Consumer-directed health plans have been presented in the press as both a mechanism to shift the locus of decision making from managed care plans to consumers and as a palatable way for employers to reduce or share with enrollees double-digit premium increases. More mainstream managed care plans have also been reported to be developing updated models with increased choice, financial incentives for consumers to choose lower-cost options, and information to support their decisions.
In this study, we report findings from a national health plan survey that included questions designed to measure the uptake of health reimbursement accounts, premium-tiered and point-of-care tiered model plans, and consumer-centered elements of mainstream MCOs. Despite its high response rate (70 percent), the survey may not have captured all consumer-directed health plans. There may have been plans offering HRAs or tiered benefits that were not identified nor contacted by Mercer Human Resource Consulting and nonrespondents may also offer consumer-directed health benefit products. Naturally, this concern is particularly salient for our estimates of total enrollment. To address this concern we made every effort to compare the responses from our survey with other reports of HRA and tiered-benefit models and to ask that experts on consumer-directed health benefits within Mercer Human Resource Consulting identify any important omissions. In several cases, we contacted plans directly to confirm or amend enrollment data.
Another limitation of our approach is that responses to Mercer Human Resource Consulting requests for information are not primarily elicited for research purposes but rather for employer contracting. This accounts no doubt for the relatively high response rate. It might also be expected that health plans would attempt to cast their products in the most favorable light. This tendency, however, would be tempered by the fact that long-term relationships are at stake and exaggerated claims are likely to be detected.
Finally, because a health plan survey was relied upon by the authors and some models may be tailored in their design (including decision support) to meet the needs of particular purchaser segments, reported differences in features among plan types may reflect differences in the purchasers that selected them rather than characteristics of that plan type. For example, large self-insured employers may be more likely than small employers to offer HRAs. At the same time, these employers may typically contract directly for health management programs for all of their employees, so that the plans themselves do not provide such additional services. Health plan survey data cannot address this potential confounding.
The best available estimates of the diffusion of HRA models in 2002 suggested that perhaps 100,000 beneficiaries were then enrolled in these plans, most of whom were signed up with one of three plans specializing in consumer-directed health benefits (Definity, Destiny, and Lumenos) (Gabel, Lo Sasso, and Rice 2002
). We estimate that in the first quarter of 2003 there were nearly half a million HRA enrollees. Plans that specialize in offering HRA models still dominate the HRA market, although to a lesser degree than previously reported. Large national managed care organizations have entered into the HRA market and some of the earliest entrants in this class enrolled tens of thousands of beneficiaries in HRA models by early 2003. Many more of these large organizations are launching HRA models in 2004, consistent with reports from the field that most health plans view their ability to offer a consumer-directed plan as a strategic necessity.
While the rate of enrollment growth is substantial, HRA enrollees remain an exceedingly small percentage of the roughly 160 million people with employer-sponsored insurance. If HRA models are to play a major role in changing the dynamics of the U.S. health system—either by encouraging consumerism or in controlling the expenditure trend—more dramatic diffusion will need to occur in the future. Perhaps this will ensue in coming years. Early results from the field suggest roughly a doubling of enrollment in 2004 and recently legislated health savings accounts will further stimulate growth of account-based plans. Nonetheless, projections attributed to industry insiders such as “20 percent of the market by 2005,” are difficult to reconcile with our survey responses (Gabel, Lo Sasso, and Rice 2002
Our findings support the notion that there is greater marketability of tiered managed care offerings with increased choice (of either benefit design or point-of-care options) accompanied by incentives to choose lower-cost or higher-quality options. Respondents reported a 2003 enrollment of nearly two million covered lives in premium-tiered or point-of-care tiered models. Point-of-care tiered models comprise the majority of this category, accounting for more than three-quarters of the enrollment.
Rather than simply increase cost sharing, consumer-directed health plans are purported to empower individuals to make informed choices with regard to their health and health care. To meet this goal, point-of-care tiered models offering consumers incentives to select a subset of providers or treatment options must also offer information to help consumers decide whether and when selection of higher-cost options is worth the outlay. We found, however, that information to support value-based choices of provider or treatment is not universally provided by HRA models and tiered-benefit products. In particular, comparative cost information for both physicians and hospitals is typically lacking. Consumer-directed heath plans frequently make available hospital quality information, possibly because there are some off-the-shelf products that derive quality information from Medicare and state all-payer administrative data. Average costs for services or procedures and drugs are also common elements of decision support for HRA model plans, perhaps because these are relatively easy for companies to provide, although comparisons of the likely cost implications of alternative types of treatment options beyond drugs for a given condition are typically not available.
The RAND Health Insurance Experiment suggested that consumers (without decision support) rationed necessary care to the same degree as unnecessary care in the face of greater cost sharing. Given this result, it may be a concern that more HRA models are not offering information on optimal care for a chronic condition. This is particularly troubling in light of the fact that just over half of HRA plans reported that they screen all claims against evidence-based practice algorithms to detect underuse and only about one-third of HRA plans notify providers and members of deviations from evidence-based practice (data not shown). On the other hand, perhaps it should not be very surprising that decision support for these products is so incomplete. Such systems entail extensive fixed investments and thus require some scale to support.
Alongside the evolving phenomenon of consumer-directed plans, mainstream MCOs also are sharing more costs with consumers, in order to shift costs, create consumer incentives to spend more prudently, or both. Most plans report percentage increases in cost sharing in the single digits. To a limited degree, MCOs, particularly HMOs, also support the consumer “coproducer” role as well, through nurse help-lines, health risk assessments, and health profiles as well as member outreach. The apparent scramble by large health plans to gain a foothold in the consumer-directed health plan market may support the adoption of additional consumer-centered health management tools because of the economies of scale mentioned previously. That is, rolling out a consumer-directed plan offering with complementary programs and decision support to help consumers manage their health and health spending may spill over onto mainstream health plans because of low or zero incremental costs for extending these programs to enrollees in all types of products.
Health reimbursement accounts and tiered-benefit models viewed together represent the latest vehicles for cost sharing and, potentially, for engaging consumers in stewardship of their health and health benefit costs. What differentiates them from one another is the point in time at which consumers are engaged, the scope of decisions that are targeted, and the degree to which support is provided to inform consumer selections. Health reimbursement account models essentially put consumers fully in charge and at risk for a range of health care decisions until spending reaches the deductible amount, usually about $1,500 per year. Premium-tiered models emphasize consumerism at open enrollment by drawing direct connections between the premium contribution and a variety of plan features including cost sharing and scope of network. Point-of-care tiered models typically engage consumers in making better provider selections, and could be extended to include better treatment option selections particularly for services deemed discretionary. Decision support for all of these models, most importantly for HRAs because of the broad range of choices consumers are expected to manage, does not seem quite up to the task of mobilizing consumers to be successful in making more cost-efficient and health-improving selections. As consumer-directed health benefits grow, it will be of central interest to track the evolution of these decision-support systems and of complementary efforts by plans to monitor underuse and proactively engage both consumers and providers when care falls short of established clinical guidelines.