With its new medical savings accounts, Aetna is embracing an idea that could turn managed care on its ear.
Introduced in September, the Aetna HealthFund isn’t about insuring against routine medical costs or controlling access to care. Instead, it’s a “consumer-driven” plan designed to give individuals more choice but also more responsibility for their health.
“We think a consumer-driven system will emerge over time,” says Aetna CEO John Rowe, calling it a “mitigating factor” against medical cost inflation. The theory is that consumers covered by employer-sponsored plans have been too insulated from the real cost of care. Conversely, educated consumers who feel they have some “skin in the game” could be a powerful force for controlling costs.
As of early summer, Aetna had eight customers for the new plan, including Levi Strauss and Toys”R”Us.
The parameters can vary, but here’s an example:
An employer gives each employee $2,000 a year in an account dedicated to paying medical expenses. Employees also receive an old-fashioned health insurance plan with a $4,000-a-year deductible. Employees get two incentives to stay healthy and manage their own medical costs. First, if they exhaust the amount in their health fund, they are personally responsible for the next $2,000. Second, except for funds earmarked for prevention, money left at the end of the year can be accumulated to provide richer benefits and less risk. (This “rollover” feature is one of several things that distinguishes medical savings accounts from “flexible” spending accounts, two funding mechanisms defined by different federal laws.)
“To the degree that people see it as their own money, we get people realizing that doctor’s visits aren’t $10, and Prilosec isn’t $15,” says Michael Parkinson, chief medical officer at Lumenos Inc., an Alexandria, Va.-based startup focused on offering consumer-driven plans.
Employers are looking for alternatives in the face of accelerating medical costs, expected to rise another 12.7% this year. In a pure “defined contribution” approach, they would give employees a flat subsidy toward purchasing health coverage. Lumenos and another startup, Definity, pioneered the model Aetna is mimicking, in which the employer’s fixed contribution to a medical savings account is backed up by traditional insurance against catastrophic illness. Other large plans use tiered co-pays that are more proportional to the real cost of more-expensive versus less-expensive drugs, or doctors, or hospitals.
Aetna adapted a flexible-spending account claims system to support its new medical savings account. The HealthFund also leans on Aetna Navigator, which provides personalized Web sites, allowing members to monitor and manage their medical savings accounts and claims status. Aetna also sees its InteliHealth Web site—a consumer health information portal—and its U.S. Quality Algorithms (USQA) medical data warehousing and analysis business as assets for giving consumers the cost and quality information required for informed choices.
But Lumenos CTO Chad Pomeroy thinks he has an edge in that all his systems, from the Web site to claims processing, revolve around the new business model. With no constraints from prior history, he was able to create “best of breed” systems around software from Siebel Systems for customer service and QCSI for claims processing, he says. “The nice thing about being a startup is you get to start with a clean slate.”
The Web is fundamental to consumer-driven plans. One of the biggest challenges is helping consumers not be overwhelmed by guiding them through the trade-offs between cost and quality. For example, you ought to be able to see whether the more expensive heart surgeon delivers a better survival rate, with fewer complications.
“My major concern as a physician is that we don’t really have the information on quality out there for patients to make the informed decisions we want them to make,” says Marjorie Schulman, a senior medical director at Aetna.
Aetna has a head start on creating such resources because of the USQA data warehouse, successfully used to drive its preventive-care programs. For example, by identifying and educating asthmatic members it was able to drive down the frequency of asthma attacks requiring emergency room visits by 22% for children and by 13% for adults. The same sort of approach can help HealthFund members manage their health quality. But to date, USQA’s analytics have been designed for internal use and for corporate benefits managers, rather than to be accessed by consumers over the Web.
How important this market will prove to be remains uncertain. But Rowe quotes an executive at one big customer as saying, “We bought your business this year because you had this defined contribution product, and Cigna and UnitedHealth didn’t, and we thought it was time to get some experience with this—and give employees some skin in the game.”
