Development of Health Care Consumerism in CTS Communities

1. Development of Health Care Consumerism in CTS Communities AcademyHealth Annual Research Meeting June 8, 2008 Paul B. Ginsburg, Ph.D. Jon B. Christianson, Ph.D. Ann Tynan, M.P.H. Debra Draper, Ph.D.

2. Background on CTS Site Visits • Periodic visits to 12 representative metropolitan areas since 1996 • Funded by the Robert Wood Johnson Foundation • Round 6 conducted throughout 2007 into early 2008 • Phase I tracking during first half of 2007 • Phase II interviews for in-depth studies • Total of approximately 600 interviews

3. Methods • Mix of in-person and telephone interviews • Matrix of research teams and site teams • HSC staff and consulting researchers • Triangulation • Atlas database

4. Today’s ARM Panel on Consumerism • Tracking these developments over many rounds of site visits • Papers presented reflect • Developments emerging very recently • Developments that have been evolving over a number of rounds of site visits • Perspective on entire history of consumerism

5. Today’s ARM Panel on Consumerism • Update on consumer-directed health plans (Jon Christianson) • Health plans’ provision of price and quality information (Ann Tynan) • Health promotion and wellness (Debra Draper) • Transition from managed care to consumerism (Jon Christianson)

6. Consumer-directed Health Plans: Mixed Employer Signals, Complex Market Dynamics Jon B. Christianson Senior Consulting Researcher Center for Studying Health System Change James A. Hamilton Chair in Health Policy and Management University of Minnesota

7. Key Findings • Over the past two years, health plans have expanded their CDHP offerings-- high-deductible plans with either a health reimbursement arrangement (HRA) or health savings account (HSA). • Employers see CDHPs as part of a broader consumerism strategy, encouraging employee responsibility for health care costs, lifestyle choices, and treatment decisions. • Employer strategies when offering CDHPs vary by size and type of workforce.

8. Complementary Offerings • Health plans typically offer consumer-support tools, such as online provider quality and efficiency information, as part of CDHPs; this information is available to PPO enrollees as well. • Health plans believe they need to have CDHP products in their portfolios when marketing to large employers that want just one company to manage all of their benefit offerings.

9. Complexity of Products • Some employers remain concerned that CDHPs are difficult for employees to understand when making their health benefit choices. • Some large employers spent 12 to 18 months on employee education before rollout. • Employees’ education focuses on: • Contribution caps. • Eligible medical expenses. • Federal tax treatment for HSAs.

10. Trends Among Large Employers • Large employers are hesitant to structure their contributions to encourage enrollment in CDHPs. • Large employers with young, highly educated workforces are not as concerned about pushback and are more confident workers will be able to use the online consumer information support tools to make informed choices.

11. Trends Among Small Employers • Small employers, regardless of workforce, often offer HSAs as “total-replacement” products. • Among high-wage workforces: • Employers typically offer HSAs and contribute to accounts because employees value the tax advantages.

12. Trends Among Small Employers – Cont’d • Among low-wage workforces: • Employers offer HSAs but often do not contribute to the account. • CDHPs are seen by some small employers as the last option before discontinuing health benefits altogether. • Less pushback because employees are already accustomed to higher deductible plans.

13. Other Observations • Employers with high workforce turnover are more likely to offer and fund HRAs than HSAs.

14. Other Observations • Public employers have low rates of CDHP offerings. Employees are accustomed to comprehensive benefits, often negotiated through union contracts. • Employers rely on incremental cost shifting in existing products through higher deductibles, coinsurance and co-payments. • Some intend to introduce HSAs and HRAs in the future, after employees become accustomed to higher deductibles • Exceptions: some state governments (e.g. Indiana)

15. Growing Optimism for HSAs and HRAs • Plan respondents and benefit consultants generally expect CDHPs to play an increasingly prominent role in large employer health benefit offerings. • For now, many large employers are engaged in “watchfulwaiting,” hoping employees will become more comfortable with the product designs over time; they are especially interested in the experience of employers who are replacing all options with CDHP(s).

16. Growing Optimism for HSAs and HRAs • For small employers, the future of CDHPs varies by workforce; low wage firms struggle to offer health benefits while the future for HSAs in higher-wage firms looks brighter due to HSA tax benefits.

