When we sit down with the leadership of our clients and their HR/Benefit departments, we usually get heads nodding when we share that 40-50% of Americans born after 2000 will have diabetes. There are plenty of peer-reviewed case studies to show that leading companies who invest in establishing a culture of health and accountability in the right way experience returns that go far beyond the expense side of the ledger.
Almost 60% of the U.S. diet is made up of sugar and carbohydrate. Since 1977, Americans have doubled their daily intake of sugar, lurking in processed foods like cereal and catsup. Our sugar intake has lead to a corresponding rise in obesity, metabolic syndrome and chronic conditions that are the result of a pancreas that eventually exhausts itself from producing the hormone insulin.
How could it be that from 1980 to 2000, fitness memberships doubled along with a corresponding doubling of the obesity rate? If our willpower is to blame why do we have obesity in 6 year olds? And of all the nutrients listed on a food label, how is it that sugar, a substance more addictive than cocaine, is the only nutrient that a food manufacturer does not have to disclose under the food label's percentage daily recommended allowance guidelines? Could it be that Americans were misled into believing that a "low-fat" diet was best for us based on junk science? Could federal guidelines have been influenced by powerful food lobbies and corporate profits placed ahead of our public health interests?
Realizing we now have an epidemic that we are not going to be able to exercise our way out of, the U.S. Preventive Task Force (USPTF) has recommended coverage for progams that have demonstrated clinical success in reversing symptoms of Metabolic Syndrome be covered under the Affordable Care Act (ACA) at 100% with no cost sharing. In a future post, I'll share more about how and when employers must cover behavioral weight management as a benefit and what our ACAP Health subsidiary is doing to help companies reverse these metabolic trends caused by sugar.
Our company will continue to endorse only programs that adhere to evidence based guidelines from trusted voices like Dr. David Katz, Dr. Mark Hyman, Dr. Robert Lustig, Tim Church, M.D., M.P.H., Ph.D and Dr. David Kessler. Please commit to watching "Fed Up", produced by Katie Couric and Laurie David.
At no other time in the history of our country has the healthcare delivery system so rapidly transformed as it has since the passage of the Affordable Care Act (ACA). With healthcare consuming nearly 20% of our country's GDP, traditional fee for service medicine simply was not sustainable. Accountable Care Organizations ("ACO's") hope to change that with the aim of improving population health, improving the care experience and reducing the per-capita cost. The Centers for Medicare and Medicaid Services (CMS) have very clear rules and definitions as to what might comprise an ACO for the Medicare market, but when it comes to what it means for the private sector, definitions vary. An ACO is a health care delivery system that has partnered with a payer or purchaser of health care to develop arrangements that align financial interests with the delivery of effective and quality care for a specific population. However, if you have seen one ACO ... you have seen one ACO since success is contingent upon IT integration, physician-led affiliation, care coordination, access, prevention and convenience, and payment reform that aligns stakeholder interests.
Many plan sponsors might first think an ACO of today is simply warmed over "HMO soup", reheated from the 1990's. What's different is that we have advances in technology, larger systems of care with greater physician/hospital collaboration, bigger federal incentives and a decade of best practices to guide us. Many systems will be smart to avoid the mistakes made during the HMO era when the market greatly underpriced premiums, withheld care and failed to model risk accurately. We're only in the first inning of the ACO era that will continue to lead to pay for performance, bundled payments, episodic risk sharing and more fully capitated transfer of risk for health sytems.
According to Leavitt Partners latest study, there are over 600 ACOs now across the United States:
There are three considerations that should prompt employers of all sizes to consider ACO's in their employee benefits portfolio:
1) Available Now - Traditional health insurers, physician groups and health systems have been hard at work building partnerships that incorporate shared risk arrangements. Last year, ACOs began rolling their products out to our benefit consulting teams for us to share with our clients. We were pleased to learn the health systems and carriers are "eating at their own restaurant" by enrolling their employees into their own ACO over the last couple of years. For the early adopter seeking alternatives that promise greater value with a narrower network or steerage mechanisms, ACO options are available now throughout the country. Our firm has examples of clients who have deployed narrow network strategies in partnership with hospital based systems anchored in DFW. One of the largests now boasts a network of approximately 50 hospitals, 500 patient access points and 6,000 affiliated physicians.
