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Proven Strategies for Tackling Health Care Cost

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Proven Strategies for Tackling Health Care Cost

  1. 1. Presentation Title Presenter’s Name • Date Proven Strategies for Tackling Health Care Costs Jane Cooper June 28
  2. 2. Workplace Application <ul><li>This session will motivate you to be more proactive in considering major strategies to reduce health care costs </li></ul>
  3. 3. Key Words <ul><li>Motivated </li></ul><ul><li>Pro-active </li></ul>
  4. 4.
  5. 5. Objectives <ul><li>You will walk away with 3 new ideas to: </li></ul><ul><ul><li>Engage your employees </li></ul></ul><ul><ul><li>Help employees compare the cost of elective procedures </li></ul></ul><ul><ul><li>Identify strategies to manage your health care costs more effectively </li></ul></ul><ul><li>You will laugh at least twice </li></ul><ul><li>You will contribute to the discussion </li></ul><ul><li>You will learn something from another attendee </li></ul>
  6. 6. Health Care Reform <ul><li>With health care reform passing… will health care costs be reduced? </li></ul><ul><li>Is it still important to engage participants to make smart lifestyle choices and behave like consumers? </li></ul><ul><li>Is it still important to manage health care costs? </li></ul>
  7. 7. Health Care Reform <ul><li>The Patient Protection and Affordable Care Act </li></ul><ul><ul><li>Regulations for this law will be 1,000,000 pages long </li></ul></ul><ul><ul><li>Major corporations: Boeing, Caterpillar and AT&T have already booked $100m - $1 billion to cover additional costs </li></ul></ul><ul><ul><li>Mandates, expanded Medicaid programs and new taxes and fines are expected to add $76 billion/year to our federal deficit </li></ul></ul>
  8. 8. Health Care Costs <ul><li>What two things drive health care costs? </li></ul>
  9. 9. Health Care Costs <ul><li>At the heart of health care costs – every expense – is a consumer… With an enormous influence </li></ul>
  10. 10. Pricewaterhouse Coopers <ul><li>Employers surveyed in 2009 ready to push more costs of health insurance to their workers in 2010, while expecting more responsibility from workers for managing their personal health. </li></ul><ul><ul><li>Improving employee wellness </li></ul></ul><ul><ul><li>Increasing employee cost sharing </li></ul></ul>
  11. 11. Pricewaterhouse Coopers <ul><li>More than 66% expect to expand wellness and disease management… although few are convinced that they are effective in mitigating health care costs. </li></ul><ul><li>42% expect to increase employee contributions </li></ul><ul><li>41% expect to increase medical cost sharing through plan design changes </li></ul>
  12. 12. Where do we spend money?
  13. 13. Prices are going up…
  14. 14. How to save money?
  15. 15. What about health care costs?
  16. 16.
