Managed Consumerism: The Next Generation of

Consumer-Directed Health Insurance

Terence Fitzgerald, M.D.Regional Medical DirectorOxford Health Plans, LLC

A UnitedHealthcare CompanyJanuary 5, 2006

Background

1980s – Rise of managed care

Network restrictions, utilization rules

Co-pays limit cost exposure

Evolution towards “managed competition”

Late 1990s – Backlash against HMOs and managed care

Employer retreat from active engagement in health care policy/cost management

Broader networks, dismantling of utilization management, rise of PPOs

2000s – Focus on effects of unjustified clinical variability

Outcomes transparency drive quality improvement

Hospital and physician quality metrics gain acceptance

Employers shift from “co-pay cost shielding” to cost-share transparency

Early CDHP Results

CDHP cost-share strategy works

Preventive visits maintained

Lower utilization in other areas

Inpatient admissions (10%)

Primary care (non-preventive) visits (5-6%)

ER visits/outpatient events (3-5%)

Higher utilization of specialty visits (3-4%)

Chronic conditions appear to get care (e.g. diabetes)

Aetna, 2005

CDHP Results: Concerns

Are lower inpatient admits related to lower PCP visits? Do CDHPs with HRA/HSA only benefit the healthy and the

wealthy? Commonwealth Fund Study (released December 2005)

Americans enrolled in HDHPs/CDHPs less satisfied

But more cost conscious

And more likely to skip care

Lack information to make decisions

Do not trust information provided by health plans

The Future: Managed Consumerism

Role of Payers Create meaningfully distinct networks based on transparency of quality and

efficiency (quality drives lower cost) Embrace “Pay for Performance” – transient incentive to drive change as

performance becomes standard for maintaining in-network status

Role of Providers

Create meaningfully distinct organizations based on performance (Q and E)

Role of Consumers

Understand benefits and network composition

Role of Employers

Educate employees on benefits

Provide more information on quality and cost issues