Healthcare Transparency Now

Recent focus groups conducted as part of a study funded by a federal agency reported the following:

• People are loathe to make cost and resource use a consideration in choosing health care providers and treatments, even when they are in high deductible plans

• People will assume higher cost = higher quality if only given cost data
• People assume more tests and treatments are better, unless information is framed explicitly in terms of potential harms and risks

• People are interested, for the most part, on what it costs them to get care

• There are some measures that people think could be very useful that are“cost” measures that they can see are also “quality “ measures

• Example: costs/level of “avoidable complications”

Much of the data currently available will not respond to what consumers care about: (1) It doesn’t address their costs, (2) It doesn’t take into considerations variations in insurance design that affect what different individuals pay and (3) It cannot be clearly linked to quality measures.

It has been my experience that lower cost providers tend to be high quality providers.  The explanation for this is that providers that end to do high volume services of a particular kind tend to have greater efficiencies.

The price variability among healthcare providers is extreme and what patients are paying for their services in many cases is not a reflection of what it costs to deliver the services.  Thus pricing is all over the place.  Often time’s people will go and seek services based on a doctor’s recommendation and patients are given the information and share it with their doctor.  This will often influence the doctor as to where patients should receive their services.

There is no doubt that price transparency in services will change purchasing behavior of physicians and patients in seeking alternatives.

Source:  Engaging consumers with a high value healthcare system, by Shoshana Sofaer (2011)

Apparently Don Berwick MD, former senior Obama Administration medical executive, thinks so, per an article in the Boston Globe:

“Already there’s a growing trend in health care to move more of the cost of care onto patients in an effort to make them think twice about what they need and how to protect their health and their financial interest. In Massachusetts, for example, enrollment in limited or tiered health plans is on the rise. Such plans offer cheaper premiums but penalize people for using providers thought to be higher cost.

Dr. Don Berwick, former administrator of the Centers for Medicare & Medicaid, and Jim Capretta, who serviced as associate director at the White House Office of Management and Budget under President George W. Bush, took sharply different stances on what shifting costs to patients could mean during a wide-ranging debate last night hosted by the Pioneer Institute.

Berwick, now a senior fellow at the Center for American Progress, called the idea of giving patients more “skin in the game” a “vicious idea.”

“Most people do not use health care as a recreational good,” he said.”

I couldn’t disagree more with Dr. Don Berwick.  Healthcare is suffering from the ills that Dr. Berwick supports.  It’s a model that is used by hospitals and health plans.  A few generations ago, patients purchased healthcare from their physicians and hospital providers very similar to how they purchase anything else.  In other words, they received a bill at the time of services except in emergencies and often times the patient took care of the bill and then submitted it to the insurance company.  Over time, people were removed from the decision making process when accessing healthcare services.

Today we have a system that instead of being patient and physician oriented, it is patient/hospital oriented.

Passing on the financial responsibility to patients is good.  I believe, when patients along with their physicians are given correct information on cost and quality, they can make the right decision.

With advancements in information technology, we can reduce the cost of care by giving people responsibility and information such that they can make informed choices in price and quality.  By doing this, it would force competition between providers of healthcare services which today does not exist.

Healthcare is expensive in many cases because it is devoid of the laws of economics that govern most businesses.

For more information visit Compass Healthcare Advisers.

Don Berwick, health competition, healthcare cost transparency

The Washington Post carried in late March an article about my SmartShopper program and its effectiveness in controlling healthcare costs.

The success of Compass of bringing down the cost of care has been remarkable.  Naysayers or those who don’t believe that shopping prices is healthy are typically those that are doing well in the healthcare system today.

Most healthcare is delivered in local markets except in extenuating circumstances.  Thus, thru the word of mouth and ability to shop a price, I believe people can make a very good decision.  There are many well educated academic healthcare executives who do not believe people can make good decisions on getting their healthcare services.  As for as continuity of care, in today’s world of technology, information is portable and should not be an issue.