  17. 17. Education <ul><li>How important is employee education? </li></ul><ul><li>What do employees need to be educated about? </li></ul><ul><li>Does education alone change behavior? </li></ul>
  18. 18. Key Challenges <ul><li>Managing Benefit Programs* </li></ul><ul><ul><li>98% find managing health care costs to be a challenge </li></ul></ul><ul><ul><li>97% find participant engagement to be a challenge </li></ul></ul><ul><ul><li>92% find participant communication and support tools to be a challenge </li></ul></ul><ul><li>*Towers Perrin Study </li></ul>
  19. 19. Beliefs drive Behaviors
  20. 20. Beliefs drive Behaviors <ul><li>A doctor’s office visit costs $10.00 </li></ul>
  21. 21. Beliefs drive Behaviors <ul><li>The insurance company is paying the bill </li></ul>
  22. 22. The Importance of Plan Design <ul><li>Patient Care data shows that if a member has a deductible of over $1,000 they are 60% more likely to ask about the cost and quality of health care services before they make a healthcare decision </li></ul>
  23. 23. Plan Design Decisions <ul><li>What is your company’s strategy regarding consumerism? </li></ul><ul><li>What is your company’s strategy regarding defined benefit versus defined contribution? </li></ul><ul><li>What is your company’s strategy regarding linking healthy lifestyles and premium contributions? </li></ul><ul><li>What is your company’s strategy regarding incentives and disincentives? </li></ul>
  24. 24. Who is your Plan Participant? <ul><li>Male? </li></ul><ul><li>Female? </li></ul><ul><li>Average age? </li></ul><ul><li>Manage their own health care? </li></ul><ul><li>Financial priorities? </li></ul><ul><li>What are they concerned about at work and at home? </li></ul><ul><li>Attitude regarding increased out of pocket health care expenses </li></ul>
  25. 25. Answers to these questions impact.. <ul><li>Benefit plan design </li></ul><ul><li>Importance of communications going to the home </li></ul><ul><li>How you communicate to participants regarding their health care responsibilities </li></ul>
  26. 26. All Health Care is Local <ul><li>Health care costs are impacted one person at a time and one decision at a time </li></ul><ul><ul><li>Do we take medications appropriately? </li></ul></ul><ul><ul><li>Do we exercise? </li></ul></ul><ul><ul><li>Are we overweight? </li></ul></ul><ul><ul><li>Do we smoke? </li></ul></ul><ul><ul><li>Do we question our doctor or just follow orders? </li></ul></ul>
  27. 27. The Jones Family
  28. 28. What concerns the Jones family? <ul><li>Paying bills….living from paycheck to paycheck </li></ul><ul><li>Never enough time – how can I exercise? </li></ul><ul><li>Vague sense of uneasiness – difficult to focus – who do you trust? </li></ul><ul><li>The health care burden falls on Sandy… and she doesn’t even work for you! </li></ul>
  29. 29. How to engage the Jones Family? <ul><li>Offer a plan design with sufficient out of pocket cost sharing </li></ul><ul><li>It’s about $$$$$$$ (Individual policyholders versus group policyholders) </li></ul><ul><li>Messages must be quick, snappy and meaningful </li></ul>
  30. 30. How to engage the Jones Family <ul><li>Repeatedly communicate the business case for managing health care costs – and results! </li></ul><ul><li>Provide different types of tools to engage employees and help them get information </li></ul><ul><li>Reward and penalize for involvement or lack thereof </li></ul>
  31. 31. Reducing health care costs <ul><li>We have to teach employees – and their families – about the consequences of their choices – and make those consequences immediate and personal. </li></ul>
  32. 32. Case Study <ul><li>Wisconsin distributor – 300 employees – self funded </li></ul><ul><li>Plan design: Two plans- $350 and $700 deductibles </li></ul><ul><li>Built incentive into plan design to call Patient Care for cost/quality information or $300 penalty </li></ul><ul><li>95 calls </li></ul><ul><li>$4500 in employer savings </li></ul><ul><li>168% ROI on Patient Care fees paid </li></ul>
  33. 33. Case Study <ul><li>National manufacturer – 5000 employee lives </li></ul><ul><li>Self funded – salaried and union </li></ul><ul><li>Two plans – one high deductible with HSA </li></ul><ul><li>Union plan includes cost sharing for first time </li></ul><ul><li>Health risk assessment and related wellness programs </li></ul><ul><li>Advocacy offered </li></ul><ul><li>Extensive employee communication and engagement program for all employees </li></ul>
  34. 34. Idea #1 <ul><li>Create a series of simple communication pieces that employees can read quickly and remember </li></ul><ul><li>Put them everywhere </li></ul>
  35. 35.
