Diabetes - A Major Financial Challenge to Employers

The number of Americans with diabetes has grown by 15% over the last two years, an alarming trend that could cost the economy more than $350 billion in lost economic output.[1] The World Health Organization says diabetes is a global epidemic that affects more than 180-million people, and twice that number are expected to develop the disease in the next 20 years. More than a million people will die from complications of diabetes this year.[2]

Beyond the public health concerns, diabetes is a significant threat to American businesses.  Employers stand to lose billions of dollars in lost productivity, health care costs, and disability costs.  The Centers for Disease Control and Prevention (CDC) report that eight percent of Americans, 24 million in all, have been diagnosed with the disease, a 15% increase in just the last two years. Another 57 million have blood sugar levels high enough that they are considered “pre-diabetic.”[3] Undetected and untreated, pre-diabetes can rapidly progress to full-blown diabetes. Complications can include blindness, kidney failure, heart attack, stroke, and amputations.[4]

“Having type 1 or type 2 diabetes places a person at the same risk of a heart attack as if they had already had a previous heart attack,” says Sam Ho, MD, Chief Medical Officer of UnitedHealthcare. “In addition, disease of the retina caused by diabetes is the number-one preventable cause of blindness in America. In fact, many complications of diabetes can be delayed or avoided by timely preventive measures. Unfortunately, many opportunities to identify and treat these complications are missed. In many cases, type 2 diabetes can be avoided entirely by weight management. The complications of both type 1 and type 2 diabetes can be identified early and successfully managed by attention to blood sugar control, adherence to a physician-directed diet, appropriate exercise, periodic physician examinations, appropriate blood and urine tests, annual foot examinations and annual examinations of the retina by an eye doctor,” Ho said.

Employers Bear a Heavy Cost
The cost of treating diabetes and its complications is a heavy burden on employee health plans. More than 10% of all U.S. healthcare expenditures in 2002 went to treat the disease and its associated complications. By 2050, the annual cost will top $132-billion, the bulk of that for treating complications. In a just-released study of diabetes trends, researchers predict that the increasingly complex and costly diabetes treatments will have a significant impact on the provision of health care to those patients.[5]

Diabetes drug expenditures leaped from $6.7 billion in 2001 to $12.5 billion in 2007 A prime cost driver was the increased use of newer and more costly drugs. The mean price of a diabetes drug prescription has increased from $56 in 2001 to $76 in 2007.[6]

Costs associated with diabetes are weighing heavily on employers and employees alike.  UnitedHealthcare claims for uncomplicated diabetes rose from $45 million per year in the 4th quarter of 2005 to $49 million in the 3rd quarter of 2007. Complicated diabetes costs increased from $64 million to $73 million over the same time period.[7]

Employers face an additional, hidden cost from the effects of diabetes. Employees who do not properly care for themselves, take their medications, and get regular professional care cost millions of dollars annually to presenteeism, the situation where an ill employee reports to work but is not able to work to full capacity. Employee effectiveness can be reduced as much as 50% in many presenteeism cases.[8]

Treatment Costs Approaching $100 Billion
 Reducing the incidence of diabetes and more effective care of people already diagnosed with the disease has the potential to save enormous sums in both direct and indirect costs. The Milken Institute conservatively estimates that the cost of diabetes will rise at about 3.4% annually over the next 15 years. Reducing that growth by 0.5% through better case management saves $90 billion in direct and indirect costs. UnitedHealthcare’s own research finds that the cost of diabetes is actually rising much faster, as high as 15% a year.

Employer-Based, Incentive-Driven Program Cuts Costs
Diabetes cannot be cured but it can be managed to lessen the devastating effects of the disease. On average, diabetes is not diagnosed in a patient until three to seven years after onset.

With the passage of time comes more damage to organs and systems like blood vessels, the heart, kidneys, and eyes.  Patients with pre-diabetes can slow the progression to diabetes by as much as 58% by modifying their lifestyles and behaviors.[9]

Recognizing the growing need for a value-based design focusing on diabetics, and built on evidence-based medicine and a critical understanding of how to motivate members, UnitedHealthcare created the Diabetes Health Plan.

