HealthCare Consumerism Outlook 2013 by The Institute for HealthCare Consumerism

ISSUE || Annual 2013

The Institute for HealthCare Consumerism

Our Experts Share Insights

What Will Have the Most Impact on Health and Benefits Programs this Year? Health Care Consumerism Growth Private and Public Exchanges

Creating Consumers of Health Care Legal and Compliance Population Health Management Health Incentives

Onsite, Offsite, Near Site Mobile Health Plus much more inside

The Official Magazine of

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(From the publishers of HealthCare Consumerism Solutions, the official magazine of The Institute for HealthCare Consumerism)

The Institute for HealthCare Consumerism www.theihcc.com

Health Care Consumerism

Account-based Plans

Making Health Care Consumerism Work in 2013 and Beyond

A Solution to Free Preventive Health Care? HSA-qualified plans have the ability to provide real cost savings over plans that impose first-dollar coverage.

Health care consumerism is a megatrend evolving with or without government mandates. There are several core functions compatible with the Affordable Care Act. By Ronald E. Bachman, FSA, MAAA Chairman, Editorial Advisory Board The Institute of Healthcare Consumerism President & CEO, Healthcare Visions, Inc.

By J. Kevin A. McKechnie Executive Director, American Bankers Association’s HSA Council

Consumer-Driven Regulation for Cyber Risks and Data Breaches

Consumer Perspective

Here’s how how regulators, organizations, and individuals can become less “fragile” and successfully confront the cyber risks of the 21st century.

Consumerism is Here, Now We Need Consumers Practical ways to convince workers to become real health care consumers in 2013.

By Jon Neiditz Partner and Leader, Big Data, Privacy and Security Practice Kilpatrick Townsend & Stockton LLP

By Wendy Lynch, Ph.D. Co-Director, Center for Consumer Choice in Health Care, Altarum Institute, Founder, Lynch Consulting, Ltd.

Legal and Compliance

As the ACA creates new norms, offering the most appropriate complementary benefits to address potential out-of-pocket exposure for employees requires integrative strategies.

Employers considering defined contributions for individual health insurance policies in private exchanges should examine several important legal and compliance factors to prepare for 2014.

By Gil Lowerre, CEBS, CLU, ChFC, President Bonnie Brazzell, Vice President Eastbridge Consulting Group, Inc.

By John Hickman Partner, Alston & Bird, LLP, Health Benefits Practice

Self-Funding Health Plans

8 Ways Pharmacy Benefit Design May Evolve in 2013

Six factors impacting the TPA industry and marketplace in 2013, including hospitals, employers, ACA compliance, and the health insurance tax exclusion.

Plan design continues to shift, becoming more advanced and putting more choice in the hands of the member, including benefits for specialty drugs.

Private Exchanges A Growing Consumerism Option for Employers in the Year Ahead The need for a new health insurance purchasing system has spurred new regional and national private exchanges. They may be a good match for your business. By Ronald E. Bachman, FSA, MAAA, Chairman, Editorial Advisory Board, The Institute of Healthcare Consumerism President & CEO, Healthcare Visions, Inc.

Pharmacy Benefits Management

State of Self-funding and the TPA Industry

By Shelly Carey, Research Director Pharmacy Benefit Management Institute

By Fred Hunt Acting Past President, Society of Professional Benefit Administrators

Supplemental Health Benefits Integration Is the Key Strategy this Year

A Look Ahead to Defined Contributions in Private Exchanges

Privacy

Public Exchanges

Population Health Management Health Data, Care Coordination, and mHealth Will Determine the Future Consumer-centric approaches provide unique services and insights to employees and employers, as well as to providers who need consumer and population level data to improve their services. By Fred Goldstein, Interim Executive Director Isabel M. Estrada-Portales, PhD, MS, Director, Communications Karen Moseley Director, Research Care Continuum Alliance

What’s Ahead this Year as Health Insurance Exchanges are Rolled-Out There are three types of health insurance exchanges. Here’s what you need to know to be ready as they “go live” across the nation January 2014. By Cindy Gillespie, Senior Managing Director Elizabeth Carpenter, Senior Advisor McKenna Long & Aldridge LLP

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

INSIde & ONLINe 55

Health Rewards & Incentives

LearN.CONNeCt.SHare. 68

Data Analytics

How to Tie Incentives to Health Outcomes that are Safe, Effective, and Fair for all Employees

Consumerism and Data Analytics in an ACA World Four areas data analytics needs to improve in order to enable health care consumerism.

Here’s how to design an optimal wellness program that complies with the Affordable Care Act.

By Ian Duncan, FSA FIA FCIA MAAA, Vice President, Clinical Research & Reporting Walgreens Company

By Jerry Noyce, President & CEO Health Enhancement Research Organization

Social Media

Perspective: Electronic Health Records Time for the U.S. Government to Apply a National Patient Identifier for EHRs, Saving Lives and Billions

Social Media Empowers Consumers Gone are the days where the only place one could learn about his/her disease or injury was within the four walls of a physician’s office. Social media will be a powerful platform. By Dr. Cynthia Haines, M.D., Chief Medical Officer, Healthday, Managing Editor Healthday-Physician’s Briefing President, Haines Medical Communications, Inc. Howard Luks, M.D., Chief of Sports Medicine and Arthroscopy University Orthopedics, PC

Health Access Alternative: Medical Travel ACA’s Impact on Medical Travel Internationally and Domestically Learn how travel to centers of excellence is the latest cost-containment strategy and how changing norms will benefit international medical travel. By Laura Carabello, Founder and Principal; Publisher CPR Strategic Marketing Communications Medical Travel Today

Health Access Alternative: Offsite/Nearsite/Onsite Health Care in the Workplace: More than Just a Clinic No longer a novelty, early adopters are improving on-site care programs with care management, direct contracting, wellness programs, and feedback loops once in the domain of managed care. By Mike La Penna, Principle National Worksite Health Center Association

Consumer engagement, patient protection, improving care, reducing waste — each depend on the interoperability of electronic health records. By Dan Munro, Contributor Forbes.com

PROVIDER FORECASTS 12

Castlight

The Inevitable Movement Towards Health Care Transparency By Peter Isaacson

WiserTogether

United Healthcare

Jellyvision

Market Trends Driving the Need for Shared Decision-Making Tools By Dr. Shub Debgupta

Rewarding Good Behavior: Incentives Help Drive Big Changes in the Battle Against Diabetes By Karen Mulready

Peering into the Jellyvision Employee Communication Crystal Ball By Harry Gottleib

Truven Analytics

SelectAccount

Transitions

HealthStat

Two Keys to Lowering Health Care Costs: Transparency and Accountability By Michael Taylor

Helping Employees Understand the Total Cost of Health Benefits By Carol Kraft

From Smoking to Snoozing: Connecting Eye to Overall Health Could Mean Big Savings for Employers By Smith Wyckoff

Health Access Alternative: Telemedicine

The Future of Health Care in America By R. John Kaegi

From Mules to Tractors: What Farmers Can Teach Physicians about the Future Leveraging telemedicine throughout the nation will provide greater medical access to consumers, reduce the cost of care, and ultimately create a healthier population. By Jeffrey S. Grossman, M.D., Physician Peachtree Spine Physicians, Inc.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

Departments 6

From the CEO

75 82

Who’s Who Profiles Resource Guide/Ad Index

7th annual Outlook Offers Insights on a Changing Market and Key Health Care reform rules

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Letter

From the Ceo www.theihcc.com VOLUME 9 NO. 2 | ANNUAL OUtLOOk 2013

7th Annual Outlook Offers Insights on a Changing Market and Key Health Care Reform Rules The health care and benefits industries are changing before our eyes. As employers, consumers, brokers, and public sector all prepare for the impact of key provisions of Obamacare, there has never been a better time to share collective years of wisdom from our experts with you. I am proud to bring you varied perspectives from health care benefits thought-leaders. Collected in this years’ Outlook are analyses of a range of crucial issues: legal and compliance, defined-contributions, health management, incentives, and public and private exchanges. This year is a crucial juncture for health care benefits, laden with changes and unknowns that are both exciting and daunting. We’re already seeing opportunities opening up for new models of coverage and prospects for heightened health care consumerism. Our experts share insights into areas that could develop into strong platforms for consumerism, as well as murky areas that could see less consumer-centric changes. You’ll want to be on the cutting-edge, feeling confident about your plans and decisions as you prepare for open-season this fall. Outlook 2013 features 20 articles that speak to this momentous year ahead, informing you about health care consumerism, self-funding, mHealth, supplemental benefits, pharmacy benefits management, health access alternatives, population health advances, medical tourism (both domestic and international), health incentives, and more. We also have extended coverage of the evolution of health care technology, which is playing an increasing role in the shifting health care landscape. You’ll find analyses of the opportunities and challenges in health care reform for mHealth, telehealth, health IT, and electronic health records. On behalf of The Institute for HealthCare Consumerism, I hope you enjoy this issue and that it becomes an asset to you as you navigate the changes in health care benefits during the next year. If you’re not yet a member of the Institute, join us online as we present continued coverage of these issues and learn about new developments in health care reform as they happen. Don’t miss our FORUM East conference in May in Atlanta, which features 5 general sessions and 24 cutting-edge workshops that delve further into the topics discussed in these pages. If you can’t attend East, join us in Las Vegas this fall for FORUM West. The Institute extends our gratitude to all of the industry experts and innovative solution providers that have shared their outlook for the upcoming year. We thank you for your participation in this issue and for supporting the health care consumerism movement.

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kim Adler, Allstate; Diana Andersen, Zions Bancorporation; Bill Bennett; Doug Bulleit, DCS Health; Jon Comola, Wye river Group; John Hickman, Alston+Bird LLP; Tony Holmes, Mercer Health & Benefits; Marc Kutter, Aflac; Sanders McConnell, My HSA rewards; roy ramthun, HSA Consulting Services LLC; John young, CIGNA WEBMAStErS

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Karen Raudabaugh 404.671.9551 ext. 108 · kraudabaugh@fieldmedia.com HealthCare Consumerism Solutions™ Volume 9 Issue 2 Copyright ©2013 by FieldMedia LLC. All rights reserved. HealthCare Consumerism Solutions™ is a trademark of FieldMedia LLC. HealthCare Consumerism Solutions™ is published eight times yearly by FieldMedia LLC., 292 South Main Street, Suite 400, Alpharetta, GA 30009. Periodical postage paid at Alpharetta, GA and additional mailing offices.

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6 Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

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HEALTH CARE CONSUMERISM By ronalD e. BaCHman fsa, maaa » cHairman, eDitorial aDVisory boarD » tHe InstItute of HealtHCare ConsumerIsm PresiDent & ceo » HealtHCare vIsIons, InC.

Making Health Care Consumerism Work in 2013 and Beyond Health care consumerism is a megatrend evolving with or without government mandates. Here are several core functions compatible with the Affordable Care Act.

he past year has been packed with enormous debate, change, regulations, clarifications, and the continued implementation of national health reform. The Patient Protection and Affordable Care Act (ACA) has been front and center in American politics from the Supreme Court to the ballot box, and its development will continue to effect American lives into the future.

Expect Expanding Consumer Engagement

Some of the major criticisms of the ACA include mandated one-size fits all benefits, increased governmentregulated insurance, and a lack of focus on cost controls. Working within the requirements of ACA, employers have the opportunity to mitigate these concerns, provide employees choices, and continue to offer health plans that improve human capital with the coverages and care they need to be productive employees. There are many parts of ACA that enable employers to make health care consumerism work.

What has been a clear and steady direction throughout The Many Benefits of Going Self-Insured the turmoil is the focus on expanding consumer engagement in Self-insurance for employers has been around for the health care system and health care decisions. The Institute decades. There are no size requirements to consider. Employers for Healthcare Consumerism (IHC) long ago recognized the can mitigate any additional financial risk of self-insurance by consumerism megatrend evolving with or without government including aggregate and specific stop loss reinsurance. There mandates. are distinct advantages for employers to self-insure now and IHC defines “health care consumerism” as engaging in the future: employees with information and incentives to change behaviors • state mandates do not apply, so you can have a and improve health and health care simplified plan design purchasing decisions, regardless of Because of ACA’s • state premium taxes do not apply, so your cost is plan design. small-group market lower IHC places more emphasis on • there are no required claims or policy reserves, to promote, encourage, incent, reforms, premiums will how therefore you will improve cash flow reinforce, and increase healthy be community-rated. behaviors and healthy lifestyle Beginning in 2014 and beyond, smaller employers with choices and less emphasis on plan relatively healthy workers that have low medical costs may find design. Health care consumerism is it financially advantageous to go self-insured with a third-party a part of the same cultural movement of personal responsibility, administrator. Because of ACA’s small-group market reforms, self-help, and community-sharing by individuals who are premiums will be community-rated. taking control of their lives. Today, individuals buy and sell goods on eBay, purchase cars on Craig’s List, ACA still allows unlimited rewards and incentives for participation and engagement. manage their music on A reward may be in the form of: iTunes, monitor their • a discount or rebate of a premium or contribution stock portfolios on the • a waiver of all or part of a cost-sharing mechanism such as deductibles, copayments, or Internet, pump their coinsurance own gas, bank on line, • the absence of a surcharge and use ATMs.

• the value of a benefit that would otherwise not be provided under the plan

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

The advantages of going self-insured, for smaller or large employers in 2014 are: employers are not subject to state health insurance regulations and benefit mandates allows multistate employers to offer uniform benefits to workers in different locations greater control over designing plan benefits, provider networks, and employee cost sharing claims experience is not pooled with others control over reserves, providing for improved cash flow employers are not subject to state health insurance premium taxes may be savings on plan administration costs. Self-insured employer plans are explicitly exempted from some ACA requirements, such as: • risk adjustment single pool requirements • medical loss ratio (MLR) requirements or rebate requirements • review of premium increases • annual insurance fee imposed on fully insured plans There is no single right or wrong solution. Each employer will need to analyze the financial pros and cons of providing insurance through an exchange, outside an exchange, or going selfinsured. Going self-insured is likely to be an attractive option for those employers wanting to provide benefits as a part of their compensation package and in support of their human capital.

as large as 30 percent of the cost of employeeonly coverage under the plan. In addition, if dependents are included in the wellness program, such reward can be as large as 30 percent of the cost of the family coverage. Department of Health and Human Services has already announced an expansion of these concepts by approving rewards for non-tobacco use up to 50 percent of coverage effective January 1, 2014. Employers are realizing it’s in their interest to have healthier, happier, more productive employees. More workers in the United States are reaping the rewards from their health plans and studies show an increase in the following employer incentives: • 17 percent, up from 9 percent the previous year, say their employer offers contributions into a health savings account or health reimbursement account • 16 percent, up from 12 percent the previous year, say their employer provides financial incentives such as gift certificates or discounts for those who participate • 10 percent, up from 6 percent the previous year, report that their employer rewards additional paid time off from work to participants

Incentives and Rewards

Wellness Programs to Promote Health or Prevent Disease

ACA allows incentives and rewards based on health status. This is a core feature of any health care consumerism plan. Effective January 1, 2014 the reward for outcomes-based programs can be

According to a survey from Principal Financial, 62 percent of workers, up from 55 percent in 2011, believe workplace wellness activities successfully improve health and reduce

health risks. However, employers have to do more than offer wellness programs; in order to see the benefits, they have to incent participation. Of course, ACA requires wellness programs to be “reasonably designed” to promote health or prevent disease. A program must provide a reasonable chance of improving the health of, or preventing disease in, participating individuals. It must not be overly burdensome, and must not be a subterfuge for discriminating based on a health status factor. The following are other requirements: • Individuals eligible for the program must be given the opportunity to qualify for the reward under the program at least once each year. • The full reward under the wellness program must be made available to all similarly situated individuals. • The wellness program must allow for a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period, it is unreasonably difficult due to a medical condition to satisfy the applicable standard.

Implement and Build The political and legal debates will continue, but for now the opportunities for making health care consumerism work still exist. The megatrend of health care consumerism continues. Employers and employees can build in choices, treatment options, lifestyle and health status supports, care convenience, and member engagement. It is no longer a question of why consumerism. Consumerism has proven its value. The issue before us is not whether to include health care consumerism in our health system, but how to implement and build upon the consumerism opportunities contained in the ACA. Ronald E. Bachman, FSA, MAAA, is also a senior fellow at the National Center for Policy Analysis, Georgia Public Policy Foundation, and Wye River Group on Health.

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

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CONSUMER PERSPECTIvE By WenDy lynCH, ph.D. co-Director » Center for Consumer CHoICe In HealtH Care, altarum InstItute founDer » lynCH ConsultIng, ltD.

Consumerism is Here, Now We Need Consumers How to Convince Workers to Become Real Health Care Consumers in 2013 The Appearance of Success Looking back over the ten years since 19% 19% health savings accounts were introduced, there are many signs of progress in consumerism growth. Enrollment in HSA-eligible, highdeductible health plans has increased ten-fold Individual Individual since 2005, now covering eight percent of Small Employer Small Employer commercially insured lives.1 If trends continue, 22% 22% Large ELarge mployer Employer these plans will have 16 million enrollees in 59% 59% 2013. Employers have fueled a majority of this growth, with large employers accounting for 59 percent and small companies 22 percent, combined covering more than 80 percent of Only 19 percent of HSA plans are purchased directly by individuals. people with these accounts2. Employers are also pushing for greater access to information about price and quality. According should treat health care decisions and purchases the same to a recent survey, almost 40 percent of employers expect way they would other important types of products and to provide detailed price and quality information to their choices. For example, our recent survey shows: employees in 20133. From these trends, one can infer that • More than half of consumers have never asked momentum for more and more about the price of health care service before consumer involvement will only getting care.4 From these trends, one • Most consumers don’t feel confident that they can grow. can infer that momentum find better prices in health care by shopping. Despite this seeming • Recommendations from friends and family still progress, now is also the time to for more and more consider what hasn’t happened. As outweigh other sources when consumers look for a new provider. consumer involvement we applaud advances in health plan Confirming these disappointing findings, another recent design and transparency, let’s also will only grow. examine ways that consumerism report 5 on health care indicates that one-half of consumers take a passive role in care, about one-third don’t think about has fallen short. it, and only four percent of consumers fall into the true “shop Where Are the Consumers? and save” consumer group. In other words, only 1-in-25 play Perhaps the most obvious disappointment in health the active consumer role originally envisioned when consumcare consumerism also may be the most ironic: it still lacks erism launched, and that number is falling. Imagine making a large numbers of true consumers. Plan designs, incentives, major purchase, such as a car, camera, or appliance without and tools have not produced a groundswell of patients inquiring about the price or comparing different options. demanding better care at a lower price. Sure there are trailA New Age for Consumerism: blazers, but consumer-driven health plan adoption largely Understanding WHY Health Care reflects top-down pressure rather than bottom-up demand. Consumerism Lags Only 19 percent of HSA plans are purchased directly The industry finds itself at an interesting juncture. by individuals. Those on the front lines of implementation have been workIndividuals still don’t realize that they can and perhaps continued on page 12 www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

HealtH Care transparenCy

By peter IsaaCson Chief Marketing OffiCer CastlIgHt HealtH

The Inevitable Movement Towards Health Care Transparency Providing Insight into the Cost and Quality of Care Reduces Spending While Improving Outcomes

he U.S. health care system is being challenged as If we were receiving the best care in the world, this never before. An aging patient population, soaring might be worth it. But on most objective measures of obesity rates, and increasing consumption of health quality — such as physicians per person, hospital beds per care services are pressuring a system fraught with wasteful person, and life expectancy — we lag behind many other spending that doesn’t contribute to better outcomes. nations. Recently introduced initiatives such as the HITECH The biggest issue in U.S. health care is that both Act, the Health Data employers and individuals lack Initiative, and the sweeping control. Insurers and health Prices for the same service Patient Protection & care providers created our Affordable Care Act (more can vary by 7x within the same present-day ecosystem with commonly referred to as minimal input from employers network in the same geographic or employees. Thus, prices for the ACA), are designed to make the U.S. health care the same service can vary by area, and astonishingly, the system more productive 7x within the same network quality of the care provided is while lowering costs for in the same geographic area, employers and individuals. and astonishingly, the quality not correlated with price. But will these initiatives of the care provided is not succeed? correlated with price. This One critical element is missing: transparency. Castlight persists because, unlike in retail, where consumers can Health is the leader in health care transparency, providing easily compare quality and prices for televisions or new the most comprehensive information about price and cars, for example, there’s little transparency in health care. quality — helping companies save money, while improving Q. What impact will the aCa have on our care. In this article, Peter Isaacson, Chief Marketing Officer health care system? of Castlight Health, speaks with IHC about this key issue.

Q. Health care is at a crossroads today — what are some of the most pressing issues? a. Health care in the U.S. is enormously expensive. According to the Organization for Economic Co-operation and Development (OECD), $8,233 is spent on health care for each individual annually. That is approximately 2.5 times the average of 34 developed countries worldwide and it represents 17.6 percent of our entire gross domestic product (GDP). In fact, a customer of ours in the grocery business recently decided against expanding in the States because providing health care to US-based employees would be so cost-prohibitive.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

a. The ACA represents the most comprehensive change to the U.S. health care system in decades. Designed to make the system more cost effective, productive, and accessible, the ACA’s provisions encourage providers to focus more on outcomes and perform fewer unneeded tests or other activities. One of the biggest changes is that the ACA will move the industry toward paying providers differently. Today, our health care system is based on fee-for-service reimbursement, which often leads to decreases in productivity and greater variability in costs and outcomes. Providers can increase their income by seeing a patient more frequently, ordering tests of marginal value, or overusing costly resources such as hospital stays.

The ACA takes steps to reverse this course by reducing reimbursement for readmission, no longer paying for treatment of hospital-acquired infections, and moving toward paying for full episodes of care rather than specific medical activities. By forming Accountable Care Organizations (ACOs), health care providers can increase their margins by delivering better patient outcomes at lower cost.

Q: outside the policy front, what have employers done to address the problems in our health care system? a. In recent years, employers have taken steps to actively promote wellness programs that help employees lead healthier lives and utilize preventive care, with the hopes of avoiding more costly treatment down the road. Employers are also now introducing cost-sharing plans — such as consumer-directed health plans — to their employees. This is often an eye-opener for any work force, as many view health care as a right afforded through their employers, not a responsibility. Introducing the financial responsibility is shifting this perspective and creating a true sense of accountability. With the advent of the ACA, most employers are waiting to see which way the winds blow on the policy front; however, some leading employers are taking big steps. The fact is that self-insured employers are some of the biggest health care purchasers in this country, and together, they wield substantial clout. By introducing health care transparency as a part of their benefits portfolios, companies have been able to provide their employees with access to information they need to make better decisions about their care. In turn, a number of these employers are seeing providers focus more on value-based health care by reducing their fees and placing a higher priority on the quality of care provided.

Q. Is health care transparency just about price? a. A consumer’s first exposure to the cost of a health care service is often times after the fact, when he or she receives an explanation of benefits. At its core, health care transparency provides employers and their employees the ability to understand the cost of services and review provider quality ratings before choosing a provider. Once

the true costs of care are unveiled, we can effectively begin to control the spiraling costs problem. More recently, health care transparency has evolved into much more than just looking up a service on a price list. In the early days of transparency, the market focused primarily on cost transparency. Since then, the definition and scope of health care transparency has expanded to include comparisons on quality, the availability of consumer education, and integration of more advanced benefit designs. We’ve recently expanded beyond the boundaries of medical spend to also include pharmaceutical spend. Going forward, health care transparency will enable employers and health plans to design benefits packages in ways they never imagined. Employers will be able to incorporate elements such as second opinion programs, utilization management programs, and perhaps even online clinics. Health care transparency and Castlight are opening doors that will help employers and employees save money by making the health care landscape more competitive economically — while delivering the high quality of care we all expect.

Q. How does Castlight Health help employers and employees? a. Health care transparency brings employees and employers together under the two common goals: lower costs and better care. With a growing number of self-insured employers offering some sort of consumerdirected health plan, employees are often sharing in the pain of rising health care costs. Health care transparency with Castlight Health helps employees benefit through better quality care and lower out-of-pocket costs, while employers can also maintain or reduce costs. In addition, healthier employees are typically more satisfied and productive, leading to a better business environment that’s good for everyone. Castlight Health works closely with many employers and leading health plans to deliver solutions that reduce costs while improving the quality of care. Our software-asa-service solution amasses a wide variety of data, providing a meaningful, personalized experience to employees, so they can better manage costs while receiving the care they need.

CONSUMER PERSPECTIvE WenDy lynCH, ph.D. » continueD from Page 11

ing hard seize the opportunity. Thus, it may be that the next decade of consumerism is the decade of WHY: WHY it matters, WHY we all should care, and WHY it is the only way to make health care safe and affordable for everyone. Now that their employees have been enrolled, employers are in the best position to give employees compelling reasons to behave as true consumers. The future of consumerism

Despite progress, now is also the time to consider what hasn’t happened.

13.5

11.4

6.1

6 4

4.5 3.2

2 1 0

2005

2006

2007

2008

2009

2010

2011

2012

Enrollment in consumer-directed health plans is increasing.

• depends on individuals actively taking part in decisions, rather than simply tolerating a high deductible and a health savings account while wishing for the old days of full coverage. • First and foremost, employers should be transparent about the degree to which health care costs have caused significant erosion in wages over the past two decades. If workers are not yet aware how much their company spends on health care on their behalf and how that affects wages, employers should enlighten them. • Workers should hear a clear message that premiums, claims, and health accounts is their money, not company money. • Next, consumers need to understand what it means to exert consumer power. They lack role models, examples of how things can change, and reasons WHY they should take action. • They need powerful testimonials about why being involved is essential to their safety and beneficial to their pocketbook. Consider sharing savings from errors detected in medical bills or use of lower-cost providers, as

Enrollment in HSA-‐Account Plans (millions)

trailblazing companies do.6 A major reason consumers have not applied collective pressure on the system is the misperception that they are powerless. We need more than an army of capable shoppers; we need an army of empowered, angry shoppers demanding better value for their money. This can only happen when consumers have both the tools and the motivation to take an active role.

