healthcheck360 medical cost gap analysis

Medical Plan Cost Gap Analysis A Wellness Solution

April, 2014 HEALTHCHECK360.COM

Direct Phone: 563.587.5415 [email protected]

Presented By: Roy Lines, CFP®, CRPS®

Business stakeholders have a choice: “Pay now through wellness programs or pay much more in health care costs later…”

How does HealthCheck360° effectively limit rising health care costs?

Through a Performance – Based Health Management Program

A systematic way – to keep healthy employees healthy, improve the health of the unhealthy and enables better care compliance for those with chronic conditions.

Our system has three broad categories of benefits to business clients and prospects:

1. Cost Effectiveness 2. Ease of Administration 3. Verifiable & Manageable Results

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How to Set Up HealthCheck360°’s Value Proposition

True or False?

All growth oriented business owners are continuously searching for a competitive edge to increase shareholder value.

and;

You want to be the one to share it with them.

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I thought of you while working on a medical cost reduction strategy for another good client of mine. I’ve done some additional analysis on your plan and I’d like to show you a business financial strategy that is showing some really good results in reducing health care spend and improve operational efficiency by increasing employee productivity at little or no cost to you? It’ll only take about 8 minutes of your time.

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HealthCheck360° Trend Cost Gap Analysis

Plan information needed for HC360° to perform (medical plan cost) trend gap analysis & show HC360 impact.

1. # of plan eligible EE’s 2. Type of Plan (Self/Partially/Fully Funded-PPO/POS, HMO etc.) 3. Medical trend rate for the past 3 years 4. Average plan cost/employee 5. Industry/Region 6. Type of HM program currently in place (if any)

WHY HAVE A HEALTHCHECK360° WELLNESS PROGRAM ?

$8,852 $9,054 $8,365

$8,967

$8,823 $8,247

$7,429 $7,861 $8,334

$9,033

$9,730 $10,346

0

2,000

4,000

6,000

8,000

10,000

12,000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

To Reduce Health Plan Medical Costs per Covered Employee

HC360 Actual Mercer Large Employers Trend

Question: Why are their health costs continuing to go up? Answer: Traditional wellness programs are not financially focused

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Source: Mercer National Survey of Employer Sponsored Health Plans 2012 (Page 17)

Presenter

Presentation Notes

8/10 groups fail compared with HC360 Green Line: Participants that have been with us for the past 6 years Red Line: Mercer trend data 77% using biometrics, 81% using some kind of participation incentives

$14,616

$16,808

$13,455 $14,625

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

2014 2015 (estimated)

ABC Costs vs. Mercer Benchmark

ABC

Mercer 500

WHY IS THIS CLIENT AT A COMPETITIVE DISADVANTAGE? ANALYZE HEALTH COST TREND

$232,200 $436,600

N=200

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Presenter

Presentation Notes

Current Year Gap: $1,161 = ($14,616 - $13,455) x 200 employees ($232,200 Competitive Disadvantage) Assumes 15% Renewal Increase in 2015 2015 Projected Gap: $2,183 = ($16,808 - $14,625) x 200 ($436,600)

$14,616

$16,808

$19,330

$22,229

$25,563

$13,455 $14,626

$15,898 $17,281

$18,785

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2014 2015 2016 2017 2018

ABC Co. Trend (15%) vs. Mftg. Industry Average (8.7%)

ABC

Mercer 500

CONTINUE WITH A DO NOTHING STRATEGY

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Presenter

Presentation Notes

ABC 15% Renewal Trend vs. Mercer 500-999 Average Manufacturing Companies based in the West. The Mercer Trend is a weighted average of the variance of Avg. Large/Avg. West/Avg. Manufacturing/500-999 Employers from 2005-2012.

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Year 1 Year 2 Year 3 Year 4 Year 5

HC360 Cost of Program + Health Plan Cost per Employee

HC360 Program Cost

Cost Per Employee

OR INVEST IN HEALTHCHECK360°

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N=450

Presenter

Presentation Notes

HC360 is a small price to pay for an out of control medical cost trend rate

IS IT COST EFFECTIVE?

