Value Based Health Benefit Design: more than just waiving copays RIBGH September 20, 2013 Sander Domaszewicz Irvine, CA [email protected]

Value Based Health Benefit Design: more than just waiving

copays

RIBGH

September 20, 2013

Sander DomaszewiczIrvine, [email protected]

© MERCER 2013, all rights reserved 2April 19, 2023

• There are many untapped opportunities

– We can address the “hidden” costs associated with poor health (such as at risk, illness, injury) with a comprehensive and integrated approach

– Manage total health to achieve total value

Reducedcost

Competitive advantage,Positive company image

Increasedproductivity

Healthierworkforce

+ + =

Total Health ManagementOpportunity 1 – 2% of Payroll +

The Hidden Costs of Illness

Estimated indirect cost of absences = 2% of payroll

+

* Assumptions:• For an employer with 5,000 employees and average salary of $47,060

* Survey results:• Average salary: $47,060 • % electing employer coverage: 84% • % with dependent coverage: 56% • Average employee age: 41 years • % females/males: 53%/47%

Source: Mercer’s 2008 National Survey of Employer-Sponsored Health Plans and Mercer’s 2007 Survey of Health, Productivity and Absence Management Programs

$49M Health & Absence Costs*

$235M Payroll* Payroll

Direct non-occupational absence costs = 2.7% of payroll

Health care benefits costs = 16% of payroll

Equals more than 20% of payroll

© MERCER 2013, all rights reserved04/19/23

Total Health Management

Total Health Management includes all of the actions an employer can take to engage and support employees in making good choices to avoid the cost and consequences of poor health

Strategic framework

Definition

Addresses medical benefits, pharmacy and the direct and indirect cost of absence – one-fifth of payroll costs

Creates a sustainable culture of health

Facilitates employee behavior change and commitment

Reduces cost associated with poor health


Total Health ManagementValue-based Design

• Value-based Design (VBD) is an approach to benefit plan design that encourages use of high value services which results in improved health, lower cost and/or increased productivity

• The “value” derived from VBD focuses on the total return on investment (medical, lost time away from work, productivity savings) and improved health

• The “design” of VBD spans medical, drug, mental health, behavioral health and disability plans

• The definition and scope of VBD varies widely across employers and carriers


Mercer VBD OverviewValue-based Designs are part of the next design evolution

• VBDs aligns with and can take medical consumerism strategies to the next level

PPO CDHP VBD

• Co-pays

• Low deductibles

• Broad Access

• Waived preventive cost-sharing

• Coinsurance

• Health accounts

• High deductibles

• Targeted waived or increased cost-sharing

• Incentives (health accounts, plan design, etc.)

• Behavioral requirements

1990’s 2000’s 2010’s


Value-based DesignMercer’s Guidelines

Mercer’s clinicians and researchers periodically evaluate nationally recognized research to identify and prioritize VBD ideas

Must demonstrate:

Clear impact on health statusb

Vetting by national entities **b

Wide recognition or peer-review in literatureb

Significant impact: Either people or % of costb

**Center for Disease Control and Prevention (CDC), National Committee for Quality Assurance (NCQA), National Quality Forum (NQF)


Value-based Design

• Not all VBD recommendations are created equal

Highest VBD value

• Lower net direct medical spend

• Reduced lost time cost

• Either improve or not affect clinical outcome

Intermediate VBD value

• Improve clinical outcome

• Cost neutral

• Reduces days away from work

Lower VBD value

• Improve clinical outcome

• Increased medicalcost, but offset by lower indirect cost, such as absence and productivity

Example:

• Diabetes and ACEI/ARB medication

• High performing networks

• Shared decision-making required for preference conditions (sensitive knee surgery, prostate, cancer)

Example:

• Immunizations

• Screenings and preventive care for those with chronic conditions like diabetes and heart disease

• Chiropractic services for neck and low back pain

• Comprehensive smoking cessation program

Example:

• Bariatric surgery

• Greater access to behavioral health services

• Laparoscopic surgery


Value-based DesignKey Strategic Components

Clinical evidenceClinical evidence

Financial incentiveFinancial incentive

Member education and outreach

Member education and outreach

Vendor administrative capabilities

Vendor administrative capabilities

Incorporates benefit plan provisions that encourage use of high value health services

Focuses on covering and encouraging the use of treatments that provide improved health outcomes and productivity

Includes periodic evaluation of nationally-recognized scientific research to identify and prioritize VBD ideas

Uses targeted/personalized strategies for member education and engagement

Requires progressive plan design administration capabilities by carriers

Value-based Design (VBD)


Clinical Evidence Desired Behavior VBD - ActionsImpact

on EmployeeValue on

Investment

• High performing specialists are more cost efficient and achieve higher quality

• Employee chooses high performingspecialists

• Lower copays for high performing specialists

• Health Plan with HPN

• Good web tools and marketing campaign

Moderate – High ** ***

• People with preference sensitive conditions who use shared-decision making tend to choose less invasive approaches

• Consult Health Advisor (HA) before elective surgery

• $500 penalty for not consulting HA

• Vendor with HA for shared decision making

• Marketing campaign to employees

Low –

Moderate **

• High risk diabetics who have eye exams and regular A1c screening have lower cost than those who do not

• High risk diabetics get preventive screenings

• Lower copays for screenings

• Health management vendor outreach and skill building

• Physician reinforcement

Moderate**

Sample Value-based Designs

-


Value-based Design Implementation Considerations

• Multi-year approach

• Prioritize benefit design

• Confirm incentive components

• Address administrative issues

• Model cost/benefit

• Develop communication/education campaign

• Key metrics


Discussion


Documents

Value Based Health Benefit Design: more than just waiving copays RIBGH September 20, 2013 Sander Domaszewicz Irvine, CA [email protected]