BUSINESS

A consumer-driven future: When patients call the shots

An introduction to consumer-driven health care, what it is and what it means for you.

By Julie A. Jacob, AMNews staff. Sept. 23/30, 2002. Additional information

It's the mantra of corporations, health plans and even many physicians: If people just knew the actual cost of health care, they would be smarter about how they use the system and more engaged in ensuring their own wellness. Everyone would save a lot of time and money.

Now those who support medical savings accounts and other forms of so-called consumer-driven health care are about to find out if their gospel is truth.

In the face of rapidly increasing premiums for health plans that seem to offer fewer and fewer services, employeers and other payers increasingly are willing to purchase, or at least consider, plans in which consumers contribute a set amount toward their own health care costs. Consumer-driven health care is no longer the future; it is now.

What is consumer-driven health care?

Consumer-driven health care encompasses a variety of employee health benefit models, such as plans where employees:

• Are given a set amount of money each month to pay for their health care premiums, have an array of different health plans from which to choose and are responsible for paying the balance of premiums that exceed the company's contribution to the cost.
• Are given a personal spending account combined with a high-deductible health plan.
• Design their own health plan by picking from among several different networks of physicians and hospitals and setting their own premiums, deductibles and co-payments.

How will the plan that patients choose affect the way physicians are paid?

For the most part, the physician's billing office won't notice a change in the way that the physician is paid.

"In terms of payment, it's pretty transparent," said Robert Stevens, CEO of Ridgeview Medical Center in Waconia, Minn., which offers the Minneapolis-based Definity Health consumer-driven plan to its employees. The plan combines a personal spending account with a high-deductible PPO.

"Patients present their Definity Health cards. Claims are processed like normal insurance. If the patient still has money in the personal spending account, the claim is paid. If the patient has exceeded the PSA, then the patient is notified that he is responsible for payment, just like regular insurance."

In upcoming years, however, patients likely will be given debit cards that automatically deduct funds from the patient's personal spending account, which will allow doctors to get paid instantly at the time of service.

Humana Inc. employees enrolled in the company's consumer-driven plan, which includes a personal spending account component, already have such a card to pay for prescriptions, said Elizabeth Bierbower, Humana's vice president of product innovation.

"Patients just pull it out and they swipe it, and funds are automatically deducted from the personal spending account," Bierbower said.

Some forms of consumer-driven plans also will give physicians more flexibility to set their own fees, instead of being paid according to a fee schedule set by a managed care company. In the version of a consumer-driven plan offered by Minneapolis-based Vivius, patients choose from among various networks of physicians who set their own rates.

"With the Vivius model, the main difference is that physicians will be setting their own fees," said Lee Newcomer, MD, Vivius's executive vice president and chief medical officer. "If their fees are unreasonable, no one will pick them, but it's perfectly possible to have higher fees and still attract patients."

How will the plans affect the way patients interact with physicians?

Consumer-driven health plans will affect the relationship between physicians and patients in several ways, say experts on the trend.

"It's going to have a profound impact on doctors," said Jay Savan, a senior consultant with the Towers Perrin health care benefits practice group.

For one thing, when patients are controlling their own health care dollars, they likely will ask their physicians more questions about the costs and necessity of various procedures.

Elona DeGoory, Humana's senior consultant for associated benefit programs, became more aware of the cost of services after she enrolled in Humana's consumer-driven plan for employees, which included a personal spending account and high-deductible health plan.

"I was more aware of my bills," DeGoory said. "I looked at the explanation of benefits much more carefully ... and just kept track of where I stood. ... When I had a checkup, my physician said she wanted to run a cholesterol test, and I asked why. When she told me why, I was very comfortable having it."

Internist Mary Bryant, MD, part of Humana's network in Louisville, Ky., said she's unsure whether it's a good thing for patients to be worried about the cost of care.

"I don't mind if patients consider cost," she said, "but I personally try not to make decisions based on cost. I try not to know anything about anyone's health insurance, so I would have to see how that sort of thing would work out. I would have to have a lot of patients with it first."

Physicians will have to be prepared to answer those cost-benefit questions, said Louis Dickey, MD, Aetna's national medical director. Aetna recently launched its own version of a consumer-driven plan that combines a personal spending account and a high-deductible health plan.

"It will put an impetus on physicians to explain those costs themselves, such as if the member sees a bill for an office visit and they perceive that the doctor only spent a few minutes with them," Dr. Dickey said. "It may be incumbent to explain the value of what nurses do, etc."

"It puts a lot more decision-making between the physician and patient," Dr. Newcomer noted. "The insurance part of it isn't as critical as before."

Stevens said he had noticed physicians affiliated with Ridgeview Medical Center commenting that some patients were asking more questions about the costs of procedures.

Physicians also should expect patients to be paying more attention to the quality of care and patient service they receive, Dr. Dickey said. For instance, Aetna's doctor finder tool on its Web site soon will include information on patient satisfaction, based on feedback from several patients.

Gary Cantlon, MD, an otolaryngologist in Spokane, Wash,. who is part of the USelect plan, a consumer-driven plan administered by Vivius and Health Net of Woodland Hills, Calif., agreed.

"If patients are picking their physicians, physicians will want to invest in their businesses," he said.

Physicians probably also will take care of many more patients from other cities, Savan said. "You will start seeing patients traveling greater distances for higher-quality and lower-cost procedures."

How will the plans affect all of the administrative hassles I go through?

On the one hand, there will be fewer. Consumer-driven plans also will decrease the administrative hassles that physicians currently deal with in managed care plans.

Patients in Aetna's consumer-driven plan don't need referrals to see specialists, Dr. Dickey said.

In a consumer-driven health care market, however, physicians will need to carefully document that he or she fully explained all of the treatment options to a patient, Dr. Cantlon said.

"If the patient decides to go a cheaper route, that will have to be documented clearly, that there was a discussion and the patient elected not to go ahead," he said.

"That is going to be significant."

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Personal spending account model

• Employers give employees a set amount of money per year to spend on health care. Employees can use this money for whatever physician or service they choose.
• Preventive care services may be covered separately.
• If the employee uses up his or her personal spending account, he or she is responsible for a "bridge" deductible, an amount determined by the plan.
• Once the employee reaches the maximum of the bridge amount, he or she is covered by an indemnity or PPO health plan.

Vivius model

• Employees choose among several different networks of physicians and hospitals, comparing information on cost and quality posted on the Internet.
• Physicians and hospitals set their own fees.
• If employees pick networks of more expensive hospitals and physicians, they pay higher premiums than employees who choose cheaper networks.
• Employees also choose their own deductibles and co-payments, which affect how much they pay in premiums.
• A personal spending account may or may not be part of the plan.

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Copyright 2002 American Medical Association. All rights reserved.