Consumer Driven Healthcare

A Mixed Bag... or an opportunity to preserve consumer choice?




               Mark H. Prudo...
Discussion Highlights

• CDHC Overview: Options, Options, Options
• The Purchaser's Point of View
• The Responding Marketp...
CDHC by Item
“Your Menu, Sir...”

            Chez CDHC                             Select Whines
The “FSA”... served lean for over    ...
“So...What are the differences?”



                  CDHC Program *
          § 125   EE Fund   ER Fund     Bal. Rollover...
“...have the different programs made a difference?”


                  HSA                                      HSA Accou...
Understanding the Purchaser
Now that health plan PMPM
costs are significantly
decreasing.
Employers think...
           !
     Bonus                  ...
“What are Employers saying?”


 “Either I increase the employee's            “If my employees are unwilling to
 Health Pla...
Now that their health plan
deductibles/coinsurances are
significantly increasing.      Sure wish I
                       ...
“What are Employees saying?”


“It's the employer's responsibility to        “Why is my company trying to put
provide heal...
“What is the Industry saying?”

Administrators: “We can manage a             Banks (trustees): “...finally, some ROI for
C...
Supply and Demand?
The Marketplace is responding to customer needs,
                          but...

                                    * O...
The Marketplace is responding to customer needs,
  but...is the Industry meeting specified goal(s).



        “OK ... I s...
Results and Projections to 2012
Designing the Plan
Products, Programs, Technology, Information
           ...too painful to adopt?


                      •   How do I asses...
“What are some of the typical CDHC plan features?”

• HDHP/HSA Benefit(s) offered as an
    option to other medical plan(s...
“Is CDHC just a matter of yes or no questions?”

A CDHC program Yes                        Yes   Rev. HDHP plan
    in pla...
“What other resources are purchasers placing in the
    hands of their health plan participants?”
“I've have a plan...where do I go from here?”
Key earmarks of a successful CDHC program

* Assess Corporate Culture – Many ER's build paternalism into their
benefit pro...
Key earmarks of a successful CDHC program



* Design and implement EE education according to each benefit class
(i.e., Ex...
Ready to see the Light?
A Case in point...a time to apply what we have learned
                                       ER Profile

You have been re...
Your mission...


Formulate the best, in your opinion,
CDHC solution for Ed and IBW. Be
sure to include your plan/program
...
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Cdhc Education Overview

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Historical representation and Consumer Driven Health Care evolution...and the perspective one should have in developing a CDH Plan.

