Population Health Insider, June 2009

Inside:

DTCC saves money, improves clinical measures and prevention

Report: Medicare Advantage ‘extra payments’ will reach $11.4 billion this ye

Washington insider questions whether reforms, Medicare Advantage cuts will actually happen this year

Using microsegmentation to reach at-risk patients

Health plans need to prepare for climate change threats

CDHP patients do not put off preventive care

PBM sale highlights dilemma for health plans

Reports show benefits, problems with public option

Health plans must adapt to changes—or perish

DTCC saves money, improves clinical measures and prevention

Pharmacists have taken on a greater presence on the healthcare team in programs such as the Asheville Project and Medicare’s Medication Therapy Management, which have shown that pharmacist coaches can help improve patient health and reduce costs.

The final economic and clinical results for the Diabetes Ten City Challenge (DTCC) concur with those findings and show that combining pharmacist coaches with value-based insurance design helped diabetic patients manage their chronic disease.

According to the study that was published in the May/June Journal of the American Pharmacists Association, average healthcare costs for those involved in the project were reduced by $1,079 per patient annually, and the participants saved an average of $593 per year on their diabetes medications and supplies because DTCC employers waived copays. (See Figure 1 on p. 3.)

The program also improved patients’ key clinical measures, including lowering A1C and cholesterol levels to achieve American Diabetes Association and National Cholesterol Education Program goals and lowering diastolic/systolic blood pressure levels to below the 130/80 goal. The project also fostered improvements in preventive care measures, including flu vaccinations and current foot and eye exams. (See Figures 2 and 3 on p. 4.)

The results show that pharmacist coaches could affect chronic disease, reduce adverse drug events, and improve medication compliance, says William M. Ellis, CEO of the American Pharmacists Association (APhA) Foundation in Washington, DC, who coauthored the study.

Pharmacist coaches can meet with patients longer than doctors, who are stretched for time, and they can help fill a gap left by physician shortages.

“Physicians today are asked to do so much in an office visit in a really short amount of time,” Ellis says. “The things they have to cover with a patient are really more than I think can be done in a lot of office visits. To have the extra support of a pharmacist to reinforce those things is valuable ... I think the opportunity for more one-on-one interaction with the pharmacist is an area where there is a huge opportunity in healthcare that can certainly pay dividends down the road.”

DTCC built upon the foundation of the Asheville Project, a successful pharmacist-driven diabetes program implemented in the city of Asheville, NC. Through DTCC, the APhA Foundation expanded the pharmacist coach model nationally to prove it can be replicated in diverse geographies and various employer types. (See Figure 4 on p. 5 for a list of locations.)

According to the study, the APhA Foundation found that successful pharmacist coaching programs feature the following:

• An employer that invests in incentives for patients and providers to improve health and lower costs
• Receptiveness of healthcare providers who support community-based collaborative care
• Employers who are more involved in program implementation and have an open culture with their employees
• A local network of pharmacists with the motivation, training, and time to help patients manage their care
• Health plans willing to provide claims data for analysis

“This whole area, I think, is emerging from pharmacy networks that are based on drug distribution to the emergence of pharmacy networks that will be based on patient care,” says Ellis.

Pharmacist coaches plus value-based design

The DTCC program included the following:

• Employer-funded, collaborative health management programs using community-based pharmacist coaches
• Evidence-based diabetes care guidelines
• Self-management strategies designed to keep patients with diabetes healthy and productive
• A value-based insurance design that lowered or eliminated copays for diabetes medications and services

DTCC was offered in community independent pharmacies, community chain pharmacies, ambulatory care clinics, and on-site workplace locations. The sites provided:

• Private areas for patient consultation
• Management support so pharmacists were free to take part in patient care activities
• Internet access for recording and tracking patient care
• Participation in a local and/or regional pharmacist service delivery network that contracted directly with the participating employer

The employers that took part were self-insured, so they were at risk for both medical and prescription costs for their employees and beneficiaries. The employers/health plans created incentives for patients and pharmacists, including waived copays for medications and certain supplies, and pharmacists were paid for their services.

