Download VHA Georgia 2010 Trustee Institute:

Healthcare Reform, MegaTrends
and Healthcare Consumerism
Ronald E. Bachman
President & CEO
Healthcare Visions, Inc.
[email protected]
404-697-7376
Patient Protection & Affordable
Care Act
GET OVER IT!
IT’S THE LAW
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Four Phases of Health Reform
• Legislation
• Regulation
• Compliance
• Litigation
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Legislation
• Look for follow up legislation, especially if Dems.
Retain control of House & Senate.
• PPACA may likely require a large “technical
corrections” bill.
• Politicians and special interests can use a
technical corrections bill to pass new provisions
and mandates.
• A technical corrections bill could include entirely
new provisions not a part of the original law.
• For example, the public option could return as a
“technical correction
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Compliance
• Consultants and lawyers will find expanded needs for their
services.
• Insurers will need to determine if they are in compliance.
• Employers not in compliance will be subject to large
penalties and fines.
• Self-insured employers will require compliance audits to
assure required essential coverages and mandates are
included.
• Each employee contribution will need to be measured
against the government affordability standard.
• Each year will likely produce new regulations and changes
that must meet with compliance standards or employers
will suffer penalties and fines.
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Regulation
• The regulatory process is likely to be a nightmare of delays,
missed deadlines, and confusing interpretations.
• In the bill there are scores of references to decisions to be
made by the Secretary of H.H.S.
• Major areas of implementation and coverage
determinations for “essential benefits” are left to the
discretion of the Secretary.
• Lobbyists from every provider and self-interest group will
converge on the bureaucracies to have their services
included through regulation.
• Ultimate coverage mandates are likely to go beyond what
employer plans typically consider as medical/surgical
benefits.
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Litigation
• Courts will decide what the language of the laws
2700+ pages mean.
• New laws require a period of adjustment that can
take decades to sort out the meanings and
conflicts of legal interpretations.
• Given the national impact and financial
consequence of any single coverage requirement,
every self-interest group wanting to be included
in the essential benefits package will push
litigation to add or solidify their coverage
demands.
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The Circle of Life
The never ending cycle will
then repeat itself, as new laws will be
passed to respond to court decisions
and off it goes again to repeat the
four phases of legislation, regulation,
compliance and litigation.
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Megatrends, and Consumerism
Megatrends represent major movements so
powerful that the direction of change cannot
be stopped. Federal laws can speed up or slow
down megatrend forces.
But, like dammed rivers megatrends will
redirect themselves to achieve the inevitable
result. Healthcare consumerism is such a
force.
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Consumerism Megatrend
• Americans who:
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bank electronically at ATMs,
purchase stocks over the internet,
buy and sell goods through eBay,
maintain their music with iTunes,
keep personal videos on Facebook,
seek employment through LinkedIn, and
control television programming with Tivo,
will not accept limits, restrictions, waiting lines,
or other barriers to their health - their most
personal asset.
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You Can’t Fight Megatrends
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Healthcare Consumerism
Healthcare Consumerism is about transforming a
health benefit plan into one that puts economic
purchasing power—and decision-making—in the
hands of participants.
It’s about supplying the information and decision
support tools they need, along with financial
incentives, rewards, and other benefits that
encourage personal involvement in altering
health and healthcare purchasing behaviors.
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Healthcare Consumerism
Healthcare consumerism is
independent of plan design.
Healthcare consumerism is a compelling force
because it embraces lowering costs, improving
quality, enhancing choice, and expanding access
by empowering individuals and reinforcing
personal responsibility.
It is the force operating throughout our economy
and is just beginning to be structured into
healthcare and insurance.
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Growth of Account-Based
Health Plans
More than fifty percent (50%) of
employers now offer consumerdriven options. In 2010, nearly 18
million lives will be covered by
consumer-driven plans.
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The Core of Consumerism
Personal Responsibility &
Behavioral Change
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The Evolution
of Healthcare Consumerism
Future Generations of Consumerism
Traditional
Plans
Traditional
Plans
with
Consumer
Information
1st Generation 2nd Generation
Consumerism Consumerism
Focus on
Discretionary
Spending
Focus on
Behavior
Changes
3rd Generation
Consumerism
4th Generation
Consumerism
Integrated
Health &
Performance
Behavioral Change and Cost Management Potential
Low Impact
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---- ---- ---- ---- ---- ---- ---- ---- ----
High Impact
Personalized
Health &
Healthcare
The Promises of Consumerism
Major Building Blocks of
Consumerism
Personal Care
Accounts
Wellness/
Prevention
Disease Early
and Case
Management
Intervention
The Promise of Demand Control & Savings
The Promise of Wellness
The Promise of Health
Information
The Promise of Transparency
Decision Support
Incentives &
Rewards
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The Promise of Shared Savings
It is the creative
development,
efficient delivery,
efficacy, and
successful
integration of these
elements that will
prove the success or
failure of
consumerism.
American Academy of Actuaries
2009 Non-partisan CDH Consumerism Studies
•1st Year Savings: The total savings generated could be as much as 12
percent to 20 percent in the first year.
– All studies showed a drop in costs in the first year of a CDH plan
from -4 percent to -15 percent. A control population of traditional
plans experienced increases of +8 percent to +9 percent.