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Cdhc Education Overview

  1. 1. Consumer Driven Healthcare A Mixed Bag... or an opportunity to preserve consumer choice? Mark H. Prudowsky, Executive Consultant
  2. 2. Discussion Highlights • CDHC Overview: Options, Options, Options • The Purchaser's Point of View • The Responding Marketplace – CDHC Benefit Considerations – Acceptance “to date...” • Challenges for the “Best” Choice plan design • “We've chosen...now what?” • A Case in Point...Putting theory into practice.
  3. 3. CDHC by Item
  4. 4. “Your Menu, Sir...” Chez CDHC Select Whines The “FSA”... served lean for over HR vin 2004 : “ Too risky, too twenty years. Cheap! complex to appreciate the value!” The “HRA”... the best option when CFO vin 2007 : A great value, but someone else is paying. $$$ may cause indigestion when the bill arrives. The “HSA”... you decide how much and when.Let's negotiate! EE (no vin, consistent blend) : glaring overtones of doubt...buyer may Famous Pairings experience sticker shock. § 125 Plan ... a great option when Broker vin 2010 : Big, brash notes you wish to save tax dollars...fine of overconfidence yielding little depth. print applies! Tri Parte Admin : Vintner commits HDHP ... pairs best with the HSA or to any pairing despite of products actual limitations...suggest one tastes HRA. FSA pairing may cause distress. before buying the bottle.
  5. 5. “So...What are the differences?” CDHC Program * § 125 EE Fund ER Fund Bal. Rollover FSA Y Y Y N HRA Y N Y Y – ER ONLY HSA Y Y Y Y – EE ONLY LP FSA Y Y Y N PD HRA Y N Y Y – ER ONLY * May require coupling with a HDHP.
  6. 6. “...have the different programs made a difference?” HSA HSA Accounts surge enrolments to over 5MM. ER's begin...7% of now offering HDHP's EE's opt for with EE coinsurance HDHP...Health and maximum Plan costs OOP ...Health Plan increase by cost increases are the < 2004 single digits. 2005 lowest...ever. 2007 2004 2006 FSA/HRA FSA/HRA More EE's/ER's enrolments enrolments continue. offering/adopting limited to Jumbo ER's prefer CDHC ... More ER's 14-22% of HRA; sm/med ER's offering LP FSA's/PD EE's...Health adopt HDHP/HSA at HRA's with HSA's. Plan costs an accelerating Expectations falling short continue to rate...Health Plan due to failed EE education, escalate. increases slow to 5%. poor planning and a program design lacking creativity.
  7. 7. Understanding the Purchaser
  8. 8. Now that health plan PMPM costs are significantly decreasing. Employers think... ! Bonus $ $ ! n us o Bo B nu $ ! s
  9. 9. “What are Employers saying?” “Either I increase the employee's “If my employees are unwilling to Health Plan contribution or adopt healthier lifestyles, then I eliminate coverage all together.” will eliminate financial incentives.” “My employees are increasingly suspicious of my ability to continue to provide health benefits.” “I can't trust my employees to “Participation in CDHC programs, use HRA/HSA money wisely generally, is low. Most employees enough to drive plan savings.” elect the most expensive coverage anyway.”
  10. 10. Now that their health plan deductibles/coinsurances are significantly increasing. Sure wish I had been kissed first! Employees think...
  11. 11. “What are Employees saying?” “It's the employer's responsibility to “Why is my company trying to put provide health care benefits for me me into these Wellness programs? and my family...pay for it too!” They're trying to get rid of me!” “My health plan is too complicated...just give me my ID card and Co-pays.” “50 percent of employees in “44 percent of employees in consumer driven plans were consumer driven plans think their satisfied that their coverage health plan helped them find protected them against the risk quality doctors and hospitals, of major health care costs, versus versus 63 percent in traditional 65 percent of those in traditional health plans.” plans.”
  12. 12. “What is the Industry saying?” Administrators: “We can manage a Banks (trustees): “...finally, some ROI for CDHC program for our customers with the insurance services division we started little or no training or adaptation to our and a chance to develop relationships with technology.” large, multi-national customers!” Producers: “if it wasn't enough that Consultants: “More opportunities to Carriers were reducing my commissions, develop RFP's, conduct surveys, assess now I have to sell a new product, for a the marketplace and draw the employer lower premium and reduced closer to me!” commissions!”
  13. 13. Supply and Demand?
  14. 14. The Marketplace is responding to customer needs, but... * On-line Prescription drug comparison tools. * 120 newly licensed health insurers offering HDHP's in all fifty States. * Twenty-seven percent of all HDHP enrollees had no prior health care coverage. * Transparency applies to cost and quality data * Prevention/Wellness benefits offered in more health benefit plans. * Consumerism Tax legislation introduced in January, 2007 increases tax advantages for consumers. * Technology vendors expand Auto-Adjudication and Transparency capabilities. * State Governments introducing consumerism incentives to Medicaid Budgets.
