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CDHP 2009


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

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

Published in: Economy & Finance, Business

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  • What is CDHP? CDHP Effects
  • Transcript

    • 1. Consumer Directed Health Care Winnie Nelson, PharmD, MS
    • 2. CDHP Consumer Directed Health Plans
    • 3. Potential Solution to Premium Growth
    • 4. CDHP Expectations
      • Financial risk to members will alter demand
        • Balance cost against expected health benefits
        • Reduce use of discretionary care
        • Seek lower-cost providers
      • Increase efficiency
        • Lowering utilization
        • Turning member into “smart shoppers”
      • Cost-containment AND protection against catastrophe
    • 5. Types of Health Care Accounts
      • Two components:
        • High deductible
        • Tax-favored savings account
      • Health Savings Account (HSA)
        • Designed to pay for qualified medical expenses
        • Must be paired with high-deductible plan
      • Health Reimbursement Arrangement (HRA)
        • Designed to reimburse employees’ qualified medical expenditures
        • Can be paired with any plan
    • 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. 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. Overall Enrollment Still Low
    • 9. CDHP Growth
    • 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. CDHP Effects
    • 12. Behavioral Change
      • Members:
      • More likely to use decision support tools
      • Pay closer attention to preventive care
      • More likely to delay/avoid care
      • Increase cost-sharing associated with decrease patient medication adherence
      • MDs:
      • Likelihood of prescribing high cost medication dropped
    • 13. Cost-Sharing Effects Davis K, 2004.
    • 14. Care-Seeking Behavior Modifiable
      • Rowe et al. 2008. Health Affairs
      • Compared use of preventive, cancer screening & diabetic monitoring services
      • Between CDHP & PPO plans
      • Members with continuous 3-year enrollment
      • Results: No difference in level & trends in use
      • WHY?
      The services were free in CDHP
    • 15. Adverse Selection
      • In Theory
      • Healthier, higher-income individuals enrolling in CDHP
      • Sicker, lower-wage individuals in traditional plans
      • Escalation of cost in traditional plans
      • In Practice
      • Healthy & sick expectations drive consumer decision
      • Conflicting findings in research affected by benefit design
      • Research methods not precise enough to detect
    • 16. Patients Becoming More Cost Conscious
    • 17. Patients Price-Conscious on Medication
    • 18. Increased Influence of Consumer Decision Support
      • Cost conscious decision making
        • Check coverage
        • Ask for generic drugs
        • Talk to doctor about treatment options
        • Ask doctor for cheaper drugs
        • Check price of service beforehand
        • Check quality rating of doctor & hospital
        • Participate in wellness programs
        • Use online cost-tracking tools
    • 19. Implications to Pharmaceutical Industry
      • Threats:
      • Erosion of market in “lifestyle” conditions
      • CDHP becoming only choice
      • Medication non-adherence
      • Cost pressure against biologics & other high cost drugs
      • Opportunities:
      • Price vs. value perception for consumers
      • Provision of decision support
      • Effects of CDHP modifiable
      • Strong interests in consumer engagement to decrease patient cost sharing