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Free prescription drugs boost usage, cut costs

Success begets success with health costs: Survey

Information key in drive to change employee health care choices

NBGH conference draws 480

Free prescription drugs boost usage, cut costs

Program targeting chronic conditions improves health


Published March 26, 2007

WASHINGTON—A major U.S. hospitality industry employer has found that giving free prescription drugs to certain employees who have chronic but manageable health conditions can save money as well as improve health care outcomes.

This was the preliminary conclusion of a university-led study testing the concept of "patient-specific value-based insurance design" on employees of Bethesda, Md.-based Marriott International Inc.

Marriott decided to participate in the experiment after its disease management program nurses discovered that the affordability of maintenance medication was an issue for some plan members with chronic conditions, said Jill Berger, Marriott's vp of health and welfare.

Although the data is still being analyzed, "we do expect to see a decrease in adverse events as well as a decrease in health care trend," said Ms. Berger, who released the initial findings at the National Business Group on Health's Business Health Agenda 2007 conference held March 14-16 in Washington.

Patient-specific value-based insurance design involves identifying patients who would benefit most from a particular drug but are not taking the medication because of cost, and then removing that barrier by either reducing or eliminating copayments.

It contrasts with disease management, which may identify patients in need of certain drugs but does little or nothing to remove financial barriers that may prevent patients from accessing those drugs, said Dr. A. Mark Fendrick, a professor of internal medicine and co-director of the Center for Value-Based Insurance Design at the University of Michigan in Ann Arbor.

"One-size-fits-all" cost-sharing, such as percentage-based coinsurance for prescription drugs, can lead to reductions in both essential and nonessential care, he said. "It is no secret that if you make people pay more for something, they will buy less of it."

Conversely, "people who pay zero for drugs will take them more often than if they have to pay $50 a month for them," Dr. Fendrick said.

This hypothesis was proven correct by the research involving Marriott employees, he said.

The study, which began in 2005, was conducted by University of Michigan and Harvard University researchers and administered by ActiveHealth Management Inc., a New York-based disease management and clinical decision support firm. It has developed the technology to identify patients who need specific prescription drugs but are not receiving them.

The technology allows ActiveHealth to use clinical data to identify plan members with a particular condition, compare their treatment with evidence-based medical guidelines and then notify the provider if the two do not match up, said Lonny Reisman, ActiveHealth's chief executive officer.

In situations where the patient is not taking a drug because of its cost, ActiveHealth works with the pharmacy benefit manager to provide discounts to make the drug more affordable for the patient, Mr. Reisman said.

"We selectively reduce copayments for drugs that these patients should be taking but aren't," he said. "It's manipulation of plan design based on the physiology of the member."

In Marriott's case, the PBM was instructed to eliminate generic copayments and halve copays for brand-name drugs used to treat diabetes, asthma and heart disease.

"We started with these conditions because there is documented evidence that if you can get your folks compliant with the drugs, it will improve their health and lead to reductions in hospital stays and emergency room visits," Ms. Berger said.

Marriott's experience was compared with a control group composed form another ActiveHealth client that was not using patient-specific value-based benefit design.

Although researchers are still measuring the financial and clinical outcomes of the experiment, "as we implement this technology, we are finding these strategies are creating a positive difference in trend," Ms. Berger said.

Moreover, employees are saving money, too, she said.

Members' out-of-pocket costs for targeted brand-name drugs decreased 27% while control group members' costs increased 4%. In addition, members' out-of-pocket costs for generic drugs fell 65%, while control group members' costs fell only 1%.

Perhaps most importantly, the preliminary analysis shows that adherence to recommended drug regimens increased for plan members compared with the control group, Ms. Berger said.

"We don't know the answer to the Marriott experiment yet," said Dr. Fendrick. "But if you're looking to save money in the short term…find those patients who are most likely to have bad things happen to them who are not taking the interventions or drugs that are very good at preventing those things from happening."

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Success begets success with health costs: Survey

Joanne Wojcik

Published March 26, 2007

Employers that have done the best job of managing annual increases in health care costs are pulling out ahead of their peers, according to the findings of the 12th annual National Business Group on Health/Watson Wyatt Survey.

These employers also are designing benefit plans that go beyond employee cost-sharing and involve appropriate use of financial incentives, effective information delivery, quality of care initiatives, employee health and productivity management programs and data mining, the survey found.

“If you look at the spread between the poor performers and the best performers, the gap is increasing,” said Ted Nussbaum, practicing director of health care consulting North America at Watson Wyatt Worldwide in Stamford, Conn.

The two-year average trend for the best performers in this year’s survey was just 2.5%, compared with 11% for poor performers, while in last year’s survey the differential was 3% for best performers vs. 11% for poor performers and in 2005 it was 5% for best performers vs. 15% for poor performers, Mr. Nussbaum pointed out.

“This suggests that the things the best performers are doing are producing better results,” he said.

In particular, the best performers are not relying on employee cost-sharing as a primary cost reduction strategy, according to Mr. Nussbaum.

“One continuous finding that we’ve had for the last several years is that …substantial additional cost-sharing is not producing better results,” he said. Rather, “it’s the relationship between plan design and cost-sharing that incents employees to think about their health care behaviors and become better consumers of health care.”

For example, best performers are 17% more likely to offer compelling financial incentives to encourage employee education and participation and 11% more likely to effectively deliver health care information, according to the survey of 573 large employers.

