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Mercer

As the latest Mercer National Survey of Employer-Sponsored Health Plans shows, more employers are offering employees tools to make more informed healthcare decisions. Among the largest employers (those with 20,000 or more employees), 28% provided transparency tools through a specialty vendor in 2016, up from just 15% two years ago. An additional 62% say their health plan provides some type of transparency tool. 

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This post is part of our “Driving Transformation” series, in which Mercer consultants share key take-aways for employers from the 2016 Oliver Wyman Health Innovation Summit, a recent conference hosted by Mercer’s sibling firm, management consultant Oliver Wyman.

 

In this blog post, Oliver Wyman’s Terry Stone discusses how to fix the healthcare consumer experience. Despite abundant effort to address the industry shortcomings, she asserts that we haven’t spent enough time addressing the root-cause issues. Success lies in understanding the consumers’ needs and solving their problems. More than ever before, healthcare consumers expect us to stop making the complexity of the system their problem. So the next time you are addressing a change to your health plan, ask if the change makes it easier for your employees to access the right care at the right time.

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This post is part of our “Driving Transformation” series, in which Mercer consultants share key take-aways for employers from the 2016 Oliver Wyman Health Innovation Summit, a recent conference hosted by Mercer’s sibling firm, management consultant Oliver Wyman.  

 

The rise of the consumer has already caused a seismic shift in the strategic direction for most hospitals and health systems. These providers recognize the imperative to find new and different ways to demonstrate value across the care delivery continuum. This means focusing attention on what consumers of most products and services look for: cost, quality and an engaging and convenient experience. Integrated clinical and commercial strategies must be developed to successfully address each of these elements.  With increased focus on improving population health and patient satisfaction, re-thinking how multi-generational consumers access healthcare providers will be critical to future success. There will be various patient-centric “front doors” to healthcare, including retail health, telemedicine, onsite clinics, digital health, care navigation and a re-invented doctor’s office experience.

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A recent report from the Health Care Cost Institute (HCCI) found that people enrolled in high-deductible consumer-directed health plans have higher out-of-pocket healthcare expenditures than those in other types of medical plans, even though they use fewer medical services. The HCCI study examined claims from 2010-2014 for over 40 million individuals per year covered by employer-sponsored insurance. According to the study, out-of-pocket expenditures for people enrolled in CDHPs were 1.5 times greater than for those in traditional PPOs or HMOs, even though CDHP enrollees utilized roughly 10% fewer medical services per year. Neither the study groups nor the results were adjusted for member demographics, so it’s difficult to say that plan design accounted for all the difference in utilization. But it is interesting to note that while utilization was lower in all categories of medical services, the biggest differences were in the use of brand-name drugs and in ER use – two areas where overutilization is targeted by consumerism strategies.

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This post is part of our “Driving Transformation” series, in which Mercer consultants share key take-aways for employers from the 2016 Oliver Wyman Health Innovation Summit, a recent conference hosted by Mercer’s sibling firm, management consultant Oliver Wyman.  

 

One idea that was explored in great depth at the conference was that the transformation of healthcare will be driven by the consumer. But how would that work when consumers don’t really speak with a single voice? Can true transformation occur when every consumer is different, with unique preferences? In fact personalized healthcare is happening already and research is showing some encouraging results.

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Unless you’ve spent the last few weeks vacationing on an internet-free tropical island or remote mountain-top (if so, lucky you!), you’ve read something about the controversy surrounding the EpiPen, the severe-allergy drug injector sold by the pharmaceutical company Mylan. Since 2007, when Mylan acquired the EpiPen, the list price has risen from about $100 for a two-pack to about $600. There are virtually no alternatives on the market, and the medication is potentially life-saving – in other words, not optional. A grassroots social-media campaign, driven largely by parents of children with food allergies, pushed Mylan to offer a $300 “savings card” to commercially insured patients to reduce their out-of-pocket costs and to broaden the eligibility for uninsured patients to receive free EpiPens. What they didn’t do was reduce the list price for the drug, and the barrage of negative press continued, affecting Mylan’s stock price. The company responded by announcing they would introduce their own generic version of the product in a few weeks, at half the price. It will be the exact same product as brand-name version – which the company will continue to sell for the full price. Although drug companies have introduced generic versions alongside their own brand-name drugs to compete with other generics, it doesn’t appear that another generic epinephrine auto injector will be available in the short-term. 

