Did you know that, on average, the sickest 4% of the population represents 41% of the total allowed medical and pharmacy spend? It’s hard to believe -- and even harder to manage. That’s why we created Mercer Health AdvantageSM (MHA), a proprietary, high-intensity care management program designed to manage care for employees with serious/chronic conditions -- and we’ve seen some great results. In fact, according to a study released this week, employers who offered MHA realized a combined average return on investment* of $2.70 in health care savings for every $1 spent.
Further, our analysis showed average annual savings of $338 per employee along with significant improvements in the quality of care for the most ‘at-risk’ patients. Based on 2014 clinical results, there was a much sharper decrease in hospital admission rates for the MHA-engaged (-18%) compared to the non-engaged (-5%) population.
MHA drives coordinated patient engagement -- at the right time, with the right providers. Individual health plan programs vary, but the core MHA model is based on a single registered nurse from a given health plan working with a dedicated team of other specialty clinicians, including social workers, pharmacists, physicians, and behavioral health specialists from the plan to coordinate patient care. This holistic, high-touch approach encompasses not only clinical care, but also addresses such important issues as spousal/family involvement, mental/psychological monitoring, and post-care monitoring.
Be sure to check out this case study to learn how a large aerospace company used Mercer Health Advantage to better control costs and improve patient outcomes.
*ROI is based on an analysis of claims data and program activity. Various best-practice methods are used to estimate savings from avoided costs attributable to program activity. The Mercer Health Advantage service was available through Aetna, Anthem, HCSC and UHC in 2014, and, as such, the ROI result herein is based on their combined performance.
Our sister company, Oliver Wyman, recently released a white paper on the “New Front Door to Health Care” -- namely, telemedicine and retail clinics. We shared their latest survey data on consumer perceptions and use of these newer access points for health care. While employers have incorporated telemedicine and retail clinics into their health benefit offerings and plan designs, it is important to think about how these access points will evolve as the health care delivery system continues to transform itself.
According to OW’s Sam Glick, “This year will usher in a new era of retail health. Retail clinics 2.0 will be different; they will be the hub of the provider network of the future. These clinics will still provide inexpensive urgent care at convenient hours and locations, but they’ll also provide insurance enrollment (like Walmart is doing); care coaching (a la Rite Aid); full primary care (as Walgreens is piloting); a community-health focus (like Target); and whole-health services (like CVS). The retail healthcare experience will be like the best of any other retail experience -- that is, tailored, affordable, and easy. In the coming year we will also see traditional health systems embrace retail care as an extension of their impact, not as a competitor.”
The advantage to employer-sponsored plans and consumers? These access points are more convenient and less costly. They also have the potential to provide coaching and educational support to drive healthy habits.
So what should employers be thinking about to maximize the benefits to themselves and their employees?
- Communicate with employees about any retail clinics and telemedicine services available to them to make sure they understand what each offers and how the costs vary. Otherwise, they may not realize how significant these differences are. For example, the cost spectrum could range from as little as $40 for a telemedicine visit, to $70 for a retail clinic visit, to $150 for a primary care office visit. It’s also important to reinforce that an urgent care facility is an alternative to the emergency room, not for a primary care visit.
- Keep a pulse on what the hospital systems in your locations are doing. We know from the OW survey that people value retail offerings that are associated with a health care name they trust. Promoting these new options could also be beneficial.
- Talk with your vendor partners about their approach to including these new options in the provider network and communications with plan members.
- Look for opportunities to link convenient retail resources to chronic condition management programs and communications. For some plan members, the personal interaction could have a significant impact on their success in managing their condition.
More access points means more opportunity to have a positive impact on plan members’ health and health improvement efforts. In the busy world we live in, that’s a good thing!
The HMO is making a “comeback,” claims a recent article in The New York Times. HMOs, once “emblematic of everything wrong with health insurance” due to lack of provider and hospital choice, are now looking to re-brand themselves as high-performance care delivery vehicles for lower cost and better managed care. In an effort to escape the negative connotations, some insurers are going to great lengths to avoid the term “HMO” altogether: Health Care Service Corporation considered lobbying state lawmakers to change the acronym to H.I.O. for Health Improvement Organization. Although these emerging HMOs generally share the same philosophy of managed care as their predecessors, they are less likely to include the unpopular gatekeeper feature, in which access to specialist care is controlled by a primary care provider.