In the end, price of care is becoming the lead obstacle to access of care.  Because of the success of Compass in Manchester and others, it is clear that people can make very good decisions on taking care of their healthcare, if given the information.

Here is the article:

Cash rewards for thrifty health consumers

By Michelle Andrews, Published: March 26, 2012

In recent years, insurers have tried to cajole consumers into using less-expensive health-care providers by promising lower co-payments and other cost-sharing breaks for members who select those doctors and hospitals.

Lately, they’re trying an even more direct approach: cash rewards.

Some Anthem Blue Cross and Blue Shield members in New Hampshire, Connecticut and Indiana can receive $50 to $200 if they get a diagnostic test or elective procedure at a less expensive facility than the one their doctor recommended. The offer covers nearly 40 services, from standard radiology tests such as mammograms and MRIs to such surgical procedures as hip and knee replacements, hernia repair, bariatric surgery and tonsillectomies.

“We identified a subset of highly utilized services with cost variances that we thought would have a big impact,” says Denise McDonough, regional vice president of sales for Anthem BCBS of New Hampshire. “We want to provide information to members to drive health-care costs down.”

It seems to be working. The city of Manchester, N.H., the first employer to pilot Anthem’s Compass SmartShopper program in January 2010, has saved more than $250,000 in health-care costs in two years, even after factoring in the cash rewards paid to the 476 plan members who have participated.

The differences in costs can be eye-popping. According to Anthem data, in Manchester a hernia repair ranges in price from $4,026 on the low end to $7,498 on the high end. A colonoscopy could cost $1,450 to $2,973.

“It was a huge eye-opener for us,” says Jane Gile, human resources director for the city government.

Here’s how the SmartShopper program works. At least 24 hours before a member has a scheduled service, he or she calls a toll-free number or logs on to a Web site to get a list of lower-cost local providers.

If a doctor has referred someone to a location that’s not on the list of cheaper providers, the member can request that the doctor change the referral. If the physician is performing the procedure, the member can ask that the doctor do it at a cheaper location.

After the provider submits the claim and Anthem pays it, the insurer compares the records of online and telephone inquiries made by the member to the SmartShopper program. If the member chose to get care at a low-cost provider identified by the program, he gets a check in the mail within 60 days. (The amount is usually about $100, but it varies with the size of the amount saved.) An employee who has not yet met his annual deductible would also save directly on the cost of the treatment.

If the member wants to stick with his doctor’s initial plan and forgo the cash bonus, no problem. The program is entirely voluntary.

Last year, Harvard Pilgrim Health Care launched SaveOn, a similar program that covers a limited number of services in New Hampshire and that recently expanded into Massachusetts.

Physician groups have some concerns. “It appears as though the decision is being made by the health plan, and tiering of providers is being made simply on an economic basis,” says Scott Colby, executive vice president of the New Hampshire Medical Society. “We have concerns about giving economic incentives without giving weight and credence to quality measures.”

It’s a fair criticism, insurers concede. Listed providers are licensed and credentialed, but quality indicators such as complication rates aren’t factored in. “It’s a first-generation set of data,” says Eric Schultz, president and chief executive of Harvard Pilgrim Health Care. “We all have a long way to go on performance data.”

For simple diagnostic lab and radiology procedures, choosing providers based primarily on cost is probably fine, says Ha Tu, a senior researcher at the Center for Studying Health System Change, a Washington-based think tank. “But when you start talking about surgery, it’s hard to argue that quality doesn’t vary quite a bit, and people shouldn’t be making these decisions purely on cost.”

Physicians are also concerned that programs such as SaveOn and SmartShopper may hinder care coordination among providers at a time when such coordination is considered key to managing patients’ health and controlling health-care costs.

When the SmartShopper program was introduced, some Manchester city employees were skeptical, says Gile. But many have come around.

Gile herself has used the program three times: twice for screening mammograms and once for a colonoscopy. She had a good experience each time. By choosing a lower-cost provider for the tests, she qualified for cash rewards of a few hundred dollars altogether, she says.

