CDHP 2009


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Introduction to Consumer-Directed Health Care with recent statistics as of March 2009.

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  • What is CDHP? CDHP Effects
  • CDHP 2009

    1. 1. Consumer Directed Health Care Winnie Nelson, PharmD, MS
    2. 2. CDHP Consumer Directed Health Plans
    3. 3. Potential Solution to Premium Growth
    4. 4. CDHP Expectations <ul><li>Financial risk to members will alter demand </li></ul><ul><ul><li>Balance cost against expected health benefits </li></ul></ul><ul><ul><li>Reduce use of discretionary care </li></ul></ul><ul><ul><li>Seek lower-cost providers </li></ul></ul><ul><li>Increase efficiency </li></ul><ul><ul><li>Lowering utilization </li></ul></ul><ul><ul><li>Turning member into “smart shoppers” </li></ul></ul><ul><li>Cost-containment AND protection against catastrophe </li></ul>
    5. 5. Types of Health Care Accounts <ul><li>Two components: </li></ul><ul><ul><li>High deductible </li></ul></ul><ul><ul><li>Tax-favored savings account </li></ul></ul><ul><li>Health Savings Account (HSA) </li></ul><ul><ul><li>Designed to pay for qualified medical expenses </li></ul></ul><ul><ul><li>Must be paired with high-deductible plan </li></ul></ul><ul><li>Health Reimbursement Arrangement (HRA) </li></ul><ul><ul><li>Designed to reimburse employees’ qualified medical expenditures </li></ul></ul><ul><ul><li>Can be paired with any plan </li></ul></ul>
    6. 6. HSA vs. HRA HSA HRA Ownership Employee Employer Contributors Employee, employer and/or family members Employer only Annual limits on contributions Federally-set limit No limit; employer usually sets limit Tax Treatment Qualified medical spending exempt from income taxes; employee contributions  tax-deductible; employer contributions  excluded from gross income and not taxed Employer contributions excluded from gross income; not treated as taxable income to employees
    7. 7. HSA vs. HRA HSA HRA Portability Fully portable No requirement; many employers do not make accounts portable Unspent funds Rolls over yearly without limits May roll over yearly but employer may set maximums; funds may revert to employer if employee leaves or retires Qualified medical expense definition Specified by IRS; payment for health insurance premiums may be restricted Specified by IRS Non-medical use Subject to income tax with additional 10% penalty before age 65 Forbidden
    8. 8. Overall Enrollment Still Low
    9. 9. CDHP Growth
    10. 10. 2008 Best Seller for Large Group Amount Avg Annual Deductible Single: $2,046 Family: $3,998 Avg Annual Out-of-Pocket Limit Single: $3,194 Family: $6,110 Avg Lifetime Max Benefit Single: $3.6 Million Family: $3.7 Million Avg Annual Premium Single: $3,185 Family: $8,241
    11. 11. CDHP Effects
    12. 12. Behavioral Change <ul><li>Members: </li></ul><ul><li>More likely to use decision support tools </li></ul><ul><li>Pay closer attention to preventive care </li></ul><ul><li>More likely to delay/avoid care </li></ul><ul><li>Increase cost-sharing associated with decrease patient medication adherence </li></ul><ul><li>MDs: </li></ul><ul><li>Likelihood of prescribing high cost medication dropped </li></ul>
    13. 13. Cost-Sharing Effects Davis K, 2004.
    14. 14. Care-Seeking Behavior Modifiable <ul><li>Rowe et al. 2008. Health Affairs </li></ul><ul><li>Compared use of preventive, cancer screening & diabetic monitoring services </li></ul><ul><li>Between CDHP & PPO plans </li></ul><ul><li>Members with continuous 3-year enrollment </li></ul><ul><li>Results: No difference in level & trends in use </li></ul><ul><li>WHY? </li></ul>The services were free in CDHP
    15. 15. Adverse Selection <ul><li>In Theory </li></ul><ul><li>Healthier, higher-income individuals enrolling in CDHP </li></ul><ul><li>Sicker, lower-wage individuals in traditional plans </li></ul><ul><li>Escalation of cost in traditional plans </li></ul><ul><li>In Practice </li></ul><ul><li>Healthy & sick expectations drive consumer decision </li></ul><ul><li>Conflicting findings in research affected by benefit design </li></ul><ul><li>Research methods not precise enough to detect </li></ul>
    16. 16. Patients Becoming More Cost Conscious
    17. 17. Patients Price-Conscious on Medication
    18. 18. Increased Influence of Consumer Decision Support <ul><li>Cost conscious decision making </li></ul><ul><ul><li>Check coverage </li></ul></ul><ul><ul><li>Ask for generic drugs </li></ul></ul><ul><ul><li>Talk to doctor about treatment options </li></ul></ul><ul><ul><li>Ask doctor for cheaper drugs </li></ul></ul><ul><ul><li>Check price of service beforehand </li></ul></ul><ul><ul><li>Check quality rating of doctor & hospital </li></ul></ul><ul><ul><li>Participate in wellness programs </li></ul></ul><ul><ul><li>Use online cost-tracking tools </li></ul></ul>
    19. 19. Implications to Pharmaceutical Industry <ul><li>Threats: </li></ul><ul><li>Erosion of market in “lifestyle” conditions </li></ul><ul><li>CDHP becoming only choice </li></ul><ul><li>Medication non-adherence </li></ul><ul><li>Cost pressure against biologics & other high cost drugs </li></ul><ul><li>Opportunities: </li></ul><ul><li>Price vs. value perception for consumers </li></ul><ul><li>Provision of decision support </li></ul><ul><li>Effects of CDHP modifiable </li></ul><ul><li>Strong interests in consumer engagement to decrease patient cost sharing </li></ul>
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