Consumerism has experienced remarkable growth. Employers have embraced consumerdirected plans, and a comprehensive platform of support tools and services have emerged. Now that a solid consumerism structure is in place, it may be time to focus on the next phase of evolution. Consumers need both a roadmap for what is expected of them, as well as sufficient reasons WHY they should take action. Until and unless consumers realize why their role matters, until consumers actually demand information and choice, consumerism will fall short of its transformational potential. Wendy D. Lynch, PhD is co-director for Altarum’s Center for Consumer Choice in Health Care, a research center focused on understanding and promoting active individual involvement in health care decisions. She also consults to large corporations and agencies in the health care industry.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

_____________________________________ 1. Buck K., www.ahip.org/HSA2012/. 2. Zirkelbach R., www.ahip.org/News/PressRoom/2012/Health-Savings-Account-EnrollmentReaches-13-5-Million.aspx. 3. Performance in an Era of Uncertainty: 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care 2012, February 2013. 4. Altarum Institute Survey of Co nsumer Health Care Opinions 2012, February 2013; Lynch, W., Smith, B., Slover, M. 5. Deloitte Center for Health Solution, The U.S. Health Care Market: A Strategic View of Consumer Segmentation 2012, February 2013. 6. Torinus, J. Jr., The Company That Solved Health Care: How Serigraph Dramatically Reduced Skyrocketing Costs While Providing Better Care, and How Every Company Can Do the Same, 2010. 7. Graban, M., Statistics on Healthcare Quality and Patient Safety Problems – Errors & Harm 2012, February 2013. 8 . Kaufman, M., Medication Errors Harming Millions, Report Says, The Washington Post.com, July 2006. 9. Statement of Director Carolyn Clancy Before the House Appropriations Subcommittee on Labor, HHS, Education, and Related Agencies, April 1, 2009; Agency for Healthcare Research and Quality. Reducing Health Care-Associated Infections, www. ahrq.gov/news/test040109.htm. 10 . Errors and Infections Still a Serious Problem in American Hospitals: A, B, C, D or F Hospital Safety Scores Assigned to Local Hospitals by The Leapfrog Group, November 2012. 11 . Altarum Institute Survey of Consumer Health Care Opinions 2012, February 2013; Lynch, W., Smith, B., Slover, M.

Six Reasons Why You Should Become a Real Health Care Consumer in 2013 1.

It’s unsafe not to be a Consumer

Consider this: more people die each year from avoidable errors in the hospital than from traffic accidents, AIDS, or breast cancer. 7 In addition, 1.5 million are injured from medication errors8, and another 2 million experience hospital-acquired infections.9 We can place blame on powerful lobbyists who fight legislation requiring safety reporting, or the process used to set pricing for Medicare. However, one main reason mistakes and errors are so common is because patients —consumers — assume that someone else is watching out for them. In last year’s review by experts, dozens of hospitals, including some famous ones at major universities, received D and F grades for lack of safety. 10 Patients at those hospitals were far more likely to die from an error, get a serious infection, or develop an avoidable complication. Yet all the major insurance companies cover care at those hospitals. Very few health plans pick which hospitals to cover based on their safety or quality of care. Advertising convinces consumers that big-name, shiny-building facilities are great places to get care. Sadly, hospitals with low safety ratings still get a lot of patients. Why? Because patients don’t spend time reading reviews, or they assume that because their doctor recommended it, it must be good. Consumers aren’t comparing which doctors, facilities and procedures can best meet their needs, and so they continue to put themselves at risk for dangerous and often deadly health care mistakes. We have been lulled into believing our medical system is second-to-none and are protected from prices. If every citizen demanded better safety and inquired about death rates, re-admission rates, infection rates, etc., unsafe care would end and a lot of pain, suffering, and expense would be avoided.

Health accounts take money away from insurance companies and put it in your retirement account A health insurance policy with a very low deductible and full coverage does limit the amount of money a person will immediately use for health care. However, the majority of people do not use as much care as they actually pay for in premiums. Where does the extra money go? It’s profit or reserves for insurance companies. A high-deductible plan with a health savings account takes the money that would have been sitting in the insurance company’s bank and gives it to workers as an additional savings/retirement account. In some years, you might spend it, but in most years you won’t, and it accumulates year after year in your name. You win, the insurance company loses.

good consumers are the only weapon against fraud and waste Don’t kid yourself, medical professionals are interested in making money just like professionals in any other business. Experts estimate that 30 percent of all medical services are not necessary. Surely that extra 30 percent is happening to someone else, right? Think again. When surgeries are shown to be no more effective than physical therapy or medication, the surgeries continue. Why? Because doctors and hospitals make more money and patients aren’t paying attention. Some providers even get sweetheart deals with insurance companies so they can charge more — as much as 5 or 10 times more — for the exact same service. Why do they get the deal? Because they have a big name or because they are the only provider in a small town. So patients pay $1,200 for an MRI instead of $200, or $100,000 for surgery instead of $20,000. How do they get away with that? Because patients aren’t shopping. Finally, a great number of medical bills have extra charges and the health plan doesn’t always catch the error. Why are there so many errors in favor of hospitals? Because hospitals make more money and patients aren’t checking.

Very few health plans pick which hospitals to cover based on their safety or quality of care.

By far, you have the most influence on your health No pill or procedure has as big an effect on your overall health and functioning as you do. Your daily habits — what you eat, whether you exercise, how you sleep, how you cope — contribute far more to your longterm well- being than anything medicine can do. Many chronic illnesses, such as high blood pressure, high cholesterol, heart trouble, and early Type II diabetes, are reversible with lifestyle. If you want to save money on health care, think about what you do every day. The safest health care service is the one you don’t need.

employers pay for health insurance right out of your paycheck Most workers mistakenly believe that health benefits are purchased by their employer. While the actual transaction may go from the company to the health plan, the money comes from labor compensation. Economic studies show that higher benefits reduce wages. Every dollar a company spends on health care is a dollar not put in a paycheck, bonus, or training. Getting a more expensive health plan means getting paid less. Period.

lastly, just by asking three simple questions, you can change the system Our 2011 survey11 indicated that most people spend more time shopping for home appliances than for choosing a doctor. Don’t underestimate the power of a question. If every patient asked three questions, it would transform medical care. • Are there other options for treating this issue? • How does this doctor/hospital compare in safety and quality? • How does the price of care here compare to similar care elsewhere? If doctors and hospitals knew they had to answer these questions in every visit, their performance and pricing would change. If you knew the answers, your choices might change, too.

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

HealtH Care transparenCy By sHuB DeBgupta fOunder & CeO WIsertogetHer, InC.

Market Trends Driving the Need for Shared Decision-Making Tools WiserTogether Tools Simplify Treatment Decisions and Lower Health Care Costs

hree trends are driving unprecedented change in the way patients engage with the health care system.

a. Consumerism is more than cost transparency As consumer-driven health care and increased cost-shifting have evolved, organizations have rolled out cost transparency tools to support decision making. However, employees continue to struggle in choosing the right care, as cost transparency solutions don’t help identify effective care. Health Affairs recently published an article based on 22 focus groups and found that patients object both to discussing health care costs with clinicians and to considering costs in deciding among comparable clinical options. In addition, WiserTogether’s research of patient decisions shows that of the 22 unique factors that patients can use in evaluating treatments, quality of care tops the list. Cost does not make the top five. Until payers offer broader care transparency, patients will continue making poor treatment decisions. B. patient Centered Care will change the patient-provider relationship The Affordable Care Act introduced patient centered care guidelines for providers. New provider systems such as Accountable Care Organizations (ACOs) are required to offer patients improved decision support. However, WiserTogether’s national Patient Centered Care Index (PCCI) has found that doctors are not doing enough to consider their patients’ values before prescribing treatments. Providers are actively looking to engage patients and guide them using shared decision support tools. Unfortunately, legacy tools in the market today are unable to offer the level of personalization and interactivity that patients need and providers seek. New shared decision support tools engage patients and adjust to meet their preferences, values, and medical situations. These tools are showing success in improving quality of care and delivering better health outcomes. C. technology and the need to personalize information Technology has redefined the ease with which patients can access information and use it in making health decisions. Over 80 percent of patients start their health decisions at an online search engine and are overwhelmed with information. Consumers are currently engaging with less than 5 percent of available content and doing so in an ad hoc manner. The challenge is to get people 16

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to the right information to help them make better decisions. Studies show that patients faced with a treatment decision are looking for information relevant to their situation and can only process a limited number of factors. Tools that use technology to personalize information and data to the patient’s situation will be more engaging and effective. WiserTogether’s Experience & Results WiserTogether’s product addresses the patient’s decision support needs and market trends. Our company’s highly engaging, personalized, and data-driven decision-making tools help members choose the right care. The tools provide clinical evidence, treatment effectiveness, treatment speed, side effects, and personal preferences for high-cost health conditions to help members choose treatments. The tools help members easily navigate complex and uncertain health decisions, find peace of mind, save time and money, and achieve better health. Through more cost-effective utilization of the health care system, members save payers money. We offer our highly scalable shared decision support platform to employers, health plans, and partners who in turn provide the product to their members. Today, more than 2 million people across the U.S. are using our products. WiserTogether’s Key Differentiators People take action five times more often with WiserTogether products than with other decision support tools. WiserTogether’s innovative approach consists of three elements: 1. A personalized treatment selection process based on each patient’s demographics, co-morbidities, personal preferences, out-of-pocket cost, and plan coverage. 2. For all treatments, a) visual presentation of clinical evidence and b) patient-reported effectiveness based on a proprietary database of 45,000 patients and 10,000 doctors (as patients). 3. A patient document with questions to ask the doctor and best fit treatment options to aid shared decision making. WiserTogether has beaten existing member engagement records and has witnessed 30-85 percent adoption across client organizations.

LEGAL AND COMPLIANCE By JoHn HICkman » Partner » alston & BIrD, llp, HealtH BenefIts praCtICe

A Look Ahead to Defined Contributions in Private Exchanges Employers considering defined contributions for individual health insurance policies in private exchanges should examine several important legal and compliance factors in order to prepare for 2014.

eginning in 2014, individuals will be able to select from a variety of health insurance coverage options available through the State-based exchanges required under the Affordable Care Act (ACA).1 Individuals will also be able to do the same from exchanges the federal government operates for states when states opt for this structure. In addition, many employers are considering a variety of ways to make multiple coverage options available to employees, in some cases utilizing the state exchanges, and in other cases making coverage available through so-called private exchanges. This article discusses issues that may arise when employers choose to use a defined contribution approach, with or without a health reimbursement arrangement (HRA), to make coverage available for employees through a public or private exchange arrangement.

to smaller employers now, enabling them to make various coverage options available to employees as well (and perhaps with different carriers).

What is a Health Coverage Exchange?

Private Exchange Considerations

Simply stated, a health coverage exchange is a marketplace that provides a selection of health insurance coverage options to consumers. The public exchange generally refers to the exchange for individual coverage plans that will be available to individuals through the American Health Benefit Exchange or the group coverage available to employers through the Small Business Health Options Program (SHOP) as part of ACA.2 A private “exchange,” however, has no set definition, and is generically used to refer to arrangements under which employers make a variety of coverage options available to employees through a pre-selected menu. In some cases, an employer may offer multiple insured or self-funded benefit options (e.g., high deductible, HMO, PPO, etc.) to employees and assign different subsidy levels toward the cost of coverage. Historically, this type of private exchange arrangement has been common among larger employers. What is new post-ACA, however, is the downstreaming of multiple benefit option arrangements available

Many employers have considered making a defined contribution approach available that offers employees a choice of health coverage options (and possibly other types of coverage) through individual insurance policies. However, great uncertainty exists because such defined contribution arrangements raise a number of compliance concerns under the Health Insurance Portability and Accountability Act’s (HIPAA) nondiscrimination rules, as well as practical coverage availability issues due to the impact of individual policy underwriting practices on employees with health concerns. Beginning in 2014 (unless implementation is delayed), ACA requires that individual health coverage in the private market (both in and out of the public exchange) must be made available without regard to pre-existing conditions or health status. Some employers may see this as an opportunity to consider a defined contribution model under which employer subsidies may be made available strictly for individual health coverage options offered through a public or private exchange as opposed to offering group insurance.

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A Defined Contribution Approach Can Minimize Financial Exposure A defined contribution approach generally enables employers to fix the amount of their financial contribution obligation, while it enables employees to use the fixed contribution to select from a variety of benefit options. The defined contribution element enables employers to provide funding for employees to purchase coverage through the exchange “marketplace.” Employees can use these allotted funds to select more or less comprehensive coverage to suit their individual preferences, and pay any additional amount through their payroll deduction.

This approach raises several compliance issues under the ACA that do not arise where employers utilize group health coverage (even through a defined contribution approach). Issues that may arise due to the utilization of individual policy coverage include: i) Federal agencies relevant to ACA have strong distaste for approaches where tax-free employer contributions are used for individual medical coverage. This was recently demonstrated by agency FAQ guidance which concluded that an employer HRA arrangement could not be “integrated” with individual policy coverage to satisfy the ACA’s prohibition on annual or lifetime benefit caps — even though an HRA could be integrated with group coverage under certain circumstances.3 ii) If the employer is an applicable large employer (50 or more FTE employees), will the employer’s subsidy for individual coverage count as minimum essential coverage and be considered to satisfy the employer’s availability and affordability requirements under the “play or pay” ACA requirement?4 Based on recent regulations under U.S. Internal Revenue Code (IRC) 5000A, it seems that the relevant federal agencies have concluded that individual coverage would not be considered eligible employer-sponsored coverage that counts for pay-or-play purposes. iii) Can employees pay for any excess cost of individual coverage through a pre-tax salary reduction? If the coverage is individual coverage offered through the government exchange, the answer would be no.5 Outside of public exchanges the answer is at best unclear. iv) Will the availability of an HRA or other employer-subsidized coverage through individual policies be considered to be group health plan coverage that will cause the employee to be considered ineligible for federal subsidies through the federal exchange?6 v) Will the employer’s defined contribution arrangement be

Not Every Defined Contribution Arrangement is an HRA The hallmark of a health reimbursement arrangement is that unused amounts are placed into an account to carry forward into future coverage periods. Although many health insurance plan service providers refer to their defined contribution “exchange” approach as an HRA, this is somewhat of a misnomer. Not every defined contribution approach incorporates a carryover feature for unused employer contributions. In many cases, the employer subsidy is made available solely to offset coverage in the current year — with no carryover. considered a separate group health plan for purposes of all of the ACA mandates, including preventive care requirements, the comparative effectiveness research (CER) fee, and the reinsurance fee? vi) A majority of states have adopted the National Association of Insurance Commissioners Small Employer and Individual Health Insurance Availability Model Act. This Act provides that the state “small group rules,” which generally impose premium rating and minimum coverage requirements, will apply when individual policies are sold to employees of a small employer through a tax-advantaged funding arrangement (e.g., an HRA, cafeteria plan, or employer-paid arrangement). Unless/until such laws are changed, carriers and agents should be wary of marketing coverage through tax-advantaged arrangements for employers subject to the small group rules (generally 50 or, for some states, 100 or more employees). vii) HIPAA generally proscribes healthbased underwriting and premium differentials based on health status with respect to any group health plan. Until 2014 there is a likelihood, based on existing Department of Health and Human Services guidance, that an employer-funded individual policy arrangement (including pre-tax salary reduction funding) would be considered to be a group health plan for HIPAA compliance purposes. Beginning in 2014, the ACA extends the HIPAA underwriting prohi-

bition to individual insurance coverage as well. There are some unresolved issues, however. For example, the ACA allows limited underwriting with regard to an individual based on age or smoker status under PHSA 2701. It is unclear whether such provisions would be considered impermissible health-based underwriting in a group plan setting. More federal guidance on this issue would be helpful. As 2014 looms nearer, the marketplace for employer-subsidized health coverage will undergo dramatic changes. In some cases, such as retiree-only plans, a private exchange utilizing individual coverage through a defined contribution approach will raise few compliance issues. In other cases, using a defined contribution approach in individual policy coverage for active employees may raise a host of compliance concerns. Rather than blindly jumping into any private exchange arrangements, employers should consider working carefully with counsel to evaluate the potential risks associated with any post-ACA arrangement. John Hickman has worked closely with health plans, financial institutions, and employers as well as the IRS, Treasury, and DOL in developing guidance for tax-favored HRAs and HSAs.

______________________________ 1 PPACA Pub. L. No. 111-148, § 1311(b)(1) (2010). If a state fails to make an exchange available a federally run exchange may be implemented. PPACA § 1321. 2 Affordable Insurance Exchanges: Choices, Competition and Clout for States, Mar. 2012, http://www. healthcare.gov/news/factsheets/2011/07/ exchanges07112011a.html. 3 FAQs About ACA Implementation Part XI, Q/as 2-4 at http://www.dol.gov/ebsa/faqs/faq-aca11.html 4 Code Section 4980H. 5 Code Section 125(f)(3). 6 Code Section 36B and Treas. Reg. § 1.36B-2(c)(3)(iii)(A).

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

HealtH plans By karen mulreaDy Director of Diabetes HealtH Plan anD Value-baseD Plan Designs unIteDHealtHCare

Rewarding Good Behavior: Incentives Help Drive Big Changes in the Battle Against Diabetes

early 27 million American adults are living with diabetes, and another 79 million have prediabetes, meaning more than a third of the adult population is at risk of developing type 2 diabetes. If current trends continue, more than half of all Americans will have diabetes or prediabetes by the end of the decade, according to an analysis from the UnitedHealth Center for Health Reform & Modernization, and diabetes will account for an estimated 10 percent of total health care spending, or more than $510 billion a year. While there is no magic bullet for conquering type 2 diabetes, there are proven, effective approaches to manage the disease, improve the health of those who have it and reduce its devastating health and financial consequences. The Diabetes Health Plan (DHP), launched in 2009 by UnitedHealthcare, is one such program. It helps people with prediabetes or diabetes take better control of their health by providing incentives that reward those who routinely follow evidence-based treatment guidelines for diabetes care as recommended by the American Diabetes Association to help manage their condition — such as regular blood sugar checks, routine exams and preventive screenings — and use wellness coaching to build their knowledge about diabetes and leading a healthy lifestyle. The DHP could be the model this country needs to begin to address this epidemic. A two-year study of 620 people with diabetes enrolled in the DHP shows that the program can help people more effectively manage their condition and reduce their health risks, while also lowering related health care costs. Seventy-five percent of the study participants enrolled in the DHP achieved compliance with the key requirements — including regular primary care visits and screening tests for blood sugar, cholesterol, cancer, kidney function and eye disease — compared with 61 percent of those with diabetes not enrolled in the plan.

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By contrast, data from the Centers for Disease Control and Prevention (CDC) show that more than 80 percent of people with diabetes do not follow their physicians’ advice on how to manage their disease. The study also found that offering incentives, including no co-payments for related doctor visits and providing some diabetes supplies and diabetes-related prescription drugs for free, increases adherence to treatment guidelines and improves health. In addition, 21 percent of DHP study participants saw a reduction in their health risk scores, which are used to measure expected health care costs. In fact, health care costs grew at a 4 percent slower pace for DHP participants than for employees with diabetes not participating in the DHP. The results of this study are clear: the DHP provides an opportunity for improved health for people with diabetes and prediabetes and reduced health care costs for the system. But in order to tackle this disease, we need to provide greater access to programs like the DHP and the proven methods behind the plan that can generate results for the millions of people with prediabetes and diabetes. At the same time, we need to remember that the real drivers of change are the people living with these conditions. While the DHP can help steer them towards better management, the winning components of the program come down to relatively simple behavioral changes that anyone can implement independently. Monitoring weight, regularly checking blood sugar levels and visiting primary care physicians are steps everyone with prediabetes and diabetes can — and should — take as a first step to better health. It’s a winning formula that’s all about taking control of your health. Karen Mulready is Director of Diabetes Health Plan and Value-Based Plan Designs at UnitedHealthcare

myHealthcare Cost Estimator

TO TAKE CARE OF BUSINESS WITH INNOVATIVE TOOLS FOR THE JOB myClaims Manager UnitedHealthcare Health4MeTM

UHC.TVSM

The right health information can take you a long way. At UnitedHealthcare, we offer innovative tools that put members in touch with their information. • myHealthcare Cost Estimator provides relevant information on care and estimated costs. • myClaims Manager helps members understand and manage their health care claims. • UnitedHealthcare Health4Me is a mobile app that provides instant access to a family’s important health information. • UHC.TV presents exciting, engaging online content about good health and living well. Empower your employees. It’s good for their health – and the health of your business. For more information, visit welcometomyuhc.com or call 1-866-438-5651.

uhc.com All UnitedHealthcare members can access a cost estimator online tool at myuhc.com. Depending on your specific benefit plan and the ZIP code that is entered, either the myHealthcare Cost Estimator or the Treatment Cost Estimator will be available. A mobile version of myHealthcare Cost Estimator is available in the Health4Me mobile app, and additional ZIP codes and procedures will be added soon. This tool is not intended to be a guarantee of your costs or benefits. Your actual costs and/or benefits may vary. When accessing the tool, please refer to the Terms and Conditions of Use and Why Your Costs May Vary sections for further information regarding cost estimates. Refer to your health plan coverage document for information regarding your specific benefits. ©2013 United HealthCare Services, Inc. Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc. or their affiliates. Health plan coverage provided by or through a UnitedHealthcare company. UHCEW506202-004

SELF-FUNDING By freD Hunt » actiVe Past PresiDent » soCIety of professIonal BenefIt aDmInIstrators

State of Self-funding and the TPA Industry

or more than 30 years I have had the privilege of sharing candid personal insights with stakeholders about the status of the TPA industry, employee benefits marketplace, and always-swirling government environment. My reports and predictions have sometimes seemed wild, but I am amazed that they have had about a 90 percent accuracy rate. I usually write my forecast before the turn of the year, but I waited this time for the election, several Affordable Care Act (ACA) developments, and the fiscal cliff deliberations. This year will continue to bump from one crisis or deadline to the next. As a result, the health care insurance scene, marketplace, and stock market will be a roller-coaster, with a big gulp as so much comes into play when the clock strikes 2014. I continue to be optimistic about the prospects of TPAs and self-funding. In fact, the biggest challenge for TPAs right now is jealousy from those facing challenges imposed by ACA, actuarial science, or human psychology.

Six Factors Impacting the TPA industry and Marketplace in 2013 1. exchanges and the Insurance marketplace ACA designers expected states to eagerly clamor to have exchanges, which would attract most of the population and become the 800 pound gorilla in the marketplace. Instead, some state leaders are leery of the program and insurers have legitimate concerns if and how long to participate, many because of fears of government micro-management and actuarial anti-selection. Surveys repeatedly I have shared the many serious practical problems facing the show that the more birth and flourishing of the enviemployers know about sioned exchange concept with of Professional Benefit ACA, the more they Society Administrators members almost want to keep their weekly. I believe supporters of exchanges in federal and state employee benefit plan. agencies are scrambling to find ways to tilt the marketplace playing field to artificially steer warm bodies into exchanges. Overall, I think government exchanges will play a much lesser role than envisioned. However, will insurers decide that participating in 22

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

exchanges or even the U.S. health insurance market is simply not a viable business plan and pull out, but keep administrative services only contracts, assuming no risk for claims payment? Because of careful education by SPBA and others during the legislative process, and because self-funding and ERISA have always had built-in consumer protections and an absence of profit motive, self-funding was spared the many punitive controls and limits such as rate reviews and MLR imposed on insurers. People forget that most of the business of the largest insurance companies is self-funding ASOs. Also, years before ACA when the original worry was a single-payer system, insurers started exploring options if the U.S. health insurance market should disappear. I believe they can afford to walk away from the U.S. market; replacement markets overseas have been prepared. I believe the ongoing role of insurance companies is not a guarantee. If ACA bombs because insurers decline to participate, anti-selection starts a downward cycle. Or if enough people fail to participate, government will feel politically obligated to “do something” to continue to provide ACA-promised coverage. I believe a failure will be attributed to the failure of private plans to make a system work, and therefore public opinion will decide that the only answer will be another form of a government health plan.

2. government guidance and Compliance ACA was designed to provide highly-regulated formulaic health plans and coverage. However, the almost three years of confusion and programs that I believe haven’t lived up to expectations, have spurred a new appreciation among employers for personalized attention and expertise in plan design and administration. Surveys repeatedly show that the more employers know about ACA, the more they want to keep their employee benefit plan. These loyalties and desire for personalized expertise feeds directly to the strengths of TPAs. Flexibility and the-most-bang-for-the-buck has always been an attraction of self-funding. The continued rise in health premium costs and drastic changes that may be on the horizon in the medical provider community make flexibility all the more desirable. SPBA’s TPAs, stop-loss firms, and their client plans have lived up to their tradition of being on the cutting edge of shaping and understanding government guidance and compliance. ACA is the largest and most comprehensive realignment of

government controls and rules the industry ever seen. The pace of new complex regulations and interpretations (and subsequent confusion and opposition) means that organizations which have not been doing ongoing intensive education for the past three years will probably never catch up or will find themselves facing serious legal problems.

3. Doctors Working for Hospitals and tpas The medical provider community is on the verge of massive change, with ACA implementation in 2014 as the main trigger. I forecast a mass exodus of doctors from practice due to early retirements, unaffordable costs of business, moving from clinical medicine, and “boutique” concierge practices. The majority of doctors have traditionally been in private practice; however, the demands of ACA and other changes means that private practice is more and more impractical and doctors and practices are being bought or absorbed by hospitals. This changes the doctor/patient dynamic because the doctor now serves the employing hospital, not his or her customer-patient. This new hospital/ doctor format sometimes adds significantly to health costs for patients because the hospital may add overhead and facilities fees (which can be more than the fee for the medical services). Small hospitals are also being absorbed by larger hospitals as a way to be more efficient in light of new technology, regulatory requirements, and government cost-cutting. Because of these survival pressures on hospitals, they must operate in a very hard-nosed mode to maximize revenue. The doctor and hospital medical services bought and managed by TPAs and plans will be a very different animal very soon. In the case of the doctor shortage, there will be a massive reality shift. Previously, having health coverage was considered synonymous with having prompt access to a doctor. Henceforth, I believe that unless a person contracts with a personalized “boutique” medical practice, there will be delays for appointments similar to some countries with government-managed health care.

4. employers I believe the ACA is punitive and complex for employers and they will find it worthwhile to minimize the number of workers for whom

they will be subject to the law — employees who work 30 hours per week or more. Consequently, I believe more and more positions will be created as part-time 29-hour jobs without insurance. This will impact not just hourly workers, college professors and bank branch managers could also find their jobs are part-time 29 hours. This means lower income, and probably little or no employer-sponsored health and pension benefits. It may become a new norm for a broad segment of the workforce. If you don’t believe this, think how many middle-manager positions were simply eliminated during the past 20 years or so.

5. the uninsured I forecast that the number of uninsured will probably be the same as before the health reform law was written. Why? Various protections, such as no pre-existing condition exclusions, remove any disadvantage to waiting until you’re sick before signing up and paying for health coverage. When the law first passed, I actually had some vendors call me about machines that could be installed in ambulances, hospital, or doctor admission offices so that the patient could sign up for coverage just before getting very expensive treatment. That is actuarial suicide. No riskpooling insurance concept can survive that. What about the mandate to buy coverage? I think it will be a toothless tiger. Judging by the large holes in many state mandatory care insurance programs, the chance of being fingered early is small, and the penalty is small compared to the “profit” of not having coverage until needed. Many of the uninsured who may get caught will have no assets to pay a fine, so it is a hollow threat to those people, and public opinion would explode at big mean Uncle Sam punishing some poor person while they are sick or injured.

