Health Plans and the Opiod Abuse Crisis

By Clive Riddle, April 7, 2017 The Associated Press reports that Dr. Scott Gottlieb, “the doctor nominated to head the powerful Food and Drug Administration told senators Wednesday that his first priority would be tackling the opioid crisis.”  What are health plans doing about Opiod Abuse? Last June, the California Health Care Foundation released  a report taking the issue on: Changing Course: The Role of Health Plans in Curbing the Opioid Epidemic, along with companion California health plan case studies and an infographic. Nationally, last fall AHIP weighed in, discussing how health plans are Fighting Opioid Abuse With Solutions That Work. So what are some current developments on the health plan Opioid Abuse front? Cigna has just announced that Use of Prescribed Opioids Down Nearly 12 Percent Over 12 Months Among Cigna Customers. Cigna reports that “58 medical groups participating in Cigna Collaborative Care, representing nearly 62,000 doctors, have signed Cigna's pledge to reduce opioid prescribing and to treat opioid use disorder as a chronic condition.” Cigna states that their program works with participating doctors to: (1) Analyze integrated claims data across pharmacy and medical benefits to detect opioid use patterns that suggest possible misuse by individuals, and then notifying their health care providers; (2) Alert doctors when their opioid prescribing patterns are not consistent with CDC guidelines; and (3) Establish a database of opioid quality improvement initiatives for doctors. Cigna also reports that “effective July 1, most new prescriptions for a long-acting opioid that are not being used as part of treatment for cancer or sickle cell disease, or for hospice care, will be subject to prior authorization, and most new prescriptions for a short-acting opioid will be subject to quantity limits.” Last week the Wisconsin Association of Health Plans announced their member plans have jointly committed to combating opioid abuse and addiction in Wisconsin and effective April 1, Wisconsin's community-based health plans are collaborating on new initiatives.  The Association members agreed to: (1) support the Association’s Statement of Principles for addressing opioid abuse  that “form the basis for sharing information, best practices and evidence-based strategies”; (2) Track morphine equivalent dose and first-time user trends for their individual and employer group members,, generating comparative data to enrich provider education and management of prescription drug formularies and coverage policies; (3) Work with provider partners to support strategies to reduce and control the level of opioid prescribing; (4) Share methodologies, best practices and evidence-based strategies to improve the quality of pain management and opioid prescribing; and (5) Ensure that every member suffering from opioid abuse has access to medically-appropriate treatment options. Two weeks ago BlueCross BlueShield of Western New York released episode four of their Point of Health Audiocast, “Addressing the Opioid Epidemic from a Health Plan Perspective,” aimed at increasing awareness of the issue and engaging stakeholders. FamilyCare Health, a health plan serving Oregon Medicaid and Medicare members, “kicks off its 4-part Opioid Training series for providers on Thursday, April 27, 2017 with ‘Buprenorphine: What we know and what we don’t. Prescribing safely for pain management and opioid dependence.’ “ And last week, Prime Therapeutics, the Blue Cross Blue Shield Association PBM, released two studies, highlighting strategies for addressing opioid epidemic.  The first study “analyzed concurrent use of opioids with benzodiazepines”, citing “previous research has shown concurrent use of these two types of drugs can increase the risk of overdose and death,” and “found more than one in six opioid users without cancer – or nine per 1,000 commercially insured members – used these two drugs concurrently for 30 days or more in 2015.” Their second study “found pharmacists based in a PBM or health plan, who do outreach to prescribers, can reduce emergency room visits and controlled substance drug costs among persistent users of controlled substances.” Following the outreach conducted with the study intervention group, “controlled substances drug costs per member for the intervention group dropped from $5,802 to $5,148, while controlled substance drug costs increased for the control group from $3,511 to $3,627 per member. Emergency department visits were 6.4 percent lower in the intervention group, compared with the control group.”

2017 Employer Health Care Strategies and Trends

By Clive Riddle, March 3, 2017

DirectPath and CEB have just released their 2017 Medical Plan Trends and Observations Report, “which analyzed more than 975 employee benefit health plans, highlights the top ten trends in employers’ 2017 health care strategies across three categories – plan design, cost savings mechanisms and care options.”

The 11-page report tells us that “employers are incorporating solutions like health savings accounts (HSAs), wellness incentives, price transparency tools and alternative care options to reduce costs.”

The ten trends they discuss include:

1.     Annual Deductibles Leveling Out

2.     Marginal Change in Prevalence of HDHPs

3.     HSAs Continue to Remain Popular

4.     Specialty Medication to Become More Expensive

5.     Contribution Surcharge Amounts Vary

6.     Wellness Incentives Continue to Increase in Prevalence and Amounts

7.     Plan Comparison Tools Lead to More Savings

8.     Alternative Care Options Remain Affordable

9.     Barriers to Employee Use of Telemedicine

10.  Focus on Higher Quality Health Care

Major findings from their surveys cited in the report include:

·         51 percent of employers offer a price transparency tool to help employees choose the service or product best for them, and 18 percent plan to add such tools in the next three years

·         In a review of price comparison requests, these services resulted in an average employee savings of $173 per procedure and average employer savings of $409 per procedure.

·         While the percentage of organizations with spousal employee contribution surcharges remained static (26 percent in 2017, as compared to 27 percent in 2016), average total surcharge amounts increased dramatically to $152 per month, a more than 40 percent increase from 2016.

·         More than a third of organizations offer telemedicine, but over 55 percent of employees in these companies are not aware of telemedicine availability, and nearly 60 percent of employees who have telemedicine programs do not feel they are easy to access, according to a separate survey recently conducted by CEB.

·         The average cost of specialty drugs that treat rare and complex conditions increased by more than 30 percent for employers surveyed.

·         67 percent of employers surveyed offer HSAs, compared to 15% offering Health Reimbursement Arrangements (HRAs). Employer contributions to HSAs increased almost 10 percent.

·         58 percent of 2017 employer plans offer some type of wellness incentives, up from 50 percent in 2016.

While we’re on the subject of wellness incentives, Humana just released their 2017 Humana Wellness Trends Report, a 20-page document that discusses five trends:

1.     The “connected experience 2.0” revolutionizing wellness strategies: “…As wellness programs begin to integrate these devices and employers gain access to the data, employers will gain insight into what’s driving organizational health costs and how to resolve them.”

2.     Older workforce leads to health, caregiving burdens: “…The U.S. workforce is getting older and retiring later due to the stress of financial burdens, caring for older loved ones and increasing health care costs.”

3.     Financial stress affects productivity: “….Americans identify money as their top stressor, which can reduce employee productivity and contribute to absenteeism, presenteeism and poor health. Research states 37 percent of full-time employees deal with financial issues while working.

4.     Poor sleep leading to errors, low morale: “…Among workers age 30 and older, 74 percent say lack of sleep affects their work performance.”

5.     Workers benefit from mindfulness techniques: “…Research has found a mindful approach may help ease the “effects of stress, anxiety and other negative emotions.”

