2 5 0 / y r 1 0 0 % t o $ 2 5 0 / y r $ 1 0 ( w e l l b a b y 1 0 0 % ) N / AP r e s c r i p t i o n D r u g s ( R e t a i l )G e n e r i c $5 $5 $10P r e f e r r e d B r a n d $15 $15 $15N o n - P r e f e r r e d B r a n d $25 $25 $15P r e s c r i p t i o n D r u g s ( m a i l )G e n e r i c N / A N / A $20P r e f e r r e d B r a n d N / A N / A $30N o n - P r e f e r r e d B r a n d N / A N / A $30C o n t r i b u t i o n s & E n r o l l m e n t S e l f - I n s u r e d S e l f - I n s u r e d F u l l y I n s u r e dE m p l o y e e O n l y $ 0 . 0 0 $ 6 5 . 0 0 1 , 4 9 0 $ 2 7 . 4 1 570 $ 4 9 . 8 3 380E m p l o y e e + O n e $ 1 2 7 . 8 3 1 , 0 0 0 $ 5 4 . 8 2 190 $ 1 0 4 . 0 0 220E m p l o y e e + F a m i l y $ 1 9 2 . 8 3 1 , 8 0 0 $ 8 2 . 2 3 570 $ 1 4 7 . 3 3 6907290 380 4290 1330 1290% o f E l i g i b l e 5% 59% 18% 18% o f E n r o l l e d 62% 19% 19%Generic Employer 2004 Medical Plan Designs Mercer Human Resource Consulting 16 Generic Employer 2005 Medical Plan Designs Modify Existing Plans G E N E R I C E M P L O Y E R2 0 0 5 M e d i c a l P l a n D e s i g n s - M o d i f y E x i s t i n g P l a n sW a i v e P P O A P P O B H M On e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r kA n n u a l D e d u c t i b l eI n d i v i d u a l N o $300 $600 $500 $800 N o n eF a m i l y c o v e r a g e $600 $ 1 , 2 0 0 $ 1 , 0 0 0 $ 1 , 6 0 0 N o n eC o i n s u r a n c e 90% 70% 80% 60% 100% 0%O u t - o f - P o c k e t M a x i m u mI n d i v i d u a l $ 1 , 5 0 0 $ 3 , 0 0 0 $ 2 , 5 0 0 $ 3 , 5 0 0 $ 2 , 0 0 0 N / AF a m i l y $ 4 , 0 0 0 $ 8 , 0 0 0 $ 5 , 0 0 0 $ 8 , 5 0 0 $ 6 , 0 0 0 N / AO f f i c e V i s i t 90% 70% 80% 60% $20 N / AE m e r g e n c y R o o m $ 5 0 t h e n 9 0 % $ 5 0 t h e n 7 0 % $ 5 0 t h e n 8 0 % $ 5 0 t h e n 6 0 % $75 N / AI n p a t i e n t 90% 70% 80% 60% $250 N / AP r e v e n t i v e C a r e 1 0 0 % t o $ 2 5 0 / y r 1 0 0 % t o $ 2 5 0 / y r $20 ( w e l l b a b y 1 0 0 % ) N / AP r e s c r i p t i o n D r u g s ( R e t a i l )G e n e r i c $10 $10 $15P r e f e r r e d B r a n d $25 $25 $35N o n - P r e f e r r e d B r a n d $40 $40 $35P r e s c r i p t i o n D r u g s ( m a i l )G e n e r i c $20 $20 $30P r e f e r r e d B r a n d $50 $50 $75N o n - P r e f e r r e d B r a n d $80 $80 $75C o n t r i b u t i o n s & E n r o l l m e n t S e l f - I n s u r e d - c o n t r i b s t r e n d e d + 1 5 % S e l f - I n s u r e d F u l l y I n s u r e dE m p l o y e e O n l y $ 0 . 