6. Health Insurance tax exclusion We have several years ahead of floundering economic policy and changes related to budgets and government spending. These could have huge side effects or unintended consequences on employee benefits. The most obvious are the employer and employee tax incentives for employee benefits. The largest “revenue loss” (uncollected taxes) to the federal budget is the tax exclusion for employee health benefits. The

The doctor and hospital medical services bought and managed by TPAs and plans will be a very different animal very soon. second largest is pension benefits. Add to these the business tax deductions employers take to sponsor the plan. To budgeteers, we are a gigantic target whom many see as the solution — eliminate, limit, or cap these deductions by workers. The resulting “savings” would be hyped as a giant step forward to solving the budget deficit. This is not a never-could-happen political suicide idea. The idea has been proposed by several key Republicans dating back to the Reagan Administration as a fairness issue to people who have to buy their own health coverage without the tax advantages. (The logical solution of extending the tax advantages to selfbuy coverage would reduce the tax base even more, so it gets rejected.) The idea has also been proposed by some single-payer-proponent Democrats over the years. The deficits and hard choices needed to attempt to avoid “cliffs” will increase its potential. The problem is that Uncle Sam has tunnel vision. One minute, politicians and public opinion will celebrate the great success of such large “savings.” Later, there will be uproar over the crisis for whoever lost the tax.

The Good News These potential effects seem awfully glum. It is my job to spot and alert potential problems so that you can avoid and be prepared if they materialize. The good news is the known factors: TPAs, sponsoring employers, and plan participants will survive and thrive. TPAs and stop-loss firms are the best news and sign for a successful future for this industry. Fred Hunt started shaping employee benefits policy as part of the discussions among framers of ERISA. He then handled government issues for the American Academy of Actuaries before serving as SPBA president from 1980-2011.

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

employee CommunICatIon anD eDuCatIon By Harry gottleIB fOunder & Chief CreatOr tHe JellyvIsIon laB

Peering into the Jellyvision Employee Communication Crystal Ball

et’s take a moment to talk about the year ahead. It’s going to be a busy one for people in the benefits business. In fact, just one peek into the Jellyvision Employee Communication Crystal Ball — or as we call it around here, “the newspaper” — reveals a number of coming challenges. What kind of challenges? Well, we can expect old favorites like tight budgets and rising health care costs to make a few appearances, but we also see things like compliance with the Patient Protection and Affordable Care Act (PPACA) and confusion about health care consumerism stopping by to gum up the works. Of course, we all know that employees will do their best to help overcome these challenges by doing what they’ve always done — devoting countless hours to the careful study of minute benefit plan changes and watching the health care landscape like a hawk. That much is given. Still, there’s an outside chance of some employees having lives to lead and jobs to do, so for their sake we make the following recommendations: Consider Year-Round Benefits Communication Cramming everything into the open enrollment window (when most people focus on medical) is like trying to celebrate a year’s worth of holidays on Thanksgiving. Sure, your Super Bowl chili brings down the house, and your Fourth of July weenies are perfect, but nobody’s really thinking about them on turkey day. Extending the benefits discussion throughout the year gives employees time and space to consider all their available benefit options. Don’t Neglect Education Around Health Reform For one thing, the government puts employers on the hook for letting employees know about health care exchanges. For another, some of your employees might be eligible for subsidies, and they’d probably appreciate you letting them know where they can go to find out. Avoid freak-outs, tantrums, and other forms of confusion by explaining health reform changes in a clear and engaging way.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

Encourage Enrollment in CDHPs Although they’re not right for everybody, consumerdirected health plans (CDHPs) can provide the best overall value to many. The challenge for employers is to getting employees to recognize when that value is there. Help employees think about their needs in terms of premium contributions, expected medical expenses, etc. you shouldn’t tell them what to choose, but you can make the decision a lot easier with a little thought and effort. Give Voluntary Benefits a Time to Shine If employees seem to take “voluntary benefits” to mean “none for me, thank you,” there’s a problem. voluntary benefits like long-term disability and critical illness provide additional protections for employees, and high participation in pre-tax benefits like dental and vision represent substantial payroll tax savings for employers. Help employees recognize the value offered by voluntary benefits with benefits communication that’s simple to understand and a delight to experience. Employees want to make good benefits decisions. They do. They just want the process to be more appealing than the Bataan Death March. And that’s where ALEx®, the Jellyvision Benefits Counselor can help. And this might seem like a crazy coincidence, but ALEx helps in all of the areas I just wrote about above. I know…weird, right? But it’s true: we’re expanding our expertise in broad benefit communication support to include wellness, health care reform education, and year-round communication planning. In a world where the future of health care is uncertain, and benefits communication challenges abound, ALEx can take care of your employee communication heavy lifting and reduce the time you — and your employees — spend on benefits education in general. Harry Go ttlieb is the founder and chief creative of The Jellyvision Lab, maker of ALEX®, The Jellyvision Benefits Counselor. Available to more than 1 million people across 90 organizations, ALEX takes the mystery out of complicated benefits details and gives employees personally relevant information they can use to select their best-fit plans.

Being boring sucks.

And it’s expensive. Start using a benefits communication solution that gives back more than you put in. ALEX®, the Jellyvision Benefits Counselor, is funny, helpful, and easy to use. Employees adore him (true story—he’s even received marriage proposals), and when you see how he boosts engagement, increases participation in CDHPs, and drives benefit savings, you’ll love him too.

® Perhaps the most engaging benefits communication tool. Ever. See more at meetalex.com/outlook/

PRIVATE EXCHANGES … WHAT’S THE BUZZ?

Mercer Marketplace enables employers to: • Reduce costs. • Simplify administration. • Empower employees through choice.

Mercer Marketplace provides employees with: • Cost-efficient, convenient buying. • Comprehensive coverage. • Personalized portfolios.

11912-AD-020413

Visit us at www.mercer.com/private-health-exchanges, or contact us at mercermarketplace@mercer.com.

Mercer is a global consulting leader in talent, health, retirement, and investments. We help clients around the world advance the health, wealth, and performance of their most vital asset — their people.

PRIvATE ExCHANGES By ronalD e. BaCHman fsa, maaa » cHairman, eDitorial aDVisory boarD tHe InstItute of HealtHCare ConsumerIsm PresiDent & ceo » HealtHCare vIsIons, InC.

Private Insurance Exchanges: A Growing Consumerism Option for Employers in the Year Ahead Note from Doug Field, CEO/Editor-in-Chief The emergence of private exchanges is becoming somewhat of a wild west show with a number key players joining the market to offer their innovative solutions. Many questions remain about how the private exchange marketplace will look when open enrollment begins, and many experts and industry leaders reasonably believe that public exchanges may not be ready in time. Nonetheless, we continue to move closer and closer to the deadlines for exchanges to be ready for open enrollment and ready for the market. To help employers and brokers sort out issues regarding private exchanges and navigate the remainder of 2013, Chairman of the IHC Editorial Advisory Board, Ron Bachman, explains the who, what, and when of private exchanges. Additionally, the Institute is now expanding editorial coverage to include HealthCare Exchange Solutions, a magazine supplement and online community whose purpose is to continue to help you solve the ins and outs of exchanges.

he Patient Protection and Affordable Care Act (PPACA) has increased awareness of the need for a new health insurance purchasing system. In response, new regional and national private exchanges may start operating this year and in 2014. Here is a summary of how these private exchanges may be a good match for your business.

New Opportunities for Private Exchanges The development of private health insurance exchanges pre-dates the Patient Protection and Affordable Care Act PPACA. In fact, some local exchanges have been operating for many years. Private insurance exchanges are and have been growing independently of PPACA as employers find ways to make consumer empowerment in care a reality. [Private health healthPeople want to have more control over their own lives and are insurance exchanges] demanding choice and individual seek to meet the ownership of their health benefits needs of existing health as they are in every other aspect of their lives. For example, health industry customers, reimbursement accounts and contribution plans for employer groups, and defined health insurance are the latest broker clients. iteration of this demand for health care consumerism by employers.

Private exchanges can be for individuals, small employers, and large groups seeking health care insurance. They are ideal for: • Employers who want to better control their health care costs • Employees who want to choose the benefit program that works best for their families • Employees who need portability (the ability for an employee to keep the same coverage as they move between jobs) • Employees from two-income families who want to combine their resources into a single benefits program for the whole family Exchanges produce a new process of shopping for health insurance. As with so many businesses and organizations, employer and employee consumers seeking value will ultimately decide which exchanges will succeed. Exchanges process traditionally funded health insurance; however, an important impetus for exchanges is the potential use of health reimbursement accounts or arrangements (HRA) that allow employers to designate a sum of money to pay for insurance premiums or out-of-pocket health care expenses for their employees, whether through an insurance program or through direct payment. Private exchanges can combine employer-paid HRA contributions and employee-paid Section 125 [known as a cafeteria plans, flexible spending plans, or similar names] contributions, allowing individual www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

PRIvATE ExCHANGES

health plans to be paid tax-free. Now, some private exchange developers hope to get a share of the PPACA federal exchange business as government-defined exchanges are scheduled to begin January 1, 2014.

Three Private Exchange Models Private exchanges are developing into three categories. Some are focused on the small group market, others on large groups, and still others on retiree health benefits.

Business group exchanges Developed from existing employer associations, these typically ensure portability for employees, but only when the employee moves between participating employers and health plans.

Insurer-sponsored exchanges Developed for insured policy holders, these make it easy for insurers to move current small employers into an exchange and allow individual employees a wider choice of health plan design. The portability is available to individuals moving among companies only covered by the same insurer.

Independent companies Developed with various sponsorships, existing relationships, and business models, these companies include existing information technology vendors, consultants/brokers, and entrepreneurs. These companies seek to meet the needs of existing health industry customers, employer groups, and broker clients. They see the opportunity to expand existing services and technology to create new businesses in a growing market.

Exchanges: A Solution for Health Insurance Purchasing The potential for private exchanges comes from the mid- and large-group markets

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

that will not be served by state-based, federal PPACA exchanges [which assist individuals, entrepreneurs, and small businesses]. Private exchanges can address some of the existing problems in our current system: • Employer costs will be fixed and controllable. An employer will be able to contribute only what it can afford. • Employees will be able to choose the plan design among those offered that works best for his/her family. • Coverage will be more portable, so employees can keep the same coverage as they change jobs or lose their job altogether. • Unlike individual coverage plans today, the employee contribution may be tax-free through using a Section 125 payroll deduction. • Two-income families may be able to use contributions from different employers to purchase a single plan for the whole family. Private exchanges can move health insurance to a system of individual choice and ownership and allow employers to concentrate on their core business. Employers should consider possible government legal or regulatory clarifications to accommodate the effective uses of private exchanges. Employers considering a private exchange should:

Private local exchanges have been operating for many years. •

•

• •

Determine the value of considering private exchanges as an alternative to their current health benefit plans. Determine the economics and employee attitudes in moving to a different system of health insurance purchasing. Consider the many benefits and some draw backs of a private exchange. Check with their compliance and legal teams, insurance brokers, agents, consultants, and insurers before reviewing or deciding to use a private health insurance exchange approach to health insurance coverage.

Disclaimer: The information presented and contained within this article is general information only, and does not, and is not intended to constitute legal advice. You should consult your legal advisors to determine the laws and regulations impacting your business. Ronald E. Bachman, FSA, MAAA, is also a senior fellow at the National Center for Policy Analysis, Georgia Public Policy Foundation, and Wye River Group on Health.

www.buckconsultants.com

In today’s economic climate, properly managing your health care plans helps both your people and your bottom line. But finding the time and the resources can be a challenge.

Buck can help. Together with Xerox, we: • Touch two out of every three insured Americans who use health care annually • Process 900 million health care claims every year • Have contracts with 36 state Medicaid organizations

• Provide RightOpt™, our private health insurance exchange, to manage costs for both you and your employees • Supply Accountable Care Organization technology to 2000+ hospitals • Support every major insurance carrier

By leveraging our experience across the health care industry — from providers and payers to employers and government agencies — you can make your health care plans more accessible, affordable, and efficient. To learn more, visit www.buckconsultants.com

PUBLIC ExCHANGES By CInDy gIllespIe » senior managing Director elIzaBetH Carpenter » senior aDVisor » mCkenna long & alDrIDge llp

What’s Ahead This Year as Health Insurance Exchanges are Rolled-Out Nationwide There are three types of health insurance exchanges offered across the nation. Here’s what you need to know to be ready as they “go live” January 2014.

xchanges are a key component of the Affordable Care Act (ACA). Here’s a snapshot of exchange developments across the country, potential regulations to watch for, and where exchanges might be by October 2013 for open enrollment and by January 1, 2014, when they are slated to “go live” nationwide.

Health Insurances Exchanges: The Vision The ACA directed each state to establish two types of exchanges or have the federal government do so on its behalf — the American Health Benefits Exchange (AHBE) for individuals and the Small Business Health Options Program (SHOP) for small employers. Under the statute, individuals are eligible to buy insurance on the AHBE if they are: • a U.S. citizen or legal alien • not incarcerated • a resident of the state in which the exchange is based

american Health Benefits exchange The ACA includes robust premium and cost-sharing subsidies for individuals who purchase insurance through the individual exchange who are living at levels between 100 and 400 percent of the federal poverty level — between

Forecast: The Health Insurance Market 2014 In addition to the much-publicized individual mandate and employer requirements included in the ACA, several insurance market reforms will take effect that will dramatically impact the individual and small group markets both inside and outside the exchange beginning in 2014. In particular: • Health status underwriting will no longer exist, with insurance premiums varying only by age, geography, family size, and smoking status. • All health insurance products will be “guaranteed issue” and “guaranteed renewable,” meaning that insurers will be required to accept all individuals that seek coverage. • Health insurance issuers will be required to include 10 categories of essential health benefits, influencing the types of products offered in the marketplace.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

approximately $12,000 and $46,000 a year — and who are not eligible for other public insurance programs (i.e. Medicaid, Medicare, Tricare) and who do not receive “affordable” insurance coverage through their employers (that meets minimum value standards). Employers which have more than 50 employees whom are eligible for tax credit subsidies, either because the employer does not offer coverage or because the coverage offered is unaffordable to the employee according to ACA standards, or not of minimum value, will be subject to a penalty.

small Business Health options program Meanwhile, the ACA allows employers with up to 100 full-time employees to purchase insurance through SHOP, although the state has the option to limit access to employers with 50 employees or less for the first two years. Most states have taken advantage of this option in order to maintain consistency with the outside market’s definition of “small employer.” States also maintain the option to allow employers with more than 100 employees to purchase insurance through the SHOP beginning in 2017, with approval of the U.S. Department of Health and Human Services (HHS). Tax credit subsidies are also available to employers who purchase coverage on SHOP for employers with less than 25 employees who have an average taxable wage under $50,000 per year. Employers cannot claim the tax credit for more than two consecutive years.

Health Insurances Exchanges: 3 Primary Models Although the ACA envisioned 50 different exchanges championed by individual states, the reality of ACA implementation has been far different. Indeed, political, logistical, and operational challenges faced by both HHS and the states have led only a subset of states to embrace exchanges. The update below provides a snapshot of how exchanges are developing across the country.

1. state-based exchanges Seventeen states and the District of Columbia are developing State-based Exchanges as envisioned under the ACA. These states have received “conditional approval” from HHS to operate them for the 2014 plan year. Under these exchanges, states execute all functions but may turn to the federal government for issues such as tax-credit eligibility determination, risk adjustment, and reinsurance. While several of these states have been making great strides toward October 1, 2013 open enrollment, others are relatively behind in the planning process and may struggle to meet the impending deadlines. For example, some states still lack legal authority to operate a Statebased Exchange, while others have yet to procure any IT-related services necessary to make the exchange function.

2. state partnership exchanges Seven states have received conditional approval from HHS to operate State Partnership Exchanges. This exchange model, not envisioned under the ACA, is an option created by HHS for states that may want to play a small role in exchange operations either permanently or as they move toward a State-based Exchange. States have two primary options for pursuing State Partnership Exchanges: a plan management partnership or a consumer partnership. States also have the choice to participate in both partnership models. States participating in a plan management partnership assume responsibility for issuer account management and issuer oversight as well as monitoring, quality reporting, and data collection. In addition, these states also play a key role in determining qualified health plan (QHP) certification. Plan management partnerships will recommend which plans should be certified as QHPs to HHS, which has the legal authority to make QHP certifications. States also have the option to pursue a consumer partnership exchange. States choosing this approach control the day-to-day management of Navigators and in-person consumer assistors, and will have the option to engage in outreach, education, and branding activities. Navigators and in-person consumer assistors

will be the “boots on the ground” in states to help educate consumers about plan choices and coverage options. For states choosing a Federally-facilitated Exchange (FFE), consumer partnership states oversee and provide technical assistance to Navigators, but HHS retains authority over the Navigator programs.

3. federally-facilitated exchanges Twenty-six states have decided not to pursue a State-based or Partnership Exchange. In these states, the federal government is establishing a Federally-facilitated Exchange (FFE). Under an FFE, the federal government performs all exchange functions with states, maintaining the option to make final Medicaid determination and operate its reinsurance program. Although the option to operate reinsurance programs has yet to gain traction, many FFE states have expressed interest in maintaining the responsibility to make final Medicaid determination for individuals assessed as eligible for Medicaid.

Marketplace Plan Management Several federal requirements necessary for health insurance plans to be qualified in order to be offered on the exchange are already criteria commonly examined as part of routine, state insurance regulatory activities. HHS has indicated that its preference is to integrate states’ existing regulatory activities into its decision-making for qualified health plan (QHP) certification, even in states with an operating FFE. To further facilitate this relationship, HHS has indicated it will offer states a marketplace plan management option, essentially allowing states to perform activities associated with a plan management partnership but without requiring them to submit a formal exchange blueprint. HHS guidance dated February 20, 2013 also indicates that states can apply for federal funds to support these activities, similarly as it did for the State-based and State Partnership models.

3 Issues to Watch in 2013 As the clock ticks on the path to open enrollment, there are several issues still under consideration that are worth tracking, particularly for the small and large employer communities.

1. Recent guidance from HHS indicates that employee choice and premium aggregation will not be required of SHOP exchanges in the 2014 plan year. In the same set of proposed rules, HHS also indicates that federally-facilitated SHOPs (FF-SHOPs) will not offer these services in their first year of operation. 2. As you may recall, employee choice and premium aggregation (the process of collecting premiums from qualified employers and delivering a single streamlined payment to insurers) are two tools at the disposal of SHOP exchanges to help drive enrollment. This recently proposed approach could potentially undermine the viability of SHOP exchanges and the small business market nationwide. 3. Additional rules from HHS surrounding 10 essential health benefits indicate that to meet these requirements outside the exchange, health insurance plans will need to either embed pediatric oral services, the tenth category of essential health benefits coverage, or be “reasonably assured” that the individual has obtained dental coverage from an exchange- certified, stand-alone dental plan. This is a new proposal from HHS and is therefore receiving significant scrutiny from several stakeholder groups, as the requirements could cause operational challenges in the market. Stay tuned. HHS released additional details regarding employers’ interface with the exchange in January. Most interestingly, the rules verify that there is no central databank containing details on employer-sponsored health insurance plans. As a result, until that information is available, exchange applicants must attest to the details surrounding their employer-sponsored health insurance plans when seeking health insurance on the exchange. The exchange will then use available data sources to attempt to verify individuals’ claims. Absent inconsistencies in available information, the exchange will be permitted to proceed continued on page 74

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

HealtH Care transparenCy By mICHael taylor, mD, faCp Chief MediCal OffiCer truven HealtH analytICs

Two Keys to Lowering Health Care Costs: Transparency and Accountability

igh costs, the poor performance of the American health care system compared to other countries, and the realization that there are widespread, unexplained differences in care are all putting pressure on the U.S. health care industry. But it is the financial pressures that are particularly serious. When the nation expands access to care under the Patient Protection and Affordable Care Act, as many as 40 million more people will be covered. This means we must find new and better ways to manage health care spending and decrease costs. The Need for Greater Consumer Participation One way to help reduce costs is by increasing consumer engagement. This strategy focuses on making patients better consumers of their health care services. The goal is to raise a person’s interest and participation in health care decisionmaking to the same level as other important life decisions. To improve consumer involvement, though, we first need to provide improved information resources. According to a study by the vanderbilt Center for Evidence-Based Medicine, 90 million consumers reported having a hard time understanding their health care choices. The study estimated that this confusion is directly responsible for 3- to 6-percent higher health care expenditures. Put simply, for consumers to be actively involved in choosing between treatment options, they must have key information on services, including quality and price. In other words, transparency is essential.

How Transparency Can Help One issue driving the high cost of health care today is the huge difference in price — sometimes more than 100 percent — for the same health care services in the same local area. For the individual consumer, understanding those price differences can offer a real chance to save money. And if you add together millions of consumers looking for the best-priced care, the opportunity is enormous: A recent Truven Health AnalyticsSM research study estimates that the American health care system could save $36 billion or more each year from price transparency alone. Of course, it is also important for consumers to understand that price variation in health care often results from contract negotiations among providers and insurers, 32

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

and it is not necessarily correlated with quality. Providing information on how well providers perform is just as essential as pricing information in helping consumers make informed decisions about their care. Full Circle: Transparency Leads Back to Accountability As transparency increases, consumers can be more responsible for their health care decisions. Already, the growing use of consumer-driven health plans (CDHPs) and health savings accounts (HSAs) is helping consumers consider lower-cost options, more actively shop for care to minimize out-of-pocket expenses, and put more effort into managing their health care budget. Tailored communications and the lessons of behavioral economics are also being used to motivate consumers. Delivering personalized messages can guide consumers to choose CDHPs and HSAs, encourage wellness program participation, and urge them to move forward with preventive care. Likewise, companies are rewarding employees for engagement and participation in self-care. Some employers are even beginning to use mandates and penalties, or creating value-based benefit designs that allow employees to “earn” benefits: Employees are provided a tiered benefit plan and employees who make the greatest effort in maintaining their health receive the highest level of benefits. The Bottom Line A healthy workforce is a competitive advantage. U.S. employers stand to see a sizeable return on investment from looking at health care as a long-term investment in health and productivity, rather than a short-term cost to be managed. History has proven that the answer to controlling costs is not about slashing coverage, reducing quality, or periodically changing benefit design. It’s about developing a culture that values both transparency and accountability — a culture that engages consumers in their own well-being and gives them the information they need to take action. Get the tools and resources you need to increase transparency and improve consumer engagement at employeeactivation.com.

think open enrollment is behind you? think again.

Start Planning Now for a Successful 2014 Enrollment Period While this year’s open enrollment challenges are still top-of-mind, now is the time to ensure that your next open enrollment process will be ideal — for your employees and your organization.

This is one of the most

The Right Plan for Your Employees Increases in plan complexity, costs, and accountability can make employees lose sleep over whether they’re choosing the right plan for their situation. Truven Health Informed Enrollment provides personalized, actionable information to quickly guide them to their best-fit plan.

of my last two years’

The Right Plan for You Helping employees select the best plan benefits your organization, too. With Informed Enrollment, our clients have seen outstanding results, such as: § 60-percent decline in the number of over-insured employees § 20-percent increase in consumer-driven health plan enrollment § 30 percent of all employees moved to a new plan that better met their needs Download our complimentary insights brief, Six Best Practices for Open Enrollment, at truvenhealth.com/IEsuccess.

valuable tools I’ve ever received. The analysis medical costs, prediction for next year’s out-ofpocket expenses, and recommendation for the best plan for me has taken the worry out of open enrollment. – Actual Employee Email to Human Resources Regarding Informed Enrollment

HEALTH SAvINGS ACCOUNTS By J. kevIn a. mckeCHnIe » executiVe Director » amerICan Bankers assoCIatIon’s Hsa CounCIl

HSAs: A Solution to Free Preventive Health Care?

ince enacted in 2003, the Health Savings Accounts (HSA) statute allows health insurance plans to pay for preventive care under the deductible. If they so choose. The Affordable Care Act (ACA) takes this a step further and requires your insurer to pay your preventive care benefits without additional cost sharing on your part. So just how “free” are these preventive care benefits? Take this headline from a March 18 press release published on the U.S. Department of Health and Human Services’ (HHS) website: “Affordable Care Act extended free preventive care to 71 million Americans with private health insurance.” If by “free” you mean that those 71 million people had the costs of their preventive care paid for their Great Uncle Ted, fair enough. But, we know that’s not true. Insurers simply used a portion of the premium they collected from those 71 million Americans or their employers to pay the costs of the claims they incurred. There’s nothing free about that. Doesn’t sound like such a problem until you realize that rhetorically, policy makers have pulled the same trick on Americans that late night TV hucksters pull every day on their audiences: So long as you don’t have to pay for it directly, it must be free. Late night TV is an odd place to find parallels, but because it is the most accessible source of information to the greatest number of Americans, it may also be the most influential. And it has a simple message: The coolest products you’ve ever heard about can be yours for a low, low price and if you act now, they’ll double your order, for free. Operators are standing by. Our culture’s wholesale abandonment of logic is on full display in late night TV ads. We watch them, order the products advertised, and assuage our guilt to their benefit by buying into the grand delusion: you can get something for nothing so the price isn’t just reasonable, it’s a steal. This delusion is nowhere more harmful than in the debate about preventive care benefits. I forecast that the ACA will replicate the same problem HSA-qualified plans were designed to fix: over utilization. Time to invest in diagnostic companies. The HHS release goes on to quote Secretary Sebelius: “Preventing illnesses before they become serious and more costly to treat helps Americans of all ages stay healthier. No longer do Americans have to choose between paying for preventive care and groceries.”

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

So, according to the Secretary, to suggest that people shoulder the costs of their own preventive care directly, at least up to their deductible, is to suggest that people risk starvation. Milliman, in a study for the Indiana Exchange Policy Committee, estimates that premiums for individual plans in Indiana would increase between 75 and 95 percent in 2014, with 20 to 30 percent of that increase attributable to the expansion of insured benefits, which includes preventive care.1 The irony here is that the law was designed to make coverage less expensive, not more. Even those on the political left are now openly debating their response to “sticker shock.” What’s the solution? It isn’t that HSAs and other consumer-directed plans aren’t friendly to preventive care or that they encourage Americans to avoid early detection. There is a comprehensive list of preventive care benefits the Internal Revenue Service allows HSA-qualified plans to cover without cost sharing. The solution is that by allowing a choice of covered preventive care to remain in the hands of employer-consumers and/or individual consumers, HSA-qualified plans have the ability to provide real cost savings over plans that impose first-dollar coverage. For example, a 2012 Aetna study suggests that consumerdirected health care subscribers are 30 percent more likely to participate in disease management programs and 10 percent more likely to use preventive care. But, because most of these services would be subject to a deductible — even though they don’t have to be — insurers don’t have to collect premium to reserve for the possibility that subscribers will elect to use “free” preventive care. Down in Orlando a month ago, the good folks at Shepherd Insurance and I tried to explain to their truck dealer clients how much “free” preventive care and other ACA-related mandates would cost in the 2014 plan year. We met dealers that employ 45 people and some that employ up to 500. It became clear to us that the costs of ACA compliance could be measured in jobs, mostly in terms of positions left unfilled, because we see costs are rising so quickly. I forecast that the economic effects of compelling insurers to pay for everything without cost sharing will be profound. American Bankers Association’s HSA Council is comprised of industry leaders from member banks, insurers, and their technology partners.