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Year 1 Year 2 Year 3 Year 4 Year 5

HC360 Plan: Cost Reduction by 1% per Year

ABC + HealthCheck 360

Mercer 500

ABC

Savings: Year 2: $29,232 Year 3: $100,266 Year 4: $228,276 Year 5: $431,219

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Presenter

Presentation Notes

Estimated cost savings with a 1% annual reduction. HC360 medical cost impact ranges from 1-3%. Impact assumes company is or may become self – funded. Year 1-2: 14% Year 2-3: 13% Year 3-4: 12% Year 4-5: 11%

VERIFIABLE RESULTS

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000

$10,500

$11,000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

$8,852 $9,054

$8,365

$8,967 $8,823

$8,247

$7,588

$8,107

$8,506

$9,012

$10,221

$10,581

$7,429

$7,861

$8,334

$9,033

$9,730

$10,346

Health Plan Costs per Covered Employee

Actual Manufacturing Large Employers

A health plan competitive cost disadvantage of $1,264 per employee has been transformed into a competitive advantage of $2,334 per employee

N=2,000 HC360 Manufacturing Client

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Presenter

Presentation Notes

Actual performance of a HC360 Manufacturing Client.

HC360° PROCESS: IDENTIFY THE ROOT PROBLEM IF YOU CAN MEASURE IT YOU CAN MANAGE IT

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Biometric Screening Findings

• 111 with glucose in diabetic range • 580 with glucose in pre-diabetic

range

• 549 individuals with elevated systolic and diastolic blood pressure readings

• 815with elevated cholesterol • 883 with BMI readings > 30, of

which 396 (44.8%) are also pre-diabetic

Claims Information

• 50 individuals have claims with diabetes or pre-diabetes

• 78 individuals have claims with hypertension

• 98 individuals at risk of a heart attack

N = 1,750 Manufacturing Firm

Management may already know… What if they knew…

Presenter

Presentation Notes

Another interesting example of how traditional wellness misses the mark is with another one of our own case studies Here we have a 1,750 member manufacturing firm and in the left column is the company’s actual claims data and on the right is the Biometric Screening data. Traditional wellness programs will often only look at claims data and participation rates by counting the number of HRA’s completed. Yes, it’s good information to have, but we refer to this as looking through the rearview mirror in that it’s really old news and quite difficult to manage to get the desired results. We see that 50 either have diabetes or are right on the cusp of it, well let’s peer through the front windshield and look down the road a ways in the right column with the results of the Biometric Screening. Here we find that there are more than 2x as many with glucose readings in the diabetic range and 10x as many in the pre-diabetic range. Similar results are found with other potential health risks like hypertension and cholesterol readings. Clearly, identifying future risks with objective and reliable data should be the cornerstone for all wellness programs from which to measure and just as importantly manage for success. It is clear to us as it will be to your clients that having this is clear and concise data for which to develop a strategic plan.

QUANTIFY HEALTH RISK IN YOUR POPULATION

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0 20 40 60 80

100 120 140 160 180

40%

20%

35% 31%

19%

Projected Health Risks in ABC Population

# Health Risks

N=450

Presenter

Presentation Notes

Health Risks Defined As: Obese > 30 BMI High Blood Pressure > 131/86 Glucose >100 Total Cholesterol > 200 Nicotine –Positive Cotinine test

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4 16 4

16

4

100 Points

All of these health conditions can be modified by a

combination of an employer’s decision on financial incentives, health behavior intervention &

compliance management programming.

Most importantly, by the

employee’s health decisions!