Thinking of Starting a Medicare Advantage Plan? 2019 Starts Now

By Peter Kinhan and Dan Juberg (Lumeris), February 10, 2017

Provider Sponsored Plans and Medicare Advantage are gaining traction as a critical strategy for profitable, value-based care. However, many underestimate the necessary lead time and effort required to move from consideration to activation. Planning for a 2019 launch needs to begin now starting with a detailed market and organizational feasibility study for standing up a health plan.

In recent years, due to increasing cost pressures and competition among providers, many organizations have expressed their ambitions to develop their own health plans, often referred to as provider-sponsored plans (PSPs). Medicare Advantage (MA) is often considered the entry point of choice due to government financial incentives and strong opportunities to drive improvements in both quality and total cost of care for an increasingly aging population.

However, because of competing priorities, many executives struggle to carve out the necessary time to truly evaluate the opportunity. The time is right to look at MA—in terms of the changing political landscape and the surprisingly lengthy lead times required to assess and apply. This means for those that consider an MA plan as part of their future strategy, that process should start today.

There is no doubt the changes in presidential leadership have created political uncertainty when it comes to the healthcare industry. There are more things unknown than known. That said, rising healthcare costs are still a major problem to be solved, but value-based care (VBC) has proven to be and will continue to be a critical part of the solution.

So what could change with this new administration and how could it affect your global Medicare strategy? Let’s take note of the significant changes to Medicare that have been gaining traction in the market to date

 
• MA enrollment continues to grow rapidly. In 2016 there were 17.6 million MA members, which is an increase of more than 200 percent from the number enrolled in 2005.
 
• MACRA and other CMS programs have deployed value based payment methods that are projected to impact up to 125,000 providers in the traditional Medicare market by 2018.

These two trends demonstrate an important shift to VBC, and if one takes Paul Ryan’s “A Better Way,” as an indication of what is to come from a Republican administration, then an assumption is the shift to value-based care will continue —if not accelerate. According to “A Better Way,” Medicare’s “overhaul” would include what Ryan terms “premium support;” a plan to increase competition among providers and allow beneficiaries the freedom to choose where to spend their healthcare dollars. Sometimes called a defined contribution or voucher system, the desired effect of this approach would be to push Medicare further away from its current largely fee-for-service setup by providing increased incentives for beneficiaries to be cost-conscious in their plan selection.

This would likely drive a considerable enrollment increase in the already-growing private MA market; a space that has long been a strong component of Republican plans. As Medicare grows and seeks to control costs, providers can expect a doubling down of population health and a need for health systems to capture a larger share of the premium dollar. MA has always been a critical aspect of organizations’ population health strategy, and with the political changes, that need and opportunity has presumably only strengthened.

Many organizations have been preparing for a migration up the Medicare food chain through the creation of their own health plan. According to Avalere, providers are leveraging their large integrated delivery networks to establish plans at an increasing pace, representing 58 percent of new MA plans entering the program in 2016. Many of these organizations have been developing the necessary competencies by establishing risk-bearing Accountable Care Organizations (ACOs) or accepting delegated risk. Many are confronted with familiar dilemmas. What are the next steps as these ACO agreement periods wind to a close? If launching an MA plan is a couple years down the road, when is the right time to start the “two years from now” process?

The MA application process differs greatly from the Medicare ACO application process and it starts roughly six months earlier. This is a significant undertaking with great opportunity, and large risk. It requires an in-depth analysis and planning and the necessary time to align organizational strategy.

The Notice of Intent to Apply for a 2019 Medicare Advantage contract opens in mid-November 2017. However the real work should begin much earlier than that. A candid evaluation of whether your organization is ready to run its own health plan takes time and thoughtful consideration. And the question isn’t simply just “Can we?” Of equal importance is “Should we? Will the market support it? Will we need partners or help? What kind of optionality should we be considering and planning for?”

Organizations legitimately contemplating starting an MA plan are taking a deep dive to assess their organizational and network readiness, scope out their competitive landscape and determine not only the overall opportunity present in the market but the viability of their organization being able to capitalize on it. Conducting a PSP feasibility study is a crucial first step to setting the wheels in motion for a successful and targeted health plan application and development process.

 
• Key deliverables of a PSP feasibility study should include:
 
• Market Assessment;
 
• Prospective Partner List;
 
• Network Adequacy Analysis;
 
• Go-To Market Product and Network Structure;
 
• Target Market Landscape and Competitive Positioning Strategy;
 
• Organizational Readiness; and
 
• Financial Pro Forma.

Armed with an honest assessment of the critical factors to successfully stand up and operate a health plan, organizations not only better understand their readiness but are also able to act immediately to implement any necessary improvements. Providers should be aware of specific opportunities available, and precisely what it will take for them to actualize them.

As a result of a PSP feasibility study, the executive team will be better informed for the ultimate decision as to whether they should pursue an MA contract. Should a “go” decision result, progressive organizations should then work to develop an implementation plan in tandem with the application process. While the development of a health plan has never been considered easy, this only underscores just how much preparation many successful organizations undergo.

With so many competing initiatives and so much uncertainty in healthcare right now, it can be easy to overlook or delay the analysis of your MA opportunity. However, we contend that with the political changes and continued demographic evolution, it has never been more important to assess this opportunity—and that process needs to start soon if organizations want options for 2019.

The Somewhat Confident but Confused Open Enrollment Consumer

By Clive Riddle, November 4, 2016

This November, many consumers across the country are voting on more than a President, Congressmen and a hot mess of ballot propositions. They are also voting on their health insurance coverage for 2017. And many consumers may be more befuddled about choosing their health plan than their choices at the ballot box.

PolicyGenius has just released their Health Insurance Literacy Survey that “reveals 2017 open enrollment shoppers are overconfident in health insurance knowledge and under prepared to select a new plan.” Here’s an excpert from the infographic PolicyGenius provided on their findings:

Here’s additional PolicyGenius findings from the survey:

• There was 22% gap between women’s self-rated confidence in their knowledge of insurance terms and their actual comprehension, compared with a 29% gap for men.
• Millennials had a 29% gap between their confidence and comprehension.
• 72% of those with non-employer-provided health insurance policies plan to shop on the open marketplace for coverage this year.
• Most insured Americans are satisfied with their current plan, at 70% of total respondents
• People who used their health insurance 2-3 times in the past year are 12% more likely to be satisfied with their plan than those who used it just once
• Millennials are most likely to be satisfied with their health insurance plan, at 77%.
• There is no variation in plan satisfaction between those who have individual insurance versus employer-provided insurance.
• More than half of respondents aren’t very confident in their ability to choose the best health insurance plan for their needs.
• Only one-third of women overall are “very confident” in their ability to choose the best health insurance plan for their needs.
• The two groups that showed the highest confidence in their ability to choose the best plan were men at 58% and millennials at 43%.
• The survey found higher confidence levels in men over women (12% difference) and younger vs older respondents (millennials were most confident at 43%, 10% more than ages 45-55) in their ability to choose the best plan.

