Bend the Healthcare Trend: How Consumer-Driven Health & Wellness Plans Lower Insurance Costs

How Consumer-Driven Health & Wellness Plans Lower Insurance Costs

Bend the

Healthcare Trend

MARK S. GAUNYA AND JENNIFER A. BORISLOW

© Copyright 2010 Mark S. Gaunya and Jennifer A. Borislow

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without the prior written permission of the author, except for the inclusion of brief quotations in critical reviews and certain other non-commercial uses permitted by copyright law. For permission requests, contact the author in writing at the address below.

The Health Dollar Equity Builder™, The Health Dollar Maximizer™, The Health Dollar Value Builder™ are trademarks of Strategic Vision Publishing, LLC. All rights reserved.

ISBN 978-0-9825459-2-8

ISBN (print) 978-0-9825459-2-8

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Strategic Vision Publishing, LLC

1 Griffin Brook Drive,

Methuen, MA 01844

To my wonderful wife, Debbie, and our three beautiful children, Grayson, Kelly and Brooke—you are my life.

Mark S. Gaunya

To my husband, Mike; our children, Jessica and Lauren; and my parents Wil and Margaret Kurth—I would not be the person I am without your love, support, and encouragement.

Jennifer A. Borislow

Praise for Bend the Healthcare Trend

Bend the Healthcare Trend is a great read and a practical guide to implementing a Consumer-Driven Health Plan and wellness strategy. Importantly, the book supports the belief that an empowered and engaged workforce with access to good information will make better healthcare decisions.

Douglas J. McKeown

CEO and Chairman of the Board, Woodard & Curran

Bend the Healthcare Trend is a wonderful resource for employers of all types to understand and attack the problems associated with the rising cost of healthcare. We have successfully implemented the strategies outlined and have been rewarded with single-digit rate increases over each of the last several years—with the most recent renewal being less than 1 percent! If you want to create a sustainable benefits program, this book is a must read.

Jill Duncan

Director of Finance, New Hampton School

President, Independent Schools Association of Northern New England

Bend the Healthcare Trend is a practical roadmap filled with years of knowledge, current-day application, and proven results. The coauthors are among the highest respected and well-known experts in the healthcare industry. This is a must-read for healthcare consultants, employers, and administrators.

Peter H. Jennings

CEO and President, HR Concepts, LLC

An easy read for today's multi-tasking HR professional, this book provides a great assortment of real-life scenarios that are designed to make the selection and implementation of Consumer–Driven Health Plans much easier. Read this book and take the next steps to improving your own company's financial health.

Mim Minichiello

Vice-President, Client Services, Tufts Health Plan

Bend the Healthcare Trend is the most succinct, accurate, and forward-thinking work I have read on the subject of health care benefits and wellness programs. We are in our fourth year of implementing many of the ideas presented and have found them to be successful on all fronts. Our employees appreciate the opportunity to get more involved with their healthcare choices and the program is more affordable for them and the school. A true win-win result.

Peter B. Rackliffe

Associate Head of School & Chief Financial Officer, Gould Academy

Chairman, Maine Association of Independent Schools Benefits Group (MAIS)

Jennifer and Mark are the gold standard among benefits problem solvers. Their new book will become the planning and implementation handbook for thousands of future-based business owners and organization executives.

Dan Sullivan

President and Founder, The Strategic Coach

This publication is not a substitute for the advice of your insurance advisor, accountant, lawyer, or any of your other advisors, personal or professional.

Neither the authors nor the publisher is rendering insurance, accounting, tax, or other professional services by publishing this book. As each individual's situation is unique, questions relevant to personal insurance needs should be addressed by an appropriate professional to ensure that the situation has been evaluated carefully and appropriately.

Neither the authors nor the publisher make any representations about the suitability of the information contained in this book, and all such information is provided as is without warranty of any kind. The authors and publisher specifically disclaim any liability, loss, or risk that is incurred as a consequence, directly or indirectly, of the use and/or application of any of the contents of this work.

Some case study names and details have been changed to protect the privacy of individuals mentioned.

Table of Contents

Foreword

Acknowledgments

Introduction

Chapter 1: The Primer

The Problem

The Cause

The Current Solution

A New Approach

Principle One: Transparency

Principle Two: Responsibility

Principle Three: Opportunity

Get Involved

Case Study: All-Access Pass

Chapter 2: The CDHP Value Proposition

Consumer Skepticism

Engaging Healthcare Consumers

Advantages to CDHPs

Informed Decisions

Case Study: Responsibility in Action

Chapter 3: The CDHP Engine—the Healthcare Account Structures

Plan Mechanics

Flexible Spending Accounts (FSAs)

Health Reimbursement Arrangements (HRAs)

Health Savings Account (HSAs)

