Workforce Health From Cost to Value

1
Workforce Health-- From Cost to Value --

• Bill Molmen, J.D.
• Co-Founder and General Counsel
• Integrated Benefits Institute

2
Whats the Real Issue?
3
National Healthcare Expenditures
Projected
Actual
Source CMS, Office of the Actuary, National
Health Statistics Group.
4
Then, The Solution
Plan Design
Healthcare Costs
5
Or This?
6
Leveraging Human Capital
Company
7
Demonstrating Healthcare Business Value
Health Status
Business Impacts
8
About IBI

• National, non-profit
• 400 corporate sponsors
• Programs
• Research
• Health productivity measurement
• Benchmarking
• Education

9
How Can Senior Management be a Change Agent?

• IBIs CFO Research

10
(No Transcript)
11
Linking Health, Productivity the Bottom Line
12
CFOs Dont Abide Ill Health
96
90
No Difference
86
84
Source The Business Value of Health Linking
CFOs to Health and Productivity, IBI, 2006
13
Are CFOs Getting Lost-time Information?

• Absence
• 51 ever get reports on occurrence
• 22 get reports on financial impact
• Presenteeism
• 22 ever get reports on occurrence
• 8 get reports on financial impact

Source The Business Value of Health Linking
CFOs to Health and Productivity, IBI, 2006
14
Lost Work Time Criticality
49
Source The Business Value of Health Linking
CFOs to Health and Productivity, IBI, 2006
15
How CFOs Would Use Lost- Productivity
Information
Source The Business Value of Health Linking
CFOs to Health and Productivity, IBI, 2006
16
Companies have two choices to increase net
income Grow revenue or reduce lost productivity
Revenue growth equivalent
Lost productivity savings
17
The Real Costs of Ill Health
18
Perceived Costs/Program
3,090
762
435
387
172
6
Source IBI 2002 Benefit Benchmarking Data
19

The Opportunity Cost of Absence

• What is the real cost of people being away from
  work?

20
Range of Lost Productivity From Absence
Source IBI 2002 Benefit Benchmarking Data
21
Real Costs/Program
3,090
2,505
1,796
660
392
178
Source 2002 IBI Full-cost Benefit Data
Nicholson Lost-productivity
Modifier
22
Top 15 Causes of Lost Work Time
Source HPQ
23
(No Transcript)
24
Managing the Economic Burden of Ill Health
Source Beyond Cost Containment, IBI - 2005

25
The Impact of Pharmaceutical Plan Design

• New IBI Research

26
Average Medication Adherence
27
Impact of Out-of-Pocket Cost
28
Filling at least one Disease Modifying script
reduces STD incidence
-36
29
Filling at least one Disease Modifying script
reduces STD duration
-6
30
Impact on Lost Productivity Costs-- No Script
Group --
-19
-26

31
Where to from Here?

• Do benefits and risk managers talk?
• Do you attempt to control costs or to manage
  health?
• Are you ready to begin measuring health and
  productivity outcomes?
• How will you get business-relevant outcomes
  information?
• Focus health-plan discussion on value

32
What Does Good Look Like?

• Health Productivity Management on the National
  Scene

33
Pitney Bowes

• World-class IDM Pioneer1999 IBI case study
• 78 of PBs healthcare costs relate to chronic
  illness
• PB Every benefits-design issue is a long-term
  investment in higher productivity
• Uses sophisticated, data-driven decision making
• Longer time horizon in assessing behavioral
  impact of benefits design than other companies
• Value-based medicine reward quality medicine
  that pays off to the companys bottom line
  prevention, screening, right treatment at the
  right time

34
Pitney Bowes - Decreased Pharmacy Copays to
Increase the Value of Health Benefits
New Rx Access Benefit
Traditional Rx Benefit
Tier 1 10 copay
Tier 1 10 copay
Most generic drugs
Most generic drugs and all brand-name drugs for

• Asthma
• Diabetes
• Hypertension

Tier 2 30 copay

• Most preferred brand-name
• drugs, including those for

• Asthma
• Diabetes
• Hypertension

Tier 2 30 copay
Most preferred brand-name drugs for all other
diseases
Tier 3 50 copay

• Nonpreferred brand-name
• drugs, including those for

Tier 3 50 copay
Nonpreferred brand-name drugs for all other
diseases

• Asthma
• Diabetes
• Hypertension

Hom D. Value Based Benefits Designs. Available
at http// http//www.sph.umich.edu/vbidcenter/sy
mposia.htm. Accessed November 30, 2006.
35
PBs Diabetes Results (after 3 Years)

• Despite the lower copays (and higher employer
  cost per script), PB had these diabetes results
• Medication adherence rates ? significantly
• Average total Pharma costs ? 7
• Emergency room visits ? 26
• Hospital admissions up slightly, but below
  demographically adjusted benchmark
• Direct health care costs per plan participant for
  diabetes ? 6
• STD days among employees in the diabetes program
  ? approx. 50

36
PBs Overall Results

• A markedly slowed increase in overall health
  costs per plan participant
• Attributes to strategic redesign of drug benefits
  for diabetes, asthma and hypertension
• Attributes also to lower copayments for physician
  office visits, availability of free or low-cost
  preventive screening and other enhancements

37
The Asheville Project Education, Lowered
Pharmacy Copays, Professional Coaching

• Started in 1997 with 85 employees from 2
  employers now gt1000 employees with diabetes,
  asthma, hypertension, and lipid-therapy
  management enrolled from 5 employers
• Employers/payers remove barriers to improve
  adherence and continuity of health maintenance
• Copay waivers
• Labs without copays
• Glucose meters
• Local networks of trained pharmacists help
  patients manage their care and are reimbursed for
  this service

38
Decreased Total Medical Costs
39
Decrease in Sick Days Taken
Source Cranor CW et al. J Am Pharm Assoc.
200343173-184
40
Asheville Project - Clinical Outcomes
Patients With Clinical Measure Improvement
Compared With Baseline at 6 Months
Source Cranor CW et al. J Am Pharm Assoc.
200343173-184
41
International Truck and Engine

• In late 2001 ITE found musculoskeletal
  disabilities to be a major problem
• Significant share of WC costs
• Often unnecessary referrals to orthopedic
  specialists or not referred when appropriate.
• EEs frequently given sedating controlled-substance
  pain relievers that hurt safe return to work.

• ITE developed a unique solution involving PCP
• education, use of medical-treatment
  guidelines,
• improved employee communications and ITE
• on-site medical facilities.

42
ITE Program

• Establish baseline data
• EE status/RTW report for PCP
• Evidence-based medicine training for PCPs
• Give PCP job functions
• Emphasized to PCP importance of timely and proper
  use of medications
• On-site PT facilities for safe, early RTW
• Communicate, communicate, communicate to EEs,
  PCPs, operations and senior management

43
ITE Program Results
Musculoskeletal Disability Cases Costs/Case
44
ITE Program Results

• Lost workdays per injury ? 21
• Days lost per FTE were cut in half
• Light-duty days almost doubled from 6.1 to 11.1
  days per injury
• On-site physical therapy ? 50
• Productivity gains through reduced lost time 99
  more trucks built per year

45
Lessons Learned

• Data Baseline and track all relevant results
• Align incentives to bottom-line value
• Dont discourage best medicine
• Communicate/Educate PCPs, EEs, operations,
  senior management
• Keep the focus on real costs include lost time
  and lost productivity