Sticking with the confusion theme, Walgreens has just released results of a survey of 1,000 Medicare Part D beneficiaries in advance of the Medicare open enrollment. Here’s what they found:

• 34% aren’t taking time to review their prescription drug plan prior to renewing it
• 19% don’t have a good understanding of their plan
• 22% look at just one component, checking, for example, to see if their own medications are covered, yet not looking at any other important considerations
• 21% falsely believes that all pharmacies charge the same copay
• 33% don’t know they can switch pharmacies outside of the enrollment period, at any time of year.
• 30% said copay costs are the most important factor, followed by pharmacy location (18%) and the opportunity for one-stop shopping (18 percent).

A Snapshot of Managed Care Pie

By Clive Riddle, August 4, 2016

MCOL’s Managed Care Fact Sheet webpages are being updated to reflect current data, so I took this opportunity to grab some Facts and provide this preview, baking this snapshot of managed care pie.

National HMO Enrollment is 92.4 million for 2016, up from 85.7 million in 2015, and a recent low of 66.8 million in 2007. The previous high was 81.3 million in 1999, just before managed care backlash whipped the numbers down. (1)

How does the managed care enrollment pie divide up?  33% are enrolled in HMOs, 57% in PPOs, 2% in POS plans and 7% in HDHPs.(1) - (3)  The top five national health plans by enrollment are United Health Group – 48.0 million; Anthem – 39.6 million; Aetna – 23.0 million; Cigna – 15.1 million and Health Care Service Corporation – 15.0 million. (14)

And what portion of the total national pie does managed care represent? 31% of Medicare beneficiaries are enrolled in Medicare Advantage plans, 63% of Medicaid enrollees are in Medicaid managed care plans, and 99% of commercial lives are enrolled in managed care. Factor in the 9% of the population that is still uninsured, and 70% of the total population is enrolled in some form of managed care plan. (4) – (10)

What are current resource use benchmarks in managed care – or how much of the pie is being eaten? HMO Hospital inpatient days per 1,000 members per year are 1,639 for Medicare, 395 for Medicaid and 231 for commercial; Commercial PPO are 237. HMO Physician visits per member per year are 10.2 for Medicare, and 4.8 for Medicaid and Commercial; Commercial PPO are 4.7. HMO Prescriptions per member per year are 29.9 for Medicare, 9.6 for Medicaid and 9.0 for Commercial; Commercial PPO are 11.8. (2) (11)

Getting back to pie, medical cost components – for a family covered by a PPO – are sliced up 31% for inpatient, 30% of physician, 19% for outpatient services, 17% for pharmacy and 4% for other services. (12)

So what does the pie cost? Single health plan premiums average $518 for HMOs and $548 for PPOs, and family premiums average $1,437 for HMOs and $1,539 for PPOs. Premium increases are estimated to be 4.3% in 2016, and have been under 5% after 2011, and under 8% after 2003. In 2002 – post managed care backlash -  they were 14.7%, but they were 8.1% or less in the pre managed care backlash era from 1993 to 2000, including a decrease of 1.1% in 1994.  Before that, double digit increases were the norm for a number of years.

(1) Total HMO Enrollment - Kaiser State Health Facts; Data Source: Health Leaders InterStudy, a Decision Resources Group Company July 2015 Data, accessed August 2016 www.statehealthfacts.org

(2) 2015 HMO-PPO Rx Digest Series, Sanofi www.managedcaredigest.com 

(3) New Census Survey Shows Continued Growth in HSA Enrollment, AHIP November 11, 2015  https://ahip.org/new-census-survey-shows-continued-growth-in-hsa-enrollment/     

(4) CMS Fast Facts: www.cms.gov/fastfacts/  

(5) Medicaid Enrollment Report as of January 2016: https://www.medicaid.gov/medicaid-chip-program-information/program-information/downloads/january-2016-enrollment-report.pdf 

(6) Kaiser Family Foundation State Health Facts Total Medicaid MCO Enrollment http://kff.org/other/state-indicator/total-medicaid-mco-enrollment/ 

(7) CDC Fast Facts, National Center for Health Statistics, Health, United States 2016: http://www.cdc.gov/nchs/ 

(8) Tricare Prime Beneficiaries 2016: www.tricare.mil/About/Facts/BeneNumbers.aspx 

(9) CDC May 2016: Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2015 http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201605.pdf  

(10) Total U.S. Population data as of April 2016, U.S. Census Bureau: www.census.gov

(11) 2015 Public Payer Digest Series, Sanofi www.managedcaredigest.com

(12) Milliman Medical Index, Milliman, May 24, 2016 http://www.milliman.com/mmi/    

(13) Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2015. www.kff.org

(14) MCOL research from 2016 company reports

When the Disruptor is the Disruptee

By Dennis Bolin, Health Plan Alliance, June 28, 2016

I don’t know about you but I am becoming tired of hearing about “disruption” in the health insurance industry. I hear and read the term everywhere and I wonder if it is overused. I just returned from this year’s AHIP Institute and I heard the term repeatedly in presentations and discussions. Whether the word used is “revolution,” “transformation,” “innovation,” or “reimagining,” the pressure to integrate to “make it happen” is mounting. Clayton Christensen defines “it” as “combining, through a coordinated effort, the business models that must comprise the disruptive value network.”

The concept of disruption as a business strategy has been popularized by Christensen’s work. We had a member of his firm present at an Alliance meeting years ago – when the concept was still new – and we have been following the evolution ever since. In his book on the health care industry The Innovator’s Prescription Christensen says health care disruption is likely to come from 3 sources: 

• Employers 
• Corporate orchestrators
• Integrated fixed-fee providers

Employers

At the Alliance’s recent Health System/Health Plan Value Visit we discussed with a Boeing executive that company’s initiatives to wrestle with health care costs, standardize quality and improve the customer experience. While we have heard about the strategy from Alliance member Providence Health Plan, I gained insights hearing it from the employer’s perspective. They have rolled out their strategy to a second market and anticipate a third market in 2017. In each case they identified a delivery system and provider network as their partner, driving costs, innovation and market share. More of our system owners are hearing directly from employers.

Corporate orchestrators

New entrepreneurial, venture capital-backed companies – corporate orchestrators – are also reshaping markets. Four are receiving a lot of attention:

• Oscar. Now in 4 states (New York, New Jersey, Texas and California) and 140,000 members Oscar is changing the market by introducing a technology-driven consumer-friendly product. I met with the CEO of Oscar 4 years ago when all they had was a group of programmers in a nearly empty loft in SOHO. Only 2 of the senior team came from the health insurance industry and they were sure they could do it better. An example:  a PCP receives a real-time text message of a member in an emergency room with a pin number used to call the member. The physician is paid $24 to call the patient within hours.
• Clover. A Medicare Advantage plan, they anticipate targeting only a small number of states. They are differentiating themselves through the use and availability of data. Using a cloud structure they do not have to worry about systems talking to each other. Instead data is deposited and accessed according to agreements on guidelines of usage.
• Harken Health. Their model is focused on primary care centers and offer insurance to small groups and individuals on and off the exchange. They currently are in Chicago and Atlanta. United is an investor.
• Bright Health Inc. They are unique in that as an insurance company they partner with a single provider system in the market to drive market share and partner to offer affordability and a differentiated customer experience. They anticipate entering the Colorado market in 2017.

