Results For Consumer-Driven Plans Getting Clearer

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How well do employees really drive their health plans? For health agents and employers, thats the question of the day.

The answer: After a year, “consumer-driven” plans seem to be holding medical costs to about 90% of the expected amount.

But the early results “just lead us to more questions that we want to have answered,” says Robin Downey, head of product development at Aetna Inc., Hartford.

About 1 million U.S. consumers have health coverage that includes a health reimbursement arrangement, a medical saving account or some other personal health account, up from 500,000 a year ago, according to Arnold Milstein, medical director of the Pacific Business Group on Health, San Francisco.

The number could double by 2005, he adds.

Although the oldest U.S. account-based plans are just a few years old, “its very important for employers to start seeing some credible data,” Downey says.

Government officials also are interested, because they hope an account-based approach can keep skyrocketing Medicare and Medicaid claims from bankrupting the country.

Members of the congressional Joint Economic Committee called Milstein and other health policy experts to testify in February at a hearing on the performance of account-based plans and other types of consumer-driven plans.

Milstein has been working on a study of 15 consumer-driven plans.

The 3 plans that talked about their claims experience said the consumer-driven approach seems to be holding medical costs to about 90% of what they expected, Milstein testified.

The companies that organize account-based plans are putting out similar figures.

When Aetna looked at medical costs for 13,800 workers who belonged to its account-based HealthFund plans during the first 3 quarters of 2002 and the first 3 quarters of 2003, it found that costs for the workers in account-based plans rose only 1.5%, while costs for workers in the traditional plans rose more than 10%.

About 50% of the employees with health accounts have assets to roll over at the end of the year, and those employees end the year with about 60% of the initial contribution.

At one employer that offers both an Aetna account-based plan and traditional health coverage, prescription drug costs at the traditional plan rose 5.1%. Because workers in the account-based plan filled fewer prescriptions and used more generic drugs, their prescription costs fell 6.5%, Downey says.

Destiny Health, Oak Brook, Ill., a company that focuses on replacing entire health plans at small and midsize employers, covers 30,000 workers, up from 5,000 workers 2 years ago.

The sponsors of its plans contribute $600 to a health account for each single employee, $1,050 for an employee with one dependent, and $1,500 for a family.

The program also offers rich preventive care benefits and perks such as airline miles and health club discounts for workers who get recommended preventive care, according to Stuart Slutzky, the senior director at Destinys actuarial division.

Destinys small group rates increased 14% in 2003, but 79% of plan members got the recommended preventive care, compared with an average of about 50% to 60% at the typical traditional plan. Generic drugs ended up accounting for 50% of prescriptions, up from 30% when the employees belonged to conventional plans, Slutzky says.

Destiny believes that in a few years it will bring about big changes in cost trends by making long-term changes in patients behavior. “Were looking forward to the future,” Slutzky says.

Definity Health Corp., Minneapolis, is reporting that care for its 200,000 account-based plan members is costing about $392.50 per employee per month, or 4.5% less than the projected cost, according to Dave Delahanty, a consultant in the Minneapolis office of Mellon Human Resources & Investor Solutions.

At Lumenos Inc., Alexandria, Va., costs at 7 plans ranged from 64% of the projected level to 122% of the projected level, with a median of about 90%, Delahanty says.

Benefits managers at many of the employers that have adopted the account-based plans are getting used to reporters and consultants calling up to ask them how the plans are doing.

At Belo Corp., Dallas, a media company, 5.5% of the 8,000 eligible employees have signed up for the self-funded Lumenos plan, up from 3% a year ago, says Joe Daume, the companys human resources director.

The demographics of the plan seem to be similar to those for the Belo self-funded preferred provider, self-funded point-of-service plan and insured health maintenance organization plans, Daume says. “If people understand the [Lumenos] plan, they really like it,” he says.

Daume declines to give exact medical cost figures, but he said the medical cost increase at the Lumenos plan was lower than that at the other self-funded plans.

Daume wants to wait to see more data before coming to any conclusions about account-based plans, but he already sees the consumer-driven plan movement improving the Web sites and Web-based tools of traditional plans.

“The competition has forced the other plans to come up to the same level,” Daume says.

Milstein and other experts point to several weaknesses in the performance data for account-based plans. One is that the plans are still very new. Claims might be lower than expected partly because employees are still learning how to use the new plans.

Another reason is that the plans might be attracting employees who are different from the employees who stick with traditional plans.

But the third reason, Milstein says, is that, despite all the efforts of the consumer-driven plan companies to give employees more information about the cost and quality of care, employees still have a hard time getting the detailed, reliable cost and quality data.


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.