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Employer, insurer adoption rates of CDHPs fall short of expectations
by JOANNE WOJCIK
Published Oct. 8, 2007
WASHINGTONIs consumer-driven health care just getting started or is it already on its way out? The answer depends on whom you ask.
Both perspectives were presented last month at the National Consumer Driven Healthcare Summit in Washington, ruffling more than a few feathers.
Unlike many health insurance industry events that generally "preach to the choir," the summit featured presentations from two Washington-based groups that have been highly critical of the consumer-driven health movement: the New York-based Commonwealth Fund and the Yonkers, N.Y.-based Consumers Union.
Sara Collins, assistant vp at the Commonwealth Fund, presented findings of the 2nd Annual EBRI/Commonwealth Fund Consumerism in Health Care Survey, which found that enrollment in CDHPs has been virtually static since 2005.
Jim Guest, president and chief executive officer of the Consumers Union, offered his impressions of the study.
"Consumers did not drive HSAs," Mr. Guest insisted. "They may be good for the wealthy and the healthy," but HSAs are mostly driven by "employers trying to save money and insurers trying to increase profits," Mr. Guest said.
James Robinson, newly named editor-in-chief of Bethesda, Md.-based health care industry journal Health Affairs and a former economics professor from the University of California-Berkeley, said the death knell is already sounding for the health plan model just six years after it was introduced.
"The vision of self-directed care has faded" and is being replaced with population-based health management approaches, he said during another panel discussion held during the three-day summit.
In addition, employers and insurers are not adopting consumer-driven plans at the rate that had been expected, and the individual market is not developing to allow employers to get out of the health care business, Mr. Robinson said.
Contrary to the original objective of consumer-driven health carethat plan members be given the freedom to choose providersmost CDHP members are choosing providers that are linked to managed care networks, "demonstrating that they value the role of the health plans in negotiating unit prices and providing utilization management," Mr. Robinson said.
In fact, many early CDHP companies have "been swallowed up by the incumbent players" he said, pointing to acquisitions of two of the first CDHP players: Alexandria, Va.-based Lumenos, which Indianapolis-based WellPoint Inc. has acquired, and Minneapolis-based Definity Health, which now is owned by Minnetonka, Minn.-based UnitedHealth Group Inc.
"High-deductible plans have grown a lot more slowly than people anticipated," Mr. Robinson said. As a result, the market is evolving to a new concept, which he called "managed consumerism," or "Consumer Driven Health Care 2.0."
Under Consumer Driven Health Care 2.0, intermediary intervention such as disease management is being welcomed to help manage chronic conditions, many of which are the result of unhealthy personal behaviors, Mr. Robinson said.
"They smoke, they eat the wrong things, they don't get the right exercise, they physically make lousy personal decisions and, honestly, giving them more Web sites and higher deductibles just isn't" all that is needed to make CDHP members better health care consumers, he said.
In addition, benefit design is changing to recognize that high-deductible plans "create too little coverage for low-cost, efficient services and too much coverage for high-cost, inefficient services," Mr. Robinson said. "Benefit design should take this into account. For example, medically necessary procedures should be covered at 100%."
Mr. Robinson also suggested that under Consumer Driven Health 2.0, deductibles and premium contributions should be tied to income so that lower-paid workers are not put at a disadvantage.
During a later session at the conference, Greg Scandlen, president and founder of Consumers for Health Care Choices in Hagerstown, Md., and co-chair of the CDH conference, countered Mr. Robinson's remarks, calling Mr. Robinson's newly coined "managed consumerism" an "oxymoron."
"He thoroughly misunderstands what is happening in the market," Mr. Scandlen said.
He attributed the slowdown in the rate of increase in health care costs over the past few years to the emergence of consumer-driven health care, comparing the current situation to the impact that managed care had in the early 1990s.
"The CDH movement is transforming health care," Mr. Scandlen said. "The products are being adopted faster than any other type of plan in my lifetime."
