Strategies for Changing Members Behavior to Reduce Unnecessary Health Care Costs by Christopher J. Mathews Wasteful spending in the U.S. health care system costs an estimated $750 billion to $1.2 trillion annually. 1 Moreover, research 2 suggests as much as 36% of health care spending could be eliminated by focusing on three key areas: Consumer behavior that contributes to unnecessary care Inefficient or unnecessary clinical care Operational inefficiency related to health care delivery. While plan sponsors, fund offices and trustees cannot change the operational inefficiencies of the U.S. health care system, they can work with their plan members to address their personal behavior patterns that damage their health and drive up plan costs. This article will discuss what plans can do to cut the high cost of wasteful, inefficient health care and will present a case study of how one multiemployer health and welfare plan has done so. Is It Worth It? It is important to recognize that a person s behavior is a primary determinant of his or her health status. 3 What types of behavior lead to care that can be avoided? As shown in Figure 1 below, eight unhealthy behavior patterns and risks lead to 15 costly chronic medical conditions that drive 80% of the cost for all chronic disease worldwide. 4 Although health funds can use a variety of means to encourage members to improve or even eliminate the eight unhealthy behavior patterns, each board of trustees will probably wonder whether it is worth the time and aggravation. On top of the rewards inherent in helping people improve their health, financially speaking, the answer is a clear yes. 22 benefits magazine september 2013 Benefits Magazine v50 no9 Sep 2013 pp 22-27
Following the article Wasteful, Inefficient Health Care Carries Huge Costs in August, this article explores what plan sponsors can do to help control unnecessary costs. september 2013 benefits magazine 23
FIGURE 1 Eight Behavior Patterns and Risks That Lead to 15 Costly Conditions Poor Diet Physical Inactivity Excess Alcohol Consumption Smoking Poor Standardof-Care Compliance Insufficient Sleep Eight Behavior Patterns and Risks Poor Stress Management Lack of Health Screening Diabetes CAD Hypertension Top 15 Most Costly Conditions Back Pain Obesity Cancer Asthma Arthritis Allergies Sinusitis Depression CHF COPD CKD High Cholesterol Source: The 2010 World Economic Forum. In 2012, when total health care spending was $2.6 trillion, up to $493 billion 18.9% was attributed to personal behavior that could have been changed. 5 Since reducing the impact of the eight unhealthy behavior patterns on the fund s claims expenditures will decrease plan costs, the question becomes how much of the 18.9% of a fund s total annual claims costs that are related to these behavior patterns could be saved. For a fund that spends $50 million annually on health care and reduces the 18.9% by half, that would be $4.75 million a year. Know Your Population The first step is for a plan sponsor to identify the medical cost drivers within its covered population. Plans can use sophisticated data analytical and data mining software to pinpoint the health risk factors that are the source of wasteful medical care spending, and plans that are insured have access to ad hoc reports that can help them identify these cost drivers. Although it is important to identify a plan s specific cost drivers, any review of medical claims and prescription drug data will probably identify the following key elements that are common to all types of plans: Upward of 50% of members are not following treatment guidelines for their chronic conditions (e.g., diabetes, coronary artery disease, hypertension, asthma). Only about 60% of members who should be taking maintenance medications to manage their chronic conditions do so. More than 65% of members engage in one or more unhealthy behavior patterns (e.g., smoking, overeating, abusive drinking, poor nutrition, lack of regular exercise). Fewer than 45% of members are getting regular screening for the early detection of hyperlipidemia (high cholesterol), cervical cancer, breast cancer and colorectal cancer. The next step is to determine what means the plan can employ to influence its members to moderate their unhealthy behavior patterns for their own good and for the financial well-being of the fund. This requires developing a health management strategy that fits the plan and its culture. Many trustees and fund managers use outside consulting support to guide them through this process, which begins with identifying the unhealthy behavior patterns that affect the most people, generate 24 benefits magazine september 2013
the highest costs and exhibit the greatest potential return on investment in terms of improved health and cost savings. Once the plan has identified these unhealthy behavior patterns, it can develop a strategy to help and encourage members to change them and improve their health. Changing Unhealthy Behavior Patterns Because there will always be members who resist change, successfully altering unhealthy behavior patterns will require the dedication and commitment of the trustees, union leaders and the fund office. The best approach is to start small with a clear strategy and an action plan for reducing the health risk factors that are most prevalent in the covered population. The most effective way to change people s behavior is through a planwide health management program that is structured to support the wide range of population needs. While most people with chronic conditions can be helped by a wellness or a supported self-care program, 6 high-risk patients who are not treatment-compliant may need a disease management program, 7 and highly complex patients with multiple conditions will probably need a case management program. 