Integrated Fixed-fee Providers

Christensen says that the challenge for integrated fixed-fee providers, such as Alliance members is that we are both the disruptee and the disruptor. In other words we are turning our own business and care models on their heads. In a truly integrated system the incentives are to keep people well. But flipping the switch on our business is not easy in ways the start-up disruptors can build from scratch. But we have one advantage:  we have all the components while none of the start ups do.

And integrated systems have the components necessary to create an enhanced enterprise-wide customer experience. Chris Fanning with Geisinger Health Plan shared their enterprise approach to customer experience at our Health System/Health Plan Value Visit. He will be going in-depth on their enterprise-wide Member Journey Roadmap at our Customer and Employer Market Strategies Value Visit July 19 – 21, click here for event information.  Geisinger has identified guiding principles around which they are organizing their customer-centered initiatives:

• Navigate – helping members make their way through the health system and make decisions right for them.
• Anticipate – help members know what to expect and help them with their needs in advance.
• Simplify – make the health system, health plan, and physician groups easier to do business with.
• Earn Trust – help members select the right plan based on their needs and work closely to resolve issues and assist beyond the traditional payer role.
• Individualize – Customize and personalize information and communication to meet specific interests and needs

As Christensen counsels, being the disruptee as well as the disruptor is a demanding but not an impossible expectation. He points out that integrated fixed-fee providers are uniquely positioned to shift care to the most cost effective site possible, to coordinate care, to manage a population’s health, to give tools to consumers to make decisions and manage their health and to provide a distinctive customer experience. And every time Alliance members gather to discuss our initiatives we get more disruptive.

This post originally apperared on the Health Plan Alliance Blog on June 28^th, 2016. You can see the original at www.healthplanalliance.org/News/160/When-the-Disruptor-is-the-Disruptee and see all the Health Plan Alliance Blog posts at www.healthplanalliance.org/hpa/Blog1.asp

Hot Healthcare M&A Market Starting to Cool

By Clive Riddle, May 6, 2016

Irving Levin Associates reports that healthcare merger & acquisition activity, which has been relatively overheated, is starting to cool a little. Lisa E. Phillips, editor of Irving Levin’s Health Care M&A News tells us “the slowdown in deal volume in the first quarter of 2016 might simply be fatigue setting in after a record-setting year in 2015. Also, some buyers are still figuring out where the best opportunities are, as the shift to value-based reimbursements gains momentum.”

Health Care M&A News states that “health care merger and acquisition activity began to slow down in the first quarter of 2016. Compared with the fourth quarter of 2015, deal volume decreased 7%, to 351 transactions. Deal volume was also down 7% compared with the same quarter the year before. Combined spending in the first quarter reached $79.5 billion, an increase of 87% compared with the $42.5 billion spent in the previous quarter.”

Here’s a snapshot the publication provided of the quarter’s activity:

How big was 2015?  Bigger than 2014, which was also a huge year.  Irving Levin’s Lisa Phillips says “health care mergers and acquisitions posted record-breaking totals in 2015. The services side contributed 62% of 2015’s combined total of 1,503 deals, which is even higher than 2014, when services deals accounted for 58% of the deal total.” A separate Irving Levin publication, the Health Care Services Acquisition Report, cites that “deal volume for the health care services sectors rose 22%, to 936 transactions versus 765 in 2014. The dollar value of those deals grew 183%, to $175 billion, compared with $62 billion in 2014. Merger and acquisition activity in the following services sectors—Behavioral Health Care, Hospitals, Laboratories, MRI & Dialysis, Managed Care, Physician Medical Groups, Rehabilitation and Other Services—posted gains over their 2014 totals. The exception was the Home Health & Hospice sector, which declined 33% in year-over-year deal volume.”

In the hospital sector, for 2015, they report that “activity remained strong in 2015, up 3% to 102 transactions, compared with 99 transactions in 2014. An average of 2.6 hospitals were involved in each transaction, compared with an average of 1.8 in 2014 and 3.3 in 2013.” Philips noted that “several deals resulted from the mega-mergers of 2013,” and that “we’re seeing more sales resulting from bankruptcies, especially in states that have not expanded Medicaid coverage.”

Et Tu, Oscar?

By Kim Bellard, February 25, 2016

Things seem to be going well for Oscar Health, the health insurance start-up that has been wowing investors and the media since it was founded in 2012.  Forbes reports that Oscar just raised $400 million in an investment round led by Fidelity, which effectively values Oscar at about $2.7b.  So why do I fear that perhaps they are taking the wrong path?

I've previously expressed my concern that Oscar and some of its fellow health insurance start-ups might be more about repackaging than reinventing.  I'm more concerned than ever after Bloomberg reported that Oscar is adopting a new network strategy: moving to "tight, exclusive networks with hospitals."  

There's no secret why Oscar is taking this approach.  It's about cost, with the expectations that narrower networks yield cost savings Closer relationships with providers and the ability to offer lower premiums without hurting quality.  If that's what Oscar is after with its new network strategy, what's not to like?

Well, plenty.  For one, with this strategy Oscar isn't innovating; it is buying into the strategy that most other health plans are trying to adopt.  That doesn't make it a bad strategy, but playing follow-the-leaders certainly doesn't fit the cool yet disruptive image that Oscar has so carefully cultivated. 

More importantly, it is the wrong strategy.  For Oscar.  For any health plan.  It is a strategy rooted in the 1990's, if not earlier.  The argument for networks, especially narrow networks, is that health plans can drive better bargains by promising more volume to specific providers.  I don't have a problem with health plans driving hard bargains with providers, especially if those bargains are performance-based.  What I do have a problem with is forcing consumers to use those, and only those. 

I think it is great when a health plan tries to find the highest quality providers, and to get a good deal with them.  What I wish they would do, though, is say, "here's the data that demonstrates their quality, and here's how much we're willing to pay them to take care of you.  If you can find providers that are better, that's great; go to them, and we'll still pay the same as we'd pay the providers we recommend.  No hard feelings." 

In other words, let the health plan act as the concierge, not the gatekeeper.

If a consumer goes to providers who charge more than the health plan would pay their designated providers, well, there's a price for choice; consumers might have to pay extra.  On the flip side, maybe the consumer should pocket some of the savings if they manage to find less expensive providers.

This approach might sound like reference pricing, because reference pricing is a start to where I think we need to go.  I'd rather we put more effort into that than in narrowing consumer's choices.  
Noah Lang, CEO of Stride Health, told Fast Company, "Oscar is primarily a consumer experience company."  I don't think restricting choice of providers is a very good consumer experience for any health plan, and especially not for one like Oscar who prides itself on its member experience.

Oscar thinks this new approach is their future.  If so, their future may be as just another health plan.  And that'd be too bad.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Revisiting the Health Cooperatives Morass

By Clive Riddle, January 22, 2016

A new Wall Street Journal article, Obama Administration Works to Fix Health Insurance Co-Ops, covered Andy Slavitt’s - acting CMS administrator – testimony to the Senate Finance Committee regarding how to recoup federal loans from failing co-ops, how so many co-ops failed, and what future fixes are planned for the cooperatives, including reducing funding restrictions. A graphic accompanying the article re-hashes the $1.5 billion lent to co-ops that have failed, which range from $265 million in New York to $60.6 million in Oregon. Yesterday’s edition of Inside Health Policy  reported that Slavitt has indicated risk adjustment changes proposed for 2017 may come sooner. The natural fallout from the failed and failing cooperatives continue to surface in the news. For example, this week it was announced the failed Kentucky Health Cooperative was placed in liquidation.

