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Education efforts vital in move to CDHP: Study

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Employers that educate their employees early and often about why a consumer-driven health plan is being offered see greater enrollment than those that don't, concludes a study by Watson Wyatt Worldwide and RAND Corp.

Employers that began communicating six or more months prior to implementation averaged a CDHP penetration rate of 42%, while those that got a later start averaged only 25%, according to "The CDHP Implementation Experience with Large Employers," released last week.

The survey also found that employers that eliminated their most popular plan option saw a 52% penetration rate, compared with 20% at those that just added a CDHP to their traditional health plan choices. Offering financial incentives also boosted CDHP penetration rates, the study found.

In addition, when a CDHP option had the lowest premium, employees chose the CDHP 36% of the time compared with 28% in companies in which it was not the lowest premium choice.

Despite the need for better consumer engagement to make CDHPs more effective in controlling health care costs, employers participating in the Wyatt/RAND study were generally disappointed in the current information tools to rate physician cost and quality. Only 11% of employers rated physician quality comparison tools as good or excellent, while 37% rated hospital quality comparison tools as good or excellent.

The findings are part of a four-year, ongoing project examining the experience of 42 large employers that offer at least one CDHP. The research, which also covers CDHPs' effect on the cost and quality of health care, was funded by the California HealthCare Foundation and the Robert Wood Johnson Foundation.

While the thinking of most employers offering CDHPs was that they would have to spend less time managing the health care benefit, "Clearly what this shows is that to have any success, they'll have to spend more time communicating with employees about why they're changing, and also after you've changed, so they can make use of (the CDHP) wisely," said Bill Custer, director of the center for health services research at Georgia State University in Atlanta, who was not involved in the study.

"Most employers don't understand the level of effort they're committing to" when they decide to introduce a CDHP, agreed Roland McDevitt, director of health care research at Watson Wyatt in Arlington, Va., and one of the consultants working on the study.

Indeed, Ray Brusca, vp of benefits at Black & Decker Corp. in Towson, Md., said his company began communicating in April about the CDHP it will introduce this fall, having learned from its bad experience in launching such a plan in 2004.

"When we rolled out a plan back in 2004, only about 30 employees signed up, so the company decided to drop it," Mr. Brusca said.

This time, the company began communications earlier and published a booklet to educate employees about the need for the plan and its merits. Black & Decker also priced the CDHP more favorably, Mr. Brusca said.

"The sooner you start to communicate, the better your chances of success," he said.

Better tools needed

But like participants in the Wyatt/RAND study, Mr. Brusca said he, too, is disappointed in the quality of the consumerism tools available to plan members.

"Consumer-directed tools have come a long way, but they're still a long way from where they need to go," Mr. Brusca said. "It took me three hours to put my basic data in to try to do a calculation, and I'm the benefits manager. How viable is it for a factory worker who may have a high school education and their kid may have a PC, but they don't really get on it often?"

Copies of the research brief, "The CDHP Implementation Experience with Large Employers" are available free to registered users of My Watson Wyatt portal at www.watsonwyatt.com/cdhp.