November 5, 2012
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October 26, 2012
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According to the HHS (U.S. Department of Health and Human Services), and HHS Secretary Kathleen Sebelius, as a result of the Affordable Care Act, 5.6 million seniors and people with disabilities have saved $4.8 billion on prescription drugs since the law was enacted. The two main reasons are:
- The ACA closes the Medicare “doughnut hole” under which seniors must pay for drugs entirely out of pocket.
- Drug makers have also agreed to offer deep discounts to Medicare recipients.
- Seniors have saved $4.8 billion on their prescriptions.
- 5.6 million seniors have received a drug discount or rebate, including 2.3 million this year.
- Seniors who hit the doughnut hole have saved an average of $657 this year.
- Over 20.7 million with Medicare also received free preventive services in the first nine months of 2012
- The health care law will save the typical person with original Medicare $5,000 from 2010 to 2022.
Among the provisions in the health care law to make Medicare prescription drug coverage more affordable are these:
- In 2010, anyone with Medicare who hit the prescription drug donut hole received a $250 rebate.
- In 2011, people with Medicare who hit the donut hole began receiving discounts on covered brand-name drugs and savings for generic drugs.
- For 2013, people with Medicare in the donut hole will receive about 53% on the cost of brand name drugs and a 21% savings for the cost of generic drugs. These savings and Medicare coverage will gradually increase until 2020, when the donut hole will be closed.
Preventative Health Services
- In 2011, 32.5 million people with original Medicare or Medicare Advantage received one or more preventive benefits free of charge.
- In 2012, over 20.7 million people with original Medicare have received at least one preventive service at no cost.
- 2.13 million of them have taken advantage of the Annual wellness Visit, an increase of 650,000 over 2011.
October 22, 2012
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A Brave New World Of Health Insurance Choices
Christopher Goldsmith of Sibson Consulting’s provocative article written for the Society for Human Resource Management (SHRM) explores how behavioral economics can help guide decision making with the complex choices consumers face in selecting better health plan options. This article summarizes that information.
The Problem: Choice and Complexity
Health care reform means more choices for consumers and a more complex decision process than before. Senior citizens will now need to make choices each and every year regarding their Medicare coverages: whether to enroll in traditional Medicare, supplement it with a Medicare supplement policy and a Part D prescription drug plan, or enroll in a comprehensive Medicare Advantage plan instead.
Health insurance marketers face the challenge of guiding consumers through a fundamentally more complex decision process in a way that helps them make more informed and better choices. The most important questions marketers face are:
- How to help simplify a complex decision process for the consumer.
- How to empower the consumer to make the best choices.
- How to differentiate your company in a field of similar products.
Behavioral economics—the study of how people make choices, drawing on insights from psychology and economics—can be useful in designing and communicating employee health plans.
Rational vs Emotional Decision Factors
Decisions regarding health often involve irrational, or emotional elements, where behavioral biases cloud rational judgment. For example:
• Unhealthy Habits: Despite numerous public health messages, many young adults nonetheless choose to become substance abusers or overweight.
• Not Taking Advantage of Preventative Services: Even if they understand the value of preventive health care and preventive care services offered under their plans without deductibles, co-payments or co-insurance, many still fail to take advantage of free health screenings or physical exams available to them.
• Lack of Interest in Health Care Research: When making decisions about hospitals and surgeons, few consumers research data about hospital costs, mortality, readmission and hospital-acquired infection rates.
• Failure to Plan: When enrolling in Medicare, many consumers fail to research the options available to them that would assist them in making an informed decision.
Behavioral Economics and Open Enrollment
Understanding these behavioral tendencies enables organizations to create more effective communications and incentives to make better decisions that produce better outcomes. This is particularly important during the open enrollment process, to steer employees toward cost-effective health plan options. Organizations increasingly want employees to migrate from more expensive PPOs to consumer-directed health plans (CDHP), which have lower costs in exchange for greater employee cost sharing. However, Goldsmith points to three behavioral biases that impede this goal:
• Loss-aversion bias. People tend to overvalue the prospect of losing something of value and to undervalue the prospect of gaining something of value.
• Value system bias. Deeply rooted value systems and selective filters necessitate substantial evidence to the contrary or significant influence to effect behavior changes will change.
• Status quo bias. Inertia, or the tendency not to change, is especially significant when choices are complex.
Optimizing Choice Architecture
Health plan participants considering the 3 choices below are likely to resist moving from a PPO to a Healthy Living Plan or CDHP because of the potential loss of their current doctor-patient relationship while undervaluing the financial gains or the prospect of improved quality of care available through a rigorous provider selection process.