  36. 36. Idea #2 <ul><li>Create informal opportunities for plan participants to learn about current and future programs </li></ul><ul><ul><li>Wellness </li></ul></ul><ul><ul><li>Disease Management </li></ul></ul><ul><ul><li>Health Risk Appraisals </li></ul></ul><ul><ul><li>Case Management </li></ul></ul><ul><ul><li>Advocacy </li></ul></ul>
  37. 37. Successful Communication Plans <ul><li>Year-round </li></ul><ul><li>Communicate a goal and communicate progress towards that goal </li></ul><ul><li>Have a spousal component </li></ul><ul><li>Involve senior management </li></ul><ul><li>Use multiple mediums </li></ul>
  38. 38. Pro-active versus Re-active <ul><li>A successful cost containment strategy requires a communication strategy – which takes planning and focused execution by you </li></ul><ul><li>Using a variety of mediums is a critical component – people learn differently </li></ul><ul><li>The communication must be ongoing </li></ul><ul><li>Offer incentives </li></ul>
  39. 39. Idea #3 <ul><li>Develop and promote quarterly education/communication meetings with participants that cover topics like wellness, benefits cost and/or quality and make them fun and make them mandatory . </li></ul><ul><li>You have mandatory safety meetings, why not mandatory health care/insurance meetings? </li></ul>
  40. 40. Sample meeting topics <ul><li>Benefits quiz show – with prizes </li></ul><ul><li>How to exercise effectively to lose weight </li></ul><ul><li>How to find the doctor that you’ve always wanted </li></ul><ul><li>Making wise health care choices – for you </li></ul>
  41. 41. More topics – for Discussion <ul><li>How do you as a patient define health care quality? </li></ul><ul><li>Which is more important to you – quality or cost? </li></ul><ul><li>Do you know what procedures should cost and what choices you have for your procedure? </li></ul>
  42. 42. Provider cost/quality information <ul><li>Costs among doctors, hospitals and outpatient centers vary significantly from provider to provider in the same market in the same network </li></ul><ul><li>How to determine and communicate “value” </li></ul>
  43. 43. Arthroscopy <ul><li>CPT Code – 29873 </li></ul><ul><li>Surgical; with lateral release </li></ul><ul><li>Knee arthroscopy is a surgical procedure in which a small camera is used to examine tissues inside the knee joint. Additional instruments may be inserted to repair the knee </li></ul>
  44. 44. Facility Costs Medical Provider Community Hospital St. Mary’s Hospital Waukesha Memorial Total Price $7,400.00 $14,350.00 $12,800.00 Discount Rate 10% 15% 11% Actual Discount $740.00 $2152.50 $1408.00 Discounted Balance $6660.00 $12,197.50 $11,392.00 Applied to Deductible (500) $500.00 $500.00 $500.00 Member Co-insurance (20%) $1232.00 $2338.90 $2178.40 Member Responsibility $1732.00 $2,838.90 $2,678.40 Employer Cost $4,928.00 $9,358.60 $8,713.60
  45. 45. Colonoscopy <ul><li>CPT Code – 45378 </li></ul><ul><li>Routine Colonoscopy </li></ul><ul><li>Colonoscopy is a medical procedure where a long, flexible, tubular instrument called the colonoscope is used to view the entire inner lining of the colon (large intestine). </li></ul>
  46. 46. Facility Costs Medical Provider Endoscopy Center Regional Hospital Hospital Surgery Center Total Price $1,640.00 $2,945.00 $7,500.00 Discount Rate 35% 35% 35% Actual Discount $574.00 $1,030.75 $2,625.00 Discounted Balance $1,066.00 $1,914.25 $4,875.00 Applied to Deductible (500) $500.00 $500.00 $500.00 Member Co-insurance (20%) $113.20 $282.85 $875.00 Member Responsibility $613.20 $782.85 $1,375.00 Employer Cost $452.80 $1,131.40 $3,500.00
  47. 47. Leapfrog Data <ul><li>CPOE to prevent medication errors </li></ul><ul><li>Appropriate ICU staffing </li></ul><ul><li>Steps to avoid harm </li></ul><ul><li>Managing serious errors </li></ul>
  48. 48. Leapfrog Quality Information <ul><li>Community Memorial – declined to respond </li></ul><ul><li>Waukesha Memorial – willing to report on 3/some progress on 1 </li></ul><ul><li>St. Mary’s – willing to report on 3/substantial progress on 1 </li></ul>
