Healthcare Reform, MegaTrends and Healthcare Consumerism

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Healthcare Reform, MegaTrends and Healthcare
Consumerism
Ronald E. Bachman President CEO Healthcare
Visions, Inc. ronbachman_at_healthcarevisions.net 404
-697-7376
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Patient Protection Affordable Care Act

• GET OVER IT!
• ITS 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
• 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 Cant Fight Megatrends
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Healthcare Consumerism

• Healthcare Consumerism is about transforming
  a health benefit plan into one that puts economic
  purchasing powerand decision-makingin the hands
  of participants.
• Its 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 consumer-driven 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 ConsumerismFuture
Generations of Consumerism
2nd Generation Consumerism Focus
on Behavior Changes

Traditional Plans with ConsumerInformation
1st Generation Consumerism Focus on
Discretionary Spending
4th Generation Consumerism Personalized
Health Healthcare
3rd Generation Consumerism Integrated Health
Performance
Traditional Plans
Behavioral Change and Cost Management
Potential Low Impact ---- ---- ---- ---- ----
---- ---- ---- ---- High Impact
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The Promises of Consumerism
Major Building Blocks of Consumerism
Personal Care Accounts
The Promise of Demand Control Savings
It is the creative development, efficient
delivery, efficacy, and successful integration of
these elements that will prove the success or
failure of consumerism.
Wellness/ Prevention Early Intervention
The Promise of Wellness
Disease and Case Management
The Promise of Health
Information Decision Support
The Promise of Transparency
Incentives Rewards
The Promise of Shared Savings
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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
ConsumerismAchievement 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)   Gross Savings as of Total Plan Costs (Programs Applicable to All Members)   Gross Savings as of Total Plan Costs (Programs Applicable to All Members)   Gross Savings as of Total Plan Costs (Programs Applicable to All Members)   Gross Savings as of Total Plan Costs (Programs Applicable to All Members)   Gross Savings as of Total Plan Costs (Programs Applicable to All Members)
 
Effective Programs Implemented Traditional plans Traditional plans Traditional plans  
Effective Programs Implemented Consumerism Plans Consumerism Plans Consumerism Plans
Effective Programs Implemented Passive Passive 1st Generation 2nd Generation 3rd Gen Future
Basic Basic 2 3 7 10
Expanded Expanded 3-4 5-8 12-15.0 20.0
Complete Complete 4 7 17 25
Comprehensive (Future) 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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2nd Generation Consumerism Focus
on Behavior Changes
The Future of Healthcare Consumerism
4th Generation Consumerism
Personalized Health Healthcare
1st Generation Consumerism Focus on
Discretionary Spending
3rd Generation Consumerism Integrated Health
Performance
Personal Care Accounts
Initial Account Only Activity Compliance Rewards Indiv. Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME
100 Basic Preventive Care Web-based behavior change support programs Worksite wellness, safety, stress error reduction Genomics, predictive modeling push technology
Information, health coach Compliance Awards, disease specific allowances Population Mgmt, Integrated Hlth Mgmt, Integrated Back-to-Work Wireless cyber support, cultural DM, Holistic care
Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health performance info, integrated health work data Arrive in time info, info therapy, social networks
Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal dev. plan incentives, health status related
Wellness/Prevention Early Intervention
Disease and Case Management
Information Decision Support
Incentives Rewards
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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