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introduction
step up introduction
Better Health Care By
Design Blueprint: What
It Is and How It Works
The Blueprint offers insight on how to achieve greater value for your health
Better Health Care By Design is willing to help. Many early adopters and
health care experts came together to make this guide possible and they share
a common desire to see value-based approaches adopted in health care. They
are willing to be a sounding board for your questions and concerns as you move
forward in establishing your own value-based design. Contact information for
our support team is listed in the closing section.
care investment in your own organization. This Blueprint also provides useful
Getting Better Health Care By Design
case studies drawn from the experience and results of early adopters. It will
It’s no secret that the high cost of health care has employers and employees at
show you how to get started and what you will need to assess and implement
a breaking point. Employers are finding themselves unable to offer affordable
the best value-based approach for you and your employees.
health insurance, resulting in more employers no longer offering this benefit.
Each section of this Blueprint is a stand-alone file, which can easily
be downloaded and shared with your colleagues. The sections following this
introduction include:
Those who do offer health insurance are often forced to shift a greater
percentage of costs and responsibility to employees.
Many employees, particularly those with chronic conditions, find
themselves unable to afford to use the health care they need to stay healthy
Value-Based Design Models
and productive. The impact of cost and responsibility shifting is beginning to
Data Drives Design
have catastrophic effects on health outcomes that determine the productivity
Legal Considerations
of employees and the companies that employ them.
Clearly, something must be done to make health care more sustainable,
Involving Health Providers
effective and valuable for employees and employers alike. The good news
Communicating the Benefit
is that something can be done. New benefit designs reverse the downward
Case Studies
spiral of health and economic outcomes with a game-changing strategy:
Your Support Team / Acknowledgements
Understanding how chronic diseases drive up health care
costs and drive down productivity
Instituting strategies for risk management to prevent and
manage chronic disease
Better Health Care By Design blueprint | 2
step up introduction
Moving from cost shifting to sharing responsibility with
Blueprint on Better Health Care By Design. It will help you understand the
employees—offering incentives for achieving better health
problem, the solution and the practical ways to adapt its principles to the
outcomes that turn the bottom line expenses of health care
health insurance needs of your company or local government.
into top line drivers of performance
in the quest to sustain the best overall health for
Addressing the Link Between Chronic Disease and
Chronically High Costs
employees and the best economic health for the employer
Better Health Care By Design focuses on the primary and secondary
Constantly assessing value by linking costs with outcomes
prevention and risk management of chronic diseases—the biggest driver of
These are not pie-in-the-sky concepts, but rather practical and productive
costs for both employees and employers. Offering a strategically developed
plans that have been designed by forward thinking companies and local
package of financial and care incentives for people with chronic diseases
governments in collaboration with their employees, insurance plans and
increases adherence to recommended treatment and decreases the need for
health care providers. They were designed and implemented by companies
catastrophic care that leads to catastrophic costs.
like Pitney Bowes and Marriott as well as the City of Asheville, North Carolina,
The success of Better Health Care By Design depends on a counter-
and Polk County, Florida. However, you don’t need to be a large employer to
intuitive approach: reduce the costs of chronic disease by reducing out of
realize the advantages of value-based approaches. These early adopters saw
pocket expenses and other barriers to care for people living with chronic
the effects of chronic disease on their profitability and performance and
diseases. While counter-intuitive, this approach has been shown to work. The
quickly realized that they needed a new benefit design that linked enterprise
alternative of increasing out of pocket expenses for the chronically ill has
value with the value of employee health. Data from their experiences clearly
been shown to lead to poorer care and worse results.
show that better value in health care is a direct result of benefits strategically
designed to produce better health and economic outcomes.
Chronic conditions are life-altering and potentially life-threatening
diseases that must be constantly treated and managed if they cannot be
We call this Better Health Care By Design—an approach to health
prevented. While heart disease, hypertension, asthma, diabetes, cancer,
benefit design that focuses on increasing value for all instead of simply
arthritis and mental health affect many, there also are less prevalent chronic
shifting costs. And, we believe Better Health Care by Design is both a health
diseases that affect fewer but have just as great or greater impact on the
effective and economically beneficial solution for many of the country’s
economic stability of employees, their employers and the costs to the health
employers and employees.
care system. Therefore, when we look at achieving better value for health care
A group of early adopters joined with interested business leaders, patient
advocacy groups, insurance companies, municipal leaders, labor unions
dollars, it is important to address all chronic diseases so as not to overlook
the hidden costs among those most often overlooked.
and providers to advance this new value-based solution. One result is this
Better Health Care By Design blueprint | 3
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People living with chronic diseases already incur heavy financial burdens for
Adverse health outcomes can be alleviated if cost-sharing
health care. Many have more than one condition. For example, diabetes often
provisions are explicitly designed with value in mind. This
comes with heart disease and hypertension—and many chronic conditions
approach can effectively increase adherence to important medications
have a negative effect on mental health. These patients must see doctors more
and complement existing disease management programs.3
often, have more procedures and use more medications in order to manage
their health and maintain their productivity. Deductibles and copays quickly
add up to create a significant financial barrier to care and ultimately diminish
the chances of living healthy, independent and productive lives. Too many are
choosing between health security and economic survival. The choice is often
to forgo adherence to recommended
care. This is not cost effective for
patients
or
employers
because
both pay the price for poor health
outcomes through lost productivity,
increased utilization of catastrophic
care and higher costs.
TOO MANY PEOPLE
ARE CHOOSING
BETWEEN HEALTH
SECURITY AND
ECONOMIC SURVIVAL.
There is compelling evidence for decreasing out of pocket costs for
patients with chronic disease:
Out of pocket health spending is highest among people with
chronic conditions, making them particularly vulnerable to cost
sharing and coverage restrictions because of their higher overall utilization
and use of specific services for which benefits are limited.1
The chronically ill are forgoing the care they need. More than
half (54%) of U.S. chronically ill patients did not get recommended care,
fill prescriptions, or see a doctor when sick because of costs, according to
Price points matter. A Brown University study reviewed mammogram
coverage by 174 Medicare managed-care plans. When plans required
copays of $12 to $35, there was a 6% drop in utilization in just two years.
Mammography rates rose by 3% in plans that did not require copayments.4
A 2005 diabetes study found that waiving copays for ACE inhibitors taken
by diabetic patients would save lives and reduce long-term costs to Medicare
because there would be fewer kidney and heart-related complications.5
Benefit design is an important determinant of out of pocket costs.
For many conditions, hospitalizations are the single largest component of
overall health care costs but the highest out of pocket costs are typically
associated with prescription drugs and physician visits. The Kaiser Family
Foundation found that most patients’ cost-sharing accounts for only 5 percent
of hospital services, while cost-sharing for office visits and prescription drugs
average, respectively, 29 percent and 54 percent of costs.6
Faced with this evidence, forward-thinking employers, insurance companies
and providers began to realize that the best way to control health care costs
is to focus on better patient outcomes. In the case of people with chronic
diseases and conditions, that means providing the means to adhere to doctor’s
orders—not increasing the financial barriers to successful prevention and
management of their chronic conditions.
a November 2008 survey by The Commonwealth Fund.2
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A New Strategic Approach: Responsibility Sharing
It was obvious to health benefit design innovators that further cost shifting to
patients wouldn’t lower overall costs. It was equally obvious that employers
are at a breaking point. Cost is a barrier to access for patients with chronic
outcomes. This conceptual shift helped benefit design innovators move from
managing health care to managing healthy economic returns. Productive
human capital drives business productivity and sustains financial success.
disease, but so is a lack of investment in patient education, coordination and
It’s Working
motivation. Innovators soon developed a principle of shared responsibility
Better Health Care By Design isn’t a theory. It’s a growing practice with a growing
among patients, employers, insurance companies and providers that is the
body of evidence as to its effectiveness. Today, employers, providers, patient
cornerstone of Better Health Care By Design:
advocacy groups, unions and health plans are working together to design new,
improved and economically sustainable benefit designs that provide better
Patients have a responsibility to take charge of their
health and productivity by preventing chronic diseases
value for patients and payers—and reduce the cost burden for everyone.
Notice how we said “benefit designs.” When it comes to Better Health
and diligently managing those that cannot be prevented
Care By Design, there isn’t one design that fits all, but a set of principles and
through education, awareness and adhering to medical
an approach that help people design the best plan for their specific needs. All
recommendations.
health care is personal, and the people who make up your workforce determine
Employers and insurance companies are responsible for
providing patients with access to the recommended care—
from preventative to treatment and ongoing management—
they need to be healthy and productive.
Providers are responsible for coordinating care to address
co-morbidities, help patients make the best choices and
encourage the best overall health outcome—not just progress
against one disease or symptom but increased overall health
and productivity that benefits patient and payer alike.
Most importantly, shared responsibility leads to shared outcomes. It moves
from the negative of making sure “everyone has skin in the game” to making
sure everyone shares in the human and economic value of better health
the kind of plan you’ll need to maximize the value of your investment.
Later in this Blueprint, you’ll learn about the principles of Better Health
Care By Design and how to adapt them to your needs. In the meantime, it is
important to know that benefit design innovators have taken a wide range of
actions—from simple to highly involved—but in each case their actions have
produced greater value for their health care dollars.
