The Truven Health Blog

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


Defined Contribution Plans – More Choices and More Risk for Employees

By Truven Staff
Mike Taylor imageThe recent announcement by Walgreens of its intention to move its employees to a private exchange may be evidence of a trend for large employers. Moving employees to a private exchange is a big step – companies have been moving retirees to this type of plan for years, but not many have offered this option to their active employees. Most large employers provide health insurance to their active employees today, but that may change. Plans in which the employer provides a fixed dollar amount for insurance and the employee picks the plan and pays the rest of the cost are called “defined contribution” plans.

Defined contribution plans should cause employees to take more “ownership” in their healthcare choices. Employees have generally had insurance options, but the options were provided by the employer. It’s fairly easy for an employee to pick from relatively few plans. In this new approach, employees are likely to have many more options from which to choose. Employees will need to understand the types of plans being offered, and which plan best fits their needs. They will need to assess the financial implications of their plan choice, and understand which doctors and hospitals are in the network they are choosing.

This move to exchanges might lead to employees developing a better understanding of how their plan works, and how expensive healthcare in the U.S. has become. Ideally, with employees understanding the cost of care, they will not only engage in more healthy lifestyles but also ask more questions about the need for certain services and procedures, thereby trimming their individual costs and in aggregate pushing overall costs down. Employees cannot be expected to make clinical decisions such as which blood test or x-ray is needed, but they should be expected to ask appropriate questions. They should want to know:
  • Why do I need this test?
  • What is the risk of having (or not having) the test?
  • How will the test result change my treatment?
  • How much will the test cost?
  • Where is the best location to have the test done?
  • Does my doctor own the testing equipment for the test being recommended?
Asking these questions will help employees become more educated about healthcare choices and hopefully lead to better healthcare decisions for them. That is good, but let’s recognize the extent of the financial risk being shifted over to employees. Should the employer subsidy become a fixed amount, and if healthcare costs increase over the years, the employee will shoulder a growing proportion of the cost burden.

The benefit of a defined contribution plan for employers is they can “cap” their costs; for employees, the question is whether they will also benefit. The answer is, “It depends…..”

Michael L. Taylor, MD FACP
Chief Medical Officer

What is Appropriate Emergency Room Utilization?

By Truven Staff
Mike Taylor imageA recent NPR article discussed a study in the Journal of the American Medical Association pointing out that complex problems cannot be solved by simple solutions. The problem to be solved is the high cost of emergency department (ED) utilization. The solution being developed by many states: Don’t pay for non-emergent visits. Sounds logical. But, as the authors point out, patients don’t go to the emergency department with diagnoses, they go with symptoms. A person with chest pain and shortness of breath at 3 a.m. should be evaluated on an emergency basis; if that person is having a heart attack, the visit is justified. If the person actually is having gastroesophageal reflux, is the visit not necessary? How is the person to know? Clearly, some people use the ED for non-emergent conditions, but making payment decisions based on discharge diagnoses has the possibility of discouraging patients from seeking needed care. In this study, only 6.3% of ED visits were classified as “primary care-treatable.”

The article makes an excellent point—“Between 4.5% and 8% of individuals in the ED are frequent users, but they account for 21% to 28% of visits.” In a 2003 Massachusetts study, 3.8% of ED users accounted for 17.6% of all ED visits. Our own data show similar results for these ED 'frequent flyers.' Perhaps a better way to reduce ED costs is to focus on those individuals who are the most frequent users, addressing their medical and socioeconomic problems, rather than penalizing those who genuinely believe they are having a medical emergency. The Centers for Medicare and Medicaid Services (CMS) should consider studying the profiles of frequent users of the ED and designing policies to address their challenges.

In a fee for service environment, ED overutilization is a logistic challenge for hospitals, but in an accountable care organization environment, with hospitals financially responsible for the health of the population it serves, ED overutilization becomes a financial issue. It is time to take a detailed look at this problem. 

Helping Consumers Navigate Insurance Exchanges

By Truven Staff
Anita Nair-Hartman imageA recent Kaiser Health News article questions consumers’ ability to navigate insurance exchanges. State-sponsored and federally facilitated insurance exchanges are building their technology platforms, selecting qualified health plans, and setting up their infrastructure. The underlying assumption is that in October 2013, when open enrollment begins, consumers will be prepared.  

The consumer’s ability to navigate exchanges is perhaps the most critical component of success. The Federal Government, recognizing that this process might confuse consumers, has funded Exchange Navigators to help consumers understand eligibility, subsidies, enrollment rules and processes, and the specifics of Qualified Health Plan (QHP) design provisions. 

Consumers and Navigators need robust information and efficient tools to manage this process. Improved consumer education benefits not only the consumer and the exchange but also the health plans — by ensuring that individuals select the plan that’s right for their situation and have a great customer experience while doing so. Increasing a consumer’s ongoing engagement in their own healthcare management can lower costs and increase their plan loyalty and satisfaction — which is especially important in this new marketplace. 

For exchanges to succeed, we must elevate consumer interest and participation in healthcare decision making to the same level as other important life decisions. States, the Federal Government, and health plans all need to share the responsibility to make that happen.

Anita Nair-Hartman
Vice President