17. Implications • For the rate of enrollment in CDHPs to increase, health plans and employers may need to take further steps to make HRAs and HSAs more appealing: • Refining consumer support tools. • Increasing employer contributions. • Some employers are creating a “competitive advantage” for CDHPs by making contributions to health savings accounts that reward employee participation in health promotion and wellness programs.

18. Acknowledgements • Co-author – Ann Tynan, M.P.H. • Paper is available for viewing and download on the HSC website, www.hschange.org– Issue Brief 119

19. Health Plans’ Provider Price and Quality Information: Work in Progress Ann Tynan, M.P.H. Center for Studying Health System Change

20. Key Findings Health plans are motivated to provide price and quality information to their enrollees because they perceive competitive advantage in having a consumerism strategy. Some plans provide facility-specific price information for inpatient and outpatient hospital procedures and services. Price information for physician office visits is less frequently available. Plans generally rely on nationally accepted measures for hospital and physician quality.

21. Health Plans’ Motivations • Must offer these tools to remain competitive. • Responding to demands of large employers. • Vital component of consumerism. • Initially developed to support members enrolled in consumer-directed health care products. • Seen as a way to engage all consumers in health care decisions, regardless of product type.

22. Price Information Overview Potential to reflect rates that health plans actually pay to providers. Some plans have achieved this. Potential to reflect consumer’s likely out-of-pocket costs based on own benefit structures. Only one plan reports this ability. National plans have more developed price information than local plans.

23. Hospital Price Information • Most common inpatient procedures and services, such as knee replacement surgery. • Generally presented as average cost or range of costs for a group of services by all providers involved in an episode of care. • Prices sometimes based on plans’ contracted rates. • If provided through a vendor, prices are based on publicly available data such as Medicare claims or all-payer health insurance data from state governments.

24. Physician Price Information Fewer health plans provide price information for physician services. If offered, generally average cost of physician office visits in a city, zip code or state. More often, it is the physician fee schedule, less helpful to consumers. Little variation in prices among network physicians in a market.

25. Quality Information Overview More quality information available for hospitals than physicians. Proceeding more cautiously for fear of provider pushback. Rely more on nationally accepted quality measures from third party sources than on plans’ own data. Many plans use vendors like Subimo/WebMD and Health Grades that aggregate publicly available data.

26. Hospital Quality Information Facility-specific quality metrics like morbidity, mortality, average length of stay, procedure volume, complications, and patient safety. Data from The Leapfrog Group and its Hospital Quality and Safety Survey. CMS data including measures from the “Hospital Compare” Web site.

27. Physician Quality Information • Quality information for physicians generally limited to: • designations of board certification. • NCQA physician recognition programs. • HEDIS measures. • Lack of quality information attributed to: • Insufficient numbers of cases for a physician in any single insurer’s claims, which limits what quality information plans can derive from their own data. • Lack of consensus on how to measure physician quality.

28. Risks and Unintended Consequences Misinterpretation of price information by consumers. Some may interpret high price as high quality. Consumers’ difficulty evaluating or understanding what quality information means. Plans provide additional information or links to other Web sites to further explain the information.

29. Risks and Unintended Consequences Alienating hospitals and physicians Hospitals and physicians may disagree with the plan’s methodology and measurement of quality Legal Risks Some contracts prevent disclosure Wariness of providing inaccurate data, putting consumers and providers at risk

30. Implications Choosing providers on the basis of price and quality information is a critical component of consumerism Yet, price and quality information currently available is of limited usefulness to consumers Achieving vision of consumerism may depend on whether plans can advance these tools to the point where many consumers rely upon the information for health care decisions.