Businesses are experimenting with new models to get better value for their
health care investment and save money. A growing number of companies are
providing services like free check-ups and screenings as well as free or reduced
copays on prescription drugs. These steps are saving their employees money,
increasing worker productivity and reducing their overall health care spending.
Companies such as Pitney Bowes, Toyota Motor Corp and Marriott International
provide free drugs for controlling some chronic diseases; in addition Intel Corp.,
Walt Disney and Toyota and others have opened on-site primary care clinics
Better Health Care By Design blueprint | 5
step up introduction
offering annual physicals, blood pressure and cholesterol screenings that are
launched a new approach to reduce the total cost of certain chronic
free or well below the typical copayment for doctor’s office visits.
diseases by reducing the patients’ cost barriers to their prescription
7
drugs. The plan cost the company $1 million a year, and although there
The Asheville Project improved patient outcomes and
reduced health care costs
was higher utilization of maintenance medications, there was also lower
use for rescue medications by people with asthma. An asthma drug that
In 1996, the City of Asheville, North Carolina, a self-insured employer, began
had previously been third tier on the prescription drug formulary, requiring
to provide education and personal oversight for employees with chronic health
employees to pay 50% or $62.50 of the drug cost, was moved to the first-
problems such as diabetes, asthma, hypertension, and high cholesterol.
tier level where employees were paying 10% or $12.50 out of pocket. As a
Employees with these conditions were provided with intensive education
result, more employees and their family members filled their prescriptions
through the Mission–St. Joseph’s Diabetes and Health Education Center.
and stuck with their treatment. Emergency room visits dropped. Within
Patients were teamed with community pharmacists who made sure they were
three years, the median medical cost for those with asthma fell 15%
using their medications correctly. Employees, retirees and dependents with
and costs for diabetic employees fell 12%. In 2007, Pitney Bowes
diabetes soon began experiencing improved A1C levels (which gauge a person’s
expanded their low-cost and no-cost drug plan to include osteoporosis
blood sugar level), lower total health care costs, fewer sick days, and increased
treatments, anti-seizure medications and prenatal supplements. Diabetic
satisfaction with their pharmacists’ services. Today, the Asheville Project is
and heart-attack patients also receive cholesterol-lowering statins free.10
inspiring a new health care model for individuals with chronic conditions. The
In 2007, the gap between Pitney Bowes per-employee cost and the 2001
Asheville model is payer-driven and patient-centered. Employers are adopting
benchmark is worth about $40 million in avoided costs.11
this approach as an additional health care benefit to empower their employees
to control their chronic diseases, reduce their health risks, and ultimately
lower their health care costs.8 The City of Asheville, North Carolina, reduced
Marriott Corporation increased adherence to recommended
treatment regimens by reducing copayments for five chronic
medication classes
total health care costs by a range of $1,622 to $3,356 per patient per year
In 2005, Marriott Corporation, which employs 108,000 people in the U.S.
and shifted their health care use from the emergency room, inpatient services
alone, eliminated or reduced drug costs by 50% for individuals needing
and physician office visits to prescription claims, keeping people healthier and
essential drugs for chronic conditions such as cardiovascular disease,
more productive.9
diabetes and asthma. The program targeted patients not taking important
Pitney Bowes changed the formularies for chronic disease
medication, resulting in lower medical costs overall
Initially driven by unsustainable health care costs, Pitney Bowes, a $6
medications and enrolled them in a disease management program as well.
Compared to a control employer that used only a disease management
program, Marriott reduced nonadherence by 7–14 percent.12
billion mail-service company with 24,000 U.S. employees, in 2001
Better Health Care By Design blueprint | 6
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1 W Hwang, W Weller, H Ireys, and G Anderson, “Out-of-Pocket Medical Spending For
Care Of Chronic Conditions,” Health Affairs, (2001): Vol. 20, No. 6, 267-278.
8 American Pharmacists Association Foundation, Internet accessed Nov. 2008 at
www.Aphafoundation.org/programs/Asheville_Project/.
2The Commonwealth Fund, “New Internationally Survey: More Than Half of U.S.
Chronically Ill Adults Skip Needed Care Due to Costs,” Internet accessed November
2008 at www.commonwealthfund.org/newsroom/newsroom_show.ht.
9 CW Cranor, BA Buntin, DB Christensen, “The Asheville Project: Long-Term Clinical
and Economic Outcomes of a Community Pharmacy Diabetes Care Project,” Journal of
American Pharmaceutical Association, (2003): Vol. 43, No.2.
3 ME Chernew, MR Shah, A Wegh, SN Rosenberg, IA Juster, AB Rosen, MC Sokol, K YuIsenberg, and AM Fendrick, “Impact of Decreasing Copayments on Medication Adherence
Within a Disease Management Environment,” Health Affairs, (2008): 111, Vol. 27, No.1.
10J Miller, “Beware of Barriers to Care: Pitney Bowes Increases Access to Care Through
On-site Clinics and Low-Cost Drug Benefits,” Managed Health care Executive, 1
April 2008, Internet accessed Nov. 2008 at www.managedhealth careexecutive.
modernmedicine.com/mhe/Cover+Article/Beware-of-barriers-to-care-Pitney-Bowesincreases-/ArticleStandard/Article/detail/507966%searchString=Pitney%20Bowes.
4 AN Trivedi, W Rakowski, and JZ Ayanian, “Effect of Cost Sharing on Screening
Mammography in Medicare Health Plans,” New England Journal of Medicine, 24 Jan.
2008: 358:375-383.
5 AB Rosen, MB Hamel, MC Weinstein, DM Cutler, AM Fendrick, S Vijan, “Cost
Effectiveness of Full Medicare Coverage of Angiotensin-Converting Enzyme
Inhibitors for Beneficiaries with Diabetes,” Annals of Internal Medicine, (2005):
Vol. 143, No. 2, 89-99.
6 Kaiser Family Foundation, “Distribution of Out of Pocket Spending for Health
Care Services,” May 2006, Internet accessed Nov. 2008 at www.kff.org/insurance/
snapshot/chcm05006oth.cfm.
7 MP McQueen, “Workers Get Health Care at the Office,” Wall Street Journal,
18 Nov. 2008, Internet accessed Nov. 2008 at www. online.wsj.com/article_
email?SB122696833222435529-IMyQjAxMD14MjE2ODkxNjg4Wj.html#printMode.
11JJ Mahoney, “Value-Based Benefit Design: Using a Predictive Modeling Approach to
Improve Compliance,” Supplement to Journal of Managed Care Pharmacy, (2008):
Vol. 14, No. 6, S-b, Internet accessed Nov. 2008 at www.amcp.org/data/jmcp/
JMCPSuppB_S3-S8.pdf.
12ME Chernew, MR Shah, A Wegh, SN Rosenberg, IA Juster, AB Rosen, MC Sokol,
K Yu-Isenberg, AM Fendrick, “Impact of Decreasing Copayments On Medication
Adherence Within A Disease Management Environment,” Health Affairs, (2008):
Vol. 27, Number 6, 103-112.
13J Berger and M Kushner, “An Employer Case Study,” Out of Pocket Cost Impact
Forum, Hilton Chicago O’Hare Airport, 17 June 2008.
Better Health Care By Design blueprint | 7
Step 1
Value-Based
Design Models
step 1 Value-Based Design Models
Value-Based
Design Models
Today’s economic realities are helping propel innovative approaches to health
care delivery in a way that brings more value to both the health care payer and
the consumer. Although the definition of value may be somewhat subjective
depending on the desired outcome, health care stakeholders are expanding its
meaning to reflect the total cost of care. That definition includes the cost of
disability, unscheduled absences, and presenteeism in the workplace. Health
care purchasers, such as employers, governmental entities and health plans,
are working to minimize financial barriers to health care services, products and
activities that provide high value by lowering or waiving their associated costs.
At the same time, “quality” has been redefined to include fewer medical
errors, less redundancy of services, procedural efficiency and improved health
outcomes, and “dividend” is emerging as a way to quantify the total improvement
in health outcomes, reduction of risk and the financial cost trend.
Cyndy Nayer, President and Chief Executive Officer of the Center for Health
Value Innovation, reminds employers that “benefit design is not a onesize-fits-all approach. It’s a strategic investment that reflects the unique
characteristics and needs of a company or community. Use the data to
identify the most vulnerable populations, then use your investment strategies
to increase access for better outcomes and better performance overall.”
No one approach is above another. In fact, the ensuing data collection
and analysis phase will very much inform what type of design best meets
the needs of your employees. Furthermore, each design will present
advantages and challenges along
the way. It is important to carefully
deliberate the implications of each
design choice to ensure you have
the tools and resources necessary to
fully implement the model.
Benefit design is
not a one-sizefits-all approach.
