These are the findings of a yearlong investigation of a CDH plan utilizations. The final results topped previous 9% estimates in the reduction of utilization costs, according to a study by Dallas-based Synhrgy HR Technologies.
Synhrgy says the study provides evidence that a CDH plan can have a positive effect on utilization without negatively affecting health of a population. The report is based on claims data from the 835 employees and their families (1,600 individuals) that took part in the firm’s CDH plan pilot project.
In CDH plans, a relatively new concept in employee health care, responsibility for health insurance choices is shifted to the employee from the plan sponsor, with the sponsor fixing costs.
Studying an East Coast manufacturing company that remained unidentified, Synhrgy was able to examine the effects of a CDH plan on the overall utilization cost. Under the pilot program, a majority of the company’s 28,000 nonunion employees were to be enrolled in one of three CDH plans as of January 1, where deductibles would range from $1,600 to $3,200. The three CDH plan options were to replace more than 200 HMO, PPO, and point-of-service (POS) options from which employees once had to choose.
To ensure the overall coverage level wasn’t reduced, the study compared the percentage of eligible expenses paid under a CDH plan to expenses paid under the company’s managed care plans in 2001.
Results of Synhrgy’s survey revealed patients had fewer medical visits, despite having a higher percentage of services covered and higher benefit levels under a CDH plan. Medical benefit coverage under a CDH plan averaged 86%, compared to coverage under more traditional managed care averaging 71%. The most significant decline in medical utilization was in behavioral health, which dropped 33% under the CDH plan.
Additionally, the implementation of the CDH plan had little effect of the cost of preventive care. Preventive care utilization decreased slightly (3%), while benefit coverage increased from 83% to 97%. Most preventive care costs are covered under the CDH plans, but are not deducted from the employee’s health reimbursement arrangement (HRA).
Overall, healthy people proved the biggest winners. Approximately 40% of families in the pilot project had less than $1,000 in medical expenses in 2002, with an average out-of-pocket expense of $11. That reduction represents a significant drop in cost from the previous year, under managed care, where families in this category paid an average of $133 in out-of-pocket expenses.
Families with between $5,000 and $9,999 in eligible charges, however, paid an average of $285 more under a CDH plan than they did with managed care. Similar results were seen in high users. Under the CDH plan, employees with claims in excess of $10,000 paid an average of $1,645 in out-of-pocket expenses. Under the managed care plans in 2001, however, employees paid $1,385.
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