He said the reason consumers are selecting products with managed care networks is because that is all that insurers have been offering, but that will soon change.
Mr. Scandlen also took exception to the suggestion that the incumbent insurers have taken over this fledgling market. "Several of the original companies have been acquired, but the entrepreneurs are busier than ever," he said.
Mr. Scandlen also asserted that the growing use of the Internet to seek out health information demonstrates that consumers are taking control of their own health decisions, and are not relegating them to case managers.
In a post-summit interview via e-mail, Clive Riddle, president of Modesto, Calif.-based Managed Care On-Line and co-chair of the summit, said that critics were invited to the conference because "there are notable criticisms leveled at consumer-driven care by a number of prominent stakeholders, and to ignore them would be to `ignore the elephant in the room."'
Moreover, it provides an opportunity for CDHP supporters "to become well-versed in the criticisms of their movement, in order to be best positioned for the future," Mr. Riddle said. "Given that the summit desired to be a platform towards improving consumer-driven care, an open dialogue and exchange regarding the strengths and weaknesses of the movement is necessary towards identifying and addressing problems," he said. "The summit features a lot of policy and research presentations and information, and much of the `back and forth' on this issue is within policy circles."
by JOANNE WOJCIK
Published Oct. 8, 2007
WASHINGTONOne Oklahoma employer found that information can be powerful medicine, ultimately leading to lower health benefit costs.
An information therapy program, which pays incentives not only to providers but also to plan members who complete online classes about their conditions and then are tested on their medical knowledge, reduced health benefit costs for city of Duncan, Okla., nearly 30% over two years.
The program, developed by Oklahoma City-based MedEncentive, is built on the premise that improving medical literacy will encourage patients to modify their behavior, thereby improving clinical outcomes and ultimately lowering health care costs, said Jeff Greene, one of the companys founders.
He said this hypothesis was proven in a study, reported in July 2007, by Northwestern University in Chicago and Emory University in Atlanta, which found that 40% of patients deemed medically illiterate died during the study, compared with just 19% of those who were considered medically literate.
The reason for the higher death rate among the medically illiterate group, researchers theorized, was that it is difficult for people who cannot understand medical information and instructions to manage chronic illnesses such as asthma, diabetes and heart disease, Mr. Greene reported to those attending the second National Consumer Driven Healthcare Summit held Sept. 26-28 in Washington.
Although it falls under the category of pay-for-performance, MedEncentives information therapy program does not follow the typical structure of paying bonuses to providers who follow medical guidelines when treating certain conditions, he said.
Instead, it provides payments to doctors who refer patients for information therapy for every diagnosis known to man and then refunds the copayments of patients who complete the necessary coursework, Mr. Greene said. Plan members have up to two weeks to complete their prescribed classes, which are available online and are based on established medical guidelines. Once a patient answers a certain number of questions correctly, a voucher pops up on the screen. Patients can print the vouchers as proof they successfully completed their lessons. The online system also alerts the claims administrator, which issues a refund check to the patient.
The program works because it aligns the interests of the three primary stakeholders: the patient, the provider and the payer, Mr. Greene asserted. We liken it to a three-legged stool.
The program was implemented in less than 60 days using a health fair to orient plan members. Doctors and office staff all received one orientation session as well as instructional videos and printed materials. The citys claims administrator made system modifications to automate the bonus payment and rebate processes.
After two years, the city of Duncan, which had projected a 20% increase in the cost of its self-funded health benefit program for 2005-2006, instead experienced a 29.8% drop going into the 2006-2007 plan year, according to Mr. Greene. The 2003-2004 plan year was used as a baseline. That year, the city spent more than $2.3 million on health care for 1,100 employees and dependents enrolled in its benefit plan.
The program cost the city a total of $74,957, including $27,835 in patient rewards, $21,114 in doctor incentive payments and MedEncentives fees of $25,978. Its two-year savings totaled $820,520, yielding a 995% return on investment, Mr. Greene said.