This unique benefits package encourages and incents members to control their blood sugar, be compliant with their medication regime, and see their physician regularly for testing and monitoring. By requiring compliance with diabetes preventive care in exchange for a reduction in the member’s out-of-pocket costs, health outcomes may improve and health costs should decrease. UnitedHealthcare surveyed 386 people with diabetes and found strong support for such a program.

Question: Having now seen all of the details of this diabetes health insurance plan – including  the enhanced benefits you’d receive, the guidelines you’d be expected to follow, and the special features such as the Online Scorecard and Diabetes Specialist, how likely would you be to enroll in it if it were offered today where you work? 

The UnitedHealthcare Approach to Diabetes Management
“Controlling the high costs of diabetes requires early detection, early treatment, effective care, and an involved and motivated patient” says Deneen Vojta, M.D., Vice President and Medical Officer of United Essentials. “UnitedHealthcare examined millions of data points and hundreds of thousands of patient encounters to develop this personalized Diabetes Health Plan that empowers members and can reduce employer health plan costs. At the heart of the program is a benefit incentive for member participation, with specific evidence-based diabetic preventive care requirements that must be met for the member to remain in the program and receive the additional benefits. UnitedHealthcare’s Diabetes Health Plan’s  features are outlined below.

Step One: Screening
An old adage in medicine says, “If you don’t take a temperature, you’ll never find a fever.” UnitedHealthcare begins by identifying people with diabetes and pre-diabetes through biometric testing and historical health claims analysis. There are several options for the screening which includes tests for fasting plasma glucose and HbA1c (a measure of glucose level control over the previous three months).[10] Employers may schedule on-site pre-enrollment clinics, or members can be tested by their primary care physician or local retail clinic.  Individual information is never shared with employers, of course, but many companies are surprised to see the aggregate number of employees who have the condition.

Historically, about 18% of the employee population with chronic conditions like diabetes is responsible for 80% of health care costs. Identifying those employees and steering them into the Diabetes Health Plan can cut costs by thousands of dollars per member per year.

Step Two: Enroll In A Diabetes Management Program
The UnitedHealthcare program has four major goals:
• Reduce member out-of-pocket expenses for evidence-based standard diabetic care.
• Provide patients with a list of physicians who have documented success in proving quality and cost-effective care.
• Encourage compliance with a plan design that requires member to adhere to evidence based guidelines to receive enhanced benefits.
• Support member compliance requirements with diabetic education and an on-line tracking tool with built-in reminders.

The primary objective of the Diabetes Health Plan is to teach members about diabetes, how to manage diabetes, and the importance of routine care to avoid complications. Education is vital; members who do not understand their disease and the reasons for controlling it will not successfully comply. Compliance is required for participation but it is not onerous. Members diagnosed with diabetes must do the following to stay in the program:
• Lab Evaluation: HbA1c levels, LDL (low-density lipoprotein) cholesterol, microalbuminuria  and creatinine level checks.
• Professional Services: Regular primary care, retinal exams
• Preventive Care: Cancer screening including mammography and colonoscopy if age appropriate.
• Wellness: Medical management participation (if offered) and  health risk assessment completion.

Members with pre-diabetes are required to complete a health risk assessment, regular primary care visits, participate medical management programs (if offered), have their HbA1c and LDL monitored, and be regularly screened for cancer, if age appropriate.

Members can track their test results and care regimen on a specialized secure Web site. The site sends reminders for screenings and exams, and also contains links to trusted sources of medical information.

Compliance Motivation
Diabetes can be  expensive for both the member and the employer, and not surprisingly a financial incentive to stay compliant with treatment is a strong motivator. Almost two-thirds of Type II diabetics surveyed said they would participate in the Diabetes Health Plan if physician visit and pharmacy co-pays were reduced. Over half said they would participate if diabetic testing supplies were offered without charge. An annual savings as low as $500 was a sufficient motivator for 97% of members surveyed who expressed interest in the program.[11]

Benefit Incentive Design
The chart below is an illustrative example of how a Diabetes Health Plan would be structured for a large employer.

