Three years after introduction, consumer-driven health (CDH) plans are gaining widespread acceptance among some of the nation's largest and most prestigious employers, who are hoping the new design will encourage patients to spend health benefit dollars more wisely.
As the annual benefits enrollment season wrapped up, preliminary figures indicated membership in consumer-driven plans will approach 400,000 this year as the plan design is being sponsored by at least 800 employers, ranging from small professional services firms to Fortune 100 companies to the federal government.
While CDH plans were pioneered by start-ups such as Definity Health, Destiny Health and Lumenos, the design is now being promoted and sold by the nation's largest health insurance carriers, including Aetna, CIGNA and Humana.
'We've always viewed this as a five-year to seven-year build,' says Doug Kronenberg, chief of strategy for Lumenos in Alexandria, Va. 'I guess by next year we'll have a couple of hundred thousand people in these plans. The key is to gain the acceptance of large employers. I think it's ahead of schedule. This is still a very new concept.'
Lumenos has some 24 large, self-funded employer groups as well as about 200 smaller fully insured employers and about 75,000 total members. When the Lumenos plan was offered as one of several health plan options to employees last year, enrollment ranged from a low of 4% to a high of 18% at individual employers. This year, enrollment penetration is as high as 40% at some companies, according to Kronenberg. 'We need to take it to the next stage and prove the concept to the employees,' he adds.
Definity Health of Minneapolis, with three full years of experience, projects enrollment will top out at around 200,000 next year for its 50 employer groups. Definity has the most prestigious line-up of mega employer clients, including the federal government, Coors, Sunbeam, Wells Fargo, JB Hunt and McKesson, according to Chris Delaney, Definity Health spokesman.
'We've seen pretty nice growth with our renewing clients as employees hear about the plan through word-of-mouth,' Delaney says. 'If you think of the traditional product development cycle, we're still in the development phase. There's still a long way to go.'
Definity has seen just one client drop its plan, a 200-person firm that was taken over by a larger rival. Enrollment at renewing companies has grown steadily even as cost increases for these self-funded clients has averaged less than 10%. 'When Definity is offered as an option, historically our range of enrollment is 5% to 20%, with our average at about 10%,' Delaney notes.
'It's been a little slower than we expected, but it appears we're reaching the acceleration phase,' says Ryan Levin, vice president of product development and risk management at Destiny Health in Oak Brooke, Ill.
Some 443 employers with about 13,400 employees and dependents are offering the Destiny Health plan this year as the sole health benefit choice. Next year, Destiny will begin offering the plan as a choice with a minimum enrollment of 50 members.
The Destiny model includes the standard elements of a CDH plan: an employer-funded health care account combined with catastrophic coverage beyond a deductible that's set by the plan sponsor, with first dollar coverage for preventive health care, inpatient services and surgery, and prescription medication for chronic conditions. Unlike most CDH plans, members can keep health account funds collected year over year when they leave the plan.
'No matter what happens, the employees get that amount of money and get to take it with them. That's the only way we believe we can change consumer behavior,' Levin says.
Insurers buy in
Aetna, the nation's largest health care company, rolled out its own CDH plan, Aetna Health Fund, last year. This year the company has signed up 20 large employers (3,000 employees and up) as well as 20 smaller accounts.
'We're off to a real good start,' states Ross Sanders, Aetna's regional vice president for national accounts in Dallas. 'It's getting a lot of exposure on the market. We have a lot of employers asking about it and asking for RFPs.'
Aetna's Health Fund is available as a fully insured or self-insured plan with an employer-funded savings account ranging from $500 to $1,000 and deductibles up to $3,000. The plan provides first dollar coverage for preventive services, provides disease management programs and comes with robust online tools to help patients find providers, price health care services and read explanations of benefits.
'We can streamline it to fit health reimbursement accounts as well as flexible spending accounts,' Sanders comments.
Humana has signed up some 11 plan sponsors and 31,000 members for its Coverage First CDH plans, which are offered as two of the six plan choices within its SmartSuite product.
CoverageFirst was piloted with Humana employees last year, and the company's experience was very positive, according to Jonathon Lord, MD, chief medical officer at Humana. Costs for the 18,000 CoverageFirst members increased 4.2% in 2002, compared to an average medical trend increase of 19% in the Louisville, Kentucky area.
Plan sponsors offer employees up to six choices in SmartSuite, including two Coverage First plans, two PPOs, an HMO and a PPO designed for parents with children in college who need coverage in a another region.
'It gave people a choice and an opportunity to spend less, if they wanted to,' Lord explains. 'The core insurance principle must be preserved: healthier people have to pay a little more to subsidize the care of less healthy patients.'
CIGNA Healthcare has also developed a consumer-driven plan option built around employer-funded health care savings accounts combined with the company's traditional PPO plan and robust consumer support tools through an Internet portal. Just three self-insured employers are offering CIGNA's CDH plan option to employees this year, but interest in the concept is building quickly, says Tom Richards, vice president of new product development for CIGNA.
'Employers that are most interested in this concept want to engage their employees in the health care decision-making process, perhaps to return it to more of a free market system,' Richards observes. 'These plans have a lot of the same freedom as PPOs, but the key differences are the consumer support tools.'
