Consumer Directed Health Plans (CDHPs) are quickly becoming a popular benefit option for U.S. employers. These high-deductible plans are one of the fastest-growing benefit options for employees. To explore their effectiveness, we conducted a study using the MarketScan® Commercial Claims Database. The study closely matched members enrolled in a CDHP to members continuously enrolled in a non-CDHP, and evaluated healthcare costs and utilization over three years. We found a direct link between CDHPs and lower healthcare costs. On average, CDHP enrollees incurred $457–$532 less per member per year.
But these savings might come with consequences. Utilization rates were lower among CDHPs for a wide range of services — including professional visits, lab services, non-maternity admissions, and prescription drugs — suggesting that consumers may be reducing utilization across the board as opposed to simply avoiding unnecessary care. Of particular concern, members enrolled in CDHPs were less likely to receive any medical care for their existing chronic conditions than were their non-CDHP counterparts (based on a review of eight common conditions — asthma, congestive heart failure, coronary artery disease, depression, diabetes, hypertension, low back disorders, and osteoarthritis).
Although the benefits of CDHPs are substantial, these arrangements need to be entered into carefully. It is important to recognize that a CDHP design could result in members not receiving recommended care — and that could lead to higher costs in the future. If your company currently offers or is contemplating a CDHP, we suggest that you consider the following:
- Educate enrollees so they fully understand and take advantage of their benefits, specifically benefits of covered preventive services.
- Engage CDHP members to ensure they are continuing to manage chronic conditions while enrolled in a CDHP. The study suggested CDHP members received less care for current chronic conditions and were less likely to be diagnosed with new chronic conditions.
- Recognize that each employee is unique, so a CDHP might not be the best choice for all members. Help individuals choose the right plan based on their current health and their healthcare plan history.
- Provide useful tools, such as cost calculators, to make it easier for members to access information on physician cost and quality.
For the full study on the impact of CDHPs on cost, utilization and care, click here.
Consumer-Driven Health Plans (CDHPs) are one of the fastest growing benefit options offered to employees – and soon may become the dominant plan type. In fact, a recent Kaiser/HRET survey found that CDHP enrollment has gone from just 4 percent of all employees who were given that option in 2006 to 20 percent in 2013.
In order to ensure CDHP members can effectively engage in their healthcare, employers must provide participants with timely access to consumer information tools to help them understand the range and cost of treatments available through plan providers and also information about provider quality. In the absence of this kind of help, CDHP participants are faced with a daunting task to make effective care decisions.
In addition to employees becoming more educated about their own healthcare, the companies they work for are offering new options that provide incentives and potential savings for the enrollees, as well as the employer itself. As part of a recent survey of Truven Health MarketScan™ data contributors, 64 percent of companies stated that they currently offer one or more CDHP options, and 76 percent stated that they will offer one or more in the future. The majority of these options consist of CDHP or high-deductible health plan (HDHP) with a health savings account (HSA) feature.
This type of growth is leading to a new paradigm in which more patients are taking on a greater role in treatment decision-making. For instance, under a traditional PPO plan in the past, it was very likely that a breast cancer diagnosis would result in a set course of action. However under a well constructed CDHP, the patient can make assessments based on the price she is willing or able to pay, the quality of treatment and providers, and even the best locations to receive the necessary treatment. With the help of her doctors and advisors, she can decide what’s best for her. She is engaged in her own plan for her health and treatment.
As this substantial shift continues, employers have the ability to empower their employees by providing the opportunity for them to be engaged in their own healthcare decisions, leading to cost-savings for the employee — and the organization.
To learn more about achieving year-round engagement with your employees, please access this complimentary insights brief from Truven Health Analytics.
Senior Director of Practice Leadership
Most commercial insurance plans have at least 3 options:
High deductible health plans, sometimes called Consumer Directed Health Plans (CDHPs) are becoming more popular among employers who offer health insurance to its employees. Most CDHPs have two features: (1) an initial deductible often exceeding $1000 (High deductible) and (2) financial support from the company in the form of a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) to partially offset the high deductible.
- Varying deductible—the amount the employee has to pay, before any insurance starts to pay
- Varying co-pay or co-insurance –-a fixed amount (co-pay) or percentage (co-insurance) the employee has to pay for each service incurred
- Maximum out of pocket expense—a pre-determined amount the employee has to pay until the maximum is reached; after the maximum is reached, the employer pays 100% of the bill
Employees appreciate the lower premiums associated with CDHP, but can be surprised when an expensive medical procedure is purchased and the employee has to pay 100% up to the deductible. As an example, in a CDHP with a $5000 deductible, the employee pays the first $5000 in medical expenses every year before the insurance pays anything.
A CHDP is designed to motivate employees to be more judicious in selecting medical services, considering they are responsible for a higher portion of the bill. The expected outcome is the employee will choose higher quality or cheaper services.
Employees often make these coverage decisions annually, with little guidance from the employer as to which plan might work best. Fortunately, tools are now available to help employees examine their prior year’s medical costs to determine costs for each plan option. The new information allows employees to make more informed decisions. This tool should ideally take into account the actual medical charges incurred and provide options for varying coverage levels.
Another helpful tool is a cost calculator; employees using this tool can compare the cost of a procedure at different locations. The medical literature shows significant price variation for radiology, lab and diagnostic tests, even within the same community, so a cost calculator can be a great help. MRIs, for instance, might vary three to four fold in price with no difference in quality.
Truven Health Analytics has developed these tools to help consumers better understand the coverage level of insurance plans and the costs of services by plan. Users of our tools have experienced better plan decision-making and a decrease in medical costs. This is part of our mission--to use data to help consumers make more informed decisions.
Michael L. Taylor, MD FACP
Chief Medical Officer