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ISSUE || Annual 2014

The Institute for HealthCare Consumerism

Our Experts Share Insights

Ron Bachman

William R. Boyles

Kevin McKechnie

Barbara Gniewek

Cindy Gillespie

Jon Comola

Cyndy Nayer

Suzanne Delbanco

Bonnie Brazzell Gil Lowerre

Rebecca Kelly

Shelly Carey

Tine Hansen-Turton

Larry Boress

Laura Carabello

Krista Drobac

John Hickman

John Goodman

Kenneth Thorpe

Jeffrey English

Brian Hill

Carolyn Smith

Chris Condeluci

Hal Scherz

Healthcare is


Implemented Healthstat for his company last year.

Reduced his health claims. Saved the company $700.

Found out he had diabetes. Learned to manage it at work.

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2/13/12 6:03 PM

INSIDE HealthCare Consumerism Solutions

The Institute for HealthCare Consumerism


Health Care Consumerism


Health Engagement

Empowering Consumers Through New Medical Delivery Models

What’s Opp, WhatsApp and Why All the Fuss about Engagement?

The key features of health care consumerism are personal responsibility, self-care, choice, personalized care and convenience.

Engagement is the collaborative focus of sharing the journey and getting to the goal. By Cyndy Nayer, CEO and Founder, Center of Health Engagement

By Ronald E. Bachman FSA, MAAA, Chairman, Editorial Advisory Board, The Institute for HealthCare Consumerism



Digital Health

Has Price Transparency’s Time Finally Come?

Employers Know CDHPs Are a Potential Delivery System Reform

When it comes to price transparency, many Americans still don’t have access to meaningful information about the price of their health care.

The times are changing, and it all favors account-based health funding and retail transactions.

By Suzanne F. Delbanco, Ph.D., Executive Director, Catalyst for Payment Reform

By William R. Boyles, Publisher, Interpro Publications, Inc.



Health Savings Accounts

Our research suggests that the majority of employers will continue to offer benefits.

Acting on his own authority, the president has again suspended the employer mandate for certain businesses until 2016.

By Gil Lowerre, President, and Bonnie Brazzell,Vice President, Eastbridge Consulting Group, Inc.

By J. Kevin A. McKechnie, Executive Director, HSA Council, American Bankers Association


Private Exchanges

Supplemental Health Employees Want Their Employers to Continue to Offer Benefits

Regulatory Delay and Uncertainty Harming Small Business



Population Health Management How to Get the Most from a Biometric Screening Event

Examining the Potential of Private Exchanges as Consumerism Accelerators

With the growing popularity of employer wellness programs, the inclusion of biometric health screenings is on the rise.

Make no mistake about it, private exchanges are likely one of the most disruptive influences in employer health benefits since Medicare.

By Rebecca Kelly, Ph.D., RD, CDE, Director of Health Promotion and Wellness, The University of Alabama

By Barbara Gniewek, Principal, and Jonathan Har-Even, Manager, PricewaterhouseCoopers (PwC)

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Benefit Designs Holding Steady

Public Exchanges

Unlike prior years, 2013 brought about a remarkable consistency with 2012 policies in pharmacy benefit plan design.

Welcome to the Future: The “Sorting Hat” Businesses In ten years, what will be the relationship between public and private exchanges?

By Shelly Carey, Research Director, Pharmacy Benefit Management Institute (PBMI)

By Cindy Gillespie, Senior Managing Director, McKenna, Long & Aldridge, LLP


Pharmacy Benefit Management


Global Health

Health Access: Retail Clinics Convenient Care Clinics: A Win-Win for Employers and Employees

Optimal Health is not Enough To succeed, an employer must engage leadership from the top of the organization and must have the worker involved in every aspect of workplace health. By Jon Comola, Chief Executive Officer, Wye

Clinic operators are not only partnering with health systems but also employers. By Tine Hansen-Turton, Executive Director, Convenient Care Association

River Group on Health HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014




Health Access: Onsite/Near-Site


Mapping Out a Plan for Medicare Reform

To address health costs, access, engagement and productivity, employers are turning to onsite, near-site, mobile and telehealth medical and wellness services.

Policy options for making the Medicare program sustainable over the long run will have to identify approaches that reduce costs and improve the quality of care.

By Larry S. Boress, Executive Director, National Association of Worksite Health Centers


Health Reform: Government Access

The Potential and Value of Onsite Health Centers

Health Access: Medical Travel Domestic Medical Travel: Quality Care, Controlled Costs

By Kenneth E. Thorpe, Ph.D., Robert W. Woodruff Professor, Rollins School of Public Health, Emory University


Physicians’ Perspective on Health Reform Why the Affordable Care Act Cannot Succeed

A growing number of U.S. employers have adopted domestic medical travel programs.

Four years after the passage of the ACA, it appears that this law is fundamentally transforming our health care system without fixing the problems that it was supposed to address.

By Laura Carabello, Founder and Principal, CPR, Publisher of Medical Travel Today and U.S. Domestic Medical Travel™


By Jeffrey B. English M.D., Brian E. Hill M.D. and Hal C. Scherz M.D., Docs 4 Patient Care

Health Access: Telehealth How U.S. Employers Can Help Make Connected Care our Future Telehealth or “connected care” has become an increasingly popular employer-covered benefit. By Krista Drobac, Executive Director, Alliance for Connected Care


Legal & Compliance: Account-Based Plans The Impact of the ACA on HRAs, FSAs and HSAs In the ever-increasing pages of guidance, it is easy to lose track of how the new rules apply to various types of health accounts. By John Hickman, Partner, Health Benefits Practice, and Carolyn Smith, Counsel, Alston & Bird, LLP


Legal & Compliance: Reimbursement Plans


UMR Time to Move on from the Dark Ages: The Consumer is the Center of the Health Care Universe


Transitions Optical See Well, Work Well: The Links Between Vision, Productivity and Employer Costs

You Cannot Use Section 105 Plans to Purchase an Individual Market Plan on a Tax-Preferred Basis Let’s cut to the chase: an employee cannot purchase an insurance policy sold in the individual health insurance market with non-taxable contributions. By Christopher E. Condeluci, Counsel, Venable LLP


Health Reform: Free Market Perspective Replacing Obamacare with Health Reform that Really Works

Departments 6

By John C. Goodman, President & CEO, National Center for Policy Analysis (NCPA)


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

From the CEO Health Care Consumerism is the Future and Technology is Driving its Growth

Almost everyone recognizes that the ACA is not working as originally envisioned and needs to be fundamentally changed.

67 74

Who’s Who Profiles Resource Guide/Ad Index

Allstate protects employees, too. Surprised? Allstate Benefits® is one of the fastest-growing benefits providers in America today, offering employees the #1 Critical Illness product in the industry. Let a leader in protection, protect your employees, too. Are you in Good Hands? ®

Life s Disability s Accident s Critical Illness s Hospital Indemnity s Dental s Vision 2011 U.S. Worksite Sales, LIMRA. Allstate Benefits is the marketing name used by American Heritage Life Insurance Company (Home Office, Jacksonville, FL), a subsidiary of The Allstate Corporation. © 2014 Allstate Insurance Company



Published by FieldMedia LLC 292 South Main Street, Suite 400 Alpharetta, GA 30009 Fax: 770.663.4409 CEO

Doug Field @ MANAGING DIrECtOr

Brent Macy


Today, the health and benefits industry is at a very different place than it was one year ago when we published the last edition of this issue. With many key provisions of the Affordable Care Act not yet underway, there was some real anxiety regarding the future of our health care system. However, over the course of the last year, we’ve seen numerous indications that health care consumerism is here to stay and that it can fix many of the issues that plague our health system. From successful IPOs to innovative product launches to an increasing awareness of the importance of health engagement and transparency, we have demonstrably seen that health care consumerism is the future of health and benefits. And the pages of this 2014 HealthCare Consumerism Outlook issue reflect that. As is custom, Ron Bachman, chairman of the Editorial Advisory Board, once again leads off this annual issue with his perspective on the future of health care consumerism. As he writes in his article, technology is having a significant impact in advancing consumerism by connecting consumers to providers through new technologies. This sentiment is echoed throughout the issue in articles by Krista Drobac, Larry Boress and others. In addition to advances in technology specifically related to health access, private and public exchanges are changing the health benefits landscape and driving consumerism. As noted by Barbara Gniewek, Jonathan Har-Even and Cindy Gillespie in their respective articles, exchange technology is enabling (even accelerating) consumerism and will be a significant part of the future of health and benefits. For the 2014 Outlook, we are proud to bring our readers 20 articles from over 25 contributors that speak to the future of health care consumerism. Topics in this issue range from account-based plans to medical travel, from supplemental benefits to digital health. For this year’s issue, we are also excited to be featuring health engagement and transparency for this first time. Over the last year, these trends have moved to the center of the industry’s attention, and we would like to thank Cyndy Nayer and Suzanne Delbanco for their contributions. Outside of the pages of this issue, the topics and solutions presented in these pages are addressed throughout the year through The Institute’s other channels, most notably our FORUM conferences. At the FORUM & Expo in Atlanta and FORUM West in Las Vegas, the industry will gather to discuss real solutions for advancing consumerism in health care. We hope to see you there. On behalf of The Institute for HealthCare Consumerism, I would like to thank all of this year’s contributors. And to all of our readers, I hope you find this to be a valuable issue throughout the upcoming year.

Jonathan Field


Heather Loveridge ACCOUNt MANAGEr

Joni Lipson


Lana Perry

Art DIrECtOr

Kellie Frissell




Ronald E. Bachman, CEO, Healthcare Visions EDItOrIAL ADVISOry BOArD

kim Adler, Allstate; Diana Andersen, Zions Bancorporation; Bill Bennett; Doug Bulleit, DCS Health; Jon Comola, Wye river Group; John Hickman, Alston+Bird LLP; tony Holmes, Sanders McConnell, tSyS Healthcare; roy ramthun, HSA Consulting Services LLC; John young, Consumerdriven LLC WEBMAStErS

Kevin Carnegie Tom Becher ASSOCIAtE WEB ADMINIStrAtOr

Tim Hemendinger


Rogers Beasley


Karen Raudabaugh

™ Volume 10 Issue 2 Copyright ©2014 by FieldMedia LLC. All rights reserved.

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The Future of Health Care Consumerism: Empowering Consumers Through New Medical Delivery Models Tele-A to Tele-Z The key features of health care consumerism are personal responsibility, self-care, choice, personalized care and convenience. Technology and free market entrepreneurs are converging on the 2.7+ billion dollar health care economy to meet consumer demands. As we move from “health insurance reform” to “health care reform,” new medical delivery models are forming. A new generation of users, who are comfortable with using technology and mobile devices, are stepping to the forefront. Among the new services are telemedicine, telehealth, telecare, mobile health, mHealth and eHealth. Many new services will develop as creative entrepreneurs exploit inexpensive communication devices and high quality wide-band internet channels. The language of this new world is still evolving. This paper will use the term “telemedicine” to represent all of the terms below: Telemedicine: the use of For the patient, medical information exchanged telemedicine provides from one site to another via electronic communications to savings in time and improve a patient’s clinical health status. (American Telemedicine money and can reduce Association) Telehealth: the use of electhe stress in delayed tronic information and telecomor denied face-to-face munications technologies to supmedical care. port long-distance clinical health care, patient and professional health-related education. (Health Resources and Services Administration) Telecare: remote care of elderly and physically less able people, providing the care and reassurance needed to allow them to remain living in their own homes. mHealth: abbreviation of mobile health. The term is most commonly used in reference to using mobile communication devices, such as mobile phones, tablet computers and PDAs for health services and information. eHealth: the use of information and communication technology (ICT), such as computers, mobile phones, communications satellite and patient monitors, for health services and information. 8

IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

Individuals are demanding options that empower them to make personalized health and health care decisions. To tap into the health care consumerism megatrend requires developing products and services with the consumer in mind (rather than the physician, hospital, employer or insurer). It is the actual delivery of lower cost, convenience and quality care that is driving the “Tele-A to Tele-Z” consumer-oriented

Convenience & Improved Access Telemedicine services can be delivered through a variety of devices, including webcams and multi-port video teleconferencing applications, email, smart phones, wearable monitoring devices, patient portals, text messaging and wireless tools. New facial recognition software can even accurately identify pulse, blood pressure, cholesterol levels and other medical metrics. Without telemedicine, access to needed providers might otherwise be delayed, denied or otherwise not available. For the patient, telemedicine provides savings in time and money and can reduce the stress in delayed or denied faceto-face medical care. There are many reasons why a patient would not be able to meet on-site with their health care providers, including poor no available transportation, the patient is homebound or is simply too ill to travel to their physician. Telemedicine can also offer consumers new or better services such as: 1. Primary Care: Telemedicine is a convenient twoway, real-time, interactive communication method with providers, especially applicable to many primary care services. We are already seeing the development of primary care “concierge” home visits with a medical technician or nurse at the patient end connecting to physician via telemedicine. Telemedicine has been particularly successful with online access dealing with depression, post-traumatic stress disorder (PTSD) and other minor mental illnesses. 2. Patient Monitoring: Patient Monitoring can be facilitated using patient-centered telehealth devices, such as on-body health care sensors, smart jewelry, smart watches, display devices and an array of sensors

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embedded in clothes and shoes. Whether sent to health care providers, hospitals or other diagnostic facilities, this information can be monitored and reviewed in real time. If needed, care can be provided without the patient ever having to leave the comfort of their own home. 3. Information Therapy: “Information therapy” is where a physician prescribes information that supports the patient’s prescribed treatment plan. This coordination of clinical therapy with information therapy provides the right patient needs. The use of the Internet and wireless mobile devices allows reinforcement of information that supports treatment compliance. 4. Remote Consultations: Remote consultations between primary care and health care specialists provide optimal patient care without the hassles of juggling schedules, travel expenses, lost or missing data or lack of access. A virtual treatment team can quickly decide on the best treatment options for their patients, coordinate their services and deliver possible.

A New “Millenium” World The use of alternative care options and information sources may be a generational phenomenon. According to a survey by the Pew Internet and American Life Project, 31 percent of Americans used their cell phones to look up health or medical information online in 2012. That same year, 37 percent used apps to track or manage their health — up from 17 percent in 2010. According to The Fiscal Times, “telemedicine has already been used by more than 36 million Americans.” It is estimated that up to 70 percent of doctor visits can actually be handled over the phone. Providers are also getting on board with alternative care connections. In recent surveys reported by Health IT Outcomes, it was found that approximately: Eighty-nine percent of primary care and

internal medicine physicians used smart phones to communicate with staff Seventy percent of doctors viewed patient information on mobile devices,

investment (ROI) when companies used telemedicine as compared to those who did not.

Legislative Barriers looked up non-patient health information Fifty-one percent used tablets to access independent medical references and perform Internet research Forty-eight percent use mobile health devices to educate and train, and Forty-two percent used mobile devices to obtain clinical information. Dr. Farzad Mostashari, former national coordinator for health IT, stated “most of what affects people’s health doesn’t happen in the hospital or in the clinic. It happens when they’re home, when they’re out and about and being able to engage with them effectively is no long going to be optional.” Dr. Mark Blatt, global medical director, Intel, says the hospital of the future may very well be the consumer’s living room. Others support the concept that we will at some point the “waiting room.”

Telemedicine: A Cost Effective Alternative Studies conducted over the last decade by telemedicine. 1. A study in 2012 developed by Johns Hopkins showed that telemedicine’s quality of care and clinical outcomes were equal to or better than in-hospital care and garnered a savings of 19 percent over inpatient costs. 2. A 2011 study of the treatment of chronically ill patients in the Northwest showed a 30 to 53 percent annually savings in health care costs, due primarily to telemedicine’s coordination of patient care and early detection services which allowed health care providers to be alerted to changes in patient status and provide timely interventions. A study that ran from 2008 through 2010 reported a 160 percent return on

Telemedicine could be greatly expanded if state and federal legislators would clear the hurdles allowing health care professionals to fully participate in telemedicine. Both government insurance and private insurance plans have been slow to provide adequate reimbursements. 1. Federal Regulation: The Alliance for Connected Care, a new bipartisan Washington-based association led by former senators (Lott, Daschle and Breaux), is dedicated to expanding federal reimbursements for telemedicine, broadening the number of providers and covered services by unifying national standards for telemedicine. 2. State Regulation: State regulations of telemedicine within their borders. The lack of multi-state licensing and the expansion of telemedicine. In most states, only a physician licensed in that state acting within his/her scope practice can provide telemedicine services or write prescriptions.

Conclusion Telemedicine and mobile health will delivery of health and health care services. It focused initially on helping physicians to serve rural areas and connecting physicians to a network of specialists for consultation. The next steps will be more consumer focused uses for remote primary care services, “concierge services,” child care (wellness checkups), pre-natal care and follow up visits for most diagnoses. It is the cutting-edge future of health to consumer/patients, including improvements cost, access and quality of health care. Telemedicine, in its various forms, will be a key service available in the next generation of health care consumerism.

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014


HEALTH CARE CONSUMERISM The Institute for HealthCare Consumerism

Time to move on from the Dark Ages: The Consumer is the Center of the Health Care Universe


t’s startling but true: In February of this year (2014) the National Sciences Foundation published results from a survey of more than 2,200 Americans showing more than 26 percent of respondents STILL believe the sun revolves around the Earth! Applying that astonishing data to our industry, it’s no wonder that many people still feel like they are at the mercy of the gravity imposed by a health care system that forces consumers to revolve around it and respond to its substantial presence. I would even argue that there are still many components of our industry that resist the evidence that shows tremendous value can be gained from a move toward a consumer-centric model of the health care universe. The old model unapologetically told consumers: t What plan designs they could choose from t How much they would have to pay for coverage t How they could and could not interact with the system t Which physicians, clinics and hospitals they could use t What procedures, treatments and medications could be recommended and … t Who to trust with managing how this engine worked Regardless of personal perspective, there can be no doubt that consumers are in a position, now more than ever, to influence how they interact with the health care system. If we are to embrace moving to a more consumercentric model, there are a few dynamics that will definitely affect who achieves success and who is eluded by it. Consumer Radiance In a heliocentric model of the galaxy, the sun is constantly radiating energy that influences and transforms the system around it. Today’s consumers are perpetually delivering a “radiance” that likewise impacts (or should impact) how the health care system looks, feels and functions. Consumers give off indications every day of: t Communication channel, frequency and type preferences t Motivation factors around what makes them tick t Long- and short-term health status concerns and t Varying levels of financial literacy and distress The industry and each of its core players (providers, health plans, facilities, employers and financial institutions)


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all need to absorb these messages and reshape our offerings based on the streams of consumer behavior data that are pummeling us on a daily basis. This consumer radiance should be treated as a positive and, in turn, be used to reflect a better experience back toward the center. Rotation on the Axis of Partnership As players in the industry reshape and reform their consumer-facing presentations and product offerings, we can’t ignore each other. Although the new environment demands that we orbit around the consumer, we also need to take time to keep our organizational heads “on a swivel” and look for new, unconventional partnership opportunities. Through these partnerships, we can more effectively focus on delivering new value to consumers that did not previously exist. A great example: social media and the role it has played in starting to connect communities of consumers around health issues. Digital Buzz Media notes that the fastest growing age group for new Facebook users is those age 55-64. On the other end of the spectrum, Search Engine Watch notes that more than 90 percent of 18-24-year-olds would trust medical information shared by others on their social media networks. In addition, 54 percent of patients are comfortable with their providers seeking advice from online communities around how to better treat their conditions (Source: MediaBistro). How we integrate this new connectivity and non-traditional partnerships into existing purchasing and decision support events will be driven by our ability to pivot around existing consumer experience gaps. Gravity: An Undeniable Force Total cost of care has continued to increase at an accelerating pace. The population of people at risk for one or more chronic conditions continues to grow, and employers are challenged by shrinking discretionary budgets available for investing in health plan value. The gravity of our shared situation is not lost on anyone who participates in the health care industry today. In the end, though, a consumer-centric approach provides a tremendous and critical opportunity for key industry participants to be drawn in toward the highest goal: creating a better, more efficient and more effective health care experience. May the force be with us all!

