CDHP Is Curing What Ails Healthcare

Everyone is looking to create a more affordable, sustainable, high-quality – and healthier – healthcare system. Is CDHP part of the solution, or part of the problem? CIGNA's Bill Reindl looks at the evidence.

Now that we are in the middle of the election season, one of the questions on the lips of politicians, pundits, practitioners and the public is “What is the prognosis for our ailing healthcare system?”

In my 28 years of experience in the healthcare industry, this is perhaps the most critical focus I have seen on the issue. However, the environment has never been more conducive to creating a more affordable, sustainable, high-quality – and healthier –healthcare system.

The key to improving the health of the individuals we serve is to involve them early and often in their own care. One way to accomplish this is to enable and “incent” people to make their own informed decisions about their health. Another involves providing people with the proper guidance – or coaching – to help them get the most out of their health care and the dollars their employers invest in their medical program.

An excellent catalyst to foster these outcomes is through well designed consumer-directed health plans or CDHPs. These programs provide people with a way to make their own choices regarding doctors and treatments. Creating an “ownership mentality” among plan participants by taking the current dollars employers spend on health care and allocating enough dollars in order to provide an effective value proposition is an incentive for individuals to act like true healthcare consumers.

Debunking the Myths

Unfortunately a number of myths perpetuated by CDHP critics have negatively affected some peoples’ perceptions. These myths include: CDHPs do not reduce costs, only shift them to employees; are only good if you are healthy, not if you’re sick; and cause people to forgo needed treatment.

The best way to address these misperceptions is with facts. Last fall we compiled and analyzed two years’ worth of health care claims experience of more than 430,000 people enrolled in CIGNA HealthCare CDHP and traditional HMO and PPO plans. The data showed that those enrolled in Consumer-Directed programs are personally motivated by real financial opportunities, are becoming more cost-conscious while not sacrificing recommended care and are increasing their use of preventive services and improving their personal health.

Key findings from the analysis showed that:

CDHPs can effectively improve costs – Medical cost trend for our CDHPs is less than half that of our HMO and PPO plans, and CDHP cost savings compounded over time.

• Cost-shifting did not occur – Individuals’ out-of-pocket costs were similar for CHDP and those in traditional plans. Notably our study did not account for the fact that payroll contributions for CDHP customers are generally 10-20% lower, which provide additional savings.
• Benefits were accrued regardless of gender or health – Results were similar for both men and women and regardless of health status, effectively countering the misperception that consumer-directed plans simply move more costs to employees or can only benefit the healthy.
• Employees continued to receive appropriate care – Use of preventive care among those enrolled in CDHPs increased and they receive recommended care at comparable or better levels 97% of the time as those enrolled in traditional plans. Moreover, compliance for controller medications improved among those with CDHPs; days supplies actually increased (although at less than a third the rate of increase under traditional plans) while costs decreased 6%.

Since facts matter, let’s take a closer look. Medical costs for first-year CDHP enrollees were more than 12% lower and showed 5% lower trend than for those in the plan for second year relative to those in traditional HMOs and PPOs. In fact, medical trend for CDHP in the second year was half (4.4%) that of the 9.8% trend for our traditional business.

Significantly employees in CDHPs continued to receive recommended care at the same or higher levels as those enrolled in traditional plans in an evaluation of compliance with more than 300 evidence-based measures of health care quality. Preventive care visits for those in CDHPs were 12% greater than when compared to traditional plans and preventive care visits and 14% greater in the second year when compared to traditional plans.

Pharmacy costs for our new CDHP enrollees were 6% lower than under traditional plans. Utilization was higher for new CDHP enrollees and cost per day was lower, for both maintenance and acute medications, suggesting that they were compliant with their medications while exercising lower-cost options such as purchasing their maintenance medications by mail order and significantly higher use generic medications.

The sharp, sustained decline in costs – achieved without reductions in care or cost shifting to the individual demonstrates that consumer-directed health plans can be an effective way to provide health benefits that can saves money, increase consumer engagement while not compromising the quality of care.

Three Keys to Better Health Coverage

And so we see the reality of CDHPs is much more positive than some of the continuous, highly publicized misperceptions. The difference is that many of these misperceptions are the result of health plans that may be called consumer-driven, but in fact do not include the key elements that foster positive engagement or provide the support needed to improve or maintain health. These key elements include:

“Benefits-neutral” design: Plans that offer benefit levels that are comparable to previous traditional plans. This approach which reduces costs year-over-year without shifting costs to members offer true value propositions to prospective enrollees. A properly designed CDHP will encourage enrollment and as a result motivates the individual to not only reduce their personal cost but dramatically utilize the growing number of decision support tools; ultimately improving their health. 100% coverage of preventive health services : Plans that support good health by covering routine check ups, breast and colon cancer screenings critical diabetic care, child immunizations, etc. at no additional charge to members. Such services can be critical to early detection of potential health issues and have shown to improve member health and plan satisfaction; Proactive health coaching : Programs that offer employees fully integrated coaching from qualified clinicians such as health education specialists or nurses to promote enhanced engagement on key health issues, including addressing future health risks.