What CMS can do to mitigate the tenuous position the remaining cooperatives are in is news. But the bulk of current media discussion of cooperatives continues to beat the dead horse of the number of failed cooperatives, their cumulative losses and unpaid federal loans, all which was significantly covered in the fall. There was plenty of blame to go around: co-ops underpricing themselves in the market, CMS policy restricting their abilities to capitalize, CMS risk adjustment policy and congressional reduction in funding for said policy. The dead horse will continue to be beaten in the news – after all it is an election year.

But perhaps a more fundamental issue that wasn’t talked about enough was simply that start-up health plans are going to initially lose significant amounts of money in new markets even under the best of circumstances, and the start-up losses weren’t adequately budgeted, capitalized or communicated in setting stakeholder expectations.

If you’re keep tabs of the continuing status and travails of the cooperatives, two sites are worth bookmarking: U.S. Health Policy Gateway's Co-op Performance by State and the National Conference of State Legislature’s Health Insurance Purchasing Cooperatives and Alliances: State and Federal Roles.

Someone Must Be On Drugs

By Kim Bellard, November 11, 2015

As is probably true for many of you, I'm busy looking at health plan open enrollment options for 2016. The past few years I've been guilty of just sticking with the same plan, so it has been too long since I've had to shop. Plus, I'm helping my mother pick her Medicare options for next year. All in all, I'm awash with health plan options.

I've got different levels of HMO, POS, and PPO options, from multiple carriers. My mother has many choices of Medicare Supplements, with Part D options, as well as Medicare Advantage options (both HMO and PPO), each from multiple health insurers.

It's not that there aren't plenty of options. It's just that, well, the options are so damn confusing.

Austin Frakt recently wrote in The New York Times about this problem. He cited a few studies specifically on point about health insurance, such as:
 

• One study found that 71% of consumers couldn't identify basic cost-sharing features;
• Less than a third of consumers in another study could correctly answer questions about their current coverage;
• Researchers found that consumers tended to choose plans labeled "gold" -- even when the researchers switched the "gold" and "bronze" designations, keeping all other plan details the same.

Many consumers tend to stick with their existing choice even when better options are available, simply because switching or even shopping is perceived as too complicated.

I'm most frustrated with prescription drug coverage. Not that long ago, the only variables were the copays for generic versus brand drugs. Now there are often five or six different tiers of coverage -- such as preferred generic, other generic, preferred brand, other brand, and "specialty" -- with different copays or coinsurance at each tier, each of which can also vary by retail versus mail order, and for "preferred pharmacies." 

Moreover, the health plan's formulary, which determines what tier a drug is in, can change at any time. Plus, as has been illustrated recently, the prices of any specific drug can change without notice, sometimes dramatically. If either of those happens to one of your drugs, say goodbye to your budget.

It's all enough to make your head spin.

The health plans would no doubt argue that their various approaches to prescription drug coverage are necessary in their efforts to control ever-rising costs for prescription drug costs. Well, they aren't working.

Prescription drug prices continue to soar, even for generic drugs. They have become a political issue, with the Senate now launching a bipartisan investigation into prescription drug pricing and the Presidential hopefuls from both parties being forced to take positions on how they would control them. For once, politicians are in sync with their constituents; the latest Kaiser Health Tracking Poll found that affordability of prescription drugs tops their priority list for Congress and the President.

I've long thought that the pharmaceutical industry was ahead of the rest of the health care industry. They were doing electronic submission of claims over forty years ago. They pushed for direct-to-consumer advertising in the late 1980's, and quickly jumped on that bandwagon. While providers only grudgingly adopted EHRs, they quickly moved to e-prescribing.  Other health providers had to move away from discounted charges twenty years ago, whereas drug companies still mostly use that approach and are only starting to tip-toe into more "value-based" approaches, as with the recent Harvard Pilgrim-Amgen deal.

And the backroom rebate deals between drug manufacturers and payors put a lie to any claim that at least drug pricing is transparent.

It's not only prescription drug coverage that is increasingly complicated, what with narrow networks, gatekeepers, different copays for different types of medical services, bundled pricing, or numerous other gimmicks used in health plan designs.  The collateral damage in the ongoing payor-provider arms race is consumer understanding. 

Making things more complicated for consumers is not the answer.

In typical fashion, the health care industry has tried to address the confusion by creating a new industry that doesn't actually solve the problem but does manage to introduce new costs. Many enrollment sites --the Medicare plan finder, public exchanges, private exchanges, broker sites like ehealth, or health insurer sites -- offer tools that purport to estimate your costs under your various health plan options. Yet consumers still don't understand their options.

We keep treating health care as a multi-party arrangement between providers/health plans/employers/government/consumers, which is why everything ends up so complicated. Drug company rebates or medical device manufacturers' payments to providers are prime examples of the kind of insider trading that goes on. It's usually the consumers that come last. And that's the problem.

I think back to 1990's cell phone plans. Consumers never knew what their next bill would bring, between peak/non-peak minutes and the infamous roaming charges. No one liked it, no one understood it, and for several years no one did anything about it. Then AT&T came out with a flat rate plan that essentially said, "we'll worry about all those for you," and soon all carriers had to adopt a version of it.

I keep hoping for that kind of breakthrough with health insurance.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Juggling Risk

By Cathy Eddy, Health Plan Alliance, November 4, 2015

The insurance industry is based on managing risk. Health insurance has managed medical costs for years. With the Affordable Care Act, the federal government has set a minimum target for the medical loss ratio at 80-85%.

But managing risk has become so much more challenging for the health care industry than just managing medical claims. We are now juggling lots of types of risk at the same time. We are hoping not to drop the ball on any of these or it could mean losing millions of dollars or even going out of business. The number of Co-ops that have closed this year is a clear indication of just how hard it is to do business in the public exchanges.

Here are the types of risk that health plans are now simultaneously juggling:

• Risk adjustment
• ORSA
• Risk Corridors
• Value-based reimbursement
• Bundled payments
• Upside risk and maybe downside risk
• Cyber Risk
• Business interruption and disaster recovery
• Key employee risk

And the Alliance health plans are right in the middle of these challenges. As we are planning our programming for 2016, we are looking at ways to share how plans are trying to align with providers to be successful.

