State Plan Offers Employees Incentives To Access Needed Services and Health Enhancement Activities, Leading to High Participation, More Appropriate Utilization, and Slower Cost Growth
State Plan Offers Employees Incentives To Access Needed Services and Health Enhancement Activities, Leading to High Participation, More Appropriate Utilization, and Slower Cost Growth
To enhance health and control long-term health care costs, the State of Connecticut offers its employees, select retirees, and their dependents the option of enrolling in a new benefit plan known as the Health Enhancement Program. Enrollees enjoy several financial benefits over those who do not enroll, but also must meet various requirements to remain in the program, including obtaining age- and gender-appropriate assessments and screenings and disease management services. As an added inducement, those with one or more of five targeted chronic diseases who meet all plan requirements qualify for an annual incentive payment. Enrollees receive regular reminders about unmet requirements and have access to tools that help them meet these requirements. The program has attracted the overwhelming majority of eligible individuals, and more than 98 percent of enrollees have met all program requirements to date. Early trends data indicate increased use of primary care services, reduced specialty and emergency department visits, and improved screening and medication adherence. These improvements have collectively contributed to a slowdown in the growth of overall health care spending. A more formal evaluation will be available in 2014.
Date First Implemented
Open enrollment for the new plan commenced in October 2011.
The rapid growth in the costs of employer-sponsored health coverage stems, in part, from a failure to require or encourage beneficiaries to engage in their health and health care, including seeking appropriate care, choosing high-value providers and services, and following healthy lifestyles.
- No requirements for beneficiaries: Like most employer-sponsored plans, the State of Connecticut imposed few requirements on employees and dependents with respect to engaging in their own health and health care before implementation of this program. The existence and level of benefits did not depend on their obtaining needed care (including appropriate disease management services), choosing high-value providers and services, or following healthy lifestyles.
- Few if any financial incentives: Like most others with employer-sponsored coverage, State of Connecticut employees and their dependents had little if any financial incentive to engage in their health and health care or to choose high-value providers and services. Before implementation of this program, monthly premiums, annual deductibles, and copayments did not vary based on their behaviors and choices. In addition, they typically had little “skin in the game” from a financial perspective, as they enjoyed relatively modest cost-sharing requirements, including no copayment for high-cost emergency department (ED) care, even for nonemergency situations when alternative care sites were available.
Description of the Innovative Activity
The State of Connecticut offers its employees, select retirees, and their dependents the option of enrolling in a new health benefit plan known as the Health Enhancement Program (HEP). HEP enrollees enjoy several financial benefits, but also must meet various requirements to remain in the program, including obtaining age- and gender-appropriate assessments and screenings and disease management services. As an added inducement, HEP enrollees with one or more of five targeted chronic diseases who meet all requirements qualify for an annual incentive payment. Enrollees receive regular reminders about unmet requirements and have access to various tools to help in meeting them. Key program elements are outlined below:
- Financial incentives to enroll in voluntary plan: State employees, some retirees (those retiring after October 1, 2011), and their dependents can choose to enroll in the plan, either through an online portal or paper application. Enrollees enjoy several financial benefits over those who choose to remain in the traditional plan, as outlined below:
- Lower premiums: HEP enrollees pay lower premiums each month, as nonenrollees pay a $100 monthly surcharge. For the typical individual, this surcharge raises the dollar contribution to the premium by 50 to 100 percent.
- Lower deductibles: Enrollees have no annual deductible, a savings of $350 per person or up to $1,400 per family versus those who remain in the traditional plan.
- Enrollee requirements to maintain eligibility: HEP enrollees agree to meet various requirements related to getting appropriate care (outlined below). Those who fail to do so can be removed from the program, with adherence verified through claims data or self-reports (used when claims-based verification is not possible). The following required services are free to all HEP enrollees:
- Age- and gender-appropriate screenings: Enrollees agree to obtain age- and gender-appropriate health risk assessments and evidence-based screening tests, including an annual physical and visual examination and two dental cleanings per year for those with dental insurance.
- Appropriate disease management and engagement in health: Enrollees who have diabetes, hyperlipidemia (high cholesterol), hypertension, congestive heart failure (CHF), asthma, and chronic obstructive pulmonary disease (COPD) agree to access appropriate disease management services offered by third-party administrators. HEP program leaders are in the process of expanding these requirements to incorporate enrollee engagement in their health, with work underway to determine the best way to measure such engagement. Among others, metrics being considered include how often the enrollee accesses the program's portal/Web site or engages in conversations with nurse counselors.
