Traditional Health Plans Begin to Adopt Elements of Consumer-driven Approach

The lines between traditional health care insurance products and consumer-driven health plans are beginning to blur as insurers look to include consumerist elements in all product lines.

    HMO, PPO and POS offerings are all being modified to incorporate features typically associated with consumer-driven health plan products.

    The changes follow significant moves into the consumer-driven health plan market by large insurers.

    In the past year, the two largest managed care insurers–UnitedHealth Group and WellPoint–have bought, respectively, Definity Health and Lumenos. Other major insurers such as Aetna have aggressively developed their own consumer-driven health divisions.

    The insurers are gambling on the notion that consumer-driven health plans will become a sizable source of health care delivery, with WellPoint estimating that they will encompass 10 percent to 15 percent of the marketplace within three years.

    But the entrance of the major managed care companies also has implications for all their policyholders as they attempt to make consumer-driven health plan tools available to members in their traditional plans.

    UnitedHealth, for example, will begin to offer Definity’s health statements to select employer-based populations beginning January 1, 2006, with the expectation that they will be more broadly offered throughout 2006. The health statements revamp traditional explanation-of-benefit statements into easier-to-read documents that resemble credit card statements and can include personal messages.

    The company’s strategy is to get individuals involved in making informed decisions about health spending, an approach that should not be limited to a particular plan design, says Meredith Baratz, vice president of market solutions for Definity Health. “The strategies and principles of consumer engagement should be driven across everything we do,” Baratz says.

    Aetna is also seeking to integrate a consumerist approach into its traditional products and has made its own consumer information Web site, known as the Aetna Navigator, available to all its members, regardless of the type of health insurance plans in which they are enrolled.

    “Consumerism is much bigger than CDHP products,” says Robin Downey, head of product development for Aetna. “The lines become much more blurred between these products.”

    Cigna, which began marketing its health reimbursement and health savings accounts to middle-market and national employers in 2002, also offers its Web-based consumer information tools to all its members. “It’s driving aspects of consumerism across 100 percent of our book of business,” says Tom Richards, senior vice president of product for Cigna.

    Richards notes that while Cigna does not view consumerism as being restricted to fund-based products, the financial inducements in consumer-driven health plan products makes those members more engaged than those members in traditional plans. That is because the cost of services comes directly from their accounts, he says.

    The use of Cigna’s Web-based tools is about 50 percent to 60 percent among members in Cigna’s consumer-driven health plans, compared with the low-20 percent range for members in traditional plans.

    “You can get consumerism through good plan design, good tools and good people resources on any product, but to really maximize it, a consumer-driven health plan is the way to go,” Richards says.

    While insurers are beginning by making consumer tools available to all members, the next step in spreading consumerism is the widespread adoption of financial incentives across all product lines, observers say.

    Cigna says a program that offers financial incentives–in the form of lower co-payments and co-insurance levels to consumers of all products who select specialists who meet or exceed certain health care quality and efficiency measures–will be expanded into several new geographical regions beginning January 1, 2006.

    Aetna has its own network of specialists who receive its “Aexcel” designation by meeting thresholds for clinical performance and cost efficiency. Employers with consumer-driven health plans and some traditional products, in certain markets, can offer employees financial incentives for choosing the Aexcel-designated specialists–and most of them do, says Don Liss, regional medical director based in King of Prussia, Pennsylvania.

    Financial incentives for completing health risk assessments or participating in smoking cessation programs have been offered previously in traditional products, but the use of such incentives has increased because of the emphasis on consumer-directed health care, says Michael Taylor, a principal with Towers Perrin in Boston. That’s because such incentives “fit very neatly under the banner of consumerism,” Taylor says.

    Richards notes that a small but growing number of employers are already giving premium discounts and other incentives to employees in traditional plans for completing health risk assessments. “That is something that we would recommend: Employers provide an incentive to employees to take an HRA,” he says.

    Hartmarx, which offers traditional HMO and PPO plans, considered a plan to give premium discounts to employees who were nonsmokers but abandoned the idea after determining that it would be difficult to weed out smokers who claim to be nonsmokers to collect the discounts. “We considered it, but we just decided it wasn’t totally workable,” says Mike Pikelny, employee benefits manager for the Chicago-based clothing manufacturer.

    The increased focus on consumer-driven health plans by the major insurers has not affected the company’s ability to obtain PPO and HMO coverage, he says. Hartmarx has explored consumer-driven health plans but has not taken steps to adopt them, Pikelny says, because he wants to be convinced that employees will have the necessary tools to be good health care consumers.

    “I think some people don’t believe in the concept,” says Scott Keyes, senior consultant with Watson Wyatt.

From the August 15, 2005, issue of Business Insurance. Written by Gloria Gonzalez.