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Employers Know CDHPs Are a Potential Delivery System Reform: HIT Is More Than an Acronym for Spending Accounts


he times are changing, and it all favors accountbased health funding and retail transactions. But what many people don’t realize is that health information technology (HIT) is a big driver of future consumer-directed health plan (CDHP) adoption. A new congressional analysis of the 2009 Health Information Technology act (HITECH) by the Government

health insurance plans and their actuaries how the law would impact their premiums. The conclusion: none of the industry leaders had ever done an analysis. Given the distractions of that other law dubbed Obamacare, HIT was off the radar. A good question is whether this is a strategic mistake in All of this has set off 2014. For instance, how does this a massive scramble by knowledge gap impact consumerhealth accounts like HIT vendors to avoid directed HSAs, HRAs and FSAs? Given the becoming dinosaurs and success of CDHC and its rapid and accelerating growth, are things like simultaneously some digital medical teams or mobile criticism of delays by electronic health records (EHRs) not worth tracking? those who are ahead I started to follow HIT on a global basis seven years ago in of the curve like mobile Europe and have been tracking app developers. But HITECH in great detail for over the past three years. I have mixed the delay also presents feelings about what to tell the a huge opportunity for CDHC industry. In many ways, the coming wave of techie innovation innovative companies to is right in line with the idea of health. And dive in, including CDHC consumer-driven retailization has caused a big rise companies who can in high-deductible plans linked to accounts. But HIT has to happen tap into the Stage III in a big way to really count. So this article takes a look at technology shift. three distinct challenges ahead: where HITECH is actually going;


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digital health system; and how this might impact the way employers and consumers view account-based models. Integrating the CDHC products into the digital self-care, or incentives and social media, may decide whether one of the key drivers.

Dummies Guide To Health Information Technology Here is a short primer. For three years, the federal billion to computerize their medical records. That effort was a roaring success. Right now, 70 percent of doctors have computerized their EHRs, including 80 percent of surgeons, 81 percent of primary care doctors and 72 percent of medical specialists. Plus, 86 percent of eligible hospitals are now digital — much more than expected. But the bad news is that this is only Stage I of three stages in the law. The new systems: (a) are not required to talk to each other and (b) are not required to exchange anything meaningful. Most do not. In fact, less than 15 percent of medical professionals have adopted a Stage I measure to provide a “summary of care” document at each care transition or referral. Basically, we are at the point where everything is computerized, but it just sits there. The real rubber hits the road with Stage II and Stage III. But in December 2013, the Obama administration announced that Stage II would be delayed until 2016 and requires all of the new systems to be able to talk to each other avoid payment penalties. Stage III will require all providers like measure and report diabetes and share a patient’s record after they see a specialist. All of this has set off a massive scramble by HIT vendors to avoid becoming dinosaurs and simultaneously some criticism of delays by those who are ahead of the curve like mobile app developers. But the delay also presents a huge opportunity for innovative companies to dive in,

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including CDHC companies who can tap into the Stage III technology shift.

Where Is The Upside of HIT for Spending Accounts? Stage III will eventually be adopted. It’s not a policy change like Obamacare, and virtually everybody agrees it is an inevitable technology shift that will improve the quality of medical care. Once consumers get acclimated to having their lab tests and appointments sent directly to their mobile phones and getting to send an email to their physician when they get sick, there’s no turning back. An explosion of CDHC is to assume that the change is coming

and that it will be led by people with highdeductible plans. Think of a patient in 2020. They will have three times as many medical distribution channels (and payment channels) due to the system-wide digital record-sharing. They will contribution from their employer, creating huge pressure to save money. They will be using online billpay or debit cards. In today’s world, consumers think of their HSA as a bank account, think of their FSA as something their employer coordinates for them and think of both HRAs and FSAs something related to their debit card. By 2020, they will look to CDHC

The HITECH law is not going to suddenly fix this. What it will do is open the floodgates of communication between patients and all of the other sources of medical input — besides their one doctor... The bottom line: the patient is the medical home in a connected health ecosystem. Consumers win. accounts to sort out the mess. I think lab tests and prescriptions are good case studies in how things will change for CDHC. Right now, you go to one doctor, and they give you a piece of paper that orders a lab test and another that orders a drug. You then go to the pharmacy to pick up and pay for the prescription and visit Labcorp to take the test and pay for it. So the payment trail includes three payments and three visits — all using a debit card or a paper invoice. The patient-consumer is now stranded. The lab test is sent only to the physician, who is supposed to contact the patient with the test result but prefers the patient to come in for an take a day or two to have any impact, the patient needs to wait a couple days. So what ends up happening across most primary care is that there is no communication with the physician after the initial visit. After the transactions have occurred, patient communication becomes an For chronic care patients, the existing system is even worse. They often cannot even

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014



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DIGITAL HEALTH The Institute for HealthCare Consumerism


visit the physician, the pharmacy or the lab, and there is no in-home system of care delivery. If they visit the hospital, they now must make a series of additional payments, and it adds an extra layer of non-communication with their physician. Worst of all, there are generally several doctors involved writing separate prescriptions — none of whom are capable of exchanging medical records and all of whom are billing the patient separately. The system is getting way too complicated. This is not some isolated example: it is the default for most employees, and they hate it. The HITECH law is not going to suddenly communication between patients and all of the other sources of medical input — besides their one doctor. For instance, lab tests will be sent simultaneously to the patient and physician with unknown consequences. Probably physicians will be forced to contact patients immediately or face malpractice suits. But think of the chain of effects: patients will not have to tests. And here is the kicker: online lab test ordering sites are already online and taking payments — right out of my CDHC account. Online docs in call centers will place the order, and when you arrive at the lab, it is already paid for. Sharing lab tests across multiple providers becomes easy, so the criticism that retail clinics are disconnected from the “medical home” are completely discredited. The bottom line: the patient is the medical home in a connected health ecosystem. Consumers win. Even more radical changes are coming for pharma. A big advance has already happened: the ability of doctors to send a patient prescription directly to the preferred pharmacy, so two trips are not necessary. But this is not followed by patient communication unless, as the physician hopes, the patients comes in for another paid visit. That all changes after HITECH is fully in place. Doctors will be required to use their new digital systems to not only write prescriptions but to collect follow-up care in digital records. Email communications with patients will now be a revenue source

are probably going to take on a new role as neighborhood advisors as part of the digital communication channels opened for follow-up care with the ability to share their records and pay using their CDHC card. In both of these scenarios, there are two points that need to be made. First, the disintermediation of the current medical to CDHC cards and consumer-directed health care. Dozens of new avenues of payment will be opened up for each patient, so CDHC accounts are indeed enablers of the shift to a more technology-savvy consumer health market. Account-based payments also are probably the best way to integrate clinical experience data with digital EHRs across a single sign-on approach. We’ll see. They have the ability to actually sort out the three most critical pieces of information: where the patient went, when they went there and what happened afterwards. In a retail health system, this is more useful than ever, but when combined with the ability to integrate account data with medical record data, it’s really the sweet spot. Patient demand for tracking payments will align with a rise in multiple delivery channels. Most patients needing care in six years will make a call to one of three options: their neighborhood clinic, their health plan or a medical call center where they will be offered an option of a tele-visit or digital visit. All three will be like the local pizza delivery outlet — the previous transactions. So CDHC accounts will quite rapidly become the default payment for retail medical care, and HIT will create the demand.

Price Transparency Enters New World Of HIT So how do HSAs differentiate themselves are better for patients than the status quo? Right now, it looks like price transparency and wellness are the route. That’s nice, but

What is called for is a return to the original vision that owning an HSA account changes patient behavior and drives the consumer into smarter ways of using medical care. it is essentially a static product that requires the user to do something. Digital is active by will be a demand for price transparency across multiple medical inputs. Consider that HSAs in theory are a way to make patients into better consumers – not keep people at the same low-quality standard of care. If CDHC accounts are no different in terms of utilization, that’s not the best outcome. They are supposed to be different, not the same. It’s nice that HSAs are no worse than the status quo for patients, but what happened to making them a Over the next 10 years, HSAs will show whether they are just one more type of highdeductible plan or a truly different delivery system model that changes the ‘consumer-asshould be better, not merely the same under this latter scenario, showing more than just a drugs, imitating a plain vanilla high-deductible plan. This will not be easy given the migration of the original vision of HSAs from a consumerdriven delivery system change into a way of enhancing the status quo. What is called for is a return to the original vision that owning an HSA account changes patient behavior and drives the consumer into smarter ways of using medical care. To read the full article, visit

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HEALTH SAVINGS ACCOUNTS The Institute for HealthCare Consumerism


Regulatory Delay and Uncertainty Harming Small Business


cting on his own authority, the president has again suspended the employer mandate for certain businesses until 2016. Most observers, especially those sympathetic to the Affordable Care Act’s (ACA) goals, consider the president’s exercise of executive power benign. Even the Republicans have been calling for delay, so why complain about not having to spend money? Well, I’ll give you a very good reason: Towers Watson says that 80 percent of large employers will offer HSAs to their employees in 2014 but that the proportion of HSA plans being offered to small businesses is shrinking. While all market segments are offering these plans in greater numbers, the proportion of plans in the large group market is growing faster than in the small group market. Towers Watson attributes this largely to the dramatic cost increases, even in HSA plans, imposed by insurers on fully insured products as they try to stay ahead of the Medical Loss Ratio (MLR) and other ACA-mandated expenses. The law already assumes that employers with 50 or fewer employees have trouble affording health insurance and at least 50 full time employees (FTEs for short, but in the law, it means 50 full time equivalents) had to provide coverage this year, in 2014, but they were given until 2015 to comply, presumably because it was too expensive already. To get ready for 2015, a majority of employers have been scaling back hours and switching to part time employees to shrink the number of FTEs on their books, and thus shrink the potential exposure to insurance costs and penalties. The new delay implicitly recognizes that employers with fewer than 100 employees are having trouble affording coverage too. Accordingly, the president decided that employers with between 50 and 99 FTEs would have an additional year, until 2016, to offer coverage. This news has been met with mixed reactions: some employer groups welcome the extra time necessary to comply; some are angry with the additional costs associated with unpredictable standards to which their businesses are subject. Remember that seven out of 10 Americans are employed by companies with greater than 100 employees but that the vast majority of employers have fewer than 50 employees. Back to the theme much discussed by industry observers: large companies, which generally self-fund their plans, have the least to fear from the ACA. Small employers, for which the law and its exchanges were designed, tend to buy fully insured plans, a product category now shaped entirely by statute. No wonder the Towers Watson study showed the results it did.

But, what happens in 2016, when presumably, all the delays and suspensions and exemptions have been exhausted? Well, let’s look at what plans have been costing over the years. PricewaterhouseCoopers (PwC) says that the rate of increase in large plan costs, typically self-insured plans, is actually slowing down: they expect a net 4.5 percent growth rate for health costs among large employers in 2014, which is much less than the 7.5 percent increase for the same plans going mainstream: 31 percent of employers now offer HSAs as the only option and 44 percent are considering full replacement in 2014. But what does that mean for a small employer, buying a fully insured product, trying to afford coverage in 2015 or in 2016 compared to their historical costs? their “In 2013, the average annual premiums for employer-

percent higher and the family premium is four percent higher than the 2012 average premiums. During the same period 1.1 percent. Over the last 10 years, the average premium for family coverage has increased 80 percent.” During that same period, the number of small employers in the KFF study offering coverage has fallen, meaning that the golden rule of economics — as the price of a good rises the demand for it falls — has been respected. Over the 2003-2013 period, small employer offerings decreased nine percent. Any idea what the premium increase might be between 2013 and 2016, when small employers will have to enter the market? Fully insured plan price increases for renewals are running at around 20-35 percent as a minimum, in Indiana and New Jersey, just this year. How will employers be able to adjust their prices to accommodate these increases? How will they manage when the year-over-year increase has two more cycles to evolve before they have to buy? The problem with regulatory uncertainty is that it’s costly. Suspending the law now, in 2014, when insurance already costs more due to new regulation, means that the market in which these small employers live will have an even Think of the ACA this way: if insurance was like buying a car, the administration has recognized that small businesses can’t afford to buy a Cadillac this year, suspending the requirement until 2016, when they will require small business to buy a Ferrari.

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HEALTH SAVINGS ACCOUNTS The Institute for HealthCare Consumerism


Retirement Savings Potential Extends HSA Value Proposition for Consumers


everal studies have emerged highlighting that many roll over from year to year with no expiration. HSA contributions Americans are in danger of facing significant financial are triple-tax-advantaged. HSA contributions are tax-free. Once shortfalls during their retirement years. From not saving HSA account balances reach a minimum balance threshold, enough, to dipping into their retirement accounts during periods funds can be invested — with earnings on investments being of hardship, a large number of workers from all age groups tax-free. And, unlike a 401K, HSA account holders do not pay and demographics are likely to enter their golden years without income tax on HSA funds when they are withdrawn for qualified sufficient savings. expenses. All of these features make HSAs an attractive vehicle, Although many people may have accrued enough savings not just for managing near term healthcare spending, but also to meet their basic needs, health costs — which tend to rise for saving for healthcare costs through retirement. during one’s retirement years — remain a core concern for most Employers, too, will benefit when their employees adults. In fact, a recent MarketWatch analysis found that most understand the full HSA value proposition — for managing both retirees will spend an average of spending and savings. Employers $250,000 in out-of-pocket health realize an immediate tax benefit Some forward-thinking costs during retirement, an amount with increased employee HSA employers may look to that can quickly cut into their nest adoption rates and contributions. savings and make it challenging to deliver increased employee Benefit programs — which are meet their medical needs as the typically designed with the intent of value by introducing expenses rise. attracting and retaining talent — HSAs offer consumers a will benefit from increased integrated retirement unique vehicle to save for qualified satisfaction rates when employees healthcare costs both now and recognize the potential of HSAs planning strategies that into retirement years — however, to address a broader spectrum take into account potential many consumers view HSAs only of their needs. Some forwardas a short term spending account. thinking employers may look to future health needs — and Employers and HSA program deliver increased employee value possibly even starting to owners that are successful in by introducing integrated retirement helping employees understand planning strategies that take into offer contributions and the full HSA value proposition will account potential future health benefit from increased employee needs — and possibly even starting matches for an HSA just HSA adoption. to offer contributions and matches like they do for a 401K. Because health savings for an HSA just like they do for accounts were introduced many a 401K. years after flexible spending accounts, many consumers Market data suggests that consumers are increasingly confuse their features. FSAs were designed as a vehicle to leveraging HSAs as a savings vehicle. According to a recent manage predictable healthcare expenses within a given year. Devenir report, HSAs have exceeded $20 billion in assets as of However, HSAs are designed to be a powerful short and long January 2014. Account balances are continuing stable growth term savings vehicle. — providing concrete evidence that account holders are both HSAs are an individual account, owned by the consumer continuing to contribute and carrying forward funds from year — just like a personal checking or savings account. As such, to year. HSA investment assets have now reached $2.3 billion they are portable — the account and contributions remain — meaning that more than 10 percent of HSA deposits are the property of the account holder, even if they change jobs currently invested. These trends are expected to continue as or enroll in a different health plan. Consumers can continue the popularity of HSAs grows as a savings tool, and consumers to contribute up to the allowable IRS limit, so long as they are increasingly look to leverage HSAs as a complement to 401Ks enrolled in a qualifying high deductible health plan — and funds and other retirement planning strategies. 18

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The Institute for HealthCare Consumerism

Fad or Trend?: Examining the NearTerm and Long-Term Potential of Private Exchanges as Consumerism Accelerators


rivate exchanges are certainly creating a huge buzz in the market, often touted as the next big Make no mistake about it, private exchanges

and retiree- based health care markets. In the next few years, private exchanges will compete with public exchanges as leading marketplace(s) through which Americans purchase a variety of insurance products, ranging from medical coverage to Private exchanges identity theft protection. While estimates about the uptake of may be able to link HR private exchanges vary, most and finance priorities, research indicates that a strong interest exists among employers but they will have to across all industry sectors and and that a large percentage demonstrate to both sizes, (from 33 to 45 percent1) of parties that they save employers surveyed indicated that they will consider (not necessarily money using sustainable implement) private exchanges

strategies that create value for employees.

Consequently, existing exchanges

growth, and new entrants are evaluating market entry in an already crowded but expanding marketplace.

customized needs of the “millenials” capitalizing on their propensity for on-line shopping. However, while interest may be high, so is the skepticism in the ability for private exchanges to deliver on the savings and service promises. So where is the disconnect? have a competitive program that will attract and retain talent without breaking the bank. Dramatic, unpredictable for years. HR executives have been trying to extract value out of their programs, balancing cost-saving strategies and often including some/many of the core features of a private exchange: high-deductible health plan options, high-performing or narrow networks, wellness and care management and even some transparency and cost estimator tools. look more like consumer price index (CPI), which is why are gaining attention. Private exchanges may be able to link to both parties that they save money using sustainable strategies that create value for employees. To gain employer buy-in, private exchanges will have to lay out both a near and long-term case for adoption by enhancing HR’s efforts while lessening the health cost burden. Employers will explore whether the exchanges can deliver on their promise,

early adopters — both employers and consumers — as private

contribution. While the value proposition for retiree exchanges (reduced administrative burden and the ability to limit/

purchasing leverage and a more streamlined and supportive customer experience. They also can offer employees and retirees a lot of choice. With the promise and promotion of saving money and reducing the administrative burden, private exchanges are creating the demand for a new market much the way tablets did — you just had to have one. Now many HR executives

for active employers is still evolving. Some of the more mature active exchanges that have been around for several years have recently released results2 indicating that their clients did experience cost reduction and better health care controls after implementing private exchanges. Savings their individual needs, increased/enabled consumerism,

consider a private exchange pathway. HR executives are also viewing private exchanges as a method to meet the

While most private exchanges “promise” additional

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PRIVATE EXCHANGES The Institute for HealthCare Consumerism


sources of savings through network differentials (high-performing, narrow, and best in class by geography), reduced HR costs due to shifting of administration, lower administrative services organization (ASO) and pharmacy purchasing and integrated care management and/or wellness programs, the scarcity of published research indicates it may be too soon to tell if the savings are real and sustainable. Some employers are taking a wait-and-see approach before they jump into a different beginning to explore the market to determine if Through our role as independent consultants, we are typically asked whether or not private exchanges will save money. This question is often immediately followed by which private exchange is the best. Both

Private exchanges are not only exciting because of the promise of what they can deliver today but because of the promise of how they may evolve in the future. questions have the same answer — it depends. If an employer has been actively moving toward consumer-oriented programs, engaged in heavily managing care delivery through network leverage transparency efforts, implemented cost-sharing and created incentives that positively impact behaviors and provider selection, an exchange may not provide the typical savings resulting from “buying-down” or “right-sizing” (selecting cheaper plans or plans

savings from other sources. 20

It depends on the effectiveness of a given employer’s health management strategy. If an employer is looking to retain its stewardship partners and contribution strategies) and invest in its employees to make them better consumers, the exchange it chooses would be different than that of a company who is looking to surrender contribution approach. The best exchange for each company will depend on its objectives and/ While the value of a private exchange for active employees depends on the starting point for and objectives of each employer, one thing is clear: the true promise of private health care exchanges is that they are consumerism accelerators. To be clear, when we discuss “consumerism” we are not limiting ourselves simply to CDHPs but rather the entire transformation of the employee from restricted buyer to prudent consumer. Private exchanges will be the platform on which the new health care consumer is built and supported. This is what makes private exchanges really exciting. Private exchanges are the technology employers need to truly enable consumerism which, in turn, can transform employees into engaged consumers. Armed with this technology, employers can design reward healthy behaviors and allow their employees to have information and support to receive the right care at the right time in the right setting. Additionally, consumers are better able to understand the implications of personal choices have on them, which is an effective way to change behaviors. Employees (and their dependents) will become prudent purchasers of services, demand high-quality, competitively priced health care and will not tolerate waste. Private exchanges are not only exciting because of the promise of what they can deliver today but because of the promise of how they may evolve in the future. Because health care delivery is always an individual decision, providing employees with the tools necessary decisions is a critical component. Private

IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

exchange version 2.0 will allow the deployment and utilization of consumer tools and health management programs in a large scale, mobilefriendly way. Reducing health care costs in the long term will occur when the health care system manages the health and wellbeing of patients, by leveraging outcome based approaches and eliminating the waste and abuse, rather than focusing on managing illness. Most private exchanges offer these tools using an integrated approach, and together with their carrier partners provide the advocacy consumers need to make informed decisions. Shopping for providers, understanding treatment options and making decisions based on quality and costs are allow them to make decisions that are in their best interest rather than their providers’. Private exchanges can provide the administrative platform for employers to accomplish these goals and support those employers with limited HR/

programs more quickly and on a greater scale. The promise of private exchanges saving employers money now may be viewed as a short term win, but the potential of exchanges to be a driving force in reducing the future cost of health care makes them an exciting trend. It does not have to be about employers getting out of the business of health care — but can be about employers changing the business of health care. By collectively leveraging their costs out of health care while preserving our superior health care system for everyone, into health care consumers. Private exchanges may be the vehicle that can drive that change, and they are open for business. 1 PEEC survey released December 2013 indicating 45 percent of surveyed employers will/may consider a private exchange by 2018; Aon Hewitt survey release in March of 2014 indicating 33 percent will consider a private exchange (“Aon Hewitt: Year-Two Enrollment Results Show Private Exchanges Can Mitigate Costs and Create Greater Individual Accountability”, March 6, 2014) 2 Bloom: The Private Exchange Platform Solution in Action, December 2013. Liazon: Shopping for Benefits on the Private Health Exchange: The Rise of a more empowered health care consumer, January 14, 2014.

already moved their employee population into a private exchange, or are planning to in the highest adoption rates, according to recent research published by Alegeus Technologies.

