Consumer-directed health plans: What they may mean for hospice
You will need well-informed consumers
There’s a new health care insurance game in town. And unlike other permutations of managed care, consumer-directed health plans give more purchasing power to consumers — and not their employers. This new model assumes that if consumers have more choices, the right financial incentives, and appropriate information, they will be better informed and more prudent users of care.
They also will spend less, proponents of consumer-directed plans say, which would ease some of the pressure of rising health care costs and offer employers a little relief from annual double-digit percentage increases. Generally, the plans give money for health care directly to employees, who then make their own choices about how to spend — or save — that money.
For now, consumer-directed health plans represent only a small portion of the marketplace. Their impact on the American health care landscape will only be known over time. The same holds true for the impact on hospice and end-of-life care. "It’s an evolving product line," says Steven Gardner, a health care consultant who advises the National Hospice and Palliative Care Organization in Alexandria, VA. "No one can be sure how it will evolve, since the market is so new."
According to those familiar with consumer-directed health plans, hospices with consumer-directed health plans in their market should not fear exclusion. By the same token, they should not dismiss these plans as benign entities, either.
According to a health care consulting group, a number of large employers have taken an interest in consumer-directed health plans, and some plan to change their health care benefits to include this new form of managed care in hopes of reversing the continuing increases in the cost of health care coverage.
As with most things new, caution is prudent. Yet, hospices also can look at the emergence of consumer-directed health plans as an opportunity, says Donald Sacco, chief strategist for My Health Bank, a Portland, OR-based provider of software and consulting services to consumer-directed health plans.
The frugal consumer
Consumer-directed health plans are based on the theory that if consumers have to pay a significant amount of money from their own pocket, then the perceived value of a visit to the doctor is more than it would be under a $10 copayment plan. From a hospice perspective, this could mean that a consumer who has accumulated money in an account and is suddenly faced with a potentially life-limiting illness could opt for palliative care sooner than traditional health insurance currently allows. Because the money is the consumer’s to spend, there are no restrictions on the health care services the consumer elects.
That’s how the theory goes, anyway. But the theory assumes that those making choices are:
- able to identify their interests;
- completely informed about the possible courses of action and their consequences;
- sensitive to differences among alternatives;
- able to make decisions that maximize their interests.
The linchpin, of course, is information. According to the AARP in Washington, DC, you can’t just assume people will choose what will best benefit them. To ensure consumers make the best choices for themselves, you must have an effective way to give them health care information. The same can be said for hospices. If hospices expect consumers to choose hospice care appropriately under this new payment method, the industry and individual hospices must do a better job of not only telling plan beneficiaries what hospice is but why it’s a wise choice.
Selling hospice to the public
Therein lies the opportunity, says Sacco. "Hospices were persistent with their message when they convinced Medicare that hospice care should be reimbursed," Sacco adds. "I don’t see why that same persistence can’t be applied to consumers."
Reaching consumers requires not only a strong message, but a campaign that addresses consumers’ concerns and an understanding of the challenges facing them. Within consumer-directed health plans, consumers face challenges related to both the initial decisions they must make and the ongoing day-to-day choices they make while seeking care. These challenges include:
- understanding information about options;
- identifying information relevant to their own situation;
- knowing the factors to consider in making a choice;
- integrating that information into choices, including differentially weighting factors and making trade-offs among factors;
- understanding the implications of choice for personal financial and health risks and considering those risks when making choices.
Although consumers face most of these challenges in more traditional health coverage options, the stakes — both personal and financial — are potentially far greater. The AARP cites a number of provider challenges. While these challenges are general, hospices can address the same concerns as they begin their education of consumer-directed health plan beneficiaries. The challenges include:
Helping consumers understand their risks and make choices that protect against events that are not currently salient. Hospices must help consumers understand the risk of not considering end-of-life care options, even when the consumer is in good health and not facing chronic or long-term illness.
Helping people make trade-offs and decisions that will enable them to achieve their goals. Hospices can help advance the message that day-to-day choices about health care may have financial and health consequences, including decisions about: when to seek care; selecting providers; spending the personal spending account vs. saving funds for a future serious illness; and seeking care once the account is exhausted.
Helping consumers make good choices on a day-to-day basis about when it is necessary to seek care and assisting them in making good choices about the kinds of care they need. A longstanding hurdle for hospice has been the need to convince payers, physicians, and patients that hospice offers its greatest benefit when accessed early. The challenge of conveying this message about when to seek hospice care will spill over to beneficiaries of consumer-directed health plans.
Giving consumers complete and relevant information that helps them integrate all important factors, including quality and cost information, into the selection of providers. Recently, the hospice industry has collected data regarding the cost-effectiveness and advantages of hospice care. Hospices must find a way to merge data with anecdotal information to help consumers see the benefits of hospice.
Helping people make choices that will allow them to better forecast and then balance current wants with possible future needs, and assisting them in understanding the meaning or potential impact of the risks they are assuming. Perhaps the tallest order of them all: to open a dialogue on end-of-life issues. The challenge here is to get consumers to talk about death and how they want to be treated during this final stage of life.
The challenges listed above represent opportunities — the chance to promote hospice care to a new market. Yet, this doesn’t represent a great departure from the challenges and opportunities hospices face with their traditional payers. With Medicare, for example, patients still must be encouraged to raise the question of hospice with their physician, and physicians must be educated about the appropriate time to certify a patient as terminally ill.
Failure to educate beneficiaries of consumer-directed health plans will likely have consequences as the market grows and evolves. For now, the model involves consumers choosing from a menu of health plans, each with varying types of coverage. Chances are that hospice care, as with most managed care health plans, is an included benefit. Therefore, the consequence of having poorly informed patients will be much the same as it is with today’s stable of payers: late referrals or no referrals at all.
What if consumer-directed health plans evolve to become a boutique of health care services, where plan beneficiaries pick and choose the type of services they want given a budget of money to spend? The consequence is far more drastic. Rather than losing referrals, hospices will lose access to patients.
For now, Sacco doesn’t see consumer-directed health plans, as a whole, moving in that direction, although some could emerge to test the boundaries of the marketplace. Whatever the future holds for consumer-directed health plans, Sacco advises hospices to continue trying to convince the public that hospice is a worthwhile health care expense and experience. "When it comes right down to it," he says, "even if you’re talking about Medicare, the real trick is to convince the patient and family to accept hospice."
Theres a new health care insurance game in town. And unlike other permutations of managed care, consumer-directed health plans give more purchasing power to consumers and not their employers. This new model assumes that if consumers have more choices, the right financial incentives, and appropriate information, they will be better informed and more prudent users of care.
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