Offering employees a variety of options in a variety of different areas is crucial to employee retention today. The more flexibility they have with time off, retirement plans and other benefits, the more likely they’ll be to stick around.
An increasingly popular health care option is the consumer-engaged health plan. The reason, according to Leon Lamoreaux, vice president of business development for Priority Health, is that it gives employees options and encourages them to be active, informed participants in the health care they receive.
Smart Business spoke with Lamoreaux about what defines consumer-engaged health plans, how they’re administered and what options they offer employees.
What is a consumer-engaged health plan?
A consumer-engaged health (CEH) plan refers to a variety of products, programs and services designed to promote consumer accountability and responsibility for health care purchasing decisions. The ultimate goal is to eliminate waste throughout the health care system and position the member as an important participant in all of the health care financing and treatment decisions. Specifically, CEHs are thought of as high-deductible plans coupled with a health care reimbursement account.
There are three areas of engagement: the mind, the body, and the money or financial resources. The goal of engaging the mind is to give members access to quality and cost information, provide options and encourage them to be active, informed participants in the health care they receive. The goal of engaging the body is to help members understand the correlation between lifestyle choices and their overall quality of life, and the cost associated with not engaging in these healthy lifestyle choices. The goal of engaging the financial resources is to help members take part in the save or spend decisions of their own resources. There are many personal funding accounts in the classic definition of CEHs: the Health Savings Account (HSA), the Health Reimbursement Arrangement (HRA) and the Flexible Spending Account (FSA). The basic theory is that we spend our own money more wisely than we spend someone else’s.
What are the advantages to a company offering a CEH plan rather than a standard health plan? Are there any disadvantages?
Advocates for CEHs typically reference the short-term and long-term savings usually associated with them as their greatest advantage. When members become exposed to the actual costs of health care, and they have a vested interest in the financial outcome, there’s typically less health care utilization than when they’re sheltered from the true cost.
CEHs shouldn’t be entered into lightly or simply to save money in the short run. It takes a real commitment from the employer and from the member to be an active treatment team member and active, price-conscious consumer. One of the often stated disadvantages of CEHs is the member’s increased involvement. Members are expected to become involved in researching the highest-quality, lowest-cost treatment options. It means they must investigate alternatives and perhaps even enter into awkward discussions with their provider about alternative treatment options and steerage to generic drugs or particular participating providers.
The insurance industry is complex, and it takes effort to become an informed health care consumer. Tools are being improved each year to give members access to quality and cost information. When these tools are available and used properly, everyone benefits from the experience. When they’re not available or are misunderstood, it can lead to a frustrating experience.
What are some different kinds of CEHs?
First-dollar coverage HMO plans typically characterized as co-payment plans are at one end of the continuum. Even with these, members can be engaged by aligning co-pays so they mirror the expense as the service level acuity increases. For instance, if there’s a difference in co-pay amount between the primary care provider and the specialist, then consumer engagement is occurring at a basic level. One of the primary ways of increasing engagement is to use larger deductibles to involve the consumer in health care purchasing economics.
At the other end of the continuum is the ‘high-deductible health plan’ with an accompanying personal funding account, such as an HSA, HRA or FSA. As the member liability increases, the more the consumer becomes involved. Using deductibles is one of the basic ways to engage the consumer. It can be large or small and still engage the consumer to some degree. Recent generations of CEHs provide payment or coverage differentials based on the member meeting basic health criteria, such as taking a health risk assessment, achieving a healthy body mass index, not using tobacco products, maintaining normal blood pressure or participating in disease management programs.
CEHs are a great way for employers to reduce the overall cost of their health care. Call your agent or your health plan to find out if these plans are right for you.
LEON LAMOREAUX is vice president of business development for Priority Health. Reach him at leon.lamoreaux@priority health.com.