Software allows wellness to speak ‘actuary-ese’
Software allows wellness to speak actuary-ese’
Program specifically targets MCO underwriters
If you can’t beat em, join em. That’s precisely the strategy that Richard Kersh, MEd, president of Russellville, AR-based Kersh Wellness Management, has taken in his effort to help clients cut health care costs.
The service and research company, which implements and designs corporate wellness programming, has been in business for 10 years. During those years, Kersh has seen a troubling trend.
"We’d go to the human resource manager to show our reports, which would show that risk factors like weight and blood pressure were down, and that this related directly to health care costs," he recalls. "The HR person would say, Great, but insurance costs are not my decision.’"
Who does make that decision? As Kersh learned, it’s the insurance company or MCO’s underwriter. What’s more, he learned, they take little note of individual companies in determining premium rates. "They take basic information down average age/sex ratio [of employees], the industry the company is in, and the past year’s utilization," he explains. "Then, they forecast from that."
Going to the source
About two years ago, Kersh started "chasing" insurance actuarials to further understand what they were looking for. "Basically, all they do is take a little real data and plug it into an actuarial program that compares this group to normative data," he notes. "But if you’re a wellness professional, you do not want to be the norm."
"When you are group-rated, you could be treated unfairly if you do a great deal to make employees healthier and safer," adds Ed Strouth, MS, senior manager in corporate safety and risk management at Anheuser-Busch Companies Inc. in St. Louis. "With software that can plug in real numbers, you may be able to negotiate better premiums. Benefits people would respond to that."
And that’s just what Kersh proposed to the actuaries he contacted. "I asked them, would it not be more accurate if I had real data from a wellness program, rather than normative data? They said, Of course it would be more accurate.’ So, I designed software that takes ICD-9 codes and predicts utilization. It’s based on what the University of Michigan showed in its Steelcase study that as wellness risk factors increase, there’s a greater chance of utilization."
Kersh Wellness Management is currently working with Anheuser Busch on an outcomes-based wellness program that will gather risk-related data that ultimately will be presented to the company’s insurance carriers. The program pilot was initiated in a Jacksonville, FL, facility, in June 1997. Programs in St. Louis and Newark, NJ, have just begun. (See Risk Stratification of Employee Population at Three Locations, p. 29.)
The population at each facility is broken down into low, medium, and high-risk. Kersh is using the 14 risk factors first identified by the University of Michigan Health Management Research Center in Ann Arbor, MI. (See complete list, at left.) After a year, utilization rates for each group are studied. "If a person goes from a 4 risk factor to a 3, utilization prediction goes down. Also, we can do what ifs,’ take out one or two risk factors, and predict what the change in utilization will be," Kersh explains.
When Strouth asked for an "outcomes-based" wellness program, Kersh recalls, what he really wanted to know was how to bring managed care to the wellness table. "We said outcomes-based wellness is a benefit to managed care because it increases the MCO’s financial return. Also, it helps them meet NCQA (National Committee for Quality Assurance) accreditation; several sections within HEDIS 3.0 are related to outcomes-based wellness and prevention, and this software program fits totally with NCQA."
What his company is doing, he explains, is "Capturing data that is very important to NCQA. It measures quality of care and outcomes of outreach.
Identifying high-risk employees
One year after the start of the program, says Kersh, Anheuser-Busch will receive a corporate report describing the aggregate status of the employee population. "Then we will generate a high-risk audit’ which identifies individuals in one of the three risk categories," he adds. "A report with the names on it goes to counselors; another is statistically generated for the employer and the managed care company."
The second page of the risk audit will show risk swings and forecast changes in utilization.
"Another reason for the data is that we are trying to identify those initiatives and events that really make a difference," says Strouth. "We will match them up with health care costs; as we go through each event Kersh will tag’ individual participants to track those costs."
But the bottom line, says Kersh, is that "It empowers the employer to negotiate with their insurers. He can sit down at the front end with the insurer, see how the group is rated now, and pose this question: If we accomplish A, B, and C, and present it in actuarial terms, will this allow us to be proactive in reducing our costs?"
He may have reason to be optimistic: When asked by Anheuser Busch to participate in the current study, three insurers United HealthCare, CIGNA, and The Principal, came forward to pay for a portion of the testing protocol.
[For more information, contact: Richard Kersh, Kersh Wellness Management, 1215 East 14th Street, Suite A, Russellville AR, 72801. Telephone: (800)-467-3005. Fax: (501) 968-8780.]
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