The high-de­ductible trap

Will the in­creas­ingly pop­u­lar op­tion un­der­mine ac­count­able care?

Modern Healthcare - - COVER STORY - Kerry Grens

Late in May, one of Dr. Thomas Al­bani’s pa­tients came to see him af­ter she had de­tected a lump in her breast. “She knew she had this for a cou­ple of months, but she didn’t do any­thing about it,” said Al­bani, a fam­ily physi­cian in Youngstown, Ohio.

The pa­tient’s hus­band was al­ready cop­ing with a prostate can­cer scare. The loom­ing threat of pay­ing down a high de­ductible had kept her away from the doc­tor’s of­fice. “Un­for­tu­nately, in her sit­u­a­tion, she now has a breast can­cer that’s fur­ther along than it should be be­cause she kept putting it off,” Al­bani said. “And that was all due to her high de­ductible.”

Since a fa­mous RAND Corp. study came out more than three decades ago, it has been well doc­u­mented that out-of-pocket ex­penses in­flu­ence peo­ple’s health choices, and not al­ways in a pos­i­tive di­rec­tion. High de­ductibles lead peo­ple to cut back on both less ef­fec­tive ser­vices and on in­ter­ven­tions that mat­ter.

This pa­tient fail­ure to dis­crim­i­nate be­tween high- and low-value ser­vices runs counter to an­other cost-cut­ting ef­fort—ac­count­able care, which de­pends on pa­tients re­ceiv­ing timely treat­ments, hav­ing their chronic dis­eases bet­ter man­aged and hav­ing them take ad­van­tage of preven­tive screen­ings. A grow­ing num­ber of ex­perts fear erect­ing high de­ductibles on the path to health­care could back­fire by un­der­min­ing moves to save money through en­cour­ag­ing high value ser­vices.

“The high-de­ductible health plans are work­ing against what we’re try­ing to do in the ac­count­able care move­ment, which is to elim­i­nate bar­ri­ers to ac­cess to physi­cians, par­tic­u­larly pri­mary-care doc­tors, and to elim­i­nate bar­ri­ers to preven­tion and well­ness,” said Dr. David Shulkin, pres­i­dent of the At­lantic Ac­count­able Care Or­ga­ni­za­tion, a group of hos­pi­tals and doc­tors in New Jersey that co­or­di­nates pa­tient care. “This can be po­ten­tially harm­ful to us.”

Re­duc­tions in health­care uti­liza­tion—and the re­sult­ing ef­fect on costs—are the key rea­son why high-de­ductible health plans have spread like wild­fire across the U.S. The big­gest driv­ers have been em­ploy­ers seek­ing to slow the growth in pre­mi­ums by hav­ing em­ploy­ees spend down a de­ductible be­fore their ben­e­fits kick in.

A sur­vey by Tow­ers Wat­son, pub­lished this year, found that firms with at least half of their em­ploy­ees in an ac­count-based health plan (which typ­i­cally in­cludes a high de­ductible) spent $1,000 less per em­ployee than com­pa­nies with­out this type of health in­sur­ance plan.

Al­ready, 19% of work­ers with health in­sur­ance were cov­ered by a high-de­ductible health plan that of­fered some sort of sav­ings ac­count to pay for the de­ductible (at least $1,000 in this case), ac­cord­ing to a sur­vey by the Kaiser Fam­ily Foun­da­tion. That’s up from just 4% in 2006. The pop­u­lar­ity of those types of plans is ex­pected to only grow.

The def­i­ni­tion of a high de­ductible can vary,

“The high-de­ductible health plans are work­ing against what we’re try­ing to do in the ac­count­able care move­ment.” Dr. David Shulkin, pres­i­dent of the At­lantic Ac­count­able Care Or­ga­ni­za­tion

but the In­ter­nal Rev­enue Ser­vice sets the thresh­old at $1,250 for an in­di­vid­ual and $2,500 for a fam­ily. Of­ten those types of in­sur­ance plans are paired with a health sav­ings ac­count, funded ei­ther by the mem­ber or the em­ployer.

The num­ber of peo­ple with a high­d­e­ductible plan—both in the in­di­vid­ual and group mar­kets—rose from 1 mil­lion in 2005 to 13.5 mil­lion in 2012, ac­cord­ing to Amer­ica’s Health In­sur­ance Plans.