- Additional incentives to encourage compliance: The plan design incorporates additional financial incentives to encourage enrollees to meet the aforementioned requirements, as outlined below:
- Little or no copayment for drugs, office visits: HEP offers either low or waived copayments for needed medications and office visits. Copayments for all office visits for chronic conditions are waived (compared with $15 for nonenrollees), as are copayments for all diabetes drugs. Copayments for medications to treat other chronic conditions (hyperlipidemia, hypertension, heart disease, asthma, CHF, COPD) are tiered depending on the drug chosen: $0 for generic drugs, $5 for preferred brand drugs, and $12.50 for other brand drugs. In contrast, nonenrollees pay higher copayments ($5, $10, and $25) for these three classes of drugs.
- Annual incentive payment: Any enrollee with one or more targeted chronic conditions who meets all HEP requirements for the year receives a $100 incentive payment. To qualify, any dependents (i.e., spouse or children) covered by HEP who have a targeted condition must also meet all requirements for the year.
- Tools, reminders, and other support: HEP sends regular reminders to enrollees about their status with respect to the requirements, and offers tools to help people monitor their compliance and access needed services.
- Periodic communications: During the program's first year, enrollees received a series of e-mails or mailed letters that updated them on their compliance status, including congratulatory communications for those who had met all requirements and a status report for those who had not, including a list of unmet requirements and a reminder to complete them by the end of the program year. As the pool of noncompliers dwindled, staff made outreach telephone calls to those still not in compliance.
- Online tools: During the program's first year, enrollees could log in to a secure, online portal where they could see their current compliance status, including any unmet requirements. The portal also offered a way to self-report certain information, such as if the enrollee had seen a physician within the last 3 months for a visit that had not yet been captured via claims data. During the second year of the program, this online portal is being replaced by a more comprehensive Web site that will offer the same functionalities along with additional tools to promote compliance and engagement in one's health, including educational materials on wellness and disease management and the ability to chat online with a nurse.
- Nurses and health navigators: Under a contract with a local company (ConnectiCare), a team of 10 nurses and 2 health navigators support those with the targeted chronic conditions in meeting HEP requirements and engaging in their health.
- Clinician portal: HEP is currently creating a new portal that will allow physician practices to link their electronic health record (EHR) systems to other information on HEP enrollees. As a result, they will be able to download a detailed patient profile in advance of patient visits. The profile will include all claims and utilization information, thus giving practices up-to-date information on what services and support a patient might need. This portal will initially be open only to patient-centered medical homes (PCMHs) that are accepting new patients, but will be expanded to other physician practices over time. (The Planning and Development Process section provides more details on how HEP works with PCMHs and other primary care practices.)
- Modest ED copayment for everyone: As a separate part of this initiative, all State employees and dependents (including those not enrolled in HEP) must pay a $35 copayment for ED visits when a “reasonable medical alternative” exists and the beneficiary is not admitted to the hospital.
Context of the Innovation
Connecticut's Office of the State Comptroller provides accounting and financial services to the State; administers employee and retiree benefits (including health benefits for employees, retirees, and their dependents); develops accounting policy; exercises accounting oversight; and prepares financial reports for State, Federal, and municipal governments and the general public.
The impetus for this program goes back to the mid-2000s, when the Health Care Cost Containment Committee (a joint labor-management committee created in the 1990s as part of the State's collective bargaining process) began evaluating utilization patterns and cost trends within the State's health benefits plans. Working with a consultant, the committee identified several areas of “low-hanging fruit” where costs could be reduced and quality improved. The committee then began to explore the potential to use a value-based insurance design to realize these improvements. Union leaders, however, remained reluctant to implement such changes, and preferred to remain with the provisions of the most recent collective bargaining agreement, which guaranteed no changes to benefits through 2017. In 2009, Connecticut began to experience a severe economic downturn that ultimately led to the loss of 100,000 jobs (a high number for a small State) and the State income tax revenues associated with these jobs, including significant revenues from the many financial services companies and hedge funds headquartered in Connecticut. Thanks largely to Federal stimulus funds and borrowing to cover operating costs, Connecticut overcame the 2009 and 2010 budget seasons.
When the new governor came into office after the 2010 elections, Connecticut no longer could rely on these funding sources, and consequently faced a $3.8 billion projected budget deficit in fiscal year 2012. In response, the governor asked the unions to accept changes to its health benefits plan, including traditional cost-shifting mechanisms such as higher deductibles and copayments. If they refused to accept these changes, the governor indicated that significant layoffs would occur. After a lengthy series of negotiations, the unions agreed to modify the previous agreement if the governor would abandon the cost-shifting strategy. Instead, the unions requested support to develop a value-based insurance design that focuses on ensuring appropriate utilization and long-term cost control.
The program has attracted the overwhelming majority of eligible individuals, and 98 percent of enrollees have met all program requirements to date. Early trends data indicate increased use of primary care services, reduced specialty and ED visits, and improved screening and medication adherence. These improvements have collectively contributed to a slowdown in the growth in overall health care spending.