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Welcome to the Future: The “Sorting Hat” Businesses


conference, I had an interesting discussion with several experts in the private exchange arena: In ten years, what will be the relationship between public and private exchanges? Our answers ranged from strong conviction by some that the two types of exchanges would still be separate and distinct entities selling different products to different populations to the belief that the products and populations served by both would begin to merge (my own opinion) — to the assertion by at least one expert that public exchanges would not exist in ten years or so. A very interesting spectrum of forecasting for the future of exchanges! After watching what has So now we have an happened in the exchange market entity, a web-broker, in just the four months since I think the answer to which can sell products December, that question is unfolding much both with a government more rapidly than any of us thought. Part of the answer lies subsidy and also in new business models unfolding without one. They can in the market — what I’ll call “The Sorting Hat” models. sell QHPs or simply If you have raised children in the last seventeen years, you traditional commercial know the story of Harry Potter,

products. They can sell to individuals, or they can sell products to employees through an employer. They sit in a sweet spot at the center of the evolving exchange world.

day of school, puts on a “sorting at Hogwarts. What we’re seeing emerging now in the market are business entities, often private exchanges or entities connected with private exchanges, that are sorting employees into the health

whether Medicaid, commercial insurance or a governmentsubsidized product. These “sorting hat” entities will be the structural underpinnings for the future relationship between public and private exchanges and public versus commercial insurance products.


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

A bit of background may help to explain what’s happening. The Affordable Care Act (ACA) designed public exchanges as the single point-of-access for an individual to subsidy to make the plan affordable. The thinking of the law’s authors was that making the exchange the sole source for a product with a federal subsidy would be key to driving customers to the public exchanges. As states designed their exchanges, this exclusivity was touted by many as one of the primary reasons public exchanges, as designed under the ACA, would be sustainable. This all changed when, the Department of Health and Human Services (HHS) essentially ended the government exchange’s exclusivity. This federal rule creates a pathway for web-brokers to contract with public exchanges (now called marketplaces) and use the web-broker’s private Web sites to enroll customers in federally-subsidized insurance “as if” through the public exchange. In other words, the rule created a way for individuals to buy insurance, and get the federal tax credit and cost-sharing subsidy, through a private broker site.

The Institute for HealthCare Consumerism

Moreover, since that time, Centers for Medicare and Medicaid Services (CMS) has signed dozens of web-broker agreements for the exchanges they are operating, broadening access to tax-credit subsidized insurance in over thirty states. As of the time of the writing directly by the states have signed web-broker agreements, but reportedly many are very close. So now we have an entity, a web-broker, which can sell products both with a government subsidy and also without one. They can sell QHPs or simply traditional commercial products. They can sell to individuals, or they can sell products to employees through an employer. They sit in a sweet spot at the center of the evolving exchange world. The next step, what we see happening today, is that “The Sorting Hat” business models are emerging in the market. In each case, these models are providing value by helping to sort individuals into the insurance that is the best The Small Business Sorting Hat: Private exchanges, often with web-broker agreements or a web-broker partner, are adding decision support to their

offerings for small businesses. This decision support essentially sorts the employees — structuring the offerings so those employees who would receive a higher subsidy if purchasing a subsidized marketplace are able to do so, while other employees purchase either individual or small group products, based on the best The Large Employer Sorting Hat: For large employers, employees Plans through a web-broker private exchange can have a cost in the form of the employer “pay-or-play” tax that is slated to start in 2015. Businesses are emerging to help an employer with the complicated calculus involved in projecting potential in pay-or-play tax payments and health insurance offerings, including variations in full versus part-time employees. However, a more straightforward sorting tool that has come on the market for employers is in the area of Medicaid eligibility, particularly for employers in states where Medicaid is now available to individuals with annual household incomes of up to 138 percent of federal

a family of four). A start-up company in New York is breaking new ground in this they are eligible for Medicaid. Just as in the story of the mythical Hogwarts sorting hat, where the hat takes the wishes of the young wizard into account before deciding where to put them, the employee always has the choice of whether to enroll in Medicaid or stay in their employer’s plan. But, economic reality drives decisions in most cases, and the Medicaid eligible employee will usually choose to take the “free” health insurance and reduce their employer’s costs. The Tax Preparer Sorting Hat: Finally, we are seeing tax preparers

While the sorting hat that groups young wizards into the proper house may be fictional, it is not hard to see that in just a few short years, “sorting hats” for health insurance will be a standard part of the operations of many private exchanges and broker operations.

determine whether they would be better

traditional commercial insurance. With relevant household income and the threat of an individual mandate tax penalty in future years at hand, the tax preparer and web-broker can work seamlessly to sort individuals into a subsidized or nonsubsidized products, depending on the

These emerging business models are just be expected to become highly sophisticated with an end result that maximizes enrollment into government-subsidized health care and reduces health insurance costs on employers and individuals. While the sorting hat that groups young wizards into the proper house in just a few short years, “sorting hats” for health insurance will be a standard part of the operations of many private exchanges and broker operations.

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GLOBAL HEALTH The Institute for HealthCare Consumerism


Optimal Health is not Enough


have spent most of my professional life in and around public policy. The last 24 years have been in health care — not just American health and health care

various delivery models, cultural norms and practices. But when it comes to the role of the employer as an agent for optimal health, the World Health Organization Healthy Workplace Model for Action has it right. Today, there are three major global trends relating to workplace and health: 1. Continued growth in workplace health promotion and well-being 2. Increase in work-related stress and mental illness that negatively affects employee performance and company productivity and a 3. Growing recognition of the link between good health and good business (beyond compliance of local legislation).

The World Health Organization developed a model for creating and sustaining a healthy workplace: Healthy Workplace Model for Action. They strove to create a model that would be transformative; the employer would become a health catalyst in every As seen through the facet of their employees’ lives. The model begins with the premise lens of the employer, the that health is greater than physical WHO model strives for a health — it recognizes that personal health encompasses every aspect of surround-sound model. It how we live our lives and what focuses simultaneously drives our behavior. As seen through the lens of the on physical work employer, the WHO model strives environment, for a surround-sound model. It focuses simultaneously on physical psychosocial work work environment, psychosocial environment, personal work environment, personal health resources and enterprise health resources and community health. Within these areas is a continuous work enterprise community focus improvement cycle. For more health. Within these information go to: focus areas is a occupational_health/healthy_ workplaces/en/index.html. At the heart of the model are continuous work an employer’s ethics and values; improvement cycle. this drives how decisions are reached. To succeed, an employer

must engage leadership from the top of the organization and they must have the worker involved in every aspect of workplace health. 1. Business ethics and legality: The organization and ensures employees health and safety. It adheres to workers’ social and ethical codes as part of their role in the broader community. It also enforces health codes and laws and encourages broad participation among all the workers 2. Sustainability and integration: Senior management is willing to use a health, safety and welloverall strategic business plan integrates workplace health concepts. Management establishes health and safety and workplace wellness committees and uses cross-functional teams. The programs have a plan for continued operation and ongoing improvements. A comprehensive view of workplace health and safety is maintained in all aspects of the workplace. Critical measurement is conducted in health, employee satisfaction, employees learning and growth, etc. 3. Follows a continuous improvement cycle: Mobilizes strategic commitment to a healthy workplace. Required resources are made available. The current situation and desired future have been addressed. The four components of healthy workplace model have been addressed or plans made to address them. The acceptance and effectiveness of the plan(s) have been evaluated. Priorities have been developed. 4. Innovative: The program contributes to learning and building an evidence base. The program(s) introduce applications that have demonstrated success in other areas into new settings and/or implements a novel approach. 5. Replicable: The program shows promise for implementation by another organization. The programs can be scaled. The program shows promise for implementation in diverse environments (e.g., urban and rural, large and small organizations, different industries and in different countries). The Global Healthy Workplace Awards and Summit was created to celebrate this model and promote its adoption around the world. To learn more, please visit www.

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What’s Opp, WhatsApp and Why All the Fuss about Engagement? The routine goes something like this: “Facebook purchased a new app.” “Yes, WhatsApp.” “What’s the name of the app?” “WhatsApp.” “WhatsApp is the name I’m trying to learn.” “Right!” “WhatsApp is the question I’m asking.” “I know!” “WhatsApp is the costliest buy in health IT? ” “I don’t know.” “That’s what I’m asking.” Both: “WhatsApp!” When we are done sighing at how this one Abbott and Costello routine still tickles us years later, we might chuckle and then go back to our daily activities. We don’t see that we’ve been engaged today on a shared platform of comedy that brought us such joy. In effect, we are part of a peer group that shares a very cool innovation — Abbott and Costello’s vaudeville-inspired sketch comedy — that brings a warmth that we all recognize. That’s engagement. It creates a feeling of well-

treatment is worse than the problem? What if the treatment is not available through the insurance plan? What if the patient cannot follow through on the treatment because it cuts hours out of the workday or because she has not

neurotransmitter results in the brain, where shared positive messages create the well-being. Engagement is a recognizable interaction between two or more entities that leads to a common goal or purpose. In the comedy adaptation above, our common goal is getting to the laugh. In health care engagement, the common goal is getting to health. The shared goal and sense of positive reinforcement can be shared between patient and provider. The shared goal can be the reinforcement of getting a non-threatening mammogram, of walking 10,000 steps in one day, of measuring adherence to diabetes protocol. Engagement is the collaborative focus of sharing the journey and getting to the goal. Sometimes

Engagement is only successful if the stakeholders in the goal are all lined up on the starting line facing the same goal. The patient who is given a list of new screenings and a prescription will likely drop the ball on some, particularly if the scheduling requires time off of work. The physician who receives a portion of her salary based on the percent of patients who are adherent to their medication may not get the planned compensation. The health plan that is reporting on adherence to evidence-based guidelines will lose “stars” on the adherence levels. Hospitals that readmit patients because they could not follow through on their medications will lose dollars.

In health care engagement, the common goal is getting to health. The shared goal and sense of positive reinforcement can be shared between patient and provider.


the journey is reinforcement enough, sometimes rewards — from lower copays to charitable donations — entice the participant into the getting-to-goal. In order to create predicable, sustainable business growth in the health care sector and the general business community, we must aim for engagement of all the health care users and providers in order to achieve better health. Better health care is a tool, just as better jobs, better education and better roads are tools towards economic security. These goals are not held solely in the health care delivery sector nor the federal or state governments. The power of better health lives in all of us. But there are dangers in how engagement is currently perceived. It’s usually presented as “patient engagement,”

IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

These are all said to be indicators of patient nonadherence. Translation: patient failure to engage. Perhaps, instead, it was lack of provider, purchaser or system engagement because of the failure to consider the patient as

Fundamentals of Engagement and Value If value is quality divided by cost, then the cost of non-engagement is quite high in dollars, wasted care and dissatisfaction. Engagement requires a holistic approach to

The Institute for HealthCare Consumerism

It requires a systems approach to the decisions facing the user (patient or consumer) and the services that are purchased. In one national survey, we discovered that emergency room visits that were true emergencies averaged only eight percent of the total visits. The other 92 percent were for issues that could have been treated in the primary care or near-site clinics in the community. We translated the dollars spent on the extraneous visits into job insecurity by using a national average salary based upon the employer segment (manufacturing). We discovered that 515 jobs were at stake. Engagement in the purchaser was focused on costs and quality outcomes suffered because the conversation with suppliers did not include participation and patient outcomes. Creating contracts that aligned the outcomes could have improved the participation and reduced the waste.

repositioned to solve for personal and systemlevel health rather than focused narrowly on cost management.

The Change in the Health Care Marketplace: Engagement and Accountability Transparency and consumerism are spreading rapidly. High deductible health plans (HDHPs) are part of the health marketplaces created by the Affordable Care Act. Centers for Medicare and Medicaid Services (CMS) is publishing data on physician-reported quality measures and hospital procedure costs. Data on safety incidences and readmission rates are obtainable through smart phone apps across Relevance for each constituent is building, but the outcomes are not aligned yet. The power of the consumer to negotiate for better pricing

Engagement Steps to Person Health Goal

Achievable outcome

Key Organizer(s)

Family and primary care physician


Specialists in treatment, lifestyle, caregiving, physical therapy, even financial impact


Online portal, direct contact, social media


Family, friends and professional support

In another survey, we asked hospital systems as employers about their employees’ participation in programs and services. One health care executive understood that employees were using the emergency room more and that chronic care management was below 50 percent. He saw the need to re-think the use of the clinic for employees and the costs involved with expanded hours versus the available saved resources if the emergency room was used more for life-preserving activities. The value proposition changes when the larger business and people goals are

and higher quality services at lower costs exists, but people who are used to being “receivers” do not change into “offensive tackles” overnight. We need to build braver consumers, providers and purchasers. The build-out cannot be focused solely on cost, particularly when costs are similar but quality is not, or when costs are lowered but commitment does not improve. Engagement demands that the system realign on measures that are meaningful at the highest and lowest levels. What if 10,000 steps resulted in coupons for fruits and vegetables and the physician

One health care executive understood that employees were using the emergency room more and that chronic care management was below 50 percent. He saw the need to re-think the use of the clinic for employees and the costs involved with expanded hours versus the available saved resources if the emergency room was used more for lifepreserving activities. who recommended the program received a transparent stipend for each patient that engaged? The discussions between providers and patients could improve; the interoperability of data could improve behaviors and outcomes. What if patients who are new to HDHPs received their training through groups their doctors and nurses) instead of in the employer setting? The engagement goal for these seminars could start at 50 percent of the invitations sent, and the proper use of HDHPs could achieve proper choices in adherence and screenings. We need a communication vehicle to publicize and promote the success of such

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Expansion into the health care space would require the algorithms to secure privacy in text messages. Texts with files (such as images) can change the conversation to real-time and relevant. Health care decisions can be peer-supported and actionable. programs. This is where newspaper articles, newsletter endorsements and social media become important in binding early participants to those who need more coaching or who just entered the program.

peer-supported and actionable. Facebook is the platform that links people around events and commonly shared priorities (goals). WhatsApp provides a Facebook experience that is meaningful when the person

WhatsApp and Facebook Can Accelerate Health Engagement

the pipeline, there are huge opportunities to improve patient-level engagement and systemlevel outcomes.

The opportunity for WhatsApp and billion paid for the 55 employee company. WhatsApp enables text messaging at no-cost or one dollar per year and each day 450 million users log into the app to communicate short, simple messages to colleagues and families. On February 24, 2014, WhatsApp announced the new voice capabilities, which can deliver more personalized messages. Expansion into the health care space would require the algorithms to secure privacy images) can change the conversation to realtime and relevant. Health care decisions can be

Engagement as the Operating System On February 25 of this year, Mark Zuckerberg announced that “Facebook will set the dial tone for the Internet.” In other words, the sound of engagement is Facebook; WhatsApp speeds messaging to engage across the system. Reinforcing the consumer engagement is this headline and subhead from Time magazine: “Consumer Choice is the New Tech Industry Theme: When companies invest to compete both for existing customers and the customers of other companies, the consumer always wins.”

to health engagement: when health care systems and producers invest to compete for both existing customers and customers of other companies, the consumer-patient always wins. If we use engagement as the operating system and we use transparency and outcomes to attract purchasers, the patients choices will lead to improved functionality, competency, literacy and satisfaction. Health engagement can secure economies’ unintended consequences and costs are lowered. Families and businesses can create health care budgets and communities can create health resource allocations in this predictable environment. Engagement must be the operating system for improved health outcomes future.

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014



Has Price Transparency’s Time Finally Come?


hen it comes to price transparency, many Americans still don’t have access to meaningful information about the price of their health care, but we can see glimmers of hope in private sector initiatives and public policy. Since declaring price transparency to be one of its special initiatives three years ago, my organization, Catalyst for Payment Reform (CPR), has reason to be optimistic. CPR is a nationwide coalition of the largest private employers, as well as state Medicaid and public employee and retiree agencies, who have come together with a shared commitment

members see price transparency as a necessary building block for a higher-value health these sites are care system, including playing a

While evolving to provide consumers with better, more-customized information about health care prices, including prices for entire episodes of care, the health plans have not done enough to help consumers understand overall value — the intersection of cost and quality.

provider networks and in payment reform. CPR defines price transparency according to Accounting



information on the price for or set of services to consumers and other interested parties.” estimate of a consumer’s complete health care cost on a health care service or set of services that 1) 2) is inclusive of all costs to the consumer associated with a service or services, including hospital, physician and lab fees; and 3)

pocket costs (such as co-pays, co-insurance and deductibles).” While most can agree on what price transparency is, the


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

and network designs intended to encourage consumers to shop for the best buy in a marketplace without prices. For many, their best bet today might be turning to their health plan for guidance. The price transparency tools the past few years. Assuming the evolution continues, they may be very robust in the near future. Last fall, CPR conducted an in-depth evaluation of the four largest national health plans’ price transparency Web sites are evolving to provide consumers with better, morecustomized information about health care prices, including prices for entire episodes of care, the health plans have not done enough to help consumers understand overall value — the intersection of cost and quality. Additionally, they have built little infrastructure around their tools to engage consumers to use them. In fact, CPR’s 2013 National Scorecard on Payment Reform, built on a nationwide survey of health plans, discovered 98 percent of plans reported making available to patient members some kind of cost calculator tool, but the health plans simultaneously reported that just two percent of their patient members actually use these tools. While we did not query consumers about their experience, we suspect this low utilization occurs, in part, or because the information they contain is not especially

usage shouldn’t surprise us. Perhaps not surprisingly, there are independent companies under contract with large employers and some health plans like Castlight Health, ClearCost Health, Compass Professional Health Services and Healthcare Bluebook, mounting competition in this space by developing and rapidly enhancing their own price transparency tools and services. When CPR examined the offerings of eight of the leading vendors last fall, we were excited to see many are improving how they show price and quality information together, though the next step will be to allow users to weight their preferences across these domains and others. Some vendors have promising features to help consumers become

The Institute for HealthCare Consumerism

savvy shoppers, such integrating Choosing Wisely information to help consumers seek more appropriate care. Across the board, these vendors have exciting engagement strategies to help bring consumers to their tools and services and to keep them coming back. For consumers without access to price information through a health plan or their employer, little, if any, information about health care prices exists in the public domain. For example, while CPR and HCI3’s 2013 Report Card on State Price Transparency Laws gave two states, Massachusetts and New Hampshire,

an “A” grade for making price information accessible to consumers, not all is as it seems. In this year’s report card, we took a closer look at how those laws were being implemented and the information actually available for consumers online. New Hampshire’s state Web site featuring its price information is down

to navigate. In this year’s report card, no state received an “A” and far more received failing grades. Across America, consumers left without access to a state-sponsored site may try using a “public” resource such as Fair Health to obtain a rough estimate about what they may pay out-of-

while the Massachusetts state Web site shows relative prices (below median, at median and above median) for different procedures, which

Health and similar resources cannot tell you the

Other “public” Web sites, such as those hosted by state hospital associations, are even

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014




COMPASS CREATES EMPOWERED HEALTHCARE CONSUMERS. Compass is the most trusted healthcare price transparency and consumer engagement company in the industry.