— Cyndy Nayer
Medication Focused or Condition Specific Incentives
To meet these new definitions, purchasers have begun to utilize a variety
The condition specific benefit designs are established for people with a
of health care benefit designs in order to drive the patients to use those
targeted chronic disease who may benefit from adherence to particular
treatments, procedures and providers that bring the greatest value to the
medications to treat their condition. This model requires less data
patient, the payers and our society.
integration and has a broad reach among employees. It may be linked to
Each of the benefit design approaches described below focuses on
a mandatory condition management program. On the other hand, it may
different areas within the health care continuum such as health behaviors,
present challenges for some employers in that it can be more costly than a
chronic condition management, medications, and provider choice. Each
more focused approach that only targets individuals who are non-compliant
model is coupled with incentives and disincentives to encourage appropriate
or considered “under-users” of health care. It may not pay out the same
health-seeking behavior. Although there are incentives such as copay
level of dividend in the short term.
reductions or waivers, premium reductions, and health saving contributions,
not all incentives are financial.
Please see the case studies for City of Springfield, Oregon, and Polk County,
Florida, to learn more about successful implementation of this design.
Better Health Care By Design blueprint | 2
step 1 Value-Based Design Models
Patient Focused Incentives
Patient focused incentives are based on a specific patient attribute such
as employees or health plan participants at highest risk. For example,
individuals who have already suffered from a heart attack and now are
being treated for hyperlipidemia are a high risk for a second cardiac event.
The advantage to this model is that the highest health risk individuals
are also the highest financial drivers of immediate and long-term costs.
Therefore, they may gain the greatest clinical and financial value from
reducing barriers to access appropriate health care. Furthermore, if these
individuals are compliant, they are more likely to reduce emergency
room visits, rescue treatments and unscheduled absences. For this
model, removal of cost barriers has shown a tremendous dividend for the
investment, ranging from 2:1 to more than 5:1. To successfully implement
this model, a significant amount of data and data integration is needed
to accurately identify this subset of people. Some employees outside of
the program may view this model as discriminatory, giving preferential
treatment to employees who are not managing their conditions well. These
kinds of perceptions can be overcome by effectively communicating the
program to all employees, underscoring that the investment in employee
medical travel and on-line coaches and physicians are included in the program.
Generally, these preferred providers are individuals who have been shown to
follow accepted guidelines, have external accreditation or certification and/
or have proven patient health outcomes. However, it is important to note that
many chronic conditions do not have recognized guidelines. Provider choice
incentives are often times coupled with additional incentives for the provider
as well as the consumer.
This design’s advantage is that it can address behavior change not only
in the health care consumer but also for the providers, yielding additional
positive outcomes across an entire community. Its challenge is that health care
consumers may have to change their provider in order to receive the benefit, and
providers must be willing to participate. Furthermore, there may be a greater
reliance and need for administrative and technological data support in order to
implement this design. It will also be necessary to clarify the criteria by which
a provider is designated as preferred in order to ensure that it is not simply an
insurance tiered network based only on costs but not health outcomes.
Please see the case study for Gulfstream to learn more about their
success in implementing this kind of design.
health actually reduces the cost of health care for the entire company and
Health Behaviors
yields higher productivity among all workers.
This design incentivizes employees to participate in a number of health
Please see the case study for Caterpillar to learn more about their success
in implementing this kind of design.
and wellness activities that are a fundamental component of total health
management. These may include employees filling out health risk assessments,
adhering to a care plan, participating in health management programs, and
Provider Choice Focused Incentives
In this model, reduced copays are offered to consumers who utilize preferred
health care providers. These providers may be physicians, physician assistants,
nurse practitioners, hospitals or outpatient facilities. In some instances, even
undergoing immunizations and preventative chronic disease screenings. This
model is fairly inexpensive to implement compared to other approaches and
can easily be applied across a broad population. The disadvantage to this
model is that often the return on investment takes a long time—especially if
it is focused on outcomes and not process.
Better Health Care By Design blueprint | 3
step 1 Value-Based Design Models
Inspiring Healthy Behaviors
Irrespective of the benefit design model and the activity that is being
incentivized, a number of financial and non-financial incentives can be
tied to the desired activity. Financial “carrots” that encourage healthseeking behavior may include decreased or waived out of pocket costs,
premium reductions for health care benefits, a health savings account with
employer contributions and health reimbursement accounts. Non-monetary
inducements may include gym memberships, home health equipment or
increased paid leave.
The flipside of a rewarding incentive is a disincentive that discourages
non-adherent behavior. These may include increases in premiums or
movement to a higher-priced or less-generous benefit design.
Better Health Care By Design blueprint | 4
Step 2
Data drives design
step 2 data drives design
Data Drives Design
Data is a fundamental element of value-based benefit design. It will guide
initial decision-making, plan implementation, and ongoing assessments
of the insurance design’s impact upon participants. Comprehensive data
collection and rigorous analysis will give the payer a deeper understanding
of the true financial cost and impact of chronic conditions on the
productivity, health and health care quality for the targeted population as
well as a sense of the opportunities to create better long-term health and
economic value. According to Dr. Jan Berger, President and Chief Executive
Officer
of
Health
Intelligence
Partners, “interpreting and using
the data correctly will ensure you
are properly aligning incentives to
maximize valued outcomes.”
When initiating the process
of value-based benefit design, it is
essential to organize the relevant data
into key determinants and categories.
This will enable the construction
of a framework, guided by a logical
process, that will ultimately produce
Interpreting and
using the data
correctly will
ensure you are
properly aligning
incentives to
maximize valued
outcomes.
— Dr. Jan Berger
well-targeted initiatives.
costs. A variety of data points, both qualitative and quantitative, regarding the
targeted population can be collected and utilized. In order to best assess the
data needs for effective plan design, it is important that the team determine in
advance what problem areas they seek to address through value-based benefit
design. Payers have identified goals such as improving work force productivity,
decreasing health care costs and improving medication adherence. Successfully
addressing any of these issues requires baseline data to see where the targeted
population stands prior to the initiation of the new plan design. Data will be
vital to every step of the design and implementation of value-based insurance
design—from identifying the target population to determining the impact once
the plan is active.
The types of data and the sources from which data are derived vary. Data
elements can include:
Claims data
Medical data: including physician visits, emergency
department visits, hospitalizations, durable medical
equipment, lab testing, radiology and procedures.
Pharmacy data
Disability data: both short and long term.
Absentee data
Workers compensation
Safety data: for example, back injuries due to heavy lifting
Types of Data to Include
Employee Assistance Program data
Accurate and secure data will be necessary to create the benefit design solutions
Disease Management Program Data
that address the issue of significant out of pocket costs as well as the ensuing
Behavioral Health Data, whether carved in or carved out
clinical and financial implications that arise from the barrier of out of pocket
Better Health Care By Design blueprint | 2
step 2 data drives design
Biometric data: including tests such as blood pressure,
blood sugar, weight, height, BMI, and cholesterol.
Self-reported survey data: employee satisfaction, productivity
data, and health risk assessment surveys.
Self-reported functional data: such as ability to perform
work functions, degree of focus, pain, etc.
Demographic data: age, race, ethnicity, socio-economic (if
available), and gender for individuals. For employers,
industry information such as average wage.
Plan design data: out of pocket costs, lifetime maximums,
utilization tools, step edits, prior authorizations
A primary goal of this data summit is to document agreement among
all parties of the specific elements and quantity of data needed to both
implement new designs and longitudinally measure results. It is important
that all participants/organizations understand the goal of addressing health
and economic value through implementation of value-based insurance
design. By engaging each of these data holders at once, you will maximize
the chances of receiving the data in a useable format. A finite timeline must
be in place to ensure achievable goals can be attained.
Coming to a common agreement on data element definitions and values
is a second goal of the summit. Differing criteria, specifications, collection
methodologies and formatting among data holders may make the integration,
and therefore the usability, of the data a challenge. A single set of data
requirements by source should be set and followed by all contributors. One
Although data is essential to successful value-based insurance design, it
data notebook with interoperability rule sets and a data dictionary should be
should be noted that some of these data points might be difficult to collect.
created for documentation purposes. It will also be helpful for new members
of the data team that were not involved with the initial summit.
Collection of Data—“The Data Summit”
The final goal of the data summit is to set a data “swap schedule.” This
At the beginning of the project it is important to convene health vendors and
will give all participants a thorough understanding of the time requirements
other business associates that are storing needed data in order to discuss the
associated with the data downloads. It is important to remember that data
project and create an agreed upon data infrastructure. This “data summit”
sharing will not occur on a one-time basis. Although data is necessary at the
should include IT and data analytics representatives as both will be necessary
onset of the project in order to understand the payer’s population, ongoing
to bring the data together in an integrated and usable fashion.
data is necessary to track changes in the population and to evaluate the results
The payer, which is the direct connection to the patient population, is an
of the value-based plan design on desired outcomes. The schedule needs to
important party to lead the data summit. It is generally recommended that
address the “how” part of data transmission. For example, it will have to be
one person take the lead on the data requirements. This person should not
determined if all parties have the ability to electronically push the data to the
necessarily be the only one addressing data collection and analysis but they will
integrating organization or if some groups will need the integrator to pull the
need to be the leader in this area. Identifying a team leader will establish clear
data in. Additionally, some providers may require a more rudimentary process
responsibility for this essential function and present a point of contact for all
for sharing data, such as data disks. Once a process is agreed upon, all rules
vendors and business associates that provide data.
and schedules should be a part of the final data summit sign-off document.
Better Health Care By Design blueprint | 3
step 2 data drives design
Challenges Collecting Data
There are a variety of challenges that can occur in the collection of data.
