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Fine-tuning consumer-driven plans

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Fine-tuning consumer-driven plans

With a few years of experience under their belts, employers and health plans are adjusting their consumer-driven health plan offerings in an attempt to make them more attractive to plan sponsors and employees.

The changes include improved communication efforts, more user-friendly decision-support tools and revamped plan design and financing.

"The only constant in this kind of world is change, so there have continually been updates and tweaks," said Alexander Domaszewicz, a Newport Beach, Calif.-based principal and senior consultant with Mercer Health & Benefits.

Wendy's International Inc., for example, boosted employer contributions to workers' health savings accounts in 2006. Lynn A. Bauman, director of employee benefits for the Dublin, Ohio-based fast-food chain, said the CDHP did so well in the first year--leveling the annual double-digit cost trend to zero--that officials decided to put money back into the plan. To meet that goal and comply with new Internal Revenue Service "comparability rules," the company chose to increase its contribution to all plan options, even though the rules would have permitted the company to reduce its contribution to certain levels.

Today, Wendy's share of HSA funding is about 60%, on average, across the various CDHP options it offers, up from 35% to 40% in the first year, Mr. Bauman noted.

The company also made changes to the frequency of HSA contributions. On Jan. 1, 2006, it switched from quarterly to semi-annual payments--funding six months worth of contributions on day one--to help employees pay for maintenance drugs for certain chronic conditions. Now, because many of those drugs are eligible for first-dollar coverage, and since most employees carried forward an HSA balance into 2007, the company began contributing monthly.

"So people are getting their money sooner than they used to," Mr. Bauman said. And the financial risk to the company of contributing to the account of a person who terminates employment is reduced, he added.

A recent Towers Perrin survey suggests that employers and health plans have a lot of heavy-lifting ahead of them if they want their CDHPs to succeed over the long haul. According to the survey, members of account-based health plans are significantly less satisfied with their plans than employees in traditional health plans. A major shortcoming: employer-employee communications.

Increasingly, though, employers are recognizing the "need for really clear and thoughtful and durable communications and marketing," said Jay Savan, a principal with Towers Perrin in St. Louis. As an example, they're using employee focus groups or advisory counsels to help design and tailor employee communications. One of Mr. Savan's clients, a national law firm, intends to solicit input on plan design and communication from the company's legal secretaries, who are regarded as opinion leaders and can "make or break an initiative," he said.

In early 2006, Meritain Health Inc., an Amherst, N.Y.-based CDHP administrator, rewrote and expanded member communication materials, including print and online tutorials that explain how the plan works. "Through our customer service reps and the type of questions that they were receiving from members, it was clear to us that members were still challenged with understanding the dynamics of the...plan and how the...design differs from a traditional PPO plan," said Janice Rahm, a Minneapolis-based senior vp of product and service innovation.

Many employers are enhancing "wellness" benefits, saying they want to make employees better health consumers and to bolster the value of CDHPs.

When Fujitsu America Inc. first introduced a CDHP in 2004, it capped preventive care at $500 per employee per year. Now, it covers 100% of the cost of routine tests, screenings and other preventive services. "We were just nervous about the idea of an unlimited amount," said Kathy Bartow, director of benefit programs in the company's Sunnyvale, Calif., headquarters. "But as more studies have been done that show the value of preventive (care), we thought it made sense to totally lift that cap."

It appears to have been the right call: "We have several situations where employees have written Lumenos (the WellPoint Inc. subsidiary that administers the plan) and said, 'I'm so glad I did this (test or procedure) because the doctor found something,"' Ms. Bartow said.

This year, Fujitsu also expanded incentives for wellness, adding $100 credits, respectively, for spouses who take a health risk assessment and for employees who complete Lumenos' smoking cessation program.

Dave Garratt, a Cleveland-based vp and market head for Aetna Inc.'s Ohio/Kentucky national accounts market, said that more employers are talking about implementing an incentive strategy that's tied to an individual's biometrics, such as body mass index, blood pressure and cholesterol levels. Aetna is piloting the concept with some of its customers. "It's sort of a new twist," he said, "and it's back to the notion of how do we reward people for doing the right things?"

Carl Mowery, managing director of compensation and benefits at SMART Business Advisory & Consulting L.L.C. in Chicago, said he is spending more time with clients on developing wellness strategies that underscore the value of staying healthy and accumulating a nest egg for when employees are older and require more medical services.

But there may be another way to move people into CDHPs. He has one client, a large school system, whose leadership is considering a "negative election" process, whereby all employees would be enrolled in the CDHP program unless they elect otherwise. "If we just say, you are now enrolled in this program unless you want to choose something else, they may just stay in the high-deductible program," he said.

Amid all the redesign activity, Mercer's Mr. Domaszewicz cautions plans sponsors to keep one thing in mind: "If you look at the plan and you wouldn't enroll yourself, why would you think anyone else would enroll?"