•2+ Year Savings: At least two of the studies indicate trend rates lower
than traditional PPO plans by approximately 3 percent to 5 percent.
– If these lower trends can be further validated, it will represent a
substantial cost-reduction strategy for employers and employees.
•Cost Shifting: The studies indicated that while the possibility for
employer cost-shifting exists with CDH plans, (as it does with traditional
plans) most employers are not doing so, and might even be reducing
employee cost-sharing under certain circumstances.
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AAA Consumerism Study –
Quality of Care
•Preventive Care: All of the studies reviewed reported a significant
increase in preventive services for CDH participants.
•Chronic Care: Three of the studies found that CDH plan
participants received recommended care for chronic conditions at
the same or higher level than traditional (non-CDH) plan
participants.
•Physician Treatments: Two studies reported a higher incidence of
physicians following evidence-based care protocols.
•Care Avoidance: All of the studies indicated that cost savings did
not result from avoidance of inappropriate care and that necessary
care was received in equal or greater degrees relative to traditional
plans.
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Potential Savings from
Full Implementation of Consumerism
Achievement of savings and improved outcomes is dependent upon both
the Type and Effectiveness of the programs implemented.
Gross* Savings as % of Total Plan Costs
(Programs Applicable to All Members)
Traditional plans
Effective
Programs
Implemented
Consumerism Plans
Passive
1st Generation
2nd Generation
3rd Gen & Future
Basic
2%
3%
7%
10%
Expanded
3-4%
5-8%
12-15.0%
20.0+%
Complete
4%
7%
17%
25%
Comprehensive
(Future)
5%
10%
20%
30%
*Excludes Carry-over HRAs/HSAs and any added
Administrative Costs of Specialized Programs
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PPACA & Consumerism
Under PPACA, financial rewards based health
status are increased from 20% to 30%. The
Secretary of Health and Human Services has
the authority to increase that limit to 50%.
PPACA still allows unlimited rewards and
incentives for participation and engagement.
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Incentives & Rewards
Rewards can include activities such as:
• Participation in a wellness assessment,
• Compliance with a condition management
program (e.g. taking medications, diet, exercise,
office visits), and
•Maintenance of good health characteristics (e.g.
blood pressure, cholesterol, nicotine use, body
mass index) using bio-metrics.
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The Evolution of
Encouraging Personal Responsibility
• Plan Design
• Education
Incentives & Rewards
• Participation
• Engagement
• Compliance
• Outcomes
• Health Status
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The Future of Healthcare Consumerism Post PPACA
• The employer world has moved to next generation
healthcare consumerism with member engagement,
rewarding healthy behaviors, and promoting personal
responsibility.
• Plans are now focusing on rewards and incentives.
• Health Incentive Accounts (HIAs) are a special form of
HRA that builds value only from rewards and
incentives.
• There are many other special use HRAs that may
become the channels for healthcare consumerism.
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The Future
• Government and the movement to a political “nanny
state” is a strong force in and of itself.
• Cynics will point to increasing demands for federal
support and government dependency by large parts of
our population.
• That may be a current political direction, but growing
welfare and expanding entitlements is not a financially
sustainable path and therefore cannot be a megatrend.
• The future is not the opiate of government welfare, but
the citizen empowerment of “Healthcare
Consumerism.”
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The
Future of
Healthcare
Consumerism
Personal Care
Accounts
Wellness/Prevention
Early Intervention
Disease and Case
Management
Information
Decision Support
Incentives &
Rewards
4th Generation
Consumerism
Generation
Consumerism
2nd Generation
Consumerism
3rd Generation
Consumerism
Focus on
Discretionary
Spending
Focus on
Behavior
Changes
Integrated
Health &
Performance
Personalized
Health &
Healthcare
Indiv. & Group
Corporate Metric
Rewards
Specialized Accts,
Matching HRAs,
Expanded QME
1st
Initial
Account Only
Activity &
Compliance
Rewards
Web-based
Worksite wellness, Genomics, predictive
100% Basic
behavior change safety, stress & error
modeling push
Preventive Care support programs
reduction
technology
Passive Info
Discretionary
Expenses
Compliance
Population Mgmt,
Wireless cyber –
Awards, disease Integrated Hlth Mgmt, support, cultural
specific allowances Integrated Back-toDM, Holistic care
Work
Personal health Health & performance Arrive in time info,
mgmt, info with info, integrated health info therapy, social
incentives to access
work data
networks
Cash, tickets,
Trinkets
Health Incentive Non-health corporate
Accounts, activity
metric driven
based incentives
incentives
Information,
health coach
Personal dev. plan
incentives, health
status related
Healthcare Consumerism
The right strategy for employers
wanting to protect their
“Human Capital”
with or without the influence and
requirements of national health
reform under PPACA.
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Navigating Health Reform
It is difficult to absorb the full implications of the health
reform bill. Each week new regulations are being
produced by the DOL, HHS, and IRS.
With so much happening so fast how can employers,
insurance agents, consultants, lawyers, or insurance
companies make rational choices and be legally
compliant?
CDHC Health Reform Navigator &
CDHC Preventive Care Navigator at
www.cdhchealthreformnavigator.net
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