Jane Dubose reports for HealthLeaders News (subscribe to magazine here): “Reviews Mixed For Consumer-Driven Plans”
As the consumer-driven movement reaches a milestone of some 1 million covered members for 2004, the pioneering employers are assessing the impact on their costs, employees’ attitudes toward healthcare and whether the model will work for the long-term.
The answers are mixed. Many early adopters say enrollment hasn’t reached a critical mass to make conclusions, but they believe the potential is there. Consumer-driven plans, which typically feature a high-deductible PPO and an employer-funded healthcare spending account, have seen exponential growth since they were launched in 1999-2000, but they still occupy only a tiny portion of the total healthcare market.
Definity Health and Lumenos, the two largest consumer-driven companies in the industry, are often offered with other insurance at large companies. Few workplaces have recorded higher than a 30 percent adoption rate. . . .
On the other hand, employers who have adopted a consumer-driven option as a full replacement tell a different story. Trover Solutions of Louisville, the first customer for Humana Inc.’s SmartSuite product [strangely, I couldn't find this product on Humana's website], expects its healthcare costs to increase by only 8-9 percent in 2003 because of its decision to both self insure and to adopt SmartSuite. In 2001 before the switch, the company faced a 70 percent premium increase. . . .
Trover is unusual in that most of its employees, or 73 percent, are using the CoverageFirst feature of SmartSuite, which has a $500 spending account for medical expenses before the deductible kicks in. . . . Deductible amounts are $1,000 or $2,500. Only 10 percent of the Trover employees in CoverageFirst got to the deductible this year . . . .
Unlike many other consumer-driven plans, Humana’s spending account is not a health reimbursement account, or HRA, and prescription drugs are not part of the account. Humana’s second-generation consumer-driven plan, SmartSelect, takes consumer and employer choice even further, allowing employees to essentially design their own benefit from as many as 100 permutations. . . .
Behavior Change?
Getting employees to better focus on healthcare costs has been a central tenet of consumer-driven products since they were launched. But are they delivering on that promise?
Trover Solutions . . . said First Coverage “is a great learning tool. When an employee goes to the doctor and if the visit costs $60, that comes out of the spending budget. They get a statement. They get to see what the real cost was.” . . .
Skeptics point out that less utilization isn’t always positive, if people aren’t getting the preventive care they need. In most cases, it’s too early to know if that is the case.
Valid point, definitely. Possible answer: consider combining with a preventive care program. See this post.
Consumer-driven plans are also designed to engage consumers through the Internet, but critics believe provider comparison information is unreliable and the Web pages themselves are typically not user-friendly.
For some employers, any Web-based tools are an improvement over what they had before. . . . “Employees can see provider quality and pricing information on line as well as track their HRA claims balances and claims activity.”
HealthMarket, a Connecticut-based firm selling consumer-driven products to the small, fully insured market, has a Maximum Allowance Charge section on its Web site. It publishes provider fees on everything from surgery to check-ups. A provider “in the green” is one whose charge is at or below the MAC.
Accounting for Accounts.
HRA accounts typically range from $1,000 to $2,000 a year. Depending on the plan, employees tap into the HRA for routine preventive care, prescription drugs and other medical expenses. . . .
Across the industry, 60 percent of employees roll over an average $400 in their accounts, said Doug Kronenberg, chief strategy officer for Lumenos.
The accounts would become even more attractive if the industry adopted the strategy of Destiny Health, whose HRA is portable from job to job.
Impact on Costs.
Humana says the first 16 companies that adopted SmartSuite saw their medical cost trend rise by only 4.7 percent, compared to an industry average of 15 percent or greater during that time.
Costs for companies renewing with Definity Health for 2004 showed an aggregate increase of less than 5 percent . . . .
Users of consumer-driven options have a greater adoption of generic drugs . . . . Industry wide, the number of prescriptions written drops by 5 to 25 percent once a consumer-driven plan is adopted . . . .
In the future, consumer-driven products may take off more quickly with the small-group segment. Those employers have faced higher cost increases and have the potential to see quicker results. In any case, the real test for staying power will come next year when [the] industry acquires enough membership to more accurately assess its financial risk.
Someday soon, I’m going to browse the sites I’ve linked and see if I find something suitable for me and my small business (law firm).
Sphere: Related ContentIf you enjoyed this post, please consider leaving a comment or subscribing.
Subscribe by RSS
Subscribe by Email
Comments
No comments yet.
Leave a comment