Some, such as dealing with vendors with different collection methodologies
and formatting, have been mentioned previously and can be addressed early
through the data summit. Others, such as cost and privacy laws, go beyond
technical issues and will be ongoing through implementation and analysis of
plan results. Although daunting, overcoming these challenges is one of the
most essential tasks undertaken in value-based insurance design.
Although somewhat cumbersome, administrative claims data can
generally be acquired. Furthermore, the rules and regulations that dictate its
use are well documented. However, linking administrative claims data to data
from employee surveys is often very difficult to accomplish externally. There
are challenges linking these sources and the survey might require individual
waivers from employees to share the data therein. These same challenges will
exist with Worker’s Compensation, paid time off (PTO) or other productivity
related data as source system variations often make these data difficult to
link internally.
More complexity occurs when trying to link medical and pharmacy
administrative claims data from either different entities or different source
systems. Among the challenges is uniquely identifying individuals and their
claims history. A possible solution would be to have the payer provide a
dataset where this is accomplished in-house and de-identified.
Many health care vendors are unable or unwilling to share health care
data for a variety of reasons, including the real or perceived loss of income
associated with the data, “ownership” issues that translate to “data is
power,” the real or perceived privacy issues, and the legitimate cost incurred
passing the data to another party in a usable format. Questions persist as to
who owns the health care data. Is it the patient, the health care entity or the
payer of the service? Depending on the purpose that the data is being utilized
for it may be all three. In some cases, state and federal law may dictate data
ownership. For the purpose of plan design and health care payment, the
payer does have a right to receive and utilize health care data.
Below are three additional areas that may prove challenging when collecting
data. With proper planning and a complete understanding of what is involved,
it is possible to address these challenges to obtain the necessary data.
Race/Ethnicity Data: There is some belief that collecting data on race and
ethnicity is illegal under federal law. It is not. There are no federal statutes
that prohibit the collection of this data, which may be vitally important
to ensuring the success of a value-based insurance design. Certain races,
religions and ethnicities have their own beliefs regarding illness, wellness
and medical care. Therefore, the cultural communications and benefits
designs may depend upon understanding who should receive the varying
components based on their culture, background and preferences.
Although federal law does not prohibit collection of such data, patient
self-reporting of race and ethnicity has its challenges as well. Patients may
question why a payer needs to collect this data or why an employer would
want to study different impacts and utilization by race/ethnicity. In addition,
many patients will not give this information for fear of it being utilized in a
discriminatory manner.
If such data is being collected from medical providers or patients and
their families, the data collector should make sure that there is a set of
questions that are asked in a uniform manner. Privacy and security will be
a key component of education for participants. Have a written rationale for
why the patient is being asked to provide the information as well as a written
security procedure to ensure non-discrimination.
Better Health Care By Design blueprint | 4
step 2 data drives design
Privacy: The Health Insurance Portability and Accountability Act (HIPAA)
includes stringent privacy and data security regulations that have created
both real and perceived data challenges. Changes to HIPAA included in the
2009 stimulus legislation, which extend many regulations related to electronic
health data to additional organizations, are likely to create further challenges.
Protection of patient data is of paramount importance. It will be necessary to
create business associate agreements or other methods to assure HIPAA and
state privacy law compliance. The data summit should include individuals
very familiar with the rules and regulations of data sharing (HIPAA) as well as
the changes that might impact the process. There will need to be documented
rules for storage, use and disclosure of any data on behalf of the payer.
Further information on HIPAA regulations appears in the Legal section.
Employee Participation in Survey
Acquiring needed data is not easy. When access to administrative claims
is not available, studies have shown that individuals will accurately report
a hospitalization. However, accurate lab values are often more difficult to
obtain. As with hospitalizations, an alternate source could be participantreported data. Additionally, reasons for missing work can only be captured
via survey. With most employers using PTO, there is no longer a separate pool
of “sick” time off. Reasons for non-adherence cannot necessarily be derived
from quantitative data: non-adherence to a medication regimen could be
driven by high out of pocket costs or by a patient simply not returning to the
doctor to obtain a new prescription.
Given these and other challenges, survey data can be the most efficient
Cost: The cost of sharing data can be significant. The start-up costs of
way of gathering information needed to establish a baseline among the
creating a file with standard specifications to be reused can vary. The
targeted population and measure impact of plan design changes. For
variations include the number of data feeds being combined and how the
example, a comprehensive health assessment completed by the patient when
data are organized (e.g., flat file, data dictionary, non standard requests,
they begin participation in the plan can provide essential data to measure
number of medical vendors). Additionally, standard data checks or control
changes in health outcomes.
totals must be assessed on one end or the other with every pull and crossvalidated to assure all data are received.
When developing and administering a survey, it is best to partner with
a survey data specialist if a customized survey is needed. Otherwise, it is
Once the start up costs are negotiated and agreed to, there will be a
always preferable to use an existing tool to measure change. When developing
cost to recreate the file on a regular basis (i.e. monthly or quarterly), with
a customized survey, it will be important to validate that the questions asked
implications around decisions such as appending the last file or overwriting
are accurately capturing the information needed. It will also be necessary to
it. The creation of the data pull and the subsequent push or pull of data
obtain participants’ authorization to use their responses for most surveys.
will require an individual on one side or the other to maintain and fulfill the
process. This cost, as with start up costs, can vary.
Ideally, a call from a known entity with useful information for the
respondent will drive the best survey results. Web-administered and/or
Finally, the data will need to be stored and protected in a way that
mailed-in surveys tend to have low participation rates. For these formats,
complies with federal and state privacy and security laws. This will add
the use of incentives is encouraged to get maximum participation. Some
an extra expense, with storage space being relatively inexpensive while
innovative Interactive Voice Response (IVR) companies are cost effective and
security may be costlier.
Better Health Care By Design blueprint | 5
step 2 data drives design
may be better able to capture information. However, a significant drawback
Another area to consider is if people are not filling necessary medications
is that some individuals do not like the intrusion of a phone call. There are
for chronic conditions.
costs associated in an accelerating order with any of these approaches.
5. Are there vulnerabilities associated with the population’s
health status that are likely to turn into significant health
Data Analysis and Interpretation
While the collection of good data is important, equally significant is the
and productivity expenses?
6. W here is the greatest opportunity for improvement of
interpretation of the data. This is a critical second step to ensuring that the
health status, health care utilization or productivity
benefit design model truly meets the needs of the intended population.
within the population?
Questions For Consideration & Data to Analyze
Decisions To Be Made
1. What is the health resources utilization of the population?
1. What are the modifiable variables that a payer can impact?
Examine hospitalizations, emergency room visits, outpatient visits, testing
and procedures, and pharmaceuticals.
(i.e. age is not modifiable; smoking is modifiable.)
2. Knowing that there is a finite budget available for health
2. How is productivity among the population affected?
benefits, where should the financial incentives associated
Key data includes short- and long-term disability, unscheduled leave, and
with value-based insurance design be placed in order to
Workers Compensation claims.
3. How does the population’s utilization data compare to
national, regional or industry-wide benchmarks?
For example, a payer may consider how emergency room visit rates for
maximize valued outcomes?
3. How will these changes in insurance design fit within the
organizational culture? Are cultural or environmental
modifications necessary?
asthmatics in the population compare to the national norm. National data
is available through a variety of government sources such as National
As noted previously, data collection, analysis and interpretation will be key to
Committee on Quality Assurance (NCQA) or the Agency for Health Care
successful design and implementation of value-based insurance design. This
Research and Quality’s Health Care Cost and Utilization Project. Health
section has noted many of the challenges and important considerations that
care vendors will have also have this information available.
will arise in this endeavor. It is essential to address these issues at the outset,
4. Are there issues of under-utilization or over-utilization in
the population?
as they arise, in order to ensure that the final plan design ultimately achieves
the desired goals of improved health and financial outcomes.
Examples include people not receiving appropriate routine care and
preventative care screenings (i.e. breast, cervical and colon screenings).
Better Health Care By Design blueprint | 6
Step 3
legal considerations
step 3 legal considerations
Legal Considerations
As you move to implement value-based benefit design, it is absolutely
critical that you comply with all legal requirements, particularly those
related to privacy and nondiscrimination. The information below is intended
as an introductory checklist to help guide you through benefit design and
implementation. It is not intended as nor is it a substitute for legal advice.
We cannot stress enough the importance of consulting with your attorney
or legal team.
Privacy is one of the most important and challenging facets to successful
value-based benefit design. In addition to the legal requirements, both
federal and state, the issue is of paramount importance to your employees or
beneficiaries. In an era of skyrocketing financial and medical identity theft,
people are justifiably concerned about making sure personal information
is protected. In addition, people have fears of their medical information
impacting their employment if employers or coworkers were to learn of it,
regardless of whether such use of the information is prohibited by law.
The Health Insurance Portability and Accountability Act (HIPAA) is
the primary federal law addressing medical information privacy. HIPAA was
enacted in 1996 and the privacy provisions took effect in April 2003. In
addition to addressing health insurance portability and access for group health
plans, the law includes strict regulations on the use, transfer and security
of protected health information (PHI) by “covered entities,” which include
providers, health plans, and health clearinghouses. Protected information
includes, but is not limited to, actual medical records and payment/billing
information. The law provides specific direction on the disclosure of health
information for research and public health activities. In general, data
disclosures for any purpose are guided by the law’s requirement to use the
minimum information necessary. In addition to these requirements, a section
concerning electronic protected health information, known as the Security
Rule, defines the administrative, physical and technical security measures
that covered entities must have in place.
