Study Looks At the Effectiveness of Health Policies


The Health Care Cost Institute (HCCI) released six policy briefs that look at how national and state policies affect health care costs and utilization. Researchers looked at commercial claims data for more than 50 million insured Americans. The following are Key findings:

  1. Provider consolidation drives up spending on cancer treatment: The consolidation of outpatient practices drove significant increases in cancer treatment spending. Hospital outpatient departments and their affiliated clinics were able to charge insurers additional facility fees. Consolidation also increased the use of more expensive medicines and other outpatient care components.
  2. Unrestricted access to physical therapy reduces opioid use and lowers costs: Seeing a physical therapist as the first point-of-care for lower back pain reduces potentially costly services later on, including emergency department visits and use of prescription opioids. Patients who sought physical therapy first for lower back pain had significantly lower costs, including out-of-pocket costs, for physician, outpatient, hospital, and pharmacy care compared to patients who saw another type of provider.
  1. Nurse practitioners push down the price of primary care: Prices for primary care services fell 1% to 4% in states that allowed nurse practitioners to treat patients without a supervising physician. However, spending on health care increased. Higher total health care costs may be a result of increased volume in services, which may stem from increased access to care.
  2. Designing insurance benefits to incentivize patients to choose low-priced providers for colonoscopies can lead to savings of 8.5% per procedure: Medical spending would decrease by approximately $95 million per year if just three health insurers-Aetna, Humana, and UnitedHealthcare, adopted a reference-based payment program for colonoscopies. These estimates were modeled on the health care savings of the California Public Employees’ Retirement System (CalPERS).
  3. Reimbursement for telehealth services is nearly 40% lower than non-telehealth care: Telehealth claims submitted by primary-care providers have increased from 1,246 claims in 2009 to 2,558 in 2013. But they continued to be reimbursed at lower rates. While many states permit reimbursements for telehealth services, only seven states have passed laws that mandate reimbursement parity between telehealth and non-telehealth care.
  4. Mental Health Parity law has a limited effect on access to mental health services: The Mental Health Parity and Addiction Equity Act (MHPAEA) has had little to no effect on access and use of mental health services for patients with depression, bipolar, or schizophrenia.

Wellness plans would be allowed to offer incentives for genetic tests under EEOC rule

Proposed Equal Employment Opportunity Commission rules would allow employers to offer incentives to or impose penalties against employees and their spouses for genetic screening as part of workplace wellness programs, writes David Burda of MSP Communications. Screening employees for common genetic disorders could allow employers to offer personalized wellness programs and invest in interventions that promise the best results, he writes. Twin Cities Business (Minneapolis) (12/29)

How Incentives Can Make Health Care More Affordable

A three-year Cigna study shows how a handful of correctable health conditions contribute to the health care costs of American workers. Study provides evidence that those with unhealthy biometrics and those who have not completed biometric screening measures are more likely to incur high costs. Findings provide evidence that incentive programs can lead to better health engagement and behavior, clinical outcomes and costs.

The bad news is that higher weight, cholesterol, blood pressure and blood sugar can raise health costs and out-of-pocket health expenses. The worse news is that what you don’t know about your health could be even more costly to you.

The good news is there are health improvement programs and incentive strategies that are proven to help people address the conditions that increase costs, according to a three-year study of health plan consumer data by Cigna.

The Cigna study of 200,000 customers shows how a handful of correctable health conditions can contribute to their average annual health care costs. A body mass index (BMI) of more than 30 increases total health care costs by an average of more than $2,460 per customer per year, and adds $492 in annual out-of-pocket costs.

A cholesterol reading of more than 240 translates into an average total health care cost increase of $1,644 per health plan customer, per year, and adds more than $353 in annual out-of-pocket costs.
Two or more chronic conditions indicated by unhealthy BMI, blood pressure, cholesterol, and blood sugar raises annual out-of-pocket expense by almost $1,300 per year, and total healthcare costs by nearly $9,000 per year.

When it comes to health conditions, those who have not undergone a biometric screening have higher health costs. For example, those who have not had blood pressure screening have total health costs that are $2,064 higher per year, and $400 more in out-of-pocket costs, than those who have verified that their blood pressure is lower than 140/90.

Those who have not had a blood glucose screening have total health costs that are $1,332 higher per year, and $266 more in out-of-pocket costs, than those who have verified that their blood glucose is lower than 100.
Incentives more than doubled biometric screening rates from 20% to 55% in 2014.

Incentives increase the probability of engaging in a coaching program by 24% and by 30% for those with chronic conditions. Incentives increase the probability of setting and meeting goals by 18% and meeting with a health coach by 43%. Incentives also increased the probability of meeting biometric targets.

Cigna’s chief nursing officer, Mary Picerno said, “Employers are increasingly rewarding employees who identify and address their potential health risks by discounting the employee’s health plan premiums or adding funds to their health spending account to lower their annual out-of-pocket expenses.”

Experts: Incentives are still important to wellness plans

The Affordable Care Act increased an employer’s ability to use incentives to drive wellness program participation, but implementing them has been tricky due to recent allegations that some plans may discriminate against employees, experts said. Aon Hewitt senior vice president Stephanie Pronk said the legal issues will make employers more cautious, but there have not been indications that companies are going to stop using them. “They might think differently about the dollar amount and what they’re asking people to do, but we haven’t [seen] movement away from it,” she said. (4/7)

Employees Like Wellness Incentives

A recent survey by Aflac reveals that employees are willing to participate in wellness programs if their employer offers financial incentives to offset healthcare costs. The survey reveals the following:
• 88% of workers agree, at least somewhat, that it’s fair for employees to get reduced premiums or incentives to become healthier.
• 78% of workers would be at least somewhat willing to change their lifestyle to get lower insurance premiums.
• 61% of workers whose employers offer wellness programs participate in them.
• 30% of workers agree, at least somewhat, they would only change their lifestyle habits if their employer penalized them with increased insurance premiums.