Original Enrollment Presentation
There are also behavioral biases that the organization could leverage in its open enrollment materials to better position the new product offerings that could result in better results. Designing communications in ways that appeal to these biases can put a new perspective on the choice that makes it easier for consumers to consider and evaluate their options.
“Choice architecture” describes how the various options are framed, ordered and explained. Figure 2 below illustrates how the default option, order of the options, plan names, presentation of decision-making factors, and use of color elements can be used to influence choice:
Reframed Enrollment Presentation:
Preliminary testing with various focus groups show many people who chose the PPO Plan in Figure 1 subsequently chose the Healthy Living Plan or Thrifty Consumer Plan when presented with the design used in Figure 2. The expected result of this presentation of the data is better outcomes for the employees and the organization.
Incentivizing Lifestyle Changes
Encouraging Wellness Program Participation: One increasingly popular way to promote more healthful lifestyle changes is by using incentives to increase participation in the organization’s wellness programs, as shown in the chart above from Sibson Consulting’s Healthy Enterprise Survey. Studies have shown that, compared to a control group:
- Sustained tobacco use quit rates are 3X as high among participants receiving incentives.
- Obese participants tend to regain their weight when they stop receiving incentive payments.
Designing Effective Incentives: Sibson’s research finds that participation in an organization’s health risk assessment activities increases as the as the incentive value increases, but incentives must be well designed to achieve desired outcomes:
• Too low incentives fail to motivate behavior change.
• Too high incentives can create a “choking” effect that impedes performance.
• Too distant incentives lead people to devalue the reward.
• Too long a qualifying period encourages procrastination, and, as the deadline nears, the perceived cost of change magnifies resulting in lower participation.
• Misguided incentives cause the reward potential to crowd out the intrinsic motivation to focus on health.
• Too many incentive elements makes the complexity is overwhelming.
Using Behavioral Economics to Effect Change
In the preceding experiment, we examined how reframing the enrollment choices aided consumers in evaluating their plan choices. In that example, two behavioral biases were considered in designing the enrollment material:
• Clue-seeking bias. When faced with complex decisions, people look for clues, which they hope will be relevant to rational decision-making.
The revised enrollment chart provided relevant clues like “thrifty” and “elite standards” to show how the plans would actually work for the customer: Providing discrete columns for the major benefits of each plan (ie. “Your annual payroll deduction,” “Company Deposit into your Account, ” etc.) allows the consumer to quickly pick up cues about the benefits offered.
• Framing bias. Because people make decisions within a larger context, they look to their experiences and the environment to establish a frame of reference. Therefore, how choices are presented has a substantial influence on the decisions people make.
The original chart, by placing the PPO option at the top, appears to suggest that it is a default option, or a standard-bearer. The revised chart, by placing it at the bottom as a “Legacy Plan” counters some of the intrinsic biases that impede change mentioned above (loss-aversion bias, value system bias, and status quo bias.)
Countering Behavioral Biases
According to Sibson Consulting:
Some behavioral biases can serve as bridges to better outcomes.
Sibson offers some examples of “countering” behavioral biases that can be used to help employees make more informed and considered decisions:
Marketers need to bear in mind that the enrollment materials they design have real consequences in terms of workforce behavioral bias, choice making and engagement. Marketers can use principles from behavioral economics to help customers make more rational decisions regarding their health and their health care benefits. This begins with taking a systematic look at those outcomes you’d like to effect, and the consumer choices that would enable them. The ordering of options, highlighting of decision factors, naming of programs, structuring of incentives and selection of defaults can impact the outcome of the enrollment choices that consumers make.
September 28, 2012
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Employers Incorporate Brain Games into Wellness Programs(My thanks to Michael Conforme, Talent Performance Expert at GCT Partners for directing this to my attention.)
Katherine Reynolds Lewis writes that some employers are expanding their wellness programs to include brain function exercises to help employees manage stress amid the increasing demands on their time and attention.
She reports that Nationwide Insurance employee Jeanne Siersdorfer is logging hours of computer time online at work balancing a virtual basketball while other objects fly across the computer screen. But Nationwide actually encourages her to play the game as a part of its wellness plan.
Surely You Kid?
Don’t call me Shirley. These games are produced by a company called Brain Resource as part of a wellness solutions package called MyBrainSolutions that are intended to teach concentration and stress management techniques to boost executive function and memory, increase positive thinking, and achieve other brain-enhancing goals. The solution is recommended for jobs that rely on knowledge work, creativity, and communication skills, which require that workers be mentally sharp, emotionally present, and free from distraction. Gregory Bayer, chief executive of Brain Resource says:
The brain, we’re finding out, is much like muscles in the body. If you exercise it, it gets better. You actually grow neurons. If you can teach people how to manage those multitasking and stressful environments optimally, you’re going to preserve their health.