2) Geographic Density - Since ACOs are about the delivery of healthcare at the local level, employers with great density (concentrations of a large number of employees) will fare better with this strategy. In California for instance, CALPERS, one of the state's largest plan sponsors, had enough clout to form a direct contract with a upside premium credit of nearly $16MM with a physicians group, Blues plan and hospital system. This alliance was formed to compete against the dominate player in the area, Kaiser of California. If you are the major employer in an area, you and other employers have more clout than you might think in this new era of ACO alignment.
3) Show Me the Money - The most fundamental change that ACOs may bring to the market is a substantial increase in the levels of collaboration among payors and providers. So how will more integrated models prove to the private sector they can truly remove waste, impact steerage, align incentives with greater patient satisfaction? These integrated systems realize they must offer up savings in the form of guarantees, ,risk-adjusted PMPMs and total cost guarantees for us to consider their offering. Initial actuarial projections are targeting PMPM savings ranging from 5-10% off of current spending levels, as contracts mature.
But accountability is up to every organization and every body with a body. The ACO cannot foster health alone ... and that's why the early adopters must be prepared to lead with executive sponsorship, design and contribution alignment to drive steerage, coordination and communications that lend support to these exciting options. I am a voracious reader of Benefits Quarterly, a publication for peers in my industry. This excerpt, written by Isabelle Wang and Michael Maniccia of Deloitte, provides a good primer for employers to consider on the topic of ACOs and is available on their website or download here:
Americans have had a love affair with the automobiles ever since Henry Ford introduced the Model-T in 1908 to the Model S of today. With all the hype around new model releases, A USA Today article found that Americans are actually holding onto our existing cars for longer periods of time. The average lifespan of a car on the road increased from 8 to 11 years over the last two decades. There were two primary reasons cited why we drive our vehicles longer: advancements in technology and changes in the economy are forcing us to become more thoughtful consumers. Michael Calkins, AAA's manager of technical services, cited that this trend brings "a corresponding rise in maintenance and repair costs as our vehicles age".
These same economic forces are occurring in healthcare as one out of every eight Americans will be 65 or older by 2030. The average American now has a life span approximating 80 years old. So how much exactly should we be investing in ourselves each year to keep humming down life's highway? We were curious to learn if we spend a greater percentage of money to keep our cars or ourselves in tune.
We decided to look at how much we spend each year to keep the asset in good working order and compare it to the annual ownership cost for each asset. Consumer Reports gave us the average amount Americans spend to maintain their cars each year divided by the annual cost of ownership. The annual ownership cost of our health is a function of the premium we pay to insure ourselves. We calculated the average wellness spend at $728 per year divided by the total health costs an active employee costs to insure in the workplace at $11,830 per year.
Surprisingly, our findings showed we spend the same percentage on both. Six cents of every dollar was spent to keep both of these assets in working order each year. Investing the same percentage in each might make sense if each asset depreciated at the same rate. The reality of this finding is that the less important asset we drive for eleven years and the more important asset (for most Americans) is driven into the ground for eighty.
At ACAP Health, our business models forecast plan sponsors will do better by investing closer to 10% of health spend towards prevention, as compared to the industry average of 6%. The right allocation will vary based on the demographics of your workforce, with additional screenings and diagnostic costs correlating with age. As technology enables more sophisticated modeling, we'll continue to see investments made in what I'm calling the "Preventive Economy". This approach to risk management will impact policy decisions on everything from climate change to obesity. And it will force health payors to reevaluate their current prevention vs. sickness allocation of health spend. Our company's big data analytics warehouse now incorporates 47 million lives and case studies using clinical algorithms tied to one's metabolic risk factors to help us better illustrate the trade-offs between a "pay a little now versus a lot later" approach to health plan sponsorship.
The Preventive Economy will also change the way these services are delivered. Think of the full-service gas and repair stations as the doctor's offices of today compared to the Jiffy Lube's in healthcare emerging for tomorrow. Accountable care, patient centered medical homes, retail pharmacy, telehealth and consumer directed models of preventive maintenance and diagnostic care are coming to the rescue to shore up the scarcity of primary care and nurse practitioners. The preventive economy foreshadows these services will be in strong demand to address the scarcity of supply needed for the coming age boom.
