Can Consumer-Driven Health Plans Work In The Small Group Market?

Another point of confusion that is vital to clarify is the notion of what expenses would qualify for health reimbursement. Theorists have proposed health accounts that could cover the cost of office co-pays, over-the-counter drugs and a host of other expenses not typically covered by employer-sponsored health insurance.

In a small group environment, expanding the definition of which expenses are covered under insurance is not going to sell. Plan designs for this market should restrict health reimbursements to what is currently covered by insurance.

Although premium reductions can help the broker get in the door, the premium is not the only issue that worries small group employers.

Administrative costs may not have a major impact on a Fortune 500 company, but they can be life or death for a small business. The broker who is selling CDHPs must be able to demonstrate that CDHPs are simple to administer. Fortunately, most major health plans provide online and other electronic demonstrations to show how account administration would work.

Despite the inevitability of a few mismanaged accounts, the process can be relatively straightforward. Under most designs, money does not change hands at the doctors office. An employee must simply submit a doctors bill to the HRA for reimbursement. Major health plans will have online tools that facilitate reimbursement, provide health balances and monitor activity. With proper technology, administering a health account does not have to be more complicated than managing an airline frequent flyer account.

Finally, the broker must be armed with the educational materials that support the promise of creating a more educated consumer of health care.

Implementing a CDHP does not mean the employer is shedding a responsibility onto the employee. Employees now managing a health care budget are the first to do so and the ability of health plans, employers and providers to support them in that new role will be critical to CDHPs success at reducing costs while improving outcomes.

Though CDHPs can provide employees with better access to information about and control of their health care choices, employers run the risk of backlash from an employee base that is not accustomed to managing medical care and medical expenses actively. A large part of the current employee population entered the workforce after the mid-1980s and is not familiar with indemnity insurance. These employees are used to employers covering their medical decisions and treatments from the first dollar.

Brokers should encourage increased levels of internal communications, support and sensitivity to ensure adequate education and mitigate the perception of a reduction in benefits.

Brokers also must prepare employers to address questions about issues such as some employees inability to pay for treatment for cost reasons, inequities in cost-shifting for lower paid employees and the requirement of computer literacy for maximum efficiency.

Review all educational materials and wellness and care management programs with prospective clients. In order for the consumer engagement model to be truly effective in generating costs savings, employers must be prepared to communicate to employees the details and advantages of all the decision-making tools available with the plan.

Kevin R. Hill is executive vice president of sales and business development at Oxford Health Plans Inc., Trumbull, Conn.

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.