There are two things to keep in mind here. First, the uptick in these “new” HMOs is being seen primarily on the state exchanges. In employer-sponsored plans, national HMO enrollment peaked in 2001 at 33% of all covered employees and has been on a steady decline ever since, slipping to 16% in 2015, according to Mercer’s National Survey of Employer-Sponsored Health Plans. Second, the outlook on HMOs varies by region. In some parts of the country, HMOs aren’t making a “comeback” because they were never out of style to begin with. For instance, Kaiser Permanente in California is widely considered one of the most desirable health consortia in the country, though it’s important to note that Kaiser has its own doctors and hospitals, whereas most insurers offering HMOs contract with a network of providers.
Even if your organization was one of those that dropped HMO offerings due to cost and member dissatisfaction, it makes sense to keep your eye on new options appearing in the market to see if they’ve truly cracked the code of how to offer first-dollar coverage while still controlling cost.
This week the Centers for Medicare and Medicaid Services (CMS) and America’s Health Insurance Plans (AHIP) announced a set of seven standard areas in which the quality of physicians should be measured, ranging from primary care to treatment of patients with cancer or AIDS. This is the first time the two organizations have collaborated on such an initiative, which will not only standardize quality measures and contribute to compensation and pay-related decisions, but will also reduce the administrative burden that many doctors currently face in terms of reporting their outcomes and other metrics of success to insurers and Medicare; in the current system, doctors often have to fill out many different, sometimes duplicative, requests for quality data from the various insurers with which they have contracts. We see this move as a great step forward for the shift to value-based care, but keep in mind, CMS said the measures will be implemented in several stages. For instance, commercial health plans will implement the core measures when contracts come up for renewal or if existing contracts allow modification of the performance measure set. CMS and partner organizations intend to add more measure sets and update the current sets over time. We encourage employers to discuss timing and possible impact with your health plan partners and transparency tool providers.
Employers are moving quickly to add telemedicine services to provide employees with an alternative to the traditional care delivery model. Our recent survey found that 30% of large employers now offer telemedicine, up from just 18% last year. Telemedicine is most commonly used for medical care, but it can also be utilized for behavioral health care. One example highlighted in a recent Washington Post article describes a situation in which the behavioral health televisit actually takes place during a patient’s primary care visit, allowing the primary care provider, the behavioral health provider, and in this case even a separate psychiatrist, to coordinate care for the individual. The convenience afforded by telemedicine is perhaps even a bigger boon with behavioral health care, considering that there are fewer behavioral health providers available than primary care providers; patients may have to wait longer for appointments and travel further to find the appropriate provider. In addition, given that behavioral health visits tend to be ongoing, the opportunity for cost savings is amplified. If your telemedicine program also covers behavioral health, it’s also important to let employees know how they can benefit from using it for these services as well as for medical care.
Telemedicine services offerings continue to rise as not only employers, but also hospital systems step up to meet the demand for convenient and cost-effective care. Mercer’s latest National Survey of Employer-Sponsored Health Plans saw a significant increase in telemedicine offerings among large employers, from 18% in 2014 to 30% in 2015. Spectrum Health, a hospital system in west Michigan, now offers their own telemedicine solution, MedNow, which replaces MDLive, one of the more prevalent telehealth providers in the industry. They cited the need for a more “comprehensive offering” and the need for physicians to “have access to patients’ electronic medical records” as the key reasons for bringing this service in-house. Inside the article, Mick Young from Mercer’s Grand Rapids office comments on the growth of telemedicine as an employer offering, particularly as a strategy to impact rising medical claim costs.
July 30 marks the 50th anniversary of the law that created Medicare and Medicaid. Let’s take a look at how much has changed since the programs were first conceived — and also at the role they play in employer-sponsored health care.
Medicare — When Medicare was established in 1965, as Federal health insurance for the elderly or disabled, there were fewer than 20 million Americans over the age of 65. Nearly half of them were uninsured, and the elderly population was viewed as politically disconnected. Today, Medicare covers 55 million people — one in six Americans. Each day 10,000 more people become eligible, while the number of workers paying the tax to fund the program decreases. And these seniors are “uber-citizens” who can’t be ignored. They are a political force to be reckoned with, and their health coverage is of great importance to them. Half of the covered individuals have four or more chronic conditions. When the George W. Bush administration expanded Medicare coverage to include prescription drugs, many employers decided to discontinue sponsoring plans for retirees over age 65.
Medicaid — Medicaid was originally intended only to provide coverage to children, pregnant women, and disabled persons. After the ACA expanded the scope of Medicaid to include residents with incomes as high as 133% of the Federal poverty level, the Supreme Court decided states could have the option to expand coverage or not, and 20 have chosen not to expand. Even so, a whopping 70 million people are enrolled — that’s one in four Americans. The annual cost of $500 billion is shared between the Federal government and states, where it tends to be one of the largest budget items. States manage cost by cutting payment rates to providers or reducing benefits, creating access challenges for members. As a potential coverage option for low-paid and part-time employees, Medicaid takes some of the pressure off employer-sponsored plans to provide affordable coverage to all.