During 2016, the Alliance will expand its membership to include health systems that our members identify. We will discuss their strategic priorities, build informational profiles on these systems and develop our meeting agendas to focus on the areas where our health plans intersect with the providers. We hope that health systems will take advantage of the content at these meetings:

• April 13-14  Clinical Integration and Payer/Provider Partnerships
• June 7:  Board and Governance Strategic Issues and Performance
• June 8-9: Health System/Health Plan Strategic Alignment
• Sept 28-30 Care Management/Care Coordination
• Oct 19-20: Managing Risk Reimbursement Arrangements
• Dec 6-8 Managing Populations with Data

We will also be collaborating with other organizations that are working with providers to serve as a resource for content. Many providers have indicated an interest in taking on more risk and either starting up a health plan or working with partners to offer a private label plan in their market. We would like to leverage the Alliance’s 20 years of experience in the provider-sponsored health plan space to help those providers that are entering or reentering the health plan business.

As the rest of the insurance industry consolidates into a few very large players, we’d like to see integrated delivery system with health plans and those independent health plans working closely with providers be able to offer a viable option to the other types of health insurers.

And to be successful, our plans and health systems will need to juggle all types of risk collaboratively.

The Nexus of Payviders

By Clive Riddle, October 16, 2015

To what degree will the mega-merged health plans dominate the landscape in the balance of this decade? We’ve recently discussed the topic: will health plan start ups and provider sponsored plans fill the competition gap? We noted then, that the airline industry demonstrated opportunities that might apply in the current health plan environment,  “where the post-merger environment after established airline joined forces didn’t prevent the emergence or growth of carriers like Southwest, Jet Blue, Virgin America  and many others.

It’s looking more and more like the gap won’t be significantly filled by co-ops, with theKentucky Health Cooperative being the latest co-op to bite the dust. Much attention, and Wall Street dollars, is being given to the venture-capital backed startups. But it remains to be seen if they will take over the world or suffer the fate of a number of the co-ops.

In the meantime, regional independent plans, a large portion being provider sponsored, have much more of a track record and maturity to fall back on. A Reuters article this week, As U.S. insurers aim to get bigger, hospitals eye health plan entry, discusses established integrated delivery systems such as Kaiser and Geisinger, as well as the re-entry into this business by hospital companies such as Tenet, who now owns six health plans with about 100,000 members. Companies like evolent health are also covered, who are doing big business working with hospitals on developing new plans and risk-bearing networks.  

During the course of 2015, a term emerging into the lexicon around the country has been “Payvider”, which hopefully is self-explanatory. Let’s listen in a discussion about Payviders from Cathy Eddy, President of Health Plan Alliance:  

“….we met with the research firm KLAS. They are conducting a survey with “Payviders,” or health systems that have their own health plan.  This is a new term for a concept that has been around for more than 30 years, but seems to be gaining traction again as more providers move into value-based reimbursement (don’t call it capitation – that is so 90s), and more are leveraging their existing health plan, partnering with one, or even starting a health plan. I’ve been working in the space between payers and providers since 1982 and running the Health Plan Alliance for nearly 20 years.  What seems different now is the level of strategic alignment between the plans and their provider sponsors.  The expertise that exists in a health plan is a great (essential? necessary? logical?) resource for a health system that is moving into Population Health, establishing ACOs and negotiating contracts for value-based payments and incentives. Many of the competencies it takes to run a health plan are critical elements for health systems that are taking on risk.”

The Health Plan Alliance represents almost fifty provider-sponsored and independent health plans, that range in size, from less than 50,000 members to more than I million members, and operate in all lines of business, including commercial, Medicaid, and Medicare. Perhaps they are the nexus of the source of competition in the health plan industry for the rest of this decade.

Will Health Plan Start Ups and Provider Sponsored Plans Fill the Competition Gap?

By Clive Riddle, September 18, 2015

The AMA recently released a special analyses of commercial health insurance markets that found the "combined impact of proposed mergers among four of the nation's largest health insurance companies would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states," and that "all told, the two mergers would diminish competition in up to 154 metropolitan areas within 23 states."

Art Caplan, a professor at NYU and a correspondent for NBC News, responded to a recent New York Times editorial, Regulators Need to Scrutinize Health Insurance Mergers, with a humorous post in The Health Care Blog, entitled Merge Away!!!. Here’s the heart of Caplan’s argument: ” Blocking these deals is a terrible idea. The mergers should be allowed to continue. In fact they should proceed until there is only one private insurer left. Only, at that point should the government step in, declare the last company standing to be required to merge with Medicare thereby letting the free market produce what many reformers have only been able to dream of—a single payer system.”

Will the mega mergers result in a vacuum of competition, and perhaps a default single payer system, or perhaps as some noted healthcare pundits have wondered out loud: where health insurance becomes the new cable television provider? Or will emerging players fill the void left in the coming competition gap? This did occur in the airline industry – where the post-merger environment after established airline joined forces didn’t prevent the emergence or growth of carriers like Southwest, Jet Blue, Virgin America  and many others.

Two potential candidates to fill the health plan competition gap are provider sponsored plans and well funded health plan start ups. Provider sponsored plans have always been around, but with today’s environment is much more conducive for their long-term prospects: the growth in Medicaid strengthens the prospects of regional provider backed Medicaid plans; the proliferation of ACOs that can serve as health plan incubators; the emergence of value based payment systems and clinical integration that nudge health systems closer towards the purchaser end of the spectrum.

And then there’s the potential of VC backed health plan start ups. Everyone continues to write about Oscar Health. Here’s a typical headline from last month: Oscar's losses are huge but investors don't care - How one insurance startup with only 40,000 members is worth $1.5 billion.

Oscar Health has been held up as the disruptive innovator embracing tech and customer service for health insurance, in the manner the Uber entered the personal transportation scene. Now this week, you can add this headline to Oscar’s mantle: Google Backs Startup Oscar Health Insurance - Internet company’s growth-equity fund makes $32.5 million investment.

And Oscar isn’t the only VC darling health plan startup. Fortune magazine this week, in their article How this startup is trying to upend health insurance, profiled Clover Health, who just announced a $100 million round of equity and debt funding to expand its presence. Clover is focusing just on Medicare Advantage, and like Oscar, has started small. Founded in 2014, they currently operate in only six New Jersey counties. Also like Oscar – their vision involves embracing technology in a more disruptive means than the traditional health plan approach.

It should be a reasonable wager that Clover and Oscar won’t be the only VC backed startups making news a year from now.

Snapshots of the Mega-Mergers

By Clive Riddle, July 24, 2015

With Anthem and Cigna’s merger announcement, the dance card has been filled out. Here’s what they had to say about their deal:  

“Anthem will acquire all outstanding shares of Cigna in a cash and stock transaction and Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem common shares for each Cigna common share. The total per share consideration equates to approximately $188.00 for each Cigna share based on Anthem's closing share price on May 28, 2015, valuing the transaction at $54.2 billion on an enterprise basis.”

So let’s take a look at the mega-health plan profiles, before and after these mergers, understanding that the “after” picture will undoubtedly change due to regulatory required divestures in certain markets:

    

Here’s a couple of edited graphics from by the plans that provide some additional insight into their merged companies:

It will be interesting to see how long the regulatory hurdles take for these three deals, and how many regulatory concessions, including specific market divestures, are required.

Jurassic Park: Rise of the Health Insurers

By Kim Bellard, June 26, 2015

If you want to see dinosaurs fighting, stalking, and even mating, you don't need to go see Jurassic World.  Just pick up the business pages and see what is going on with the big health insurers, who seem intent on getting even bigger.