8 (See Figure 2.) Case management, disease management and wellness initiatives are not magic. They work when a plan sponsor figures out how to get the members who will benefit the most from the program to actively participate. That often requires persuasion through targeted and creative communications from influential union leaders and the use of incentives in the form of rewards or penalties. FIGURE 2 Health Management Programs Different Populations Have Different Needs Source: The Segal Group. Case Manage Disease Management Wellness or Supported Self-Care Plan design can also be used to motivate members to modify unhealthy behavior patterns. For example, the plan should engage members by offering extensive health education, empowering them to make appropriate provider and facility selections and offering incentives that are tailored to the covered population s needs. What works for a fund s population will be specific to its culture. Moreover, if members do not actively engage in the programs the plan has designed to modify unhealthy behavior, there will be no savings. A new understanding of behavior modification requires improving access to information (improving the health literacy of a population) and targeting participants who are ready to act. Many participants know they are at risk for disease but avoid confronting the problem early when intervention can avoid complications of long-term For highly complex patients (multiple conditions) For high-risk patients (not treatment-compliant) For 70-80% of people with chronic conditions health issues. New strategies understand this hurdle and design programs that are more accessible and engaging. Case Study After being on the edge of bankruptcy in 2000 with medical trend running 10-12%, a multiemployer health and welfare fund with 6,800 members launched a chronic disease management program in 2003. However, the fund made little effort to encourage participation, and the fund s trustees did not actively promote the program. As a result, participation was low Some members even complained about being called by the vendor. Because there was no apparent change in the fund s medical trend from 2003 to 2006, in 2007 the trustees decided to redesign the program. Having identified what and who was driving most of the plan s health care costs, they wanted september 2013 benefits magazine 25
takeaways >> Behavior often determines how healthy a person is. Many plan participants skip regular preventive screenings, engage in one or more unhealthy behaviors and fail to follow treatment guidelines for chronic conditions. In 2012, when total health care spending was $2.6 trillion, up to $493 billion (18.9%) was attributed to personal behavior that could have been changed. A health management strategy should fit the plan and its culture. Case management, disease management and wellness initiatives work only when a plan can get members who will benefit the most to actively participate. Plans need to address the problem of participants who know they are at risk for disease, but avoid confronting the issue early enough to avoid health complications. to focus on increasing participation in the disease management initiative, especially for members with diabetes and heart disease. The first step was to write an action and strategy plan that included a collective vision for the program, defined its guiding principles and key objectives and determined how to measure success. The trustees decided that one of the fundamentals of the program would be to reward participation and penalize nonparticipation. For example, participants were given incentives when they joined the program and had their prescription copayments for their chronic condition medications waived. Nonparticipants who declined to actively engage in the program or did not respond to invitations to join had their primary care and specialty care physician copays doubled. Trustees also realized that the current plan design did not encourage preventive care, so the plan was modified to cover lab testing and preventive benefits at 100%. This change was made several years before the Affordable Care Act required it. In addition, the trustees decided to: Communicate the program s value to members via persistent, multidimensional communications that supported member education and positively branded the program Eliminate any plan design elements that were barriers to improving member assistance Ensure effective coordination between the fund office and the vendor to reach chronically ill participants Establish baseline measures using monthly activity reports and quarterly impact reports Monitor participation and participants treatment compliance via monthly vendor calls. The plan made significant progress in reaching members who were candidates for the chronic disease management program and then getting them to participate. Participation rose from 21% of the covered population that was identified for the program in December 2006 to 53% in June 2009, with high levels of active engagement among those members at greatest risk. These were the members who were driving most of the excess costs and were now benefiting most from the program. 