During regularly scheduled appointments, pharmacists “applied a prescribed process of care that focuses on clinical assessments and progress toward clinical goals and work with each patient to establish self-management goals. In addition, they worked with other healthcare providers and could recommend adjustments in the patients’ treatment plans when appropriate,” according to the study.

These private visits allowed patients to ask questions, and the pharmacists were able to identify problems and teach self-management skills.

The APhA Foundation focused on diabetes because of the number of Americans with the disease and diabetes’ influence on other health problems. According to the American Diabetes Association, nearly 18 million Americans have been diagnosed with diabetes, and another 5.7 million people are unaware they have the disease.

Diabetes is more than a health concern; it affects the nation’s economy. In 2007, the direct cost of diabetes was $174 billion, which is about $1 for every $5 spent on healthcare, according to the DTCC final study.

The disease also affects productivity. Diabetes accounted for 120 million lost workdays and reduced productivity by $58 billion in 2007, according to the study.

Northwest Georgia Healthcare Partnership

The Northwest Georgia Healthcare Partnership (NGHP), based in Dalton, led one of the 10 DTCC sites. The nonprofit includes healthcare providers, business, industry, payers, government, and educators, who look to improve the health of residents in Whitfield and Murray counties.

Nancy Kennedy, executive director of NGHP, says the organization recognizes gaps in healthcare, offers solutions, attains funding to test possible solutions, and then evaluates those programs’ return on investment and their effects on the community.

NGHP recruited four local employers to participate: Hamilton Health Care System, Dalton Utilities, city of Dalton, and Whitfield County. The Georgia Pharmacists Association coordinated the Northwest Georgia program, which featured 11 independent and community pharmacists.

Kennedy says an important part of the DTCC is that pharmacists are not replacing doctors or diabetes educators. Instead, they are there to help patients between doctors’ appointments and update the physicians about their patients’ health.

Similar to many parts of the nation, Northwest Georgia is facing a primary care physician shortage. Through visits with patients, the pharmacists are able to provide face-to-face case management.

In effect, pharmacists go from dispensing prescriptions to being educators. Patients feel a close bond with pharmacists and aren’t afraid to ask them medical questions, says Kennedy. Having that friendly relationship also allows for more honest communication.

“That accountability, face-to-face accountability, with someone in your community that you know, that you see on a regular basis, to me is what makes this program so phenomenal and strong,” says Kennedy.

One of the businesses that participated in Northwest Georgia, Hamilton Health Care System, contracted with the Georgia Pharmacists Association to provide the pharmacist coaches, who met with employees in conference rooms.

The health system project was not merely a freebie for diabetics. The patients had to follow their prescription regimen, exercise regularly, and maintain a proper diet to remain in the program.

Both employees and employers “have skin in the game, so to speak,” says Jason Hopkins, HR director at Hamilton Health Care System. “That helps both the investment we put forth to these individuals, but also, in theory, motivates them to comply.”

Although Hamilton did not achieve great financial savings and probably broke even in the DTCC, Hopkins says, the health system should realize preventive savings through diabetics taking better care of themselves.

Faced with rising health costs, many businesses are reactive. They pass rising costs onto employees by increasing copays and deductibles. That works to a certain extent, but employers must draw the line, Hopkins says.

“What this tells the healthcare community is that one, you can incentivize your associates to take better care of themselves—that’s what the healthcare providers want to see. But from the industry standpoint, I think this proves to them that they don’t have to push off more cost onto their employees. They can actually pay more but ultimately in the long run see better financial outcomes because [employees] are taking better care of themselves,” he says.

What is next for concept and DTCC?