A systematic review of drug cost awareness among prescribing physicians reported in 2007 pervasive ignorance about costs of medication. The authors comment:

“Doctors’ ignorance of costs, combined with their tendency to underestimate the price of expensive drugs and overestimate the price of inexpensive ones, demonstrate a lack of appreciation of the large difference in cost between inexpensive and expensive drugs. This discrepancy in turn could have profound implications for overall drug expenditures.”

“Physicians’ awareness of the cost of therapeutics is poor. With only 31% of estimates within 20% or 25% of the true drug cost and the median estimate 243% away from the true cost, many of the estimates appear to be wild guesses. Country, level of training, specialty, and other factors seem to have little impact on the degree of awareness. Despite substantial and increasing concern about costs, doctors’ awareness has not improved in the 26-year span of these studies.”

This does not surprise me that doctors are unaware of the cost differences between medications and drugs.

Physicians are also unaware of larger cost items of medical services and the cost differences there.  I believe many doctors do not feel it is their role to save their patients money.  The physician’s primary concern is the care of the patient.  Most doctors, I believe feel it is the patients role to know the price difference since they are the consumer.  This is a great example of why patients need to be empowered with information about the cost of their care since they are ultimately responsible.

If patients were equipped with correct information, they would be able to disclose to the physician the price variance of their care.

What is needed are tools to shop their care that shows price differences between drugs and services that are readily available such as labs and diagnostics.

In conclusion, people are willing to take responsibility but they need to be given the instruments necessary to shop their care

The article: Allan GM, Lexchin J, Wiebe N (2007) Physician Awareness of Drug Cost: A Systematic Review. PLoS Med 4(9): e283. doi:10.1371/journal.pmed.0040283

healthcare cost transparency, healthcare price variation, medical drug costs

A study by Kenneth Thorpe, Lydia Ogden, and Katya Galactionova, published in Health Affairs in 2010, examined the diagnoses behind Medicare claims in 1987, 1997, and 2006 and found:

Increased spending on chronic diseases among Medicare beneficiaries is a key factor driving the overall growth in spending in the traditional Medicare program.

In the case of heart conditions (one of the top ten most expensive conditions the researchers investigated), the treated prevalence remained the same in the three years they examined, although spending attributable to heart disease accounted for 6% of Medicare’s increased costs between 1987 and 2006. This suggests that the cost growth for heart disease is due to a rise in the cost of treatment, not in the proportion of Medicare beneficiaries being treated for it.

By contrast, a group of six other chronic conditions — diabetes, arthritis, hyperlipidemia, kidney disease, hypertension, and mental disorders — accounted for more than one-third of the increased spending Medicare experienced during the study period, and the treated prevalence of these conditions did increase. The authors note that an increase in treated prevalence might be due in part to a lowered clinical threshold for treatment, and that cost growth may be partly attributable to new treatments (e.g., technologically advanced kidney transplantations) that cost more. Either way, Medicare is spending a lot of money treating these conditions, so efforts to contain cost growth in this entitlement program requires addressing chronic diseases. The authors state in their discussion:

More than half of beneficiaries are treated for five or more chronic conditions each year, and a typical Medicare beneficiary sees two primary care physicians and five specialists working in four different practices. System fragmentation means that chronically ill patients receive episodic care from multiple providers who rarely coordinate the care they deliver. Because of this structural deficiency, patients with chronic illnesses receive only 56 percent of clinically recommended medical care.

There is no doubt that fragmented care leads to poor outcomes and higher cost.  I believe the leading cost driver is the lack of transparency in healthcare.

If patients had greater skin in the game and the ability to be aware of pricing, I believe the cost of care would be reduced such that inflation rates would be similar to that of the CPI.

A few weeks ago, the news is full of slow growth in healthcare spending in 2010.  But the news is misleading with respect to one key constituency: households. The report on household spending fails to include spending on healthcare premiums, which went up double digits.  Nor does it address the higher financial risks as more households  take on high deductible plans. In sum, in 2010 household financial insecurity driven by healthcare definitely worsened.