High-de­ductible plans have the po­ten­tial to yield mas­sive spend­ing re­duc­tions in health­care. A study pub­lished last year by re­searchers at the RAND Corp., the Univer­sity of South­ern Cal­i­for­nia and Tow­ers Wat­son pre­dicted a drop in an­nual health­care spend­ing of $57 bil­lion if high-de­ductible plans are taken up by 50% of em­ploy­ers.

Em­ploy­ers are ex­pected to con­tinue shift­ing em­ploy­ees onto high-de­ductible plans, and the forth­com­ing health in­sur­ance ex­changes will in­clude a high de­ductible on the menu. For ex­am­ple, the “bronze” plan un­der Cov­ered Cal­i­for­nia, the state’s new health in­sur­ance ex­change for 2014, in­cludes a $2,000 de­ductible, which is the up­per limit for an in­di­vid­ual de­ductible for the ex­changes.

Fur­ther­more, 90% of ac­count-based health plans of­fered by em­ploy­ers look as if they will ex­ceed the Pa­tient Pro­tec­tion and Af­ford­able Care Act’s stan­dards for cov­er­age, ac­cord­ing to an anal­y­sis by Tow­ers Wat­son.

The ef­fect of ACOs

But even as em­ploy­ers are push­ing their work­ers into high-de­ductible plans, they are en­cour­ag­ing their in­sur­ers to de­mand val­ue­based pay­ment mod­els from providers, in par­tic­u­lar, ac­count­able care or­ga­ni­za­tions.

Provider or­ga­ni­za­tions in ACOs take on some fi­nan­cial re­spon­si­bil­ity for lim­it­ing the cost of care, even as they seek to achieve a “triple aim”: cost con­tain­ment, pa­tient sat­is­fac­tion and im­proved health out­comes.

Ac­cord­ing to track­ing ef­forts by David Muh­lestein, a se­nior an­a­lyst at con­sul­tancy Leav­itt Part­ners, there were just a few ACOs in 2010, but by early 2013, there were more than 400. Muh­lestein said high de­ductibles have not been much of a fo­cus for ACOs be­cause their tar­get pop­u­la­tions rarely over­lap.

High-de­ductible plans are usu­ally picked up by the health­ier, younger seg­ment of the pop­u­la­tion, while ACOs have been mostly tried with the big­gest health­care spenders. The big­gest po­ten­tial cost re­duc­tions can usu­ally be found by pro­vid­ing more cost-ef­fec­tive care to the sick­est, old­est and usu­ally most ex­pen­sive pa­tients.

“I re­ally think both are go­ing to grow, and there will be over­lap,” Muh­lestein said.

High-de­ductible in­sur­ance and ACOs clearly have a com­mon goal in work­ing to slow the rise in health­care costs, but some ex­perts fear their dif­fer­ent ap­proaches may clash.

On the cost side, ACO lead­ers agree that high-de­ductible health plans can lower over­all spend­ing. A RAND study from 2011 found that fam­i­lies who switched from a con­ven­tional

in­sur­ance plan to one with a high de­ductible and a health sav­ings ac­count re­duced their health­care out­lays by 21% in the first year.

“Hav­ing the pa­tient in­volved in think­ing about the to­tal cost of care would align ev­ery­one’s best in­ter­ests in mak­ing sure that what the provider and pa­tient agree to do to­gether is al­ways the most ef­fi­cient and ef­fec­tive in meet­ing the pa­tient’s needs,” said Dr. Bar­bara Wal­ters, the ex­ec­u­tive med­i­cal di­rec­tor at the Dart­mouth-Hitch­cock health sys­tem, based in Le­banon, N.H., and the chief med­i­cal of­fi­cer of ACO OneCare Ver­mont.

High-de­ductible plans pro­mote en­gaged con­sumerism, agreed Shulkin of the At­lantic ACO, say­ing “if we want to im­prove, we need to have pa­tients highly ed­u­cated and en­gaged in their own health­care.”

But in that ideal world, pa­tients would cut back only on un­nec­es­sary ser­vices and marginally ben­e­fi­cial in­ter­ven­tions and not avoid the care that mat­ters. Al­bani’s pa­tient il­lus­trates that that isn’t al­ways the case.

“In gen­eral, peo­ple make cuts across the board,” said Dr. Ali­son Galbraith, an as­sis­tant pro­fes­sor at Har­vard Med­i­cal School and the Har­vard Pil­grim Health Care In­sti­tute. “They don’t make a dis­tinc­tion be­tween high-value and low-value care.”