Although DTCC showed positive results, most pharmacies could not offer the same level of services at this point. To have more pharmacist coaches, Ellis says the following should happen:

• Pharmacies will need to redesign their areas to create private consultation rooms
• Widespread implementation of electronic health records, which could lead to better data exchange
• Employers should understand pharmacy coaching programs bring long-term savings and not view them solely as an expense
• Payers will have to change the way they reimburse pharmacists to include payment for providing coaching services

Ellis says pharmacists add value to the healthcare system by providing evidence-based treatments that can improve patients’ health. Better health means lower employer costs and increased productivity.

“We’re at a point now in healthcare that a lot of people are looking at the healthcare system in total and looking at how can we revitalize it, how can we change it, how can we improve it. This is an example of the promising practices that could lead to a reformed healthcare system in this country,” says Ellis.

The APhA Foundation is now looking to expand the tenets of the DTCC to other disease states, including hypertension, low back pain, asthma, and chronic obstructive pulmonary disorder.

Report: Medicare Advantage ‘extra payments’ will reach $11.4 billion this year

The federal government will pay private insurers $11.4 billion more for Medicare Advantage plans this year than what the same beneficiaries would cost traditional Medicare, according to a new report from The Commonwealth Fund.

The report adds more ammunition for critics, including the Obama administration and Democrats, who think the private Medicare program is too expensive.

Brian Biles, professor of health policy at George Washington University, and his coauthors reported in the analysis that private insurers have received $43 billion in “extra payments” since 2004. The extra Medicare Advantage payments this year will amount to an average of $1,138 or 13% over the fee-for-service costs for the 10 million Medicare beneficiaries enrolled in Medicare Advantage. The $11.4 billion figure is a 34% increase over 2008 payments, which totaled $8.5 billion. The increase was because of payment rate and plan enrollment increases, the authors wrote. (See Figures 5–9 on pp. 6–8.)

Medicare Advantage, which was created in the Medicare Prescription Drug, Improvement and Modernization Act of 2003, was an attempt by the Republican-controlled White House and Congress to privatize Medicare. Medicare Advantage has seen its enrollment more than double since 2004. In fact, Health Affairs and the Robert Wood Johnson Foundation recently reported that one in four Medicare beneficiaries is in Medicare Advantage, including 41% of Oregon beneficiaries and 34% of California beneficiaries.

Since Obama took office, the president and Democrats have taken aim at the program. CMS lowered Medicare Advantage reimbursements to health insurers by between 4% and 4.5% for 2010.

The Obama administration also implemented stricter terms for health insurers that offer Medicare Advantage. In the new regulations, health insurers will not be able to charge sick, low-income patients more than they would pay under traditional Medicare. The administration’s move was a preemptive strike to prevent Medicare Advantage insurers from transferring costs onto the most vulnerable beneficiaries once the payment cuts went into effect.

The Commonwealth Fund president Karen Davis said Medicare Advantage payment cuts are an “excellent first step,” but warned that policymakers should review whether the government could spend Medicare Advantage dollars more wisely.

The report’s authors wrote that eliminating the extra payments to private insurers would provide $150 billion in savings over 10 years, which could help fund expanded health coverage to the 47 million uninsured Americans or offset the costs of Medicare policy improvements, such as reducing the Part B premiums or increasing eligibility for low-income Americans.

Given Obama’s statements that private Medicare plans should be paid at the same levels as traditional fee-for-service Medicare, the authors suggested that future analysis could focus on creating a way to make the payments more comparable to Medicare fee-for-service costs.

They added that any Medicare Advantage payment reform should “provide increased incentives for private plans to better accomplish their intended role—to develop innovations in quality, efficiency, and patient service; to spur traditional Medicare to better performance; and to offer beneficiaries a choice of the best of both worlds.”

Although the private Medicare program has been bashed by Democrats, Medicare Advantage supporters say the program offers benefits beyond traditional Medicare, including care coordination and vision and drug coverage. Medicare Advantage is also the home of special needs plans, which cover institutionalized beneficiaries who are dual-eligibles and suffer from disabling chronic diseases.