______________________________________

1 Milliman: Individual and Small Group Premium Changes Under the ACA, http://www.in.gov/aca/files/Individual_SmallPremium_Increases.pdf

HealtH savIngs aCCounts By Carol kraft preSident, Chief Operating OffiCer seleCtaCCount

Helping Employees Understand the Total Cost of Health Benefi ts

any people don’t ever fully understand the true cost and If the worst-case scenario occurs and out-of-pocket value of the benefit plan that their employer is providing, maximums are met, the HDHP will require the employee to pay because the cost of insurance is typically considered to $4,500 more. Even so, the employee still saves $1,004 overall with be the cost of the health plan premium. And, since most people the HDHP. The employee also benefits because they can make get their insurance through their additional contributions to the HSA Example of Family Coverage employer, they pay only a small on a tax-free basis. Traditional PPO HDHP+HSA portion of the actual expense, Even without an employer Annual deductible $750 $5,000 which is typically deducted from contribution, a CDHP with a Out-of-pocket maximum (OOP) $2,500 $7,000 their paycheck in increments spending account is a win-win Coinsurance 80% 90% throughout the year. However, it’s for most employees because the Employer HSA contribution $1,500 important that employees begin to best case still saves $4,004 over a understand the total value of the traditional plan, and the worst case Actual biweekly health plan cost $792 $638 benefit their employer provides, costs $496 more. Building up the Amount paid by employer $549 $549 and a consumer-directed health HSA balance through employee Amount paid by employee $243 $89 plan (CDHP) with a spending contributions also provides a buffer Annual amount paid by employee $6,318 $2,314 account is an effective way to that is owned by the employee and achieve this. can be used in the future. Best-case scenario (no claims) Annual premium paid

Three Simple Steps to Claims paid up to OOP Educating Employees Employer contribution The first step to reinforcing Total best-case employee cost the value of the employee health benefit is to educate employees Worst-case scenario (claims equal OOP max) about how their health plan and Annual premium paid spending account work together Claims paid up to OOP to extend coverage and save Employer contribution them money. Employee education Total worst-case employee cost should include showing employees how the account can be used to cover a portion of their health expenses until their deductible is met and the health plan kicks in. Next, illustrate the potential tax savings that can be realized from funding the spending account. Use scenarios to demonstrate how employees can convert premium savings from their highdeductible health plan (HDHP) into account contributions, thereby reducing their taxable income. Last, show employees how the spending account can be used to reduce their out-of-pocket expenses in the event they or their dependents need care. Consider the example for family coverage (see chart). The employee premium difference of $243 versus $89 per pay period doesn’t seem like much, until you consider the annual cost difference of $4,004 between the plans. Since this employer is contributing $1,500 to the HSA, there is a $5,504 savings to the employee before any claims are processed. 36

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

$6,318

$2,314

The SelectAccount Difference $0 -$1,500 SelectAccount can help $6,318 $814 employers define and develop a custom-fit spending account solution that meets the financial $6,318 $2,314 needs of their business and the $2,500 $7,000 personal health care needs of their $0 -$1,500 employees. $8,818 $7,814 As an IRS approved, nonbank HSA trustee SelectAccount is uniquely positioned to provide spending account solutions because of its singular focus on health care, knowledge of and experience in partnering with health plans, and approach to customer service, which includes a team of specially trained spending account representatives. Coupled with this knowledge and singular focus is SelectAccount’s “One fee. No surprises.” approach to pricing. That means, with SelectAccount, employees and individual account holders will not pay surprise fees for standard services like nonsufficient funds, debit card swipes, replacement debit cards, and opening or closing an account. To learn more, visit www.SelectAccount.com. Carol Kraft is president and chief operating officer of SelectAccount. She can be reached at carol_kraft@selectaccount.com.

Donâ&#x20AC;&#x2122;t lose a drop. Many banks add on fees, which means you could waste your HSA one drop rrop at a time. SelectAccount, on the other hand, has no extra overdraft rrdraft fees or minimum balances, just a tall glass of your savings, rready when you need it.

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NOMINATE & RECOGNIZE INNOVATIVE HEALTH & BENEFITS MANAGERS

The Leading Annual Awards Issue from TheIHCC.com — Publishers of HealthCare Consumerism Solutions Magazine

Do you know someone who goes the extra mile as a creative problem solver and innovator? The Institute for HealthCare Consumerism (www.theihcc.com) is looking for the industry’s true superstars—professionals in health care and benefit management, including: employers, solutions providers, brokers, TPAs and HR managers, who have excelled at implementing solutions to complex health care benefits HR Visionary of the Year issues. Superstars Award, Sponsored by: will be published December 2013 in our annual HealthCare Consumerism Superstars issue and To formally recognize human will be accessible to resource and benefits professionals more than 70,000 who are promoting healthy sight to readers.

Nominate a Superstar Today! ■

■

John J. Robbins Sr., Memorial CEO Leadership Award: To an outstanding leader of any size organization who is an exceptional businessperson, as well as a successful parent and pillar of the community. CEO Leadership Award: To an outstanding leader of any size organization, who embraces supports and endorsed an innovative health care or benefits program. Most Innovative Plan Design Award: To an HR/Benefits executive who identified and solved a problem using an innovative health care or benefits program. Most Effective Plan Implementation Award: To an HR/Benefits team that successfully implemented a health care or benefits program and exceeded goals or reaped unanticipated awards. Most Innovative Employee Education/Communication Award: To an employer, who designed and implemented tools for their employees that exceeded plan participation.

their workforce through superior vision care beneﬁts offerings and education.

Most Innovative Employee Empowerment Award: To an employer, who designed and implemented tools that had a high engagement of employee participation in a health care or benefits program. ■ Most Effective Population Health & Wellness Award: To an employer who uses the most innovative method to reduce absenteeism and chronic disease costs to improve overall employee health. ■ Public Policy Leadership Award: An individual who encourages health care consumerism in public policy through legislation. ■ Most Effective Solution Provider Award: To a solution provider who introduces the most innovative health care or benefit solution. ■ Most Innovative Partner-Consultant Award; To a consultant who worked most effectively with an HR/Benefits team to implement a health care or benefits program. ■ Most Innovative Broker Award: To a broker, who learned a client’s needs and provided the most effective solution for the employer. ■

NOMINATION CATEGORIES:

Nomination Categories for 500 - 2500 employees, 2501 - 7500 employees, and 7500+ employees

For details, please visit www.theihcc.com. Nominations close October 1, 2013. E-mail your Superstar nomination to nominations@fieldmedia.com or nominate online.

PRIvACy By Jon neIDItz » Partner & leaDer, big Data, PriVacy & security Practice kIlpatrICk toWnsenD & stoCkton llp

Consumer-Driven Regulation for Cyber Risks and Data Breaches Jon Neiditz has been managing multiple security breaches every week since 2005. Learn how regulators, organizations, and individuals can become less “fragile” and successfully confront the cyber risks of the 21st century. Antifragility: An Approach to Risk Management Data breaches and near-breaches can either weaken organizations or make them more resilient. This holds true for both information security and relationships with constituents and consumers. For the past seven years, serving many organizations as a manager of data breach response, I used the legal requirement to notify consumers and regulators of incidents as an opportunity to achieve greater resilience at several levels. Critical to my efforts has been the growing recognition that good security, resilient relationships, and effective regulation of information management must be “antifragile,” a term recently coined by the brilliant and controversial risk manager, Nassim Nicholas Taleb, and found in the title of his latest book.1 Taleb makes no claim as a risk manager to predict when and how incidents will occur — indeed, he holds those who pretend to be able to do that accountable for failing to predict the “Black Swans” he also made famous.2 Instead, Taleb assesses the existing characteristics of an entity and its environment to determine whether it is: (a) fragile, i.e., will lose more by being wrong than it will gain from being right; (b) robust, or is indifferent to winning or losing; or (c) antifragile, or will win more from being right than it will lose from being wrong. One of Taleb’s useful metaphors for antifragility is muscles that gain strength from stress. Through “optionality,” antifragile organizations and people can mitigate the downside of each loss and take full advantage of the occasional win, enabling them to be wrong in their predictions most of the time but prevail over time, and prevail more where there is more volatility and therefore opportunities for big wins.

Lessons from the Financial Crisis Taleb witnesses the world hurtling toward “Extremistans” at many levels, in which volatility is suppressed by centralized governance of larger and larger new systems, as opposed to

the “Mediocristans” that were naturally segmented because they were small. His example in government is the fragile government of Saudi Arabia versus the antifragile aggregation of city-states that is Switzerland. The theme of the inevitability of unanticipated, disastrous Black Swans in over-connected, massive new systems is evident in many thoughtful books that followed the recent financial collapse, including William Davidow’s book, Overconnected.3

The History of Data Breaches Volatility and change are always accelerating in the world of information security. New public visibility into this world began in early 2005 with the ChoicePoint breach, when the company announced that their data for 30,000 Californian residents had been breached. The initial announcement only identified California residents because California was the only state that required breach notification to consumers. When the public found out, similar legislation spread like wildfire, now enacted in 46 states and 3 territories and covering, if you follow Texas law, all states and territories.4 Studies done in 2005 — the first year in which breach notification laws swept across the country — indicated that 20 percent or more of customers receiving breach notification letters would seek services or products elsewhere if they could.5 We had stumbled upon a new kind of regulation much more effective than the government telling companies what to do; instead of regulators taking years to impose penalties that companies could avoid by hiring expensive lobbyists, consumers were able to send an immediate, powerful, and direct business message. Breaches back then were painful Black Swans, but the pain was useful in getting organizations to pay attention to information security. It became apparent that maintaining good customer relationships in a notice-triggering breach required clear, credible, helpful communication not only about what happened, but about what would be done to prevent recurrence. If a breach turned out not to be noticetriggering, the stress of the close shave would be an equally valuable chance to develop breach response “muscle.” www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

PRIvACy

The Voyage to Extremistan Information security antifragility improved, but not nearly as quickly as the information security risks grew. Well-organized, international, Internet-based black markets in personal information and trade secrets grew ever more sophisticated, as did national cyber-espionage, trade secret theft, and global hacktivism. Taleb noted well the ways globalization could create Extremistans with enormous and unpredictable losses, and globalization of cybercrime and the scaling of identity and trade secret theft did just that. Network segmentation has become a necessary part of any organization’s information security strategy in order to limit the size of breaches. The net-net is that entities with very good data security systems know most systems are infected. In fact, the latest Ponemon study on cybercrime indicates that a wide spectrum of entities experience close to two successful security breaches every week.6 Therefore, information security has become not only the art of keeping bad things out of your system, but monitoring any bad things that may be impacting the good things in your system and preventing data from leaking out. Individuals became used to receiving breach notices, and in the past few years they often no longer assumed that the mere fact that an entity suffered a breach meant that it had poor information security. As the stigma of breaches was lessened in this way, breach response and information-sharing greatly improved, yielding both better security and more trusting relationships. This de-stigmatization of data breach may be considered in Taleb’s terms the antifragilization of both organizations and breach victims, building muscles for managing breaches and preventing identity theft and other harms, so that increasingly one can detect and acknowledge frequent losses but assure that those losses have limited consequences.

Fragile and Antifragile Regulation Into this environment of tremendous uncertainty, consultants have regularly attempted to introduce fragile certitudes. I 40

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observed the most intense such activity in 2009 when health care institutions, which had ignored state breach regulation for four years even though they were subject to it, were introduced to data breach regulation by the HITECH Act and the Health and Human Services interim final breach regulations. Hundreds of health care consultants proclaimed that health care providers had to and could prevent all breaches, setting one of the most porous sectors in the economy up for very painful Black Swans. The HITECH Act and HHS regulation reflected that perspective by establishing a more regulatory rather than a consumer notice-focused framework, including what the health care world universally dubbed the “Wall of Shame,” a webpage on which the names of organizations suffering breaches of 500 records or more were posted, signaling also that they were about to be subjected to long federal investigations (breaches of fewer records were not until recently subject to them). The state attorneys general and federal banking regulators, meanwhile, already had years of experience dealing with data breaches — in the case of the banking regulators under the 2005 Interagency Guidance and Guidelines,7 and their perspective was already moving breach regulation in a more consumer-focused direction. Instead of punishing entities for having breaches, many focused on punishing entities for not quickly disclosing breaches and improving their security. As attorneys general became more familiar with information security breaches, they became more interested in dialogue with the entity suffering the breach. Transparency concerning diligent efforts to contain breaches, assist victims, and prevent recurrence became the clear winner among risk management strategies in almost all breaches.

The noteworthy exceptions in this country are among health care entities subject to HIPAA, which has spawned a consulting industry the purpose of which is to bring the number of records breached below 500, to avoid the Wall of Shame. As a regular manager of breaches, I find the general trend toward more of an open exchange of information, collaborative informationgathering, and the de-stigmatization of breaches to be very helpful both to improving security and containing costs. Consider the cost of a data breach in 2010, according to the widely-cited Ponemon Institute 2011 study:8 of the $240 per record cost cited, the indirect costs, such as loss of customers, were reported to be more than double those of the direct costs. This fact presented a great opportunity to companies to reduce the cost of lost customers by using breach response as an opportunity to build trust. Since a crucial part of building trust is real, credible improvement in information security, costs can be reduced while more dollars are devoted to real security. From my vantage point, the reduced 2012 cost-per-record of $194 is progress in de-stigmatization and better security.9. I think we lucked into data breach notification laws, because what they force is openness about data breaches with customers

What does it mean for an organization to be antifragile? • Good security does not operate in denial: the organization monitors both intrusions and ex-filtrations, and discovers incidents immediately while managing false positives. • Using network segmentation that makes each breach an event in Mediocristan rather than in Extremistan. • Relationships with constituents such as customers and employees that will survive the breach. • Protection through encryption at the app, data, and network level.

What does it mean for an individual to be antifragile? • Realizing that information about you has been breached, probably hundreds of times a year. • Having protections and/or monitoring in place to prevent identity theft and other harms. • Engaging in safe practices in electronic commerce.

What does it mean for regulation to be antifragile and lend itself to antifragility? • Regulation should not punish organizations for simply having breaches. • Regulation should punish organizations for not dealing effectively with breaches and information security. and employees as well as regulators. Consider the differences with other consumer protection regulation: We do not force entities to send consumers notices when they have engaged in price fixing or polluted a water supply. Breach notification — particularly when the regulators strongly encourage it — is a powerful nudge toward transparency, at a difficult moment in the relationship between the organization suffering the breach and the individual whose information was breached. Victims need this notice to protect themselves before their information is misused, and they need it regularly because breaches are a regular occurrence, making breach notification an ongoing relationship issue. Moreover, it undermines the fragilizing myths of consultants that only relationships free of Black Swans are worth having.

The Final HIPAA Breach Rule Most of the more current state breach notification laws incorporate a “risk of harm” standard that HHS tried to build into the Interim Final Breach Rule in 2009. Aside from statutory problems,10 the major practical problem in the implementation of the HHS standard has been that although “harm” in the context of financial identity theft and fraud that was the focus of the state laws is fairly clear, “reputational or other” harm in the context of the HITECH Act’s much broader definition of breach is much less so. Together with the fear of the Wall of Shame, I

believe this vague harm standard contributed to under-notification. The Final Breach Rule, which goes into effect for breaches after September 23, 2013, significantly alters and clarifies the class of notice-triggering breaches by removing the “risk of harm” standard. The Final Rule replaces the “harm” threshold with the prior and more statutorily based inquiry regarding the risk that the protected health information (PHI) has been compromised due to a use or disclosure. Moreover, that inquiry is not always required thanks to a newly-clear default position: breach notification is presumed necessary in all situations involving improper use/disclosure unless the covered entity/business associate can demonstrate and document that there is a “low probability that the PHI has been compromised” (or that an exception applies). Assessing the probability that the PHI has been compromised requires that the covered entity/business associate undertake a risk assessment that specifically considers the following four factors: 1. The nature, extent, type, and sensitivity of the PHI 2. The unauthorized person/entity that used or acquired the PHI, including whether or not they are subject to confidentiality obligations (such as HIPAA, but including others)

3. Whether the PHI was actually acquired or viewed, or merely subject to the opportunity for access 4. The extent to which the risk to the PHI has been mitigated; including efforts to obtain assurances that the PHI will not be further used or disclosed, and the reliability of such efforts under the circumstances One strength of Taleb’s approach to risk management is that it acknowledges the unknown and avoids speculation. A security breach lawyer or consultant for an organization should know how fragile the organization is and should possess facts relating to the unauthorized disclosure that go to the likelihood of harm, but he or she is very unlikely to know much of anything about how fragile the victims are, particularly in the context of a large breach. Given that there’s no getting rid of the Wall of Shame, forcing more disclosures and notifications about breaches is probably the best way to make organizations and actual or potential victims less fragile. Jon Neiditz is a Partner & Leader, Big Data, Privacy & Security Practice, Kilpatrick Townsend & Stockton LLP. __________________________________________ 1 Antifragile: Things That Gain from Disorder, Random House, 2012. 2 The Black Swan: The Impact of the Highly Improbable, Random House, 2007. 3 Overconnected: The Promise and Threat of the Internet, Delphinium, 2012. 4 Current list of regulation:www.ncsl.org/issues-research/ telecom/security-breach-notification-laws.aspx. 5 2006 Annual Study: Cost of a Data Breach Understanding Financial Impact, Customer Turnover, and Preventative Solutions, Ponemon Institute. 6 2012 Cost of Cyber Crime Study: United States, Ponemon Institute. 7 FDIC FIL-27-2005. 8 www.symaXtec.com/about/news/resources/press_kits/ detail.jsp?pkid=ponemon&om_ext_cid=biz_socmed_ twitter_facebook_marketwire_linkedin_2011Mar_ worldwide_costofdatabreach 9 www.symantec.com/content/en/us/about/media/pdfs/bponemon-2011-cost-of-data-breach-us.en-us.pdf. 10 Caught in the Middle Between Federal and State Breach Notification Requirements, American Health Lawyers Association, 2009.

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

SUPPLEMENTAL HEALTH By gIl loWerre, CeBs, Clu, CHfC » PresiDent BonnIe Brazzell » Vice PresiDent » eastBrIDge ConsultIng group, InC.

Integration Is the Key Strategy in Benefits Offerings This Year As the ACA creates new norms, offering the most appropriate complementary benefits to address potential out-of-pocket exposure for employees requires integrative strategies.

mployers have long used their benefit plans to help plans with 60 or 70 percent actuarial value. Assessing the differentiate their companies from others in the job most appropriate complementary benefits to address this market. Most view benefits as a central part of their out-of-pocket exposure is something that requires attention compensation packages, a way to improve morale and in the year ahead. productivity, and a way to attract and retain employees. Employers that do not integrate benefits also are in Even given the difficult and shifting economy, employers danger of lacking a comprehensive benefits program that still remain committed to Figure 1 Employers Using a Broker workplace benefits. They understand that as the 100% 90% job market heats up, the 88% 89% pressure to have a large 80% 59% variety of high-quality 60% insurance coverages and 40% non-insurance benefits will once again be a 20% major factor. Benefits are 0% a key factor of a potential 10-100 100-500 500-2,000 2,001+ employee’s decision to Employee Size work at a company and an existing employee’s meets the majority of employee needs and/or not offering decision to stay. the best-of-class products, thus hurting their ability to Assess the Most Appropriate Benefits recruit and retain employees. In recent years, employers Employers, however, may find their benefits decisions have attempted to differentiate themselves by offering taking a toll on their bottom line and on employee satisfaction tailored core benefits and a smattering of ancillary/voluntary if they choose to ignore the plan options. They often relied on an advisor for medical Employers’ success importance of integrating all and/or other core coverages, another for voluntary/ancillary of their benefits offering. products, and even a third for enrollment design and will depend upon aspects These employers also run the risk management. But the time has come when these components providing employees of not being out of compliance can no longer be considered as separate strategies—and with Affordable Care Act (ACA) when employers choosing to remain static will feel the shock. with an integrated yet rules and regulations, which may Brokers can help employers sift through the myriad cause them to incur fines and of options to achieve an integrated approach to benefits. In comprehensive benefits penalties, as well as not having a fact, most employers already use the services of a broker, solution that considers benefits strategy that adequately according to an Eastbridge report surveying more than 700 coverage gaps for employees. employers. (See Figure 1) ACA impacts. plugsMore than anything else, ACA Today, most brokers serve as a personal shopper will create a new normal around for workplace insurance and enrollment services. We 42

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

find that employers prefer to use brokers to comparison shop the traditional core, voluntary, and enrollment options. They then take the information gathered, researched, and recommended by the broker to do their own due diligence and come to a decision. This has become especially important as employers realize the key to competing successfully in the job market is to provide a broad range of benefits containing a core plan (or plans), a myriad of voluntary and ancillary products to meet their employees’ varied needs, and enrollment services that are geared towards the employee and supporting their benefits decisions. Moreover, as products and platforms evolve quickly under ACA, employers must make sure they have competent advisors/brokers who know the full breadth of the market. They need to be experts about ACA, products, funding options, and platforms, as well as experts at helping design a comprehensive benefit strategy encompassing all of these things. The advent of ACA has brought commoditization of medical plans and, for more and more employers, the move to a defined contribution strategy. The latter is driven by cost control issues and effectively puts core and voluntary benefits on the same footing — a menu of benefits (core and voluntary) with a sum of money for the employee to spend on benefits. Defined contribution makes everything voluntary (except medical, which is mandated one way or the other), allowing benefits to finally become controllable costs. As employers move to defined contribution, and to the degree products look more alike to the consumer, the overall plan may be increasingly differentiated by the amount of money the employers put in as their defined contribution. Consider 401ks — the individual funds no longer distinguish one plan from the other (consumers rarely study the difference between the funds in two plans), and more often employees focus on the matching contribution that employers offer. As a result, design differentiation is diminished as core plans become more similar, raising the importance of employers’ funding differentiation whether through cost shifting, defined contribution, or

Figure 2

Employers Offering at Least One Voluntary Product by Employer Size 88%

90%

88%

85% 81%

80% 76%

75% 70%

10-100

100-500

500-2,000

2,001+

Employee Size some other mechanism. Voluntary/ancillary benefits: More choices, greater flexibility, and higher quality Other aspects of the benefit plan are not as static, however. By default, they are becoming more important in helping employers compete for the best employees. One is the voluntary/ ancillary offering. No longer will voluntary benefits be an “afterthought” or a response to employee demand but rather an important tool for employers to manage their benefits — just as important as the traditional employer-funded Figure 3

benefits. More benefits, greater flexibility, and higher quality are all hallmarks of this change. In fact, more than three-quarters of employers with 10-100 employees offer at least one voluntary product, according to our survey. That percentage increases with larger employers. (See Figure 2) Employers offer more and more offer voluntary plans as a response to decisions made regarding core benefits. For example, hospital income, critical illness, accident, and gap plans continued on page 46

Benefits Offered 2012

Health ins

Dental

18 67

16 44

Life

AD&D

STD

Accident 1 3

2 2

HIP/Supp Med

HDHP LTC

2 2

26 6

29 15

26 11

HSA

Cancer

11 37

Vision

LTD

Ltd Medical

30 Offer, ER pays

Offer, ER/EE share

100

Offer, EE pays

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

supplemental HealtH By smItH WyCkoff KEy ACCOUNT MANAGER, MANAGED CARE/ONLINE RETAIL transItIons optICal, InC.

From Smoking to Snoozing: Connecting Eye to Overall Health Could Mean Big Savings for Employers

hanks to today’s cost pressures, the majority of employers have some type of wellness initiative in place to encourage healthy habits among their workforce. One problem is — even with the best intentions, classic commands like “don’t smoke!”, “eat right!” and “get enough sleep!” can lose their attention-getting effect after a while. One solution could be right above your nose — that’s right, the answer could lie with the eyes. Unfortunately, very few employees know the impact of overall healthy habits on their eye health – yet new research shows that this knowledge could go a long way in motivating them to change behavior. This topic was explored in Transitions Optical’s 4th annual Employee Perceptions of vision Benefits survey.1 Let’s take a look at results related to just two common habits that could have huge cost implications for employers.

Most people know lack of sleep isn’t good for them overall, but sleep deprivation and irregular sleep patterns can also impact on the eyes in a variety of ways. These can mean lost productivity and even costly long-term medical issues: • Blurred vision and eye discomfort1 • Loss of vision in one eye after awakening (caused by long-term sleep loss, such as from sleep apnea) • Swelling of the optic nerve and gradual vision deterioration • Factor in glaucoma development • Decreased color perception, which is restored daily during sleep • “Tunnel vision” effect — which can be extremely dangerous, especially for truck drivers and employees who work in potentially hazardous environments.

Smoking Chances are, you have some type of employee smoking cessation program, incentive or penalty in place. Smoking is too expensive to ignore, costing employers $172 billion in health care dollars each year. In today’s world, few employees can claim they don’t know that smoking is bad news for their overall health. Unfortunately, they do, however, remain largely in the dark about the eye health connection. In the survey, just half of employees said that they believe smoking can impact their eyes, and less than a quarter knew it could lead to serious eye diseases. In reality, smokers are at higher risk for • Macular degeneration (5x) • Cataract and glaucoma (3x) • Diabetes and diabetic retinopathy (more than 2x) • Dry eye syndrome and thyroid eye disease (2x) • Lazy eye in child if mothers smoke while pregnant (6x)

Unfortunately, more than one in three employees don’t know that sleep deprivation can affect eye health. By educating employees on this connection and encouraging them to get enough sleep — or seek help if they’re not — employers can achieve a healthier bottom line.