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TRANSPARENCY The Institute for HealthCare Consumerism


less helpful. For example, many state hospital associations use a variation of a price point Web site to share price information with consumers. However, in reality these Web sites are showing only chargemaster data for hospitals. We know that what facilities charge is often radically different than what a health insurance plan or consumer actually pays. Few, if any, of these voluntary (not mandated) public sites show real price information. One exception is a site hosted by Minnesota Community Measurement that contains details about paid amounts at clinics. Fewer still show price and quality information side-by-side. This shortcoming is critical as having both types of information is the only way a consumer can understand that higher-cost doesn’t always mean higher-quality, and, in fact, sometimes the opposite is true. So where does this leave consumers? Despite the scarcity of true price transparency, the lack of policy support, and the paucity of viable tools for consumers, there is reason for hope. In our 2014 review of state price that have recently passed stronger legislation or regulations. We hope this means we will soon see more and better price information online in states like North Carolina and Colorado. Furthermore, the new public health insurance exchanges will undoubtedly put pressure on state lawmakers to pass additional laws and regulations ensuring that consumers have access to price and quality information. There to help consumers buy higher-value coverage and care. One interesting nuance that warrants additional focus and further research is how the tools available from states, plans and other vendors choose to show price. Some plans and vendors elect to highlight the total cost of care for a procedure or treatment, the total amount the health plan will pay, or just the consumer’s share of the cost. There are products that encourage consumers to understand the

price for a total episode of care and tools that and service individually. Still others focus on displaying more general information, such as whether the price is high, medium or low (like on the Massachusetts website). CPR believes it is important for consumers to understand the total cost of care, including their share of cost and why both numbers matter (especially since employers and other purchasers generally foot most of the bill). But more research may tell us how consumers best understand price

a checklist that employers and purchasers can use to help ensure that whatever tool their employees have access to meets the needs of consumers. Given the advancements we’ve seen are more sophisticated than those we released in 2012; most of the major tools available all this positive momentum, we’re optimistic price transparency is a movement whose time better for those consumers looking to shop around.

a range, such as low-priced, averaged priced or above average. CPR’s 2014 Specifications for the Evaluation of Price Transparency Tools offers

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014



Employees Want their Employers to


iven all the attention on implementing and complying with the Accountable Care Act (ACA), many have speculated on whether employers would use the opportunity to just

you want to allocate the money your employer provides

is still out on how many will opt out; however, our research suggests that the majority of employers will continue to offer

would you be in this type of option?”

According to an Eastbridge survey conducted in 2012, many employers are still unsure about their plans

Employees expressed little interest in this approach. The largest percentage (42 percent) said they feel their

are not likely to send employees to exchanges or they will use

programs. About one-third (31 percent) said they may be interested depending on the amount of money provided, and another 14 percent said it depended on the options available. The employees were then asked if they would prefer to work for an employer that chooses to pay more to employees

That’s good news since employees we’ve surveyed are clearly not ready for their employers to get out of the

...a significant percentage said they are not likely to send employees to exchanges or they will use the exchanges only for health benefits. That’s good news since employees we’ve surveyed are clearly not ready for their employers to get out of the benefits business.


“Due to health care reform, some employers are now providing employees with access to an online menu of

said they are not interested in and prefer to purchase their question was designed to gauge interest in an employer giving them access to an online menu

That response makes sense given the fact that only 20 percent of those surveyed indicated feeling at least somewhat informed and prepared to purchase products on their own into a health care exchange environment.

Preferred Method of Handling Deductible

Nothing; I would pay the deductible out of pocket


Look at other insurance products to help cover the deductible, even if I have to pay the premium on my own


Look at starting a health savings account




IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

The Institute for HealthCare Consumerism

Reasons for Buying Voluntary Products

Products purchased filled my needs


Convenience of purchasing at work


Convenience of having premiums payroll deducted


Reasonable cost for the coverage


Reputation of carrier for service and claims payments


Name of the insurance company is well known


Endorsement by employer


Influence of co-workers


It appears that voluntary benefits will continue to play an important role in helping both parties overcome any obstacles imposed by the regulations. Dental Long-term disability Long-term care Pet Hospital indemnity

Most of the employees who purchase voluntary which, of several options, would they likely choose to cover this amount. Forty-one percent said they would like to look at other insurance products to cover the deductible, even if they have to pay the premium on their own. Just 18 percent said they would cover the deductible out of pocket. Those that selected “Other” typically answered “I don’t know” or “I can’t afford to get sick.” This high percentage (41 percent) of employees preferring to look at other insurance providers that can give employees a costeffective way to cover expenses caused by higher deductibles and out-of-pocket medical costs.

be conveniently purchased at work and paid through payroll deductions, according to our recent employee survey. The strong demand for voluntary is 2012 (the last year of data as of this writing), for example, voluntary sales were an estimated percent) over 2011. The top products that employees bought in included: Term life Personal injury accident Short-term disability When asked about products they may

Voluntary sales for 2013 are also expected to be solid, according to some of our preliminary Although the health care reform and health care exchange debate will again be a much talked about topic in 2014, it’s clear that there will continue to be interdependency between employers and their employees when it

in helping both parties overcome any obstacles imposed by the regulations.

employees were:

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014


SUPPLEMENTAL HEALTH The Institute for HealthCare Consumerism

TRANSITIONS OPTICAL, INC. 9251 Belcher Rd. Pinellas Park, Florida 33782, 800.533.2081 ext. 7540

See Well, Work Well: The Links Between Vision, Productivity and Employer Costs


s businesses look for ways to do more with less, productivity is a topic that looms large in the minds of employers. It would be challenging to think of a profession that wouldn’t be compromised by poor eyesight. Yet, many of the programs that are designed to promote healthy habits among a workforce undervalue or entirely overlook a major contributor to staff performance: vision. Generally speaking, employees can’t feel or work their best if they aren’t seeing their best, which can have a palpable effect on an employer’s bottom line.

Prevalence of Problems Unfortunately for employed adults, the probability is high that they’re already experiencing disruptions to their vision when on the job. In fact, according to Transitions Optical’s 5th annual Employee Perceptions of Vision Benefits survey,1 nearly 80 percent of employees encounter at least one visual disturbance that bothers their eyes while at work. Nearly half of all workers reported having tired eyes, accompanied by a myriad of other complaints. t Tired eyes (47 percent) t Reflection off computer screen (31 percent) t Bright, glaring light (30 percent) t Dry eyes (30 percent) t Headache from visual disturbance (29 percent) t Blurry vision (28 percent) t Reflection off personal device (16 percent) t Reflection off outdoor surfaces (16 percent) Many visual disturbances can be alleviated with wearing the right eyewear — including lenses with an up-to-date prescription and eyeglass options, like anti-reflective coatings and Transitions® lenses to reduce glare. Impact on Productivity Studies indicate that eye focusing problems, which can result from eyestrain and fatigue, can cause employees to lose up to 15 minutes of working time per day. This can translate to more than $2,000 per year per employee who suffers from this issue.2 There are also links between eyestrain/tired eyes and headaches. A significant 29 percent of all workers say they suffer from headaches as a result of visual disturbances. According to the National Headache Foundation, headaches cost the nation


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

$17 billion dollars in absenteeism, lost productivity and medical expenses. While 90 percent of employees say headaches affect their work performance, only 33 percent tell their employers, indicating a potentially bigger issue than employers realize.3 Vision problems can further hurt productivity by increasing the number of breaks employees take. More than half (53 percent) say they take breaks during the work day to rest their eyes — a 45 percent increase from when this question was asked two years ago. According to the 2013 survey, the average employee takes two breaks per day, but nearly one third (32 percent) take three or more, and 13 percent are taking more than five. Finally, perhaps the most devastating threat to a workforce is undetected eye disease. Many eye diseases, which can be treated and even avoided if caught early, are increasingly common among the aging workforce. Employees can help protect their eye and even overall health with regular eye exams for early detection of eye disease and systemic issues, like diabetes and hypertension. Opportunities for Education Despite the potential detriments to workplace productivity that exist as a result of vision disruptions, miscorrected vision and eye disease, employers are missing opportunities to educate employees on the relevance of eyecare and vision correction. The 2012 Employee Perceptions survey revealed that only 16 percent of employees reported receiving education from their employer related to their eye health.4 Vision plans, benefits brokers and HR professionals can help by providing education about the critical importance of regular eye exams and wearing the right eyewear to see your best. A variety of employee- and employerfocused education materials can accessed free Smith Wyckoff of charge at Key Account Manager, Managed Care/ Online Retail

Congratulations to the 2013 Transitions Vision Benefits Broker of the Year! Regular eye exams and quality eyewear help protect employees’ eyes and overall health – and ensure they’re seeing their best – so they can perform their best. Transitions Optical is proud to recognize brokers who go above and beyond to promote vision benefits. Learn more about the importance of vision benefits and the Transitions Vision Benefits Broker of the Year award at

Sara Niemeyer

Account Executive USI Insurance

©2014 Transitions Optical, Inc. All Rights Reserved. Transitions, the swirl, and Transitions Healthy Sight Working For You are registered trademarks of Transitions Optical, Inc. Photochromic performance is influence by temperature, UV exposure and lens material.

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How to Get the Most from a Biometric Screening Event


ith the growing popularity of employer wellness programs, the inclusion of biometric health screenings is on the rise. In fact, according to a Kaiser Family Foundation report, more than 55 percent of large employers offered an onsite biometric screening in 2013. The growth in screenings is due partly to employers increasingly wanting to help employees identify health issues while engaging

incentives tied to achieving certain biometric goals, such as a target body mass index, blood pressure or cholesterol level. Biometric screenings consist of the gathering of physiological data — ranging from height and weight to blood pressure and cholesterol levels — that can It’s important for indicate whether an individual or is at risk for certain health employers, employees has conditions. Biometric screening and the general data is important because it can play a key role in an employer’s business community workplace wellness program. During a biometric to understand that a screening, employees are screened

biometric screening alone is not meant to diagnose health conditions or to replace the relationship between an individual and their health care provider.

by a third party at the worksite. A health report is then shared with each participant outlining their respective areas of good health, as well as opportunities for health improvement. Data is reported to the employer in aggregate to identify opportunities to improve the overall health and well-being of the organization. These reports provide both an individual and workplace health assessment to benchmark and evaluate changes in employee health status over time. The screening process and how the data is used by because screening data is increasingly being used to incentives, such as lower health insurance premiums or spending account contributions. Because of this connection essential that biometric screenings and incentive strategies

are implemented in a way that is safe and not discriminatory for participants, while still producing useful reports to improve the overall health and well-being for organizations and their employees. To address this, three national health organizations recently collaborated on and published guidance designed to help employers create more successful programs for gathering health-screening information from employees. The Health Enhancement Research Organization, the American College of Occupational and Environmental Medicine and the Population Health Alliance, formerly Care Continuum Alliance, collaborated on the consensus statement “Biometric Health Screening for Employers”, which was published in the October issue of the Journal of Occupational and Environmental Medicine. It’s important for employers, employees and the general business community to understand that a biometric screening alone is not meant to diagnose health conditions or to replace the relationship between an individual and their health care provider. Rather, a screening is a tool to enhance the understanding of health, while providing the motivation and monitoring needed to improve. Biometric screenings, combined with a review of the results with a health educator and personal goal setting, can enhance an individual’s knowledge of their health status as well as possible health conditions and issues. But many variables must be taken into account in order for biometric screening programs to succeed, including data collection methods, selection of appropriate populations for screening, operational issues, privacy considerations, budget limitations and others. “Biometric Health Screening for Employers” offers detailed suggestions on all of these and other variables, organized into four major categories to help employers when considering biometric screening as part of an overall employee health management approach. The new guidance also includes advice on the use fat percentage, comparison of methods for blood testing, the impact of state and federal regulations on biometric screening, and how best to staff and run a screening of vendors for screening services, the evaluation of program effectiveness, and methods for employee engagement — including communication strategies data reports and

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014


You imagined it. We built it. Introducing RedBrick 5—the newly enhanced platform from RedBrick Health. Easier to administer and better to use—RedBrick 5 offers a true health engagement and behavior change hub that goes far beyond traditional wellness portals or mobile apps. Grounded in behavior design, RedBrick 5 brings together an expanded array of tools to help consumers make wiser choices, save money and get the care they need. Plus, you can seamlessly integrate in your own activities or third-party programs making administration and management easier than ever—now, and well into the future. To schedule a demo or to learn how RedBrick Health has what it takes to power your population health strategy, visit or call:


POPULATION HEALTH MANAGEMENT The Institute for HealthCare Consumerism


using incentives to encourage participation in wellness programs. It is the belief of the organizations that developed the guidance that biometric screenings succeed when they are “part of a comprehensive health management program, prioritizing the health and well-being of goals, and evaluated for effectiveness and engagement”. This belief is reinforced by for the HERO Employee Health Management Best Practice Scorecard in Collaboration with Mercer, which featured survey responses from more than 600 employers. Findings from this survey show companies that offer a biometric screening in the context of a comprehensive workplace wellness program that fosters a supportive culture, leadership support and strong employee communications realize better health (37 percent reported greater health risk percent reported lower health care trend) than those that offer a biometric screening alone. We believe this is in part because biometric screenings – when used as a component of population health management – establish a baseline that can be used to follow an individual’s health status over time. Employers can also use design their well-being programs and health employees. This, in turn, helps them achieve The “Biometric Health Screening for Employers” guidance includes the following practical, easy-to-implement recommendations for any employer who offers, or is considering, a biometric screening as a part of their comprehensive workplace health management program. 1. Consider your goals when deciding to offer or when evaluating a screening program. consider the program goals: if the screenings are part of an overall health management program, corporate culture, number of location(s) and population makeup, what screening measures to include and whom to screen (employees only, spouses, dependents).

Employers today realize that in order to improve their health, people need information. The best place to start is with an assessment of your own personal health so you understand where you have opportunity to improve and where you might be at risk for serious health problems. Tools like a biometric screening and health assessment provide immediate feedback to the individual and the organization and can be used to keep employees engaged in long-term health improvement if done properly. The biometric screening guidance helps companies achieve this goal. 2. Screen for generally accepted biometric measures. Non-blood screening elements include height, weight, calculated BMI, waist circumference, blood pressure and pulse rate. Blood screening elements include cholesterol and glucose measure. 3. Protect employee privacy. It is best to conduct screenings in private rooms or large spaces to create visual privacy. Screening personnel should refrain from verbalizing results and instead point to results once recorded. 4. Disclose how participant data will be used. Clearly communicate that the individual results will only be shared with the employee and their physician, if may be shared with the employer and the health management provider to inform program offerings. 5. When using incentives, make screenings accessible to all employees. Because screening programs have become more integrated into health management programs and popularity, it’s important that everyone has an opportunity to be screened. In fact, when health plan choice, premiums or out-of-pocket contributions are based on participation in, or the results of a

screening, convenient access to screenings 6. Offer multiple screening options. opportunity to be screened, offer screenings at clinical laboratories or urgent care centers, individual screenings at the kits and physician test kits. 7. Educate employees. Promote the screening to employees through communication that helps them understand what the program is, why the employer is offering it, the program goals, what is expected of the employee, impact associated with participation, and how the information will be used and by whom. 8. Evaluate the screening effort. Measure the results of the screening by examining how the process worked, what percentage participated, employee satisfaction, how the screenings impacted the overall health management program, and if the screening drove participation in the health management programs offered. To learn more about biometric screenings or to download the complete employer guide, simply visit any of the authoring organizations online.

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014




began monitoring prescription costs and drug

to keep up with the industry. Examples include multi-tier co-pay structures, innovative utilization management tools, drug coverage rules to address new therapies (e.g., weight loss/gain and erectile dysfunction), and most recently, creative retail network designs. recent Prescription Drug Cost and Plan Design Report,

trends, 2013 brought about a remarkable consistency with 2012 policies. From cost-sharing to drug coverage policies unchanged. The most likely explanation for this pattern is uncertainty as plan sponsors waited for full implementation of the Affordable Care Act (ACA). Additionally, sponsors that wished to “grandfather” their health plans (exempt

maintaining cost-sharing levels to avoid loss of grandfather status. According to the Kaiser Family Foundation’s 2013

holding steady. Unlike prior years, which as mentioned were characterized by changes and adaptations to market

Summary of Key Plan Design Features

Plan Design Feature




Three or more tiers*




Copayments (versus coinsurance)*








Prior Authorization




Step therapy




Prior Authorization




Prior Authorization








Drug Coverage

Limit specialty products to 30-day supply

Preferred or limited retail network *Among plans with the most common design configurations. NA = not asked. Source: PBMI 2013-2014 Prescription Drug Benefit Cost and Plan Design Report


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The Institute for HealthCare Consumerism

Top Five Management Strategies in Pharmacy Benefits 2011 (a) (n-122)

2012 (b) (n-306)

2013 (c) (n-335)

Prior authorization




Preferred products/formulary




Clinical care management programs




Step therapy




Limit specialty products to 30-day supply




a Base: Respondents who cover at least one specialty drug under the medical benefit. a,b,c, Significantly higher than group indicated by superscripted letter. Groups are identified in the column header. Strategies are ranked by their use rate in the pharmacy benefit in 2013. Source: PBMI 2014 Specialty Drug Benefit Report

more likely to offer a grandfathered plan.1 One area in which some change did occur was the management of specialty medications, most likely due to their increasing contribution to overall prescription drug expenditures.2 Although a very small percentage of people use specialty medications, their cost far exceeds those of nonspecialty products. According to the Express Scripts 2013 Drug Trend Report, in 2012, specialty medications accounted for 25 percent of total prescription drug expenditures but less than one percent of prescriptions

authorization protocols and formularies, has become more widespread in the management of specialty medications. Only time will tell as the ACA plays out. With the landscape and rules still changing, one way in which plan sponsors can take control is by assessing pharmacy network contracts each year. Dispensing fees and ingredient cost discounts, which are critically important determinants of a plan sponsor’s cost per prescription, may vary by channel, often substantially. Regular data analysis helps plan sponsors monitor these outcomes and, if necessary, adjust contracts accordingly. In recent years, the popularity of narrow pharmacy features, their use rates are unchanged in 2013 compared with 2012. As mail-service pharmacy has become less costcompetitive for a variety of reasons, including innovative retail pharmacy programs and legislative/regulatory initiatives, narrow networks may become an increasingly

Dispensing fees and ingredient cost discounts, which are critically important determinants of a plan sponsor’s cost per prescription, may vary by channel, often substantially. Regular data analysis helps plan sponsors monitor these outcomes and, if necessary, adjust contracts accordingly. valuable cost-containment tool. As noted in our report, “big data” can be used by plan sponsors to conduct independent analyses of their clinical and economic outcomes rather than relying solely on vendors to provide information. The old adage that “you cannot manage what you do not measure” has, in today’s rapidly changing and complex health care environment, become an imperative. 1 Semro, Bob. “Grandfathered Plans, the ACA and the ‘If You Like Your Plan ...’

Available at

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What are Convenient Care Clinics? Usually located in retail locations, such as pharmacies and drug stores, supermarkets, big box retailers and other clinics (CCCs) are health care clinics staffed by nationally(PAs) that provide basic primary care services.1 The clinics initially provided only a limited scope of services to patients that included treatment for minor acute illnesses and conditions, such as bronchitis and upper respiratory infections. As the popularity of the clinics grew, consumer demand for additional services paved the way for clinic operators to expand their menu of services to include preventive and wellness care and chronic disease care. Today, consumers can receive treatments for acute ailments, such as urinary tract

Transparency of medical costs is top priority to the convenient care industry, and this has set the clinics apart from traditional medical delivery systems. The clinics visibly post their health care services, treatment costs and information about their providers — whether at the clinic or on the clinic’s website — and consumers appreciate this feature.


ear infections; wellness services, including vaccinations, sports and camp physicals and biometric screenings; and chronic disease care, including — but not limited to — monitoring, treatment and management of diabetes and hypertension. With more than 1,600 clinics Columbia and over 20 million people treated to date, CCCs are known for providing accessible, consumers who would have waited hours, days or even weeks for basic primary health care services.