Washington insider questions whether reforms, Medicare Advantage cuts will actually happen this year

A leading Washington, DC, healthcare expert is questioning whether any major healthcare reform will happen this year or even whether the proposed Medicare Advantage payment cuts will get through Congress.

Robert Laszewski, president of Health Policy and Strategy Associates, LLC, in Washington, DC, has been outspoken in his belief that policymakers have simply not found enough money to fund major healthcare reform. For example, a major healthcare reform effort supported by Obama would cost $1.2 trillion over 10 years, but federal leaders have only been able to find $316 billion over 10 years through payment reforms, Laszewski says.

Because lawmakers haven’t found a way to fund a major healthcare plan, Laszewski says interest groups and Washington insiders are presenting their own Plan Bs, which include minor tweaks to healthcare rather than wholesale reforms.

“There is a whole other scenario starting to brew out there, and it’s not clear what it’s going to look like—but it ain’t major healthcare reform,” he says. “How it impacts Medicare Advantage is in no way certain.”

Support for major healthcare reform is getting dimmer. “The rats are headed off the ship ... Everybody is covering their own butt,” he says.

Laszewski has predicted major Medicare Advantage payment cuts over the past two years because the Democrats oppose the program. But times are changing rapidly. Healthcare reform is “floundering” on Capitol Hill, and the Congressional Budget Office keeps rejecting healthcare reform funding programs.

Plus, Laszewski says so-called Blue Dog Dems, which are about 50 House moderate and conservative deficit hawks, have agreed to give a two-year patch to Medicare physician fee reductions, including the 21% cut planned for January 1, 2010. In effect, that means Medicare payments won’t be required to follow the statutory pay-go requirement, which means Congress won’t have to find the $38 billion that would have been saved through physician cuts by cutting other programs. Instead, the $38 billion winds up being tagged onto the federal deficit.

Although Obama has been vocal in his opposition of Medicare Advantage and the need to cut health insurers’ payments, Laszewski is not sure whether Congress will ultimately approve those cuts.

Medicare Advantage payment cuts have always been linked to physician payment cuts. The thinking has been that the money saved by paying private insurers less would offset delaying physician payment cuts for another year. Now, with physician payment reductions not following pay-go, Laszewski suggests that Medicare Advantage supporters could push to not make Medicare Advantage payment cuts because they won’t need to offset the physician payment reductions.

“What I think is interesting ... is we have always tied the Medicare Advantage money to fixing the doc problem, but now that the docs seem to have worked a side deal and healthcare reform is floundering, there is a scenario you can paint that Medicare Advantage does not get touched this year,” Laszewski says.

Alternative to HRAs

Using microsegmentation to reach at-risk patients

Tobacco and food companies find potential customers by using demographic and consumer attitude information, but those kinds of data are usually not used by healthcare companies.

Instead, most health insurers and population health companies try to find at-risk members through health risk assessments (HRA) and medical claims information.

HRAs ask members and employees about their health status and their desire to change their lifestyle habits. Although HRAs find individuals who are ready to improve their health, many people don’t fill out HRAs because they feel the information is intrusive and that their employer or health plan will use it against them. This often leads to low participation rates.

As a way to more effectively find at-risk people and increase engagement rates in wellness programs, Boston-based population health company Health Dialog created the Wellness Segmenter^TM. The challenge is that health and wellness outreach efforts are usually either broad-based and poorly targeted or focus only on the few people who fill out an HRA, making it difficult for health plans and employers to engage individuals who may benefit from health and wellness programs, says Elizabeth Barbeau, ScD, MPH, senior vice president at Health Dialog.

Many employers, population health companies, and health plans use HRAs to find people who need intervention, but Barbeau says the assessments often don’t find at-risk people. In fact, 40% of those who are identified as smokers by their providers on a medical claim do not self-report smoking on HRAs. And that doesn’t even include the people who refuse to fill out an HRA.