9 The following are some of the results of these efforts to date: Members identified with a highrisk chronic condition accounted for 42% of all participants and drove 70.3% of the total spend. The disease condition management program reached 68% of all identified members with 90% of them agreeing to engage in telephone counseling with a nurse. Acute admissions to hospitals of the managed population decreased in real terms, when trend for these events was running 2.5%. The population under management experienced a 4.5% decrease in inpatient utilization while the total population s inpatient utilization increased by 1.5%. Emergency room (ER) visits for the managed population increased by only 1.6% while expected trend for ER visits for the rest of the population was 4.5%. There were many member testimonials about improved biometrics, lower body mass index, lower cholesterol and lower blood pressure. In the 12 months ended February 28, 2011, the chronic disease management program targeted 1,108 individuals, reached 749 and convinced 675 to participate (74 declined). The 675 participants accounted for 25.1% of the plan s total spending, or $5.9 million. Between 2008 and 2011, the plan saved more than $6.1 million. Moreover, by 2011, the plan s net assets were a healthy 143% of targeted reserve and the plan s continuation value 10 was at 17 months. Medical trend was reduced from 12.7% in 2006 to less than 5.0% by 2011. While there are many factors that contribute to improvement in medical 26 benefits magazine september 2013
trend, there are strong indications that an effective chronic condition management program will have an impact. What changed for this fund? Trustees learned from their mistakes and followed these five rules for implementing a successful health management program: 1. The most successful programs closely identify the health risk factors in the covered population and focus on those factors. 2. Participation is critical. If the members who can most benefit from the program do not participate or make needed behavior changes, the program s return on investment may be negative It may cost more than it saves. 3. All plan design barriers must be removed to facilitate program participation and reduce targeted health risk factors. 4. A program that is implemented without appropriate design and communication will fail. 5. If trustees and union leaders are not 100% committed to the program s success, its financial impact will be minimal or could be negative. Following the successful rejuvenation of the disease management program, in 2012 the fund implemented a broadbased wellness initiative focusing on behavior related to weight management, nutrition education and regular exercise. Conclusion Plans that invest in identifying and modifying their members unhealthy behavior patterns before they create serious health problems will save lives and reduce costs. The first step in controlling the high costs of wasteful, inefficient health care is to realize that the status quo is not sustainable. Plan sponsors need to understand the risk factors that are driving their health care costs, identify who is generating the bulk of their costs and then invest in programs to encourage healthy behavior and reduce behavior patterns that cause problems and increase plan costs. Endnotes 1. Institute of Medicine s Best Care at a Lower Cost: The Path to Continuously Learning Health Care in America, National Academies Press, 2012. 2. The price of excess: Identifying waste in healthcare spending, the PricewaterhouseCoopers Health Research Institute, 2012. 3. According to the Institute for the Future, Center for Disease Control and Prevention, behavior is responsible for 50% of a person s health status followed by environment (20%), genetics (20%) and access to care (10%). << bio learn more >> Education 59th Annual Employee Benefits Conference October 20-23, Las Vegas, Nevada Visit www.ifebp.org/usannual for more information. Wellness and Disease Management Visit www.ifebp.org/elearning for more information. From the Bookstore A Closer Look: Wellness ROI International Foundation. 2012. Visit www.ifebp.org/books.asp?7242e for more information. Wellness Programs and Value-Based Health Care, Third Edition International Foundation. 2012. Visit www.ifebp.org/books.asp?7174e for more information. Christopher J. Mathews is a vice president and total health management practice leader for Segal. He has 30 years of health and welfare benefits consulting experience, and his expertise includes developing innovative health care management strategies. He can be contacted at cmathews@segalco.com. 4. The 2010 World Economic Forum. 5. The price of excess: Identifying waste in healthcare spending, the PricewaterhouseCoopers Health Research Institute, 2012. 6. Wellness is considered to be an active process of becoming aware of and learning to make healthy choices that lead toward a longer and more successful existence. Wellness is more than being free from illness. Wellness is a dynamic process of change and growth. There are many interrelated dimensions of wellness: physical, emotional, intellectual, spiritual, social, environmental and occupational. Each dimension is equally vital in the pursuit of optimum health. 7. Disease management is a system of coordinated health care interventions and communications to people with conditions in which patient selfcare efforts are significant. 8. Case management is a collaborative process of assessment, planning, facilitation, care coordination, evaluation and advocacy for options and services to meet an individual s and family s comprehensive health needs through communication and available resources to promote quality, costeffective outcomes. 9. In 2008-2009, members in the highest risk group (the top 10%) accounted for 12.6% of the money the plan spent on health care and 46.2% of the money spent under the chronic disease management program. 10. Continuation value is the number of months that the assets available in a health and welfare fund are available to pay claims assuming no additional assets were contributed to the fund. september 2013 benefits magazine 27