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Not a Bitter Pill

How to Create and Implement a Successful CDHP Model

June 6, 2013

As employers face rising healthcare costs, many are choosing to implement consumer-driven health plans (CDHP) within their organizations. A CDHP model consists of two main components: a high-deductible healthcare plan that is complemented with a medical savings account. Though CDHP models are thought to drive down healthcare costs as well as increase healthy behaviors, many individuals are skeptical of these claims and reluctant to participate.

According to Ana Sabatino, regional segment vice president, consumer solutions, at Cigna, CDHP models can be a win-win for employers and employees when implemented correctly, and they are growing in popularity throughout the business community. Approximately 66 percent of companies with 1,000 or more employees currently offer a CDHP option, according to Sabatino. The figure is expected to increase to 80 percent by 2014.

Reducing Costs and Improving Health

The question at the heart of the CDHP model is does it actually reduce costs and improve health. Sabatino says the answer is a firm “yes.” She cites a Cigna-produced study that involved nearly 2,000 employer groups representing approximately 2.5 million individuals. The study examined people who participated in Cigna’s CDHP model, which is known as the Cigna Choice Fund. The study compared Cigna’s CDHP participants to individuals in traditional healthcare models. The results, according to Sabatino, showed that individuals participating in the CDHP model saved money and improved their health, while at the same time employer costs decreased.

“This data really gets down to that big question that started 12 years ago when these plans were first introduced, which is do these plans affect the way people think when they’re making healthcare decisions and health in general, and does that lead to better health? The answer is yes,” she says.

According to the study, CDHP participants were more engaged in their personal health and wellness, and were better able to understand the costs associated with their healthcare. For example, 72 percent of individuals participated in Cigna’s online offerings, with 59 percent using the cost calculators and quality assessment tools. CDHP participants were also two times more likely to complete a health assessment and engage with a health coach.

The study also found that CDHP participants spent less on their overall medical services. There was a 13 percent decline in overall medical care, a 6 percent decline in emergency room visits and an 8 percent decline in pharmacy costs. Sabatino adds that medical costs went down for all health status groups: low-, medium- and high-risk individuals. CDHP participants were also more likely to seek preventative care and were more satisfied with their overall healthcare experience.

Design a Plan that Works

Developing a successful, cost-reducing CDHP model doesn’t happen effortlessly. Sabatino advises employers to think about their organization’s long-term objectives and create a plan that matches those objectives. “[Develop] a multi-year strategy that integrates with your organization’s vision and brand,” she says. “It must be a year-round discussion.”

Once your company has a clear set of objectives and goals, Sabatino recommends following five key steps to design your plan.  

  1. Define your company’s contribution strategy. What is your company contributing and what are employees expected to contribute? “[Create] a contribution strategy that is compelling—so they want to participate and engage.”
  2. Determine the type of medical savings account your plan will include. Will you offer a health savings account (HSA) or a health reimbursement account (HRA)? Will your company contribute to that account? If so, how much?
  3. Develop incentives that are meaningful and motivating. “[Incentives should be] specific and targeted to meet health improvement through clear and prescribed activities.”
  4. Consider how integrated coverage will impact your plan. For example, will your plan involve clinical programs that will support health improvements?
  5. Communicate all changes clearly to employees. “Bring people along in the conversation so they can see the end points and the objectives, not just from a benefits perspective, but from an overarching organizational structure.”

View Employees as Partners

When implementing a CDHP model, employee buy-in is crucial. Sabatino says it is important that employers “design these plans to bring a high level of value to the individual,” and once employees understand the value, “behavior will changes because people see it as an investment in healthcare.”

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