When officials at Cerner Corp. took a closer look at their employees’ medical usage several years ago, one costly surprise involved mental health treatment.
Six medical conditions made up nearly 30 percent of the company’s total costs, and mental health ranked third on that list. Plus, those costs were incurred prior to the federal Mental Health Parity and Addiction Equity Act of 2008, so individuals were typically paying more out of pocket compared with other medical care, says Mike Heckman, the company’s former director of global benefits. “We said, ‘We already spend a lot in this area. It’s often overlooked. And it’s only going to become a larger and larger issue for us.’ ”
To counteract that trend, the Kansas City, Missouri-based technology company decided to invest in earlier intervention. Cerner provided employees and their families a toll-free number to call to speak with mental health clinicians, and, starting this year, it boosted the number of free employee assistance program, or EAP, visits from three to six annually.
In just the first six months, EAP usage doubled from 3 to 6 percent compared with the first six months of 2009, according to Cerner data. And outpatient mental health costs declined by nearly 41 percent during that same stretch—from $402,261 for the first six months of 2009 to $239,076 in 2010. Christa Roberts, a registered nurse and Cerner’s health and wellness strategist, credits the clinicians with triaging and referring callers to the most appropriate care. And, she says, employees “are using more EAP sessions, and fewer are going on to outpatient care.”
Cerner, which provides health coverage to nearly 11,600 employees and dependents, is one of 16 Kansas City-based employers that are wrapping up a three-year pilot initiative to better understand their employees’ medical-care usage so they can redesign benefits accordingly. The underlying concept, frequently called value-based health benefits, involves tailoring insurance coverage to encourage better health and ideally lower medical costs as well. “This is about aligning your efforts and targeting your dollars to where you will get the best value for your investment,” says Sara Poage Palermo, a vice president with the Mid-America Coalition on Health Care.
The analysis and related case studies of the Kansas City Collaborative should be available by spring 2011, Palermo says. Already, the pilot effort is being expanded into five other regions of the country, involving employers in Dallas-Fort Worth and Pittsburgh, among other locations. Pfizer Inc. is providing technical and financial support.
In Kansas City, the collaborative group—involving some 400,000 covered lives—primarily focused on heart- and obesity-related issues, including smoking, high blood pressure and diabetes, Palermo says. But some employers, including Cerner, have adopted a broader approach. “They are very aggressive,” she says of the health information technology company. “They always have a lot of different activities going on.”
Joining the collaborative provided Cerner access to national experts and the opportunity to brainstorm with local employers, Heckman says. “We kind of did this stuff in a vacuum or in a bubble. It was extraordinarily helpful to bounce ideas off of people and to share what may be working and what may not be working.”
Cost and benefit
Employers can design benefits to improve medical care and even extend lives without additional costs, says R. Scott Braithwaite, a physician and chief of the section of value and comparative effectiveness at the New York University School of Medicine.
But Braithwaite, who just completed a related study, stresses that for employers to achieve these results, they must move beyond generic drugs, mammograms and other low-cost interventions. They should also cover high-dollar services, if they’ve been shown to provide strong medical benefit, such as implanting a defibrillator in a heart attack patient, he says. “Often employers will say ‘high value’ and what they mean is ‘cheap.’ ”
Gail Wilensky, an economist and a senior fellow at the international health education foundation Project HOPE, also supports the underlying value-based concept, albeit with a caveat. “It helps move the [health]system in the right direction, particularly if there is credible evidence on which to base the variation in copayment and coinsurance,” she says.
Cerner officials, as they continually reassess their own benefits design, have accumulated extensive data about employees’ risk and treatment patterns. The company provides points to employees who fill out a health risk survey and get their cholesterol levels and other risk factors measured. The points can be applied toward premium reductions in the following year. By 2007, 92 percent of Cerner’s employees had completed both.
In 2008, Cerner officials launched a free diabetes management program to assist employees with that diagnosis, including access to health coaches and periodic blood sugar checks. By 2009, 99 employees were participating in the program, slightly less than one-third of the company’s employees with diabetes.
Of that group, 59 had controlled diabetes and 40 were uncontrolled as of 2009, according to Cerner data. Roberts didn’t have comparative data from the prior year, but says that will be automatically tracked moving forward. But since the disease management program’s inception, the average annual cost for all employees with diabetes has declined from $13,500 in 2007 to $10,900 in 2009. The program played a role, Roberts says. “We’re helping them to take an active role in their health care.”
In a recent analysis, Braithwaite and fellow researchers used a computer simulation to apply the effects of value-based design to people with health insurance. The analysis found little effect on life span, if the approach was used just for pharmaceuticals. But using that strategy for both drugs and other types of medical treatment extended life span by an average of three to six months without any related increase in health costs, according to the findings, published February in PloS Medicine, an open-access medical journal.
As such efforts become more sophisticated, insurance coverage could be tweaked for specific medical treatments depending upon relative benefit, Wilensky says. As one example, she points to Herceptin, a breast cancer drug that’s proven to be effective in women who test positive for a particular protein. Under a value-based design, employees who test positive could pay far less out of pocket than those who don’t, she says.
Meanwhile, companies in the Kansas City collaborative continue to look at new ways to customize insurance coverage. At Cerner, officials say their point-based incentive system provides considerable flexibility moving forward.
Each year a Cerner employee can earn up to 1,000 points, with each point translating to a $1 reduction in the following year’s annual premium. Getting a recommended mammogram earns 100 points; having a colon cancer screening reaps 400 points. Participants in the diabetes management program can accumulate as many as 300 points.
In 2009, 85 percent of employees accumulated at least 700 points. “That’s why we can see the improvement in our health status measures,” Roberts says. All upfront investments that Cerner officials hope will pay off for the company’s costs and the employees’ health down the line.
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