Whether anything actually comes of all the merger mania, or whether such mergers prove good for consumers, remains to be seen.

Everyone seems to be in play.  The Wall Street Journal reported that Anthem has made overtures to Cigna, while United is interested in Aetna, with Humana still attractive to Aetna and Cigna.  You can't make this stuff up. It would be ironic if Humana was one left standing in this game of musical chairs, but many feel their assets are too inviting to be left out. 

One conventional wisdom is that these kinds of mergers/acquisitions have to do with scale. Bigger means more lives to spread such costs over.  The other culprit often cited is a desire to gain more clout with providers,

The trouble is, no matter how big health plans get, if they face markets where there is, in essence, only one provider with which to negotiate, size doesn't really matter. Bigger isn't always better.

You can make dinosaurs bigger, but that doesn't make them more agile or better prepared to deal with new risks.  I'm wondering when we're going to see not bigger health insurers, but truly different models for them.

We've seen true integrated provider/health plan models like Kaiser, Group Health Cooperative, or Geisinger for decades now, and they're generally successful in their core markets, but that model hasn't proved easily replicable. 

We've also seem health system building their own health plans, such as Intermountain Healthcare, Sentara, or UPMC.   We've even seen health plans buying/building their own health systems, such as UPMC's bitter rival Highmark Health.

If Anthem buys Cigna or United buys Aetna, it wouldn't be all that interesting, nor would it be novel.  Those are dinosaurs getting bigger but not evolving.  

If Humana and HCA got back together, that would be interesting.  That would be provider/payor integration writ large, and maybe produce something new. 

And if, say, CVS or Walgreens chose to merge with a health insurer, that would something even more unique.  I don't know how they'd change the health insurer, but it might be fun to find out.

Honestly, though, what I'd really love to see is a company from an entirely different sector, hopefully one with a strong consumer focus, buy into the health insurance business.  Maybe Humana should get back together with the Virgin Group, or perhaps Walmart would be interested in taking over a Medicaid managed care or Medicare Advantage plan.  Wouldn't you love to see Walmart take on the health care supply chain?  I bet they could squeeze better value out for its customers.

Jurassic World seems to be raking in the money despite being just another sequel about rogue dinosaurs.  Let's hope we see something with health insurers that isn't just another sequel as well.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

PwC and Milliman Examination of Medical Cost Trends

by Clive Riddle, June 10, 2015

PwC projects a medical cost trend for 2016 of 6.5%, netting down to 4.5% after benefit design changes. Milliman tells us that the 2015 actual trend was 6.3%, up from 5.4% in 2014.

PwC’s Health Research Institute this week released their tenth annual Behind the Numbers report, which includes a “projection for the coming year’s medical cost trend based on analysis of medical costs in the large employer insurance market. In compiling data for 2016, HRI interviewed industry executives, health policy experts and health plan actuaries whose companies cover more than 100 million employer based members.

Milliman released their fifteenth annual Milliman Medical Index report two weeks ago, which is “an actuarial analysis of the projected total cost of healthcare for a hypothetical family of four covered by an employer-sponsored preferred provider organization (PPO) plan. Unlike many other healthcare cost reports, the MMI measures the total cost of healthcare benefits, not just the employer’s share of the costs, and not just premiums. The MMI only includes healthcare costs. It does not include health plan administrative expenses or profit loads.”

With respect to 2015, Milliman found “the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $24,671”, up from $23,215 in 2014. The 2015 family costs works out to $2,055 on a monthly basis.

Milliman emphasizes the importance of the role the Rx costs play in the mix. They note “prescription drug costs spiked significantly, growing by 13.6% from 2014 to 2015. Growth over the previous five years averaged 6.8%. The 2015 spike resulted from the introduction of new specialty drugs as well as price increases in both brand and generic name drugs, increases in use of compound medicines, and other causes. Since the MMI’s inception in 2001, prescription drugs have increased by 9.4% on average, exceeding the 7.7% average trend for all other services. Prescription drug costs now comprise 15.9% of total healthcare spending for our family of four, up from 13.2% in 2001.”

Milliman also highlights the role of cost-sharing, citing that the “total employee cost (payroll deductions plus out-of-pocket expenses) increased by approximately 43% from 2010 to 2015, while employer costs increased by 32%. Of the $24,671 in total healthcare costs for this typical family, $10,473 is paid by the family, $6,408 through payroll deductions, and $4,065 in out-of-pocket expenses incurred at point of care.”

PwC also keys on these two issues for 2016 as well, with drugs as an inflator, and cost-sharing as a deflator of the medical trend.  PwC spotlighted two inflators of the 2016 medical trend: (1) New specialty drugs entering the market in 2015 and 2016 will continue to push health spending growth upward; and (2) Major cyber-security breaches are forcing health companies to step up investments to guard personal health data, adding to the overall cost of delivering care.

PwC notes three factors that serve to "deflate" the 2016 medical cost trend: (1) The Affordable Care Act’s looming “Cadillac tax” on high-priced plans which is accelerating cost-shifting from employers to employees to reduce costs; (2) Greater adoption of “virtual care” technology that can be more efficient and convenient than traditional medical care; and (3) New health advisers helping to steer consumers to more efficient healthcare.

PwC also comments on the longer range medical trend perspective, citing four key cost growth factors H observed over the past decade:

• The healthcare-spending trajectory has leveled off but is not declining;
• Cost sharing slows consumer use of health services;
• Curtailing inpatient care lowers costs; and
• The ACA has had minimal direct effect on employer health costs.

Future of Provider-Sponsored Health Plans and Managing Risk

By Cathy Eddy, Health Plan Alliance, December 1, 2014

Deloitte Consulting conducts an enterprise wide risk assessment with Presbyterian Health Services annually and the information is leveraged by the health plan.

Health systems are looking at their range of options for the future – most with an eye for making the transition from fee-for-service to value-based reimbursement. These options include shared savings programs, bundled payments, accountable care organizations, some form of capitation or global payment and for some, starting or growing a health plan. These options involve varying levels of risk.

As the lines blur between payers and providers, it is important for health systems to carefully evaluate their strategies and their partners to be successful in the future. It will also mean doing business differently and navigating through the major challenges that have been driven by marketplace dynamics and health care reform.

Many organizations have identified provider-sponsored plans as a “hot topic” and are trying to identify the keys to success with this model. As systems move to value-based reimbursement, a health plan can act as both a catalyst and an accelerator for change.

For almost 20 years, the Health Plan Alliance has been working with integrated delivery systems that have health plans. These are the systems that stayed with the vertical strategy when many of their colleagues sold off or closed down their insurance arms. The health systems that stayed committed to owning a health plan are now at a strategic advantage in many ways:

• They have a vehicle to understand and manages risk
• Health plans have the infrastructure to manage populations 
• A closer link to the marketplace 
• Better understanding of managing care 
• Ability to gather and analyze quality data for the populations served 
  
• A driver for more clinical integration 
  

What are some of the key considerations for systems to consider when owning a health plan or partnering with one?