Case and Point – Putting Plans in Action

Let’s look at a tangible example. A major financial services company with 20,000 employees and $20 billion in revenues needed to reduce the double-digit rate at which its annual medical costs were growing. The company has a large number of employees working in rural call centers, and its generous health care benefits plan helped it compete successfully with other local employers for potential employees. To maintain that advantage while reducing costs, the company wanted to continue to offer an attractive plan that would more cost effectively provide employees with the care they need to improve their health.

An analysis of the plan design found several factors that were contributing to the double-digit cost increases and that offered potential for savings:

• The plan had a low employee cost share that did not encourage efficient utilization of medical services. If it’s “free,” or nearly so, I have no reason to care what it costs. Employees tended to overuse high cost services, such as the emergency room and brand name drugs, rather than more economical and medically appropriate services and medications.
• More than 20% of employees did not use their benefits, even for preventive care. A review of the results for employees who voluntarily took the online health risk assessment showed that more than 2,100 had health risks either because of family history or lifestyle choices that claim data had not previously identified. Disease is the real enemy and early detection is critical to improving overall health and reducing cost
• More than 17% of employees were being treated for a chronic condition. The plan provided disease management programs for heart disease, diabetes, asthma, low back pain and chronic obstructive pulmonary disease. However, overall participation in the programs was low, particularly for heart disease, diabetes and asthma. These three conditions alone accounted for more than 26% of the company’s medical costs.
• A large portion of the company’s call center employees were younger females who had a higher than average rate of maternity costs. These costs accounted for more than 10% of the total medical costs, and costs for newborn care accounted for an additional 3%.

In this case we phased in a full replacement of the company’s benefit plan with a CDHP and implemented additional health advocacy programs. The strategy was supported by a communications plan designed to help employees understand their benefits and how to use them cost effectively to improve their health.

We introduced both CIGNA Choice Fund Health Reimbursement Account (HRA) and CIGNA Choice Fund Health Savings Account (HSA) over the course of two years. Since both of these plans introduced employee funded accounts all employees had an incentive to make better health care choices because they were now in effect spending – or saving – their own money. The plan also included 100% coverage for preventive care and screenings, to encourage use of these services.

All By Design: New Features and Enhancements

The HRA and HSA provided employees with a financial incentive for becoming more actively involved in managing their health care costs. The employer also recognized that their employees needed clinical support to help them make decisions about improving their health. The new health advocacy programs included:

• Expand and enhanced disease management: the plans added $250 incentive for participation in a heart disease or diabetes disease management program, automatically deposited to the employee’s account. In addition new programs were introduced for depression, weight loss and several other targeted conditions to help employees with chronic conditions and those at risk improve their health.
• Health coaching: the plans featured CIGNA Health Advisor SM, which provides telephonic outreach from specially trained health advisors who help employees navigate the health care system, understand how their lifestyle choices can affect their overall health, and access information about cost and quality. This program includes outreach to employees whose health risk assessment indicates that they may be at risk; and additional incentives were offered for participation in the health risk assessment.
• A comprehensive maternity program was also added which offers financial incentives to expectant mothers who identify themselves early in their pregnancies. This program will ensure that these expectant moms receive early screening for risk factors as well as information about prenatal care.

As we all well know change – even positive change – can be scary. To help employees understand how to use their benefits more effectively to improve their health, the company developed a comprehensive communications strategy that included:

• On-site benefits enrollment fairs and webinars to ensure that employees understand their health plan benefits.
• Plan modeling tools to help employees determine which plan choices were best for their family’s anticipated health and personal cost needs.
• Health expos that provide health screenings and information about healthy lifestyle choices at sites that have the highest prevalence of members with chronic diseases.

A Healthy Bottom Line

The new benefits strategy has had a significant positive effect on the company’s medical cost trend. As it continues to refine the plan, the company expects additional improvement. So far, the strategy has resulted in:

• A multiple-year single-digit cost trend.
• A 10% increase in the number of members getting preventive care and a 10% increase in the number of members with chronic conditions who are more actively managing their conditions with preventive care and use of drug therapies.
• A 100% increase among members participating in a utilization management, case management or disease management program
• A double-digit decrease in lifestyle-related prescription medicines (for example, pain-reducing agents) resulting from an increase of equivalent but significantly more cost effective over-the-counter medications.
• A high rate of participation in the health fairs, resulting in additional identification of employees with health risk factors.

Through this real-life example as well as claims experience of hundreds of thousands of plan participants in other plans we see the value of strategies that encourage employees to use their benefits more effectively combined with a high level of coaching and support. It includes clinical resources, incentives for participating in a disease management program and higher preventive care utilization, and ongoing communications support to ensure that employees understand their benefits and how to use them to become more actively engaged in improving their health.

Prescription for a Better Health System

As the fact-based results of our multi-year study and the case history demonstrate, health care quality and the cost efficiency offered in a well-designed CDHP are not only sustained, but cost reduction compounds over time; as does improved health.

These elements are the prescription for what ails the American health system – they help remove costs from the system, rather than simply shifting them elsewhere, and health care quality improves. By removing costs, we make coverage more affordable and as a result, perhaps more accessible for millions of people without protection.

If we take the specific steps that have been shown to be effective at providing true multi-year solutions, we will have a sustainable, affordable healthcare system for the 21 st century,

Bill Reindl is Senior Vice President for CIGNA HealthCare’s consumer segment. If you wish to receive a detailed summary of CIGNA HealthCare’s CDHP study, contact: william.reindl@cigna.com.