The American Recovery and Reinvestment Act of 2009, generally referred
to as the stimulus bill, included several provisions to significantly strengthen
the privacy protections in HIPAA. Among the new rules, most of which take
effect in February 2010, are an expansion of the privacy protections to
business associates of covered entities and vendors of personal health records,
requirements for patient notification in the event of a data breach, and, in limited
circumstances, a requirement that
covered entities comply with patient
requests not to share certain health
information with the patient’s
insurer. The new provisions also
include
significantly
increased
penalties for HIPAA violations.
ensure that
you have a full
understanding of
all legal issues
involved
What follows is a brief list of issues to consider as you undertake valuebased benefit design. Where necessary, a bit of context has been provided.
Again, you must consult with your legal advisor to ensure that you have a
full understanding of all legal issues involved, particularly as regulations are
issued or revised. It is also crucial to consult with your attorneys to obtain
guidance on communicating with your employees about the scope of protection
provided by HIPAA regulations.
Better Health Care By Design blueprint | 2
step 3 legal considerations
Legal and privacy issues in Value-based
Benefit Design
Check all state and federal privacy laws. HIPAA sets federal
privacy standards for protected health information. State laws may be
considerably more stringent. HIPAA in no way preempts stricter state
the same way that covered entities must do. In addition, contractual
agreements with business associates, including those already in place,
must include the information security requirements. Business associates
will also now be subject to the civil and criminal penalties for violations
of the rule’s provisions.
privacy laws. As noted above, the 2009 stimulus bill includes greatly
Check to make sure that the outreach utilized within the
increased financial penalties for violations of HIPAA, up to fines of
benefit (i.e. health management vendor outreach) meets the
$50,000 per violation.
marketing rules contained within HIPAA. HIPAA requires covered
Make sure that you communicate early and often in easily
understood words that an employee’s health information is
covered under privacy laws and will not be shared with their
employer or fellow employees. HIPAA requires covered entities to
notify employees of their privacy rights and how their information may
be used. Employees should be reassured that the health care providers,
insurance companies, and wellness program providers cannot reveal PHI
to employers without the employee’s authorization.
M ake sure that you have appropriate business associate
contractual arrangements with all health care vendors
and data integrators. A business associate is an organization that,
on behalf of a covered entity, performs a function or activity that involves
disclosure of individually identifiable health information. Examples of
such functions include claims management, billing, or data analysis.
Under the original provisions of HIPAA, a business associate was subject
to HIPAA’s privacy provisions only as such provisions are included in
the contract with the covered entity. The 2009 stimulus act requires
business associates to comply with HIPAA’s Security Rule administrative,
technical and physical requirements for electronic health information in
entities to allow individuals to decide if they want their PHI shared for
marketing purposes, although the definition of what is marketing allows
for situations that do not require patient authorization. The 2009 stimulus
legislation placed further restrictions on what is considered “marketing”
when covered entities contact patients or beneficiaries. For example,
contact about services or treatments that encourage the patient/beneficiary
to buy or use a product may be considered marketing if the entity has
received payment for making the communication and the treatment
described is not one the patient is currently taking.
Assure that you are utilizing the minimal information
necessary rules within HIPAA when sharing personal health
information with the value-based benefit design program
and with associated vendors. Included in the 2009 stimulus
bill is a requirement for the Secretary of Health and Human Services
to issue guidance on the “minimum necessary” standard, which has
been criticized for being too vague. The Secretary’s guidance must be
issued within 18 months of the bill’s enactment, by August 2010. The
law includes instruction on the minimum necessary standard until the
guidelines are released.
Better Health Care By Design blueprint | 3
step 3 legal considerations
Have a data breach reporting process in place and make sure
If the value-based design being developed includes incen-
it complies with state privacy laws and HIPAA. The data breach
tives, make sure the incentive structure complies with HIPAA
provision included in the stimulus legislation requires notification of those
wellness program nondiscrimination regulations. Guidance is
whose information was compromised. For large data breaches, there are
available to help employers determine plan features that could be consid-
also requirements to notify the media in the affected market as well as the
ered discriminatory. Generally, plan benefits can discriminate in favor of
Secretary of Health and Human Services. The notification requirements
individuals with health factors. If the benefits require individuals to meet
include several additional provisions, including direction on the timing of
a standard relating to a health factor, the nondiscrimination rules limit
the notification following a breach.
the maximum amount of the incentive, require that the plan be designed
Make sure that there is compliance with any tax obligations
to promote health or prevent disease, require that individuals be given
related to the health care incentives put in place. Some
the opportunity to qualify for the incentive at least once per year, require
incentives may be taxable to the patient or the employer. It will be
that the incentive be made available to all similarly situated individuals,
necessary to ensure that any tax obligations are fully understood as the
and require that a reasonable alternative standard be made available and
value-based plan is designed and implemented. It will also be important
communicated to plan participants. As long as the incentive structure in a
to communicate clearly to the patient or employer how any such taxes will
wellness program meets these conditions, it is possible to use health fac-
affect them.
tors as part of the plan’s value-based design.
There are other legal issues to take into consideration when
putting a value-based benefit design together. It is important
to make sure that the design you are looking to implement complies with
regulations found within the Americans with Disabilities Act, other federal
regulations and any state laws you may be subject to.
Better Health Care By Design blueprint | 4
Step 4
iNVOLVING HEALTH CARE
PROVIDERS
step 4 iNVOLVING HEALTH CARE PROVIDERS
iNVOLVING HEALTH CARE
PROVIDERS
emphasizing to providers that this type of benefit design enables them to
focus on the patient by crafting a treatment plan specific to the individual by
utilizing national guidelines as a starting point where appropriate. Some of
the areas where they can support this type of design include:
Previous sections have addressed the types of value-based benefit design
Knowledge of national guidelines for care and other value-
and the associated data and legal issues. Although the primary focus of these
based health care guidelines
types of benefit designs is payers and health care consumers, it is important
Knowledge of patient-specific costs of care
not to forget the health care providers. “Providers” is a broad term that can
include physicians, pharmacists, nurses, nurse practitioners, case managers,
• Health care visits
caseworkers, social workers and a number of other members of the health
• Diagnostics
care team.
• Treatments, both pharmaceutical and non-pharmaceutical, with an
Even as health care has evolved to place greater focus on the consumer,
providers continue to play an essential role in medical care a patient
receives and are rated very highly in the “trusted advisor” role. Therefore,
emphasis on improved adherence by the patient.
Help in creating a patient-centric, value-based care plan
it is important to incorporate the provider community when developing a
It will also be critical that providers be made aware of the need and
value-based benefit design, which serves to complement the individualized
opportunities for multidirectional communication when they are part of a
care plan drawn up between provider and patient. William Ellis, Executive
health care team treating a patient
Director and Chief Executive Officer of the American Pharmacist Association
with chronic illness. In such
Foundation explains, “from a provider perspective, value means that we are
circumstances, all members of the
able to deliver care in a comprehensive way—from preventative services to
team must be kept informed of
continual management—so everyone avoids the catastrophic consequences
treatment decisions and adapt their
of ER visits and hospitalizations.”
role as necessary. This comprehensive
Persons with chronic conditions may utilize a variety of health care
team approach to coordinating care
providers to obtain support and education. It is important that, as patients
will ultimately benefit the patient
reach out and engage these various members of their health care team, they
through improved health outcomes.
receive consistent information. To this end, educating these providers on the
In order to maximize the ability
fundamentals of value-based benefit design and informing them as to ways
of the health care providers to best
that they can support these patients is very important. Equally important is
support patients, health plans and
value means that
we are able to
deliver care in a
comprehensive way…
so everyone avoids
the catastrophic
consequences
of ER visits and
hospitalizations.
—William Ellis
Better Health Care By Design blueprint | 2
step 4 iNVOLVING HEALTH CARE PROVIDERS
pharmacy benefit managers (PBM) should work with health care providers to
As was stated in an earlier section of this Blueprint, an incentive to the
assure that they receive the proper education regarding the benefit and how it
health care consumer is in some cases partnered with additional payment
can help their patients. It is also important that the health plans and PBMs make
incentives to the provider as well. In order to best utilize this type of value-
available to providers at the point of care tools such as registries and electronic
based benefit design, an employer needs to work with their health plan(s)
patient-specific information sent to electronic medical records or e-prescribing
to find out how they recognize and reward desired outcomes from providers
tools in order for the appropriate conversations to occur between the patient
within their network. It is not only physicians that can be rewarded within
and the provider. In addition, providers should have access to comprehensive
this type of plan design. On occasion, pharmacist and pharmacy incentives
assessment tools for use with patients that allow for the application of evidence-
and tiering have occurred. Regardless of the provider(s) that the plan may
based medicine to the specific circumstances at hand.
focus on, this type of plan design looks to change and reward the behavior of
A second area that links providers with value-based benefit design
is through the use of the provider-focused incentive design. In this type
both the health care consumer and the health care provider. Some of these
copay changes have been used as follows:
of design, there is a decrease in out of pocket costs to the health care
consumer if they utilize a practitioner that has been designated as a high
Copay reduction for using physicians who agree to
value practitioner. Health care providers are generally given this designation
practice to evidence-based guidelines
in recognition of their use of and adherence to the national guidelines,
Copay reduction for use of worksite or grocery store
although future models may need further adaptation to reward providers
for achieving optimal outcomes in the care of patients with extraordinary
needs that may fall outside the scope of current guidelines. Furthermore,
the benefit design should not punish a provider and patient who work
together to create a treatment plan in a situation where guidelines are
lacking, competing guidelines exist or new discoveries suggest the current
guidelines may be outdated.
screenings, clinics, etc.
