Beyond cdhc behavior based financing putting the health back into health care benefits
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BEYOND CDHC – BEHAVIOR-BASED FINANCING Putting the “health” back into health care benefits. Kyle Rolfing | 5.04 Wellness Incentives Track. GROUP ACTIVITY / DISCUSSION. BEHAVIOR-BASED FINANCING. A digression and a thought experiment.

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Beyond cdhc behavior based financing putting the health back into health care benefits l.jpg

BEYOND CDHC – BEHAVIOR-BASED FINANCINGPutting the “health” back into health care benefits

Kyle Rolfing | 5.04 Wellness Incentives Track



A digression and a thought experiment l.jpg

BEHAVIOR-BASED FINANCING

A digression and a thought experiment

What would happen if we applied the health benefit financing model to retirement savings programs?


The twist equal distribution regardless of individual investment l.jpg

BEHAVIOR-BASED FINANCING

The twist – equal distribution regardless of individual investment

Investment amount $ _____low_______

GroupFund

Investment amount $ ___moderate____

Investment amount $ _____high______


Consider implications on future behavior l.jpg

BEHAVIOR-BASED FINANCING

Consider implications on future behavior

  • What is your reaction to this financing model?

  • Who gains form this approach? Who loses?

  • What behaviors would you expect to see take place as a result of this plan?

  • Who would invest? How much?

  • How much attention would be paid to individual investments?



Cdhc connecting financing to health care decisions works l.jpg

BEHAVIOR-BASED FINANCING

CDHC – connecting financing to health care decisions works!

5-10% fewer ER visits3

  • 6.5% decrease in pharmacy costs1

  • 11% decline in overall prescriptions1

  • 13% increase in overall generic utilization1

  • 31% increase in the use of pill-splitting2

  • 100% increase in the use of mail order pharmacy services2

  • 12% fewer inpatient admissions3

  • 30% fewer inpatient hospital days3

36% increase in members taking annual preventive exams3

Source:1 Aetna CDH book of business. 2 UnitedHealth book of business. 3 2007 Health Spring Meeting, Session 89: CDHP Experience Update.


However the impact to health status is less evident l.jpg

U.S. Adult Population

Inactive

60

Obese

40

Smokers

Percent

20

0

CDHC introduced

1995

2000

2003

2006

Year

BEHAVIOR-BASED FINANCING

However, the impact to health status is less evident

While CDHC has impacted individual health care decisions, it does not appear to have much impact on the individual health behaviors that drive increased medical costs.

Source:Centers for Disease Control and Prevention, National Center for Health Statistics.


And efforts to engage aren t having the desired effect a sickly response l.jpg

BEHAVIOR-BASED FINANCING

And, efforts to engage aren’t having the desired effect (a “sickly response”)

  • 4% of smoking employees participated in employer-sponsored smoking cessation programs

  • 5% of overweight employees joined workplace weight control programs

  • 10% of employees with chronic conditions participated in employer-promoted disease management programs

Source:Survey Findings: Two Roads Diverged: Hewitt's Annual Health Care Survey 2008.



50 of healthcare costs are attributable to individual behaviors l.jpg

Modifiable behaviors account for over $85 billion in health care spend for Fortune 500 employers

Total

HealthcareCosts

  • Specifically, behaviors related to:

    • Physical activity

    • Smoking

    • Nutrition

    • Medical compliance

    • Alcohol use

    • Stress

$8,000

Excess over “normal”, driven by modifiable behaviors

$4,000

$0

2008

BEHAVIOR-BASED FINANCING

50% of healthcare costs are attributable to individual behaviors


The problem will only get worse l.jpg

$17,000 care spend for

Today’s behaviors will drive this portion of costs tomorrow.

8% Year-Over-Year Increase

$8,500

2018

BEHAVIOR-BASED FINANCING

The problem will only get worse

These costs are entirely preventable.

Total

HealthcareCosts

$8,000

$4,000

$0

2008


A digression and a thought experiment13 l.jpg

BEHAVIOR-BASED FINANCING care spend for

A digression and a thought experiment

What would happen if we applied the health benefit financing model to financing home owner insurance?



Consumerism s next phase l.jpg

Defined Contribution / Exit Strategy? care spend for

Level of Consumer Ownership

1950s

1980s

2000

Today

20(??)

BEHAVIOR-BASED FINANCING

Consumerism’s next phase

Behavior-Based Financing

Connects financing to individual behaviors and health engagement

Consumer-Driven PlansReconnected financing through deductiblesand point-of-sale decision-making

Indemnity PlansConnected financingthrough deductible

Managed Care PlansDisconnected financing

Time Line


Components needed to move to behavior based financing l.jpg

BEHAVIOR-BASED FINANCING care spend for

Components needed to move to behavior-based financing

  • First, we need a behavior-based financing framework in which the individual consumer’s share of health care costs depends on whether they engage in their health

  • Second, because we are asking people to take more responsibility in their health, we need to make it easy for individuals to engage


Slide17 l.jpg

STEP 1: care spend for ESTABLISH A BEHAVIOR-BASED FINANCING FRAMEWORK


The current system treats employees unfairly l.jpg

BEHAVIOR-BASED FINANCING care spend for

The current system treats employees unfairly

Regardless of behavior,everyone pays equallyfor increasing premiums.