What lies ahead for these landmark programs, and how can employers prepare? Consider that Medicaid is the only safety net for millions of middle-class people who need long-term care at home or in nursing homes — in fact, more than 60% of nursing home residents rely on Medicaid for assistance. Not surprisingly, Medicaid programs are working to shift people from costly nursing homes to less costly services at home or in community settings. Your employees should consider what they would want for their parents, or themselves, should they need this type of assistance. Advance planning for long-term care is a good thing to include in financial wellness coaching.
Medicare and employer programs have a symbiotic relationship. According to the Urban Institute, reducing the rate of chronic disease by just 5% would save Medicare and Medicaid $5 billion per year by 2030; 25% reduction would save $26.2 billion per year. Employer investments to help workers avoid and/or manage chronic conditions have the potential to contribute to significant savings. At the same time, the vast purchasing power of Medicare has the potential to move the market in productive ways. In 2014, 20% of Medicare spending ($72 billion) went to providers under contracts that gave them incentives to coordinate care to drive better quality and lower costs. This effort is parallel to employer efforts to utilize Accountable Care Organizations and patient-centered medical homes to achieve the same goals. The more pressure on providers to provide care this way, the faster we will be able to make progress.
A recent article in The New Yorker entitled “OverKill” by Atul Gawande describes the harmful effects of unnecessary medical care, with a focus on the resulting adverse medical consequences. It framed the issue of medical waste using a different lens than I typically apply, and I find myself thinking about the implications frequently.
As Mercer’s Chief Actuary for Health and Benefits, I have spent nearly a year leading an internal initiative aimed at understanding how value-based care is changing the health care landscape. Value-based care is a term used to describe a number of strategies for reducing unnecessary care and encouraging the practice of evidence-based medicine by changing incentives for providers and patients. In particular, I’m looking at the implications for the employers with whom we consult. My focus, first and foremost, is on all things financial. Studies point to the large degree of waste in the medical system, and as employers look at ways to flatten the medical trend curve, eliminating waste seems a logical place to start.
I am also a spouse and a parent, though, and will admit to the tiny voice in my head that asks if it were my child or spouse who was ill, wouldn’t I want to exhaust all possibilities to cure them? How do we find the right balance between personal and global interests?
What this article points out, though, is that medical waste is not just a case of better safe than sorry. In many cases unnecessary medical procedures are actually harmful to the patient. Beyond throwing dollars down the drain, we are actually putting health and, in some cases, lives at risk.
As consultants, we continually work with employers to identify cost-effective solutions that improve the health and well-being of their employees and dependents. The value-based care movement has the potential to do just that, by creating financial incentives and accountability within the health care delivery system. These incentives, part of a broad payment reform movement, reward providers for managing cost, improving quality, and increasing patient satisfaction with the health care system.
Many aspects of our current health care system are broken, and it needs transformative change in order to address the fundamental problems that Gawande describes. There are grass-roots movements under way focused on driving this transformation, led by organizations like Catalyst for Payment Reform and National Business Group on Health, and as employers, you can lend your voice to the collective call for action. Wasteful spend for unnecessary tests and procedures not only pressures our profit margins and competitiveness in a global economy, it can harm the people we are looking to help — our employees and their families.
Learn more about value-based care and how you can help to drive this transformation.
A recent study reported that the US government saved millions through the Medicare Pioneer Accountable Care Organizations (ACOs) — $212 million in year one and $105 million in the second year. Physicians who participate in these ACOs follow quality standards and in return share in a portion of the cost savings. Employers have also been successfully testing ACOs and other value-based care models. If structured and deployed appropriately, we believe value-based care has the ability to improve quality, reduce costs, and enhance the patient experience.
Since the passage of the ACA in 2010, we’ve seen large increases in funding for health care technology and some really interesting innovations. We are quickly moving into a time where there will be more information available than health care providers can possibly interpret on their own. Here’s an interesting look into the future and what may be possible if we can learn how to harness the information and customize care for each individual. But, this innovation comes at a cost. Employers should expect more controls on data use and privacy.
There are many forces at play in the market that will drive the movement to value-based care. The creation of Accountable Care Organizations is one of the major initiatives driven by the hospital and physician community. This article makes the case for the importance of leveraging community health programs that offer cost-effective, non-medical ways to prevent and improve chronic conditions. Programs that focus on fitness and nutrition are low cost and address the root causes of preventable conditions. As you evaluate new partnerships for value-based care, find out whether they are drawing on these types of resources, which could be an important key to success in improving member health and holding down cost.