Copay reduction for use of urgent care or convenient
care services
Companies such as Gulfstream, QuadMed, Caterpillar, Toyota, and others
have successfully used these incentive designs.
Better Health Care By Design blueprint | 3
Step 5
communicating
the benefit
step 5 communicating the benefit
Communicating
the Benefit
The Importance of Communication
Essential to the success of the new benefit design is the ability to clearly
and effectively communicate its value to employees and plan participants.
Mapping out a communication plan should not be considered an afterthought in the implementation phase as it is a strategic element that will
maximize the benefit for both the employees and the employer. Michael
S. Kushner, Risk Management Director, Polk County, Florida, and an early
adopter of value-based approaches for the Polk County government explains,
“effectively and repeatedly communicating with our workforce about their
health, the programs available to them, and the difference it has made in
the lives of their coworkers has been essential to our success.” Therefore,
begin creating a communication plan and a timeline as early as six months
in advance of the new benefit to ensure that the outreach is thorough and the
messages and information resonate with all employees.
A study conducted by the Midwest Business Group on Health found
employees have the desire and confidence to play an active role in
managing their health. However, their motivation to act is hindered by time,
money and know-how.1 Most people are not compelled to truly understand
their health benefits until they are in a position to actually need them.
Value-based benefit designs reward people for taking proactive steps with
their health. Therefore, consider communication tools and venues as
opportunities to proactively educate and motivate employees to engage in
constructive use of their benefits and adopt healthy lifestyle changes that
will further enhance all facets of their lives. Relate the information in a
personalized manner that connects the individual to the new program and
motivates them to enroll.
The targeted benefit will not be provided to each and every plan
participant. Nevertheless, it will be necessary to communicate with all
employees—even those not receiving the benefit—so that no one believes
that some employees are receiving preferential treatment. Underscore this is
“value-added” for everyone. Everyone benefits by reducing absenteeism and
presenteeism, increasing worker productivity and satisfaction, and curbing
health care costs overall. These types of strategies keep employee benefits
sustainable and companies viable.
Know Your Audience
An effective communication plan begins with a firm understanding of the
audience who is intended to receive it. Take time to understand the challenges
and the opportunities that may exist with your employee population. Survey
your employees to determine how they prefer to receive information about
their health benefits, keeping in mind that you may have to rely on several
forms of repeated communication to fully reach your targeted audience.
Choose your words carefully when sharing information about the
benefit. Prepare glossaries free of confusing jargon or acronyms that fully
explain key terms. Consider that
about 20% of the U.S. population
is functionally illiterate. Medical
2
literacy, which includes the ability
to understand prescription drug
instructions, appointment slips,
patient brochures, doctor’s direc­
communicating with
our workforce…
has been essential
to our success.
—Michael S. Kushner
tions and consent forms and the
Better Health Care By Design blueprint | 2
step 5 communicating the benefit
ability to navigate health systems, lags even further. Approximately 40%
the employees’ perspective and build a comfort level between them. Back
of American patients cannot comprehend directions for taking medication
their expertise with secondary information such as links or brochures from
on an empty stomach. These statistics underscore the importance of not
credible health care institutions located in your area and nationwide. Choose
over-estimating the comprehension level of your employees and as a result
such information carefully to ensure the information is easy to understand
undermining the success of the new benefit even before it goes into effect.
and geared to a patient audience.
3
It may be necessary to conduct communication in several languages,
Oftentimes, employees have an inherent suspicion that anything coming
requiring a thorough understanding of cultural connotations and barriers that
from management cannot be good or truly in the best interest of the worker.
may lead to a misinterpretation of your intended message. Enlisting the help
Be aware of this as you choose “employee champions” who can help deflect
of staff members familiar with these cultural and linguistic distinctions will
negativity and dispel misgivings. If possible, recruit well-respected employees
ensure your message is properly communicated and received.
to be part of the communication team. These are not necessarily the leaders
Covered employees are not the only audience. Consider how best to convey
information to family members also covered by the benefit. Their full engagement
in the benefit will also contribute to the success of the overall program.
Employees who do not have the chronic conditions targeted in the value-
or company management; they’re people to whom others are drawn to
informally. They are individuals who help shape their peers’ work morale.
What to Communicate
based design will need to appreciate how it benefits them as well. Help them
Value. Explain the rationale for the new benefit and why, as their employer,
understand that while they are not benefiting health-wise from the program,
you want them to utilize their health benefits. Health of the individual
the engagement of those with the conditions is not preferential treatment,
reflects the health of the company: healthy employees mean lower health
but another way for the company to minimize risk, increase productivity and
care costs for everyone, a more productive workforce with less absenteeism
control health care costs for everyone.
and presenteeism, and a sustainable business model for the company to be
Who Should Communicate the Benefit—
The Trust Factor
more competitive overall.
Privacy. Reassure workers that their privacy is being maintained. Print it
and say it continually in the information you share. Let employees know
The messenger is as important as the message. People are more likely to hear
that they have privacy rights under federal law that protect their health
and act on information shared by a trusted source. When conveying the value
information. Tell them they have the opportunity to opt out of the program
of benefit design approaches in health care, utilize health care professionals
and that federal law limits the use of personally identifiable health
such as nurses, physicians and pharmacists to help explain it. If and when
information. It is important for employees to know that in the establishment
providers are selected to be part of the health care support team, they should
of the new health benefit, all privacy laws were followed and will continue
make a point to visit work sites to better understand the work environment
to be upheld not only by the employer, but also by the doctors, nurses,
in which employees operate. It will help the professionals better understand
Better Health Care By Design blueprint | 3
step 5 communicating the benefit
pharmacists, hospitals, clinics, insurance companies and pharmacies
Health suggests that employers strive to reframe employees’ perceptions
helping to implement the program. All health care providers are required
of the health care marketplace: higher quality can equal lower cost.4
by federal law to present employees/patients with an explanation of their
Take action. Simplify and streamline the process for individuals to enroll
privacy practices. Health information cannot be given to employers and
in the benefit.
use of personally identifiable health information for marketing is strictly
limited and generally requires the employee’s prior authorization.
HOW AND WHEN TO COMMUNICATE
Personalize the benefit. Personalized benefits opportunity statements
The communications strategy you and your colleagues implement should
are a great way to relate the benefit message. These can be particularly
encompass many different forms of communication—all of which are chances
helpful to introduce programs with value-based design approaches because
to educate and encourage employees to sign up for the new benefit. However,
they help the employee or plan member understand how it affects them
to the extent possible, a thorough explanation of the plan should be conducted
personally. Content should include: 1) the services or drugs that they have
in-person so employees and health plan participants have an opportunity to ask
or should have received in the past; 2) what the associated costs were in
questions. Even the most well-prepared information may not be understood or
the past; 3) what the costs will be under the new model; and 4) how to
interpreted correctly. Such meetings are a great opportunity to clarify points
take action within the new plan.
and fine-tune related communications in the future.
Use examples. If personalized benefit opportunity statements are not
Mix in-person communication with letters, personalized benefits opportunity
possible, personalization can also occur by using examples that best mirror
statements, posters, email, videos and testimonials from colleagues enrolled in
the targeted population. Examples should include both genders, various
the program. Include information in payroll stuffers and employee handbooks.
ages and ethnicities, and the targeted chronic conditions.
Value-based plan features. Not all benefits are created equal in a
Company competitions or team challenges for exercise or weight
management may also heighten enrollment in the new benefit and inspire
value-based plan. Most individuals equate higher costs with higher quality.
camaraderie among workers. Colleagues can be a good source of both peer
This issue will need to be explained. The Midwest Business Group on
pressure and encouragement.
1M
idwest Business Group on Health, “Focus Group Research: Employees’ Readiness to
Adopt Value-Based Benefit Design Strategies.” November 2008; Internet accessed April
2009 at www.mbgh.org/templates/UserFiles/Files/2008/Readiness%20to%20Change/
VBBDFindings_white%20paper_Nov_2008.pdf.
2T
he Informatics Review, “Comprehension and Reading Level.” Internet accessed April
2009 at www.informatics-review.com/FAQ/reading.html.
3 Ibid.
4M
idwest Business Group on Health, “Focus Group Research: Employees’ Readiness to
Adopt Value-Based Benefit Design Strategies.” November 2008; Internet accessed April
2009 at www.mbgh.org/templates/UserFiles/Files/2008/Readiness%20to%20Change/
VBBDFindings_white%20paper_Nov_2008.pdf.