The Proof Is in the Savings

The Only Choice

Case Study: Finding the Right Structure

Chapter 4: A Culture of Health and Wellness

The Root of the Problem

Choices, Choices

Top Cost Drivers

Personal Health and Its Effect on Healthcare

The Foundation

A Likely Story

Case Study: Wellness Strategies

Chapter 5: Building A Health and Wellness Program

Building a Culture of Health and Wellness in Your Organization

Increasing Your Chances of Success and Unlocking Financial Resources

Health and Wellness Program Development

Encouragement-Based Health and Wellness Programs

Performance-Based Health and Wellness Programs

Best Practices for Health and Wellness Program Management

Case Study: The Safeway Story

Chapter 6: Implementation and Communication

Introducing the CDHP Solution

Support Systems

Focus on the Foundation—The 3 Principles of CDHPs

Transparency

Responsibility

Opportunity

Implementation

Organizational Leadership

Human Resources

Mandatory Management Meetings and Employee Education

Communication and Education

Use Examples

Use Simple Language

Offer Various Media

Seek Feedback

Compare and Contrast Plans

Provide Post-meeting Resources

Case Study: Being Informed

Chapter 7: Education Best Practices

Learning the Mechanics

Types of CDHPs

Using Your Account

Financial Savings

Spreading Accountability

Summing It All Up

Case Study: Communication Is Key

Chapter 8: Post-implementation Communication and Education

Early Stages

Reinforcement

A Helpful Resource

Member Education Forums

Administrative Processes

Turning Theory into Application

Live Claiming Examples

Sharing Experiences and Responsibility

Healthcare Account Management

Flexible Spending Accounts (FSAs)

Health Reimbursement Arrangements (HRAs)

Health Savings Accounts (HSAs)

A Step Ahead

Continuous Promotion

The Value of Continuing Education

Case Study: Big Business Benefits

Chapter 9: The CDHP Renewal Solution

Great Expectations

Gathering and Studying the Data

Healthcare Trend

Claims Experience

Premium Increases

The Year in Review

Making Choices

Healthcare Account Funding

Too Much Funding

Too Little Funding

An Appropriate Amount

The Next Steps

Education Year after Year

Spreading the News

Case Study: Plan Design

Chapter 10: The Report Card

The Payoff

Getting Prepared

Tackling the Issues

Forward Thinking—Sustainability versus Growth

Case Study: Big Savings for Small Business

Conclusion

Glossary

Index

Foreword

Five years ago, my former employer, Harvard Pilgrim Health Care, published an annual report called The Cost of Not Knowing. It focused on how little information existed in the public domain concerning healthcare cost and quality. As the primary author of that report, I was struck by three core issues:

There is no incentive to be a low-cost, high-quality provider of healthcare services because there is no public accountability or recognition for cost or quality.

Differences in hospital admission costs varied by up to 300 percent. We looked at the cost per admission for Harvard Pilgrim members using community hospitals in Massachusetts. Costs ranged from $2,305 to over $9,700, even after adjusting for variables such as case severity.

There is virtually no correlation between high cost and high performance.

Today, America remains stuck in neutral when it comes to understanding much of anything about healthcare cost and quality. Ask ten people how much it costs to deliver a baby, and you'll get ten different answers. Ask about specific hospital costs and you'll be lucky if you get any answers at all. The same holds true if you ask someone about who does a good job with hip surgeries. No one knows.

Why have we been so slow to embrace the transparency we so eagerly demand from other industries? The decisions we make about healthcare are critical to our well-being. Information around complication and infection rates, for example, are a lot more important than the number of pixels embedded in the picture of a flat-screen TV. Yet we know more about the latter than we do about the former. Why?

Part of the problem is that we lack a feeling of ownership when it comes to our healthcare benefits. The government or an employer make most of our major decisions about what's covered and how much we pay; we get most of our information about who does what well from our friends, family, and care providers. But in this day and age, given the amount of money and complexity that's involved in healthcare, this isn't enough. We need to be more involved and more engaged.

More than most, Mark Gaunya and Jennifer Borislow understand the fundamental premise of informed healthcare, and their book is an excellent primer on how to get there. The story is simple enough: People who spend more time thinking about their health, healthcare, and health benefits make better decisions for themselves and their families. Moreover, when they do, the system responds.

There was a fascinating cover story in the September 2009 issue of The Atlantic Monthly called What Washington Doesn't Get About Health Care. It was written by David Goldhill, a business executive who lost his father to a hospital-acquired infection during a relatively routine procedure. He spent the subsequent two years trying to figure out why his dad had died from such a preventable ailment. He concluded that, as consumers, we are so far removed from the day-to-day realities of the healthcare system that we fail to bring the same focus to assessing healthcare delivery as we do to assessing every other service or product we buy.

In his own words:

"Ten days after my father's death, the hospital sent my mother a copy of the bill for his five-week stay: $636,687.75. He was charged $11,590 per night for his ICU room; $7,407 per night for a semiprivate room before he was moved to the ICU; $145,432 for drugs; $41,696 for respiratory services. Even the most casual effort to compare these prices to marginal costs or to the costs of off-the-shelf components demonstrates the absurdity of these numbers, but why should my mother care? Her share of the bill was only $992; the balance, undoubtedly at some huge discount, was paid by Medicare.

Wasn't this an extraordinary benefit, a windfall return on American citizenship? Or at least some small relief for a distraught widow?

Not really. You can feel grateful for the protection currently offered by Medicare (or by private insurance) only if you don't realize how much you truly spend to fund this system over your lifetime, and if you believe you're getting good care in return."

Goldhill believes a system built around the twin pillars of personal responsibility and shared decision-making would be far more successful than the one we have today. Mark and Jennifer agree, and in this book they have provided you with the framework, tool kit, and capacity to take on the task of owning your healthcare.

Bend the Healthcare Trend is an important step towards making us all better, more