value based health plans
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Value Based Health Plans: The Wave of the Future?
Jim Wisdom, CFPJames L. Wisdom Insurance Services
June, 2012
Skyrocketing health care costs Unaffordable rate hikes Diminished quality of life for employees Less hopeful health outcomes Less perceived value in health plan
Issues with Traditional Plans
Fewer employees monitoring their health and lifestyle◦ Over 50% of all health care costs are due to
lifestyle Chronic illnesses aren’t detected until the
later stages, driving up costs and lowering employee’s overall health and productivity
Higher absenteeism and presenteeism Lower employer profitability
The Result?
Allow employees to enjoy better health and a better quality of life
Employers to have a healthier, more productive workforce
Lower, more stable premiums over the short and long-term
Employers gain happier, more loyal clients
Profile of an Ideal Health Plan…
Like typical health plans, a Value Based Plans pays an insured’s claim when he/she is sick or injured
Unlike typical health plans, Value Based Plans go further, rewarding members to take actions to improve and manage their health
The Difference? Health Insurance vs. Healthy Insurance
The Solution: Value Based Benefit Plans:
Remember this formula: The # of detected conditions + the # of undiagnosed conditions = The # of actual health conditions in a group.
It’s not uncommon for the # of detected conditions to equal about one third of the total, which means two thirds of conditions are undiagnosed.
See Client Example ( SeeChange Health)
Identifying undiagnosed conditions
Undiagnosed conditions, if left undiagnosed until later stages, result in far higher health care claims
The impact of undiagnosed conditions
Cervical Cancer Claims Costs◦ Early Stage Treatment: $16,000/yr.◦ Late Stage Treatment: $84,000◦ Annual Difference: $68,000
SeeChange Health Claims Examples
Breast Cancer Claims Costs Early Stage Treatment: $16,000/yr. Late Stage Treatment: $108,000/yr. Annual Difference: $92,000/yr.
Health Claims Examples ( Cont’d)
Prostate Cancer Claims Costs Early Stage Treatment: $13,000/yr. Late Stage Treatment: $54,000/yr. Annual Difference: $41,000/yr.
Health Claims Examples (Cont’d.)
Colon Cancer Claims Costs Early Stage Treatment: $12,000/yr. Late Stage Treatment: $126,000/yr. Annual Difference: $114,000/yr.
Health Claims Examples ( cont’d.)
Lower claims costs Lower health care premiums Early detection saves lives Early, smart intervention increases
employee health and productivity
The benefits of early detection
1,100 undiagnosed conditions times $50,000 annual savings when treated early equals $55 Million in annual savings.
Note: From a group with 75,000 employees
SeeChange Example: The Math
Promote early detection and treatment of serious conditions
Encourage members to see their doctor and reward them for taking “Health Actions”
Value Based Plans: A New Perspective
Subscriber and Spouse voluntarily complete Preventive Health Actions to receive financial incentives
Online Health Questionnaire Biometric Screening
◦ Phlebotomist ( blood draw)- 15 minute exam Preventive Care Exams
◦ Preventive Health Actions covered at 100% based on age/gender specific guidelines
Health Actions and Financial Incentives
Female Compliance Criteria◦ 4 Age Categories ( 18-20; 21-39; 40-49; 50+)◦ 6 Health Actions
Online Health Questionnaire Biometric Screening Preventive Exam Pap Smear Mammogram Colorectal Cancer Screening
Health Actions are Personalized
Male Compliance Criteria 2 Age Categories ( Age 18-49; 50+) 5 Health Actions Total
◦ Online Health Questionnaire◦ Biometric Screening◦ Preventive Exam◦ Colorectal Cancer Screening◦ Prostate Cancer Screening
Health Actions are Personalized
American Heart Assn. American Diabetes Assn. American Cancer Society American Lung Assn. Nat’l Cholesterol Education Program U.S. Preventive Services Task Force Nat’l Asthma Education and Prevention
Program Nat’l Heart, Lung and Blood Institute
Health Actions Recommended By:
Personal Dashboard allows employees to track progress online.
Results of Health Actions may reveal chronic health conditions◦ Pre-Diabetic Health Actions◦ Diabetes Health Actions◦ Asthma Health Actions◦ Cardiovascular Disease Health Actions◦ Coronary Artery Disease Health Actions
Members Monitor Health Actions Online
Health Questionnaire + Biometric Screening + Preventive Examination =
1. Enhanced Benefits 2. Health Incentive Account Deposits 3. Deductible Credit
Financial Incentives
Some plans reward members by lowering members’ coinsurance and annual Out-of-Pocket Maximum
Children also get enhanced benefits when employee and spouse ( if any) complete Health Actions
Added Bonus: Once employee and spouse ( if any) complete Health Actions, all prior claims for the calendar year are re-adjudicated at the Enhanced benefit level.
Financial Incentives
Some plans offer HIA’s $200-$500 in HIA funds available to both
Employee and Spouse/Domestic Partner Add’l financial rewards for completing Health
Actions related to specific conditions Available to reduce the deductible or IRS
approved medical expenses Unused amount may be carried over from
year to year Unlike HSA’s, account balance forfeited if
employee or employer leaves plan.
Financial Incentives: Health Incentive Accounts ( HIA’s)
Health Coaching◦ Coaching Targets:
Depression Smoking Diabetes Stress Exercise Activity Weight
Additional Benefits of Value Based Plans
Value Based Plans have offered rate increases averaging 1.5% over the last two years ( far below industry norms)
For groups of 51+, some are offering two year rate guarantees
Value Based Plans may be attracting a healthier risk pool
If this happens, Value Based Plans may continue to experience lower rate increases
Conversely, traditional plans may experience higher than average rate increases
Future Potential Benefits- Value Based Plans
Value Based Plans may be the right approach for today’s challenges
Other carriers are trying to catch up Employee choice is key with any group
health plan. Work with an Employee Benefits Broker who
has experience in all types of health plans ( HMO/PPO, HSA, HRA, Value Based Plans)
Don’t forget Senior Planning ( for employees 65+)
Summary
Jim Wisdom, CFP President James L. Wisdom Insurance Services 4607 Lakeview Canyon Road- Suite 482 Westlake Village, CA 91361 Work: (805) 497-9264 Cell: (818)469-6640 Fax: (805) 435-3636 www.wisdomhealthplans.com CA License #0699524
Thank You!
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