Better Health Care By Design blueprint | 4
case
studies
and
resources acknowledgements
resources case studies
Achieving new heights with
improved health
“Partners 2 Health is Gulfstream’s health partnership with employees,” says Bob Holben,
Director of Global Total Rewards & International HR for Gulfstream Aerospace. “We value
our employees and do our very best to help them take care of themselves and their families.
Our health care providers know that we expect them to follow the latest evidence-based medical protocols to
keep our employees healthy, and we have established incentives to encourage them to do that.”
Like many companies, Gulfstream experienced burgeoning health costs inflation. However, unlike
many companies, Gulfstream instituted proactive quality of care messaging and decisive actions. Increased
emphasis was placed on health risk detection and proper early treatment to prevent or delay the development
of the more costly co-morbidities associated with certain chronic conditions, such as diabetes, asthma
and cardiovascular disease. The goal: Engage employees to take an active role in their own health care—
securing appropriate preventive screenings and complying with their physician’s plan of care—to reduce
the incidence of hospital inpatient admissions and lower Gulfstream’s health care cost trend. The company
developed a comprehensive strategy that repositioned the employees and their primary care physicians as
partners with Gulfstream in total health care management. Key components included:
The plan:
Who is Gulfstream?
• A wholly owned subsidiary of General Dynamics
• 9,000 Employees/22,000 Covered Lives
• $5.0B Annual Revenues
• Self-funded PPO medical plan
• Fully-insured HMO & POS coverage
Gulfstream believes that
when all stakeholders—
management, health care
providers and employees—
focus on improved health
management, everyone wins.
1. C-Suite Buy-In. The leadership of the company shifted its focus from viewing the dollars spent on
health care as simply an overhead cost to seeing those dollars as an investment opportunity in the
health and productivity of the employees as well as the profitability of the company.
2. 3-Way Partnership. Employees, primary care physicians and the company work together with a common
goal to improve the quality of health care being provided thereby resulting in healthier outcomes.
3. Personal Responsibility. Employees and their dependents are provided with tools and resources to
understand their health benefits and work with their health providers to manage their health.
4. Meaningful Context. Employees and their dependents are provided health care education on a variety
of relevant topics to help them achieve their personal health goals.
Case study provided by
For more information visit www.vbhealth.org.
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Key components of the
program include:
Results: improved care
and compliance.
Quick glance: Flu Shots Focus
on Health and Productivity
1. Quality standards are defined by Gulfstream,
• Measures over a 5 year period showed increased
It wasn’t rocket science, say the folks at Gulfstream.
lab tests/monitoring of HbA1C, mammography,
Simple mathematics showed the incidence of flu was
diabetic eye exams and lipid profiles.
impacting the bottom line. Each year, an estimated
using guidelines from evidence-based medicine.
2. Incentives to quality-driven clinicians for
meeting established standards (20% of their
annual E&M coded office charges).
3. Incentives for employees to use the quality-based
physicians (reduction in office visit copays).
4. Service providers held to specific standards.
• Further claims data showed reductions of
10–20% of employees lose time due to the flu—
amputations, frequency of heart attacks and
on average, 6 lost workdays per employee. At just
strokes and overall health costs per patient in
10%, nine hundred (900) sick employees with an
the diabetic population.
average of 6 days of downtime is too much lost
• Reduction in overall pharmaceutical costs
productivity for Gulfstream. Benefits and Medical
Health plans, disease management companies,
(64.5% generic dispensing rate & 99.1%
Department executives calculated the expected ROI
etc. are also held to quality protocols and are
generic substitution rate).
that would result from a formal flu vaccine program
measured on their ability to deliver high quality
health management service.
5. Incentives for employees’ proper prevention
• Reduced mastectomies in the group of women
getting annual mammograms.
• Improvement in physician adherence to
and active treatment compliance. Employees
evidence-based medicine treatment protocols
must be compliant with their doctors’ orders
(70% qualified for quality bonus).
to help their physicians qualify as a recognized
and developed the following plan:
1. Barrier removal: $0 copay for flu shots.
2. Health coaching: People were taught health
behaviors (hand washing, for example) to help
control the spread of flu.
• $0 copay generic drugs for asthma, diabetes,
3. Flu shot “House Calls” were initiated: Sending
quality-based physician and eligible to offer
high cholesterol, heart disease, hypertension,
nurses to the employees’ onsite work locations
reduced office visit copays.
anxiety and depression.
to administer the flu shots increased employee
6. Mail order prescriptions offer a 90-day supply
for a low copay to increase adherence to
prescribed drug therapy.
7. HRAs with biometric screenings offered
in a “House Call” setting throughout the
2008 improvements. $0 copay generic drugs for
asthma, diabetes, high cholesterol, heart disease
participation.
4. Determining the business case: Gulfstream
and hypertension.
projected a 3:1 return on investment for the
Potential 2010 improvements and beyond.
free flu vaccine program.
Onsite clinic and onsite pharmacy.
facility to encourage employee participation.
Results of the HRA were an eye-opener for
many employees.
Case study provided by
For more information visit www.vbhealth.org.
Better Health Care By Design blueprint | 3
resources case studies
Managing Risk Clusters Will
Save Dollars for CATerpillar
Mike Taylor understands the total costs of worksite health management. “Our trend line showed an
increase in direct costs of 20% over 4 years. We wanted a targeted plan design that would identify
risk early and allow us to intervene before costs skyrocketed.” Dr. Taylor, Medical Director for Health
Promotion, is working with Caterpillar’s renowned research engineering staff to develop artificial
intelligence technology to more robustly use medical risk factors to predict future disease. The CAT
team has launched into a focused risk-management strategy that identified those at highest risk for
coronary, diabetes, or stroke events. These diseases are driving the claims costs as well as disability and
unscheduled absences, and the team is determined to get the trend line under control.
Who is Caterpillar?
• Fortune 100 company
• $36B sales and revenue
• 50% sales outside US
• Leader in Forestry Logistics Energy Solutions
• 80,000 employees/120,000 covered lives
• Self-insured average age =47
• Average age of employee = 47 (male)
• Employee turnover <10%
The plan:
1. Develop our own Health Risk Appraisal based upon our findings.
2. Launch HRA and collaborative disease management within the exempt employee group.
3. Provide incentives to the participants by reducing monthly insurance premiums
by $75 for each employee, $75 for each spouse, and $75 for each retiree under age 65.
CEO Jim Owens is in favor
of initiatives; sets target
of 80% engagement by 2010
4. Stratify risk by cardio-metabolic indicators:
Waist >40/males, >35 females
Triglycerides >150
Blood pressure >130/85
Fasting glucose 110–125
Low HDL chol <40/men, <50 women.
5. Enroll in collaborative risk/disease/ case management with provider network.
6. Track clinical outcomes over time.
7. Track financial outcomes over time.
Case study provided by
For more information visit www.vbhealth.org.
Better Health Care By Design blueprint | 4
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Value-based health delivers
• 90% HRA participation
• 50% of enrollees in diabetes management experienced HbA1C reduction
(7.2 as compared to average of 8.7 one year previous)
Quick glance: CAT design
1. Incentive: $900 reduction on yearly insurance
with HRA participation (for each employee,
spouse, and retiree under age 65).
2. Increase supply: remove barriers to disease/
• 96% of enrollees are measuring A1C
• 72% meeting Surgeon General’s activity recommendations
• 98% are on aspirin
care management and EAP (resulted in
80,000 enrolled Employees, Spouses and
Retirees [Bargaining unit accepted the
• In the general employee group:
approach 1/05]).
50% Reduction in disability days
3. Collaborative management: with providers,
Smoking cessation rates of 35%, even after 3 years
with integrated claims, pharmacy and
selfreport database.
4. Caterpillar scorecard: shows employee
improvement against CAT aggregate AND
employee improvement over time.
Case study provided by
For more information visit www.vbhealth.org.
Better Health Care By Design blueprint | 5
resources case studies
Value-Based Plan Boosts Health
and Reduces Sick Days
“We needed to address the rising costs of diabetes,” says Ardis Belknap, Human Resource Manager for
the City of Springfield, Oregon. “We knew the Asheville community model for diabetes improvement, and
we worked hard to institute the model. But we wanted to do more—we wanted to provide business-based
evidence that the model delivered. So we created a randomized study that could measure the results.”
The study, called “EMPOWER,” also included Lane County and the City of Eugene, Oregon, and was
conducted through the Oregon School of Pharmacy. Twenty-five percent of eligible employees enrolled
in the program for people with Type I and Type II Diabetes. Study participants received waived out of
pocket expenses for prescription medication and medical visits related to diabetes. In addition, the
control group received educational materials, and the intervention group received consultations with a
pharmacist consultant. Early results have been encouraging.
“Participants told me they were encouraged to work with their doctor to consider alternatives to
the tired approaches they had tried in the past,” says Belknap. “They were so excited about having
affordable medications that leveled out their blood sugar and helped them maintain better health
throughout the day.”
The plan:
1. Enroll eligible employees based on a diag­nosis of Type I or Type II diabetes.
2. Randomize participants into two groups: control and intervention.
3. Collect clinical data at the onset of the study (Dec 2005–Feb 2006), repeat in early 2007.
Who is the City of
Springfield, Oregon?