The greatest savings came from controlling noncatastrophic costs, which declined more in the second year than in the first, he said. In addition, there were significant reductions in hospitalizations and radiology services, Mr. Greene said.
by JOANNE WOJCIK
Published Oct. 8, 2007
WASHINGTONWalk-in medical clinics could help drive greater transparency and competition in pricing, which are key ingredients for the success of the health care consumerism movement, an expert says.
The convenient care industry has emerged in response to the reluctance or inability of physicians to provide cost, quality and service information that consumers expect, according to Dr. Charles Peck, chief medical officer of Take Care Health Systems in Conshohocken, Pa.
The top three factors critical to success of company health care strategy: employees understand the impact of rising costs on the companys ability to succeed as a business; that employees understand the true cost of health care services they use; and that employees are effective health care consumers, Dr. Peck said, quoting a white paper published by Stamford, Conn.-based benefit consultant Towers Perrin.
Employers are looking for the solution in transparency, which the convenient care industry provides, Dr. Peck said during a keynote address at the Second National Consumer Driven Healthcare Summit Sept. 26-28 in Washington.
The clinics, usually housed in retail settings such as drugstores, openly display the prices that will be charged for the services provided so that patients know ahead of time how much they can expect to pay, he said.
But price is not the only factor contributing to the convenient care industrys growing popularity, according to Dr. Peck.
We view our patients as customers, and treat them as such, he said.
In fact, growth of the industry has exploded in response to the increasing demand by patients that have been having difficulty accessing the health care system, either because of lack of insurance or because of long waiting times to see physicians, Dr. Peck said.
Before the emergence of health care consumerism, patients didnt really have a choice, he noted. Today many patients are choosing to use convenient care clinics to gain access to the health care system.
The convenient care industry provides us with a window to what we can expect to see from consumers/patients in terms of their behavior when theyre given a choice, Dr. Peck said.
There is also growing demand by employers for cost-effective and convenient alternative health care delivery vehicles, as is evidenced by the proliferation of on-site medical clinics, he said.
Employers are seeing skyrocketing costs for emergency room visits and frankly, a lot of that is because employees/consumers/patients cant get appointments to see their physicians, which is a huge problem, Dr. Peck said. There are long wait times, inflexible and inconvenient hours.
Take Care charges between $59 and $74 per office visit. This compares with national average emergency room charges of $310, urgent care center charges of $106, and doctors office visit charges of $91. The company is able to offer such a low price because they use mainly nurses practitioners rather than doctors to provide medical services, Dr. Peck said.
Nurse practitioners are severely underutilized in the commercial health care market, he said. By contrast, if you look at the armed services health care system, theyve used nurse practitioners for primary care for many, many years. Nurse practitioners are trained and are able to provide a significant numberprobably about 70% of the primary care services that most primary care physicians provide.
In addition to cash patients, Take Care accepts most insurance plans having contracts with most major insurers and several state Medicaid plans.
Take Care, which was acquired in May 2007 by Deerfield, Ill.-based Walgreens Co., operates 51 clinics in the metropolitan areas of Chicago, Kansas City, Milwaukee, Pittsburgh and St. Louis.
by JOANNE WOJCIK
Published Oct. 8, 2007
WASHINGTONRep. Pete Stark, D-Calif., chairman of the House Ways and Means Health Subcommittee, was among featured speakers at the National Consumer Driven Healthcare Summit, at the Hyatt Regency Capitol Hill in Washington.
The summit, which attracted more than 300 participants Sept. 26-28, was founded to provide a forum on the impact of consumer-driven health care on employers, providers, health plans, pharmaceutical companies and financial institutions. In addition to plenary sessions, the program was divided into six tracks: employer case studies, policy and research, banking and technology, operational and technical, transparency, and provider issues.
The next Consumer Driven Healthcare Summit is Sept. 22-24, 2008, in Washington. For more information, visit www.consumerdrivensummit.com, or call 800-684-4549.