Health Care Reform Consumerism Personal Care Accounts Health

Health Care Reform Consumerism, Personal Care Accounts & Health Reform September 14, 2010 Ron Bachman President and CEO Healthcare Visions, Inc. © 2010 A. D. A. M, Inc. All rights reserved. 1

Patient Protection & Affordable Care Act GET OVER IT! IT’S THE LAW © 2010 A. D. A. M, Inc. All rights reserved. 2 2

Four Phases of Health Reform Legislation Regulation Compliance Litigation © 2010 A. D. A. M, Inc. All rights reserved. 3 3

Legislation Look for follow up legislation, especially if Dems. Retain control of House & Senate. PPACA may likely require a large “technical corrections” bill. Politicians and special interests can use a technical corrections bill to pass new provisions and mandates. A technical corrections bill could include entirely new provisions not a part of the original law. For example, the public option could return as a “technical correction © 2010 A. D. A. M, Inc. All rights reserved. 4 4

Compliance Consultants and lawyers will find expanded needs for their services. Insurers will need to determine if they are in compliance. Employers not in compliance will be subject to large penalties and fines. Self-insured employers will require compliance audits to assure required essential coverages and mandates are included. Each employee contribution will need to be measured against the government affordability standard. Each year will likely produce new regulations and changes that must meet with compliance standards or employers will suffer penalties and fines. © 2010 A. D. A. M, Inc. All rights reserved. 5 5

Regulation The regulatory process is likely to be a nightmare of delays, missed deadlines, and confusing interpretations. In the bill there are scores of references to decisions to be made by the Secretary of H. H. S. Major areas of implementation and coverage determinations for “essential benefits” are left to the discretion of the Secretary. Lobbyists from every provider and self-interest group will converge on the bureaucracies to have their services included through regulation. Ultimate coverage mandates are likely to go beyond what employer plans typically consider as medical/surgical benefits. © 2010 A. D. A. M, Inc. All rights reserved. 6 6

Litigation Courts will decide what the language of the laws 2700+ pages mean. New laws require a period of adjustment that can take decades to sort out the meanings and conflicts of legal interpretations. Given the national impact and financial consequence of any single coverage requirement, every selfinterest group wanting to be included in the essential benefits package will push litigation to add or solidify their coverage demands. © 2010 A. D. A. M, Inc. All rights reserved. 7 7

The Circle of Life The never ending cycle will then repeat itself, as new laws will be passed to respond to court decisions and off it goes again to repeat the four phases of legislation, regulation, compliance and litigation. © 2010 A. D. A. M, Inc. All rights reserved. 8 8

Megatrends, and Consumerism Megatrends represent major movements so powerful that the direction of change cannot be stopped. Federal laws can speed up or slow down megatrend forces. But, like dammed rivers megatrends will redirect themselves to achieve the inevitable result. Healthcare consumerism is such a force. © 2010 A. D. A. M, Inc. All rights reserved. 9 9

Consumerism Megatrend Americans who: bank electronically at ATMs, purchase stocks over the internet, buy and sell goods through e. Bay, maintain their music with i. Tunes, keep personal videos on Facebook, seek employment through Linked. In, and control television programming with Tivo, will not accept limits, restrictions, waiting lines, or other barriers to their health - their most personal asset. © 2010 A. D. A. M, Inc. All rights reserved. 10 10

You Can’t Fight Megatrends © 2010 A. D. A. M, Inc. All rights reserved. 11 11

Healthcare Consumerism is about transforming a health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants. It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors. © 2010 A. D. A. M, Inc. All rights reserved. 12 12

Healthcare Consumerism is independent of plan design. Healthcare consumerism is a compelling force because it embraces lowering costs, improving quality, enhancing choice, and expanding access by empowering individuals and reinforcing personal responsibility. It is the force operating throughout our economy and is just beginning to be structured into healthcare and insurance. © 2010 A. D. A. M, Inc. All rights reserved. 13 13

Growth of Account-Based Health Plans More than fifty percent (50%) of employers now offer consumerdriven options. In 2010, nearly 18 million lives will be covered by consumer-driven plans. © 2010 A. D. A. M, Inc. All rights reserved. 14 14

The Core of Consumerism Personal Responsibility & Behavioral Change © 15 2010 A. D. A. M, Inc. All rights reserved. 15

The Evolution of Healthcare Consumerism Future Generations of Consumerism Traditional Plans with Consumer Information th 1 st Generation 2 nd Generation 3 rd Generation 4 Generation Consumerism Focus on Discretionary Spending Focus on Behavior Changes Integrated Health & Performance Personalized Health & Healthcare Behavioral Change and Cost Management Potential Low Impact ---- ---- ---- High Impact © 16 2010 A. D. A. M, Inc. All rights reserved. 16

The Promises of Consumerism Major Building Blocks of Consumerism Personal Care The Promise of Demand Control & Savings Accounts It is the creative Wellness/ development, The Promise of Wellness Prevention efficient delivery, efficacy, and Disease and Early The Promise of Health successful Case Intervention integration of these Management elements that will Information The Promise of Transparency prove the success or Decision failure of Support Incentives & The Promise of Shared Savings consumerism. Rewards 17 © 2010 A. D. A. M, Inc. All rights reserved. 17