Then there’s the ultimate price to pay for smoking — blindness.1 Smokers are two to three times more likely to lose their sight later in life than non-smokers. The silver lining — 84% of employees agreed that they would take steps to quit smoking if they knew it could hurt their eye health.1 The education message on the part of employers is simple: quit smoking and you could save your sight. Plus, smokers in particular — and those who are exposed to secondhand smoke — should schedule regular, comprehensive eye exam, and wear protective eyewear to block Uv rays that can increase their eye disease risk. Many eye diseases faced by smokers also contribute to sensitivity to light and glare, making photochromics like Transitions® lenses and anti-reflective coatings an important choice. Sleeping Lack of sleep can wreak havoc on the productivity of a workforce and is a rampant problem that costs U.S. employers $18 billion each year in lost productivity. 44

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

Missed Opportunity for Vision Benefit Education Despite the potential high pay-off of educating on eye health issues, most employers don’t take the opportunity. In our survey, only 16 percent of employees reported receiving education from their employer related to their eye health. Even if employees are neither smokers nor poor sleepers, changes are there’s a healthy habit they could improve that impacts eye health. Obesity, Uv exposure and even taking certain common medications can all increase their risk for eye-related issues, especially if they are older. With the power of eye exams to detect vision problems and eye-related health conditions, not to mention the importance of eye protection, even the healthiest seeming employee can’t afford not to make eye care one of their healthy habits. All they need is a little reinforcement from you as part of your overall wellness outreach. For more information, check out our lifestyles and eye health presentation under the Tools section of HealthySightWorkingForyou.org. Smith Wyckoff, Key Account Manager, Managed Care / Online Retail, Transitions Optical, Inc. 9251 Belcher Rd. Pinellas Park, Florida 33782, 800.533.2081 ext. 7540 HealthySightWorkingForYou.org Twitter.com/TransitionsMVC Facebook.com/HealthySightWorkingForYou 1 Survey conducted online by Wakefield Research on behalf of Transitions Optical, Inc. from September 18-21, 2012 among 1,500 employed American adults whose employers offer vision benefits.

Help employees see their best. Learn more and find free vision savings calculators and employee education materials at HealthySightWorkingforYou.org.

Brought to you by Transitions Healthy Sight Working for YouÂŽ, a public education program to raise awareness of the value of quality vision benefits.

ÂŠ2013 Transitions Optical, Inc. All Rights Reserved. Transitions, the swirl, and Transitions Healthy Sight Working For You are registered trademarks of Transitions Optical, Inc. Photochromic performance is influenced by temperature, UV exposure and lens material.

SUPPLEMENTAL HEALTH gIl loWerre anD BonnIe Brazzell » continueD from Page 43 Figure 4

Method of Enrollment Used for Voluntary

are increasingly positioned as a way to help employees pay out-of-pocket expenses resulting from changes in their core medical plans, gaps in coverage, or areas not adequately covered in the core plans. Some core plans have moved to voluntary as employers try to contain costs. Dental is an example of a benefit that once was part of a former core plan that is much more frequently offered a voluntary benefit now (See Figure 3). Differentiated voluntary offering by employee class (executives vs. other employees) are also a response to core plan standardization. All of this suggests that the two — core and voluntary strategies — must be seen as a whole. Enrollment processes will increasingly offer both sets of products together, as they will relate more closely to each other.

Employers choosing to remain static will feel the shock. 46

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

Integrated Enrollment Processes are Improving The benefits platform is also changing as employees look for convenience and simplicity in their benefits decision-making. Self-enrollment using a paper enrollment form is no longer the most common method of enrollment and telephonic methods are also still fairly uncommon. Self-enroll via a website is the most preferred and used by employees. (See Figure 4) The enrollment process is evolving, too, becoming more employee-friendly and supportive. There are better enrollment systems with Internet/Intranet, laptop, and call center-based options. There is better decision support, not just education about available products, so employees can make an informed and beneficial purchasing decision. There are also more self-service options available 24/7, making it easier for employees to enroll in the benefits they want and need. Access to enrollment is also simpler with single sign-on integration into a company’s HR portal.

As this new decade progresses, employers should consider refocusing their benefit strategies not just on medical or even core benefits, but on all benefits (insurance, noninsurance, wellness, perks, etc.) and the way those benefits are presented, maintained, and serviced. Their success will depend upon providing employees with an integrated yet comprehensive benefits solution that considers ACA impacts — which includes core and voluntary benefits as well as enrollment process — to meet their individual needs and then giving them the information they need to make an informed and beneficial purchasing decisions. Gil Lowerre founded Eastbridge Consulting Group, a leading U.S. consultancy specializing in voluntary product and work site marketing. Bonnie Brazzell is a leading expert on work site marketing of financial services products. She joined Eastbridge in 1999 and manages consulting projects for both worksite/voluntary and group clients.

PHARMACy BENEFITS MANAGEMENT By sHelly Carey » researcH Director » pHarmaCy BenefIt management InstItute (pBmI)

8 Ways Pharmacy Benefit Design May Evolve in 2013 Pharmacy benefit plan design continues to shift, becoming more advanced and putting more choice in the hands of the member.

n the past, employers simply shifted more of the cost to members through higher copays, preferred products, and/or a drug benefit-specific deductible. But, that can only go so far. Pharmacy benefit programs are advancing, evolving from simply cost-shifting to more complex offerings and adopting new management tools. Pharmacy benefit plan sponsors continue, however, to shift to higher member cost-sharing, a pattern similar to overall trends in employer health benefits: reducing benefits and raising the member contribution. Specialty pharmacy continues to be the fastest growing and one of the most complex market segments in the health care landscape. Employer adoption of several specialty management strategies is growing, but lags behind management of non-specialty medications. In addition, the management of specialty drugs under the medical benefit trails management under the pharmacy benefit.

Cost-Sharing Widens Between Tiers Cost-share tier structures have changed over the years. Pharmacy Benefit Management Institute’s (PBMI) annual Prescription Drug Benefit Cost and Plan Design report shows continued decline in the use of twotier, cost-share structures while the use of four-tier, copay designs continues to grow, fueled Most employers still by the addition of a separate for specialty drugs (see focus the incentives tier Figure 1). The most common on participation cost-share tier among plan whereas less than 10 sponsors answering the percent of employers survey was three-tier — generics, preferred brands, tie incentives to actual non-preferred brands. are starting to see the changes in behavior. We emergence of innovative cost-share structures with five or more tiers, but it is unclear whether these will grow to become mainstay. Tier categories include preferred and non-preferred generics as well as

splitting by clinically and cost-effective therapies. In addition, the copay differential between tiers continues to widen. The average differential between generic and preferred brand copays has increased to $19 (compared to $7 about ten years ago). The average differential between preferred and non-preferred brand copays is $23, compared to $13 a decade ago. As benefit designs move towards more tiers, the use of coinsurance designs — where a member pays a percentage of the overall drug claim cost — are declining. This may be due to concerns over member out-of-pocket costs as typically one of the higher tiers is for specialty drugs.

Alternative Incentives for Behavioral Change During the last several years employers have begun to experiment with various types of incentives intended to reward healthy behaviors that can lead to improved health outcomes. The use of copay waivers for specific drug classes and/or health conditions (e.g., diabetes) has decreased over the past few years. The decline may be a reflection of the growing question about the value of reducing copays. Several studies have emerged on this topic in the last 18 months, which have challenged the assumption that copay waivers increase medication adherence or help to

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PHARMACy BENEFITS MANAGEMENT

of pharmacy in order to incentivize members to use certain channels. Historically copays for a 90-day supply filled in a mail pharmacy have been less than filling a 30-day prescription three times at a retail pharmacy. A new trend is varying within channel — incentivizing the use of particular brick and mortar retail pharmacies. This allows plan sponsors to keep the broad network while still managing costs as the preferred retailers typically offer better pricing.

Limited Networks

contain overall health care costs. However, when alternative incentives are provided, most employers still focus the incentives on participation whereas less than 10 percent of employers tie incentives to actual changes in behavior.

Managing Purchasing Channels Overall member cost share is around 25 percent, but this amount often varies by type 48

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

After cost-sharing, establishing pharmacy networks has been a popular approach to cost management. Limited pharmacy networks, not talked of much before 2012, are more of a consideration after the contract dispute between Walgreens and Express Scripts. Providing the broadest access to members may no longer trump the more favorable pricing of a narrowed network. A large and growing supply of retail pharmacies makes the limited network approach possible: there are four to five times as many retail pharmacies as there are McDonalds (~ 13,000 vs. 56,000). Have you ever heard anyone complain about not being able to find a McDonalds?

Trend Management Programs Trend management tools have grown in popularity in the last decade, now becoming a mainstay of effective pharmacy benefit management. There are two general types of trend management programs — utilization management and clinical/educational programs. • Well-managed drug benefit plans

•

include a variety of drug inclusions, exclusions, and utilization management tools. Excluded drugs often include medications deemed nonessential (e.g., hair growth treatment, experimental/investigational drugs, and over-the-counter medications). Even when medications are covered, employers use a range of coverage limitations to promote appropriate use. These include prior authorization, quantity limits, refill-too-soon limits, and step therapy. This type of program is on the rise due to its effectiveness, which can outweigh any member disruption. Prior authorization, refill-too-soon, and quantity limits are used by the vast majority of plan sponsors already, while step therapy is used by 65 percent of plans. The one exception is pill splitting, which has never experienced widespread adoption as PBMs generally do not promote these programs due to safety concerns. The main goal of education programs is to improve quality of care. They include disease management, fraud/ waste/abuse, therapy adherence, retrospective DUR, prescriber profiling, and medication therapy management. They typically intervene with the patient and/or physician after a medication has been dispensed. Education programs have experienced considerably lower adoption. Given their retrospective nature, the effectiveness of these programs is often less than utilization management programs administered during the point-of-sale. Use has declined in recent years, perhaps reflecting ongoing questions about the value that some provide. Disease management is the most commonly used educational program, with 70 percent of plan sponsors offering it. The remainder of educational programs has been adopted by less than half of plan sponsors.

Specialty Drugs Employer adoption of management strategies specific to specialty mediations has grown over the past year, but management of specialty drugs under the medical benefit still lags behind the pharmacy benefit. At the core of this gap is the problem that employers cannot measure specialty drug spend under the medical benefit — only 25 percent of employers have any visibility (see Figure 2). Plan sponsors are challenged with balancing the costs of specialty medications while providing coverage for their members. Traditional pharmacy Figure 1 benefit management strategies, such as pharmacy networks, formulary management, prior authorization, and step therapy programs are now widely used for specialty drugs (see Figure 3). Quantity limits, in the form of limiting specialty products to a 30-day supply, are also common. Another quantity limit strategy is to limit the first fill to one to two weeks to ensure the patient tolerates the medication. This approach ensures dosage safety and minimizes waste of expensive drugs in situations where the regimen needs to be changed due to poor tolerability or lack of efficacy. In order to be advantageous all around, it is important that the plan design accommodates this policy such that the patient does not pay a regular/full copay for the lesser quantity.

site-of-Care and White Bagging Payer cost varies considerably depending on the setting where the specialty drugs are administered. Many plan sponsors are not sure which site-of-care has the lowest cost under the medical benefit. Of those that do know, one-quarter say that their medical benefit is designed to encourage selecting the lower-cost site of care for infusion services.

A fairly new strategy which has gained ground recently is white bagging. White bagging is the term used when patient-specific medications are purchased through a specialty pharmacy and shipped to the provider to administer. This process eliminates the buyand-bill model used by physicians, where drug reimbursement is typically equal to the cost of the medication plus a fixed percentage. White bagging is designed to allow the payer to purchase the drugs at a lower cost from a specialty pharmacy versus the provider. It also

offers the ability to shift coverage of drugs from the medical benefit to the pharmacy benefit. There are potential drawbacks, such as patient safety, wasted medication, and operational headaches for the provider. Patient safety concerns are largely related to the integrity of the drug supply chain and proper handling procedures. Once a drug is received, providers bear the additional burden of storing it separate from their regular inventory until it is time to be administered. If a last minute change is made to the patient’s treatment plan, then a new drug or additional drug may need to be ordered, resulting in delays in care.

Copay assistance programs Specialty drug manufacturers frequently offer copay assistance programs that cover the member’s cost share. These programs have become popular due to the increase in member’s cost share for specialty drugs and manufacturers’ concern that higher copays could result in members not taking their medications. By subsidizing the member copay, manufacturers maintain demand for their drug at a low cost relative to the total selling price of the drug. Many of the programs will cover member cost share up to $500/ month, and very few have a maximum income requirement. The extent these programs are used by members is unknown to employers, but it may be an effective strategy to maintain patient adherence. Many employers, however, view the programs as adding a layer of complexity that is not worthwhile and do not see them as a good way for patients to save money. Of course, copay programs also exist for non-specialty medications. They too are aimed at offsetting the patient’s copay at the point-of-sale. The number of these programs has increased significantly over the past few years, mainly due to many brand drugs coming off patent. Opinions differ as their intent and usefulness for pharmacy benefit management. Plan sponsors say they undermine copay tier structures, which are designed to incentivize the use of lower-cost alternatives, and increase costs due to members taking brand drugs over the generic alternatives. Proponents of coupons advocate that they are legitimate tools to make drugs more affordable for patients, thereby increasing adherence. Plan sponsors would be prudent to proactively develop their position and strategy for drug coupons on the traditional pharmacy side. Shelly Carey, MMR, is is responsible for all research conducted by PBMI an writing resulting reports. Before joining PBMI, Shelly held various market research roles on both the client and supplier side. Her experience includes research design, execution, and analysis.

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

POPULATION HEALTH MANAGEMENT By freD golDsteIn » interim executiVe Director » Care ContInuum allIanCe IsaBel m. estraDa-portales, pHD, ms » Director, communications » Care ContInuum allIanCe karen moseley Director, researcH » Care ContInuum allIanCe

The Future for Population Health Relies on Three Key Consumer-Centric Features:

Health Data, Care Coordination, and mHealth Systems that enable consumers to put their health data to good use will depend on provider-patient relationships and actionable resources.

onsumerism and its impact on health often move faster than the health care industry. Health care consumerism as a practice within population health is about providing individuals with the tools, services, and support to be informed consumers, able to make informed decisions. It leads to healthier consumers who access the health care system appropriately. Improving the health of populations starts by building a healthy shield around one individual consumer at a time. The Care Continuum Alliance (CCA) is an organization that convenes stakeholders along the continuum of care to improve the health of populations, including individuals who are healthy, those at risk of illness, and those managing chronic conditions. Through advocacy, research, and education, CCA advances population health management strategies to improve quality of care and positive health outcomes while reducing preventable costs. CCA’s population health framework, an outcome of our quality and research committees’ work, puts the consumer at its very center. We use the term consumer, not patient, because the health continuum encompasses services beyond those of traditional health care and being a “patient” to include wellness and prevention, and engaging the individual. Lifestyle issues such as Data exchange and exercise and diet have been one foci of consumerism interoperability will free ofas theit initial entered the health care consumers/patients space. At CCA we keep pace with the market movement from providers and towards consumerism and focus employers controlling our research and advocacy priorities, which are driven by their health care data. our members. For example, we focus on understanding how 50

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incentives work, not merely to move consumers into wellness programs, but on understanding how to engage consumers in community wellness —that is, incentives that inspire the consumer to transcend the health of self to move into a community health mindset. CCA members — health plans, wellness and chronic disease management providers, population health management companies, data and metrics companies, technology companies — have been shifting to consumer centric approaches to provide unique services and insights to their members, as well as to providers who need consumer and population level data to improve their services.

Engaging Consumers and Behavior Change Let’s look at what the future holds for three key areas of population health: health data, care coordination, and mhealth, and how they are driven from the consumer and service sides, where consumerism and our members are intersecting.

1. Health Data — one patient, one record … but, Who owns It? The discussion of interoperability leads directly to the larger issue of health data, privacy, and ownership. There is a movement that we at CCA absolutely adhere to: one patient, one record. More revolutionary types, such as U.S. Chief Technology Officer Todd Park, champion this movement as “Data Liberación,” but it boils down to the same: Data exchange and interoperability will free consumers/patients from providers and employers controlling their health care data and empower consumers to shop around for services that fit their needs. Dr. Farzad Mostashari, national health IT coordinator

We focus on understanding how incentives work, not merely to move consumers into wellness programs.

for the Office of the National Coordinator for Health IT (ONC), believes the concept of consumer-mediated health information exchange will be one of the most significant aspects of health care delivery transformation in the country. Implementing view, download,

and transmit (VDT) functionality is at the core of a consumer-centric approach to health care delivery. CCA agrees with Mostashari’s position. This will represent a shift from personal health records tethered to a particular provider or

health plan’s data source to personally controlled health records. This is not entirely new, since we have seen how the Blue Button feature, which allows Veteran’s Administration patients to download their data, has expanded to the private sector. An empowered, engaged consumer will not just download his or her data but put it to good use by taking action to improve his or health status. But, what kind of action can consumers take now that they have their data? Having access to accurate health information and continued on page 53

mHealth: The Apps Revolution Is Transforming Consumer Engagement and Behavior Change If health consumerism is the epitome of individuals taking control of their lives by considering their personal needs and preferences, the app revolution is — or more accurately, could be — its centerpiece. The third key area for population health is mHealth. mHealth is growing rapidly, providing consumers with the opportunity to choose and customize apps to serve their specific health needs. New apps hit the market daily. There are tens of thousands of health apps now available that include: • fitness, activity, and clinical trackers • wellness, prevention, and chronic disease management tools • direct lines of communications with providers • education and decision support • health insurance information Apps have the potential to impact and improve many areas of consumer health and the health care system, including the providerpatient relationship. Apps provide consumers with a system that is always on and ready to be accessed, as they want or need it, not just when scheduled by their provider or other health care company.

Apps enable real-time information exchange and support between the consumer and many points of the health care system, potentially improving the health system’s understanding of the effect that a consumer’s life has on his or her health, outside of the clinic’s or hospital’s four walls. This knowledge will lead to a health care system with more efficiency, engagement, and satisfaction. Although information about diseases and even preventive behaviors abound, actionable information is not as readily available. The coming years will see the advent of apps that not only track one’s data, but provide insights into the data and give the consumer actionable information in real time. Patients and consumers in general also need access to evidencebased, regulated information that will facilitate smart interactions with their health care providers. But information without context and support could be harmful. There is a need for tools that will efficiently support patient engagement by guiding patients through the intricacies of their care, www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

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POPULATION HEALTH MANAGEMENT freD golDsteIn, IsaBel m. estraDa-portales, pHD, ms, karen moseley continueD from Page 51

connecting them to a provider-led or, at the very least, a guided support system, and supplying them with continuous feedback on their progress. We believe that the app revolution in health care should be able to deliver us from the evils of dis-connectivity and usher us to a new age of patient-centered, provider-led health care in which both sides of the equation take responsibility — and in today’s parlance, are accountable � for the outcomes.

App downsides and solutions A potential downside of the app revolution is an overabundance of them. This makes the consumer’s decision-making process cumbersome because there are very few criteria to assess the value or effectiveness of an app. Here is an overview of the challenges and likely solutions: • Apps that are clinical need oversight and regulation to ensure these systems and devices “do no harm” to consumers and actually meet standards for clinical care. We will see further efforts in this area from federal government entities such as Food and Drug Administration and Federal Trade Commission, and from private groups like Happtique, which will make them feel secure that the apps or devices work as they are intended. • Similar to the health care system with which apps seek to integrate, the fragmentation within the app world is huge.

one’s own EHR are necessary, yet insufficient, conditions to improve health outcomes. From a population health perspective, consumers need the patient-provider partnership and the resources put in their hands so that he or she can understand and implement appropriate actions. As more data becomes available, consumers will experience greater personalization of their health care. Treatments will be based upon consumers’ unique genes, behaviors, wants, and needs.

2. Care Coordination There has been no greater priority for CCA than improving care coordination. We believe that it is not just an immense cost-saver, but also an unparalleled benefit for the patient, resulting in better health outcomes. Providers are adopting care coordination practices by investing in and improving electronic medical records (EMR), also called electronic health records, establishing new systems of care, and implementing care coordination tools and systems. However, there is consensus that although EMRs are a

•

A person with a chronic disease, who wants to track their exercise, diet, and sleep patterns, may need four or more apps on their device. Each app would collect data separately, with the obvious redundancy of information. As the drivers of this revolution, consumers will demand better; we already see the market moving towards integration. The issue of interoperability is also important for the consumer. Who wants apps that don’t work together? CCA works to make sure all its members see the greater benefit of interoperability and standardization because it will allow the efficient scaling-up of services, tapping into new markets, and becoming not just relevant but indispensable to the consumer. Without an interoperable environment, population health management solutions run the risk of recreating the old problem of lack of communication between primary care doctors’ offices, hospitals, and specialists by introducing apps and tools that do not talk to each other.

Will access to better and more readily available and user-friendly apps and monitoring devices/programs improve outcomes, communication, and engagement? We believe the answer is “yes,” and our members are hard at work to show the evidence.

crucial first step, these still leave untouched the systems that will encourage consumer engagement. Again, the access to all that data and information needs to lead to actionable consumer information and support. The clinical data that EMR technologies have provided is invaluable. We have never had access to so much relevant information with so much potential to actually improve care by facilitating care transitions and coordination. But even among providers, that wealth of data is not yet optimized to fully realize its potential. The lack of interoperability and compatibility of data sets from EMRs limits their usefulness to analyze clinical outcomes in a way that gives providers actionable intelligence. The health care system is still a long way from being able to furnish information to the consumers in a manner that allows them to manage their care outside of care settings. In the CCA’s transitions of care model, the health care continuum spans from wellness to end of life. It involves many professionals who strive to deliver proactive, consumer-centric coordinated care. Throughout their lifetime, many individuals will transition between

settings on the continuum on one or more occasions as they experience an acute severe illness or during the course of chronic disease. At the heart of this model is an empowered consumer who reaps the benefits of a wellcoordinated system of care aided by multiple providers and a variety of health care resources, all connected to and by a well-integrated and interoperable data delivery system. CCA’s model and population health framework, which puts the consumer at the center, is still a somewhat lofty but achievable vision of the excellent health care system that our nation needs today, more than ever. Fred Goldstein, founder and president of Accountable Health, LLC, has more than 25 years of senior management experience in the health care industry encompassing disease management and wellness, HMO, hospital and physician group operations, and mHealth. Karen Moseley manages the CCA quality and research agenda and has 20 years of experience and training in the healthcare and non-profit industries. Isabel M. Estrada Portales is the former director of communications for the Office of Minority Health Resource Center, HHS, and a winner of the J. William Fulbright Scholarship for communications research.

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REWARDS AND INCENTIvES By Jerry noyCe » PresiDent & ceo » HealtH enHanCement researCH organIzatIon (Hero)

How to Tie Incentives to Health Outcomes that are Safe, Effective, and Fair for All Employees The ACA will influence wellness programs beginning in 2014 — find out how employers have weighed in and how to design an optimal program.

mployers are increasingly recognizing the connection between employee health and business success. There is no question that they have a huge financial stake in the health of their workers and that the workplace plays an important role in combating chronic disease and containing health care costs. As a result, more companies are offering incentives to employees for participating in workplace health management programs and for meeting specific health or biometric goals. Employers increasingly are focused on the impact of their efforts in reducing the risk of chronic disease of their workers. For a growing number, tying financial incentives to achieving health standards has become a method of helping their employees move from merely participating in programs to true engagement in improving their health. This approach, referred to by wellness providers and employers as outcomes-based incentives, will be influenced by the Patient Protection and Affordable Care Act (ACA) beginning in 2014. Although incentives have proven successful for increasing participation in wellness programs, there is concern among industry experts that tying incentives to specific health or biometric outcomes could be problematic if not implemented appropriately. The Health Enhancement Research Organization (HERO) is a not-for-profit orgaTying financial nization that represents a voice incentives to achieving of employers and providers in worksite wellness. We believe that health standards has employers who invest in offerbecome a method of ing reasonably designed wellness programs to their workers and, helping employees increasingly, to workers’ dependents, should be supported by move from merely allowing them to innovate in their participating to true approach as much as possible, understanding that these programs engagement. should not be discriminatory or overly burdensome for individuals.

HERO is dedicated to providing leadership, conducting research, and sharing best practices in the field of worksite wellness by convening employers from both the private and public sector, including universities, health plans and health systems, consultants, researchers, and vendors of wellness services. HERO has more than 90 member organizations representing millions of employees. HERO collaborated with American College of Occupational and Environmental Medicine, American Cancer Society and American Cancer Action Network, American Diabetes Association, and American Heart Association to bring together both the views and concerns of the consumer (in this case the employee) and the employer. The result of this collaboration was a published joint consensus statement regarding ACA regulations for the purpose of informing employers who are either considering or currently offering a “health-centric” wellness program as to what should be considered in their plan.1 In addition to the published joint guidance, this same group issued comments to the U.S Department of Labor about the revised, proposed regulations pertaining to workplace wellness incentives. Here are some highlights from HERO’s comments on the proposed regulations:

How Should the Reward be Apportioned in a Health-contingent Wellness Program When Dependents are Eligible? HERO recommends that if dependents are eligible to participate in a health-contingent, employer- sponsored wellness program and a financial incentive is tied to achieving a health standard, the total reward be apportioned to the employee and each eligible dependent consistent with the additional premium to cover that dependent, based on the premium for the category of coverage that includes the dependent. Furthermore, if dependents are permitted to participate in the wellness program, we recommend it be noted that they should have full access to the program similar to the employee www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

REWARDS AND INCENTIvES

and be offered an alternative standard based on the same criteria used to provide the alternative standard to employees.

How Should Employers Coordinate the Tobaccorating Factor Under PHS Act 2701 with the Nondiscrimination and Wellness Program Provisions? We recommend that employers avoid incentive designs that put too much financial emphasis on a single factor versus a balanced approach of spreading the incentive over several health factors. The concern is that if up to 50 percent of the total premium cost is allowable for tobacco cessation ¾ compared to 30 percent available for all other risk factors ¾ this allocation may signal to employees that tobacco cessation is of much greater importance than other factors such as BMI, glucose, blood pressure, and cholesterol. Although many employers continue to rely on self-reporting as a means for qualifying for the non-tobacco use incentive, an increasing number of employers are including cotinine testing in their screening protocols. HERO supports either approach. As with any other test tied to an incentive, cotinine testing must have evidence of validity to support its implementation. We recommend that any employer who decides to verify by testing, institute a formal appeal process for retesting employees who believe their test provided false results. This would be consistent with appeals of any other test result, since no test is 100 percent valid.

Are Additional Rules or Standards Needed to Guide the Process of Determining Reasonable Alternative Standards for Wellness Programs? For individuals who have a medical condition that makes it unreasonably difficult to meet the health standard or medically inadvisable to attempt to do so, we recommend employers defer to the view of the individual’s health care provider for setting an alternative standard (or providing a waiver). The provider’s plan for 56

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• Employers increasingly are complementing health insurance benefits by offering wellness programs that help improve employee health and productivity and lower health care costs.2 • Employers spent more than $8,500 per active employee on health care insurance in 2011, which is 76 percent of the total cost of coverage, with the employee paying the remainder. an alternative standard may be supported by the employer-sponsored wellness program and may include activities such as health coaching. For individuals who do not meet the health standard and do not have a medical condition, we recommend the individual be required to meet the health standard to earn the health-contingent incentive if it is reasonable to do so in the time allotted. For individuals who do not have a medical condition but for whom it would be unreasonably difficult or inadvisable to attempt to meet the health standard within the time allotted, we recommend that a reasonable alternative standard be established by a qualified wellness professional, such as a health coach with medical oversight, since there is no established certification of health coaches. For individuals for whom it would be unreasonably difficult or inadvisable to attempt to meet the health standard within the time allotted, regardless of whether they have a medical condition, we recommend that achieving a reasonable progress-based target (e.g. losing five percent of baseline weight) as an acceptable alternative standard, unless medically inadvisable. A reasonable progress-based target would be set by a wellness professional with medical oversight or the individual’s health care provider, depending on whether the individual has a medical condition as defined above.

