Healthcare Reform, MegaTrends and Healthcare Consumerism

Ronald E. BachmanPresident & CEOHealthcare Visions, Inc.ronbachman@healthcarevisions.net404-697-7376

Patient Protection & Affordable Care Act

GET OVER IT!IT’S THE LAW

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Four Phases of Health Reform

• Legislation• Regulation• Compliance• Litigation

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Legislation• Look for follow up legislation, especially if Dems.

Retain control of House & Senate.• PPACA may likely require a large “technical

corrections” bill. • Politicians and special interests can use a

technical corrections bill to pass new provisions and mandates.

• A technical corrections bill could include entirely new provisions not a part of the original law.

• For example, the public option could return as a “technical correction

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Compliance• Consultants and lawyers will find expanded needs for their

services. • Insurers will need to determine if they are in compliance.• Employers not in compliance will be subject to large

penalties and fines. • Self-insured employers will require compliance audits to

assure required essential coverages and mandates are included.

• Each employee contribution will need to be measured against the government affordability standard.

• Each year will likely produce new regulations and changes that must meet with compliance standards or employers will suffer penalties and fines.

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Regulation• The regulatory process is likely to be a nightmare of delays,

missed deadlines, and confusing interpretations. • In the bill there are scores of references to decisions to be

made by the Secretary of H.H.S. • Major areas of implementation and coverage

determinations for “essential benefits” are left to the discretion of the Secretary.

• Lobbyists from every provider and self-interest group will converge on the bureaucracies to have their services included through regulation.

• Ultimate coverage mandates are likely to go beyond what employer plans typically consider as medical/surgical benefits.

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Litigation• Courts will decide what the language of the laws

2700+ pages mean. • New laws require a period of adjustment that can

take decades to sort out the meanings and conflicts of legal interpretations.

• Given the national impact and financial consequence of any single coverage requirement, every self-interest group wanting to be included in the essential benefits package will push litigation to add or solidify their coverage demands.

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The Circle of Life

The never ending cycle will then repeat itself, as new laws will be passed to respond to court decisions

and off it goes again to repeat the four phases of legislation, regulation,

compliance and litigation.

Megatrends, and Consumerism Megatrends represent major movements so

powerful that the direction of change cannot be stopped. Federal laws can speed up or slow down megatrend forces.

But, like dammed rivers megatrends will redirect themselves to achieve the inevitable result. Healthcare consumerism is such a force.

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Consumerism Megatrend• Americans who:

– bank electronically at ATMs, – purchase stocks over the internet, – buy and sell goods through eBay, – maintain their music with iTunes, – keep personal videos on Facebook, – seek employment through LinkedIn, and – control television programming with Tivo,will not accept limits, restrictions, waiting

lines, or other barriers to their health - their most personal asset.

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You Can’t Fight Megatrends

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Healthcare Consumerism

Healthcare Consumerism is about transforming a health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants.

It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors.

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Healthcare Consumerism

Healthcare consumerism is independent of plan design.

Healthcare consumerism is a compelling force because it embraces lowering costs, improving quality, enhancing choice, and expanding access by empowering individuals and reinforcing personal responsibility.

It is the force operating throughout our economy and is just beginning to be structured into healthcare and insurance.

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Growth of Account-Based Health Plans

More than fifty percent (50%) of employers now offer consumer-

driven options. In 2010, nearly 18 million lives will be covered by

consumer-driven plans.

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The Core of Consumerism

Personal Responsibility & Personal Responsibility & Behavioral ChangeBehavioral Change

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The Evolution of Healthcare Consumerism

Future Generations of Consumerism

Behavioral Change and Cost Management Potential

Low Impact ---- ---- ---- ---- ---- ---- ---- ---- ---- High Impact

Traditional

Planswith

ConsumerInformation

2nd Generation Consumerism

Focus onBehaviorChanges

TraditionalPlans

3rd Generation Consumerism

IntegratedHealth &

Performance

1st Generation Consumerism

Focus on Discretionary

Spending

4th Generation Consumerism

Personalized Health & Healthcare

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The Promises of Consumerism

Personal CarePersonal CareAccountsAccounts

Incentives & Incentives & RewardsRewards

Wellness/Wellness/PreventionPrevention

Early Early InterventionIntervention

Disease and Case Disease and Case ManagementManagement

InformationInformation Decision SupportDecision Support

The Promise of Demand Control & Savings

The Promise of Wellness

The Promise of Shared Savings

The Promise of Transparency

The Promise of Health

It is the creative development,

efficient delivery, efficacy, and successful

integration of these elements that will

prove the success or failure of

consumerism.

Major Building Blocks of Consumerism

American Academy of Actuaries 2009 Non-partisan CDH Consumerism Studies

•1st Year Savings: The total savings generated could be as much as 12 percent to 20 percent in the first year.

