More than 145 million people — or nearly half of all Americans — live with a chronic condition, according to Johns Hopkins University. That number is projected to increase by more than 1 percent each year through 2030, resulting in a chronically ill population of an estimated 171 million.
So what does this mean for employers that are already struggling to control health care costs?
“There are 29 chronic illnesses that make up 80 percent of all health plan costs,” says Mark Haegele, director, sales and account management, with HealthLink. “The problem is that, with a typical health plan, you are only managing five to seven of those diseases, reaching a significantly smaller component of the population.”
Smart Business spoke with Haegele about how to remove barriers to chronic illness compliance and manage health care costs.
How are chronic diseases typically managed?
Chronic disease management may include an evidence-based care treatment plan, with regular monitoring that follows guidelines developed by the American Medical Association, the American Heart Association and others, coordination of care among providers, medication management, and measuring care quality and outcomes.
How do chronic illnesses exponentially affect employee health insurance costs?
Patients with chronic conditions often are required to take one or more medications indefinitely. The combination of dormant symptoms, coupled with long-term treatment, means that patients don’t always follow the recommended daily regime for disease maintenance. If employees don’t manage chronic illness by following treatment protocols, they may end up in the emergency room or hospital, spending more on health care costs than if they had spent money to stay in compliance through testing and medication.
With the way the health care system is structured, a patient does not know the ultimate cost of going to a doctor. Months later, he or she will get a bill in the mail — hopefully with a corresponding explanation of payment from the insurance company — that might be for $50 or $250. This uncertainty can keep patients with chronic diseases from following wellness and disease management.
In addition, failing to manage chronic illness correctly can lead to complications, which increases costs. A University of Chicago study found that three out of five patients with Type 2 diabetes suffer from at least one significant complication, such as heart disease, stroke, eye damage, chronic kidney disease or foot problems. Consequently, the yearly medical expenses of a person with Type 2 diabetes complications are nearly $10,000, with nearly $1,600 paid out of pocket.
What challenges do employers face with chronic illness compliance?
There can be challenges with many fully insured health plans because benefit designs are limited to support chronic illness compliance. Most health benefit plans have an optional disease management program that impacts 5 to 9 percent of chronic diseases, such as asthma, diabetes, cardiovascular disease and chronic obstructive pulmonary disease. The problem is that many more types of chronic illnesses drive up health care costs, and the benefit design doesn’t change to support the highest chronic disease prevalence among your specific employees. In addition, a voluntary program won’t necessarily reach the employees who are increasing costs the most.
It takes time to change employee behavior. Even with the Patient Protection and Affordable Care Act, under which companies have been paying for 100 percent of preventive care such as immunizations and mammograms, there hasn’t been an uptick in services.
How can employers use value-based benefit plans to increase chronic illness compliance?
Traditionally, employers try to save money on health insurance plans by shifting costs to employees and encouraging generic medicine use. Now, some are lowering or eliminating copayments on medications to encourage adherence to regimens through value-based benefit design.
Companies can use a series of incentives and disincentives to shape employee behavior. For example, smokers may have to pay a higher premium than nonsmokers, and employees who undergo a biometric screening each year could qualify for a plan with better benefits.
This is where the flexibility of a self-funded plan can help. If a company has a disproportionate number of diabetics, it can design its health plan to remove barriers to following a health treatment plan by taking steps such as fully paying for diabetic test strips. In addition, an employer can fluctuate employee members between plan levels based on their compliance throughout the year, rewarding good health practices with better benefits.
In a recent study of a 30,000-member business coalition in Clinton, Ill., of 250 diabetics studied, those who followed a value-based benefit plan with aligned incentives had health costs that were half those of other diabetics.
How can employers ensure that adding health care costs by lowering or eliminating copayments saves money?
You can hire professional consultants to evaluate health plan vendors, but effective communication is critical. When looking at programs, those with motivational coaching are the most effective. They get employees on board by motivating them as opposed to informing them of a checklist, then calling to ask why they aren’t following it. In addition, the program should also be communicating both with the member and primary care doctor.
You need to understand your health care population and then monitor progress monthly, quarterly or yearly to see your return on your investment. One self-funded program found that more than 90 percent of the population identified with high cholesterol had gotten cholesterol levels down to normal following a value-based health plan that ultimately lowers overall health care costs.
Mark Haegele is a director, sales and account management, with HealthLink. Reach him at (314) 753-2100 or [email protected].
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