  15. 15. The Marketplace is responding to customer needs, but...is the Industry meeting specified goal(s). “OK ... I saved the customer a ton of “How do I evaluate $$$. What about that consuming behavior next year?” is changing?” €
  16. 16. Results and Projections to 2012
  17. 17. Designing the Plan
  18. 18. Products, Programs, Technology, Information ...too painful to adopt? • How do I assess my Customer's readiness for a CDHC program? • How crucial is strategic planning? • What is my Customer's ultimate goal? • What are the costs to the plan, employee morale and/or other employee benefits? • What are the costs of not offering an expanded CDHC program? • Which technologies will help ensure success and employee satisfaction? • What analyses should be conducted pre- and post-implementation? • Are there voluntary benefits available that will add value and allow employees to assume more responsibility?
  19. 19. “What are some of the typical CDHC plan features?” • HDHP/HSA Benefit(s) offered as an option to other medical plan(s) • Avg. Deductible $2,668 (S); $5264 (F) • Avg. OOP max $3,449 (S); $6,881 (F) • Ann. PMPM costs avg. $2,855 (S); $6,995 (F) • Most commonly provided (first dollar) Preventive Health Programs were Diabetes (91%), CAD (90%), COPD (80%), CHF (89%) and Asthma (87%) • HRA's more popular with large ER's (vs. HSA's) • Medical FSA's, while prevalent, continue to have low participation • Limited Purpose FSA's and Post- Deductible HRA's becoming more popular as HDHP's include participant coinsurance and max OOP.
  20. 20. “Is CDHC just a matter of yes or no questions?” A CDHC program Yes Yes Rev. HDHP plan in place? Offering a HSA/HRA (Y/N) HDHP? Enrollments & Education No No Are Savings or Savings Design HDHP Rev. Claims to Employee Morale with HRA/HSA offer Wellness more important? Benefits Morale Design MFSA Design HDHP Consider offering with HRA & with HRA/HSA Health Incentive EE Education Accounts Rev. Voluntary Use $avings to Benefits offering incent EE's and to expand pay for Preventive participation care.
  21. 21. “What other resources are purchasers placing in the hands of their health plan participants?”
  22. 22. “I've have a plan...where do I go from here?”
  23. 23. Key earmarks of a successful CDHC program * Assess Corporate Culture – Many ER's build paternalism into their benefit programs; * Review previous CDHC attempts/programs – Learn from prior mistakes; * Ultimately, the goal should be a full replacement CDH model...but the customer will dictate the pace of evolution; * Don't use boilerplate plan designs (watch out for the Carriers)...tailoring the right approach will insure success; * Involve the participant in preventive/wellness programs from the beginning; * Always use derived plan savings to “pay” for the CDHC program...you'll be offering the customer a “budget neutral” renewal.
  24. 24. Key earmarks of a successful CDHC program * Design and implement EE education according to each benefit class (i.e., Exempt, Non-Exempt, Bargaining Unit, Exec's earning > $150K); * Multi-site ER's will require on-site education, and if Voluntary Benefits are offered, they will also require enrollment assistance; * Conduct post-enrollment/education evaluation(s) to assist with designing next year's benefit offering and CDHC program enhancements; * Communication with the customer is crucial. Make sure meeting are scheduled to keep all necessary parties “...in the know.”
  25. 25. Ready to see the Light?
  26. 26. A Case in point...a time to apply what we have learned ER Profile You have been requested by Ed Bitness, Broker for I B Widgets, Inc., to provide a CDHC solution. You have worked with Ed before and know that if mistakes are made, whether yours or not, you will be held responsible. You review Ed's email request, give a big sigh, cuss a little, and respond in the affirmative. Ed coordinates a conference call with IBW. You learn the following about the customer's health benefit plan: 1). The ER has 11oo EE's across three job sites (2700 plan participants); annual health plan expenditures of $6.05MM...EE's pay 25% of health plan costs (as a contribution); 2). Ed is moving the customer from a SI-PPO to a full replacement SI-HDHP with deductibles of 1200/2400 and 100% coinsurance due to continued double-digit renewals (this year's increase 18%, budgeted 13%); 3). IBW has had an FSA for the last eight years with no more than 13% of the EE's participating; 4). Avg. EE profile is Female, < 35 yrs, married, ann. Income ≈$30,000.00, education at least two years of college; 5). Dx's driving claims: HTN, Diabetes, CAD, Asthma, Obesity, Complicated Pregnancy; 6). ER leads the industry in applied technology, all EE's are computer literate and have asked in the past for preventive care programs.
  27. 27. Your mission... Formulate the best, in your opinion, CDHC solution for Ed and IBW. Be sure to include your plan/program design and implementation. Remember to include planned communication, CDHC recommendations including technology for education, healthcare prevention and transactional access. Employee education will be crucial to your plan's success...determine how you will educate them. And, lastly but most importantly, include your plan for post-enrollment evaluation keeping an eye on the following year's plan enhancements.

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