Look at it this way.  You pay out of pocket a slight increase from the prior year.  But that fails to account for larger premium deductions from your paycheck. And it totally misses the higher rainy day risk you incur by taking on a high deductible plan. We need a broader, more realistic way of depicting financial risk of healthcare to households than we are getting currently from studies.

This trend increases the pressure on insurers and employers to bring cost of care awareness to households.

To understand the total cost of healthcare borne by households in 2010, you have to look at two separate studies.  An article in Health Affairs prepared by federal personnel in CMS, which reports on all self payments except for premiums, reports that household outlays rose in 2010 by 1.8%, faster than in 2009 but much slower than in previous years.

Another study, prepared by the Kaiser Foundation, found that households that purchased employer-sponsored health insurance paid $3,997 for their premium share, up 14% from $3,515 or by $482.  But total premiums for family coverage rose by only 3%, or by $389. Thus over 100% of the total increase in premiums was shifted onto households, reducing in absolute dollars the burden retained by the employer.

Covered workers on average in 2010 contributed 19% of the total premium for single coverage (up from 17% in 2009) and 30% for family coverage (up from 27% in 2009).

Now look at the additional financial risk of high deductible plans.  Financial risk went up by lot – that is, their total potential spending, due to increases in deductibles, co-insurance, and co-pays.  The share of these households with deductibles equal or greater than $1,000 went up from 22% to 27% between 2009 and 2010 (single coverage only).

More details on outlays other than premium:

Out-of-pocket spending by consumers increased 1.8% in 2010, accelerating from growth of 0.2% in 2009 but still slower than its average annual growth of 4.8% between 2000 and 2008.

The report uses the National Health Expenditure Accounts definition of out-of-pocket spending includes direct spending by consumers for health care goods and services—such as copayments and deductibles—for people with any type of insurance coverage (private, Medicare, or Medicaid) and spending for care by the uninsured. It does not include any premiums paid for coverage.

More details on premium burden on households:

The Kaiser Foundation reports that in 2010, covered workers contributed a greater share of the total premium, a notable change from the steady share workers have paid on average over the last decade. Covered workers on average contribute 19% of the total premium for single coverage (up from 17% in 2009) and 30% for family coverage (up from 27% in 2009). As with total premiums, the premium shares contributed by workers vary considerably around these averages. For single coverage, 28% of workers pay more than 25% of the total premium while 16% make no contribution.Looking at dollar amounts, the average annual worker contributions are $899 for single coverage and $3,997 for family coverage, up from $779 and $3,515 respectively in 2009. This is a 13.7% increase.

More details on deductibles:

Among workers with a deductible, the average general annual deductible for single coverage is $675 for workers in PPOs, $601 for workers in HMOs, $1,048 for workers in POS plans, and $1,903 for workers in HDHP/SOs (which by definition have high deductibles). As in recent years, workers in small firms (3–199 workers) with single coverage have higher deductibles than workers in large firms (200 or more workers). Average deductibles for single coverage do not vary by region for any plan type. The percentage of covered workers in a plan with a deductible of at least $1,000 for single coverage grew from 22% to 27% in the past year. Covered workers in small firms remain more likely than covered workers in larger firms (46% vs. 17%) to be in plans with deductibles of at least $1,000.

Sources of information:

Health Affairs, Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009, by Anne B. Martin,  David Lassman,  Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team. http://content.healthaffairs.org/content/31/1/208.full

Kaiser Family Foundation, Health Research and Educational Trust. Employer health benefits: 2010 summary of findings [Internet]. Menlo Park (CA): KFF; 2010 Sep [cited 2011 Nov 23]. http://ehbs.kff.org/pdf/2010/8086.pdf

From Kaiser’s 2011 survey of employer health benefits:

Hidden away on page 218 of the annual Kaiser Employer Health Benefits Survey is a table that shows what employers think of the main strategies they have to control health care costs.  More specifically, the table shows what the person in the firm responsible for its health benefits thinks, which is whom we survey.  The short answer is, employer confidence in their own ability to control costs is not high.

