The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

Modeling ABHP Designs is Critical for Employers

By Chris Justice/Tuesday, September 30, 2014
Account-based health plans, or ABHPs, have taken on increasing importance with employers trying to manage cost trends and position their plans to have minimal exposure to the “Cadillac” tax beginning in 2018.

Roughly 75 percent of large employers currently offer an ABHP option, and one third of employers are planning to go to a total replacement approach next year, according to a recent survey by the National Business Group on Health. ABHPs are also a prevalent design on both public and private health insurance exchanges. So understanding their cost impact — for both the plan sponsor and the employee — is of great interest to organizations evaluating their exchange options.  

In recent years, ABHPs have evolved to have more complex provisions. One area of particular interest is the design of pharmacy benefits, which has often been an afterthought. Pharmacy benefit design is an important component in encouraging efficient medication use and better compliance with therapies. Now, with advanced modeling, it becomes easier to see the specific outcomes of even highly complicated changes in pharmacy benefit design.

For example, some sponsors choose to maintain a carve-out pharmacy design, not subject to the plan medical deductibles and out-of-pocket cost-sharing. With this approach, the sponsor can employ a first-dollar, multi-tier cost-share approach including tiers for specialty drugs. Other sponsors choose to impose this type of tiered cost-sharing arrangements in a plan only after participants satisfy a combined medical and pharmacy deductible.

To understand the cost impact of this range of complex design approaches, modeling alternatives with actual employee population claims data, using an actuarially effective evaluation approach, becomes key.

Beyond pharmacy and medical benefit design, modeling can take a look at the implications of different health reimbursement and saving account funding levels and the impact on account balance accumulation. And viewing different scenarios of enrollee treatment compliance and their effects on population health can have tremendous value, too.

Going forward, employers have a lot to gain by honing their approach for ABHP design. In combination with a thoughtful measurement approach, using the data that’s already available on enrollees’ health risks, costs, and usage patterns, a sponsor can ensure the plans continue to contribute to lowered cost trends and improved employee health.

And frankly, without the insights that modeling can bring to those pre-design discussions, employers will likely leave money on the table and lose a chance to make a noticeable difference in population health over time.

Although Not Typical, Walmart’s Employee Benefit Costs Worth Noting

By Anita Nair Hartman/Tuesday, September 16, 2014
Anita Nair-Hartman imageA recent CNBC article discussed Walmart’s announcement that it will spend far more than anticipated on employee health coverage and have to trim its earnings forecast for the year. The retailer expected more workers to seek coverage under the Affordable Care Act’s (ACA) mandated coverage requirement, but the actual number topped their projections. Although this news has gotten a lot of attention, National Business Group on Health research indicates that most employers aren’t expecting as large of a jump in healthcare costs as Walmart, and Truven Health research supports this. As the CNBC article points out, Walmart’s employee base has some unique characteristics -- including low-wage workers in states where Medicaid expansion didn’t occur, forcing them to chose Walmart (rather than Medicaid) coverage. These aren’t typical employer circumstances.

Nonetheless, after years of low healthcare inflation, employee benefit costs have grown this year, and Wall Street is going to be keeping an eye on the impact to every company’s bottom line. For employers, monitoring benefits spend and strategy is more critical than ever. Equally important will be engaging employees in healthcare decision making, improving health and productivity through wellness programs, and remaining vigilant on fraud and waste.

Anita Nair-Hartman
Vice President Market Planning and Strategy

Penalties for Avoidable Medicaid Readmissions….And the Gang Piles On

By Jean Chenoweth/Friday, September 12, 2014
Jean Chenoweth imageThe release of the list of Illinois hospitals penalized for avoidable readmission of Medicaid patients in a recent Chicago Sun Times article was interesting reading! While the list was led by two brand name hospitals, Ann and Robert H. Lurie Children’s Hospital of Chicago and Rush University Medical Center, the list also included John H. Stroger, Jr. Hospital of Cook County, University of Illinois, University of Chicago, St. Mary, St. Catherine, and others with long histories of treating the poor and disadvantaged.

Policy wonks argue that the only way to reduce delivery system fragmentation, which is known to cause quality gaps, is by creating penalties that force changes in the structure of the delivery system. Development of metrics that force hospitals to be responsible for care beyond their current control has become much more common. Why? Because it’s the hospital that has the staff and financial resources to make changes in the delivery system across the community. If the penalty is high enough, the hospitals will innovate to avoid the penalties, ultimately transforming the healthcare system.