0 0 $ 7 4 . 7 5 1 , 3 4 0 $ 3 1 . 5 2 760 $ 5 7 . 3 0 340E m p l o y e e + O n e $ 1 4 7 . 0 0 900 $ 6 3 . 0 4 310 $ 1 1 9 . 6 0 200E m p l o y e e + F a m i l y $ 2 2 1 . 7 5 1 , 6 2 0 $ 9 4 . 5 6 820 $ 1 6 9 . 4 3 6207290 380 3860 1890 1160% o f E l i g i b l e 5% 53% 26% 16% o f E n r o l l e d 56% 27% 17%Mercer Human Resource Consulting 17 Generic Employer Moderate with HSA G E N E R I C E M P L O Y E RM o d e r a t e w i t h H S AE l i m i n a t e A d dW a i v e P P O A P P O B H M O H S An e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r kH S A - E p s o n F u n d e dI n d i v i d u a l N / A N / A N / A $100F a m i l y N / A N / A N / A $200A n n u a l D e d u c t i b l e A g g r e g a t e F a m i l y D e d u c t i b l eI n d i v i d u a l N o $300 $600 $500 $800 N o n e $ 1 , 0 0 0 $ 2 , 0 0 0F a m i l y c o v e r a g e $600 $ 1 , 2 0 0 $ 1 , 0 0 0 $ 1 , 6 0 0 N o n e $ 2 , 0 0 0 $ 4 , 0 0 0C o i n s u r a n c e 90% 70% 80% 60% 100% 0% 80% 60%C o i n s / C o p a y M a x i m u mI n d i v i d u a l $ 2 , 0 0 0 $ 4 , 0 0 0 $ 2 , 5 0 0 $ 3 , 5 0 0 $ 2 , 0 0 0 N / A $ 2 , 0 0 0 $ 4 , 0 0 0F a m i l y $ 4 , 0 0 0 $ 8 , 0 0 0 $ 5 , 0 0 0 $ 8 , 5 0 0 $ 6 , 0 0 0 N / A $ 4 , 0 0 0 $ 8 , 0 0 0O f f i c e V i s i t 90% 70% 80% 60% $20 N / A 80% 60%E m e r g e n c y R o o m $ 5 0 t h e n 9 0 % $ 5 0 t h e n 7 0 % $ 5 0 t h e n 8 0 % $ 5 0 t h e n 6 0 % $75 N / A $ 5 0 t h e n 8 0 % $ 5 0 t h e n 6 0 %I n p a t i e n t 90% 70% 80% 60% $250 N / A 80% 60%P r e v e n t i v e C a r e 1 0 0 % t o $ 3 5 0 / y r 1 0 0 % t o $ 2 5 0 / y r $20 ( b a b y 1 0 0 % ) N / A 1 0 0 % t o $ 3 5 0 / y rP r e s c r i p t i o n D r u g s ( R e t a i l ) ( k e e p c o p a y ; c h a n g e i n 0 6 )G e n e r i c $10 $10 $15 $15P r e f e r r e d B r a n d $25 $25 $35 $20N o n - P r e f e r r e d B r a n d $40 $40 $35 $40P r e s c r i p t i o n D r u g s ( m a i l )G e n e r i c $20 $20 $30 $30P r e f e r r e d B r a n d $50 $50 $75 $40N o n - P r e f e r r e d B r a n d $80 $80 $75 $80C o n t r i b u t i o n s & E n r o l l m e n t S e l f - I n s u r e d - c n t r i b t r n d + 1 5 % S e l f - I n s u r e d F u l l y I n s u r e d S e l f - I n s u r e dE m p l o y e e O n l y $ 0 . 0 0 $ 7 4 . 7 5 1 , 4 5 0 $ 3 1 . 5 2 0 $ 5 7 . 3 0 390 $ 2 5 . 0 0 600E m p l o y e e + O n e $ 1 4 7 . 0 0 940 $ 6 3 . 0 4 0 $ 1 1 9 . 6 0 220 $ 5 0 . 0 0 250E m p l o y e e + F a m i l y $ 2 2 1 . 7 5 1 , 7 3 0 $ 9 4 . 5 6 0 $ 1 6 9 . 