Under current system…

Typically these increases are absorbed by employers or passed on through premium increases or plan design changes. But neither option addresses the primary cause – behaviors.

Increase

As costs increase both parties assume some percent of increase with no apparent end in sight

HighlyEngaged

Employee dollars

Employee dollars

Costs are split between employers and employees with employers bearing the larger share

Increase

ModeratelyEngaged

Employer dollars

Employer dollars

This system does not treat individuals fairly.

Unengaged


A more equitable effective system aligns financing with behaviors l.jpg

Increase care spend for

As costs increase both parties assume some percent of increase with no apparent end in sight

Health Investment

HighlyEngaged

Employee dollars

But instead of absorbing yearly increases, expected costs are pooled into a health investment account

Increase

ModeratelyEngaged

Employer dollars

Unengaged

BEHAVIOR-BASED FINANCING

A more equitable, effective system aligns financing with behaviors

Premiums are distributed more fairly based onindividual behavior.

Under current system…

Behavior-based financing breaks the pattern…

Increase

Increase

Employee dollars

Employee dollars

Behavior-based financing works within the current framework to transform health care

Employer dollars

Employer dollars


Solution transform financing to pay for health l.jpg

Identify Appropriate care spend for

Cost Share

Base Investment

Health Investment

Employee

$12,000

Employer Health Investment:“Pay for Health”

$10,000

$8,000

The Opportunity

Employer Base Health Spend:“Pay for Sick”

Cost (PEPY)

$6,000

$4,000

$2,000

$0

2008

2009

2010

2011

2012

2013

Year

BEHAVIOR-BASED FINANCING

Solution – transform financing to pay for health

Yellow portion is contingent on employee engaging with their Personal HealthMapSM

Notes:

10,000 employees; $8,000 total health spend (2008); 80% / 20% current contribution split; 8% trend.


Incentive approach aligns rewards to achieve outcomes l.jpg

Participants Complete care spend for All Three:

Health Screening

Health Assessment

Online Profile

Participants Engage in Health Programs:

Preventive Care

Health Programs

I. “Get to Know You”

Awareness and Education

II. “Get Going”

Action and Behavior Change

Earn:$100

Preventive:$25

Programs:$300 / $75 Per QTR

BEHAVIOR-BASED FINANCING

Incentive approach aligns rewards to achieve outcomes

PHASE

FEATURES

TYPE ANDAMOUNT


Comparison of monthly contribution impact to consumers l.jpg

Contribution Impact care spend for

Contribution Impact

Without

Behavior-Based Financing

With

Behavior-Based Financing

$200

$200

With behavior-based financing, engaged consumers earn incentives to offset premium increases.

$177

$150

$150

$157

$157

$145

$133

$100

$100

Contribution (PEPM)

Contribution (PEPM)

$50

$50

$0

$0

Year 2

Year 2

Year 2

Year 1

Year 2

Without

Engaged

Unengaged

BEHAVIOR-BASED FINANCING

Comparison of monthly contribution impact to consumers

Notes:

10,000 employees; $8,000 total health spend (2008); 80% / 20% current contribution split; 8% trend; first-year health budget increase of 8%; 5% first-year base health spend allowance.


Redbrick health solution rewards employees more equitably l.jpg

Mary care spend for

Bill

Sue

BEHAVIOR-BASED FINANCING

RedBrick Health solution rewards employees more equitably

Notes:

3,741 employees; $7,752 total health spend (2008); 75% / 25% current contribution split; 5% trend


Slide24 l.jpg

STEP 2: care spend for MAKE IT EASY TO ENGAGE


Making it easy for individuals to engage l.jpg

Understand care spend for health status

Take action to maintain and improve health

Track progress and receive rewards

BEHAVIOR-BASED FINANCING

Making it easy for individuals to engage


Approach designed to best meet individual needs l.jpg

Understand care spend for health status

Take action to maintain and improve health

Track progress and receive rewards

GOAL

  • Biometric screening

  • Health Risk Assessment

  • Profile

  • Personal HealthMapsSM

  • Lifestyle behaviorchange phone coaching

  • Disease management phone coaching

  • Web-based programs

  • Hybrid programs

  • SAFeSM

  • Record keeping

  • Incentive fulfillment

SERVICES

DELIVERY

ConsumerPortal

ConsumerAdvocacy

HealthContent

BEHAVIOR-BASED FINANCING

Approach designed to best meet individual needs


Early results of behavior based financing l.jpg

75% care spend for

50%

50%

Industry

30%

BEHAVIOR-BASED FINANCING

Early results of behavior-based financing

Notes:

Actual engagement represents year-to-date book-of-business results through July 2008.


Slide29 l.jpg

CONCLUSION care spend for


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