Best performers also are allowing their health care cost management strategies to evolve as they learn more about the outcomes of their previous attempts at managing costs, according to Mr. Nussbaum.

In last year’s survey, best performers found that they could lower health care costs by encouraging employees to seek care from “high-performance networks,” defined as a subset of doctors and hospitals in a particular provider network that have proved they provide consistently high quality care on a cost-effective basis.

However, this year, the best performing employers are finding not all providers in a “high-performance network” can produce the same results for all types of procedures. In other words, “quality is procedure-specific,” Mr. Nussbaum explained. As a result, many best performing employers are using high-quality, cost-effective providers similar to the way they use Centers of Excellence for transplants, only to treat other conditions, he said.

Some other findings of the survey, which was released Thursday at the 2007 Business Health Agenda sponsored by the National Business Group on Health in Washington, were:

  • The number of employers offering consumer-directed health plans continues to grow, from 33% in 2006 to 38% in 2007. However, employee enrollment in CDHPs has increased only 1% since last year, to 8%.
    Watson Wyatt noted that such arrangements generally include a high-deductible plan coupled with a personal savings account such as a health savings or health reimbursement arrangement.
  • Five percent of employers are offering CDHPs on a total replacement basis, and another 4% plan to do so in 2008.
  • Median health care cost increases for health care expenses were 8% in 2006—in line with employers’ expectations.

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Information key in drive to change employee health care choices


Published March 26, 2007

WASHINGTON—Online tools intended to change employees’ approach to using health care resources may be subject to misinterpretation, and one employer and its health care plan provider want to make certain employees are not led astray.

The amount of information and how it is displayed affect both employee usage and understanding, say initial findings of a study contracted by the Chicago-based Blue Cross & Blue Shield Assn. of online tools for Wal-Mart Stores Inc. employees across the United States.

The research, conducted by RTI International of Raleigh-Durham, N.C., aimed to identify the information and the presentation that health care consumers found most helpful in making provider selection decisions, said Lauren McCormack, director of RTI’s Health Communication Program, during a session at the Business Health Agenda 2007 conference sponsored by the Washington-based National Business Group on Health.

The study, which is ongoing, is part of the BCBS Assn.’s transparency demonstrations that it started in 30 states under its “Blue Distinction” program launched last year.

The demonstrations test the impact of the different communication tools for providing information to plan members on cost and quality, said Jennifer Vachon, executive director of marketing and business strategy at BCBS.

“We are actually testing different ways to put information in front of your employees. What we know is this is incredibly complex, and if we’re not putting information out there in a way that is accessible and usable…then we’re not going to change behavior,” Ms. Vachon said.

“Transparency is the critical enabler when we think about empowering people to make better decisions,” Ms. Vachon said. “Consumers are saying they want the information to be able to make decisions (and) they want to be able to make decisions based on actual evidence.

“When information and provider selection tools and quality information is made accessible to your employees, it really does lower the rate of increase in health care costs,” she said.

The study that used focus groups, individual interviews, quantitative research methods and statistical analysis found that “people’s preferences actually change as they are given information, particularly when it’s more complex,” RTI’s Ms. McCormack said.

If something is not personally relevant, people will dismiss it. They also dismiss it if they don’t understand it, she said. “That’s why it’s critical to make it easy to understand.”

For example, many Wal-Mart employees participating in focus groups equated lower volume of a particular procedure with higher quality—just the opposite of what the statistic indicates, said Steve Lampkin, vp of benefit compliance and administration at the Bentonville, Ark.-based retailer.

In addition, the use of symbols such as stars to denote complication rates proved to be confusing. Many employees didn’t know if more stars meant that a facility had a high or low complication rate.

“We initially thought that our associates would respond better to symbols, sort of like a Consumer Reports format,” Mr. Lampkin said.

Focus group participants also were more interested in quality rather than cost information, Mr. Lampkin said. However, “as we move more and more toward consumer-driven health care…the cost-quality equation will begin to balance out.”

Ms. McCormack said information has to be “really clear” to achieve consumer understanding. “If we don’t get it right, consumers may dismiss this information, or worse, they make the wrong decision using the information.”

She said one of her personal favorites among various study results was nurse-to-patient ratio data for hospitals.

“One person wanted to know if the ratio was during the day or at night,” Ms. McCormack said, acknowledging it was a relevant question since hospital staffing generally is lower at night than in the daytime.

Mr. Lampkin said he was surprised by how eager many Wal-Mart associates were to get the information—the more the better in some cases.

“Some wanted high-tech information while others wanted low-tech information,” he said. In addition, younger users wanted more data than older users, he said.

Wal-Mart employees also said they preferred customized information, so that they receive only the information that matters to them, personally, Mr. Lampkin said. That might be achieved by analyzing past choices and searches made by employees, he suggested.

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NBGH conference draws 480


Published March 26, 2007

WASHINGTON—Consumerism, technology and transparency were key topics at the National Business Group on Health's Business Health Agenda 2007 earlier this month.

The Washington event drew 480 participants from the employee benefits field, including benefits and human resource executives, health care industry experts, consultants and benefits-related vendors.

Next year's Business Health Agenda is scheduled for March 12-14, 2008 in Washington.

For more information about the annual meeting and other NBGH-sponsored activities, visit the organization's Web site at

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