So as you evaluate next year's healthcare spend make sure you are investing more than low single digits towards preventive maintenance to avoid your engine light coming on ... because establishing a healthy lifestyle of keystone habits is the closest thing you'll find to an 80 year bumper to bumper warranty.
The following is a must watch for anyone who endeavors to change the health risk of a population. Our industry needs to move beyond treating our people like they are asses. We assume humans are like farm animals motivated by dangling a carrot or giving a smack on the rear. As Dr. BJ Fogg explains in the video below, an employee's level of motivation is hardly the culprit.
The research and understanding of "B=MAT" - behavior = motivation, ability and trigger ... is worth the small time investment it will take to watch this video. Dr. Fogg’s research is some of the most groundbreaking in terms of how human beings change behavior. Dr. B.J. Fogg is the Director of the Persuasive Technology Lab at Stanford University.
I came across this video at Rock Health when launching my own startup in the digital health technology space.
This real life tsunami is really a metaphor for what occurs beneath the "sight line" of our health plans everyday. It's also why pouring through outdated historical experience to project future costs is as outdated as the "old midpoint trend method we all learned in underwriting boot camp. To have a more accurate line of sight into your health plan, you will want to collect three primary components: 1) first is to leverage a firm that can gather your firm's claims in a longitudinal data analytics warehouse. This helps identify key drivers of health costs and gaps in care 2) second is to get a baseline of biometric measures on the greatest number of engaged participants. This helps identify certain health risks factors of an individual, and 3) the final ingredient comes about by gathering self-reported health assessment responses to gauge lifestyle related factors missed by the other two components.
When you have all three, Dee Edington's (PhD, Health Management Research Center, University of Michigan) research confirms an accuracy rating of between 70-85% predictability in identifying low, medium and high risk individuals three years before they manifest. Our firm utilizes the InfoLock system comprised of 1.3 million individual's claim records over a multi-year look back period that helps our health risk management and clinical staff identify cost drivers and gaps in care.
Once your HIPAA compliant business associates can identify these individuals, your organization can begin aligning the health of your people with the health of your business. Health management programs must be data-driven and evidence-based, otherwise you could find the waves crashing over your head with escalating trend.
If your interested in learning which health carriers our InfoLock system automatically interfaces with please submit your question through our "Contact" section to learn more.
This year health care costs are expected to rise by more than double the rate of inflation. HSAs and FSAs provide individuals with opportunities to put away tax free savings for everyday medical expenses. When Congress first made HSAs available, these plans only covered 454,000 lives. Today, more than 10 million people are covered under a health plan that is eligible for an HSA. U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, today unveiled the Family and Retirement Health Investment Act of 2011, bicameral legislation to strengthen and expand Health Savings Accounts (HSAs) and Flexible Spending Arrangements (FSAs) for American workers and retirees. Companion legislation was introduced in the U.S. House of Representatives by U.S. Rep. Erik Paulsen (R-Minn.).The Family and Retirement Health Investment Act of 2011 will streamline these health care products and simplify them for American families, seniors, and entrepreneurs.
Specifically, the legislation will:
- allow a husband and wife to make catch-up contributions to the same HSA; - remove the onerous new restrictions on the use of HSA and FSA dollars for the purchase of over-the-counter drugs; - allow individuals to roll-over up to $500 from their FSA accounts; - clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible; - reauthorize the use of Medicaid health opportunity accounts; - promote wellness by expanding the definition of qualified medical expenses to encourage more exercise and better diet; - allow seniors enrolled in Medicare Part A to continue contributing to their HSAs; and - allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.
We are witnessing an adoption rate of HSAs that is tracking with similar "hockey stick" patterns experienced by 401(k)s when first introduced. While this is not a cure-all for the fee for service sick care delivery system, we applaud efforts to better align trade offs that improve tax efficiency in health plan design.
It is gratifying to see a health insurance company not act like one when it comes to traditional stodgy branding. Aetna is partnering with Celebrity Chef Bobby Flay and others to conduct a 10 city competition open to the public to take home the title of America's Healthiest Cook and win $10,000 in kitchen appliances. Look out for Texas stops in San Antonio on October 2nd and 3rd, 2010 and Houston on October 9th and 10th.
Original Source: Celeb chef weighs in on cook-off | Business Insurance.
Aetna Press Release: http://www.aetna.com/news/newsReleases/2010/0831_BobbyFlay.html