• 52,864 Residents
• 430 Employees
• 1100 Covered Lives
• $281,789,000 fiscal
• Fully-insured benefit plan through
PacificSource
• Plan Deductible: $1500, 3-tiered prescription
drug benefit: generic, preferred
Ardis Belknap, a woman
with extraordinary
vision, inspires others
to embrace the values
of the City: Passion,
Integrity, Results
4. Provide waiver of copayments to all partici­pants for prescription medications and medical visits
related to diabetes control.
5. Provide educational materials to control group and face-to-face consultants with pharmacists
to intervention group.
6. Track clinical and financial outcomes over time.
Case study provided by
For more information visit www.vbhealth.org.
Better Health Care By Design blueprint | 8
resources case studies
The City of Springfield, Oregon has measured the improvement in
dia­betes management through a randomized study based upon the
Asheville model.
Quick glance: program’s
business results
1. Hemoglobin A1C dropped 30% in the control group (comparable to other studies) and 50%
control provided the platform to improve the
in the intervention group with pharmacy consult­ants.
The Asheville Model of community-based diabetes
health of the citizens of Springfield.
2. Sick leave decreased by 30% for the intervention group.
The Asheville model is an icon in health
3. Low-density lipoprotein (LDL) dropped more in the interven­tion group:
improvement regarding diabetes management.
• Goal: LDL concentration of less than 100 mg/dL.
The City of Spring­field, working with the Oregon
• Baseline: 107mg/dL for control group, 101mg/dL for intervention group.
School of Pharmacy, quickly understood the power
• Mean changes at study end: decrease of 1.6mg/dL in control group, decrease of
of the model. But the City also wanted to be the
5.8mg/dL in intervention group.
leader in producing evidence that the model
4. Future plans: Build a wellness center with 2 onsite professionals; an exercise physiologist
and a nurse practitioner.
impacted businesses, so a randomized study was
created in which enrollees would receive one of
5. Future plans: Launch a value-based depression model to improve total health management.
two interventions:
1. The control group received printed
educational materials.
2. The intervention group received one-on-one
counseling with pharmacist experts to encourage
adherence with the total health management of
diabetes, includ­ing physician and lab visits, reti­
nal and foot exams, medication and testing, and
exercise and nutrition.
3. Results: 30% decrease in sick days for the
enrollees in the pharmacist–consultant group.
Case study provided by
For more information visit www.vbhealth.org.
Better Health Care By Design blueprint | 9
resources case studies
POLK COUNTY, FLORIDA PUTS
VALUE-BASED HEALTH ON THE MAP
In the heart of Central Florida lies Polk County, a vibrant community leading the next revolution in health
care by designing health benefits that lower costs and boost productivity and performance. Michael
Kushner, Risk Management Director for Polk County, is leading that charge. Mike and his colleagues
have found a way to get greater value out of the County’s health care investment by removing the barriers
to care for employees with chronic diseases and conditions.
With a keen eye for assessing and quantifying risk, Mike had concerns about the high cost of workers’
compensation claims. Rather than dealing with the consequences of high claim costs and absenteeism
among employees, Mike and his colleagues set out to mitigate risks before they became problems.
By initially utilizing risk data, the County management found a high incidence of diabetic and
hypertensive patients in their workforce, leading them to craft a new value-based approach for those who
were already diagnosed or most at risk for developing the conditions.
WHO IS POLK COUNTY, FLORIDA?
• Economy largely based on agritechnology,
phosphate mining and tourism
• Largest citrus producer in the State of Florida
• Center for many of the nation’s largest
distribution companies
• 581,058 residents as of 2007
• $1.7 billion county budget for 2009
• 8,000 employees and dependent lives covered
by the County’s self-insured plan
Preventive and routine care, counseling for nutrition and weight management, and smoking cessation
programs are provided by health care professionals at the county-owned Wellness Center, a medical home for
county employees. The Wellness Center doesn’t take the place of employees’ health care providers. It helps
employees get the most out of their benefits through services that are tailored to their needs and the County’s
requirements, such as pre-employment physicals and mandatory Department of Transportation testing.
The County’s health team develops individualized care plans. Copays for diabetic and/or hypertension
medication and supplies are eliminated if employees participate in a disease management program.
While the approach has been strictly driven by risk mitigation to stem the tide of escalating costs,
Mike and the County management team are truly striving to make a difference in the health and quality
THE COUNTY MANAGEMENT
IS STRIVING TO MAKE
A DIFFERENCE IN THE
HEALTH AND QUALITY OF
LIFE OF ITS EMPLOYEES.
of life of their chronically ill employees because, as Mike says, “it’s the right thing to do.”
The plan:
1. Assess patients and categorize by severity of disease state.
2. Develop individualized care plans.
3. Assess patients’ overall knowledge of their disease state.
4. Routine consultations to educate, promote behavior change and set health care goals.
5. Patients retain $0 copays if actively participating in the program.
Better Health Care By Design blueprint | 10
resources case studies
RESULTS AND OUTCOMES
Due to increased medication adherence in conjunction with routine care and behavioral changes,
employees with hypertension have a decreased risk of stroke and heart attack while the diabetic
population has experienced a decreased risk of kidney diseases, amputations and blindness.
• Since 2004, emergency room visits have declined 7% among diabetic participants and 11% for
those with hypertension.
• Hospitalizations have dropped even more dramatically—22% for diabetics and 18% for those
with hypertension.
• The County’s high risk diabetic patient population dropped 22% from 2004 to 2008, yielding
considerable savings per employee each year.
• After the initial program investment and cost of waiving diabetic and hypertension medication
copays, the Polk County government has seen net savings of $213,000. This amount reflects
only savings from reduced hospitalizations and ER visits—and doesn’t account for net gains from
increased worker productivity and reduced absenteeism.
Quick glance: THE WELLNESS
CENTER’S ADDED VALUE
Polk County established their Wellness Center
in 1997 to provide medical management
to promote a healthy workforce under its
Occupational Health Program.
• Medical care is provided for most
occupational injuries.
• Services include Drug Free Workplace
Program, infection control, annual TB testing and hepatitis vaccines.
• In its first five years of operation, the
Occupational Health Program showed a
cost savings of over $5 million in workers’
compensation injury care.
The Wellness Center expanded to offer employee
health services for preventive care coupled with its
value-based benefit design. As a result, the County
reaped additional cost savings:
• X-ray costs are greatly reduced through a
partnership with a local hospital.
• Lab costs are reduced by 75% through a local
lab company.
• Greatly reduced the number of primary care
insurance claims and minimized employee leave
time associated with doctor’s appointments.
Better Health Care By Design blueprint | 11
resources acknowledgements
A special thanks to the individuals who contributed their time,
expertise, insight and enthusiasm to make this Blueprint possible.
Dr. Jan Berger
President and Chief Executive Officer
Health Intelligence Partners
Dr. Laura Long
Vice President, Clinical Quality and Health Management
BlueCross BlueShield of South Carolina
Larry Boress
President
Midwest Business Group on Health
Clare Miller
Director, Partnership for Workplace Mental Health
American Psychiatric Foundation
Marc Boutin
Executive Vice President and Chief Operating Officer
National Health Council
Gaylon Morris
Assistant Vice President, Alliance Development
Wyeth Pharmaceuticals
Kimberly Calder
Director, Insurance Initiatives
National Multiple Sclerosis Society
Cyndy Nayer
President and Chief Executive Officer
Center for Health Value Innovation
David Chatel
Executive Vice President, Advocacy
National Multiple Sclerosis Society
Dania Palanker
Deputy Administrator, SEIU Health Care Access Trusts
Service Employees International Union
William Ellis
Executive Director and Chief Executive Officer
American Pharmacists Association Foundation
Victoria Piazza
Executive Director, Public Policy
Wyeth Pharmaceuticals
Steven First
Assistant Vice President, Employee Benefits
Wyeth Pharmaceuticals
Julie Slezak
Vice President, Enterprise Analytics
CVS/Caremark
Michael S. Kushner
Risk Management Director
Polk County, Florida Board of County Commissioners
David K. Stacey
Senior Vice President, National Accounts
CIGNA
Better Health Care By Design Blueprint | 12
resources acknowledgements
Better Health Care By Design is willing to help.
Many early adopters and health care experts came together to create this Blueprint. They share a common desire to see value-based approaches adopted in
health care. They are willing to be a sounding board for your questions and concerns as you move forward in establishing your own value-based design.
Your Support Team
Dr. Jan Berger
Michael S. Kushner
President and Chief Executive Officer
Risk Management Director
Health Intelligence Partners
Polk County, Florida Board of County Commissioners
3842 North Monticello Avenue
2135 Marshall Edwards Drive
Chicago, Illinois 60618
Bartow, Florida 33830
[email protected]
[email protected]
William Ellis
Cyndy Nayer
Executive Director and Chief Executive Officer
President and Chief Executive Officer
American Pharmacists Association Foundation
Center for Health Value Innovation
2215 Constitution Avenue, Northwest
12545 Olive Boulevard, Suite 232
Washington, DC 20037-2985
St. Louis, Missouri 63141
[email protected]
[email protected]
Better Health Care By Design blueprint | 13