Access, Affordability and Quality The clinics provide easy accessibility and are convenient for patients because of their locations in retail-based settings. Studies show that one-third of the American population lives within 10 miles of a clinic2 and many

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of them open seven days a week—up to 12 hours a day during the workweek and up to eight hours on Saturday and Sunday, including most holidays. Most visits take approximately 15-25 minutes, and many of the clinics see patients 18 months and older, encompassing pediatric, adult and geriatric care.3 Transparency of medical costs is top priority to the convenient care industry, and this has set the clinics apart from traditional medical delivery systems. The clinics visibly post their health care services, treatment costs and information about their providers — whether at the clinic or on the clinic’s website — and consumers appreciate this feature. The average cash cost for a visit to a CCC is $75. Up don’t have an existing medical home, which makes the CCCs the lowest-cost unsubsidized provider of care. The clinics have a demonstrated ability of consistently success of the convenient care industry. At most convenient care clinics, standardized protocols based upon evidencebased guidelines assist NPs and PAs in clinical decisionmaking. These protocols are used to assist the provider in the decision-making process and are not intended to replace critical thinking and/or the clinical judgment. Additionally, many convenient care clinics have incorporated rigorous internal and external reviews are being built into these new entities, for example, formal chart review by collaborating physicians and peer-review by providers with additional standard coding auditing.5

Consumer Validation Quality, accessibility and cost savings have been organizations, such as Gallup, Deloitte and RAND Corporation. Results from this research indicated that retail clinics are creating a better health care experience for or better than that offered in more traditional settings and care settings. Gallup research showed that customer engagement in

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the care setting was in the top 10 percent of all organizations that Gallup had measured. This was not just among health care providers but across all industries — including luxury hotels, premium retailers and high-end auto dealerships.6 Cost savings, accessibility, highpatient experience continue to drive growth in the industry especially in light of the implementation of the Patient Protection and Affordable Care Act (PPACA).

Industry Growth & Partnerships Growth among the clinics both in numbers and services is expected to accelerate as increased demand from consumers who are newly insured under the PPACA are confronted with the growing shortage of primary care physicians. Convenient care growth will also come from the ongoing transition from fee-for-service to capitated and value-based reimbursement models of care, whose success will depend, in part, upon patients’ ability to

part of the growth trend, it is expected that more large health care systems seek out relationships with convenient care clinic operators, and in some cases open their own clinics, in order to deliver the most cost-effective care and stimulate referrals to their physician networks

primary care services. Programs offered in the clinics — such as smoking cessation and weight management — are poised to help employers realize long-term savings through a reduction in chronic disease costs related to illnesses like diabetes and COPD.

patients who say they don’t have a primary care provider.7 Clinic operators are not only partnering with health systems but also employers. Employers have found partnerships with


employees’ health and wellness, but also from a cost savings perspective. The top three reasons cited for employers to have clinics available to their employees are: reduction in lost employee productivity increased control over health spending; and help with employee retention.8 According to the Kaiser Family Foundation and the Health Research & Educational Trust’s survey, 56 cover retail health clinics. Further, of those

positioned to provide. Many private clinic operators are major health systems, which allow for increased

incentive to receive services in a retail clinic Employers are also attracted to the prevention and wellness services the clinics offer in addition to the

With over 1,600 clinics nationwide, serving more than 20 million patients, convenient care clinics are here to stay. The clinics are a valuable part of the health care landscape providing basic primary health care. Consumers continue to “vote with their feet” and have played a in number of clinics and expanded scope of services. This growth trend will continue as more Americans become covered under the PPACA and will need access to health care. Partnerships between the clinics and health systems and employers will also contribute to the growth of the convenient care industry and continue to play an increasingly important role in the ever-changing health care system. 1 Convenient Care Association. (2014). About Us. Accessed February 24, 2014, from http://ccaclinics. org/index.php?option=com_content&view=article&id =7&Itemid=119 2 Rudavsky, R., Pollock, C. E., and Mehrotra, A. (2009) The Geographic Distribution, Ownership, Prices, and Scope of Practice at Retail Clinics. Annals of Internal Medicine, 151(5), 321-328. 3 Convenient Care Association. (2014). About Our Clinics. Accessed February 24, 2014, from http:// 4 Mehrotra, A. et al. (2009) Comparing Costs and Quality of Care at Retail Clinics with that of Other Medical Settings for 3 Common Illnesses. Annals of Internal Medicine.151(5), 321-328. 5 Convenient Care Association. (2014). Quality of Care. Accessed February 24, 2014, from http://ccaclinics. org/index.php?option=com_content&view=article&id

O. (2010) Elevating the Patient Experience. Retail Clinician, pp. 2-4. 7 Mehrotra, A. et al. (2009) Comparing Costs and Quality of Care at Retail Clinics with that of Other Medical Settings for 3 Common Illnesses. Annals of Internal Medicine.151(5), 321-328. 9 Employer Health Benefits 2013 Annual Survey, Kaiser Family Foundation and Health Research & Educational Trust. HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014


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HEALTH ACCESS: ONSITE/NEAR-SITE The Institute for HealthCare Consumerism



While many vendors recommend at least 1000-1500

because they’re altruistic. They do so to recruit and retain talent and to ensure their covered populations are mentally and physically able to be productive. With another 30 million Americans gaining access to insurance coverage, employers are also concerned about their workers having access to primary care.

have to avoid expenses where you can, reduce the health risks within your population and eliminate unnecessary and inappropriate utilization. Another key area is to increase the percent of those engaged in worksite wellness While treating programs. Employers spend millions of dollars each year on employees is the preventive, lifestyle management condition management primary and initial focus, and programs that attract less than 20 allowing dependents percent of their populations. To address these costs, to take advantage of access, engagement, health onsite services can and productivity challenges, an increasing number of employers dramatically lower are offering onsite, near-site, and telehealth medical and overall costs and mobile wellness services. This number will reduce unnecessary be increasing in the near future.

care. Many employers also allow retirees and part-time workers, and, in some cases, contract workers and visitors to utilize the facilities.

The Prevalence of Employer-Managed Care

According to studies by the National Association of Worksite Health Centers, Mercer and Towers Watson, around 30 percent of companies offer some form of onsite, near-site or mobile health services to employees, dependents, retirees and others. Another 16 percent offer pharmacy services and more than 67 percent centers. Eleven percent of companies expanded their service offerings over the last two years and another 11 percent plan

small as 200 employees are offering once-a-week nursing services to provide access to basic preventive and primary care services. A number of employers are also taking advantage of local providers who will come to the worksite or have mobile units. Onsite health centers range from one day-a-week operations, led by a nurse practitioner or physician assistant, weekends and primarily staffed by physicians.

Objectives of Onsite Health Centers Onsite care has evolved from the “company nurse” site health programs provide a range of services and programs, including primary care for adults and children, specialty physician services, pharmacy and lab, physical and massage therapies, preventive and lifestyle management programs, nutritional and health coaching, chiropractic and acupuncture care and behavioral health services. Employers with onsite health centers are also seeking to offer some level of services to their smaller and remote locations and workers. Mobile units and telehealth services are now available, using kiosks and computers that utilize as convey sharp images for physical exams.

Key Decision Areas It’s not something an employer should go into lightly. It various services, and the likelihood of workers wanting to obtain their health and medical care at the worksite. Employers interested in this approach need to set and measure clear objectives such as improving health, reducing costs, increasing productivity and managing risks. While treating employees is the primary and initial focus, allowing dependents to take advantage of onsite services can dramatically lower overall costs and reduce unnecessary care. Many employers also allow retirees and part-time workers, and, in some cases, contract workers and visitors to utilize the facilities.

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an employer must get involved in the hiring process. The types of services to be provided need to be the location, hours, level of cost-sharing and how to measure the impact of the onsite center. Employers currently provide an array of activities related to improve health and productivity of their populations, such as treatment of injuries, occupational health, Today, an employer need not self-manage these types of services, but can contract out of the center to local providers or third-party vendors. However, since the personality and skill set of the medical and administrative staff are critical to the success of an onsite center,

There are many dimensions of value, with some of these able to show results in a short time and others taking several years. Alternately, financial indicators, productivity gains and reduction in absenteeism may take two to three years to be accurately measured.


management, wellness programs, primary care and ancillary services. campus and see an outside provider. In the future, more employers will bring these services and programs on campus or near-site. People who have to have their blood pressure checked, child for a physical offsite often are gone threeto-four hours, feed their dog and never return to work the same day. By offering these services on or near-site, the time away from work can be dramatically reduced, increasing productivity and giving workers easy access to the care they and their family need. Unfortunately, most employers have siloed or carved out these activities. This sets up the potential that the worksite center will be a further fragmentation of the medical care system. To avoid this, an employer must view the center as the hub of all health and medical programs and services, integrating and coordinating care and offering easy referrals and handoffs to other worksite programs.

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Measurement is Key for ROI — Now Value of Investment In today’s competitive global market place and challenging economy, an employer must be able to measure the impact of an onsite or nearsite center. The key is to recognize that cost savings are not the sole metric. Employers have to be examining not just return on investment, but value of investment, and look at multiple areas that affect the bottom line and success of the center and company. There are many dimensions of value, with some of these able to show results in a short time and others taking several years. For example, within 12 months, an employer can effectively measure participation and engagement in

indicators, productivity gains and reduction in absenteeism may take two to three years to be accurately measured.

Addressing the Potential Barriers to Successful Utilization of Onsite Health You can’t just announce a program or advantage of it. Successful onsite centers will need ongoing, effective communications. They also need to be attractive and offer easy access. Especially important is visible senior management support for the onsite center and a belief that the center’s staff can be trusted onsite center will be key, and the vast majority of employer-sponsors of centers don’t charge for their use. Finally, as mentioned before, indifferent and impersonal medical providers and staff who don’t understand or partake in the worksite culture will undermine all efforts. “Employer-managed health,” a term coined by Michael LaPenna, an expert on worksite centers and employer managed care, will offer employers opportunities to educate, inform, treat and motivate their populations to achieve better health, while reducing unnecessary costs and utilization of services. In tomorrow’s workplace, onsite and near-site centers will play a key role.

HEALTH ACCESS: MEDICAL TRAVEL The Institute for HealthCare Consumerism



growing number of U.S. employers have adopted domestic medical travel programs, encouraging employees to travel to Centers of Excellence (COEs) for elective surgical procedures. Patients save money and companies are able to

to 50 percent — or more — below the rates charged through traditional insurance plans. The COEs range from high-

orthopedic and cardiac care. Interest in domestic medical travel comes in response to rising health insurance premiums, lack of transparency and vary dramatically between hospitals and across regions. Recent domestic medical travel programs include: Wal-Mart has partnered with six U.S. health care organizations to expand its COE program in 2013 to certain heart and spine surgeries in addition to transplants at Mayo Clinic. In 2012, Boeing began offering its 83,000 non-union employees, retirees and their dependents the option to travel to the Cleveland Clinic for complex heart procedures or surgery. PepsiCo domestic employees and their dependents — almost 250,000 people — have Interest in domestic had the option since 2011 to seek at Johns Hopkins medical travel comes in treatment Medicine for cardiac and complex response to rising health joint replacement surgeries. PepsiCo negotiated a bundled, insurance premiums, all-inclusive rate for hospital and lack of transparency physician charges and certain preoperative testing. and increased The growing interest in domestic medical travel among awareness of how employers and payers is likely to varied medical costs and see an uptick as more companies follow in the steps of the retail quality vary dramatically giants.

between hospitals and across regions.

employers who waive co-pays and deductible, offer cash incentives and cover the full cost of travel for the patient and caregiver. Medical travel within the United States is a much easier sell than travel abroad, especially for patients who have never traveled to another country and feel uncomfortable about unfamiliar settings while recovering from surgery. can be arranged. Based on patient volume, complication and infection rates, a surgeon is chosen who can perform the procedure and help negotiate a bundled rate at a facility he or she is contracted with — all within driving distance for the patient. an alternative to surgery. Rather than being guided solely by

information about their diagnosis, prognosis and treatment options, they make informed medical decisions that lead to healthier and more personally satisfying outcomes. Given the ability to understand their options and actively participate in directing their surgery.

Influence of the Affordable Care Act The Affordable Care Act (ACA) has triggered a centric care, and employers now put enormous stock in preventive health care programs and options that offer The ACA waives pre-existing conditions restrictions by insurance companies and makes insurance premiums the same for healthy and chronically ill individuals. With this aspect of reform driving insurance costs up dramatically, it will increase the appeal of domestic medical travel as a way to curb costs for employers and insurers. And as Americans become more engaged and educated health care consumers in the new reform environment, domestic medical travel will become more acceptable.

Benefit to Employees

Role of the Employer

Employees who travel to COEs experience lower costs and

The key difference between domestic medical travel and medical travel overseas is that employers and employees

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appear to prefer the concept of domestic travel. Individuals like staying within U.S. borders where they say they feel safer and more comfortable dealing with English-speaking physicians. The pioneer employers understood the cost-savings of domestic medical travel and recognized the opportunity to keep employees healthy and productive, while maintaining Toward that end, they demanded safety, As more employers adopt domestic medical travel, they will be motivated more by cost control, while moving toward paying for service. With this in mind, domestic medical travel offers a way to curb the cost of unnecessary surgery. Utilizing robust health data, employers can identify plan members who are on the providing education about the surgery, and the COEs. for employer organizations of all sizes. A relationship with a COE empowers employers to anticipate costs and take action, which is important given that surgical costs represent the largest component of U.S. health care spend by far.

Opportunities and Challenges Insurers pose a potential roadblock to the adoption of domestic medical travel. to develop ways for workers to determine the dragged its feet for years, and Lowe’s ended up doing the research. As baby boomers age, the number of knee, hip, spine and heart-related surgeries are rising. Surgery costs account for 30 percent or more of employers’ total health care spend. These consume disproportionately high resources. In the case of Lowe’s, one employee had three complex heart procedures while hospitalized under the new program. Lowe’s


those procedures if they were done under the company’s standard insurance plan. The agreement with the Cleveland Clinic, Lowe’s With the implementation of private insurance exchanges, the growth of health the surge in self-insurance for companies of all sizes, the domestic medical travel trend will continue to build, as employers introduce incentives, including waiving co-pays and deductibles to prompt utilization. Opportunities for expanding domestic medical travel care to include a wider range of conditions exists as well, particularly for

accountable and must become competitive to survive. The full impact of the ACA has yet to play out. When employer plans are no longer able to impose annual or lifetime dollar limits on employers will be looking for new solutions. designers and HR to focus on educating employees about the advantages of domestic medical travel — and for positive word-ofmouth to push acceptance even further. Many companies have watched the big retailers begin offering domestic medical travel to COEs and have waited to see results. Soon, they will begin to explore how they too can curb strategy in the spirit of health reform.

as diabetes, where it is a precursor for other serious conditions.

Looking Ahead For employers and payers, domestic medical travel provides an opportunity to control rampant health care costs — and play a role in accelerating health care reform. After years of operating outside of market forces, U.S. health care organizations are being held

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s health care costs in the U.S. continue to rise, employers are looking for new ways to enhance health care offerings that complement traditional insurance while providing

reduce absenteeism and improve worker productivity. At the same time, employees have become more savvy health care consumers and more technologically connected. They want more convenient health care and are not hesitant about utilizing technology to get it. Telehealth or “connected care” has become an employees to communicate in real-time their health care providers. The National Business Group on Health/Towers Watson survey of large employers showed 23 percent of large employers would implement We must create a telehealth in 2013. One example is Golden consistent definition of Living, a post-acute health connected care that will care employer with more than 15,000 employees nationwide. In promote participation December 2012, Golden Living

and broaden acceptance of remote care among providers, payers and patients. We must also address the lack of broad and consistent reimbursement, insufficient broadband infrastructure, inconsistent state medical licensing and varying degrees of clinical permissibility.

provider of medical care for adults and children experiencing non-emergency medical issues via phone, secure online video, and mobile app. Since providing employees, Golden Living has seen a reduction of unnecessary emergency room visits by eight in overall urgent care visits and medical costs, providing Golden Living with savings of more than $800,000 so far. Private sector employers are not alone in offering “connected care” to their employees. In September 2013, Cuyahoga County in Ohio began offering services to their employees via a HealthSpot station located within

the Cuyahoga County Justice Center. Patients can see a doctor for a range of primary care conditions with realtime diagnostic feedback through connected devices like a stethoscope, otoscope or blood pressure cuff via highstation on the employer’s site. Despite the rapidly developing technology and increasing interest among consumers, employers and medical providers in using connected care, regulatory and statutory barriers continue to limit mainstream use of connected care technology. To achieve the promise of connected care in our health care system, there must be renewed urgency among policy makers to foster a regulatory structure that enables safe and accessible use of remote patient care technology. care that will promote participation and broaden acceptance of remote care among providers, payers and patients. We must also address the lack of broad and consistent inconsistent state medical licensing and varying degrees of clinical permissibility. The time is right to address this issue: technology can provide powerful answers, but we must pave the way by ensuring our laws and regulations keep up with technology and the interest among employers and consumers in using it.

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LEGAL & COMPLIANCE: ACCOUNT-BASED PLANS The Institute for HealthCare Consumerism


In the ever-increasing pages of guidance from the federal regulatory agencies responsible for implementing the Affordable Care Act (ACA), it is easy to lose track of how the new rules apply to various types of individual account-based health plans (i.e. FSAs, HRAs, and HSAs). Following is an overview of how the ACA has changed key rules for health

3. Application of ACA Market Reforms Are health FSAs subject to the ACA market reforms? A health FSA is exempt from the ACA market reforms regulators have made it clear that if a health FSA does not

and health savings accounts. services without cost-sharing and the prohibition on annual


1. Dollar Limit on Salary Reduction Contributions (FSA Dollar Limit)

The employer must make other group health plan coverage available to the employees who are eligible for the health FSA. The other group health plan coverage

Effective for plan years starting on or after January 1, 2013, salary reduction contributions to health FSAs are subject to a dollar limit per employee per plan year. The

The health FSA must be structured so that the exceed two times the participant’s salary reduction election for the health FSA for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).

2. New $500 Carryover Option

Failure to satisfy the ACA market reforms can trigger excise taxes under the Internal Revenue Code of $100 per day per violation and may give rise to claims under ERISA.

relaxed the “use-it-or-lose it” rule, unused amounts in health FSAs be forfeited following each plan year. New IRS guidance allows up to $500 to be carried forward

forward does not reduce the next year’s $2,500 FSA dollar limit. Employers may decide whether or not to allow the carry forward, i.e., it is optional. Health FSA plans may not have both a carry forward and utilize a grace period that allows for reimbursement of expenses after the plan year ends. Plans will need to be amended if they wish to allow a carry forward.

For example, stand-alone health FSAs (i.e. where the employer does not offer other group health plan coverage)

for small employers who may be considering dropping their Failure to satisfy the ACA market reforms can trigger excise taxes under the Internal Revenue Code of $100 per day per violation and may give rise to claims under ERISA.

4. Reimbursement of Over-the-Counter Medicines and Drugs Effective January 1, 2011, the cost of an over-thecounter medicine or drug cannot be reimbursed from a health FSA (or other employer plan) unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other non-drug health

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care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The IRS has issued guidance with respect to this rule, including rules regarding the continued use of payment cards under health FSAs.


1. Application of ACA Market Reforms The compliance landscape for HRAs was related guidance issued by the Department of Labor and HHS. A. Stand-alone HRAs Stand-alone HRAs for active employees, i.e. where an employer offers an HRA that is not linked to other group health plan coverage, are no longer permitted under the ACA. Such stand-alone HRAs automatically fail to preventive services without cost-sharing and the prohibition on annual dollar limits. HRAs may continue to be used for so-called “retireeonly” plans.