Reasonableness of Physician Verification We believe physician verification should be allowed in all cases when an individual is asking for an alternative standard, not just when it is “obvious.” Such documentation must be administered consistent with all legal requirements (i.e. HIPAA and state laws) to assure that personal health information privacy and security

is protected. Employees may not be required to disclose a disability protected by the ADA, and any medical information obtained as part of a wellness program that could identify a disability must be kept confidential. The Joint Consensus Statement referenced earlier provides the following advice: “To optimize confidentiality and credibility, employers should strongly consider having appeals independently adjudicated by a qualified vendor that specializes in this activity.”

Are Standards Needed to Ensure that Wellness Programs are Reasonably Designed to Promote Health or Prevent Disease? HERO has been involved in identifying best practices in worksite wellness program design and implementation, since such practices improve participation, health impact, and medical cost outcomes. The HERO Employee Health Management Best Practice Scorecard in Collaboration with Mercer is a tool that provides this information. The Scorecard has been completed at least once in the past four years by more than 800 employer organizations, including large, mid-size, and small employers in a broad range of industry segments, both public and private. It represents an excellent resource for identifying practices that employers use and how they affect the health outcomes of their workforce.

Fundamental Reasonable Wellness Program Design Health management research, which is supported by the self-reported results of employers through the HERO Scorecard, indicates the following elements to achieve success: continued on page 74

SOCIAL MEDIA By Dr. CyntHIa HaInes, m.D. » cHief meDical officer » HealtHDay » managing eDitor » HealtHDay-pHysICIan’s BrIefIng anD PresiDent » HaInes meDICal CommunICatIons, InC. HoWarD luks, m.D. » cHief of sPorts meDicine anD artHroscoPy » unIversIty ortHopeDICs, pC

Social Media Empowers Consumers Gone are the days where the only place one could learn about his/her disease or injury was within the four walls of the treating physician’s office. Social media will continue to be a powerful tool for the empowered consumer looking for information about their doctors and diseases.

he democratization of information brought about by the Internet, social media, and digital technologies has left consumers of health care information with endless choices from which they can absorb content, and providers with opportunities to reach consumers. Even the recent and higher-tech age of “virtual libraries” has expanded into a connectivity that would have been hard to imagine just a decade or two ago. The upside is the many opportunities for the health care consumer to be more educated and engaged. A downside is that the wealth of information can leave one unsure of where to turn for the best, most reliable sources of credible information. Regardless, this unbelievable access to unlimited information enables today’s health care consumer to seek out and obtain more knowledge about a disease process or injury than any other generation before. The health care consumer now has access to a multitude of channels and platforms from which to begin to curate information — and it all begins with a simple Internet search. The information can be found on any given social platform, with its reach extended by shared communication of the That’s the essence of how Sadly there is a lot of content. “social” works and why it is such a misinformation pushed powerful medium. As the age of managed care out on social platforms morphs into an age of health care and an equal amount reform, physicians continue to be squeezed from all sides. Health care of commercialized providers may not have the time to all the information that may nonsense. share be relevant to a patient and the condition(s) at hand. Social media and various digital technologies provides additional opportunities for physicians and other providers to post relevant and impactful information online, extending the education potential for patients beyond the four walls of the physical office.

Social Media = Positive Outcomes Social status and networks have proven to be vital components to overall health; thus, social media holds 58

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great potential for enhanced connectivity in an increasingly fragmented world. Results from a 2009 Annals of Internal Medicine study revealed a link between one’s social network and changes in alcohol consumption, supporting a role for group-level interventions in addressing problem drinking. “Our results support the basic idea that because persons are connected, their health is also connected,” the authors wrote. Findings from another study, one in PLoS Medicine, further support this association linking stronger social relationships with an increased likelihood of survival at a magnitude of effect comparable to quitting smoking.

Doctors and Public Health Experts Share Too Alongside the growth of social media, researchers are increasingly exploring the use of such platforms in health care and public health impact overall. A study in the Journal of Medical Internet Research suggests that the majority of physicians use social media on at least a weekly basis. What’s more, physicians report that using social media improves the quality of the patient care they deliver. The researchers analyzed responses from 485 practicing oncologists and primary care physicians; finding that 61 percent scanned and 46 percent contributed information online at least weekly. The main factors found to influence a physician’s use of social media to share medical information with others were two-fold: perceived ease of use and usefulness. Doctors’ age and gender had no impact on their social media use. The Centers for Disease Control and Prevention, a leader in national and global public health, has demonstrated understanding and acceptance of the power of social media in health care over the years. Recently, CDC unveiled an iPad application called Solve the Outbreak; it allows gamers to take on the role of a disease outbreak investigator and determine the cause of outbreaks based on real-life events. The application can be used as a learning tool for students, teachers, scientists, and just run-of-mill gamers, according to CDC. The app also introduces health tips, definitions, and information about epidemiology.

Participants earn points in the game to advance in rank and then can post their results on social media to engage and challenge others. In a similar application of novel communication detailed in American Journal of Infection Control, researchers investigated the power of social media in communicating and clarifying misunderstandings regarding proper use of antibiotics. Researchers randomly selected 1,000 “tweets” from a complete list of 52,153 mentioning antibiotics between March 13, 2009 and July 31, 2009. They found that the keyword search of “flu + antibiotic(s)” reached 172,571 followers while “cold + antibiotic(s)” reached 850,375 followers. “Further study is warranted to explore how [social media] networks may provide a venue to identify misuse or misunderstanding of antibiotics, promote positive behavior change, disseminate valid information, and explore how such tools can be used to gather real-time health data,” the authors conclude.

Can Social Media be Predictive? A study in the American Journal of Medical Quality, “Measuring Hospital Quality via Facebook,” was directed at social media feedback relative to hospital quality and outcomes. Researchers took a look at 40 hospitals’ Facebook pages to assess whether their “likes” were associated with hospital quality and patient satisfaction. They found that the “likes” were tied to a strong negative association with 30-day mortality rates while positively associated with patient recommendations, suggesting that a greater number of Facebook “likes” for a hospital could serve as a positive indicator of hospital quality and patient satisfaction.

Pitfalls A note of caution: The news is not all good. As with any emerging trend or technology, there is much to be fine-tuned and optimized. There are potential pitfalls to consider when engaging in social media within health care, much of which centers around confidentiality and professionalism. A 2009 study in the Journal of the American Medical Association

Social Media in Clinical Practice By Dr. HoWarD luks

SOCIAL MEDIA is simply the platform that I and a multitude of other health care providers use for personal messaging or to share relevant information with a thirsty global audience. Once our message or the news that we have shared is placed onto a social platform, a bidirectional exchange can take place for clarification or for sharing with a friend or colleague who may find it interesting. No longer is there a need to actually know the provider you are learning from. Serendipity may play an equally important role when you are looking for information because you may find a link that your friend or colleague “retweeted” or “liked.” The possibilities are endless. Social media has become, and will continue to be, a very powerful platform and tool for the empowered consumer looking for information about their doctors and diseases. Social media opens avenues and opportunities for the consumer to learn the available options, find who may be the best person available to treat a disease or condition, and which institution may be best suited for his or her needs. The power the health care consumer now possesses is unprecedented. Yet, this also comes with a word of caution: the credibility of the information you are curating or reading is a big issue. Credibility may be tied to the credentials of the person who posted it, or the number of “retweets” or “likes” associated with it — but that may not prove to be the best indicator of credibility. Consumers of health information should always review and source the information, seek clarification if something is vague, and if something sounds too good to be true — it might be. Sadly there is still a lot of misinformation pushed out on social platforms and an equal amount of commercialized nonsense as well. The intersection of social media and health care are is not only limited to Facebook, Twitter, and YouTube. The space has exploded with focused patient-centric groups which coalesce around a certain disease or health care-related topic. If you search, you will soon find communities which focus on most chronic diseases, and even communities which focus on such topics as joint replacements. Or, a simple tweet or Facebook post about the type of support or group you are looking for will enable your entire network to assist you in finding a community to call home. If the past two weeks scales or even remains the same — the level of new patients (now averaging 12-15 percent) entering my office because of my social media presence and the information presented on my website — then I can emphatically state that the ROI of time and resources to present content in a transparent, meaningful, evidencebased (if possible) manner will pay off quite well for any practice. Perhaps even far more important, patients entering your office will be far better prepared, far better informed, and far more comfortable than those who didn’t use digital media. They will already have a reasonable understanding of what they might be suffering from, they will be far more comfortable with the provider because they have seen videos and are comfortable with the provider’s demeanor and presentation — and all this, in the end makes the job far more engaging, more productive, and more efficient. revealed that the majority of medical schools report instances of medical students posting unprofessional content, including patient confidentiality violations, on social media sites.

Providers, Educators, and Consumers: We Are All in This Together A well-conceived and thoughtful use of social media can improve the human condition by aiding human interaction. Health care social media hopefully can result in better educated patients, and physicians, nurses and other health care professionals with mindsets open to embracing patients actively engaged

in managing their care and treatment. Social media can hopefully help foster that relationship and elevate it to a more meaningful level when the “in real life” (IRL) encounter takes place. We watch with fascination, and participate with enthusiasm, as this virtual revolution in health care communications unfolds around us. Dr. Cynthia Haines is a family physician and medical communicator, covering global medical news for health care professionals and patients. Recognized by US News and World Report as one of the Top Five Doctors to Follow on social media, Howard Luks is a board certified orthopedic surgeon who believes that humans are innately social, health is social, and that health care by nature should be social. Howard also is an External Advisory Board Member of the Mayo Clinic Center For Social Media.

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HEALTH ACCESS ALTERNATIvE: MEDICAL TRAvEL By laura CaraBello » founDer anD PrinciPal; PublisHer cPr strategic marketing communications » meDICal travel toDay

The Affordable Care Act’s Impact on Medical Travel Travel to Centers of Excellence — the Latest Cost-Containment Strategy

edical travel is on its way to becoming commonplace in response to the shift toward quality and increased consumer education — there surely will be a snowball effect as more U.S. companies send employees to COEs and overseas for care. The Affordable Care Act (ACA) is triggering a significant shift toward cost-containment and patient-centric care, and employers now put enormous stock in preventive health care programs and options that offer quality, transparency, and value — key advantages of medical travel. Patients traveling overseas and within U.S. borders to Centers of Excellence (COE) have benefited from highquality, low-cost procedures for After years of operating years. For patients, medical travel means access to high-quality care, outside of market flexibility, and choice, as well as forces, U.S. health optimized outcomes, a better overall experience, and faster recovcare organizations are ery. Furthermore, because of the being held accountable significant savings, most medical travel benefit plans cover travel — and must become and lodging and waive deductibles. Will overseas travel continue competitive to survive. to climb post-ACA implementation? Yes, here’s why. • ACA does not cover many of the medical travel industry’s most popular procedures, such as dentistry, cosmetic and plastic surgery, in-vitro fertilization, and bariatrics, which will continue to attract medical travelers in the same numbers. • ACA waives pre-existing conditions restrictions by insurance companies and makes insurance premiums the same for healthy and chronically ill individuals. If this drives insurance costs up dramatically as I forecast, it will increase the appeal of medical travel as a way to curb costs for employers and insurers. • Globalization of health care continues to compel providers to compete on price and quality, no matter where they are located. • As the senior population grows, expected lack of physician access and long wait times will prompt more people to look overseas for care. 60

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• •

A number of international hospitals and physicians already meet U.S. standards.1 I forecast that insurance companies will cover international medical bills, especially for more complicated procedures such as heart operations and cancer treatment, and alternative therapies such as stem cell treatments not available in the U.S.

Currently, the size of the medical tourism industry varies from 550,000 to 1.6 million. There are signs employers have greater interest in sending employees abroad for surgery. In Florida, for example, the Osceola County government recently began offering employees an incentive to use lessexpensive elective procedures — including heart bypass, joint replacements, gastric procedures, and hysterectomies — overseas in such countries as India, Singapore, and Turkey.2 Osceola, a self-insured organization, expects to save so much money on each overseas procedure — even after paying for travel — that it can cover the surgery without charging the usual co-pays and deductibles that can cost employees thousands of dollars. A knee replacement might cost $65,000 to $75,000 in the U.S. vs. $25,000 abroad.3 Osceola employees who travel for surgery receive airfare, an average stay of 17 days — staying until they are medically cleared to leave — and accommodations at a four-star hotel for patients’ travel companion. Furthermore, as Americans become more engaged and educated health care consumers in the new reform environment — and with increased positive word-of-mouth — medical travel overseas will become more acceptable as certain culture-based fears about safety and quality begin to fade. According to Josef Woodman, author of Patients Beyond Borders, medical travel from the U.S. will increase in the long run as patients seek global options for more immediate care, and as global health care options become more attractive when cost, quality, and patient experience data becomes increasingly available to consumers. According to David Boucher, president of Companion Global Health Care, citing a decade’s worth of declining Medicare participation and the fact that even four years ago nearly one in three Medicare beneficiaries had difficulty locating a primary care physician, getting treatment overseas will be cheaper and faster for many seniors.

Some experts predict that the population growth of insured individuals will collide with the physician shortage. The Census Bureau projects a 36 percent growth in the number of Americans over age 65, the very segment of the population with the greatest health care needs. The Association of American Medical Colleges states that by 2020 the U.S. will face a serious shortage of both primary care and specialist physicians to care for an aging and growing population, with 45,000 too few primary care physicians and a shortage of 46,000 surgeons and medical specialists in the next decade. In the short term, however, Woodman forecasts that the millions of currently uninsured Americans that will be covered per the ACA will choose not to travel for certain treatments, causing a short-term stagnation in outbound U.S. medical travel.

The Big Story for U.S. Patients and Employers in 2012: Domestic Travel

pocket costs; it also covers travel, lodging, and food for the patient and a caregiver. A number of other companies have recently announced similar domestic medical travel options including: • Cleveland Clinic and Boeing have entered into a deal for the company’s 83,000 non-union employees, dependents, and retirees in which doctors perform heart surgeries on employees for a bundled payment. • Newspaper publisher Stephens Media sends employees and their families needing hip and knee replacements to a handful of hospitals across the country that score well on quality of care and also offer a low fixed rate for surgery. • Grocery retailer Kroger flew nearly two dozen workers across the U.S. in 2012 for hip, knee, or spinal fusion surgeries to save money and improve care; there were no complications or hospital readmissions.

Health care in 2012 saw a significant trend in domestic medical travel across state lines that eclipsed travel to exotic lands. Inevitably, traveling to COEs for surgical procedures will become a standard health plan option for most people. In 2011 PepsiCo announced that it would cover certain medical travel costs for its 250,000 domestic employees, and in 2012 WalMart Stores Inc. began offering its employees with health insurance access to heart, spine, and transplant surgeries at six of the nation’s most prestigious hospitals with no out-of-

Retail giants offer medical travel to health care facilities that specialize in a particular surgery at high volume because they show promising results in avoiding unnecessary procedures, offer superior outcomes, and have fewer readmissions, all of which go far to mitigate the high cost of complex surgeries. In addition: • As baby boomers age, the number of knee, hip, spine, and heart-related surgeries are rising. • Surgery costs account for 30 percent

More demand in the U.S. will drive consumers to look for options ACA’s fines for opting out of insurance are not prohibitive ($95 in 2014 and $695 in 2016). The Congressional Budget Office (CBO) projects that four million currently uninsured, non-exempt Americans will refuse to get medical coverage — sustaining pressure on the U.S. health care system. The number of insured individuals (legal, nonelderly residents) is projected to rise from 82 percent in 2012 to 92 percent by 2022 due to ACA. According to the CBO, between 23 million to 25 million people will receive private health care insurance through the exchanges and 10 million to 11 million people will be enrolled in Medicaid or CHIP beginning in 2016. Inbound medical tourism by international patients will continue to grow due to increased demand and purchase of global health insurance policies, according to the Medical Tourism Association. There will be roughly 561,000 inbound medical tourists to the United States by 2017, according to Deloitte Center for Health Solutions.

•

or more of employers’ total health care spend. These complex, high-cost surgeries, while infrequent, consume disproportionately high resources.

Providing employees access to COEs represents an opportunity for employers to reverse a costly trend in which health plan members typically make decisions about surgery guided solely by their physician. Studies show that when patients engage with highly specific, detailed information about their diagnosis, prognosis, and treatment options, they make informed medical decisions that lead to healthier and more personally satisfying outcomes. Given the ability to understand their options and actively participate in surgical decisions, consumers can play a significant role in directing their surgery. The widespread acceptance of domestic medical travel will give more employers better value at lower cost, and enable them to provide high-quality medical procedures to employers at a time when budgets are shrinking.

The Future For employers and payers, medical travel provides an opportunity to control rampant health care costs — and play a role in accelerating health care reform. After years of operating outside of market forces, U.S. health care organizations are being held accountable and must become competitive to survive. It may take a couple of transitional years to really take hold, but domestic and international medical travel offers an irresistible combination of high quality and low cost. As employers offer incentives such as deductible waivers, everyone wins — patient and payer alike. Laura Carabello is executive editor and publisher of Medical Travel Today www.medicaltraveltoday.com, an international newsletter reaching the worldwide medical tourism marketplace. She is a principal owner of CPR Communications, a health care marketing and communications firm www. cpronline,com. ___________________________________________ 1 Orlando Sentinel, May 19, 2012 quoting Paul van Ostenberg, director of the Joint Commission International, the global arm of the organization that accredits U.S. hospitals. 2 Ibid. 3 Ibid.

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HEALTH ACCESS ALTERNATIvE: ONSITE, OFFSITE, NEAR SITE By mIke la penna » PrinciPal » tHe la penna group, InC.

Health Care in the Workplace: More than Just a Clinic No longer a novelty, many early adopters are improving upon on-site care programs with care management, direct contracting, wellness programs, and feedback loops that were once only in the domain of managed care. Demand for Worksite Health Access Continues to Expand The concept of an on-site or workplace health clinic is no longer a phenomenon that is unique or unknown to employers and benefits counselors. Although this may not reflect mainstream benefits design, there are enough thought leaders among self-funded employers to make this trend a feature which employers consider seriously any time they are earnestly reviewing options for benefits re-design. Employers are beginning to seriously consider on-site and workplace health care programming as a natural extension of the benefits program. The self-funded employer has generally used programs that are similar to those connected with traditional insurance products to “manage” their health benefit programs. However, most self-funded employers are doubtful that any management really occurs when they look at their increased cost of health care — by whatever method they choose to use as a measure. If one adds the consumer in the process by applying consumer-directed health plans and health savings accounts,

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Many firms are trying to figure out how to best use telemedicine. there is increasing pressure for the one critical factor that has been missing in the health care equation — credible information. Consumers are now aware that the idea of consumer choice is now connected directly with consumer cost-sharing. I forecast that consumers will welcome new programming that assures access and which has any level of credible information. Self-funded firms, which have traditionally depended upon traditional partners in traditional forms, are now willing to consider entirely new relationships, and they are taking a more active role in benefits design, benefits management, and in the oversight of intermediaries who might have been somewhat slow to adapt. This is an industry that is now in transition. On-site programming is now moving beyond the simple application of a clinic and morphing into population management and value-based contracting. Initial attempts to control and enhance access are not new, but new forms of on-site services incorporate care management, direct contracting,

•

On-site programs always have a base that includes a stable offering of primary care and ancillary health care services that support a primary care function. Most programs are managed by an independent vendor which acts as a distinct provider for the employer.

What Is On-Site? Definitions from Accidental Development

On-site employee services now include health care. and feedback loops that were once only in the domain of managed care.

A Growing Trend: New Design and New Forms of Workplace Health Research organizations attempting to track the growth of workplace health programming are finding that the market continues to expand along several fronts. Towers Watson, in its 2012 Onsite Health Center Survey Report, reflected that the most important reason employers elect to open on-site programs is to increase productivity, with cost control coming in second. Many employers are recognizing existing physician shortages and the continuing access problem, and are developing these programs to assure continued access to care in the face of this growing demand. Our research confirms the Towers information, and when matched with reports from Mercer and the National Association of Worksite Health Centers, a picture emerges of employers shifting benefits programs to involve more consumer involvement and an increased level of employer management. This dual process focuses a new look at the benefit cost from a couple of new perspectives. Often, for the first time, the employer is taking a renewed

look at the design and impact of overall benefits cost at the same time that they are introducing their employees to a program that shares the cost in a significant fashion. There is no one source that has an accurate tracking mechanism to gauge on-site programming, and the surveys, when taken on an individual basis, all contain many caveats regarding the statistical basis of the responses. Also, there is a mixture of taxonomy among studies. However, some facts about on-site programs are consistently reported in all of the data sources: • There is a movement by large selffunded employers to expand their programs and add services. This is also a trend among on-site clinic vendors. • Estimates now suggest that the great majority of firms with employee populations greater than 1,000 are deploying on-site programs or are in the process of considering this as an option. • Municipalities and publicly-funded workforces are following the trend. Recent surveys indicate that as much as twenty percent have access to a clinic or have a board or management team studying the development of a program.

The terms that are used in describing on-site health care are many and varied, just as the programs are. Terms such as wellness, prevention, intervention, therapy, and rehab become mixed up with occupational health and safety. The basic level of entry into most services that are health-related has been the traditional occupational health program that addresses safety and workplace injuries. Many times the existence of the “plant nurse” provides a platform for the service in the “company clinic” to transition into urgent care for all types, whether job-related or not. When intervention or prevention seems appropriate, there is a department where medical personnel can become involved in a support role. Essentially, the traditional occupational health function is growing into a primary care service site. Reflected in the genesis of many programs is the organic growth from a wellness or company-wide health improvement initiative. Employees and their dependents frequently have access to exercise programs and health classes, and the access is coupled with an employee health assessment of some kind, often one that is company-sponsored or endorsed by the human resources department. These health professionals move gradually into more sophisticated forms of disease state management and work with other health care professionals to expand primary care services that are diagnostic in nature. This type of wellness-based programming can often have its own progressive impact on health care costs, but when coupled with an on-site clinic, it can transform into something that is a model of coordinated prevention, wellness, and care. continued on page 73

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HealtH aCCess alternatIve: onsIte Care By r. JoHn kaegI Chief COrpOrate StrategiSt HealtHstat, InC.

The Future of Health Care in America

et’s get one thing straight, anyone who claims to know the future of health care is delusional. Advocating the phrase coined by pioneering computer scientist Alan Kay, Healthstat believes the only way to predict the future is to build it. We’re doing this through Healthstat Complete, the essence of which lies in effective Total Population Management (TPM). Most hospitals, pharmaceutical companies and insurance providers define TPM as an effort to manage a population’s health from an illness perspective; they focus on how to manage disease and illness instead of focusing on wellness or preventing disease. The reason being, of course, there is no revenue incentive for them to create a healthy population. On the contrary, the definition of Total Population Management that Healthstat subscribes to uses a variety of health interventions to produce positive outcomes. By creating health care that is more personal, more convenient and more focused on wellness, Healthstat represents the new wave of health care delivery. Healthstat Complete provides for each of these needs with a three-pronged plan: 1. make Health Care local and personal you’ve heard the phrase health care is local. It’s also personal. Worksite health solutions achieve both because of the proximity of the care that’s provided and the ability for on-site clinical staff to form a trusting relationship with their patients. The nature of worksite care is best performed by Nurse Practitioners, which is the predominant clinical provider Healthstat employs. Not only do Nurse Practitioners have the best medical training for job they also receive the interpersonal skills training necessary to form close bonds with patients as well as employees who may not yet participate in the worksite program. By integrating technology throughout the process, Healthstat Complete is able to bridge the personal side of health care with the science of health care to ensure a complete solution for each individual. Through the use of Electronic Medical Records, Healthstat Complete connects a patient’s bio screening data and patient web portal information to the health programs they may be participating in and shares it with their health coaches, primary care providers and other health specialists. 2. Create a Culture of Wellness On average, 15% of plan participants make up 80% of the cost. These individuals often have chronic health issues requiring expensive treatment and medications, usually for long periods of time if not indefinitely. Healthstat Complete immediately identifies the highest risk individuals and 64

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prescribes treatment to help alleviate or eliminate them as quickly as possible. We then spend the majority of our time on the 85% of individuals who have few or no chronic health conditions today, but who need to initiate and/or maintain a healthy lifestyle in order to stay that way. The older one gets (or the longer one lives the American lifestyle), the more likely they are to acquire a chronic health condition, so Healthstat Complete works to prevent a company’s healthiest employees from becoming unhealthy. This may only be accomplished with Employer participation, however, which is why Healthstat Complete requires 100% commitment from the employer. This commitment is achieved through a combination of deliberate initiatives, including: 1) Participation Incentive Programs 2) Shared Claims Data 3) Wellness Tools like Web Portals 4) No-Cost Prescription and Disease Management Programs 5) Active Participation from the Employer and Total Quality Improvement 3. achieve total population Health management On-site care must reach out and engage all employees — even those who choose not to participate initially. Many of those in the healthiest 85% of an employee population won’t visit an onsite facility because they don’t see a need. For those, a health coordinator or coach is able to provide good health and wellness advice to help steer individuals toward a path of constant health improvement. For the highest risk 15%, the disease management programs set up through the on-site health center are designed to keep them engaged. And, finally, Healthstat Complete helps employers maximize employee participation through financial incentives. With prevention and wellness at its core, Healthstat Complete is designed to be the best health care solution we can envision for America. Making it work, however, requires the support of corporate America — the last remaining institution with the power to influence individuals to take a proactive interest in their personal health. R. John Kaegi is chief corporate strategist for Healthstat, Inc., one of the country’s largest and fastest-growing providers of employer-based on-site health centers. His previous work with Blue Cross Blue Shield of Florida (BCBSF) and the prestigious Harvard/Kennedy School Health Care Delivery Policy Program has earned him a reputation as one of the U.S. health benefits industry’s most experienced solutions innovation experts.

Healthcare is

Predictable

with a partner who identifies and manages health risks early. Healthstatâ&#x20AC;&#x2122;s unique predictive modeling system promotes early knowledge and treatment of health risks to prevent sudden complications from derailing your business. Our experience, advanced technology and scalability can help you create an environment of wellness that works. As the leading provider of on-site primary care, health risk intervention, chronic care management and occupational medicine, Healthstat is here to make healthcare better. Inspire a healthy change today, by visiting healthstatinc.com.

Implemented Healthstat for his company last year.

Reduced his health claims. Saved the company $700.

Found out he had diabetes. Learned to manage it at work.

HEALTH ACCESS ALTERNATIvE: TELEMEDICINE By Jeffrey s. grossman, m.D. » PHysician » peaCHtree spIne pHysICIans, InC.