Projected Savings
The purpose of the Diabetes Health Plan is to provide additional benefits to people with diabetes in exchange for compliance with evidence-based diabetic preventive care guidelines which may improve health outcomes and reduce medical costs for the global diabetic and pre-diabetic population. UnitedHealthcare’s historical data show that people with pre-diabetes cost about $5,000 yearly in health benefits. People with previously undiagnosed diabetes can spend as much as $12,000 annually, reflecting the costs of stabilizing them medically and dealing with conditions that have resulted from the untreated diabetes. Once stabilized, members with uncomplicated diabetes incur average annual costs of $10,000, while those with complications cost three times as much, $30,000 annually. Clearly, both members and employers have a strong incentive to control costs. An example of how the UnitedHealthcare Diabetes Health Plan may produce savings is illustrated below:

Illustrative Savings at 1,000 Employee Company
1,000  X  .08 [12]  =  80 employees

Complicated diabetes =  22 employees [13]
Uncomplicated diabetes = 58 employees [14]

Annual estimated cost for 22 complicated diabetes cases = $672,000
Annual estimated cost for 58 non-complicated cases = $576,000
Estimated annual cost =  $1.248 million.

With the Diabetes Health Plan
Estimated Year One Savings:  $62,000
Estimated Year Three Savings: $124,000

Diabetes Health Plan vs. Traditional Disease Management
The Diabetic Health Plan can compliment existing medical management programs. While disease management is effective for the highest risk members, it is not designed to support standard preventive diabetic care for all people with diabetes. The Diabetes Health Plan has the principles of disease management, such as closing the gaps in care baked into the benefit design. Recognizing that there can be an actuarial value to compliance, this plan can share some of the actuarial savings with compliant members, putting self-management in the hands of the consumer. As an example, high-risk members with diabetes will continue to benefit from intensive support provided through various medical management programs.

Conclusion
Diabetes is a significant driver of health care costs and can increase the severity of other chronic and acute medical conditions. Poorly managed, diabetes directly increases employee benefit expenses and indirectly costs the organization in lost productivity. Reliance on passive or self-motivated condition management and education is no longer sufficient in light of the increasing number of cases and the relatively small number of members willing to take this path. A properly designed health benefit plan backed by financial incentives and built on evidence-based medicine is one approach to addressing a disease that costs the national economy more than $100 billion every year. Leading-edge organizations that want to reduce their benefit spend and increase productivity are turning to the Diabetes Health Plan to help reduce top-line costs and help improve their bottom line.

For more information on the Diabetes Health Plan, contact UnitedHealthcare at 860-702-7741 or by e-mail: mj_frascino@uhc.com. www.unitedhealthcare.com

References:
[1] An Unhealthy America: The Economic Burden of Chronic Disease. Oct., 2007, the Milliken Institute
[2] Diabetes Fact Sheet number 312.  World Health Organization. September, 2006
[3] Morbidity & Mortality Weekly Report 57(43), Oct. 31, 2008. Centers for Disease Control and Prevention. Pp. 1169-1173
[4] Harrison’s Principles of Internal Medicine, 12th Ed. 1991, pp. 1740 -1743)
[5] National Trends in Treatment of Type 2 Diabetes Mellitus, 1994 – 2007. Archives of Internal Medicine 168(19), Oct 12, 2008.  American Medical Association
[6] Ibid.
[7] UHC Comparative Spend for Primary Care. Reden & Anders, an Ingenix Company. January, 2008.
[8] Better Outcomes Through Health and Productivity Management, Journal of Managed Care 2005 Medical Director Colloquy Supplement.
[9] Diabetes Prevention Program Research Group. Reduction in the Incidence of Type 2 Diabetes with Lifestyle Intervention or Metformin. NEJM; 346(6): 393-403.
[10] Harrison’s Principles of Internal Medicine. 12th Ed. Vol. 2. (1991) p. 1749
[11] UnitedHealthcare Proprietary Research, August, 2008.
[12] Diabetes prevalence in the general U.S. population. Centers for Disease Control and Prevention.
[13] Understanding Diabetes Population Dynamics Through Simulation Modeling and Experimentation. American Journal of Public Health. 2006 March; 96(3): 488–494
[14] Understanding Diabetes Population Dynamics Through Simulation Modeling and Experimentation. American Journal of Public Health. 2006 March; 96(3): 488–494