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28 16

Scoring Model

Presenter

Presentation Notes

HealthCheck360 rewards participants for progress towards a defined overall health score that meets a business client’s minimum score criteria. We refer to this as “rewarding progress not perfection”. This approach is unique in that it allows for an employee who may be inflicted with one or multiple health conditions the ability to make modest improvements i.e. gain points in multiple health factors. The unique benefit to the employer is the flexibility this provides in plan design and monitoring overall progress and program efficacy. Typically, HC360 recommends the following scoring benchmarks: Score 85 or more total points = Ideal Risk; Score between 71-84 total points = Low Risk; Score between 61-70 total points = Moderate Risk; Score 60 – 51 points = High Risk; Score 50 or less = High Risk. NOTE: This point system enables HealthCheck360 to readily manage the Reasonable Alternative Standard and Waiver process. This system rewards healthy participants for staying healthy, rewards at risk participants for improvement and rewards participants with chronic health conditions for being compliant with care.

CORRELATE RISK LEVELS TO HEALTH SCORE

HealthCheck360° Scorecard Risk Level Correlated to HC360° Health Score

Ideal ≥ 86

Low 71-85

Moderate 61-70

High 51-60

Very High ≤ 50

HealthCheck360° has an easy to interpret scoring system that translates biometric values into a simple to understand score that is highly correlative to health risk factors. Ease of interpretation for both participants and company reports for analysis and planning. Financial incentive strategies easily integrate with this progressive scoring system and simplifies the reasonable alternative process.

TRANSLATE HEALTH RISKS INTO AN ACTION PLAN (POPULATION HEALTH DISPERSION)

30.70% 31.10%

18.90%

10.20% 9.10%

Ideal (85+)

Low Risk (71-84)

Moderate Risk (61-70)

High Risk (51-60)

Very High Risk (<60)

HC360 Sample Population Study: N=10,262 2012

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Keep this

Group Healthy Improve

this Group’s Health

Drive Behavior Change &

Manage Care Compliance

Presenter

Presentation Notes

Health Score Ideal: (85+) 2,650 / 30.7% Low Risk: (71-84) 2,679 / 31.1% Moderate Risk: (61-70) 1,629 / 18.9% High Risk: (<60) 1,662 / 19.3% Total: 8,620 100.0%

24.1%

32.6%

21.0%

10.3% 12.0%

Ideal (18.5-24.9)

Low Risk (25-29.9)

Moderate Risk (30.0-34.9)

High Risk (35.0-39.9)

Very High Risk (40+)

ABILITY TO DRILL DOWN TO DETERMINE SPECIFIC HEALTH RISKS EXAMPLE: BMI POPULATION DISPERSION

HC360 Sample Population Study: N=10,262 2012

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Keep Up the

Good Work Eat

Healthy Exercise Program

Weight Management

Program

Presenter

Presentation Notes

BMI Ideal: (18.5-24.9) 2,076 / 24.1% Low Risk: (25-29.9) 2,814 / 32.6% Moderate Risk: (30.0-34.9) 1,806 / 21.0% High Risk: (35.0-39.9) 888 / 10.3% Very High Risk: (40+) 1,036 / 12.0% Total: 8,620 100.0%

ESTABLISH YEAR 1 BASELINE TO SHOW Y-O-Y POPULATION HEALTH IMPROVEMENT

R² = 0.9662

R² = 0.8815

66

68

70

72

74

76

78

80

82

84

20 25 30 35 40 45 50 55 60 65

HR

A T

otal

Sco

re

Age

HC360 Repeat Participants vs Baseline

Baseline

HC360 Participants

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HC360 Sample Population Study, Baseline N = 38,000 2012

Presenter

Presentation Notes

Each dot represents at least 1,000 lives. Data integrity: 95% confidence interval that for any size population the margin of error is +/-2%

CORRELATING CLAIMS COSTS TO RISK LEVELS

HealthCheck360° Risk Level Cost

Ideal $1680.35

Low $2279.46

Moderate $2855.74

High $3040.94

Very High $3879.80

Competitor Risk Level Cost

“Best” $2260.85

“Moderate” $2676.97

“Poor” $3012.15

HealthCheck360° includes two additional levels of stratification to accurately identify health risk levels. This gives consultants and business owners more accurate data to create targeted interventions resulting in a much higher probability for cost reduction.