Not more than about a quarter of employers felt any one strategy was “very effective,” and they were divided on virtually every cost-containment strategy they were asked about.  For example, 22% said consumer-driven health plans were “very effective,” and 19% said they were “not at all effective.”  Similarly, 18% said tighter managed care restrictions were “very effective,” while 26% said they were “not at all effective.”  The “winner” this year seems to be disease management, garnering the most employer confidence, with 26% calling it “very effective” and 19% calling it “not at all effective.”  The not very enthusiastic “somewhat effective” was the description often chosen by employers to characterize the cost-containment strategies available to them.  Interestingly, many firms said they don’t have a lot of confidence in increasing employee cost-sharing as a way to decrease costs.  Many firms also offer wellness programs, and in an answer to a different question, slightly more than half think those programs help to lower costs to some degree.

To me this is no surprise because none of these measures address the cost of care directly.  Any solution devoid of personal responsibility and then transparency will not work in the long run. The problem of healthcare is very fundamental.  It is absent of any laws of economics in nature that create competition between healthcare providers on price.  The paradigm of healthcare must change such that low cost providers will be allowed to gain market share on higher cost providers.  For that to occur, patients and employees need to have financial  “skin in the game” at the point of purchase combined with price transparency.  In the end, people need tools or the ability to shop their healthcare.

CDHP, consumer directed health plans, cost of medical care, disease management, household healthcare costs, Kaiser, Kaiser Employer Health Benefits Survey

Governor Mitch Daniel, a fierce champion of consumer driven health plans, has achieved the remarkable milestone of getting an estimated 90% of state employees to participate in a plan.  That makes the state’s use of CDHPs far, far above any other state’s, and for a U.S. Census reported workforce of 75,000 quite possibly the largest CDHP penetration of any employer public or private.

How did he do it, from Indiana’s inception of CDHPs in 2006, when very few employees elected a CDHP to today, when upwards of 90% have enrolled for the plan year beginning January 1, 2012?

Mercer’s head of health consumerism, ‘Sander’ Domaszewicz, was helpful in the analysis which follows.

It has to do in large part to plan design.  Also, according to Stateline, a political news source, “Indiana’s intensive education and outreach program that has overcome the barriers to acceptance that most states face. It also helps that the state’s carrier — Anthem of Indiana — is one of the largest providers of consumer-driven plans in the country and offers easily accessible comparative information on local health care services across the state.”

The article says,  “One thing Mitch Daniels believes with absolute conviction is that consumers need to pay more of the cost of their health care.”

Indiana has used Mercer to help design and monitor the CDHP plans.  Mercer’s summary of the results is here and its more in-depth report to the state is here. Both end with 2009 data.

Mercer estimates that the state’s CDHP plan reduces the state’s costs of employee health benefits by about 10%. It would be useful to for Mercer to estimate the financial savings to employees from using an CDHP plan vs. traditional PPO.

What has been the utilization impact?

To keep this simple, let’s focus on the second rolled out CDHP, or CDHP II. (CDHP’s figures are even better).  In 2009, ER visits per 1,000 covered lives were 308 for the state’s PPO and 210 for the CDHP. Outpatient visits per 1,000 were 3,242 vs 1,841. Hospital admissions were 113.9 vs. 64.3.

In 2009, average cost per covered employee was for PPO $8,223; HMO, $8,570; for CDHP, $6,393.

Mercer accounted for differences in health status.  It divided employees n 170 cohorts and tracked them as they went into or out of CDHPs and between two CDHPs.

It explained the differences between the PPO and CDHP by noting some difference in health status.  But  “consumerism or behavioral change” and “unidentified differences” that could not be explained by demographics such as family size and consumerism or behavioral change were more important (see page 9 of its indepth report).  “Unexplained differences” is the residual that could not be explained by differences in demographic (such as family size and age), health status, and consumer behavior.  Mercer says that the behavior change may have been underestimated in its analysis.

