Wednesday, April 7, 2010

Health Plan Benefit Design of the Future?

As I have noted in previous posts, true health care reform means tackling the issues of rising cost and unnecessary care. Health plans need to develop benefit designs and payment methods that provide incentives to both employees and providers to seek and/or provide the most cost effective care necessary. What kind of benefits designs could help bring about these changes?
One would be a three tiered system that takes into account value, prevention, chronic illness care, and overutilization of services that don't provide the most value.

The three tiers would include:

  • Tier 1: No copay or low copay for ambulatory care for those with chronic conditions, as well as for preventive services to help people from moving to chronic illness.
  • Tier 2: This would resemble the current healthcare system and would ask consumers to chip in 20% coinsurance for normal healthcare.
  • Tier 3: This tier would require consumers to pay more out of pocket for services that do not provide a high clinical value.

Most people, including employers, health insurers, and consumers, are fine with the top two tiers, but the third one raises alarm. Research, most notably from the Dartmouth Atlas, shows that limited-value care is driven by the number of providers in a given community and/or the preference of the provider—not necessarily driven by rich medical evidence.

The implementation of such a three tier system will require a great deal of education by the health plan and the employer on what is considered necessary care and why. If the negative reaction over research that showed that women over 40 should no longer should have annual mammograms unless family history warrants is any indication how people will react to being informed certain care is not warranted, there is no doubt that this education will not be easy. Health care of course is very personal and being told by a health plan or employer that a treatment is not "essential" will be a very difficult discussion. But it a discussion that will have to be held if we want to lower the cost of health care in this country.

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