Employers are playing an increasingly active role in disease
management (DM) initiatives for their employees. Employers are
recognizing that a disproportionate amount of health costs are
incurred by a small percentage of their employees (typically 5% of a
group accounts for about 60% of health care costs). Many
employers are frustrated by perceptions that health care premiums
are rising faster than medical costs and that health plans and
providers are not taking enough steps to manage clinical care.
Here are 5 Simple Truths about Employers and DM Initiatives:
- Employer interest in DM is growing.
- SOME employers are VERY interested in DM.
- Many employers have little interest or ability to pursue DM
- Employer interest in DM is driven primarily by concerns about
- Quality is a distant secondary consideration for employer DM
We will briefly discuss each of these.
1) EMPLOYER INTEREST IN DISEASE
MANAGEMENT IS GROWING
The Mercer/Foster Higgins National Survey of
||Among HMO plans, the use of
chronic disease management programs jumped sharply in 1999,
with 58% of employers' largest health plans including one or
more such programs, up from 49% last year.
||Among preferred provider
organization (PPO) plans, there was a big jump (from 47% to 58%)
in plans providing one or more
management programs for conditions such as heart disease,
diabetes, asthma, back pain, and depression.
Watch for employer interest in DM to take a variety of forms:
||Employers asking their health
plans to sponsor DM programs
||Employers contracting directly
with DM vendors (and carving-out specific conditions or patients
from a health plan)
||Employer coalitions sponsoring
community based DM programs
2) SOME EMPLOYERS ARE VERY
INTERESTED IN DISEASE MANAGEMENT.
DaimlerChrysler is representative of a new breed of activist
employer -- one that is taking the issue of health care costs into
its own hands.
"DaimlerChrysler is a global automotive, transportation and a
service company and is not part of the health care industry, but
it has learned on the job that sound business practices create
value for everyone," said Kathy Oswald, Senior Vice President of
Human Resources. "Health care should be no exception.
That's why we've introduced our
supply-chain management model to the health care
DaimlerChrysler facilitated a meeting with a diverse group of
health care suppliers - physicians, hospitals, pharmacists, HMOs,
PPOs, and others - to collectively develop standard clinical
guidelines for five diseases (Asthma, Low Back pain, Diabetes,
Congestive Heart Failure, Depression) and pharmaceutical prescribing
guidelines. The initiative titled
"Evidence-Based Medicine in Action: A Collaborative Approach,"
is the next wave in DaimlerChrysler's ongoing efforts to achieve
consistently high quality health care and curb runaway costs.
(Makes us wonder how collaborative it FEELS to have
DaimlerChrysler tap you on the shoulder and say "'scuse me doctor,
can we talk about health care costs?")
The Disease Management Purchasing Consortium (DMPC) has worked
primarily on behalf of health plans interested in purchasing DM
vendor services. Al Lewis, Executive Director of the DMPC,
reports that two very large deals with employers are in the works.
While he cannot identify the employers, he does speak to the
magnitude of the initiatives. Al states that one of the
employers is "going to can its disability management initiative,
which they now realize is something done to its employees, not for
them, with no guaranteed savings or health status improvement.
They are likely to combine their UM with multi-disease DM to create
a true population management model. If they succeed, it spells the
end of disability management and the beginning of a mega trend
towards true managed health for self-administered employers."
(Here's a suggestion to keep people occupied at your next
scavenger hunt: ask folks to find an article about disease
management that doesn't quote Al Lewis.)
3) MANY EMPLOYERS HAVE LITTLE INTEREST OR ABILITY TO PURSUE
While some of the largest employers are pursuing DM initiatives,
many employers face significant barriers to pursuing DM:
||Employers are not clear about how
best to measure health care quality
||Employers are reluctant to get
into health care delivery or health insurance, viewing these as
straying from their core competencies.
||The average large U.S. company
offers approximately 19 health plans, with some companies
offering as many as 200 plans (Towers Perrin study).
So, what types of employers are MORE LIKELY to undertake DM
initiatives? Here's a checklist of "Employer Characteristics
Suggesting Interest in DM":
||Larger employers (better able to
manage medical costs as a line item, more sophisticated
||Self insured (at financial risk
for medical claims)
||Aging workforce (older people have
more chronic conditions)
||Low turnover in workforce (more
likely to recoup investments in DM)
||Large number of insured retirees
(greater incentives to be proactive in preventing medical
||Already developing a "Total Health
Management" type approach toward integrating medical,
disability, workers comp, etc. (DM fits well with such a
strategy, but DM in isolation can't drive an integrated
||Industry characteristics greatly
driven by cost management (e.g., Old Economy vs. New Economy)
||Concentration of employees in an
area (conducting DM with widely scattered employees will be
||Concentration of large employers
in an area (watch for DM initiatives being sponsored by existing
||Concentration of employer's health
plans (it's easier to convince 5 health plans to sponsor DM than
to convince 50)
4) EMPLOYER INTEREST IN DISEASE
MANAGEMENT IS DRIVEN PRIMARILY BY CONCERNS ABOUT COST.
According to the latest
Perrin Health Care Cost survey, the cost of large employers'
health benefit plans will increase about 12% on average in 2000, and
more than 90% of those polled said they expect double-digit
increases to continue over the next few years.
"Something I think people would find surprising is that the
most expensive component of a Chrysler brand vehicle isn't steel
or plastic, but health care," said Kathy Oswald.