An employee who is eligible for affordable, minimum value group health coverage is not eligible for a premium tax credit. B. HRA options for employers who offer group health plan coverage Although stand-alone HRAs are no longer permitted for active employees, for employers that offer a group health plan, HRAs remain a

reimbursement for medical expenses that without cost-sharing. General requirements For an HRA to be ACA-compliant, the The employer must offer a non-HRA group health plan. The HRA must be available only to employees enrolled in a group health plan. The group health plan does not need to be a plan offered by the employer. For example, the employee may be enrolled in a plan offered by the spouse’s employer. The employer may limit participation in the HRA to employees who are covered under a group health plan of another employer. If the employee is not enrolled in the employer’s plan, then the employer should obtain an attestation from the employee that he/she is covered under another plan and whether the other plan provides minimum value. An employee (or former employee participating in the arrangement) must be permitted to permanently opt out of or waive future HRA reimbursements at least annually. In addition, upon termination of employment, either the remaining amount must be forfeited or the employee must be permitted to opt out and waive future reimbursements. These opt-out HRA will generally constitute minimum essential coverage so that participating in the HRA will preclude eligibility for premium tax credits. Permitted reimbursements under the HRA If the underlying group health plan does not provide minimum value (i.e., does not reimburse at least 60 percent of expenses

health plan in which the employee is enrolled is not sponsored by the employer (e.g., is a spouse’s plan), then the employer should obtain an attestation from the employee that the is a reimbursement for a co-payment under the spouse’s plan). If the underlying group health plan provides minimum value, then the reimbursements under the HRA do not have to be limited to particular medical expenses. Treatment of HRAs for purposes of employer penalties and availability of premium tax credits Starting in 2015, employers with 50 (subject to transition relief) or more full-time penalty if they fail to offer affordable, minimum value coverage to full-time employees and their dependents and even one full-time employee receives a premium tax credit for coverage purchased through the Health Insurance Marketplace. An employee who is eligible for affordable, minimum value group health coverage is not eligible for a premium tax credit. Amounts newly available for the current plan year under an HRA offered in connection with a group health plan are treated for affordability and minimum value purposes as follows: If the HRA can be used only to reduce cost-sharing under the employer’s primary medical plan, then the amounts newly available under the HRA are taken into account in determining minimum value. If the HRA can be used to pay premiums under the primary employer plan, then amounts newly available under the HRA are taken into account only in determining affordability, and may not be taken into account for minimum value purposes, even if the HRA also may be used to reimburse cost-sharing.

persons who are enrolled in a group health plan. below will be considered in compliance with the prohibition on annual limits and the


limited to reimbursement of co-payments, co-insurance, deductibles and/or premiums under the underlying group health plan and

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with group health plan coverage of another under a group health plan of the employee’s

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In determining the AV level of a plan, if an HSA is offered in conjunction with the health plan, the insurer may take employer contributions to the HSA into account in determining the AV of the health plan, if the amount of employer contributions is known to the insurer. spouse), amounts in the HRA cannot be taken into account for purposes of determining whether the plan of the other employer meets the affordability or minimum value standards.


Retiree -only HRAs Plans that cover only retirees (or other former employees) are exempt from the ACA market reforms, including the annual limit

While the ACA impacts HSAs in some ways (e.g., increase in excise tax for nonmedical disbursements to 20 percent), HSAs are not group health plans. Thus, HSAs are not subject to the ACA market reforms, such as the

1. Application of ACA Market Reforms

Thus, HRAs (or other group health plans) that

general terms, the AV of a plan is the portion the plan, determined in accordance with applicable regulations. There are four AV levels — bronze (60 percent), silver (70 percent), gold (80 percent) and platinum (100 percent). In determining the AV level of a plan, if an HSA is offered in conjunction with the health plan, the insurer may take employer contributions to the HSA into account in determining the AV of the health plan, if the amount of employer contributions is known to the insurer. year starting on or after January 1, 2014, fully-insured small group health plans can have a deductible of no more than $2,000 for single coverage and $4,000 for family coverage (these dollar limits will be indexed applied to reduce the deductible under a plan; rather, they are taken account in determining the AV of a plan as discussed above.

limit on annual dollar limits on essential health pre-tax reimbursement of individual major medical coverage for retirees only) are still permissible under the ACA. Note, however, that such arrangements are considered group health plans and will preclude eligibility for premium that retirees must be offered the opportunity to opt out of such arrangements in order to give the retiree the opportunity to seek a premium subsidy.

2. Reimbursement of Over-theCounter Medicines and Drugs

that arise with respect to the interaction of HSAs, high deductible health plans associated with HSAs, and the ACA market reforms. Preventive services that may be offered under a HDHP In general, to be compatible with an HSA, a HDHP must have a deductible of at least a coverage and $2,500 for family coverage), and cannot pay any expenses before the deductible is reached. However, HSAs can pay for certain preventive care services without regard to the

over-the-counter medicine or drugs applies to HRAs as well. See discussion under FSAs above. under the ACA without losing its status as an HDHP. Impact of HSA employer contributions on actuarial value Small group fully insured health plans


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Impact of HSA employer contributions on eligibility for premium tax credits and employer penalties HSAs are not group health plans. Thus, employer contributions to an HSA will not from receiving a premium tax credit for the purchase of a HDHP though a federal or state marketplace. For the same reason, employer contributions to an HSA will not satisfy the employer pay or play penalties that apply to large employers (i.e., at least 50 full-time

2. Reimbursement of Over-theCounter Medicines and Drugs over-the-counter medicine or drugs applies to HSAs as well. See discussion under FSAs above.

LEGAL & COMPLIANCE: REIMBURSEMENT PLANS The Institute for HealthCare Consumerism



et’s cut to the chase, an employee cannot purchase an insurance policy sold in the individual health insurance market (i.e., an “individual market plan”) with non-taxable contributions — period, exclamation point. This includes payments from an employer to reimburse the premiums paid by an employee for an individual market plan under a Section 105 Medical Reimbursement Plan, a Revenue employer dollars are being used for such reimbursements. This also includes the purchase of an individual market plan with employee pre-tax contributions made through a Section 125 cafeteria plan.

Why Can’t an Employee Use a Reimbursement Arrangement to Purchase an Individual Market Plan With Tax-Free Employer Contributions?

General Answer Because an arrangement under which an employer reimburses an employee’s Let’s cut to the substantiated premiums for health insurance (e.g., a Section chase, an employee 105 Medical Reimbursement

cannot purchase an insurance policy sold in the individual health insurance market (i.e., an “individual market plan”) with non-taxable contributions — period, exclamation point.

arrangement) would be considered a “group health plan” under the Internal Revenue Code (“Code”).

How Would a Section 105 Medical Reimbursement Plan Be Considered a “Group Health Plan” Under the Code? Under the Code, a “group or contributed to by, an employer… to provide health care (directly or

otherwise) to the employees…or their families.”1 Under a Section 105 Medical Reimbursement Plan,2 an employer reimburses an employee for the premiums the employee paid to purchase coverage under an individual market plan. In other words, the employer — out of its own general assets — pays for the premiums for the individual market plan on the employee’s behalf. Employer reimbursements, in substance, are employer contributions. As a result, because employer dollars (i.e., employer contributions/reimbursements) are being used to pay for health care (i.e., the individual market plan), a Section 105 Medical Reimbursement Plan is ing the arrangement a Section 105 Medical Reimbursement Plan does not save it from being considered a “group health plan” under the Code (and calling the arrangement a Section 105 Medical Reimbursement Plan does not save it from being considered a “group health plan” under the Code).

How Would a Revenue Ruling 61-146 Arrangement Be Considered a “Group Health Plan” Under the Code? On September 13, 2013, the Department of Treasury rules relating to the purchase of an individual market plan through certain funding arrangements established by an employer.3 would be considered “a group health plan under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.”5 Thus, Treasury considers a Revenue Code.6

Why Is Being Considered a “Group Health Plan” Under the Code Important? incorporates by reference the ACA market reforms originally added to the Public Health Services Act (“PHSA”).7 Code Code, which means an arrangement like a Section 105 Medical

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Reimbursement Plan and a Revenue Ruling “group health plans” under the Code — would be subject to the ACA market reforms.8 The ACA market reforms include, among others, the prohibition against imposing annual limits on the dollar value of the “Essential Health

violation, payable by the employer adopting this non-compliant arrangement.10

How Does a Section 105 Medical Reimbursement Plan and a Revenue Ruling 61-146 Arrangement Violate the Annual Limit Restriction? Medical Reimbursement Plan and a Revenue are “group health plans” under the Code — will fail to comply with the annual limit restriction because (1) these reimbursement arrangements are considered to impose an annual limit up to the cost of the individual market plan purchased with the arrangement and (2) the arrangements are not “integrated”11 with another group health (i.e., instead, the arrangements are used to purchase an individual market plan which the arrangement cannot be “integrated” with).12

But Premiums Are Not “Essential Health Benefits,” How Does a Section 105 Medical Reimbursement Plan and a Revenue Ruling 61-146 Arrangement Violate the Law? Many stakeholders in the health care industry have argued that because premiums of an individual market plan are not 13 an arrangement that reimburses an employee for


Services (collectively, the “Federal agencies”)

argument, the Federal agencies re-iterated and

“an annual limit up to the cost of the individual market plan” purchased through a group health plan still violates the annual limit restriction. Thus, while employers and other stakeholders position is controlling unless and until the Federal agencies issue guidance indicating otherwise. This means that if an employer fails to act in accordance with this position, the employer will be subject to a $100 per day, per violation excise tax.

Can an Employee Use a Section 125 Cafeteria Plan to Purchase an Individual Market Plan Outside of the ACA Exchange With Pre-Tax Employee Contributions?

General Answer

pre-tax contributions made through a Section 125 cafeteria plan cannot be used to purchase an individual market plan sold outside of the new ACA exchange.15

Why Can’t a Section 125 Cafeteria Plan Be Used to Purchase an Individual Market Plan Outside of the ACA Exchange?

allowance does not violate the ACA’s annual limit restriction. While this argument has some merit — because premiums for health insurance are fundamentally different from the types of medical services that are otherwise considered

Employees participating in a Section 125 cafeteria plan16 are permitted to pay the portion of premiums for health insurance coverage not otherwise paid for by their employer on a pretax basis through salary reduction.17 Treasury treats these salary reduction contributions as employer contributions, so these contributions can be excluded from income under Code section 106 (i.e., so the salary reduction contributions for health insurance coverage are not taxed for income or FICA taxes).18 As discussed above,

Departments of Labor and Health and Human

as “a plan of, or contributed to by, an employer…

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to provide health care (directly or otherwise) to the employees…or their families.” Thus, by virtue of employee contributions under a Section 125 cafeteria plan being considered employer contributions, a Section 125 cafeteria plan would be considered a “group health plan” under the Code. As also discussed above, as a result of the plan” under the Code is subject to all of the ACA provide certain preventive services with no costsharing.20 that a reimbursement arrangement — such as a Section 105 Medical Reimbursement Plan or a provide preventive services without cost-sharing in all instances.” Similar to these reimbursement arrangements, it would appear that a Section 125 cafeteria plan also fails to “provide preventive services with no cost-sharing in all instances,”21 and therefore, it would appear that a Section 125 22

The only way a Section 125 cafeteria plan could satisfy the no cost-sharing for preventive services rule is if the cafeteria plan was “integrated” with another group health plan that 125 cafeteria plan is being used to purchase an individual market plan, the cafeteria plan by

the cafeteria plan cannot be “integrated” with the underlying individual market plan).23 Therefore, it would appear that in this case, the Section 125 cafeteria plan would fail to provide preventive services without cost-sharing in all instances, thereby violating the ACA.

What Type of Reimbursement Arrangements Can Be Used to Purchase an Individual Market Plan?

General Answer An arrangement that provides reimbursements on an after-tax basis may be used to purchase an individual market plan both inside and outside of the ACA exchange.

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the reimbursement amounts). In addition, the

“employers may establish payroll practices of forwarding post-tax employee wages to a health insurance issuer at the direction of an employee without establishing a group health plan, if the standards of the DOL’s regulation section 2510.3-1(j) are met.” This means that employers can still reimburse the premiums paid by an employee for an individual market plan. But, these reimbursements must be taxable (i.e., the employee pays income taxes and both the employer and employee pay FICA taxes on 1 Section 9832(a) of the Internal Revenue Code (“Code”), cross-referencing Code section 5000(b)(1).

regulation section 2510.3-1(j).


may change. This author is optimistic that this position could indeed change. However, unless and until there is a change in policy, employers that adopt an arrangement that reimburses the premiums paid by an employee for an individual market plan with non-taxable contributions will

Will the federal government ever permit employees to purchase an individual market plan


politics in Washington, DC change after the 2016 elections — and/or the newly reformed insurance markets stabilize over time — an argument can be made that the federal agencies’ current position

Prior to joining Venable, Chris served as tax and benefits counsel to the U.S. Senate Finance Committee. As Tax Counsel to the Finance Committee, Chris actively participated in the development of portions of the Patient Protection and Affordable Care Act, including the health insurance exchanges, the state insurance market reforms and all of the new taxes under the law.

a “group health plan” for purposes of ERISA, but the

another group health plan). Therefore, if the group health plan used to purchase the individual market

health plan” under the Code. that would be considered a “group health plan” 8 Code section 9815 was placed in Chapter 100 of the Code, which sets forth rules applicable to “group not subject to the insurance market reforms enacted under the Patient Protection and Affordable Care Act (“ACA”). [See Code section 9831(b), (c)]. 2 A Section 105 Medical Reimbursement Plan has

of a self-insured medical expense reimbursement discrimination in favor of highly paid individuals under a self-insured group health plan. Properly reimbursement plan in context, a strong argument in the context of these non-discrimination rules. justifying how the tax laws work in other areas, as well as attempting to describe this arrangement as something other than a “group health plan” under the Code.

9 See section 2711 of the Public Health Services Act (“PHSA”). The ACA added PHSA section 2711, requiring insurance carriers (in the case of individual or fully-insured group health insurance coverage) and employers (in the case of a selfimposed on the dollar value of “essential health

restriction, this plan will be found to have violated the annual limit restriction requirement. 13 under individual and small group market plan. HHS issued regulations implementing the “Essential benchmark plan. In most States, the “Essential health plan in the state’s small group market by enrollment [78 Fed. Reg. 12834 (Feb. 25, 2013)].

2711(a)(2)]. For plan years beginning on or after January 1, 2014, no annual limits may be imposed

premiums of an individual market plan are not

under an individual health insurance policy or a group health plan (fully-insured and self-insured). [PHSA section 2711(a)(1)]. On June 28, 2010, the Department of Health and Human Services (“HHS”), the Department of Treasury (“Treasury”), and the Department of Labor (“DOL”) (hereinafter referred

Question issued on January 24, 2013. See FAQs about Affordable Care Act Implementation Part XI (“FAQs”), Q&A#2, (explaining that a health reimbursement arrangement used to pay for the premiums of an individual market plan violated the annual limit restriction). 15 The ACA added new Code section 125(f)(3)(A), providing that an individual cannot use a Section 125 cafeteria plan to purchase an individual market plan

20 See PHSA section 2713. The ACA added PHSA section 2713, requiring “non-grandfathered” group health plans (both fully-insured and self-insured) to cover certain preventive health services with no cost-sharing. In other words, a plan cannot impose deductibles, co-payments, or co-insurance for the following preventive health services: (1) Evidence-based items or services recommended by the United State Preventive Services Task Force, Centers of Disease Control and Prevention, and (3) Evidence-informed preventive care and screenings supported by the Health Resources and Services Administration for infants, children, adolescents, and women. [See ACA section 2713(a) and 45 C.F.R. section 147.130(a)(1)]. On July 19, 2010, and again regulations implementing the requirement to cover the preventive services described above with no costsharing. [See 75 Fed. Reg. 41759 (July 19, 2010) and

22 Id. As discussed in footnote 11, to be considered “integrated” with another group health plan, the employee covered under the plan must also be (1) enrolled in the group health plan that is offered by the employer or (2) enrolled in a group health plan offered through the employee’s spouse’s employer.

3 The DOL issued identical guidance in Technical Release 2013-03, and HHS intends to issue guidance

regulations (“IFR”) implementing, among other things, new PHSA section 2711. [See 75 Fed. Reg. 37188 (June 28, 2010)].

2013-54 and the Technical Release.

10 Code section 4980D(b)(1).

market plan purchased inside the ACA exchange

23 Id.

11 In general, to be considered an “integrated” reimbursement arrangement, an employee receiving any reimbursements must also be (1) enrolled in another group health plan offered by the employee’s employer or (2) enrolled in a group health plan offered through the employee’s spouse’s employer, provided the underlying group health plans satisfy, among other things, the annual limit restrictions.

Code section 125.

a safe harbor which exempts an arrangement from

issued formal guidance in the form of a Revenue Ruling, holding that employer payments made under an arrangement to reimburse the premiums for an individual market plan are excluded from an

Section II.B. reimbursement arrangement is not considered a “group health plan” under the Employee Retirement Income Security Act (“ERISA”), the reimbursement arrangement will still be considered a “group health plan” under the Code for the reasons discussed in of a “group health plan” under ERISA and the Code are different. So, for example, there may be instances where an arrangement is not considered

This safe harbor is set forth under DOL regulation section 2510.3-1(j), which enumerates the following factors that must be met in order to take advantage coverage under an accident or health plan that is excludable from income of employees under Code Reg. section 1.125-1]. As discussed in footnote 15, a

the annual limit restriction on its own, the group health plan must be “integrated” with another group health plan that otherwise meets this requirement (as described in footnote 11). In addition, according

market plan sold inside the ACA exchange. [Section 125(f)(3)(A)]. 17 See Code section 125. 18 Prop. Treas. Reg. section 1.125-1(r)(2).

to purchase an individual market plan cannot be “integrated” with the underlying individual market

by the employer; (2) Employee participation in the program must be completely voluntary; (3) The employer cannot endorse the arrangement and the employer’s role is limited to (a) allowing the insurer through payroll deductions, and (c) remitting contributions to the insurer; and (4) The employer receives no consideration in connection with the arrangement, other than reasonable compensation for its administrative expenses.

19 Code section 9832(a), cross-referencing Code section 5000(b)(1).

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lmost everyone recognizes that the Affordable Care Act is not working as originally envisioned and needs to be fundamentally changed. What follows are the most important steps in getting from where we are now to workable health reform. Choice. People should be able to choose a health care


bureaucrats. This means no mandate. Men shouldn’t have to buy maternity coverage; women shouldn’t have to pay for prostate cancer tests. No one should have to buy coverage for preventive procedures that researchers have known for years are not cost-effective. Fairness. Obamacare treats Americans differently in arbitrary and unfair ways. Instead, everyone should get the same help in purchasing health insurance. If government subsidizes health insurance though refundable tax credits, the credit should be the same a goal of health care for everyone. Suppose we offer every adult an annual tax credit reform is to insure worth $2,500 and every child a millions of uninsured, credit worth $1,500 (these are

enrollment has to be easy. The more complicated the process, the more likely that only the sick will persevere — causing the insurance pools to experience “death spirals,” in which premiums increase until no one can afford to pay them.

estimates of the cost of enrolling new people in Medicaid). People would get this subsidy so long as they obtained credible private health insurance. Think of how many problems we are currently having that would vanish. Since a person’s income would no longer be relevant, the exchanges would not have to link to the IRS, the Social Security Administration and other federal agencies. Insurance companies would be able to sign people up outside the exchanges without

about their income. If a goal of health care reform is to insure millions of uninsured, enrollment has to be easy. The more complicated the process, the more likely that only the sick will persevere — causing the insurance pools to


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

experience “death spirals,” in which premiums increase until no one can afford to pay them. Jobs. A uniform tax credit and no mandate would also get rid of the chaos Obamacare is creating in the labor market. Businesses would no longer be incentivized to stay small (avoiding the mandate by hiring fewer than 50 fulltime employees). Nor would they have an incentive to shift employees to part-time work (avoiding the mandate with work weeks less than 30 hours). Health care reform should be neutral with respect to the number of hours you work and the number of people you work with. Further, employers and employees would no longer face perverse incentives to buy wasteful insurance. (Currently, Instead, they could buy insurance that meets their core needs and increase take-home pay with the savings. This would lower the cost of employment and encourage hiring. Universality. Experts predict that, after all the havoc Obamacare will cause, most of the uninsured will still be uninsured. Along the way, Obamacare will reduce spending on the very safety-net institutions that deliver care to uninsured people. There’s a better way. There will always be some who will turn down a tax credit. But instead of the Treasury keeping those unclaimed credits, the money should be sent to safety-net institutions in the communities where the uninsured live. Uninsured patients will be asked to pay their medical bills, but if they cannot, safety-net institutions will have a source of cash to pay for “uncompensated care.” Portability. In most states, it is illegal for employers to buy for their employees what they most want — insurance that travels with them from job to job and in and out of the labor market. Employers can buy group insurance with pretax dollars, but they can’t buy individually-owned insurance. This means that people lose their insurance when they leave their employer — the primary reason preexisting conditions are a problem for the uninsured. This policy needs to be reversed. Employers should be encouraged to provide insurance that is portable in the NFL football players and United Mine Workers members already have portable insurance because of special federal legislation. It’s time to extend this opportunity to everyone. Patient Power. Health savings accounts (HSAs) and

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millions of people are losing insurance that offers very reasonable access to providers and are being forced into an exchange where the typical plan excludes the best doctors and hospitals. People are losing access to care because we are creating a market in which insurers have to compete with one another in light of perverse incentives. With community rating and guaranteed issue, insurers are not allowed to charge actuarially fair health reimbursement arrangements (HRAs) are very effective ways to eliminate waste and control costs. That’s why 30 million people have these accounts. The RAND Corporation estimates that more widespread use of these plans would make savings of up to 30 percent possible. In addition to their incentive effects on buyers of health care, these accounts are also having a big impact on providers of care. Walkin clinics, mail-order pharmacies and Walmart’s the supply side of the market is responding to patients who control their own health care dollars. Still, we are not taking full advantage of the opportunities here. Instead of the rigid restrictions under current law, HSAs should be with third-party insurance in innovative ways. The private sector also needs the ability to create special accounts for the chronically ill. A model is the highly successful Cash and Counseling program, under which disabled Medicaid recipients have managed their own health care dollars. Real Insurance. The prime motive behind reform was to give everyone access to care. But the way things are panning out,

But since this means that healthy enrollees will losses, every insurer will go to great lengths to attract the healthy and avoid the sick. Insurers are convinced that the healthy buy on price and that only the sick care about networks, so they are keeping premiums down by creating networks that include only providers who agree to accept rock-bottom fees. We don’t have to look far. One out of every four seniors has enrolled in a private insurance plan through Medicare Advantage. You can think of this program as an exchange in which insurers have to community-rate and take all comers. However, the actual premiums the plans receive are not community-rated. Medicare adjusts the payments based on the expected health-care expenses of the enrollee. As a result, private Medicare Advantage plans do not run from the sick — they compete to enroll them. But rather than having the government manage the risk adjustment, the market can do it. No insurer should be allowed to dump its costliest enrollees onto another insurer without paying the cost of the transfer. So if an expensive-to-treat patient moves from Plan A to

Real protection against the cost of developing a preexisting condition requires a market in which insurers find it in their self-interest to solve the problems of the sick. Plan B, the former has to compensate the latter for any above-average expected costs — just the way Medicare compensates private plans. Right now, Obamacare is destroying the individual insurance market. It’s allowing state risk pools to dump high-cost patients into the exchanges and get off scot-free. The federal government is about to do the same thing with the risk pools it manages. So is Detroit. And there are countless ways in which employers will be able to game the system by keeping employees out of the exchanges when they are healthy and sending them to the exchanges if they get sick. This is worse than bad policy. It is unconscionable. Untangling the disastrous mess in

that you wouldn’t be denied coverage because of a preexisting condition was a bait-andswitch. As insurers run from anyone who has an expensive-to-treat health problem, those policies they have access to are little better than Medicaid. Real protection against the cost of

interest to solve the problems of the sick. There is an urgent need to reform possible to prevent states, cities, counties and private companies from dumping their highcost patients into the individual market with impunity. We can’t afford to wait until 2017.