American Academy of Actuaries 2009 Non-partisan CDH Consumerism Studies 1 st Year Savings: The total savings generated could be as much as 12 percent to 20 percent in the first year. All studies showed a drop in costs in the first year of a CDH plan from -4 percent to -15 percent. A control population of traditional plans experienced increases of +8 percent to +9 percent. 2+ Year Savings: At least two of the studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent. If these lower trends can be further validated, it will represent a substantial cost-reduction strategy for employers and employees. Cost Shifting: The studies indicated that while the possibility for employer cost-shifting exists with CDH plans, (as it does with traditional plans) most employers are not doing so, and might even be reducing employee cost-sharing under certain circumstances. © 2010 A. D. A. M, Inc. All rights reserved. 18 18

AAA Consumerism Study – Quality of Care Preventive Care: All of the studies reviewed reported a significant increase in preventive services for CDH participants. Chronic Care: Three of the studies found that CDH plan participants received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants. Physician Treatments: Two studies reported a higher incidence of physicians following evidence-based care protocols. Care Avoidance: All of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degrees relative to traditional plans. © 2010 A. D. A. M, Inc. All rights reserved. 19 19

Potential Savings from Full Implementation of Consumerism Achievement of savings and improved outcomes is dependent upon both the Type and Effectiveness of the programs implemented. Gross* Savings as % of Total Plan Costs (Programs Applicable to All Members) Traditional plans Effective Programs Implemented Consumerism Plans Passive 1 st Generation 2 nd Generation 3 rd Gen & Future Basic 2% 3% 7% 10% Expanded 3 -4% 5 -8% 12 -15. 0% 20. 0+% Complete 4% 7% 17% 25% Comprehensive (Future) 5% 10% 20% 30% *Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs © 2010 A. D. A. M, Inc. All rights reserved. 20 20

PPACA & Consumerism Under PPACA, financial rewards based health status are increased from 20% to 30%. The Secretary of Health and Human Services has the authority to increase that limit to 50%. PPACA still allows unlimited rewards and incentives for participation and engagement. © 2010 A. D. A. M, Inc. All rights reserved. 21 21

Incentives & Rewards can include activities such as: Participation in a wellness assessment, Compliance with a condition management program (e. g. taking medications, diet, exercise, office visits), and Maintenance of good health characteristics (e. g. blood pressure, cholesterol, nicotine use, body mass index) using bio-metrics. © 2010 A. D. A. M, Inc. All rights reserved. 22 22

The Evolution of Encouraging Personal Responsibility Plan Design Education Incentives & Rewards Participation Engagement Compliance Outcomes Health Status © 2010 A. D. A. M, Inc. All rights reserved. 23 23

The Future of Healthcare Consumerism - Post PPACA The employer world has moved to next generation healthcare consumerism with member engagement, rewarding healthy behaviors, and promoting personal responsibility. Plans are now focusing on rewards and incentives. Health Incentive Accounts (HIAs) are a special form of HRA that builds value only from rewards and incentives. There are many other special use HRAs that may become the channels for healthcare consumerism. © 2010 A. D. A. M, Inc. All rights reserved. 24 24

The Future Government and the movement to a political “nanny state” is a strong force in and of itself. Cynics will point to increasing demands for federal support and government dependency by large parts of our population. That may be a current political direction, but growing welfare and expanding entitlements is not a financially sustainable path and therefore cannot be a megatrend. The future is not the opiate of government welfare, but the citizen empowerment of “Healthcare Consumerism. ” © 2010 A. D. A. M, Inc. All rights reserved. 25 25

The Future of Healthcare Consumerism Personal Care Accounts Wellness/Preventio n Early Intervention Disease and Case Management Information Decision Support Incentives & Rewards Consumerism 2 nd Generation Consumerism 3 rd Generation Consumerism Focus on Discretionary Spending Focus on Behavior Changes Integrated Health & Performance 1 st Generation Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards 4 th Generation Consumerism Personalized Health & Healthcare Specialized Accts, Matching HRAs, Expanded QME Web-based Worksite wellness, Genomics, 100% Basic behavior change safety, stress & error predictive modeling Preventive Care support programs reduction push technology Passive Info Discretionary Expenses Compliance Population Mgmt, Wireless cyber – Awards, disease Integrated Hlth Mgmt, support, cultural specific allowances Integrated Back-to. DM, Holistic care Work Personal health Health & performance Arrive in time info, mgmt, info with info, integrated health info therapy, social incentives to access work data networks Cash, tickets, Trinkets Health Incentive Non-health corporate Accounts, activity metric driven based incentives Information, health coach © 2010 A. D. A. M, Inc. All rights reserved. Personal dev. plan incentives, health status related 26

Healthcare Consumerism The right strategy for employers wanting to protect their “Human Capital” with or without the influence and requirements of national health reform under PPACA. © 2010 A. D. A. M, Inc. All rights reserved. 27 27

Navigating Health Reform It is difficult to absorb the full implications of the health reform bill. Each week new regulations are being produced by the DOL, HHS, and IRS. With so much happening so fast how can employers, insurance agents, consultants, lawyers, or insurance companies make rational choices and be legally compliant? Adam Health Reform Navigator & Adam Preventive Care Navigator at www. cdhchealthreformnavigator. net © 2010 A. D. A. M, Inc. All rights reserved. 28 28