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How Pharmacy Benefits May Evolve

Pharmacy benefit programs are evolving from simply using cost shifting to providing more complex offerings and adopting new management tools, according to a report by the Pharmacy Benefit Management Institute. The report reveals the following trends:

More Cost-Sharing Among Tiers – The use of four-tier, copay designs continues to grow, fueled by the addition of a separate tier for specialty drugs. Innovative cost-share structures with five or more tiers are emerging, but it is unclear whether they will become mainstream. Tier categories include preferred and non-preferred generics as well as a split by clinically and cost-effective therapies. In addition, the copay differential continues to widen. The average difference between generic and preferred brand copays is $19 compared to $7 about 10 years ago. The average difference between preferred and non-preferred brand copays is $23, compared to $13 a decade ago. As benefit designs move towards more tiers, the use of coinsurance designs are declining. This may be due to concerns over the members’ out-of-pocket costs.

Alternative Incentives for Behavioral Change – Several studies have challenged the assumption that copay waivers increase medication adherence or help to contain overall health care costs. However, when alternative incentives are provided, most employers still focus the incentives on participation.

Management of Purchasing Channels– Benefit programs often vary the cost share by the type of pharmacy in order to encourage members to use certain channels. Copays are less for a 90-day supply filled once in a mail pharmacy than for a 30-day supply filled three times at a retail pharmacy. A new trend is to provide incentives to use certain retail pharmacies. This allows plan sponsors to keep the broad network while managing costs since the preferred retailers typically offer better pricing.

Limited Networks– Limited pharmacy networks were not talked of much before 2012. But they have become more of a consideration after the contract dispute between Walgreens and Express Scripts. Providing the broadest access to providers may no longer trump the more favorable pricing of a narrowed network.

Trend Management– Drug benefit plans often exclude medications deemed nonessential. Even when medications are covered, employers use coverage limitations to promote appropriate use, such as prior authorization, quantity limits, refill-too-soon limits, and step therapy. The vast majority of plan sponsors already use prior authorization, refill-too-soon, and quantity limits. Sixty-five percent of plans use step therapy. The one exception is pill splitting, which has never experienced widespread adoption. PBMs generally do not promote these programs due to safety concerns.

Specialty Drugs– Traditional pharmacy benefit management strategies are now used widely for specialty drugs. The strategies include the use of pharmacy networks, formulary management, prior authorization, and step therapy programs. Quantity limits are also common, in which specialty products are limited to a 30-day supply. Another strategy is to limit the first fill to one or two weeks to ensure the patient tolerates the medication.

Site-of-Care and White Bagging– White bagging is a fairly new strategy, which has gained ground recently. It’s the practice of having medications or supplies delivered directly to the practice setting (outpatient infusion center, physician office, hospital) for use by a specific patient. The idea is to allow the payer to purchase the drugs for less from a specialty pharmacy. Also coverage of drugs can be shifted from the medical benefit to the pharmacy benefit. There are potential drawbacks, such as patient safety, wasted medication, and operational headaches for the provider. Once a drug is received, providers have the burden of storing it separately from their regular inventory. If there is a last-minute change to a treatment plan, a new or additional drug may need to be ordered, resulting in delays in care.

Copay Assistance– Specialty drug manufacturers frequently offer copay assistance programs that cover the member’s share of the cost. Many programs will cover the member’s cost share up to $500 a month, and very few have a maximum income requirement. This may be an effective strategy to maintain patient adherence. However, many employers say the programs only add more complexity.

Over the past few years, there has been a significant increase in the number of copay programs for non-specialty medications, mainly because many brand drugs have come off patent. Plan sponsors say these programs undermine copay tier structures, which provide incentives for patients to use lower-cost alternatives, such as generics. Some advocate the use of coupons to make drugs more affordable, thereby increasing adherence. The authors say that plan sponsors would be prudent to develop a strategy for drug coupons on the traditional pharmacy side. For more information, visit

Agents can help advise on corporate wellness programs

Large employers are shifting toward wellness programs to manage health costs, but fewer small and midsize businesses are developing and using wellness programs. Trusted agents are well positioned to advise businesses on implementing health and wellness programs, writes Barbara Stewart, a vice president with Washington National Insurance Co. Agents can help employers see the value of wellness programs and incentives, advise on the basic elements or programs to implement, and guide employers in developing the program. (10/24

Wellness experts say incentives are big part of company plans

Industry experts said companies have quickly caught on to the benefits of using employee incentives and penalties to drive wellness program participation. Aon Hewitt medical director Dr. Michael Cryer said he never expected the percentage of companies linking biometric outcomes to incentives would increase from 4% to 25% in one year. Tom Billet of Towers Watson said companies also are using financial incentives to get more people engaged in wellness programs. Reuters (10/10)

Modest incentives boost wellness participation, expert says

Incentives of $600 per employee per year can lead to wellness participation levels of 75% or more, says United Health Care vice president Chris Galanos. He says an initial incentive should be offered to even the healthiest employees, to cast a wide net and identify emerging risks, while a secondary incentive could be aimed at higher-risk individuals. (10/1)

Last Updated 05/25/2022

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