5) QUALITY IS A DISTANT SECONDARY
CONSIDERATION FOR EMPLOYER DM INITIATIVES
A recent comprehensive survey noted "Employers Are More Worried
About Costs Than Quality". The Kaiser Family Foundation has
released its 1999
Annual Employer Health Benefits Survey.
Some key relevant findings:
||72% of all firms say they are
worried that health care costs will increase faster than they
||At the same time, 26% of firms say
they are worried they will have to switch health plans because
of concerns about quality of care.
||Accreditation plays a relatively
minor role in plan selection.
Among employers offering an HMO or POS plan, just 12% of workers
are in firms where plans are required to be accredited by the
National Committee for Quality Assurance (NCQA). ** Among all
companies, the percentage of workers in firms familiar with
accreditation declined from 56% in 1996 to 45% in 1999. The
drop was greatest among large companies, where the decline was from
57% to 33%.
Health care costs are rising again. While many employers
will undertake watchful waiting, expect many to take the bull by the
horns and sponsor DM services for their employees.
Employers See Broad Value in Promoting Health
Employers, DM Vendors Edging Just a Bit Closer
Mercer's Fax Facts Survey: Health Management
Employers Starting To Hold HMOs Accountable for Quality
Strategies for the Future
Eight Potential Best Practices
SOCIETY OF ACTUARIES (SOA) STUDY --
"MANAGED CARE REPORT CARDS NOT YET AFFECTING ENROLLMENT"
The study, "Managed Care and Performance Measurement:
Implications for Insurance Markets," sought evidence tying managed
care plans' ratings to plan enrollment -- and, by implication, to
employee choice. Researchers examined 18 published and
unpublished studies, including surveys, focus groups, case studies
and statistical analyses. A
summarizing the study and the
full study are
"There is little current empirical evidence that consumers
(employees of large employers) use this type of information in
The Kaiser Foundation Study -- 1999 Annual Employer Health
Benefits Survey (referenced above) came to a similar conclusion:
Percentage of Covered Workers in Firms
Citing Features as "Very Important" When Choosing a Health Plan
credentials of physicians
|Cost of the plan
|Accuracy and speed
of claims payment
|Range of benefit
of gaining access to specialists
|Ease of making
appointments with physicians
|HEDIS data and
However, the authors of the SOA study caution that it would be
premature to conclude that plan performance ratings are useless or
will never impact plan enrollments: 1)problem areas found in
the rating process may be corrected, leading to better patient care,
cost savings or both; 2) ratings reports may be refined, improving
clarity for consumers and purchasers; 3) ratings may be disseminated
more widely, increasing usage by consumers.
PURCHASERS SEE THE VALUE IN HEALTH
BEHAVIOR CHANGE PROGRAMS, BUT ARE RELUCTANT TO BUY OR NEGOTIATE
THESE BENEFITS FOR WORKERS
The Center for Advancement of Health recently issued
Health Behavior Change in Managed Care: A Status Report.
The report is the first of its kind to assess the degree to which
proven behavior change strategies are integrated into medical care.
The report is based on a 1999 survey of HMO medical directors,
interviews with health care purchasers, and a review of the
literature. Some key findings:
||Behavioral health risks (diet,
inactivity, smoking) are tied to higher ambulatory care and
hospitalization costs and account for as much as 70 percent of
all medical care spending. However, health plans said they
were reluctant to incorporate behavior change> interventions
into their systems of care, in part because the cost impact of
doing so is unclear.
||Although there are many examples
of evidence-based interventions that work, the Center's analysis
incorporating these interventions into medical practice remains
a "limited and piecemeal" effort. Part of the problem,
according to the findings, is that managed care decision-makers,
health care purchasers, providers and consumers have had
difficulty distinguishing effective behavior change approaches
from unproven ones.
TOP HEALTH STORIES FOR 1999
Here's a quick quiz for you: "In the mind of the public,
what were the top health related news stories in October/November
1999? ....in all of 1999?" Give up? Detailed answers to
these questions can be found in the
Health News Index.
The short answer: about half of Americans followed closely
two health news stories in late October and November.
Fifty-one percent (51%) of Americans closely followed the report by
the National Academy of Sciences' Institute of Medicine on the large
number of medical errors in hospitals. News coverage of
UnitedHealth Group's announcement of a new policy to give doctors
the final decision on whether patient treatments are necessary was
followed by nearly half (48%) of the public.
Intriguingly, these same two issues were listed as #1 and #2 in
the Top Five Most Closely Followed Health Policy Stories of 1999.
The report goes on to suggest that AWARENESS of an issue does NOT
translate to accurate UNDERSTANDING of the issue. For example,
when asked "Which policy change in health coverage did UnitedHealth
Group recently announce?"
||57% responded "don't know"
||29% responded "To give physicians
the final say on patient treatments" (the correct answer)
PHYSICIANS OFFERED FREE SERVICES BY
American Medical News reports that physicians are being offered
free services or equipment by Internet firms desperate for eyeballs.
HEALTH PORTAL RATINGS -- CONSUMERS AND
Gomez Advisors has issued consumer ratings for the
Internet Health Content Sites.
The top 5 overall sites:
|HIGHEST SCORE =
recent survey of health portal preferences showed that
Medscape was the #1 ranked portal among medical professionals.
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