From Mules to Tractors: What Farmers Can Teach Physicians about the Future Leveraging telemedicine across the nation will provide greater medical access to consumers, reduce the cost of care, and ultimately create a healthier population. Agricultural Innovation Increases Productivity and Lowers Food Prices In 1900, one-third of the American labor force was committed to agricultural production. In 1950, food consumed at home cost 22 percent of a household’s disposable income. By 1998 that percentage had dropped to 7 percent. This dramatic decrease in the cost of food was largely attributable to improved productivity through technological advances. Although this astounding increase in farmers’ productivity created economic instability and the virtual of many rural Managed care was abandonment Southern farming towns, the ultimately a failed development of U.S. agriculture is overall a great success story. Along experiment in the late the way, this transformational 1980s and 1990s change threatened many families’ livelihoods, particularly the small because it centered on farmer. Productivity comes at a price. rationing supply. Farming turned into a “get big or get out” scenario, which made it difficult for small farmers to compete. In the U.S. agricultural industry, technology has created efficiencies that allowed smaller inputs to generate exponentially larger outputs for a growing population over many years. To the dismay of mule breeders, the reliability, versatility, and affordability of the tractor drastically increased production. The free market was ultimately an important vehicle for this transformation. Innovative change will always result in winners and losers, and state and policy makers should take care not to limit productivity artificially or restrict technological advancements such as telemedicine, lest it have negative consequences on a changing market, such as spurring innovation outside the United States rather than here at home. 66

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Access to Insurance ≠ Access to Care Today, the nation faces a similar challenge in the supply and demand of medical care. The health care reform debate in recent years seems to be focused on access to health insurance coverage, culminating with the Patient Protection and Affordable Care Act. It would be more appropriate to define access to health care as access to medical care. The most well-insured person with a maxed-out health savings account who is involved in a car wreck in rural Georgia is unlikely to have access to a neurosurgeon due to a lack of trauma centers. Yet an uninsured person who sustains a gunshot wound to the head in Atlanta and is taken to the trauma center at Grady Memorial Hospital could very possibly have access to the renowned Dr. Sanjay Gupta. Managed care was ultimately a failed experiment in the late 1980s and 1990s because it centered on rationing supply. It turned primary care doctors into gatekeepers who were financially rewarded for referring fewer patients to specialists in a flawed HMO model. There were no rewards or incentives for greater access, efficiencies, or better outcomes. The government mandate that everyone purchase insurance will not automatically increase supply or reduce demand. Access to health insurance is not the same as access to a physician. Patients will still have the same needs. And, as Bachman points out, health care consumerism is “an individual’s right to know,” not simply health care transparency. I believe physician supply is further limited by an onerous regulatory environment, a legal environment of medical malpractice, and insurers managing the payment process. Supply and demand should be focused instead on informed patients who are responsible for their own health care expenditures. The right approach is to reduce demand by empowering patients with information and access, not to limit the supply of medical care. Telemedicine is an example of a technological advancement that directly gives patients both information and access to a physician they would otherwise not be able

Access to health insurance is not the same as access to a physician.

to see. However, telemedicine regulations are determined by each state, and law makers decide what constitutes the establishment of a physician-patient relationship and minimum standards of care. There is tremendous variability, with some states requiring an in-person visit while others do not. For example, Hawaii is progressive while Georgia is in flux. This is why one of the leaders in telemedicine, Teladoc, is available in some states and not others. These fences need to come down.

Leveraging Telemedicine: The Tractor of Medicine The state of Georgia is an example of a state beginning to leverage telemedicine to become a national leader in reducing the demand for physicians through patient education, early access, and prevention. Georgia has 57 (out of 159) counties that do not have a doctor, 67 without a primary care physician, and 80 with third-world health care demographics. Georgia leads the nation in the percentage of its population with tuberculosis and HIV/AIDS, and is ranked second in childhood obesity. Nearly 40 percent of children in Georgia are obese, costing the state $2.4 billion each year. Georgia Governor Nathan Deal and Dr. Brenda Fitzgerald, Commissioner of the Georgia Department of Public Health, recently launched an initiative called Georgia Shape, focused on curtailing childhood obesity by providing education and access specifically through telemedicine.

Preventive measures that focus on reducing the demand for traditional doctor visits are essential. Georgia leaders believe leveraging technology can provide greater access, reduce the cost of care, and ultimately create a healthier population. It’s a trend that deserves national attention. Ron Bachman, the chair of the Institute of Healthcare Consumerism’s editorial board [publisher of this magazine] and one of the nation’s leading experts in health care consumerism and the uninsured (www.healthcarevisions.net), appropriately stresses the necessity of decreasing the demand for health care. He maintains this reform will not occur without a commitment to prevention.

Physicians Must Be Able to Leverage Technology “Supersize me” philosophies and obesity trends suggest the demand for food and calories have increased per person, and the agriculture industry has had no problem meeting demand. Did they train more farmers? Just the opposite happened: innovation and implementation created agricultural, production, and food chemistry economies of scale. Without the productivity boom that occurred in farming, Harry Truman may never have left the family farm in Cass County, Missouri to become our 33rd president. There needs to be a commitment as a society to focus on rewarding innovations. Everyone wants higher quality,

cheaper, more accessible health care. The answer is a return to the simpler days of the town doctor (or medical provider) showing up with his or her medical bag. The metaphorical house “call” is entirely possible throughout the nation with telemedicine. Innovation has similarly enabled a return of small farmers to specialty niches such as free-range and organic farming. This nation’s success as a society in agriculture reinforces the need for policy makers to encourage the implementation of new technologies that address the physician shortage and fundamentally transform health care in the United States. For telemedicine and other advances that drive productive and lower cost to be effective in the United States, however, the nation requires a legal and reform environment that embraces innovation. A medical school classmate of mine is now performing percutaneous valve replacements but he was forced to perfect his training in France. The technology was developed by an American company but onerous Food and Drug Administration regulations drove the procedure to Europe. The answer is not simply more physicians and/or medical schools. At its core is a need to better leverage physicians and other medical providers. The solution lies in making the existing physician workforce more efficient and effective. Physicians must be able to leverage technology and become more productive. For physicians, today’s tractor may well be widespread implementation of telemedicine. It’s time for policy makers to ask, “Where are our tractors and why are we still using mules?” Dr. Jeffrey Grossman is an Atlanta-based pain management physician (peachtreespine) whose practice has conducted at least 100 telemedicine consultations.

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DATA ANALyTICS By Ian DunCan, fsa fIa fCIa maaa » Vice PresiDent, clinical researcH & rePorting » Walgreens Company

Consumerism and Data Analytics in an ACA World

he Affordable Care Act (ACA) of 2010 changed many things about data analytics in the United States. Although it encourages the automation of data collection and integration of provider systems, it places disproportionate emphasis on providers and offers little encouragement for the consumer to take control of his or her health or health insurance using the benefits of data analytics. Although consumer-driven health care and personal financial responsibility have made strides within commercial (employer and self-pay) sectors, government payers are generally off-limits. According to the National Health Expenditure Projections (CMS) for 2011-2021, as more people are covered by Medicaid, the share of government expenditures for health care will expand from 46 percent to 56 percent (Medicare, Medicaid, and local governments), with business and household expenditures accounting for 44 percent in 2021. Assuming consumers are responsible for 100 percent of out-of-pocket expenditures and 14.6 percent of employer expenditures, consumers in 2011 controlled 16 percent of all expenditures. Assuming that consumerdirected plans do not grow as a percentage of the private market, this percentage will fall to 14.7 percent by 2012. I believe this shift towards more government expenditures does not augur particularly well for consumerism. Why are these numbers important? The ACA centralizes payment decisions at the government level — the Independent Payment Advisory Board (IPAB) If there is no significant is an example. It also shifts the responsibility for care decisions in growth in the number favor of the physician and away and skills of analysts from consumers and insurers. A recent article in The Wall able to interpret Street Journal by Shara Tibken available data, we will points to the use of data by insurers pharmacy benefit managers to not realize the return and find patients likely to be admitted or that will make our readmitted to a hospital, or patients investment worthwhile. likely to be non-compliant with medication regimens. Analytics of this type, however, largely support interventions to the patient by others, rather than action by the patient to take control of his or her own health care. The article goes on to say that “WellPoint nurses and case managers pour over patient records and claims histories to see whether patients are following doctors’ orders.” Aside 68

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from the dubious economics of having expensive clinical resources manually performing this type of analysis, once non-compliant patients are found, it is the external clinical resource that will try to change the patient’s behavior rather than changing the patient himself. The ACA encourages innovation in data sharing and analytics, but these innovations are largely aimed at connecting providers and providing them with information, and in some cases, such as Accountable Care Organizations (ACO) or the bundled payment initiative, providing financial incentives for providers to use this information. When I started in the health care data and analytics business 25 years ago, we still had mainframe computers using the DOS operating system. Fast-forward 25 years and we have exponential increases in the quantity of data available and the speed of processing, and exponential declines in cost (Moore’s law). What we have not seen, however, is a corresponding growth in the health care system’s ability to analyze or use the data that are produced, which has grown, at best, arithmetically. If there is no significant growth in the number and skills of analysts who are able to interpret available data, we will not realize the return that will make our investment worthwhile. Let me illustrate with four examples: 1. Data analytics today are not always focused on the right thing. Indeed, they are an example of the man looking for his wallet under a light because it is too dark to search where he dropped it. For example, there is considerable focus on gaps in care. These gaps in care tend to be chronic- care based (although companies such as ActiveHealth Management provide their clients with a broader range of non-chronic gaps) because the data are available and the care management protocols for chronic patients are widely accepted. Protocols that would have a potentially more significant effect on patient care and cost ― for example the appropriate use of certain specialty drugs for cancer treatment ― are less accepted and harder to interpret from available data. CMS has made recording and closing gaps in care a focus of a number of its initiatives. Whether this will lead to an improvement in true health care quality (rather than simply ticking a box on an electronic chart) will take considerable time to evaluate, given the response time to many of these measures. A recent

article by David Eddy and Roshan Shah in Health Affairs, “A Simulation Shows Limited Savings From Meeting Quality Targets Under the Medicare Shared Savings Program,” provides a note of caution with respect to the potential financial value of gap closure for patients with diabetes. 2. So, if we are too often focused on the wrong thing, what’s the right thing? There is no single answer to this question, but that’s where analytics should play a useful role. As an example, the output of traditional predictive modeling is lists of high-risk patients; we have enhanced this technique by including additional dimensions and call the approach opportunity analysis. It involves an additional dimension of intervenability, that is, if you identify high-risk patients, what can you do for them that will reduce their utilization? Opportunity analysis also includes intervention cost, that is, is the cost of your proposed intervention less than the potential improvement in the patient’s utilization? As an example, our analysis of Medicare data for Medicare Shared Savings Program ACOs shows that a sub-population that is responsible for a disproportionate share of cost is patients at the end of their life. This sub-population is ideal for applying opportunity analysis because there are several successful intervention programs and alternative sites of care to which the patient may be referred if identified early enough. Although these programs are relatively resource intensive, requiring both physician and nurse resources, our modeling shows that the potential impact of such a program can lead to both improved quality of life and significantly reduced endof-life costs. This is just one example of the value of specific analyses that combine predictive analytics, economic analysis, and program design in a way that returns a significant benefit to the payer or provider.

3. The outputs of analytics need to be provided to clinicians in an actionable way. A considerable investment is being made in electronic health records, but these systems are too often simply data collection tools. For the busy physician, there is simply too much data to wade through to find key measures that indicate a significant issue or change in status. Once again, this is where intelligent analytics can play a role because analytics that track changes and compare a patient’s status to benchmarks will be able to highlight those factors with potential significance. The analytics necessary to create the rules that identify when a change in status is meaningful and requires an intervention are complex, and will take time to develop. Systems such as IBM’s Watson or Hadoop may be able to perform this type of function but this remains to be seen. Step 1 is to develop algorithms and rules. Step 2 is for the analytics to be displayed for the clinician together with proposed actions in a rules-based system that allows the treatment plan to change based on newly-input information supplied by the patient or the physician. Care management companies and health plans have used these systems for a number of years, but they have been slow to penetrate providers. 4. Traditional provider practices will have to incorporate new clinical resources such as nurse practitioners and pharmacists as 30 million newly-insured patients enter the health insurance system due to ACA. Resources such as community pharmacists often have frequent contact with patients (particularly chronic patients) and, given their trusted status, could be a source of education, screening, and testing, and even diagnosis and prescribing services that would otherwise take resources to provide in a physician setting. Integrating systems will allow data exchange between different

clinical resources to act as an extension of the physician office. Although many new sources of data will become available because of the integration of providers and databases, this data will be focused on the treating physician, with the consumer role secondary. Incentives provided by the ACA encourage people to purchase of more comprehensive plans with lower cost-sharing and higher price points (particularly if you happen to be younger or in good health), not incentives to be a wise, information seeking or (with respect to treatment options) conservative consumer. I forecast that there will be fewer opportunities for consumers to benefit from their own choices, and therefore less demand for the type of information that analytics could provide for consumers. Meanwhile, ACA makes clinicians responsible for choosing and recommending less-costly treatments, and, if necessary, not using treatments where their efficacy is limited. The purpose of the IPAB is something like the United Kingdom’s National Institute for Health and Clinical Excellence (the oddly-named “NICE”) in terms of identifying treatments that should not be offered. In the future, although there still will be large incentives for employers and insurers to try to control health care utilization by better educating members about choices and their implications, there will be less scope for the consumer-directed approach. Instead, data and analytics will be focused on providers, who will have to find ways to change patient behavior from the top down, and not on consumers. Although there will be a role for data and analytics going forward, this role largely will be limited to providing clinicians with information they can use for treating patients. We will look back at the first decade of the 21st century, prior to the passing of the ACA, as a golden age of consumer-driven health care in the commercial population, and even Medicare. But ultimately these efforts will be stifled by the ACA with its top-down, centrally-directed model. Truly a missed opportunity. Ian Duncan is also an adjunct professor of actuarial statistics at the University of California Santa Barbara and an adjunct research professor in the Department of Healthcare Administration at Georgetown University.

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PERSPECTIvE: ELECTRONIC HEALTH RECORDS By Dan munro » contributor » forBes.Com

Time for the U.S. to Apply a Standard Patient Identifier for Electronic Health Records, Saving Lives and Billions Consumer engagement, patient protection, improving care, reducing waste — each depend on the interoperability of electronic health records. Providers may be adopting EHRs, but the industry is missing a fundamental requirement for EHRs, the foundational infrastructure on which our entire health care transformation depends.

primary mechanism for bringing efficiency into this antiquated health care system of ours continues to be the drive to electronic health records — or EHRs. As of February the U.S. Government has spent more than $12 billion on interoperable EHR deployment nationally — and we’re not done. Many consider the EHR Incentive Program, legislated by the Health Information Technology for Economic and Clinical Health Act (HITECH), to be the single most foundational element of health care reform. Nowhere, it seems, is data more critical or so lacking in its capture, management, and exchange than in health care. Last week the U.S. House of Representatives Energy and Commerce Committee held a hearing titled: Health Information Technologies: Administration Perspectives on Innovation and Regulation (the video is available online). Dr. Farzad Mostashari presented as a witness on behalf of U.S. Department of Health and Human Services, Office of the National Coordinator (ONC), and Christy Foreman presented on behalf of the U.S. Food and Drug Administration (FDA). In his prepared testimony, Dr. Mostashari was quick to highlight that: “As of February 2013 more Clearly the technical than 230,000 providers — nearly 43 percent of the challenge of creating nation’s eligible professionals over 75 percent of a national patient and eligible hospitals — have identifier isn’t steep. earned over $12.6 billion in total payments for meeting 70

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the requirements of the EHR Incentive Programs.” Neither the hearing nor the testimony was very informative — except for the final question — which occurred in the closing two minutes. A key focus of the hearing and questioning revolved around the issue of interoperability of the EHR’s themselves. The problem, of course, is that very few of these EHR software systems are able to communicate with each other. Often these EHR solutions can’t even communicate between systems made by the same software vendor. Congressman Michael Burgess (R-Texas) finally asked this simple question: “Dr. Mostashari, I just have to ask you here as we conclude today — hearing a lot of stuff about interoperability — I mean you’re the head — why don’t you just fix that? Why don’t you just make that happen?” Dr. Mostashari’s reply was necessarily brief — and overly confident: “We are using every lever at our disposal to increase the sharing of information.”

The U.S. Government has Precedence Dr. Mostashari’s answer was politically correct answer, but it wasn’t entirely true. There is absolutely another lever that the ONC could use — but likely never will. It is called a National Patient Identifier. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated a National Provider Identifier

in 1996 and Centers for Medicare & Medicaid Services (CMS) began issuing those in 2006. Sadly — and clearly — patients don’t warrant the same level of standard identification as providers.

Industry Knows How There’s an easy corollary of course — the routing transit number that the American

Bankers Association put into place back in 1910. It’s still working faithfully today — and it safely transfers trillions of consumer dollars both online and as paper checks every year. (See Figure 2) Dr. Mostashari concluded his final reply with this declaration: “We don’t want to be the ones to say we’ll choose the standards.” The reluctance is obvious and palpable.

The difficulty, of course, is industrywide acceptance and adoption. The reason — as are most things in Washington D.C. — is opaque, obscure, and coached in the legalese of being “barred” from addressing this critical health care issue. The challenge then, is that both industry and Government collectively demonstrate a complete lack of patient-centered thinking. Basically, the EHR is the foundational infrastructure on which our entire health care transformation depends — but the health care “industry” can’t agree on a standard patient identifier and our Government won’t apply one.

Patient Protection and Rights Suffer

PricewaterhouseCooopers concludes that about $1.2 trillion is wasted each year.

The evidence for the necessity of a standard goes well beyond patient identifiers and EHRs too. For example, Hugo Campos has spent several years fighting for his right to access the data that is generated by the cardiac defibrillator implanted in his chest. The medical device industry has concluded that Hugo has no legal rights to the data generated by his own www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

PERSPECTIvE: ELECTRONIC HEALTH RECORDS

Both industry and Government collectively demonstrate a complete lack of patient-centered thinking. heart. Hugo can be seen at a TEDxCambridge talk discussing this. I caught up with Hugo recently: “Modern implantable cardiac devices are designed to transmit patients’ health data to a device manufacturer who collects and uses it to their benefit. Doctors have some access to reports. Patients, however, are downright barred from their own device data. This raises serious ethical questions about data ownership and our right to access our own health information.” — Hugo Campos, ICD and Patient Advocate The Healthcare Information and Management Systems Society (HIMSS) — the health care industry’s not-for-profit organization that is “focused on providing global leadership for the optimal use of information technology” — has itself reported that “8-14 percent of medical records include erroneous information tied to an incorrect patient identity.” More recently, Marc Probst, CIO of Intermountain Healthcare, summarized his thoughts for an interview with FierceHealthIT: The Government needs to take a role in defining what these standards are, and getting them in place so that we can more quickly reach our

To Err Is Wasteful I can easily think of five online articles that highlight the extraordinary waste and cost of the U.S. health care system. 1. To Err Is Human, Institute of Medicine — November, 1999 2. The Price of Excess, PricewaterhouseCooopers, www.PWC.com, ©2008 — free but registration is required (See Figure 1) 3. USA, Inc., Mary Meeker, KPCB, February, 2011 4. Best Care at Lower Cost, Institute of Medicine, September, 2012 5. Bitter Pill, Steven Brill, exclusive to Time magazine subscribers, February, 2013 destination. I wouldn’t say I’m on the majority side of that conversation, but, HL7’s had, what, 30 years? SNOMED’s been there for a long time. We can’t get there. There [are] too many divided interests in trying to get to the end. To me, it’s as simple as driving on the right side of the road, or using a single gauge of railroad across our country. Someone needs to define that and say ‘go do it.’ We also need time. They need to set these things — they need to do it now — and then they need to say, “15 years from now, everybody’s driving on the right side of the road” so we don’t have absolute chaos, which is what we have. Interoperability is a huge part of the answer, and it’s been evasive for all the wrong reasons. Clearly the technical challenge of creating a national patient identifier isn’t steep. You could start, for example, with a 128-byte field. That could easily include all the elements necessary to create a national patient identifier,

including such variables as driver’s license, social-security number, birth date, and first and last name. The difficulty, of course, is industrywide acceptance and adoption. I get that, but we’ve now had two Government passes at this — HIPAA and HITECH. Those efforts have spanned 20 years and spent billions of dollars, all while deftly avoiding a fundamental requirement: patient identification. In the meantime, another key-element of health care reform is now leading many health care discussions and headlines. It’s called patient-engagement. I’m going to go way out on a limb here and suggest that patient-engagement is directly tied to another key patient attribute — trust. Given all the wonders of technology that patients live with daily how easy or likely will that trust be granted when everyone understands that patient identity is directly tied to billions of wasted dollars, huge health care IT inefficiencies, and 8-14 percent of all medical errors? No one cares what it’s called or who invents it, and it may or may not be a single 128byte field (although that could work). In many ways it’s the first real test of Meaningful Use. It’s also where real health care reform meets patient engagement. A petition is circulating in an effort to have our Federal Government review any legal impediment to study this issue. Should you wish to voice your support for that petition, you can e-sign it online at http://hc4.us/NPIpetition. Dan Munro writes about the intersection of health care IT, innovation, and policy. He focuses on challenges, opportunities, and solutions that can be geared to scale and have the capacity to influence our health care system significant.

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HEALTH CARE ACCESS: ON SITE, OFF SITE, NEAR SITE mIke la penna » continueD from Page 63

GE, Apple, and Google and found to be positive. These industries are being joined by municipalities and school districts which also are finding that the investment and the returns make sense for both the employer and the employee. Employers follow the lead of other employers, but in a cautious and focused fashion. These clinics and workplace health programs have to integrate with benefits Racine city and county partner with a local health care system for plans and consumer “near site” services. involvement in their spending and treatCan an Employer Save More ment patterns. Often, the clinic becomes conby Spending More? fused with the programs that surround it, and Modern workplace medical clinics are the focus becomes the facility rather than the quick to adopt proven models of care, such new system processes that surround it. These as the primary care medical home model that programs become the link and the anchor for is being touted as “primary care on steroids.” new forms of contracting, medical tourism, The physicians typically spend more time with medical telemetry and telemedicine, redefinition patients and focus on a wide range of health of risk contracts, and new relationships with issues. The patient is treated in a modern secondary and tertiary providers. They become facility (generally newly constructed) with game-changers simply because they coordinate all of the technical advantages of the general and combine the goals of the employer and their practitioner’s office and then some. The “medical spending with consumers If you need a pullhome” physician acts not only as a direct care quote, use this sentence provider, but also as a coordinator of the entire New Approaches to On-Site care process. Sometimes this care is coupled Primary Care with an electronic medical record and on-site Employers who invest in capital and diagnostics, such as lab and medical imaging. contracting efforts necessary to launch health Keeping access measures high and service care on-site are awakened to a new approach levels consistent with the principles embodied to benefits design. For the first time, there is a in the medical home model is costly on a perserious review of the newly-created health care patient basis. When the employer has dedicated service and the vendor that provides it, along capital such as space, fixtures, and equipment, with how their employees receive it. investment costs must be weighed carefully. It This gives energy and continued focus is instructive that some of the “smartest” firms to the design of their benefits program, the have considered this investment carefully and review of the way it is being used, and what determined that the cost is worth the risk and can be done to improve it. After employers the return. Return on investment (ROI) is studlaunch their program, they then have a ready ied every day in clinics at Disney, BP, Toyota,

laboratory to see first-hand how it is being accepted and to study how to improve upon it. There now are ample new approaches employers are using that include collaboration with area employers, telemedicine projects, integration with local health care systems, medical tourism, articulation with retail clinics, incorporation of social media, and closer coordination between existing employer-sponsored programs. For example, collaboration between and among employers is an obvious outgrowth of an on-site program since employers in most communities join regularly to address community issues related to health care and costs. This also occurs within an industry. They share information and tips, and innovative ideas spread naturally. The most formal example of this type of collaboration is in Milwaukee where QuadGraphics and several other area businesses have collaborative clinic access arrangements. This coordination is simplified because they use one vendor, which coordinates care for Miller Brewing, Briggs & Stratton, and Northwestern Mutual. Common goals and a common vendor have advanced the on-site programs into a system of care for the employees of each individual firm. Use this as a pull-quote if you need one.

On-Site Programs: a Catalyst for Transparency and Consumerism Employees and employers are discovering that value-based contracting and selective treatment programs achieved with an on-site program are as important as the primary care doctors. They are also discovering that there is a real barrier when it comes to price transparency. There is simply no good way for consumers to match the benefits that they are receiving and the cost that they are being asked to assume in the new “out of pocket” exposure that they have with value. Employers and the on-site programs are one source of information and employers are moving quickly to fill this gap. This will probably be the link to the social media impact we know is coming. When a price for a CAT scan can be compared on a cell phone, then the consumer will have some real power. Right now, I can access the balance in my health savings account, and I can check pharmaceutical

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HEALTH CARE ACCESS: ON SITE, OFF SITE, NEAR SITE mIke la penna » continueD from Page 73

pricing and restaurant reviews, so why can’t I find a PET scan and check to see if it can coordinate with my benefit program? I can also check local retail clinics and figure out their menu of services. I can make an appointment with a physical therapist, so why can’t I make an appointment on-line with an orthopedic practice? On-site workplace clinics won’t solve the problems related to transparency and consumer coordination, but they will be the catalyst for those who will. A number of new initiatives are being developed to match consumer information with provider selection and program value. Walgreens is coordinating retail site access with its on-site programs through Take

Care Health Employer Solutions, and other employers are giving broad access to employees and dependents through on-site programming. Soon, when we want to get access information and comparative pricing, the answer will be, “There’s an app for that,” and employers will be automatically downloading that application to a beneficiary’s cell phone as they apply for their health care savings account or health reimbursement program.

Does It Work? Is It Sustainable? Yes, on both counts. Firms with workplace medical clinics and programming that support them consistently report a higher control of

health care costs with neutral or negative health care cost inflation. More importantly, they also report wide employee acceptance, and many programs measure their success by employee engagement and customer satisfaction. ROI is really still anecdotal and detailed only on a firmby-firm basis, but the trends don’t leave much room for confusion. Workplace health care programs are increasing and existing programs continue to advance in their sophistication and level of service. Mike La Penna’s consulting firm has developed on-site clinic programming for some of the largest Fortune 100 employers. La Penna, MBA, is author of the book Workplace Clinics and Employer Managed Healthcare and co-founder of the National Association of Worksite Health Centers.

REWARDS AND INCENTIvES Jerry noyCe » continueD from Page 56

• • • • • • •

supportive culture and work environment health assessment and screening evidenced-based interventions evidence-based education programs sound communications strategy appropriate use of incentives measurement and evaluation of the outcomes

How can Employers Avoid “Unreasonable” Programs? Employees should not be subjected to an unreasonable, one-size-fits-all approach when qualifying for a reward, this includes failing to take an employee’s circumstances into account and thereby making it unreasonably difficult for the employee to access different means of qualifying.