Although adding incentives for completing HRAs increases compliance, Barbeau says that doesn’t mean that individuals are truthful on them, particularly if the HRA responses, such as smoking status, are used to determine qualifications for benefits, such as reduced premiums.

HRAs provide important information but are insufficient to target a total population, Barbeau says.

“We’re spending way too much money on HRAs to solely identify individuals,” she says. “There are other ways to do this, and we can look outside our industry to do it.”

The issue is threefold: few people bother to fill out an HRA, those who do aren’t always truthful, and medical claims often don’t properly identify obesity and smokers. This means the net is too small and not effective.

Health Dialog’s solution uses predictive models that leverage third-party demographic and consumer data to more effectively identify and target members for health and wellness outreach interventions, says Barbeau.

The idea is to move away from the so-called “spray and pray” method, which means reaching out to all members regardless of risk profile. This means you provide a broad audience with generic messaging, which is expensive and ineffective. And this method sidesteps the “cherry-picking” that comes with only targeting the small percentage of people who fill out an HRA, says Barbeau.

Instead, Health Dialog promotes the idea of using third-party demographic and consumer data to find people who are most likely at risk of specific diseases or lifestyle issues, such as smokers; reaching out to that group; and personalizing the message. Barbeau studied the way the tobacco industry reaches its client base and found some parallels for healthcare companies looking to engage patients.

The underlying premise is that there are specific patterns of demographic characteristics, consumer behaviors, and lifestyle-related medical conditions, which, when taken together, can predict lifestyle behaviors and risks, says Barbeau.

The Wellness Segmenter is a suite of lifestyle-based predictive models that identify individuals with a high probability of being a current smoker or obese. Although obesity is a national problem, obesity rates are higher in some regions. Those are the areas in which the Wellness Segmenter could find possible at-risk members.

In this model, Health Dialog uses community data, such as age, consumer spending, language/ethnicity, and education level; claims data, such as costs and procedures; utilization, such as provider visits and types, ER visits, and frequency of visits; and additional sources, such as HRA and personal health record data.

Barbeau says Health Dialog microsegments populations by using ZIP code plus four, which corresponds to approximately 16 households, and combines it with the other information specific to these microsegments. Each individual is assigned a risk score for obesity and smoking.

“What is really important in this is that it can all be done in the absence of the HRA data,” explains Barbeau. “We can then identify a stratified list of individuals who are likely to fall into those categories [smokers and obese].”

When Health Dialog built the models, the company let the empirical data tell it how to weigh claims, community, utilization, and additional sources to come up with the best prediction. “We created a laundry list from medical claims and consumer segmentation data that we thought would likely be associated with an individual identifying on an HRA and rigorously evaluated which ones have the highest predictive value in identifying obesity and smoking,” says Barbeau.

Health Dialog has found that by using the lifestyle-based predictive model for obesity, the company doubles its chances of correctly identifying obese individuals. By zeroing in on a key 15% of the population, Health Dialog was able to more accurately find at-risk patients than by simply using HRAs, according to the company. (See Figure 10 below and Figure 11 on p. 12.)

“It’s a pretty powerful indicator,” says Barbeau about the Wellness Segmenter.

With that information, the company is also able to target resources to reach out to members with a personalized and meaningful message that resonates with the individuals’ lifestyles and will lead to higher engagements, she says.

Barbeau adds that the Wellness Segmenter could actually help reduce racial disparities in healthcare.

“I think one of the things that got me so excited when I joined Health Dialog about this consumer model is it represents an effective way to tackle health disparities,” she says. “If we keep doing the same health behavior and health interventions, we are going to see an exacerbation of health disparities by race, income, and educational attainment. We need to find ways to identify and engage all members of a population, including those who public and commercial entities have had a hard time reaching to date.”