Beyond the immediate benefit of improving brain function, the suite of games can work in tandem with other wellness programs to help individuals achieve other health goals, such as weight loss, exercise, or quitting smoking. Employees can set goals within the MyBrainSolutions software and track their progress, in addition to working on cognitive areas that will help them stick to the plan.
What’s the Methodology?
MyBrainSolutions users begin with an assessment of their brain to provide a baseline along four axes:
Based on the resulting profile, the software suggests specific games to build up the areas of cognitive function that are weakest. The system then tracks users’ progress, giving points for playing time and badges when users reach milestones.
According to Jesse Wright, a psychiatry professor at the University of Louisville whose research on computer-assisted cognitive therapy was cited by Brain Resource in a white paper on the scientific basis for the program, this is a form of cognitive behavioral therapy (CBT):
Wide spread use of CBT computer programs does have the potential of helping people who do not have psychiatric illness but could benefit from the practical strategies of CBT to enhance problem solving, stress management, etc. A caution is that people with real problems such as depression would likely need genuine, well-constructed help programs to relieve symptoms.
What’s the Need?
David Nill, vice president and chief medical officer at electronic medical records provider Cerner Corporation introduced MyBrainSolutions as a pilot program this summer to offer support to a workforce of about 9,500. The pilot will eventually expand to its global workforce as far as India, where seeking mental health care carries a stigma.
Reduction in Health-Related Costs: It’s a key area of interest at Cerner because behavioral health issues such as depression and anxiety affect 30% of their employees and family members and cost about $2 million in health expenses. The most expensive cases, which represent about 5% of Cerner’s workers, involve stress-related conditions, according to Nill. He says:
Usually, people don’t engage in this type of activity until they’re not functioning well; they’re headed toward a diagnosis. Brain Resource brought on an ability for consumers to engage any time, any place, on their own terms without having to talk to anybody. I’ve been aware of the science for quite a while. It’s very compelling. It’s cognitive behavioral therapy; you’re just doing it without them having to sit in a therapist’s office.
Now if only we can distract those corporate efficiency experts with games, we might be able to save some jobs.
Show Me The Money!
- EAP use at Nationwide Use skyrocketed to 18.4% in 2011 from 7.7% in 2007 (that year’s industry average was 4%.)
- Nationwide’s percentage of obese and overweight workers declined between 2010 and 2012.
- In 2012, for the first time more than 70% of the population became low risk.
- The high-risk population fell to an all time low of 7%.
- Over 1,000 employees signed up for the program within the first two weeks and currently there are 2,500 users, more than Nill anticipated.
Self Development Results
At Nationwide, a case study found, based on self-reported responses to Brain Resource questions, that workers who played the games regularly:
- Increased their positive thinking by 5%
- Boosted social skills by 8%
- Heightened their emotional resilience by 9%.
Bottom Line Results
- 8% improvement in productivity
- 7% decrease in absenteeism
Kathleen Herath, associate vice president for health and productivity at Nationwide states that the best outcomes are when people are doing this along with another program:
If I’m trying to do a weight loss program, learning what motivates my brain and how my brain functions is the key to helping change my behavior.
August 30, 2012
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Wellness Programs Reduce Medical Costs
BY Amanda McGrory of BenefitsPro highlights a recent study by Zoe Consulting Inc. on behalf of Interactive Health Solutions Inc., a provider of performance-based health management solutions for employers. The analysis is based on multiple years of medical claim data from two comparable population groups.
The reason this issue is so significant, according to Joseph O’Brien, president and CEO of Interactive Health Solutions, is that health care spending has grown to over 25% of total labor expense. However, the study finds that employers using wellness programs experience a significant average medical cost trend reduction that includes:
- 6.1% average annual medical cost trend reduction.
- 13.5% average annual medical cost trend reduction among members with core conditions, including:
- asthma, coronary heart disease, chronic obstructive lung disease, diabetes and hypertension.
- Many health effects from core conditions can be managed through early detection and compliance with prescribed therapies.
- 7.7% reduction in per member per month for the survey’s final year.
- 85% of members maintain or lessen their health risk levels.
- Fewer days off due to workers’ compensation and short-term disability claims.
- 9 day earlier returns to work under workers’ compensation
- 17 days earlier returns to work for short-term disability.