Benefits and beyond c. 6 and 7 health care

1. Benefits and Beyond, C. 6
Health Care
Thomas E. Murphy

2. 11/26/10
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Health Care Today
3. It is vitally important that you understand the historical perspective and current plan designs of health care.
This is C. 6 and 7
We will then discuss how the Patient Protection and Affordable Care Act of 2010 (Health Care Reform) affects our current health care landscape.
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Now later 2014 & Beyond!
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Health Care 2014
5. Origins of employer sponsored health care
Wage controls and fringe benefits
Current issue: the high cost of health care in the U.S. and the uninsured.
The evolution of health care plan designs:market conditions, quality, efficiency, preserve choice, and reduce the cost.
Note: the principle of compensating differentials. (Which billfold do we take from?)
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Health Care Historical Perspecive
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6. Health care inflation jeopardizing Medicare and Medicaid.
New employer plans designed to better control costs.
Small employers struggling.
Individual purchases require trade-offs.
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Health Care Cost Crisis
7. Cost shifting to employees?
We must introduce better health management and reduce health care utilization and the costs of treatment
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8. The 2010 Mercer Health Study
Mercer Survey on H.C. Reform
Getting Ready for 2011
Inflation for 2011 will be 9-12% unless,
Cost savings are implemented.
Could jeopardize the grandfathered status
With cost cutting inflation can be 6%
Employer coverage holding at 65%.
R/X inflation at 7.6%
Cost per single employee: $9,000.
Premium contribution per employee 23%.
For family 30%
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Parties and interests in the system
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10. Current Health Plan Design Features
U.S. subsidies
Some choices?
Not taxed to employee as income
Tax deductible to employer
Why not just give the employee cash?
Sponsor has negotiatingleverage and cash is taxable.
To insure or self-insure the employers dilemma
Cost sharing with employee/participant
What is a TPA?
Are there true market conditions?
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11. What is causing inflation?
H.C. Inflation exceeds other costs of doing business.
Cost impedes access.
Longevity
New technology
New drugs
Inappropriate care
Consolidation of health care practices and provider groups more leverage
Crazy quilt administrative system
Lack of true market conditions
Consumer has very little skin in the game.
Its our prices, stupid.
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12. Choosing the right health care plan - - -
Employers Decision
Choice, Quality, Cost
What are the demographics of your workforce?
What type plan would be a good fit?
What are your labor competitors offering?
What can you afford?
Benefits Model
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13. What will be the impact of
Health Care Reform?
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14. Internal fairness coverage, plan benefits, same plan for employees with families and single?
Should your plan lead, lag, or meet your labor market competitors? What are the relevant factors here?
Can your plan positively affect employee behaviors? Effect better health and higher productivity? Do employees make cost effective choices?
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Relevance of the Benefits Model
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15. Is plan cost effective and well administered? Are there adequate provider choices? Does plan assure quality health care, choice, and cost effectiveness? Is it affordable for both employer and employee?
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Choosing: Use the Benefits Model
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16. Basic principles of today will probably endure in spite health care reform.
Limits on coverage, choices of plans, reimbursement of providers
Cost sharing.
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Plan designs on the precipice?
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The Evolution of H.C. Plan Design
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Some preliminary questions
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19. Designing the indemnity plan
Basic features
Special features
Coverage
Eligibility
Which procedures covered?
What level of reimbursement will be provided?
Review and controls over health care resource utilization. What are the techniques?
What do your employees need?
What about cost sharing? Goal?
Encourage quality?
Whats your H.C. market?
Employee choice?
Encourage healthy life style?
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20. Bundling or un-bundling?
Coordination of benefits?
What are your values?
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Designing the indemnity plan
21. Premium paid by employee
Deductible
Co-insurance
Office co-pays
Out-of-pocket maximum (usually = co-insurance amounts paid, not deductibles, etc)
Life time maximum
Tiering/Means Testing/Coordination
Note: to keep grandfathered status plan cannot make certain changes in cost sharing
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Cost sharing how does it work?
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The Evolution Progressed
23. Problem: indemnity plan reimbursed customary and usual provider fees.
No provider discounts
So, TPAs and employer sponsors offered patient volume in exchange for discounts. How to get the volume?
The PPO offered incentives (deductible) to participants. An attempt to influence their choice of providers.
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The evolution: The PPO
24. Easy to administer the PPO
New market conditions introduced.
But, no real control over the utilization of health care resources.
Providers prescribed more services to offset their reduced revenue caused by discounts
And, the anticipation of increased volume was not really met.
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So, whats the problem?
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Enter the POS (Point of Service Plan)
The Primary Care
Physician is now
THE GATEKEEPER
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26. Same as indemnity plan
Same as PPO
Added feature: no visit to specialist unless the Gatekeeper makes the referral.
So, now we have more market conditions and control over utilization.
So, got a pain in your elbow? Go to PCP first.
You get an aspirin instead of a referral to an orthopedic physician cortisone injection or surgery.
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Design features of POS
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27. With a POS you are preserving the right of choice of physician or other provider.
You are merely offering an incentive to choose a provider in the network.
Quality is still an important value of the sponsor.
But, cost effectiveness warrants some control over utilization of health care resources and the advantages of discounts.
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Note: in or out of network!
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28. No choice - assure network providers of real increased volume?
Bigger discounts?.
Its an HMO (Health Maintenance Organization)
Features? Same as Indemnity, PPO, and POS except there is no choice!
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The evolution continues: the HMO
29. No out of network coverage
Often the HMO comprises an integrated network of providers who coordinate care amongst specialists, have a single medical record system, and can offer high quality care. This is how care is managed.
The incentives to select the HMO are lower premiums, first dollar coverage, and lower or no deductibles.
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Design features of HMO
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30. The plans developed treatment protocols and critical paths to better manage the care.
Fee arrangements with HMO providers often included a capitated (per participant) annual rate. So, it was incumbent upon the HMO to manage the care.
The fear that cost consciousness would imperil the quality of care did not happen. HMOs practiced preventive care to avoid catastrophic health incidents.
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Design features of HMO
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Many employees chose HMOs and were very satisfied with them
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32. Plan design and the market
HMOs part of Medicare
Significantly reduced costs
Must exist in highly competitive markets.
As the degree of provider competition increases so do the opportunities to offer managed care plans.
Problem: HMOs required a lot of TPA administration and were oversold and underpriced to participants.
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Truthfully what does a TPA do?
34. Assumes short-term financial risk
Develops network
Negotiates reimbursement levels.
Does pre-utilization reviews
Establishes medical protocols
Encourages integrated practices
Sets full plan design including incentives
Underwriting analysis.
Manages Wellness
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What does a TPA do?
35. In highly competitive provider markets, why not directly contract with providers?
Pay them a per capita fee and avoid all the costly administration.
How do you select the right providers?
Do you have the right incentives?
This idea is called direct contracting.
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Evolution omit the TPA
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36. Accountable Care Organizations
Listen to NPR above
ACO and Integrated Care
Primary Care MDs
Specialists
Hospitals
Full health care
Capitated annual fee
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Click file below
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Consumer Driven Health Care
Well, Mr. Brooks,
It appears that your
health care is up
to just you and me.
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38. Flexible Spending Account
Health Reimbursement Account
Health Savings Account (High Deductible Health Care Plan, HDHCP)
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Putting the consumer in the game
39. Consumer Driven Health Care Plans
Tax favorable treatment
Preventive care preserved
High deductible
IRS compliance
A Health Savings Account
Employer and employee can contribute to HSA.
Typically linked with a PPO
Can invest $$ in HSA.
Can carry over money not spent.
Cannot be used to pay premiums except for retiree health care.
Preventive care can be excluded from deductible.
Has all features of health care plan
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40. Portable its your money!
Tax law, not your insurance company determines what is medical expense. Broader definition.
Pre-65withdrawals not for medical results in tax + penalty
After 65 for non-medical expense, there is only tax and no penalty.
Anyone can contribute and these are either pre-tax or deductible.
HRAs are controlled by employer
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Other Features Of HSA
41. Will the cost of health care be reduced with HDHCPs?
Will preventive care be a priority?
Will consumers make more rational decisions?
How will employers encourage higher levels of participation in CDHCPs?
How can mini clinics and urgent care facilities be used?
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Some observations
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42. Minimum Deductibles: $1200/$2400
Maximum Contributions: $3050/6150
Out of Pocket Maximum plus deductibles: $5950/11900
Post 55 Catch up: $1000
Lets do a calculation!
Or, we could try another calculation!
Or, how about this one?
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HSALimits - 2011
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What is Wellness?