• What are the populations you want to serve – commercials, exchanges, Medicaid Advantage, Medicaid or duals? These all have different risk challenges 
  
• Do you have the financial resources to fund a start-up and maintain the risk-based capital requirements? 
  
• Do you have or can you acquire the expertise to run a successful plan? 
  
• Does it make sense to partner with another health plan or payer?
  
• Are you willing to make the delivery system changes need to manage risk? 
  
• Are your physicians organized to take on risk and support quality measures of a health plan? 
  
• Are you organized to manage the care of a population along the healthcare continuum?
  
• Are you thinking about direct contracting with large employers in your marketplace?

The members of the Health Plan Alliance have a wealth of knowledge about how integrated delivery systems are managing risk. Last month, our Fall Retreat addressed the various levels of risk that a health plan manages – governance, product lines, physician alignment, clinical integration, financial and business continuity.

If you weren’t able to attend this meeting, you can find the presentations on our website and you can request a video recording of the meeting.  Managing multiple levels of risk will continue to be a challenge for health systems in the future, especially those that have made the strategic investment to own a health plan. 

Study on Health Plan Shopping – Reluctants, Premiums and Defaulters

By Clive Riddle, October 10, 2014

Vitals – who provide a consumer health information platform including doctor ratings and reviews, has released a study on health plan shoppers in open enrollment season, and lumping many of the shoppers into three categories: (1) The Reluctant; (2) The Premium; and (3) The Defaulter. Vitals study was based on their August online survey of 1,000 adults.

The big takeaways from their survey?

• 80 percent of respondents said they were not planning to switch their insurance this year.
• More than 1 in 5 are dissatisfied with their plan.
• Nearly one-third said they were unhappy with the value for cost of their plan.
• 27 percent were unhappy with customer support services
• 9 percent were unhappy with the lack of quality network doctors and hospitals

So what the heck are Vitals’ trio of Reluctants, Premiums and Defaulters?

Vitals classifies Reluctants as age 30-44 with no dependents and household income under $25k, who are satisfied with their plan provider network but not the plan value. Vitals says “the Reluctant doesn’t want to buy insurance and isn’t satisfied with their plan – if they even have one. They’re more likely to have an HMO to keep costs down, but still say they’re not getting a good value for cost. Over 1 in 4 will switch their health plan during open enrollment this year. Their main gripe: Cost. They index higher for cost increases over the past year and report being surprised more by health care costs this year, compared to last year.”

Vitals classifies Premiums as age 45-60 with dependents and household income over $100k, who also are happiest with the network and unhappiest with plan value. Vitals tells us “the Premium is most likely to have Cadillac-like coverage for their health care. They index higher for employer-provided health care and PPO-type plans, which offer the most flexibility. Premium shoppers are most likely to say they’re happy with their health insurance – only 5 percent will switch during open enrollment! And they uniformly agree they have adequate access to medical care.”

Finally, Vitals classifies Defaulters as any age adult (but often age 60+) with no dependents and household income of $50 - $99k. They define the Defaulter as someone “on cruise control and typically doesn’t review or change their plan from year to year.”

Humana Study on Workplace Wellness: It’s not just ROI

By Clive Riddle, September 19, 2014 

Humana has just published a 22 page report Measuring wellness: From data to insights which based on their study conducted by the Economist Intelligence Unit, examining “why companies implement workplace wellness, how data influences these programs and identifies obstacles that inhibit program participation.” The study surveyed 225 U.S.-based executives and 630 full-time employees from organizations with workplace wellness programs. 

Beth Bierbower, President of Humana’s Employer Group Segment, tells us “It’s interesting to validate that employers now view ROI as an important, but not exclusive or even primary measure of a wellness program’s success. Employers are now seeing that employee health is important beyond health care costs, it has profound impacts on productivity, retention, workplace engagement and morale.” The report states that instead of asking about ROI, “perhaps the question should be, ‘do we improve health at a reasonable price’ as opposed to ‘do we save money by doing so.’” 

Here are some key findings highlighted from the study:

• Nearly 70 percent of executives consider their organization’s wellness program to be cost effective, even though not all of the outcomes are measurable.
• While 86 percent of executives say improving employee health as an indirect driver of productivity, morale and engagement is their top reason for implementing a wellness program, cost factors are still important, including reducing employee health care costs (66 percent) and controlling medical claims (48 percent).
• About 30 percent of employees rate subsidized gym memberships, onsite health and wellness facilities, and budgeted wellness activity time during business hours, as the three most important services that would motivate participation.          
• 64 percent of employees have used fitness devices to monitor health and capture data, but only 19 percent use them regularly.         
• Two-thirds of executives feel data collection and interpretation is the biggest challenge confronting effective workplace wellness.         
• 53% of survey respondents say their organization collects health-related employee data as part of its wellness program
• The biggest disconnects between executives and employees regarding their perceptions of obstacles to employee participation in wellness programs, were in regards to the statements: “Employees don’t perceive health and wellness as a high priority” (30% of executives agreed vs. 2% of employees); “Employees are concerned that personal information will not remain confidential (43% of executives agreed vs. 27% of employees); and “Employees distrust employer motives” (24% of executives agreed vs. 11% of employees.)     

Humana Study Measures Claims Costs and Absence Rate by level of Wellness Program Engagement

By Clive Riddle, May 2, 2014

Humana has released findings from their HumanaVitality Health Claims and Productivity Impact Study of Humana employees. HumanaVitality is a joint venture between Humana Inc. and Discovery Holdings, Ltd. That serves 3.5+ million members and “is a data-driven wellness and rewards program that motivates members to make healthier life choices.”

Humana touts that “the two-year study found improved health, as shown through lower health care costs and fewer unscheduled absences, among employees who actively participated in the HumanaVitality program.”

Here’s their specific findings:

• Unengaged members in both years averaged $53 more per month spent on health care claims than members who were engaged in HumanaVitality both years.
• The largest impact on health care costs was on members with lifestyle-related chronic conditions like high blood pressure or diabetes. Engaged members with these conditions had 60 percent lower health claims costs than unengaged members with these conditions.
• Another way of stating this: Unengaged members with lifestyle-related chronic conditions had 101% higher claims costs than the total population, while engaged members with these chronic conditions had 41% higher claims costs than the total population
• Unscheduled absences were 56.3 percent higher among unengaged members in both years than engaged members
• Members who were unengaged the first year but engaged the second year had 29% higher unscheduled absence and an average of $28 per month in claims costs than members who engaged both years

Humana shared this about the study methodology: “This study was performed on a cohort of Humana associates that were on a Humana employee medical health plan for a full 12 months in at least two consecutive plan years over the study period. The study was conducted by Humana actuaries for the following time period: Baseline Year (July 2010 – June 2011), Year 1 of the HumanaVitality program (July 2011 – June 2012) and Year 2 of the HumanaVitality program (July 2012 – June 2013). Only Humana employees were included in the study; individuals with high cost claims (>= $ 150,000 in the Baseline Year, Year 1 or Year 2) were removed from the sample. The final sample size was 13,046 members in the Year 1 analysis and 16,296 members in the Year 2 analysis.”