Health Net tries Wellness Segmenter

Health Net, the Woodland, CA–based health insurer with more than 6 million members, is an example of a health plan eager to sharpen its wellness program participation rates. Although Health Net has traditionally used HRAs and set up numerous avenues to reach out to members, it is stepping up efforts to bolster participation rates.

Jennifer Christian-Herman, PhD, vice president of national integrated health improvement at Health Net, says that in the past, the insurer has tried to find at-risk members through HRAs, claims data, and laboratory data, but it still can be difficult to pinpoint the right individuals.

“One of the things we found was that by doing broad outreach without targeting the specific population, you are not necessarily identifying the people who would benefit most from a particular wellness program,” says Christian-Herman.

One of Health Net’s key areas of interest is supporting individuals with cardiometabolic risk, which is a combination of risk factors (including smoking; blood pressure; key lab values, such as fasting blood sugar, triglycerides, and HDL cholesterol; and girth measurement) that strongly predict future heart disease, diabetes, and other preventable health conditions. The insurer has worked with Health Dialog, and by now integrating the Wellness Segmenter, the insurer and population health company broadened their relationship.

Christian-Herman says Health Net is interested in identifying its patient population with a cardiometabolic risk and performing targeted outreach. In the short-term, Health Net will gauge smoking cessation rates and weight loss and track lab results. In the long-term, the insurer will track whether the program is preventing the clinical outcomes associated with metabolic syndrome.

Christian-Herman says the program is part of a larger integrated whole-person approach. “An important aspect of our Decision Power Health and Wellness program is offering multiple ways to reach out to people,” she says. “We have integrated our Web strategy and our online tools with our health coaching and telephonic programs. We know that people have multiple ways of learning and choosing to engage in behavior change, and we try to meet them where they are clinically and support them in how they would like to learn or to change.”

Health plans need to prepare for climate change threats

A new regulation will require health insurers to think about climate change and how it could affect their companies, investments, and members.

Although property insurance companies have been preparing for possible climate change, health insurers have not been focused on the issue. Property insurance has tackled the issue of climate change because of possible catastrophic events, such as rising seas wiping out oceanfront property.

On the surface, climate change may not appear to have as much of a direct effect on health insurance companies, but health insurers face their own climate change issues.

In hopes of getting health insurance companies focused on the issue, the National Association of Insurance Commissioners (NAIC) recently adopted a regulation that requires insurance companies to complete an annual eight-question survey about their financial risks associated with climate change and what actions they are taking to respond to those risks. The survey will assess insurers’ risk assessment and management efforts and allow regulators to follow up with questions if necessary, according to the NAIC.

The policy will require all insurance companies with annual premiums of $500 million or more to complete the Insurer Climate Risk Disclosure Survey and submit them to the state insurance commissioner where the company is domesticated. The first reporting deadline is May 1, 2010.

The survey includes questions about what insurers are doing to reduce greenhouse gas emissions, whether they have a climate change statement of policy, whether they consider climate change as they choose investments, what they have done to encourage policyholders to reduce losses caused by climate-influenced events, how they are engaging their members on the topic of climate change, and how climate change could affect the insurer’s investment portfolio. (See Figure 12 below for a list of questions and where there is overlap with the Carbon Disclosure Project.)

“Climate change will have huge impacts on the insurance industry, and we need better information on how insurers are responding to the challenge,” Pennsylvania Insurance Commissioner Joel Ario, who chairs the NAIC Climate Change and Global Warming Task Force, said in a recent announcement about the new requirement. The task force released a white paper, The Potential Impact of Climate Change on Insurance Regulation, in 2008. Insurance commissioners point to several potential issues for health insurers:

• More airborne allergens, rising temperatures, greater humidity, wildfires, and dust and particulate pollution may “considerably exacerbate” upper respiratory disease and cardiovascular disease
• Compounding current health issues, such as asthma
• People exposed to hurricanes and floods
• Heat wa