Transformation requires innovation, trial, and error, and the ability to rapidly correct error. Setting policies that attempt to drive innovation in the delivery system via stiff penalties is innovative itself! This approach might be reasonable if government could act fast enough to adjust for error inherent in the innovation process. However, in a democracy, government is deliberative by definition, and therefore slow to act. It is especially unfortunate that states are piling on to extend avoidable readmission penalties without taking into account socio-economic conditions of patients. Both state and federal government could simply exempt or reduce the impact of the penalties on safety net hospitals now. There are existing socio-economic adjustment methodologies that have been used for over a decade by health systems like Dignity Health. Neither solution is perfect, but fast action is necessary to reduce safety net hospital financial harm that is being exacerbated by the state “pile on.”
There is no doubt that the government is trying to innovate, and I applaud those efforts. Using hospital penalties to drive innovation and delivery system structural change might even work well in some cases.  But the risk of government’s inadvertent commission of “avoidable error” is too great, given its slowness to act. It would be better to run a few small pilots first to get the kinks out. Then, when the piling on occurs, it will not hurt those that are already hurting.

To read more about the connection between socio-economic factors and readmissions, download our white paper, Community Need Association with 30-Day Readmissions.

Jean Chenoweth
Senior Vice President, Performance Improvement and 100 Top Hospitals

Walmart’s Move into Primary Care

By Michael L. Taylor/Friday, September 5, 2014
Mike Taylor imageLast year, Walmart announced a plan to provide full primary care services to consumers nationwide within five to seven years. With its latest announcement, as reported by The New York Times, it now intends to start fulfilling its promise. Starting with six clinics in South Carolina and Texas, Walmart announced its intention to open six more clinics by the end of 2014. Walmart stores are often in rural areas that are medically under served, and they may be leveraging their locations to provide medical services in these under served areas. A big winner in this new development may be QuadMed, the service provider who won the contract to partner with Walmart in this effort.

How Walmart intends to use these primary care clinics isn’t completely clear. The traditional QuadMed model has been to provide comprehensive primary care services and to be the patient’s sole primary care provider. Their clinics typically use primary care doctors, with nurse practitioners supplementing the care. Specialty care is typically referred to the specialists in the community, but QuadMed doctors provide all the primary care, even in the care of complex cases.

But in the Walmart deal, there’s a subtle difference. Nurse practitioners will be providing the care with oversight of physicians, but the physicians won’t actually see patients – just providing oversight. This is a different model that may have implications for Walmart. As reported in The New York Times, the QuadMed Medical Director, Dr. David Severance said, “In that circumstance (complex care patients), it’s our desire to get those individuals established with a primary care provider, preferably a physician within the community.”

This is a different approach for QuadMed. The Walmart clinics won’t be a primary care center, but will employ a nurse practitioner model that uses physician in the community for primary care, in some cases. This model has similarities to the Walgreens and CVS approach of “retail clinics” that provide a limited scope of services and don’t deliver primary care. QuadMed has provided more comprehensive services, that of a patient-centered medical home led by a strong primary care physician. Their clinics have an excellent track record of providing cost-efficient, high-quality care in a timely manner. This new model of care will need to be delivered with a mid-level approach and a partnership with a physician in the community. That may be tricky.

The Walmart approach to delivering outpatient care could fill an important void, especially in under served areas. I was surprised to learn the Walmart clinics will only be open 8:00 a.m. – 5:00 p.m. Monday through Saturday, and 10:00 a.m. – 6:00 p.m. on Sunday. I imagine the hours will expand over time to offer more evening hours to better compete with urgent care centers—especially in Texas, which doesn’t restrict free-standing emergency and urgent care centers. To be successful over time, the clinics will also need to accept their patient’s private insurance; this will be another change in the QuadMed model.

Medical care can be fragmented, with multiple physicians treating the same patients, but not communicating well. This fragmentation can lead to medical errors, inefficiencies and increased cost. The physicians overseeing the Walmart clinics should have a clear method of communicating with other physicians caring for these patients, ensuring all involved are aware of any diagnoses and treatments resulting from the clinic visit. There should also be a method to avoid duplicate lab tests and x-rays – a common problem in today’s medical care community. Well-run centers generally do a better job of using generic prescriptions, managing referrals to specialists, and avoiding unnecessary tests, especially CT and MRI exams. Since the actual care will be delivered by nurse practitioners, not by physicians, close oversight will be important to avoid these pitfalls.

This is a big step for Walmart, and I’m hopeful these clinics perform well. Will Walmart one day be the largest provider of primary care in the U.S.? Don’t be surprised to see that happen.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Ensuring Success in the Health Plan Marketplace

By Anita Nair Hartman/Thursday, September 4, 2014
Anita Nair-Hartman imageA recent New York Times article discussed the impact of competitive health insurance markets on the cost of purchasing health insurance, particularly via Marketplaces. Health plans are just beginning to understand and create market-based products tailored for consumer needs and market competition. Competition motivates health plans to improve value and align consumer needs with products and services, resulting in the consumer benefits of lower premiums and additional services and coverage.

As part of the retail and complex channel strategies for health plans, aligning consumer needs (provider network, out-of-pocket-costs, and service coverage) with their products becomes increasingly important, as does ensuring appropriate consumer education on plan design choices, cost transparency, and engagement in healthcare. Health plans that can manage these aspects when offering products in the new Marketplaces will have greater success – gaining more consumers and keeping them for the long-term.

Anita Nair-Hartman
Vice President of Market Planning and Strategy