Gym membership?

44. Encourage health lifeStyles?

Company nurse takes

B/P and cholesterol
Readings?

Smoking cessation?

45. Weight reduction?11/26/10
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How to improve health?
47. A comprehensive approach to affect the risk factors that lead to chronic and expensive health conditions.
Must have detailed personal health assessments from employees to pursue the program.
Then, these steps should follow:
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Wellness Programs- Catching on!
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48. I.D. High Cost
Medical Conditions
I.D. Risk Factors
Driving High Costs
Calculate Financial
Impact and ROI
Of Program
Take all base
Line costs
Flow chart of
Wellness
Program
Measure Impact on
Health Costs
Analyzed Data
From Self
Assessments
Develop
Wellness
Incentives
Measure Impact
On Risk
Factors
Integrate
With Health
Plan
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Thomas E. Murphy
49. How do you measure the ROI?
Is it particularly applicable to employers wanting longer service by its employees?
How do you integrate it into the existing health care plan?
Wellness is not sponsoring bike rides or hikes into the woods.
Wellness is reducing costs and increasing productivity.
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Some thoughts on Wellness
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50. What are employers doing with retiree health care?
Does it encourage employees to leave?
How would you design a plan that would facilitate early retirement yet limit health care expense?
Are younger employees really subsidizing the cost of retiree health care? Is this a problem?
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Some other health care issues
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51. Health care purchasing. . .
Specialized TPAs are now
Available.
How do you measure a TPA?
To insure or not insure
Community or manual ratings
Law of Large Numbers
Pooling
Risk premiums
Administrative and retention fees
How about a RFI or RFP from a TPA?
Performance contracts with TPAs
Steer employees to the most cost effective plans.
You can reduce utilization or reduce the price. How would you do these things?
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52. Expectations for TPA
Selectthe Best TPAs
Pay them for performance
Quality customer service EOB, phone calls, communications.
Health insurance creates value for sponsor.
Select the best providers for the network
Health assessments
Pay providers for performance.
Use integrated care.
Engage participants in their health care.
Assure patient compliance.
High participation rates for chronic disease management
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You want to avoid this . . .
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And, provide more of this . .
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Preventive
Care
55. Health care insurance for employees is a value proposition!
Simply loading costs on the participants will not work.
H.C. can create new value!
How?
Accent is on prevention and avoiding the catastrophic health incidents requiring Emergency or long term chronic care.
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New perspective . . .
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Good health is the passport to a good life . . .
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But health care is not free! (Photo: www.medicine.net)
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58. So, lets talk about reform! (Photo: www.medicine.net)
The Problem is Cost
Cost affectsAccess
What is it designed to do?
What are the choices?
How will it work?
What is needed?
Who are the uninsured?
How much will it cost?
What changes for plan design?
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Benefits and beyond c. 6 and 7 health care

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Transcript of Benefits and beyond c. 6 and 7 health care