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Adding evidence-based care coordination and prevention with the goal of improving the health care outcomes for Medicare beneficiaries, while reducing costs for the federal government. The Need for Medicare Reform Policy options for making the Medicare program sustainable over the long run will have to identify approaches Effective interventions will be ones that target the key cost drivers in the system, chronic disease. spending is associated with a doubling of obesity among seniors. Moreover, over half the Medicare population receives year, accounting for nearly 80 percent of spending. My earlier paper, “The Medicare Advantage Experience, Lessons for Reform to Original Medicare,” practice approaches for prevention Clearly, the original and care coordination derived from Medicare Advantage plans Medicare program and other private sector delivery 1 needs comprehensive models. Clearly, the original Medicare care coordination program needs comprehensive care coordination and more effective and more effective approaches for reducing the rise approaches for in chronic disease incidence and prevalence. This paper outlines a reducing the rise plan that would add evidence-based coordination and prevention in chronic disease care into the original Medicare program incidence and with the goal of improving the health care outcomes for Medicare


Today, 50 percent of seniors are pre-diabetic, and the DPP intervention has been shown to reduce the incidence of diabetes among these seniors by 71 percent. Access to Care Coordination Services to engage chronically ill patients to keep them healthier and out of the hospital, clinic and emergency room. These services could include comprehensive medication therapy management, transitional care, health coaching, use of These services and evidence of their effectiveness are detailed in the Appendix. select the Integrate option would face no cost sharing for clinically recommended services to manage their chronic health conditions (annual eye exams, HgA1c tests, medications, etc). In addition, overweight and obese seniors who have at least one cardiovascular risk factor (pre-diabetes) would be encouraged to enroll in intensive lifestyle programs like the diabetes prevention program at no charge. Team-Based Care. A clinical strategy designed to provide comprehensive “whole person” care. Care coordination would involve a care plan for all chronic and other medical and behavioral health conditions facing the patient. Provider Choice of Care. Medicare Integrate would remain similar to the original Medicare program in allowing free choice of where to receive health care

for the federal government.

A New Option for Medicare Beneficiaries — “Medicare Integrate” Medicare program, Medicare Advantage or a new option, Medicare Integrate. The key elements of original Medicare and Medicare Advantage are well known. The key elements of Medicare Integrate include: Access to Evidence-Based Programs like the diabetes prevention program (DPP) that reduce the incidence of diabetes and related chronic health care conditions. 62

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Smart Data Application. An important part of effective care coordination is timely collection of utilization data allowing on-going feedback to providers. Comprehensive utilization data will allow targeting high use patients. The data will also allow real time information on patients’ health status and the development of health care problems allowing more effective on-going medical management. Private Sector Partnership. The Centers for Medicare

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and Medicaid Services (CMS) would (to include health plans, insurance companies, providers and third party administrators) to provide the full range of prevention and care coordination services. In order to generate savings and to ensure successful implementation at scale in the marketplace, it is important to allow contractors with past performance and capabilities to participate. CMS could use the current 15 (with future consolidation to 10) Medicare Administrative Contractor (MAC) regions for the contracting process. Contractors would be paid per member per month fee for serving patients throughout each region. A key to reform is the migration away from fee for service payments. These payments discourage innovation in the delivery of coordination care services to chronically ill patients. Broader use of accountable care organizations (ACOs) or bundled care could and should be accelerated within the Medicare program. At the same time, as we move toward the broader use of bundled care or ACOs, we should assure that any transition from fee-for-

service to an alternative payment model does not discourage innovation. Innovations, whether they are new drugs, medical devices or procedures, will be critical to long-term improvements in Additional discussion of the need for payment reforms are presented in the Appendix.

Financing the Integrate Option — Shared Savings into the accountable care organization model, Medicare Integrate plan vendors would split savings with Medicare only once a predetermined savings threshold in achieved for the

beyond the pre-determined threshold would accrue to the vendor, while savings short of the pre-determined threshold would be paid back by the vendor to CMS. Quality metrics used in the Medicare Integrate option should be similar to those used by Medicare Advantage and should be extended to include original Medicare. To the extent possible, these metrics should focus on clinical outcomes, be adaptable to new technologies and act as a counterbalance to short-term cost saving

activities that do not improve health long-term. Adding Medicare Integrate as a third choice for seniors could be accomplished in short order. Having both prevention and care coordination as an integral part of care delivery is what baby boomers entering into the Medicare program expect; indeed, it is the type of care they are receiving through private plans prior to Medicare. Adding the option would provide better continuity of care as those turning age 65 with chronic health care conditions could continue to have their care coordinated. Both the diabetes prevention program and care coordination functions are readily scalable and replicable. The capacity for care coordination already exists in the marketplace, in the form of population management vendors among others. Moreover, the functions performed by the care coordination teams are based on both published randomized trials and actual best practice experiences from the private sector. These data show that effective care coordination and the use of preventive lifestyle models like the diabetes prevention program reduce spending However, implementation of these models

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HEALTH REFORM: GOVERNMENT ACCESS The Institute for HealthCare Consumerism


who are the sickest of the sick — those dually eligible for Medicare and Medicaid. For these patients a slower implementation schedule may be wise to assure that any changes result in better outcomes. In this case, we have much to learn from the best practices of special needs plans in the MA program of how best to design

The performance of several integrated health centers like Marshfield Clinic and Geisinger, demonstrations and the performance of health teams in Vermont and North Carolina have produced lower spending and improved quality. A common feature of all of the above is the use of team based care. Appendix: Key Implementation Steps

rate, SGR) is outdated, drives up additional volume of services and must be replaced to improve health care delivery. Our entire health care system is built around FFS and updating our current health care delivery structure will health care system. However, transitioning away from FFS will not be easy and will not happen overnight; reforming the Medicare system so data collection and monitoring, updates to regulations, and testing and scaling of new and innovative payment models and incentives. Advancing these objectives and facilitating a gradual shift from FFS medicine will take time and will therefore likely occur in stages and lead to a number of new payment model reforms. The experience from the Medicare Participating Heart Bypass Center Demonstration, that made bundled payments to cover all inpatient hospital and physician services for coronary artery bypass graft surgeries, show the potential for substantial savings.2 Bundled payments in this case reduced Medicare expenditures on heart bypass surgeries by about 10 percent. Evaluations of the demonstration also found slight improvesures included in the study. The Affordable Care Act includes some payment reforms that move in the right direction. The Act includes a bundled payment demonstration that started in January 2013. To date, CMS has outlined four different payment models that include a single payment for an

I. Transition Away from Fee-forService (FFS) in Medicare A key to introducing care coordination into traditional Medicare is to transition away from fee-for-service payments and as a start replace it with more bundled payments for Part A and B covered services. The incentives to increase the volume of services in FFS run completely counter to the incentives to provide clinically effective care coordination. As FFS is phased out over time, it would be replaced by bundled payments for (most) hospital admissions that include all covered post-acute care services 30 days after discharge. There is broad agreement that Medicare’s FFS payment model (the sustainable growth 64

a combined bundled payment to 500 different providers. Typically, these bundles include Medicare-covered services (acute inpatient hospital, physician services delivered in and outside the hospital, outpatient hospital services, emergency room services, and post-acute services such as physical therapy) for each of the

payment models, and recommend adopting either one or two of the most effective ones (ideally the more comprehensive models that include more Part A and B services). In the interim, providers would be paid on a mix of fee-for-service payments and bundled payments.

should recognize the fact that over half of all Medicare patients are under medical treatment 80 percent of Medicare spending. In addition, continue to move the Medicare program toward consistent measures throughout the program with a focus on clinical and patient-centered outcomes. Measures will also need to preserve the adaptability needed for the adoption of medical advances and new technologies. Finally, measures should serve as a counterbalance be counter to near-term cost savings, such as activities that promote wellness and prevention The performance of several integrated Geisinger, demonstrations and the performance of health teams in Vermont and North Carolina have produced lower spending and improved is the use of team based care. Team-based care occurs when health care professionals (physicians, nurses, pharmacists, social and mental health workers) work collaboratively to achieve shared health goals with patients and their families. The health team works in close collaboration with the physician(s) practice. In some models a nurse care coordinator is embedded in the teams and in others they meet outcomes. The teams essentially provide “whole care. To read the full article, visit

the episode are not included.

1 See Kenneth E Thorpe, The Medicare Advantage Experience, Lessons for Reform to Original Medicare. Emory University.

expand the bundled payments to virtually all episodes of care. During this time, CMS could

2 downloads/oregon2_1998_3.pdf

performance of providers for each of the four

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our years after the passage of the Affordable Care Act (ACA), it appears that this law is fundamentally transforming our health care

coordination of care. This is a ruse as the ACOs are nothing more than the latest iteration of the unpopular HMOs of the as individuals but rather as “covered lives.” They maximize

whether these goals can ever be achieved under the ACA. group dedicated to exploring solutions to the problems confronting the health care system. This organization of actively practicing physicians approaches the health care system with the same deliberation with which they handle medical problems confronting their patients. They thoroughly understand the nuances of the ACA and have reached the conclusion, as have others, that the law attempts to manage the symptoms that the health care system suffers from without treating the underlying disease. Just as with a sick patient, the disease will progress, until the patient succumbs. The harmful effects of the ACA have just begun, and the outcome is predictable. The delivery of care to a patient from a doctor is a transactional relationship. Thus, health care can be thought of as a commodity that obeys the same rules as any other limited resource. This interaction occurs in an examination room. The further away a decision is made from the point where a business transaction occurs, the greater the likelihood for error. The ACA has taken medical decisions out of the exam room and puts them in the hands of bureaucrats in Washington. Such a top-down, Such a top-down, one- one-size-fits-all health care size-fits-all health care model affecting over 300 million American patients will be fraught

model affecting over 300 million American patients will be fraught with unintended consequences, which are predictable and affect real patients.

The Institute for HealthCare Consumerism

which are predictable and affect real patients. This new model limits both patient and physician choice through external controls. One such mechanism is the creation of accountable care organizations (ACOs) — rapidly expanding hospital oligopolies and their associated integrated networks under the guise of better

doctors in this system, but are instead “providers,” whose main allegiance is to the institution — not to the patient. If the system does not cut costs, then the physicians caring for the patients will pay for the cost overrun. And if costs decrease, then those savings are shared. This model does not properly align the goals of the physician with the patient. The ACO achieves cost containment by implementing clinical protocols, many of which arise not from the hospital but by federal agencies and health system review boards in Washington, far removed from the direct patient and physician interaction. These protocols are developed by agencies with innocent sounding names like comparative effectiveness research or the Preventive Services Task Force, but their focus is on the norms within society rather than of medicine inherent in the ACA results in restrictions on the delivery of care — a very treacherous path for patient management. The health insurance exchanges have built in further premiums as low as possible despite the expansion of the physician networks associated with these insurance products are very narrow, limiting patient choice, access and treatments. The treatment options available to patients are becoming increasingly limited too. Insurance companies are saving money by restricting their drug formularies, often eliminating what might be the only effective drugs for certain conditions. As physicians realize that the payment in these networks fails to cover practice costs and the rules of participation are will accept patients covered by these plans. A 2013 Merritt accept Medicaid patients due to low reimbursement. The chief actuary for Center for Medicare and Medicaid Services (CMS) expressed similar access concerns for seniors due to ACA-mandated Medicare reimbursement cuts to physicians, which would drop them below Medicaid rates. Soon, having

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014




Economic uncertainty, rising practice costs amidst declining reimbursement and bureaucratic burdens — many of which are newly created by the ACA — are driving physicians towards consolidation. a Medicare card will only guarantee a place on an ever increasing waiting line to be seen. Some have credited the decreased rate in health care spending from 2011 to 2013 to instead decreased overall spending as a result of the recession. Spending is predicted to rise for Medicaid and private health insurance. percent of GDP and the reforms within the ACA are expected to increase national health care

expenditures $621 billion more than it would have gone up had the law not existed. As more individuals are covered by cost-controlled, low-reimbursement insurance — Medicaid, Medicare and the insurance exchanges — physicians will become increasingly dependent on the higher reimbursing commercial market in order to substantial pressure for premium hikes, a burden that is going to place both businesses This risk will be exacerbated by the current trends in the health care industry, which will accelerate the upward bending of the cost curve. One such trend is the consolidation of the health care marketplace when hospitals and doctors come together to form accountable care organizations. According to Irving Levin Associates, the rate of hospital consolidation doubled of hospitals are either exploring possible hospital consolidation transactions or are currently engaged in such activity. Just 13 percent of hospitals plan to maintain complete independence. This consolidation can increase of increased leverage in the marketplace. Economic uncertainty, rising practice costs amidst declining reimbursement and bureaucratic burdens — many of which are newly created by the ACA — are driving physicians towards consolidation. The

percent in 2000 to 65 percent in 2010, a trend that is rapidly accelerating. Sadly, consolidation has not led to either

security and leverage in the marketplace. As physicians shift care into hospitals, which are the highest cost centers for the practice of medicine, costs will rise. The ACA introduces new delivery models and payment schemes. They are gimmicks but not solutions. ACOs and patient-centered medical homes are little more than new


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

iterations within a poorly functioning economic construct. The movement from fee-for-service to alternate payment models, such as valuebased purchasing and bundled payment systems like the changes in delivery models, still miss the true problem in the construct of the health care system. The ACA has basically taken the current economic model and added layers of costly bureaucracy, creating an even more convoluted approach to health insurance. It maintains the separation of patients from control of their health care dollars and places the determination completely removed from the exchange of the medical service. This historic relic of a system needs to be rebuilt. The patient must be in control of the health care encounter. They need to have a personal stake in the health care that they purchase, and this is accomplished only when they and not a third party are paying for such patient and the doctor must be re-established as it is at all levels of a true free market economy. Once the patient becomes a consumer, the of this. Ultimately, it is the consumer that best determines the value of the product. There must be provider competition along with price and burdens on physicians need to be eliminated to further drive down overall costs in the system. Medical insurance needs to be transformed into true insurance and move away from what it has become a prepaid health maintenance plan. in the construct of the health care system is now. New delivery models are coming into the marketplace to provide true disruptive innovation. Only by properly realigning the economics of health care will we be able to to the greatest number of people at the lowest possible cost. In physician-speak, it is time to diagnose and treat the disease rather than managing the symptoms.



Intrepid goes beyond the typical expectations of the benefits consultant. We take the time to understand each client’s unique culture in order to implement the most progressive, creative solution to their benefits needs.


Liz Frayer, RHU 400 Interstate North Parkway, Suite 600, Atlanta, GA 30339 888-612-4644

“Our mission is to empower clients to achieve a more sustainable health care policy; it’s about more than just giving the client a plan — it’s a process of educating the client and their employees to better understand the plan and ensure its success. When we see the shift that occurs when employees have their ‘aha’ moment is when we feel we have done our job. — Liz Frayer, RHU, Intrepid


Health Insurance 101: An Orientation is a new, flexible online course offered by AHIP. It is designed to teach health insurance basics to those new to health care or individuals who wish to review the fundamentals. The course is formatted in short modules; you learn at your own pace and on your own time, moving through the materials as you choose. Plus, AHIP will customize the course to fit your organization’s specific learning requirements.

AMERICA’S HEALTH INSURANCE PLANS 601 Pennsylvania Ave., NW South Building, Suite 500 Washington, D.C. 20004 Lindsey Miranda Canaley Tel: 800.509.4422 Fax: 202.861.6354



Castlight Health enables employers, their CASTLIGHT HEALTH 85 Market Street, Suite 300 employees, and health plans to take San Francisco, CA 94105 control of health care costs and improve care. Named #1 on The Wall Street 415.829.1400 Journal’s list of “The Top 50 Backed Companies” for 2011 and one of Dow Jones’ 50 Most Investment-Worthy Technology Start-Ups, Castlight Health helps the country’s self-insured employers and health plans empower consumers to shop for health care. Castlight Health is headquartered in San Francisco and backed by prominent investors including Allen & Company, Cleveland Clinic, Maverick Capital, Morgan Stanley Investment Management, Oak Investment Partners, Redmile Group, T. Rowe Price, U.S. Venture Partners, Venrock, Wellcome Trust and two unnamed mutual funds. — Giovanni Colella, M.D. CEO and Co-Founder, Castlight Health HSA/HRA/FSA TECHNOLOGY: ADMINISTRATION & MANAGEMENT



10275 W. Higgins Road, Suite 500 Rosemont, IL 60018 855-563-6993

The InsureXSolutions® private exchange offers employers a simplified role in the new health insurance marketplace. Employers with part-time workers or retirees, as well as small businesses can utilize this exchange to empower their employees to choose the health and dental insurance that best fits their personal and family needs. Employers can reduce costs and administrative tasks, while employees receive interactive support tools and personal guidance from our licensed insurance professionals. Available in select markets, InsureXSolutions is exclusively offered and operated by Flexible Benefit Service Corporation (Flex). Contact your broker or consultant, call us directly at 855-563-6993, or visit to learn more. HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014





MasterCard (NYSE: MA), is a global payments and technology company.

MASTERCARD WORLDWIDE 2000 Purchase St. Purchase, NY 10577-2509

It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities—such as shopping, traveling, running a business and managing finances—easier, more secure and more efficient for everyone.


Carena provides 24/7, on-demand access to CARENA, INC. health care by phone, webcam, and house 1525 4th Avenue, Suite 300 call. Seattle-based Carena is committed to Seattle, WA 98101 delivering the best health care experience 800.572.2103 possible. Its technology-enabled care delivery model provides on-demand access to health care 24/7, via phone, secure video, and house call. Carena provides health care solutions to patients through employers, health systems and through its consumer service, CareSimple.

“People are paying more out of pocket for care than ever—through higher co-pays and deductibles, reduced benefits, and in the rising costs of goods and services. Taken together, health care has become more expensive and less accessible. Our goal is to make health care more affordable by providing the right care at the right time for the right cost; to help people live healthier lives by removing the barriers to people taking control of their health care.” — Ralph C. Derrickson, President & CEO, Carena


Orriant helps businesses produce a better, more profitable product by creating a workforce that is healthier, more productive, and less expensive to insure.


