Cutting employee health costs
- September 1, 2008
by Marjolijn Bijlefeld
Chesapeake Regional Medical Center and Chesapeake Public Schools will begin an experiment this fall that turns the typical employee health insurance model on its head: Workers’ out-of-pocket health costs will go down instead of up as the employers encourage them to take steps to manage chronic diseases.
For instance, if employees with diabetes need medication and test strips to monitor blood glucose levels several times a day, they can expect a lower co-pay for these items. If depression is an issue, free counseling will be available.
The guiding principle behind this model? Consumers choose to use health care less when they have to bear more of its costs. And since that choice can be dangerous for patients with chronic conditions such as diabetes, this reverse model encourages people to take care of themselves.
The hope is that soon — very soon — the employers will see savings in medical claims and a reduction in sick days.
Chesapeake Regional Medical Center, a not-for-profit health system that includes Chesapeake General Hospital, could see a return of $4 for every $1 spent. That adds up to a reduced cost per diabetic patient of $2,000 in medical claims and a 50 percent reduction in sick days per year, says Beth Reitz, the hospital’s director of community health services. In other areas that have tried this program, initial costs are higher but savings start to mount by the second year.
The health system, with 2,500 employees and 3,700 people enrolled in the health plan, has at least 172 people with diabetes, or 4.6 percent. The expectation, says benefits manager Sharon Beene-Brichter, is that in the second year of the program, the self-insured health system will see a $210,000 reduction in medical claims costs.
The idea is based on an experimental program done in 1997 in Asheville, N.C. The city provided personal assistance and financial incentives to patients with diabetes to encourage them to manage their condition. In the experiment, pharmacists were trained to coach people with diabetes through information about diet, exercise and medications so they would be more compliant with health routines. The idea was to spend a little to save a lot.
In Asheville, for example, the blood glucose levels of participants went down and stayed down over the five years participant data was collected. During the program, participants met regularly with pharmacists who would review medication usage, diet and exercise. Also, people with diabetes have a higher risk factor for other conditions, such as hypertension.
Before the program, none of the diabetes patients enrolled in the program was taking an ACE inhibitor, an inexpensive medication used to treat hypertension or congestive heart failure. After 14 months in the program, 33 percent were taking the drug, and after 24 months, 57 percent were on the medication. Per-patient costs in the first year for those in the
program dropped nearly $1,000 and overall costs were reduced by more than $17,000.
Results from the Asheville model have been replicated in at least 10 cities through the Diabetes Ten Cities Challenge. The program has since become HealthMapRx, an initiative of the American Pharmacists Association (APhA) Foundation.
Chesapeake Regional and Chesapeake Public Schools are the first employers in Virginia to implement HealthMapRx. The program is being promoted by the Virginia Business Coalition on Health, a membership coalition of employers and health-care providers working to compare health plan data and share best practices. The organization began in 1983 as the Hampton Roads Health Coalition but expanded statewide in 2006. Members of the business coalition can enroll in HealthMapRx at a reduced cost. Eileen
Ciccotelli, the coalition’s vice president, hopes that other Virginia businesses will follow suit. Chesapeake-area companies can benefit from the groundwork laid by these two employers because the pharmacists in the region have already been trained in the coaching skills, says Ciccotelli.
While these programs emphasize getting diabetic patients more involved in disease management, they also put a strong focus on overall wellness. For example, Beene-Brichter says Chesapeake Regional is reducing co-pays for enrollees who need medicines for hypertension. The hospital also will conduct depression screenings, referring employees to free counseling through the employee assistance program. “We are partners in a fitness center and wellness program. We’re going to incorporate a tracking mechanism so that these individuals have incentives to come exercise at least three days a week,” she says.
At a time when so many companies are looking for ways to reduce health-care spending, having employers increase their spending seems contradictory. But as a long-term proposition, it makes financial sense. “A triple bypass or an amputation carry tremendous costs. If we can slow down the disease process, that’s good. Plus, it shows that as an
employer, we care about our employees,” says Beene-Brichter.
Preventive care has been a fundamental component of many health plans for years. Think of immunizations and annual health exams. What’s different about disease management is that employees already have a chronic condition or are on the verge of developing one. Immunize a child against polio, and it’s over. Identify a person with diabetes, and it sets off an
expensive and long-term treatment program.
Employers who focus on a “culture of wellness” are going to lead this trend, says Dr. Jay Schukman, chief medical director for Anthem Blue Cross and Blue Shield in Richmond. Those who offer discounts for fitness facilities or smoking cessation programs, for example, have already seen the benefits in employee health and wellness. Now the technology exists to make it easier to show employers where they can do more. “We can go to employers’ groups and talk about wellness programs and incentive programs
with information about their employees. We can say what type of disease processes are driving their claims expenses and provide recommendations to help them reduce those claims expenses.”
Anthem’s sister company, Health Management Corp., is a Richmond-based disease management firm. If, during the course of a health risk assessment, for example, an employee is identified as having one of several risk factors, someone from disease management becomes a kind of coach — just as pharmacists do in programs based on the Asheville
project. “They go through a comprehensive inventory of reviewing risk factors, like whether the person smokes and knows how to find a smoking cessation program. Or they’ll find out whether the person is taking medication as directed or whether his or her diet is appropriate,” Schukman says.
He suggests that incentives for good health habits are likely to appear in an increasing number of consumer-driven health plans as well. “People who decide to undertake a disease management program can get incentives added to the plan. By taking a health risk assessment, some dollars will be added to the account. Or companies may waive or reduce co-pays for certain drugs, encouraging employees to take the medications they need.”
Businesses that offer health management incentives are still in the minority. But to “get at the cost of health care, more employer groups are going to have to become active,” Schukman says. The alternative is frightening. “One in three Americans born in 2000 will develop diabetes,” he says. “One in two minority Americans born in 2000 will develop
diabetes. It’s being driven by the obesity epidemic.” Schukman and others say the only way to reverse that trend is to provide more intensive coaching to help people manage chronic conditions.