Here, the com­pat­i­bil­ity be­tween ACOs and high de­ductibles starts to fray. “What the high-de­ductible health plans do is they very ef­fec­tively ad­dress the cost of care, but they don’t have a pos­i­tive im­pact on the qual­ity of care or on ac­cess,” Shulkin said.

An­other 2011 RAND study re­vealed that peo­ple with high de­ductibles used preven­tive ser­vices less of­ten than their coun­ter­parts in tra­di­tional in­sur­ance plans. “Iron­i­cally, the preven­tive care was cov­ered ... but it did not stop re­duc- tion in uti­liza­tion of preven­tive ser­vices,” said Jill Ye­gian, vice pres­i­dent of pol­icy and ex­ter­nal re­la­tions at the In­te­grated Health­care As­so­ci­a­tion, a not-for-profit that pro­motes qual­ity im­prove­ment and af­ford­abil­ity in Cal­i­for­nia.

De­layed care pos­si­ble

Joe Damore, a vice pres­i­dent at the Pre­mier health­care al­liance, said high-de­ductible health plans can align with ac­count­able care prin­ci­ples, but “the devil is in the de­tails of the plan de­sign ... Peo­ple can de­lay care if the high­d­e­ductible plan is not de­signed cor­rectly.”

In­sur­ers have tried to ad­dress the po­ten­tial pit­falls of high de­ductibles. Cigna Corp., for in­stance, in­cludes 100% cov­er­age for preven­tive ser­vices, health coaches and diseaseman­age­ment pro­grams in its high-de­ductible plans. “It’s not just a high de­ductible with a fund,” said Joe Mondy, a Cigna spokesman.

The com­pany has tracked the be­hav­ior of 407,000 cus­tomers who have a high­d­e­ductible health plan and found that they are ac­tu­ally more likely to seek out ev­i­dence­based care and preven­tive ser­vices than mem­bers with con­ven­tional plans.

“We do see more so­phis­ti­cated plans that have more ac­cess to pri­mary care,” Shulkin said. “We’re com­fort­able with those types of plans be­cause they’re try­ing to fine-tune those un­in­tended con­se­quences” of the high de­ductible.

Dr. Tri­cia Nguyen, chief med­i­cal of­fi­cer for the Mesa, Ariz.-based ACO Ban­ner Health Net­work, agreed that ACOs and high­d­e­ductible health plans can work to­gether if pa­tients have cost and qual­ity in­for­ma­tion avail­able to help them make de­ci­sions. How­ever, health sys­tems don’t al­ways have that in­for­ma­tion read­ily avail­able. “In to­day’s en­vi­ron­ment, it is not con­ducive to mem­bers who have a high-de­ductible health plan be­cause there’s a lack of trans­parency, a lack of in­for­ma­tion around cost and qual­ity of ser­vices,” she said.

Even with greater trans­parency, en­cour­ag­ing con­sumers to shop around for care can cre­ate a chal­lenge for ACOs.

Pa­tients’ com­mit­ment to an ACO is im­por­tant for that or­ga­ni­za­tion to man­age the health of a pop­u­la­tion, said Stu­art Lock­man, pres­i­dent of Michi­gan Pi­o­neer ACO, which is af­fil­i­ated with Detroit Med­i­cal Cen­ter. Doc­tors make an in­vest­ment, say, through ed­u­ca­tion or co­or­di­na­tion of care, to pre­vent dis­ease or keep chronic con­di­tions in check.

“The con­cept of a high-de­ductible health plan is not nec­es­sar­ily in­con­sis­tent with that, but ... to the ex­tent that the pa­tient leaves the sys­tem and goes else­where, to the ex­tent that the pa­tient switches plans, to the ex­tent that the pa­tient does not come back into the sys­tem to re­ceive fol­low-up care, all of those things work as dis­in­cen­tives to achiev­ing the kinds of out­comes that I think we’re all in­ter­ested in achiev­ing,” Lock­man said.

Philip Kamp, CEO of Va­lence Health, a data-an­a­lyt­ics con­sult­ing firm, said there may need to be some tweaks to ben­e­fit de­sign to keep con­sumers with high de­ductibles within an ACO. But in the­ory, there’s no rea­son why the two can’t work hand-in-hand.

“The con­cepts make sense to­gether,” Kamp said. “We want pa­tients to make de­ci­sions based on value and them ac­tu­ally pay­ing money for it. So it should con­nect with the con­cept of providers as­sum­ing risk ... I don’t see it in con­flict.”

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