The financial deal for employees is strongly favorable to CDHPs. Mercer has not worked out an estimate, but by perusing the data below it would appear that family plan enrollees, even those who are not in the best of health, are saving several thousands of dollars a year, and those with little need for medical care and have a health savings account are socking away several thousand dollars a year for retirement.

What Mitch Daniel’s is doing, CDHP, does improve the cost of care because employees now have “skin in the game”.  This a far more effective approach than asking employers to contribute more to their monthly premiums.

The CDHPs, by themselves, are somewhat effective but they could be more effective if the employee had the ability to price shop their services.

Two essential ingredients in bending the healthcare cost curve are:

1)            Personal responsibility

2)            Price transparency at the moment of use

The CDHP plan costs and benefits for 2012 are summarized the employee manual for employees, here.

For 2012 the family annual premium contribution for non-smoking family CDHP II is  $2,233.40. For the PPO, it is $9,136.40.

For the CDHP II plan, the family plan deductible is $3,000. Above that, the state pays 80% of costs. The maximum exposure of the family is $6,000.

The State offers a Health Savings Account in which the state will contribute 45% of the HSA amount for a maximum of $3,000.  The maximum annual combined contribution cannot exceed $6,250 in 2012.

Mercer reports that in 2008 82% of CDHP enrollees used an HSA. In 2008, 46% withdraw at least $2,000; of which 31% withdrew over $3,000. As that is the maximum contribution of the state, that means that 31% of CDHP members dug into their own contributions. Any estimate of the balance of HSA accounts is misleading, since the majority of participants enrolled only in the last few years, but reportedly some employees have over $10,000 in their HSAs.

(Note that a household, to preserve its HSA balances for family financial planning purposes, might self-pay for medical care out of their own bank account.)

That non-tobacco provision goes as follows in the employee manual:

“The state is offering a $25 reduction in health plan premium each pay period for those state employees who agree to not use tobacco during 2012. This is an increase over previous years. In 2011, the state offered a $10 reduction per pay.

“State employees will need to accept the Non-tobacco Use Agreement, pledging to not use any tobacco products during 2012 and agree to undergo nicotine testing.

“If you accept the Non-Tobacco Use Incentive during Open Enrollment and later use tobacco, your employment will be terminated. The only exception to the job loss penalty is if you rescind the agreement by logging in to PeopleSoft and completing the self-service process to change your agreement prior to the use of any tobacco product.”

CDHP, Connecticut Health Enhancement Plan, Indiana, Mitch Daniels

Only very recently has the medical profession begun to change a professional culture that perpetuates an “evasion of cost consciousness.”

As a Harvard Medical School student recently remarked on a blog, doctors are clueless about the cost of the care.  Physicians must start educating themselves about the economics of their patient care methods. This will require a culture shift.

Research has shown that doctors will change treatment plans once they are aware of the cost of care.  I do believe that given the immense expense of healthcare services that patients can experience extra financial hardship.  I am also aware that the price point difference in services can also be vast so I do believe that doctors, when present treatment and therapy should consider the financial impact of the cost.

Molly Cooke MD is a professor at UC San Francisco Medical School and an expert in medical education.  She wrote an article in the New England Journal of Medicine in 2010 with the title,  “Cost Consciousness in Patient Care — What Is Medical Education’s Responsibility?” The “evasion” quote comes from this article

Addressing in her article her fellow physicians, she wrote, “I would argue that patients depend on us to help them understand both the likelihood that they will experience benefit and the cost, broadly construed, at which that benefit might be won.”

Her prescription?  “First, we must acknowledge the lesson of recent history: creating financial incentives for physicians to behave in ways that are not, or are not perceived to be, in patients’ interest creates distrust and antagonism. We physicians should not gain from doing too little for patients any more than we should prosper from doing too much.

“Second, we must abandon the myth of the physician as single-minded advocate for any amount of benefit for every patient.

“Third, we must broaden our programs so that all trainees receive a foundation of exposure to health care management and health services delivery, enabling them to participate as informed citizens in the systems in which they work and learn.”