31. Funding Acknowledgement Coauthors Allison Liebhaber, B.A. Paul B. Ginsburg, Ph.D. Paper will be available for viewing and download on the HSC website after July 2008, www.hschange.org

32. Health and Wellness Initiatives: The Shift from Managing Illness to Promoting Health Debra A. Draper Associate Director Center for Studying Health System Change

33. Part of Broader Consumerism Strategy Initiatives to promote health and wellness now commonplace across the country Much of the momentum has come from employers, particularly large employers Address rising health care costs Reduce absenteeism and improve productivity Support broader consumer-based strategy of giving employees more responsibility for health care decisions and costs

34. Helps Plans Reposition Themselves Indianapolis plan executive: “Our value proposition has to be built around how we are going to help you manage health care costs. This involves not just managing illness, but where health care companies have been [deficient] in the past is in how often they talk to healthy members. They only talked to members when they had a claims issue. We are trying to build an organization that is interactive with all members, not just the ones who are sick”

35. Plans Build Capacity Plans are building, acquiring or enhancing capabilities to deliver health and wellness services Emphasizing value of integrating health and wellness activities with other care management efforts dependent on plans’ claims data Plans using health and wellness activities as a way of differentiating themselves in the market

36. Premise of Health and Wellness Activities • Healthier people use fewer medical resources • Encourage the pursuit of healthy behaviors • Provides support to people interested in making lifestyle changes • Distinct from other care management activities focused on detecting or treating disease

37. Range of Activities • Worksite activities • Health fairs • Educational seminars • Screenings • Behavior modification programs • Weight management • Smoking cessation • Fitness • Health coaches • Health risk assessments

38. Health Risk Assessments • Growing interest and use • Questionnaire, often available online, that collects information provided by the enrollee • Personal and family medical history • Current diagnoses and symptoms • Use of preventive and screening services • Lifestyle behaviors – diet, physical activity, tobacco and alcohol use • Predicts health risk • Identifies enrollees needing more intensive intervention

39. EnrolleeEngagement • Participation in health and wellness activities is typically voluntary • Incentives often used to encourage participation

40. Incentives • Vary and generally small • Cash • Gift cards • Gym membership discounts • Reimbursement for programs such as Weight Watchers • Consumer-directed health plans often offer larger incentives to participate • Greenville plan medical director: “At this point, we don’t see anybody creating sticks or any type of negative processes if they don’t participate. It’s more like a reward if they do”

41. Privacy Concerns • Phoenix employer: “Some people are worried about privacy, how the data they report on the health risk assessment will be used” • Some question the validity of employee-provided information on health risk assessments, especially if employees believe employers will use the information to reduce benefits

42. Employers Offering Wellness Programs Are Intruding On Worker Privacy Employees’ Views Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Health Confidence Survey

43. Funding • Fully insured products • Typically included in the premium • Self-insured products • Typically additional cost

44. Investment Payoff • Investment payoff difficult to demonstrate • Current evidence largely anecdotal • Many health and wellness activities only recently introduced, often on a limited basis • Northern New Jersey benefits consultant: “There is recognition that a healthier workforce leads to less spending and more productivity, but it’s hard to prove.”

45. Plans and Employers Willing to Invest • At least in the near term • “It is the right thing to do” • Important to more effectively engage consumers • Small employers or those with more transient workforces are more reluctant to invest • Increasing pressures for plans to demonstrate effectiveness – clinical and financial

46. Implications • Health and wellness initiatives offer promise for engaging consumers more effectively • Challenges • Engaging larger numbers of consumers • Demonstrating clinical and financial effectiveness • Success dependent on • Developing credible evidence on effectiveness • Gaining consumers’ acceptance and validation of the legitimacy of these activities

47. Acknowledgements/other • Co-authors • Ann Tynan, M.P.H. • Jon B. Christianson, Ph.D. • Paper available for viewing and download on the HSC website, www.hschange.org – Issue Brief 121

48. Transition From Managed Care to Consumerism?: A Community-level Status Report Jon B. Christianson, Ph.D. Senior Consulting Researcher Center for Studying Health System Change James A. Hamilton Chair in Health Policy and Management University of Minnesota

49. Transition Away from Managed Care • It has been more than a decade since some analysts and benefits consultants declared that managed care was dead • Robinson (2001): “Information and incentives will replace paternalism and control as the primary instruments of corporate health benefits policy”

50. Facilitated Consumerism What is the status of managed consumerism in local communities? • Discussion focused on: • Health benefits designs • Quality and price transparency • Health and wellness programs • Care management (disease management, intensive care management, utilization management)