HERO believes that a worksite wellness program should be tailored to achieve improved health outcomes for individuals. We recommend that employers take into account the needs of their workforce in designing the elements of a program so they are not overly burdensome. The language in the federal regulations should specifically state this requirement. At the same time, the regulations should be flexible enough to allow employers to design programs that are responsive to what works in their organization. Industry experience to date in some organizations demonstrates that an opportunity to receive a lower premium tied to a health factor standard, so long as it is not overly burdensome, can be a strong incentive to change behavior. When an employer has a process for creating alternative standards in place, it should

be clear for individuals with special circumstances how to access that process and obtain a reasonable approach to achieving the reward. To learn more about the joint guidance on incentives, as well as HERO’s ongoing work to define best practices in employee health management, including incentive design, visit www.the-hero.org. 1 “Guidance for a reasonably designed employer-sponsored wellness program using outcomes-based incentives: Consensus statement of the Health Enhancement Research Organization (HERO), American College of Occupational & Environmental Medicine (ACOEM), American Cancer Society and American Cancer Society Action Network, American Diabetes Association, and American Heart Association,” Journal of Occupational and Environmental Medicine, 2012. 2 Robert Wood Johnson Foundation, Health Policy Snapshot (Public Health and Prevention), August, 2012.

PUBLIC ExCHANGES CInDy gIllespIe anD elIzaBetH Carpenter » continueD from Page 31

to enroll the applicant in a health insurance plan along with the applicable subsidies. Employers will be notified of employees who claim a tax credit on the exchange. However, exchanges must select a valid sample of people for whom employer coverage details could not be verified and verbally call employers for additional information. If the exchange cannot obtain information within 90 days, eligibility will remain unchanged.

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Looking Toward 2014 The issues described above are only a select set of developments that have emerged in recent months. Indeed, there are a host of unanswered questions and operational challenges that stand between today and open enrollment. ACA implementation process has passed the window for planned delay. Employers and the health benefits industry should expect for exchanges to “go live” and for tax credits to be available begin-

ning January 1, 2014. The Stakeholders should prepare for implementation, albeit with hiccups along the way, as scheduled. Cindy Gillespie leads the health care policy team at MLA, focusing on health care and health insurance reform and advising clients on long-term market opportunities and business strategies. Elizabeth Carpenter focuses on public policy and federal government affairs, concentrating on policy and funding issues related to the Affordable Care Act, payment reform, insurance market reforms, and public health and nutrition initiatives.

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Who’s Who Profiles

Access these profiles online at www.TheIHCC.com. HSA/HRA/FSA TecHnology: AdminiSTRATion & mAnAgemenT

TSyS Healthcare® provides end-toTSyS HeAlTHcARe end strategic payment solutions for 706.649.5080 consumer directed healthcare. We www.tsys.com/healthcare partner with benefits administrators, healthcare@tsys.com financial institutions, health plans, and software providers to navigate all aspects of HSAs, HRAs, FSAs, transportation accounts, cash reimbursements, and lines of credit. TSYS Healthcare cards offer participants the security they expect along with the ability to conveniently access funds from multiple accounts and manage their benefits payments with simplified single-card access. Clients and partners benefit from simplified processes, reduced paperwork and cost savings that can contribute to improved return on investment.

“We built the TSyS Healthcare platform to meet the market demand for reliable, configurable and intelligent solutions. Understanding the dynamic U.S. healthcare market, our customers rely on our option-driven system to prepare them for the future.” — Trey Jinks, Group Executive, TSYS Healthcare HSA / HRA / FSA AdminiSTRATion And FinAnce

WageWorks helps employers

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child and elder care. Wage Works also offers retiree health care and coBRA Services. more than 100 of America’s Fortune 500 employers and millions of their employees use WageWorks.

HSA AdminiSTRATion & FinAnce

At HSA Bank, we’ve been helping businesses HSA BAnk optimize their health care spending for over 605 N. 8th Street Suite 320 15 years. We offer unmatched service and Sheboygan, Wisconsin 53081 expertise when it comes to health-based United States of America savings accounts. You can count on our 800.357.6246 dedicated business relations team for turnkey www.hsabank.com solutions and ongoing support that help your business and workforce save for a healthy future. To connect with your regional representative, call 866.357.5232 or visit hsabank.com.

“When implementing one of the first medical Savings Account programs in the country, i had a belief that health care could be fixed with free-market principles. i still do. By adopting flexible and transparent practices that manifest core attributes of consumerism such as private exchanges, defined contributions, and self-funding; we will reform health care in our nation.” — Kirk Hoewisch, Co-Founder and President, HSA Bank, a division of Webster Bank, N.A. HSA / HRA / FSA AdminiSTRATion And FinAnce

evolution1 and our Partners serve more eVolUTion1, inc. than 9 million consumers, making us 952.908.9056 the nation’s largest electronic payment, www.evolution1.com on-premise and cloud computing sales@evolution1.com healthcare solution that administers reimbursement accounts, including HSAs, HRAs, FSAs, VeBAs, Wellness and Transit Plans. It is the only solution that offers a single end-to-end user experience, provides innovative auto-substantiation technologies, and automates workflow for Partners, employers, and consumers. It does all this on one technology platform comprised of 1Cloud™, 1Direct™, 1Pay™, 1View™, 1Plan™, and 1Mobile™. Evolution1 and our Partners are dedicated to delivering value, reducing costs and simplifying the business of healthcare.

“The combination of our innovative products will further our leadership position in a rapidly changing healthcare market. Together with our Partners we are committed to reducing costs and simplifying the business of healthcare.” — Jeff Young Chairman and CEO, Evolution1

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Who’s Who Profiles

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Giovanni Colella, M.D. CEO and Co-Founder, Castlight Health HeAlTHcARe dATA AnAlyTicS

med-Vision delivers health-plan risk med-ViSion llc management and wellness strategies to Connie Gee, Vice President help employer groups achieve optimal connie.gee@med-vision.com employee health. Med-Vision’s healthcare data analysis tool, Med-View, guides 813-205-1577 www.med-vision.com employers in mitigating health risks. With www.med-view.net Med-Vision’s help, self-funded employers, healthcare facilities, municipalities, and school districts have reversed trends and decreased healthcare costs while enhancing care.

“you can’t change what you can’t measure. That’s why med-Vision leverages med-View’s analytics tool to investigate employee-health data and determine actionable solutions for employers. med-Vision uses the data to implement innovative and customized plans for strategic wellness and disease management. Results include healthier employees, greater productivity, and drastically lower healthcare costs.” — Connie Gee, Vice President, Wellness Strategist & Health Data Analyst

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HealthPerx is a health and wellness marketing company specializing in creative non-insurance benefit solutions that reduce absenteeism, increase productivity and decrease healthcare costs. consultants: These benefits differentiate you from competitors.

HSA/HRA/FSA TecHnology: AdminiSTRATion & mAnAgemenT

HeAlTHPeRx Jeff Marks, CEO Jmarks@hperx.com direct: 205 222-4062 Toll Free: 888 417-6187 www.hperx.com

corporations: These will give you a far greater ROI than your wellness program while saving your employees thousands of dollars a year. differentiator: n Telemedicine Services: offering the entire family unlimited calls with no consult fees 24/7/365—anytime from anywhere n Additional Health Benefits: offering significant savings for pharmacy, dental, vision, medical advocacy, travel assistance, telephonic counseling (EAP) and more n Turnkey Program: billing, administration, fulfillment, call center, marketing HealthPerx benefits complement any and all existing benefit plans. — Jeff Marks, CEO

ToTAl PoPUlATion HeAlTH mAnAgemenT

lifeSynch changes behaviors to improve lives. liFeSyncH Our approach integrates care of the mind and body to enhance health, increase productivity and 2101 W. John Carpenter Frwy Irving, Texas 75063 minimize unnecessary medical expenses. Built 800-207-5101 on a solid foundation of understanding human www.lifesynch.com behavior and how to motivate behavior change, we deliver proven outcomes through: n Proven methods that lead to increased n Customizable programs that easily engagement and sustained behavior incorporate into existing benefits and change. services. n Clinicians and coaches who provide n Scientifically proven best-practice personalized attention and form trusted guidelines to proactively manage care. relationships with members. n Scalable, user-friendly technology.

“Whether it’s lifeSynch’s health coaching, eAP/Work-life, integrated medical-behavioral health or utilization management services, we integrate our behavioral health and behavior change expertise to ensure our members reach their goals and achieve sustainable, long-term improvements toward their health and well-being.” – Sean Slovenski, President of LifeSynch,

dataPath, inc., is one of nation’s largest providers of cdH solutions specializing in account-based administration systems.

dATAPATH, inc.

1601 WestPark Drive, Suite 9 Little Rock, AR 72204 501.296.9990 www.dpath.com

Since 1984, service providers using DataPath systems have provided administrative solutions for over 1 million participants of FSA, HRA, HSA, and COBRA. DataPath is the only solutions provider to design and deliver a full Suite of systems for handling 125, 105, 132, COBRA, HSAs, Credit and Debit Cards all delivered to account holders through a single Internet portal, myRSC.com.

“With the significant changes in healthcare today, our software solutions allow users to create custom plans for clients that benefit both the employer and employee. not only have we created a single platform for all systems with myRSc.com, with the integration of our mySourcecard debit card at Wal-mart and other retailers, our clients are able to offer a hassle-free solution with 100% compliance.” ®

HSA/HRA/FSA TecHnology: AdminiSTRATion & mAnAgemenT

At Flex, we believe in making health FlexiBle BeneFiT SeRVice benefits more affordable for everyone. coRPoRATion (Flex) For 25 years, we have enabled thousands of clients to make their health care 10275 W. Higgins Road, Suite 500 dollars go further with our consumer Rosemont, IL 60018 driven plans and benefits administration +1-888-353-9178 services, including: fpsales@flexiblebenefit.com n Flexible Spending Accounts (FSAs) www.flexiblebenefit.com n Health Reimbursement Arrangements (HRAs) n Health Savings Accounts (HSAs) n Transit/Parking Reimbursement Accounts (TRAs) n COBRA Administration n And more! Flex continues to evolve and enhance our product portfolio with the addition of our scalable private insurance exchange, InsureXSolutions™. This latest innovation promotes a defined contribution funding model that allows employers to provide health and retiree benefits at a fixed cost, while offering employees with access to coverage options through our online insurance marketplace All Flex clients receive our personalized customer service and a wealth of resources that make our plans easy to use. Each plan we administer comes with online account access, simple transaction tools like debit cards, custom educational resources and unrivaled plan design expertise to keep you in compliance every step of the way. www.TheIHCC.com I HealthCare Consumerism Solutions™ I January/February 2013

Who’s Who Profiles

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Solutions to help your innovative health and benefit programs. HSA/HRA/FSA TecHnology: AdminiSTRATion & mAnAgemenT

mastercard (nySe: mA), is a global payments and technology company.

mASTeRcARd WoRldWide 2000 Purchase St. Purchase, NY 10577-2509

It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities—such as shopping, traveling, running a business and managing finances—easier, more secure and more efficient for everyone.

HeAlTH AcceSS AlTeRnATiVeS

carena provides 24/7, on-demand access to cARenA, inc. health care by phone, webcam, and house 1525 4th Avenue, Suite 300 call. Seattle-based Carena is committed to Seattle, WA 98101 delivering the best health care experience 800.572.2103 possible. Its technology-enabled care delivery www.carenamd.com model provides on-demand access to health James.Taylor@CarenaMD.com care 24/7, via phone, secure video, and house call. Carena provides health care solutions to patients through employers, health systems and through its consumer service, CareSimple.

“People are paying more out of pocket for care than ever—through higher co-pays and deductibles, reduced benefits, and in the rising costs of goods and services. Taken together, health care has become more expensive and less accessible. our goal is to make health care more affordable by providing the right care at the right time for the right cost; to help people live healthier lives by removing the barriers to people taking control of their health care.” — Ralph C. Derrickson, President & CEO, Carena

ToTAl PoPUlATion HeAlTH mAnAgemenT

orriant helps businesses produce a better, more profitable product by creating a workforce that is healthier, more productive, and less expensive to insure.

oRRiAnT

9980 South 300 West Ste. 100 Sandy, Utah 84070 801.574.2603 www.orriant.com suzanne.viehweg@orriant.com

Orriant’s proven strategy is to hold people accountable for improving their health as an integral part of your benefit strategy in a way that is fair and compassionate to all.

“employers can fight back to control rising health care costs. orriant’s strategies have helped major employers from almost every industry cut the cost of health care, improve the health and productivity of their workforce, and push hundreds of thousands of dollars to their bottom lines.” — Darrell Moon, Orriant CEO

HSA/HRA/FSA TecHnology: AdminiSTRATion & mAnAgemenT/PRiVATe excHAnge

Workable Solutions is based in WoRkABle SolUTionS, llc orlando, Fl and provides a full array of 7120 Lake Ellenor Dr. employee benefit solutions including Orlando, FL 32809 HSA, HRA, FSA and commuter accounts, coBRA administration, and benefits 800.946.6342 administration outsourcing. They offer Fax: 407.540.1749 a comprehensive benefit exchange www.workablesolutions.com application, Workable Choice, which provides plan selection assistance, comparison-shopping technology, eligibility management, enrollment, consolidated billing, and more. Workable also offers a myriad of defined contribution options, which allow employers to control their employee health care costs while giving their employees greater choice and flexibility.

“As a small business, we understand first-hand what challenges a small business faces. At Workable Solutions, we can help you control the cost of employee benefits. Workable choice is a private exchange solution that makes offering defined contribution and a multitude of consumer-driven products easy and affordable.” — Terry McCorvie, President/CEO, Workabe Solutions, Inc.

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

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medencentive offers a patented, web-based incentive system that’s been independently validated

medencenTiVe

Cecily Hall Executive Vice President medencentive.com chall@medencentive.com

to control healthcare costs. Doctors and patients earn financial rewards for declaring adherence to best practices and healthy behaviors, provided they agree to be accountable to the other party for doing so. Easy to implement and

experiencelab has created a breakthrough, cdHcenTRic patented communication program that saves 507 S. 8th Ave. Bozeman, employers money by increasing adoption and Montana 59715 usage of consumer directed health (cdH) 617.224.6223 insurance plans among their employees. www.experiencelab.com CDHCentric, sold on a subscription basis, rtravis@experiencelab.com delivers regular, multi-media communications that are tailored based on seven unique attitudinal segments developed from proprietary research.

Traditional health plans protect employees from having to learn the basic skills for making cost-effective healthcare decisions. our segmentation research, which is based on 20 years of behavioral marketing, found 7 unique personality types, and each makes healthcare decisions differently. The result is that, when employee messages are correctly tailored to their personalities, employees become health care consumers! — Roger Travis, President

embraced by users. SUPPlemenTAl HeAlTH

Transitions optical, inc. is the maker of Transitions® lenses, the #1-eyecare professional recommended photochromic lenses worldwide.

emPloyee commUnicATion And edUcATion

TRAnSiTionS oPTicAl 9251 Belcher Road Pinellas Park, FL 33782

800.533.2081 ext. 2262 www.healthysightworkingforyou.org

Transitions Healthy Sight Working for You® is an education initiative that helps HR professionals and benefits professionals communicate the value of the vision benefit to employees. More information and complimentary education tools are available at HealthySightWorkingForYou.org.

“don’t overlook your employees’ healthy sight when thinking about your business goals. A vision benefit that includes an eye exam and sight-optimizing eyewear helps ensure that employees see their best, so they can do their best work, directly affecting your business.”

HeAlTH AcceSS AlTeRnATiVeS

Wecare Tlc is a medical risk management company that leverages onsite primary care clinics to provide solutions to rising healthcare costs while improving patient health and wellness.

We cARe Tlc

120 Crown Oak Centre Dr Longwood, FL 32750 800.941.0644 www.wecaretlc.com raegan.garber@wecaretlc.com

Our holistic approach to care empowers the clinic staff to act as patient advocates, which increases compliance and decreases unnecessary expensive services.

“Healthcare is now a right and employers are faced with the challenge of truly managing their healthcare costs. We have created a unique medical home clinic model that properly addresses quality of care and cost. This requires constant, aggressive, creative, and directed attention to accomplish but it can be done.” — Lynn Jennings, CEO, WeCare TLC

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Who’s Who Profiles

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Solutions to help your innovative health and benefit programs. emPloyee engAgemenT ToolS

Under the ciVA (codeBaby intelligent Virtual codeBABy ciVA Assistant) brands of benefits and health 111 S. Tejon St. Suite 107 advisor, codeBaby improves the healthcare Colorado Springs, CO 80903 consumer experience and optimizes online 877.334.3465 self-service on any web-based platform codebaby.com/online-solutions or device with absolutely no iT disruption. solutions@codebaby.com Benefits advisor offers guidance and selfservice options that help consumers and organizations alike to make better decisions about benefits selection. Health advisor engages new patient visitors on hospital or office websites or existing patients on wellness, prevention & disease management platforms.

“With the rapid changes in health care, our solutions provide organizations innovative ways to optimize their current platform while meeting the demand for an enhanced online experience. ciVA benefits and health advisor solutions are industryleading models that help consumers and organizations more efficiently navigate complex health benefit exchanges and patient portals. “ -Dennis McGuire, CEO BeneFiT enRollmenT And eligiBiliTy

Totem Solutions is a boutique benefits ToTem SolUTionS consulting and administration firm offering highly 11330 Lakefield Drive specialized services and products. We serve Bldg 1, Ste 150 benefit management and HR professionals as an Duluth, GA 30097 extension of their team, allowing them to focus on key initiatives and core strengths. Our services 770-295-1600 include Employee Benefits Consulting, Benefits Toll-free 866-481-4917 Administration, Enrollment, & Communication, www.totemsolutions.com Health Care Reform Education, Enrollment, Reporting & Compliance, Leave and Disability Management Administration.

“We are hands-on benefits advisors for public and private sector companies throughout the country. Totem delivers employer-centric service that simplifies benefits administration and enrollment in order to facilitate employee understanding and ensure the best possible employee experience. our goal is also our great passion and commitment: to offer organizations clear and accurate counsel accompanied by services and solutions that are easy to access, seamlessly implemented and custom fit, while providing a worry-free outsourcing solution.” — Debbie Schultz, President, CEO, Totem Solutions

Annual Outlook 2013 I HealthCare Consumerism Solutions™ I www.TheIHCC.com

HeAlTH deciSion SUPPoRT And coST-SAVing ToolS

WiserTogether inc., helps patients choose the right care at the time. it

WiSeR TogeTHeR Praveen Mooganur

offers an innovative online treatment

202.276.3074

selection & shared decision support

www.wisertogether.com praveen.mooganur@wisertogether.com

platform that helps patients make evidence-based, cost effective

treatment decisions across musculoskeletal, cardiovascular, mental health, diabetes, pregnancy and respiratory illnesses saving payers money. currently 1.5 million members have access to the platform through employers and health plans in the country. WiserTogether was founded in 2008 and is based in Washington, dc. — Praveen Mooganur, COO SUPPlemenTAl HeAlTH

delta dental leads the delTA denTAl industry in designing 1130 Sanctuary Pkwy, Suite 600 Alpharetta, GA 30009 innovative dental coverage programs that keep costs 770-641-5196 down and deliver quality care. Our diverse client list includes everyone from Fortune 100 companies to public agencies to individuals and families. Our customer’s satisfaction is based on our expansive dentist network, cost-saving mechanisms and superior customer service. We are part of the Delta Dental Plans Association that provides dental coverage to more than 56 million people in the US.

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FSAstore.com is the only one-stop-shop FSASToRe.com exclusively stocked with FSA eligible 244 5th Avenue, Suite J-257 products and services. At FSAstore.com, New York, NY 10001 consumers have access to more than 4,000 888.FSA.1450 (372-1450) FSA eligible products, a national database of FSA eligible services, and much-needed information through the FSA Learning Center. FSAstore accepts all FSA and major credit cards, offers 24/7 customer service, one-to-two-day turnaround for all orders, and free shipping on orders over $50.

“each year consumers lose hundreds of millions of dollars simply because they do not deplete all of the pre-tax funds available to them in their FSA. But this year, more consumers than ever are realizing that they can use that money to buy many of the daily health products they need, and without a prescription. FSAstore.com strives to make it easy for participants to use and understand their FSAs.” — Jeremy Miller, Founder and President, FSAstore.com

BeneFiT AdminiSTRATion/PRiVATe excHAngeS

Since 1988, cieloStar (formerly outsourceone) cieloSTAR has helped brokers, employers and employees 530 U.S. Trust Building navigate the ever-changing world of benefits. 730 Second Avenue South Now, with the dawn of “Defined Contribution Minneapolis, MN 55402 Health Care” we are again on the leading edge. With a team of industry thought leaders, CieloStar 612.436.2706 makes navigating healthand benefits choices john.reynolds@cielostar.com easy for employers and employees by offering comprehensive benefits administration solutions with a high-touch, high technology model—most recently launching a proprietary private health insurance exchange.

“Fueled by the far-reaching impact and complexities of health care reform taking effect in 2013 and 2014, employers and employees increasingly find themselves in a ‘farmer’s market’ of benefits choices. cielostar is uniquely positioned with enabling technology that helps purchasers and consumers make the best possible decisions and create a best-in-class benefits administration process. our unique comprehensive approach to benefits offers everything from back room technology for enrollment, data, billing and call centers to complete solutions for coBRA, cdHP and health insurance exchanges.” — John Reynolds, CEO, Cielostar

ToTAl PoPUlATion HeAlTH mAnAgemenT

Dr. tools Steven level1diagnostics uses new to M. Helschien leVel1diAgnoSTicS Founderhealth and CC&BW evaluate employees’ cardiovascular 11722 Lightfall Court Heart disease is the number one killer Columbia, MD 21044 www.level1diagnostics.com in the U.S. and costs millions of dollars 410-707-5667 ◆ doc@level1diagnostics.com Dr. Steven Helschien, Founder in medical care and time lost from Sales: Penny Aleo, Executive VP work. Detection and prevention is the 443.878.3087 key to heart health. Level1Diagnostics pbaleo@gmail.com is an innovative program that, unlike conventional cardiology tests, provides new advanced technology testing and methods to detect and prevent the earliest signs of cardiovascular disease and encourage optimal health. “The biggest problem with traditional cardiology is that it is not preventive—there isn’t a testing program to evaluate people who don’t have any symptoms of heart disease, but may be at significant risk. drugs and surgery are offered to patients instead of lifestyle change programs and supplements.”

HeAlTH deciSion SUPPoRT ToolS

Truven Health Analytics, formerly Healthcare at Thomson Reuters, delivers unbiased information, analytic tools, benchmarks, and services to the health care industry.

TRUVen HeAlTH AnAlyTicS 6200 S Syracuse Way, Suite 300 Greenwood Village, CO 80111 734.913.3000

Hospitals, government agencies, employers, health plans, clinicians, and life sciences companies have relied on us for more than 30 years. We combine deep clinical, financial, and health care management expertise with innovative technology platforms and information assets to make health care better by collaborating with our customers to uncover and realize opportunities for improving quality, efficiency, and outcomes.

—Dr. Steven Helschien, Founder, Level1Diagnostics

www.TheIHCC.com I HealthCare Consumerism Solutions™ I Annual Outlook 2013

Who’s Who Profiles

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Solutions to help your innovative health and benefit programs. Industry Innovators

FSAstore.com — A Flexible Spending Account Solution Company: FSAstore.com Headquarters: New York Website: www.fsastore.com Founded: 2010 Nature of Business: FSAstore.com Inc. operates an online

Flexible Spending Accounts (FSAs) are employer-based programs that allow approximately 35 million Americans to use tax-free income on a variety of health care products and services from band aids to smoking cessation programs. Jeremy Miller, president of FSAstore.com, founded the company on the idea that it should be simple and convenient to use an FSA, as the company estimates that more than $400 million in FSA funds are forfeited every year. FSAstore.com is exclusively stocked with FSA-eligible products removing the guess work that consumers face each time they walk into a drugstore and wonder what they can and cannot purchase with their FSA. The site also offers a variety of tools and services to help customers better understand and use their funds including an FSA-eligible provider database to find local eligible services such as acupuncture and ophthalmologists, an FSA calculator to help them determine how much income to allocate to their FSA, a prescription service for OTC products that require a prescription in order to be reimbursed, a product eligibility list, live chat, and a Learning Center designed to answer all their FSA questions.

shopping Website for flexible spending accounts.

Key Executive: Jeremy Miller, Founder/President.

holders. In addition to customized promotional materials and full technical support, FSAstore.com offers educational outreach to partners’ sales teams and to individual employers’ HR representatives to increase participation. FSAstore.com offers 24/7 customer service, free shipping on orders $50+, one to two day turn around, accepts all FSA debit and major credit cards, and there is no need to submit receipts when using an FSA card.

FSAstore.com is currently partnered with more than 100 benefits administrators to deliver their products, tools and services directly to FSA

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Ameriflex .....................................................7

Jellyvision ............................................ 25-25

Best Buy ............................Inside Back Cover

level1Diagnostics ......................................81

Buck Consultants .......................................29

lifesynch ...................................................77

Carena .......................................................78

MasterCard ................................................78

Castlight health ............................. 12-13, 76

Medencentive ............................................79

Cielostar ....................................................81

MedVision ..................................................76

CDhCentric ............................................... 79

Mercer Marketplace ...................................26

CodeBaby ................................................. 80

orriant .......................................................78

DataPath .................................................. 77

Quest Diagnostics.......................................52

Delta Dental ...............................................80

selectAccount ............................................76

eflexgroup ................................................ 76

Target GiftCards .........................................57

evolution1 ..................................................75

Totem solutions .........................................80

flexible Benefit service Corporation ...........77

Transitions .................................... 44-45, 79

fsA store ............................................ 81, 82

Truven health Analytics.................. 32-33, 81

aCCOunt ManagErs

GBehavior ....................................................5

TsYs healthcare ................................. 10, 75

Joni Lipson jlipson@fieldmedia.com

healthPerX............................................... 77

UnitedhealthCare ..............20-21, Back Cover

Rogers Beasley rbeasley@fieldmedia.com

healthstat ............. Inside Front Cover, 64-65

WageWorks................................................75

hsA Bank ........................................... 35, 75

WeCare TlC ............................................. 79

rEPrInts

intellispend ..................................................5

Wiser Together .............................. 16-17, 80

Rogers Beasley rbeasley@fieldmedia.com

ihC health & Wellness library ....................54

Workable solutions ....................................78

advertising contacts 404.671.9551 CEO/PublIshEr

Doug Field dfield@fieldmedia.com · ext. 101 ManagIng DIrECtOr

Brent Macy bmacy@fieldmedia.com · ext. 103

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