  49. 49. System Challenges <ul><li>My doctor never has enough time for me and I don’t know what to ask him/her </li></ul><ul><li>How do I find the “best” doctor? </li></ul><ul><li>My husband is about to be discharged from the hospital and I have no idea what to do once he gets home. I have a job. </li></ul><ul><li>I just got a bill from the hospital for $3,500. I have no idea why they are billing me. I have insurance. </li></ul>
  50. 50. Cost & Quality <ul><li>Quality </li></ul><ul><ul><li>This is very difficult </li></ul></ul><ul><ul><li>Participants need help defining quality </li></ul></ul><ul><ul><li>Public data relates to major illnesses and treatments, not outpatient procedures </li></ul></ul><ul><ul><li>Public data can b e in conflict, not current and debated by the physician or hospital </li></ul></ul><ul><ul><li>Case mix adjusting, physician referral patterns and other external factors can influence “quality data” </li></ul></ul>
  51. 51. Cost & Quality <ul><li>Cost </li></ul><ul><ul><li>Outpatient! </li></ul></ul><ul><ul><li>Two numbers impact costs: billed charges and contracted rates </li></ul></ul><ul><ul><li>Patients need specific procedure or revenue codes </li></ul></ul><ul><ul><li>How many variables to measure? </li></ul></ul><ul><ul><li>Ranges are only marginally useful </li></ul></ul><ul><ul><li>How current is publicly available data? </li></ul></ul><ul><ul><li>The member needs help knowing how to use the information – e.g. talking to their physician about changing facilities </li></ul></ul>
  52. 52. What’s in it for Me? <ul><li>There are so much money to be saved that you can provide incentives and still be ahead. </li></ul>
  53. 53. Idea #4 <ul><li>Implement incentives – or disincentives within your benefit plan to encourage employees to become better health care consumers </li></ul><ul><li>Assurant Health – piloting incentive program for 12 procedures </li></ul><ul><ul><li>Pay policyholders $250 - $3000 if they call Patient Care and use high value provider </li></ul></ul>
  54. 54.
  55. 55. Carrot Strategy <ul><li>Work with your network and payor to identify the most cost effective and highest quality facilities </li></ul><ul><li>Reward employees for using those providers through plan design or by paying them an incentive for choosing them </li></ul>
  56. 56. Decisions by Members <ul><li>After receiving and discussing the cost/quality information: </li></ul><ul><ul><li>78% moved to a lower cost provider </li></ul></ul>
  57. 57. Better Consumerism… <ul><li>Publicly available data on provider cost and quality </li></ul><ul><li>Employees making decisions based on that data </li></ul><ul><li>Employees understanding the impact of lifestyle choices on their health care and health care costs </li></ul><ul><li>Employees understanding that their decisions impact health care costs for the entire company </li></ul><ul><li>Informed patients and physicians making decisions together </li></ul>
  58. 58. It’s a Long Journey <ul><li>What we’ve learned at Patient Care </li></ul><ul><ul><li>Larger deductibles and increased out of pockets costs do make employees more interested in cost comparisons </li></ul></ul><ul><ul><li>Once an elective procedure has been recommended, people typically do not want to change physicians </li></ul></ul><ul><ul><li>The major opportunity to improve purchasing is in the outpatient area </li></ul></ul><ul><ul><li>More interest in cost than quality </li></ul></ul><ul><ul><li>Technology tools provide limited data with which to make a decision </li></ul></ul><ul><ul><li>Choosing more expensive care has to cost consumers more </li></ul></ul>
  59. 59. Keys to Success <ul><li>Boost consumers’ health literacy </li></ul><ul><li>Develop a company goal and a strategy to support </li></ul><ul><li>Identify benchmarks to measure success </li></ul><ul><li>Communicate the goals and strategy to employees and dependents </li></ul><ul><li>Measure based on benchmarks </li></ul><ul><li>Communicate results </li></ul>