The truth about consumer driven plans: Addressing the top CDH misconceptions

By Bart Halling

Consumer-driven health (CDH) plans require participants to think differently every time they access their health care benefits. The plans require management of a financial account for health care spending purposes and are often designed with larger deductible structures – making each plan participant more accountable for their own health care spending. These factors differentiate CDH from traditional plans and can be outside of a participant’s initial “comfort zone.” However, many people do not understand CDH in full and are often plagued by confusion and misconceptions.

By removing the confusing messages and intimidation that can greet new CDH consumers, you can educate plan participants, achieve buy-in and support and boost consumer confidence in their health care decisions. Ultimately, dispelling misconceptions up front helps you increase your CDH enrollment and overall plan satisfaction, and modify health care purchasing behavior in favor of your trend.

Misconception:  CDH is just a cost shifting strategy.

Truth:  CDH plans include both cost sharing and cost containment strategies.

How to address:  Stress positive plan benefits that may go unnoticed.

CDH plans move away from the "pre-paid health benefits" mindset. At the crux of every health expenditure is a consumer that has tremendous influence over medical costs. Exposing members to the true cost of health care instead of insulating them from it brings about behavior change by way of simple economics. Members are brought into the center of the decision-making ring, they play a decisive role regarding where, when, from whom and at what price they will seek care.

Help your plan participants address the high deductible "sticker shock" by providing solid education highlighting the premium differential, increased decision-making

freedom and the often impressive tax benefits. Doing so motivates individuals to become conscientious, savvy health care consumers who seek the highest value for their dollars and create long-term wealth strategies that are directly connected to their health care spending.

Misconception:  CDH is just a fad.

Truth:  CDH products may be considered new, but they are not a fad.

How to address:  Provide history and context on CDH plans.

CDH plans appeared on the market in the late 1990s as business models for venture firms looking to disrupt the existing health care models. By 2003, congressional acts and provisions formalized the plans under the Medicare Prescription Drug, Improvement and Modernization Act. Between March 2005 and January 2009, the number of individuals with some form of CDH plan grew by 800 percent - the fastest growing health product in the U.S. (faster comparable growth than even the HMO concept when it was first introduced). By some counts nearly 20 million members across the U.S. now participate in consumer-driven, account-based health plans and the numbers continue to grow.

Misconception: CDH plans are only for the healthy and wealthy. Those in need will forgo even the most necessary care.

Truth:  CDH plans offer benefit value across a wide range of participants, regardless of health status and/or financial "wellness."

How to address:  Offer rich preventive coverage, incentives, wellness and disease

management programs and attractive post-deductible benefit structures.

Studies show CDH plans attract the same mix of members across the health status continuum as other traditional plans. Initial forecasts for CDH expected that the profile enrollee would be young, healthy and unmarried. Actual results across the industry prove out that average participant age is 40-plus with more than 2.1-plus members per household.

We encourage adding several components to your plan design to serve the needs of all members.  First, due to health care reform, all insurance plans renewing on or after Sept. 23,

2010, will be mandated to offer preventive care first-dollar coverage without cost-sharing components for in-network providers.  This requirement assists in encouraging the healthy to maintain their health status, and for those in need of improvement, an opportunity to assist in identifying areas of focus.

Second, offer incentives for people to work toward better health - whether that is as simple as taking an online educational tutorial on weight management, or as powerful as physically lowering their body mass index (BMI). Incentives create an attractive opportunity for

participants to actually reduce out-of-pocket financial exposure and make plans more affordable.

Third, offer wellness and disease management programs to identify your at-risk population. Provide tools and resources to help them work toward better health.

Lastly, it is worth highlighting to your employees that there is protection in place for large health care expenses. For the percentage of the employee population that manages chronic conditions, or is more likely to satisfy their deductible during the plan year, we encourage employers to offer a rich post-deductible benefit, such as a 90/10 split or 100 percent coverage.

Misconception:  CDH plans require employees to "shop" for medical care, but there is no way for employees to get information on prices and quality.

Truth:  Decision support, transparency and analysis tools are available to members, equipping them for true consumerism in health care decisions.

How to address:  Point them to the right tools, early and often.

The universe of effective consumer decision support tools continues to expand and support the evolution of savvy consumer purchasing in health care. True consumers are educated about their purchasing decisions. They have done their research for the product/service they are purchasing, know the market rate and what value and quality to expect. It is the same behavior most savvy consumers exhibit in purchasing a car, a vacation, or hiring a contractor to work on their home...and is the same behavior CDH plans can bring about.

A variety of tools are available to members that assist them in transitioning to consumerism. They help them select the best physician/facility based on the need, understanding and estimating procedure and treatment/prescription drug costs and comparing

facilities and the services they offer.  Help your members become smart purchasers by communicating and marketing the use of these tools early in the plan transition and continue to point them toward the tools throughout the life of the plan.