4 3 690 $ 7 5 . 0 0 6407290 380 4120 0 1300 1490% o f E l i g i b l e 5% 57% 0% 18% 20% o f E n r o l l e d 60% 0% 19% 22%Mercer Human Resource Consulting 18 Generic Employer Significant with HSA G E N E R I C E M P L O Y E RS i g n i f i c a n t w i t h H S AE l i m i n a t e E l i m i n a t e A d dW a i v e P P O A P P O B H M O H S An e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r k n e t w o r k o u t - o f - n e t w o r kH S A - E p s o n F u n d e dI n d i v i d u a l N / A N / A N / A $150F a m i l y N / A N / A N / A $300A n n u a l D e d u c t i b l e A g g r e g a t e F a m i l y D e d u c t i b l eI n d i v i d u a l N o $400 $800 $500 $800 N o n e $ 1 , 0 0 0 $ 2 , 0 0 0F a m i l y c o v e r a g e $800 $ 1 , 6 0 0 $ 1 , 0 0 0 $ 1 , 6 0 0 N o n e $ 2 , 0 0 0 $ 4 , 0 0 0C o i n s u r a n c e 90% 70% 80% 60% 100% 0% 80% 60%C o i n s u r a n c e M a x i m u mI n d i v i d u a l $ 2 , 0 0 0 $ 4 , 0 0 0 $ 2 , 5 0 0 $ 3 , 5 0 0 $ 2 , 0 0 0 N / A $ 2 , 0 0 0 $ 4 , 0 0 0F a m i l y $ 4 , 0 0 0 $ 8 , 0 0 0 $ 5 , 0 0 0 $ 8 , 5 0 0 $ 6 , 0 0 0 N / A $ 4 , 0 0 0 $ 8 , 0 0 0O f f i c e V i s i t 90% 70% 80% 60% $20 N / A 80% 60%E m e r g e n c y R o o m $75 t h e n 9 0 % $75 t h e n 7 0 % $ 5 0 t h e n 8 0 % $ 5 0 t h e n 6 0 % $75 N / A $ 7 5 t h e n 8 0 % $ 7 5 t h e n 6 0 %I n p a t i e n t 90% 70% 80% 60% $250 N / A 80% 60%P r e v e n t i v e C a r e 1 0 0 % t o $ 4 0 0 / y r 1 0 0 % t o $ 2 5 0 / y r $ 2 0 ( b a b y 1 0 0 % ) N / A 1 0 0 % t o $ 4 0 0 / y rP r e s c r i p t i o n D r u g s ( R e t a i l ) m a x $ 7 5 / s c r i p t A f t e r D e d - m a x $ 7 5 / s c r i p tG e n e r i c 20% $10 $15 20%P r e f e r r e d B r a n d 20% $25 $35 20%N o n - P r e f e r r e d B r a n d 20% $40 $35 20%P r e s c r i p t i o n D r u g s ( m a i l ) m a x $ 1 5 0 / s c r i p t A f t e r D e d - m a x $ 1 5 0 / s c r i p tG e n e r i c 20% $20 $30 20%P r e f e r r e d B r a n d 20% $50 $75 20%N o n - P r e f e r r e d B r a n d 20% $80 $75 20%C o n t r i b u t i o n s & E n r o l l m e n t S e l f - I n s u r e d - c n t r i b t r n d + 1 5 % S e l f - I n s u r e d F u l l y I n s u r e d S e l f - I n s u r e dE m p l o y e e O n l y $ 0 . 0 0 $ 7 0 . 0 0 1 , 5 9 0 $ 3 1 . 5 2 0 $ 5 7 . 3 0 0 $ 4 0 . 0 0 850E m p l o y e e + O n e $ 1 4 0 . 0 0 980 $ 6 3 . 0 4 0 $ 1 1 9 . 6 0 0 $ 8 0 . 0 0 430E m p l o y e e + F a m i l y $ 2 1 0 . 0 0 2 , 0 2 0 $ 9 4 . 5 6 0 $ 1 6 9 . 4 3 0 $ 1 2 0 . 0 0 1 , 0 4 07290 380 4