As U.S. health care costs continue to escalate, Consumer Directed Health Care (CDH) can be a positive force for change that allows patients to gain greater control over their healthcare decisions, allow employers to reduce their healthcare benefit expenditure, enable insurers to increase membership by making more affordable insurance available and provide opportunities for financial institutions to expand their presence in the healthcare industry, according to MBProject.org. CDH is expected to lower the overall cost of healthcare through market competition and fostering the expansion of solutions that can:
--Empower consumers by providing quality and pricing information, self-pay calculators, and expanded payment options;
--Lower employer fringe benefit/healthcare costs; and,
--Assist providers in receiving payments (debit cards, collection tools, etc.), and
expand the role of banks (health savings accounts, tools to expedite collection, such as payment cards and on-line payments).
The current heated debate in Congress may damage these concepts if the existing options on the plate are enacted in their current format. However, it is too soon to provide a death watch for any CDH options even if the federal government decides to enact a health care bill. CDH has the ability to reduce costs, and has proven in many cases to provide savings where it is applied. The entire health care industry is waiting for the final act in an ongoing struggle between socialized medicine, consumerism, patient rights, medical costs, freedom of choice in the market place, and the uninsured. Options are available now in the health care community that provide more transparency, and Americans are more empowered now than ever with the advent of medical information on reputable websites on the internet. More research is being conducted now in several medical fields helping to reduce the lack of knowledge by consumers and health care providers. Information technology has improved dramatically, although it still needs more ownership by the medical community to help reduce the cost of health care.
CDH members appear to be typically younger and more computer savvy than the general population, according to MBProject. These patients seek online billing and payment solutions, want to register (or pre-register) online and schedule services online. Many providers say they are in the process of planning to offer these on-line capabilities. Of the on-line access already available for patients most providers start with online bill payment. Making services available to patients online was said to reduce staff labor, making it available for other functions, such as eligibility checking and additional follow-up. In a nutshell, according to MBlog.com, healthcare providers need to recognize that the tools they need today are not the tools they have from yesterday…they have to realize that they’re at a severe disadvantage unless they re-tool for this new patient responsibility paradigm … today many providers are basically bringing knives to a gunfight.
Consumer Directed Healthcare (CDH) typically combines a high deductible health insurance plan (HDHP) with a personal saving/spending account, from which medical expenses can be paid directly, according to MBlog.com. Most common spending account plans are Health Savings Accounts and Health Reimbursement Arrangements. Although not to be considered the panacea for all Americans who need health care, the CDH arrangement does work for many employers and their workers. CDH is a growing portion of $2 trillion market:
--CDH plans grew by 43% in 2008. CDH plans are over 14.9M accounts in 2009.
--There is $5.3B value held in Health Savings Accounts which is expected to grow to $16B by 2010.
--Consumers spent over $250B on out of pocket healthcare expenses in 2008. $242B paid for by cash, check, credit, debit. The remaining $8B was paid by some form of Healthcare card
--According to the US Census Bureau consumers will pay over $1000 annually in out-of-pocket healthcare related expenses by 2012 up from $800 today.
--The proportion of patient payments is projected to rise over the next few years from 15% to 21%.
According to MBlog, there are key stakeholders in Consumer Directed Health Care:
1.) Consumers: Provides economic incentives to manage their own care. Ability to build a medical nest egg.
2.) Employers: Reduce benefit costs from lower premiums and FICA tax savings.
3.) Government: Proponents hope to drive down healthcare costs by stimulating market competition.
4.) Payers: Deliver high deductible health plans along with consumer tools such as quality and health information.
5.) Banks: Deliver Health Savings Accounts linked to a debit card. Offer online payment tools.
6.) Providers: Must manage rising patient payment portion resulting from higher co-pays and deductibles. Less predictability in collections as responsible party becomes blurred further.
The medical community and health care providers in general have been slow to accommodate CDH plans primarily due to factors related to cost, staffing, and other business issues. The health care industry has recognized the growth of consumerism but has been slow in certain areas to improve the ability for patients to benefit. According to MBlog, the many in the health care industry should strongly consider movement toward and adoption of the following recommendations:
--Assemble project team for examining current practices, evaluating options, making recommendations, and implementing new programs to adapt to CDHP growth trends and impact on their organization.
--Evaluate existing processes and tools in place today, and evaluate best practices to improve quality of care and transparency.
--Analyze method for managing commercial and governmental posting of EOB, ERA to speed posting process and potentially free up resources.
--Work with strategic banking partner to streamline revenue cycle activities as much as possible and to understand financial tools and options that are available.
--Determine suitability for new processes, tools, and/or possible upgrades to existing systems and capabilities.
--Prepare to implement new tools, software, staffing model, training programs, financial tools as needed.
According to Aetna.com, consumerism is not cost-shifting in disguise. Premiums in consumer-directed plans are more affordable than in most traditional plans, meaning more individuals can obtain coverage. Consumer-directed plan enrollees have demonstrated as much as a 23% increase in the use of preventive care, which both improves health and saves money. Also, consumerism gives individuals more control over their health care spending and informs them about the true cost of care, which makes them more cost conscious. Consumer-directed products have four critical attributes:
--They give individuals better access to information and more control over their own health care, allowing them to make informed decisions about treatment and provider options.
--They increase consumer involvement and raise awareness about the real cost of health care, which research has shown to reduce total health care spending.
--Featuring lower monthly premiums, these products make it more affordable for employers to offer coverage and for individuals to purchase it.
--Finally, consumer-directed products encourage healthy behavior.
Consumerism in health care is a good thing, no matter how much political naysayers may protest. Saving money is a very good thing, and giving Americans the power to make those choices helps reduce the cost and provide multiple options. The power of choice is a good thing, and the ability to hold medical providers accountable for the procedures and tests they wish to perform gives consumers more power to control their health care and their health care dollars. The medical community must recognize that consumers need help and quality care, and they need trustworthy information, and they need good advice. When the market place, consumers, and the health care industry work together to accomplish these goals, medicine and the healing process works.
Until next time. Let me know what you think.