Presenter

Presentation Notes

1,500 in ideal and low risk buckets combined and competitor has 1500 total in Best. However our research shows that 40% of their best falls into our moderate, high & very high risk buckets. 22% of their Poor bucket falls into our Ideal & Low buckets.

HealthCheck360° is unique because we provide a progressive program that integrates participatory, activity-based and outcome-based programming into one effective program.

Over 90% of our clients migrate towards outcome-based incentive structures within 2-3 years.

HC360° can (and often does) integrate our Condition Management (disease and compliance management) programming.

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Why is HealthCheck360° Unique?

HEALTHCHECK360° 5-STEP BEST PRACTICES

• Objective biometric collection process – Identify & measure health risks

• remove subjective predispositions from self-reported HRA

• Superior scoring algorithm – Translate lab values into an easy to understand health score

• correlated to established benchmarks that are highly predictive of health costs

• Flexible and effective incentive management – Motivate participation with flexible design that evolves with program

• Reward progress not perfection while maintaining HIPAA & ACA compliance

• Mitigate known and unknown health risks – Multimedia engagement programs driven by individual biometric data

• Health coaching & Condition management programming

• Manage to maximize results – Participation analysis, Engagement levels & Risk migration

• Claims integrated client specific reporting

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HealthCheck360° is not just another wellness provider. HealthCheck360° has a financially focused, easy to

adopt 5-step best practices health management program that is unique, cost effective and delivers verifiable results to enable company stakeholders to effectively mitigate and manage health care costs while at the same time improve the health and productivity of their employees.

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HealthCheck360°’s Value Proposition

HealthCheck360°s Value Proposition

HealthCheck360° provides stakeholders with an easy to adopt and implement five step best practices health management system.

Our system is unique, cost effective, delivers verifiable result and reduces the administrative burden of doing it alone saving both time and money.

When integrated with a well designed health plan, our results driven system leads to healthier and more productive employees resulting in increased operational efficiency and a reduction in total health care costs.

Provide management with insightful and actionable information.

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BENEFITS GAINED

Effectively manage your wellness program – • like you manage your business; with employee accountability, goal achievement and more predictable outcomes

A systematic way to achieve better health outcomes – • which will mitigate your health spend while increasing productivity resulting in higher operational efficiency and profitability

Expert consultation enables you to set realistic goals and benchmarks – • Enables management, employee benefits team, consultants and providers to effectively monitor, measure & manage for program success

Saves you valuable time in the strategic planning process – • results in developing an evolving program that is congruent with your corporate goals and initiatives

Effectively analyze your population’s health risk migration – • and correlate to claims data; better enabling predictive modeling alignment with ROI expectations

Program is designed to be cost neutral – • program hard costs will have minimal impact on cash flow if implemented as recommended

Program is administratively simple and efficient – • Saving you both soft & hard dollars on administering your wellness program

With access to an employee’s Personal Health Information – • we are in the best possible position to influence a shared vision of good health and healthy habits

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BENEFITS GAINED

Expertise with HIPAA and HITECH regulations – • compliance oversight maintains your program integrity and reduces time and cost for staff

Expert consultation on prudent financial incentive strategies – • that are intuitive and member specific programming will foster high participation and engagement; ensuring program sustainability and overall goal

achievement

Empowering employees to take more personal responsibility – • Over their health increases their confidence in the program resulting in sustainability

A trusted partner – • you can depend on HealthCheck360° for world class customer service and support

A systematic way – • to keep your healthy employees healthy, improve the health of the unhealthy and enables better care compliance for those with chronic conditions

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HEALTHCHECK360° CONTACT

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For a meeting, webinar or plan proposal call or email:

Roy C. Lines, CFP®, CRPS® Sales Executive

Office 563.587.5415 | Cell 563.599.2844 | Fax: 563.587.6602

www.HealthCheck360.com | [email protected] HealthCheck360° 800 Main Street | PO Box 1475 | Dubuque, IA 52004-1475

http://www.healthcheck360.com/

mailto:[email protected]

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