– All studies showed a drop in costs in the first year of a CDH plan from -4 percent to -15 percent. A control population of traditional plans experienced increases of +8 percent to +9 percent.

•2+ Year Savings: At least two of the studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent.

– If these lower trends can be further validated, it will represent a substantial cost-reduction strategy for employers and employees.

•Cost Shifting: The studies indicated that while the possibility for employer cost-shifting exists with CDH plans, (as it does with traditional plans) most employers are not doing so, and might even be reducing employee cost-sharing under certain circumstances.

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AAA Consumerism Study – Quality of Care

•Preventive Care: All of the studies reviewed reported a significant increase in preventive services for CDH participants. •Chronic Care: Three of the studies found that CDH plan participants received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants. •Physician Treatments: Two studies reported a higher incidence of physicians following evidence-based care protocols.•Care Avoidance: All of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degrees relative to traditional plans.

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Potential Savings from Full Implementation of ConsumerismAchievement of savings and improved outcomes is dependent upon both

the Type and Effectiveness of the programs implemented.

 

Gross* Savings as % of Total Plan Costs(Programs Applicable to All Members)

 

EffectivePrograms

Implemented

Traditional plans  

Consumerism Plans

Passive 1st Generation 2nd Generation 3rd Gen & Future

Basic 2% 3% 7% 10%

Expanded 3-4% 5-8% 12-15.0% 20.0+%

Complete 4% 7% 17% 25%

Comprehensive (Future) 5% 10% 20% 30%

*Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs

PPACA & Consumerism

Under PPACA, financial rewards based health status are increased from 20% to 30%. The Secretary of Health and Human Services has the authority to increase that limit to 50%.

PPACA still allows unlimited rewards and incentives for participation and engagement.

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Incentives & Rewards

Rewards can include activities such as:

• Participation in a wellness assessment,

• Compliance with a condition management program (e.g. taking medications, diet, exercise, office visits), and

•Maintenance of good health characteristics (e.g. blood pressure, cholesterol, nicotine use, body mass index) using bio-metrics.

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The Evolution of Encouraging Personal Responsibility

• Plan Design• Education

Incentives & Rewards• Participation• Engagement• Compliance• Outcomes

• Health Status

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The Future of Healthcare Consumerism - Post PPACA

• The employer world has moved to next generation healthcare consumerism with member engagement, rewarding healthy behaviors, and promoting personal responsibility.

• Plans are now focusing on rewards and incentives. • Health Incentive Accounts (HIAs) are a special form of

HRA that builds value only from rewards and incentives.

• There are many other special use HRAs that may become the channels for healthcare consumerism.

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The Future

• Government and the movement to a political “nanny state” is a strong force in and of itself.

• Cynics will point to increasing demands for federal support and government dependency by large parts of our population.

• That may be a current political direction, but growing welfare and expanding entitlements is not a financially sustainable path and therefore cannot be a megatrend.

• The future is not the opiate of government welfare, but the citizen empowerment of “Healthcare Consumerism.”

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2nd Generation Consumerism

Focus onBehaviorChanges

3rd Generation Consumerism

IntegratedHealth &

Performance

1st Generation Consumerism

Focus on Discretionary

Spending

4th Generation Consumerism

Personalized Health & Healthcare

Personal Care Personal Care AccountsAccounts

Incentives & Incentives & RewardsRewards

Wellness/PreventionWellness/Prevention

Early InterventionEarly Intervention

Disease and Case Disease and Case ManagementManagement

InformationInformation

Decision SupportDecision Support

Initial Account Only

Activity & Compliance

Rewards

Indiv. & Group Corporate Metric

Rewards

Specialized Accts,Matching HRAs,Expanded QME

100% Basic Preventive Care

Web-based behavior change

support programs

Worksite wellness,safety, stress & error

reduction

Genomics, predictive modeling

push technology

Information, health coach

Compliance Awards, disease

specific allowances

Population Mgmt, Integrated Hlth Mgmt,

Integrated Back-to-Work

Wireless cyber –support, cultural DM, Holistic care

Passive Info Discretionary

Expenses

Personal health mgmt, info with

incentives to access

Health & performance info, integrated health

work data

Arrive in time info, info therapy, social

networks

Cash, tickets, Trinkets

Health Incentive Accounts, activity based incentives

Non-health corporate metric driven

incentives

Personal dev. plan incentives, health

status related

The Future of

Healthcare Consumerism

Healthcare Consumerism

The right strategy for employers wanting to protect their

“Human Capital” with or without the influence and

requirements of national health reform under PPACA.

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Navigating Health Reform

It is difficult to absorb the full implications of the health reform bill. Each week new regulations are being produced by the DOL, HHS, and IRS. With so much happening so fast how can employers, insurance agents, consultants, lawyers, or insurance companies make rational choices and be legally compliant?

CDHC Health Reform Navigator & CDHC Preventive Care Navigator at www.cdhchealthreformnavigator.net

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