In a subsequent published reply to readers to wrote letters to the editor, Cooke provides an example of cost awareness: “There are substantial opportunities to build into medical education the knowledge and skills that are required for the provision of cost-conscious care. Imagine, for example, a computerized order-entry system that displays the charge for each drug or test at the time that it is ordered and that informs the physician of the daily charges for each patient and the cost of the hospitalization, as compared with the average cost for the principal diagnosis-related group.”

In the first days of this year, the American College of Physicians. through its publication The Annals of Internal Medicine, issued a revised Code of Ethics, in which it said, in a section titled the “changing practice environment,”

“Physicians have an obligation to promote their patients’ welfare in an increasingly complex health care system. This entails forthrightly helping patients to understand

clinical recommendations and make informed choices among all appropriate care options. It includes management of the conflicts of interest and multiple commitments that arise in any practice environment, especially in an era of cost concerns. It also includes stewardship of finite health care resources so that as many health care needs as possible can be met, whether in the physician’s office, in the hospital or long-term care facility, or at home.”

In a latter section titled “Patients first and stewardship of resources,” the code of ethics says: “Physicians have a responsibility to practice effective and efficient

health care and to use health care resources responsibly. Parsimonious care that utilizes the most efficient means to effectively diagnose a condition and treat a patient respects the need to use resources wisely and to help ensure that resources are equitably available.”

A  2011 article by Weinberger recommended a new, seventh competency requirement for physicians:  “cost-conscious care and stewardship of resources: Understand the need for stewardship of resources and practice cost-conscious care, including avoiding the overuse and misuse of diagnostic tests and therapies that do not benefit patient care but add to health care costs.”

In summary, I do believe physicians have a moral obligation to consider the final impact on their patients and be able to offer an alternative that would have the same impact.

cost of medical care, healthcare cost transparency

Mercer in late 2011 reported that employer incentives for healthy behavior of employees have grown.

Tougher wellness program design, coupled with price transparency of care, lead the American household to greater accountability for their health.

It is obvious when issues of the heart effect people’s pocketbook, you get greater participation.  It’s called “skin in the game”.  By giving people firm incentives to take care of their health is an essential component in solving our healthcare cost problem.

Any solution to the healthcare cost problem devoid of personal responsibility or “skin in the game”, price transparency will fail.

It is essential that to get desired behavior, people need to have “skin in the game” or a firm incentive as well as the tools to be able to take responsibility.

The Towers report said, “An astonishing 87% of large employers say they will add or strengthen programs or policies to encourage more health-conscious behavior. For a second year in a row there was a sharp increase in the use of incentives or penalties to encourage higher participation rates: 33% of large employers with health management programs provided incentives or penalties, up from 27% last year and 21% in 2009. Five years ago, the most common incentive offered by large employers for completing a health assessment was either a token gift or cash; this year it is a lower premium contribution (the median reduction in the annual contribution is $240).  Health assessments, which are intended to alert employees to possible health risks and to identify individuals who could benefit from disease or lifestyle management programs, are offered by most large employers (70%), but small employers are adopting them as well: 34% offered an assessment in 2011, up from 29% in 2010

Towers Watson’s survey for the National Business Group on Health, published in late 2011, confirms the toughening of incentives for wellness. “ despite significant investments in wellness and other health management programs, engaging employees in their health is proving to be a very difficult challenge. As a result, a growing number of employers are rethinking their current strategies and imposing tougher, more specific requirements for incentives. For example, this last year marked a twofold increase in incentive designs that pinpoint specific outcomes for weight control or cholesterol levels.

Another 33% of employers plan to adopt an outcome-based program in 2012 — “a staggering increase given only 6% of employers had such a program in 2010.”

Per the Towers, report, 13% of employers in 2011 Require employees with high health-risk-factor status or with chronic condition(s) to show evidence of active treatment management from specialty vendor and/or treating provider to receive reward (or avoid penalty). 18% expect to implement such a program in 2012.

Further, average spending per employee on incentives has risen 65% – from $260 in 2009, to $430 in 2010 – according to the National Business Group on Health and Fidelity Benefits.