9980 South 300 West Ste. 100 Sandy, Utah 84070 801.574.2306

Orriant’s proven strategy is to hold people accountable for improving their health as an integral part of your benefit strategy in a way that is fair and compassionate to all.

“Employers can fight back to control rising health care costs. Orriant’s strategies have helped major employers from almost every industry cut the cost of health care, improve the health and productivity of their workforce, and push hundreds of thousands of dollars to their bottom lines.” — Darrell Moon, CEO, Orrian



IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

eflexgroup (eflex) is a nationwide eflexgroup administrator of pre-tax benefits 2740 Ski Lane and COBRA. Committed to providing Madison, WI 53713 fast answers, fast claims, and web 877.933.3539 ext 300 self-service, we set the industry standards for service. With a customer focus and Lean Six Sigma methodology, we don’t talk about service, we prove it. See our metrics at

“eflexgroup’s customer service department should be a model for ALL customer service departments. The courtesy, professionalism and knowledge surpass ANY customer service department I’ve encountered! I feel the outstanding, exemplary customer service of eflexgroup is simply the best!” — Kimberly Adams, Southeast Energy Assistance [testimonial]



TSYS Healthcare® provides end-toTSYS HEALTHCARE end strategic payment solutions for 706.649.5080 consumer directed healthcare. We partner with benefits administrators, financial institutions, health plans, and software providers to navigate all aspects of HSAs, HRAs, FSAs, transportation accounts, cash reimbursements, and lines of credit. TSYS Healthcare cards offer participants the security they expect along with the ability to conveniently access funds from multiple accounts and manage their benefits payments with simplified single-card access. Clients and partners benefit from simplified processes, reduced paperwork and cost savings that can contribute to improved return on investment.

“We built the TSYS Healthcare platform to meet the market demand for reliable, configurable and intelligent solutions. Understanding the dynamic U.S. healthcare market, our customers rely on our option-driven system to prepare them for the future.” — Trey Jinks, Group Executive, TSYS Healthcare HSA / HRA / FSA ADMINISTRATION AND FINANCE

WageWorks helps employers support consumer directed pre-tax benefit programs, including health care (FSA, HSA, HRA), wellness programs, commuting and

WAGEWORKS 1100 Park Place, 4th Floor San Mateo, California 94403 United States of America 888-9905099

child and elder care. Wage Works also offers retiree health care and COBRA Services. More than 100 of America’s Fortune 500 employers and millions of their employees use WageWorks.



At HSA Bank, we’ve been helping businesses HSA BANK optimize their health care spending for over 605 N. 8th Street Suite 320 15 years. We offer unmatched service and Sheboygan, Wisconsin 53081 expertise when it comes to health-based United States of America savings accounts. You can count on our 800.357.6246 dedicated business relations team for turnkey solutions and ongoing support that help your business and workforce save for a healthy future. To connect with your regional representative, call 866.357.5232 or visit

“When implementing one of the first Medical Savings Account programs in the country, I had a belief that health care could be fixed with free-market principles. I still do. By adopting flexible and transparent practices that manifest core attributes of consumerism such as private exchanges, defined contributions, and self-funding; we will reform health care in our nation.” — Kirk Hoewisch, Co-Founder and President, HSA Bank, a division of Webster Bank, N.A. HSA / HRA / FSA ADMINISTRATION AND FINANCE

Evolution1 and our Partners serve more EVOLUTION1, INC. than 9 million consumers, making us 952.908.9056 the nation’s largest electronic payment, on-premise and cloud computing healthcare solution that administers reimbursement accounts, including HSAs, HRAs, FSAs, VEBAs, Wellness and Transit Plans. It is the only solution that offers a single end-to-end user experience, provides innovative auto-substantiation technologies, and automates workflow for Partners, employers, and consumers. It does all this on one technology platform comprised of 1Cloud™, 1Direct™, 1Pay™, 1View™, 1Plan™, and 1Mobile™. Evolution1 and our Partners are dedicated to delivering value, reducing costs and simplifying the business of healthcare.

“The combination of our innovative products will further our leadership position in a rapidly changing healthcare market. Together with our Partners we are committed to reducing costs and simplifying the business of healthcare.” — Jeff Young Chairman and CEO, Evolution1

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014





Under the CIVA (CodeBaby Intelligent Virtual CODEBABY CIVA Assistant) brands of benefits and health 111 S. Tejon St. Suite 107 advisor, CodeBaby improves the healthcare Colorado Springs, CO 80903 consumer experience and optimizes online 877.334.3465 self-service on any web-based platform or device with absolutely no IT disruption. Benefits advisor offers guidance and selfservice options that help consumers and organizations alike to make better decisions about benefits selection. Health advisor engages new patient visitors on hospital or office websites or existing patients on wellness, prevention & disease management platforms.

“With the rapid changes in health care, our solutions provide organizations innovative ways to optimize their current platform while meeting the demand for an enhanced online experience. CIVA benefits and health advisor solutions are industryleading models that help consumers and organizations more efficiently navigate complex health benefit exchanges and patient portals. “ — Dennis McGuire, CEO, CodeBaby BENEFIT ENROLLMENT AND ELIGIBILITY

Totem Solutions is a boutique benefits TOTEM SOLUTIONS consulting and administration firm offering highly 11330 Lakefield Drive specialized services and products. We serve Bldg 1, Ste 150 benefit management and HR professionals as an Duluth, GA 30097 extension of their team, allowing them to focus on key initiatives and core strengths. Our services 770-295-1600 include Employee Benefits Consulting, Benefits Toll-free 866-481-4917 Administration, Enrollment, & Communication, Health Care Reform Education, Enrollment, Reporting & Compliance, Leave and Disability Management Administration.

“We are hands-on benefits advisors for public and private sector companies throughout the country. Totem delivers employer-centric service that simplifies benefits administration and enrollment in order to facilitate employee understanding and ensure the best possible employee experience. Our goal is also our great passion and commitment: to offer organizations clear and accurate counsel accompanied by services and solutions that are easy to access, seamlessly implemented and custom fit, while providing a worry-free outsourcing solution.” — Debbie Schultz, President, CEO, Totem Solutions


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™


WiserTogether Inc., helps patients choose the right care at the time. It

WISER TOGETHER Praveen Mooganur

offers an innovative online treatment


selection & shared decision support

platform that helps patients make evidence-based, cost effective

treatment decisions across musculoskeletal, cardiovascular, mental health, diabetes, pregnancy and respiratory illnesses saving payers money. Currently 1.5 million members have access to the platform through employers and health plans in the country. WiserTogether was founded in 2008 and is based in Washington, DC. — Praveen Mooganur, COO, WiserTogether SUPPLEMENTAL HEALTH

Delta Dental leads the DELTA DENTAL industry in designing 1130 Sanctuary Pkwy, Suite 600 Alpharetta, GA 30009  innovative dental coverage programs that keep costs 770-641-5196 down and deliver quality care. Our diverse client list includes everyone from Fortune 100 companies to public agencies to individuals and families. Our customer’s satisfaction is based on our expansive dentist network, cost-saving mechanisms and superior customer service. We are part of the Delta Dental Plans Association that provides dental coverage to more than 56 million people in the US.




HealthPerx is a health and wellness marketing company specializing in creative non-insurance benefit solutions that reduce absenteeism, increase productivity and decrease healthcare costs. Consultants: These benefits differentiate you from competitors.


DataPath, Inc., is one of nation’s largest providers of CDH solutions specializing in account-based administration systems.

Direct: 205 222-4062 Toll Free: 888 417-6187

Corporations: These will give you a far greater ROI than your wellness program while saving your employees thousands of dollars a year. Differentiator: Telemedicine Services: offering the entire family unlimited calls with no consult fees 24/7/365—anytime from anywhere Additional Health Benefits: offering significant savings for pharmacy, dental, vision, medical advocacy, travel assistance, telephonic counseling (EAP) and more Turnkey Program: billing, administration, fulfillment, call center, marketing HealthPerx benefits complement any and all existing benefit plans. — Jeff Marks, CEO


Phoenix Benefits Management is a prescription benefit manager providing traditional PBM services to Self-Funded companies, TPA’s, Brokers, and Consultants. We also provide comprehensive 340B services as well as our very own prescription savings card known as the Phoenix RxAdvantage Prescription Savings Card. Though our approach is scalable, our solutions are individualized. It’s been our experience and it is our firm belief that prescription benefit plans are not a one-size-fits-all proposition so we create a plan that is customized to fit the unique needs of each and every one of our clients.

1601 WestPark Drive, Suite 9 Little Rock, AR 72204 501.296.9990

Since 1984, service providers using DataPath systems have provided administrative solutions for over 1 million participants of FSA, HRA, HSA, and COBRA. DataPath is the only solutions provider to design and deliver a full Suite of systems for handling 125, 105, 132, COBRA, HSAs, Credit and Debit Cards all delivered to account holders through a single Internet portal,

“With the significant changes in healthcare today, our software solutions allow users to create custom plans for clients that benefit both the employer and employee. Not only have we created a single platform for all systems with, with the integration of our mySourceCard Debit Card at Wal-Mart and other retailers, our clients are able to offer a hassle-free solution with 100% compliance.” HSA/HRA/FSA TECHNOLOGY: ADMINISTRATION & MANAGEMENT

410 Peachtree Parkway, Suite 4225 Cumming, Georgia 30041 888.532.3299 main office 678.208.6257 marketing & pr 678.208.6252 sales 678.208.6255 fax




Provider of Prescription Benefits Management services to self-funded employee groups, TPA’s, Brokers, and Consultants. Phoenix also offers a prescription savings card, RxAdvantage, for individuals and groups alike.




10275 W. Higgins Road, Suite 500 Rosemont, IL 60018 888-353-9178 It has been an exciting year at Flexible Benefit Service Corporation (Flex). We celebrated our 25th anniversary along with a decade of increasingly popular HSAs. We have been a trusted benefits administrator of these consumer-driven plans since day one and also offer FSAs, HRAs, Transit and COBRA Administration. In fact, we now offer the InsureXSolutions® private exchange to employers with part-time workers or retirees, as well as small businesses. At Flex, we look towards the future and leverage our consumer-driven experience as a way to help our clients move forward in the changing marketplace. Contact your broker or consultant, call us directly at 888-353-9178 or visit to learn more. HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014





Avoid the Cadillac Tax! Consumer’s Medical Resource® (CMR) helps your employees answer the five most important questions in healthcare: What do I have? What do I need? Where do I go? What will it cost? How do I connect? CMR helps leading Fortune 1,000 companies improve engagement, quality, and satisfaction through informed clinical decision-making with guaranteed savings. “10% of employees drive 70% of your cost. Our services not only help companies save money in areas such as reducing unnecessary elective surgeries, but also empower employees to make some of the most important decisions of their lives.” David J. Hines President and Founder

CMR delivers value by helping organizations take control of their healthcare costs. Find out what we can do for you. iÞÊ7>>Vi]Ê ˆÀiV̜ÀʜvÊ>ÀŽï˜}ÊUʎÜ>>ViJVœ˜ÃՓiÀÓi`ˆV>°Vœ“Ê Çn£‡Ç䙇£ÇÓÇÊUÊÜÜÜ°Vœ˜ÃՓiÀÓi`ˆV>°Vœ“


Steven LEVEL1DIAGNOSTICS Level1DiagnosticsDr. uses new M. Helschien Founder and CC&BW 11722 Lightfall Court tools to evaluate employees’ Columbia, MD 21044 cardiovascular health

410-707-5667 ◆ Dr. Steven Helschien, Founder Heart disease is the number one killer Sales: Penny Aleo, Executive VP in the U.S. and costs millions of dollars 443.878.3087 in medical care and time lost from work. Detection and prevention is the key to heart health. Level1Diagnostics is an innovative program that, unlike conventional cardiology tests, provides new advanced technology testing and methods to detect and prevent the earliest signs of cardiovascular disease and encourage optimal health.

There is testing for the early detection of cancer and other diseases, and now we have testing for the early detection of cardiovascular disease.


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

Since 1988, CieloStar (formerly OutsourceOne) CIELOSTAR has helped brokers, employers and employees 530 U.S. Trust Building navigate the ever-changing world of benefits. 730 Second Avenue South Now, with the dawn of “Defined Contribution Minneapolis, MN 55402 Health Care” we are again on the leading edge. With a team of industry thought leaders, CieloStar 612.436.2706 makes navigating healthand benefits choices easy for employers and employees by offering comprehensive benefits administration solutions with a high-touch, high technology model—most recently launching a proprietary private health insurance exchange.

“Fueled by the far-reaching impact and complexities of health care reform taking effect in 2013 and 2014, employers and employees increasingly find themselves in a ‘farmer’s market’ of benefits choices. Cielostar is uniquely positioned with enabling technology that helps purchasers and consumers make the best possible decisions and create a best-in-class benefits administration process. Our unique comprehensive approach to benefits offers everything from back room technology for enrollment, data, billing and call centers to complete solutions for COBRA, CDHP and health insurance exchanges.” — John Reynolds, CEO, Cielostar HEALTH DECISION SUPPORT TOOLS

Truven Health Analytics, formerly Healthcare at Thomson Reuters, delivers unbiased information, analytic tools, benchmarks, and services to the health care industry.

TRUVEN HEALTH ANALYTICS 6200 S Syracuse Way, Suite 300 Greenwood Village, CO 80111 734.913.3000

Hospitals, government agencies, employers, health plans, clinicians, and life sciences companies have relied on us for more than 30 years. We combine deep clinical, financial, and health care management expertise with innovative technology platforms and information assets to make health care better by collaborating with our customers to uncover and realize opportunities for improving quality, efficiency, and outcomes.



MedEncentive offers a patented, web-based incentive system that’s been independently validated


Cecily Hall Executive Vice President

to control healthcare costs. Doctors and patients earn financial rewards for declaring adherence to best practices and healthy behaviors, provided they agree to be accountable to the other party for doing so. Easy to implement and


ExperienceLab has created a breakthrough, CDHCENTRIC patented communication program that saves 507 S. 8th Ave. Bozeman, employers money by increasing adoption and Montana 59715 usage of consumer directed health (CDH) 617.224.6223 insurance plans among their employees. CDHCentric, sold on a subscription basis, delivers regular, multi-media communications that are tailored based on seven unique attitudinal segments developed from proprietary research.

Traditional health plans protect employees from having to learn the basic skills for making cost-effective healthcare decisions. Our segmentation research, which is based on 20 years of behavioral marketing, found 7 unique personality types, and each makes healthcare decisions differently. The result is that, when employee messages are correctly tailored to their personalities, employees become health care consumers! — Roger Travis, President

embraced by users. SUPPLEMENTAL HEALTH

Transitions Optical, Inc. is the maker of Transitions® lenses, the #1-eyecare professional recommended photochromic lenses worldwide.


TRANSITIONS OPTICAL 9251 Belcher Road Pinellas Park, FL 33782

800.533.2081 ext. 2262

Transitions Healthy Sight Working for You® is an education initiative that helps HR professionals and benefits professionals communicate the value of the vision benefit to employees. More information and complimentary education tools are available at

“Don’t overlook your employees’ healthy sight when thinking about your business goals. A vision benefit that includes an eye exam and sight-optimizing eyewear helps ensure that employees see their best, so they can do their best work, directly affecting your business.”


WeCare TLC is a medical risk management company that leverages onsite primary care clinics to provide solutions to rising healthcare costs while improving patient health and wellness.


120 Crown Oak Centre Dr Longwood, FL 32750 800.941.0644

Our holistic approach to care empowers the clinic staff to act as patient advocates, which increases compliance and decreases unnecessary expensive services.

“Healthcare is now a right and employers are faced with the challenge of truly managing their healthcare costs. We have created a unique medical home clinic model that properly addresses quality of care and cost. This requires constant, aggressive, creative, and directed attention to accomplish but it can be done.” — Lynn Jennings, CEO, WeCare TLC

HealthCare Consumerism Solutions™ I I HealthCare Exchange Solutions™ I IHC Annual Outlook 2014




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ADVERTISING INDEX If you use the services of our solutions providers, please tell them you saw their ad in

AHIP ...................................................... 67

IHC Membership .................................... 24

Alegeus Technologies ............................ 18

IHC Radio............................................... 28

Allstate .................................................... 5

IHC Save the Date FORUM West 2014....14

Best Buy ........................Inside Back Cover

insurexsolutions ..................................... 67


Carena ................................................... 68

Intrepid .................................................. 67

Castlight Health ..................................... 67

Level1Diagnostics .................................. 72

CDHCentric ............................................ 73

MasterCard ............................................ 68

CieloStar................................................ 72

MedEncentive ........................................ 73

CodeBaby............................................... 70

Orriant ................................................... 68

Compass Health Advisors ....................... 32

Phoenix Benefits Management................ 71

Consumer’s Medical Resource................ 72 21

ConnectYourCare ................................... 46

Quest ..................................................... 38

DataPath ................................................ 71

Redbrick Health ..................................... 40

Delta Dental ........................................... 70

Totem Solutions ..................................... 70

eFlex Group............................................ 68

Transitions ..................................36-37, 73

Evolution1.............................................. 69

Truven Health Analytics ......................... 72

Flexible Benefit Service Corporation........ 71

TSYS Healthcare ................................7, 69

HealthPERX ............................................ 71

UMR .................................................10-11

HealthStat ......................Inside Front Cover

UnitedHealthCare ..................... Back Cover

HSA Bank ........................................16, 69

WageWorks ........................................... 69

IHC Call for Content................................ 55

WeCare TLC ........................................... 73

IHC Certification ..................................... 52

Wiser Together ...................................... 70


Doug Field


ManagIng DIrECtOr

Brent Macy aCCOunt ManagEr

Joni Lipson DIrECtOr Of COnfErEnCE sPOnsOrshIP/ COrPOratE MEMbErshIP/rEPrInts

Rogers Beasley


IHC Annual Outlook 2014 I HealthCare Exchange Solutions™ I I HealthCare Consumerism Solutions™

REWARD THEM WITH A HEALTHY DOSE OF FUN Staying healthy feels better with Best Buy® gift cards.

GIFT CARD INCENTIVES As powerful incentives, Best Buy gift cards energize your health and wellness program by motivating people with the things they want most, from TVs to tablets to smart phones. They’re hard to resist and easy to redeem online or in store. For instant e-mail delivery and easy personalization, choose our popular e-gift cards. Make your wellness program even more rewarding. Visit us online today.


No fees. No expiration dates. Just happiness.™ © 2013 BBY Solutions, Inc. All rights reserved.


to empower your employees with award-winning health resources

At UnitedHealthcare, we offer innovative tools that put members in touch with their information. We’ve made it easier for your employees to find the right information at the right time (even on the go). s MY(EALTHCARE#OST%STIMATOR provides relevant information on care and estimated costs. s MY#LAIMS-ANAGER helps members understand, track and pay their medical bills online. s 5NITED(EALTHCARE(EALTH-E4- is an award-winning* mobile app that provides instant access to a family’s important health information. s MYUHCCOMŽ is a resource for members, providing easy access to personal health care benefit information – whenever they need it. Empower your employees. It’s good for their health – and the health of your business. &ORMOREINFORMATION VISITWELCOMETOMYUHCCOMORCALL   

*Produced by MediaPost Communications, a media, advertising and marketing news and events publishing company based in New York, the annual Appy Awards’ aim is to acknowledge extraordinary Applications, whether they be mobile, social, or Web-based. The Appys don’t discriminate by format, platform or device; instead, they focus on simply honoring the best Apps in all imaginable categories: All UnitedHealthcare members can access a cost estimator online tool at Depending on your specific benefit plan and the ZIP code that is entered, either the myHealthcare Cost Estimator or the Treatment Cost Estimator will be available. A mobile version of myHealthcare Cost Estimator is available in the Health4Me mobile app, and additional ZIP codes and procedures will be added soon. This tool is not intended to be a guarantee of your costs or benefits. Your actual costs and/or benefits may vary. When accessing the tool, please refer to the Terms and Conditions of Use and Why Your Costs May Vary sections for further information regarding cost estimates. Refer to your health plan coverage document for information regarding your specific benefits. Š2014 United HealthCare Services, Inc. Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare company. UHCEW686242-000

HealthCare Consumerism Outlook 2014  

Innovative Health & Benefit Management

HealthCare Consumerism Outlook 2014  

Innovative Health & Benefit Management