Health Care Insurers Tailor Service During Downturn

At a time when major health insurers are facing declining enrollment in employer-sponsored plans, several are rolling out the red carpet with new tailored coverage packages in an attempt to hold on to valuable commercial membership.

Both Aetna and Cigna have locked major corporations into multiyear contracts with products aimed at ultimately lowering employers’ health care costs.

These contracts are shaking up the health insurance industry as competition becomes increasingly fierce for big payers—when the nation’s unemployment rate is at a 16-year high of 7.2 percent and the number of people receiving jobless benefits has reached an all-time record, according to the Department of Labor. The two largest U.S. health insurers—UnitedHealth Group and WellPoint—both reported enrollment losses in the fourth quarter of 2008, and other major insurers are expected to follow suit when they release earnings over the next two weeks.

For employers, the new contracts offer guaranteed cost savings over several years, says Jeff Dobro, a physician and principal at Towers Perrin, a benefits consulting group. “Health plans get all or most of the work, and if they can be the sole-source vendor, they will guarantee to employers savings off their health care costs,” Dobro says. “It’s the ultimate performance guarantee.”

Starting January 1, Aetna became the primary insurance carrier for Bank of America, covering about 350,000 employees and family members in a three-year contract. Aetna is managing delivery of medical, dental, vision, leaves of absence, disability and life insurance programs for the Charlotte, North Carolina-based bank. Aetna must meet claims payments and medical cost targets or pay penalties to the bank. Aetna and Bank of America declined to release details of the contract, including how it affects provider reimbursement.

As part of the contract, Aetna has launched “concierge care” for Bank of America workers. Whether they have a health or administrative issue, they need only call one toll-free number and an Aetna attendant can access their medical or billing files to answer questions.

Aetna sees this as an opportunity to make a connection with a member for other services. So, for instance, if workers call asking about their co-payments for a certain drug, under concierge care, those workers might be reminded that they are due for an annual physical.

Workers in poor health or at high risk for certain serious medical conditions are assigned health advocates, who contact the workers directly to discuss their condition and treatment options.

“It’s not the patient calling Aetna, it’s the other way around,” said Aetna CEO Ronald Williams in describing the program at the JPMorgan 27th Annual Healthcare Conference in San Francisco in mid-January. Aetna also steers Bank of America workers to certain providers and centers of excellence in their region, Williams said.

Health care providers are taking a wait-and-see attitude on the agreements, with the American Hospital Association and others declining comment because of lack of information on the plans.

Cigna has lined up three major employers in three-year health plan contracts that include concierge care, which it calls an “integrated personal health team.” About 10 other employers are looking at the option for 2010, according to Cigna.

In January, each of the participating households received a “welcome call” from Cigna to let them know about the new services provided. Next, using claims data, Cigna will begin targeted outreach to members who have been diagnosed with or are at risk for 10 health conditions, including asthma, congestive heart failure, depression and diabetes.

Like the Bank of America workers, Cigna offers personal health coaches to workers and their families with one of these 10 conditions.

The coach is a single point of contact for the employee, and coaches are either licensed nurses or social workers. About 200,000 people are eligible for these programs, and Cigna has 92 coaches on staff. Cigna declined to name the employers.

In just the first three weeks of implementation, Cigna has seen “complex medical cases that we historically would not have seen holistically,” says Jodi Aronson Prohofsky, senior vice president of health solutions operations at Cigna. “Now that you can see the whole person, you see how to wrap services so they benefit the right person at the right time.”

Cigna is targeting a 2.8 percent reduction in medical costs for the employers, and employees don’t pay more for these services, Prohofsky said. Cigna is also offering the program to its own employees.

These deals can be risky for both sides, Dobro said. Bank of America is putting most of its insurance products in the hands of Aetna. Meanwhile, Bank of America is facing some serious financial and regulatory problems related to its acquisition of Merrill Lynch & Co. last fall. In December 2008, Bank of America said it would cut between 30,000 and 35,000 jobs over the next three years.

Officials did not have information yet on how Merrill Lynch employees would be integrated into the Aetna benefits plan, said Kelly Sapp, a Bank of America spokeswoman.

Job cuts not only mean fewer plan enrollees, but also could mean higher medical claims costs for insurers. Cigna president and COO David Cordani last month told investors that layoffs could increase the company’s medical claims costs because workers who get laid off tend to be younger and healthier.

Cordani said that in a down economy, insurers need to do more to provide better service to members. “Service is 50 percent of the reason why business goes out the window,” he said. “We have to make sure our service is strong.”