 

Although this move may take heat off the company, the reason Mylan didn’t just reduce the price of the brand-name drug is because they hope and expect that sales of the brand-name version will continue – because (as this New York Times article suggests) some doctors will keep writing prescriptions for it by name, out of habit; because pharmacists will have a financial incentive to sell the more expensive, brand-name version; and because consumers with the $300 savings card might get the brand-name version for free but have a small co-payment for the generic version. On the other hand, some PBMs and carriers may have negotiated prices for the brand-name that are lower than the generic price! Employers will need to talk to their PBM or health plans to understand the current pricing structure and how, now that the target has moved and moved again, to get the best deal for their employees and their organization.

 

This story shines a spotlight on the urgent need for regulation to address pharmaceutical price-gouging and the extreme variation in prices paid by different purchasers for the same drug. On the defensive, Mylan’s CEO called out high-deductible plans as the real culprit; in fact, they exposed unfair price increases that might otherwise have gone unnoticed, as they do in so many cases. But the EpiPen story also highlights a problem with consumerism: you can’t be a smart shopper if there is no alternative to a product that your life, or your child’s life, may depend on.

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One way to improve engagement is to provide plan members with their own personal “health guide”.  Mercer is helping plan sponsors do that a couple of different ways. Mercer also just announced an alliance with Accolade: Mercer Complete Care, powered by Accolade. Check out this interview with our leader of specialty consulting services, Jean Moore, and Rob Cavanaugh from Accolade as they provide their perspective on the alliance and why we think it has the potential to enhance engagement. Now is a good time to consider the tools you are providing your employees and family members to help them access the right health care, and how that is working to support smart consumerism and effective use of care.

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The move from fee for service to payment for value is real. This blog post on the Health Affairs site provides a glimpse into the progress being made with this new approach to contracting with providers. I was struck by one sentence in particular – Patients are the most underutilized resource to help reach positive medical outcomes. Since 155 million Americans are covered by employer-sponsored health plans, employers are in a unique position to be able to influence patient behavior. With the advent of consumer-directed health plans, health advocacy and other well-being programs, we have made strides in promoting consumerism and empowering patients. While we have a long way to go to get plan members more comfortable and confident in this role, there’s a big potential upside.

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I recently sat down with Lenny Sanicola from WorldatWork to discuss what’s trending in employer-sponsored health plans. We discussed telemedicine, consumer directed health plans, centers of excellence and more. Listen in to learn more about the future trends and drivers identified by Mercer’s national survey.

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When faced with a diagnosis of a severe medical issue, many of us find it socially uncomfortable to appear to cast doubt on our doctors by seeking a second opinion from an independent source. It is precisely at such times that this course of action is most useful. You likely have employees facing tough medical diagnoses every day, and they may not be aware of the importance of seeking a second opinion in the face of those diagnoses.

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For those of us who experienced the major consolidation of the health care industry during the 1990s, the recent announcements of Anthem’s bid for CIGNA and Aetna’s proposal to Humana was a “back to the future” kind of moment. Many are wondering whether the Justice Department will allow such a degree of consolidation to take place, and, if so, what the impact will be. A quick search of the internet turned up two studies looking at insurance market consolidation in the past. Health Affairs published a study in 2004 based on market consolidation data from 2000-03. The author, James Robinson, documented short-term price and profit pressure but suggested that long-term success was dependent on new products and new competition. In 2011, RAND published a study that found consolidation among plans benefited consumers by lowering hospital prices. With so few major health plans left, it will be interesting to see how this plays out.

 

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