- Near universal acceptance and compliance with requirements: The overwhelming majority (98 percent) of the approximately 54,000 eligible employees and retirees voluntarily enrolled in HEP. During the program's first year, 99 percent of these individuals met all program requirements. At present, this figure has declined slightly, but still remains above 98 percent.
- More primary and less specialty care: Monthly primary care visits increased from roughly 12,000 in July 2011 (before the program's launch) to approximately 21,000 in May 2012 (after the launch). Over the same time period, specialty visits fell from 24,000 to 19,000 per month and ED visits fell from 3,500 to 2,700 per month.
- More screening and better medication adherence: Since the program's launch, the proportion of eligible enrollees getting recommended cholesterol screenings and colonoscopies increased modestly among active employees and retirees. Over the same time period, the proportion of enrollees with various chronic conditions who are adherent with their medication regimens has also improved modestly, including for CHF (84.7 to 86.3 percent), diabetes (69.9 to 72.2 percent), hypertension (75.1 to 76.0 percent), and hyperlipidemia (72.3 to 74.5 percent).
- Slowdown in overall spending: Per-member per-month (PMPM) health care costs for active employees grew at an annual rate 2.2 percent during the 15-month period after HEP went into place, well below the 8.9-percent rate during the 2.5-year period before implementation.
- More formal evaluation to come: Because the trends outlined above are preliminary in nature and cannot be definitively attributed to HEP, the University of Michigan Center for Value-Based Insurance Design is comparing trends in utilization and expenditures among HEP enrollees to a control-group population; results should be available in 2014.
Planning and Development Process
Key steps included the following:
- Forging consensus on plan design: Negotiations between the governor and the unions began in early 2011, with the goal of having something in place by the beginning of the next plan year (July 1, 2011). Representatives from the Office of the State Comptroller (which administers benefit plans for employees) also participated as a neutral party. An outside consulting group (Milliman) worked with the parties to develop various plan design proposals and estimate the financial impact of each.
- Rejection of initial plan: The unions rejected the first plan design in May 2011, in part due to the spreading of inaccurate information about plan requirements (including that employees would be required to enroll in Connecticut's Medicaid plan).
- Agreement and ratification of second plan: Union leaders decided to try again, tweaking some language and adding certain “guarantees” to the agreement, including that no one would be required to enroll in Medicaid. This second plan was ratified by 80 percent of union members in August 2011.
- Adjusting plan year: During the negotiations, primary care physician (PCP) practices alerted program leaders to the potential for capacity issues related to scheduling annual physicals and other preventive services. For this and other reasons (including that July 1, the normal start of the plan year, had already passed), program leaders decided to implement the initial HEP plan on October 1, meaning that the first plan “year” would last only 9 months. The combination of the late start and capacity concerns led program leaders to adjust various enrollee requirements for the first year, including extending the deadline to comply until the end of calendar year 2012, effectively giving enrollees 15 months to meet them.
- Collaborating with medical community: The Office of the State Comptroller engaged several graduate students to work with the State medical society to survey all PCPs to see if they were accepting new patients and if they had been designated as a PCMH or planned to secure such a designation within the next 18 months. This information assisted with the development of an online tool to help enrollees without an existing PCP find one. In conjunction with the survey, PCPs also received information about HEP, including their roles and responsibilities. PCPs generally responded quite positively to this message, and the communication process served as a way to correct a misconception among some PCPs that their practices would have to absorb the waived copayments. In reality, the State absorbs this cost and PCPs receive the same amount of money they did previously.
- Partnering with disease management vendors: For the first 18 months, United Healthcare and Anthem continued to manage the provider network, pay claims, and provide care management to those with targeted conditions, as they had with other plan offerings offered by the State. After HEP launched, program leaders asked the two companies to refine their existing chronic care management programs to the unique characteristics of HEP, but ultimately decided that these programs were not adequate. As a result, the Office of the State Comptroller issued a request for proposal for development and operation of a data warehouse and chronic care management program specifically for HEP enrollees. After reviewing 14 bids and conducting 11 interviews, program leaders chose ConnectiCare to provide disease management services (due in part to its local presence and existing relationships with physician practices) and InforMed, LLC to create and run the data warehouse.
- Ongoing refinements and expansion: Program leaders continue to evaluate, refine, and expand HEP. In addition to incorporating requirements and metrics related to enrollee engagement and integrating with provider EHRs (as noted earlier), they are planning efforts to raise awareness of alternative care sites to the ED, promote use of PCMHs, and extend the program to municipal-level employees and their dependents.
Resources Used and Skills Needed
- Staffing: The Office of the State Comptroller hired two additional staff to help administer HEP.
- Costs: Upfront development costs consisted primarily of fees paid to outside consultants to help develop various plan proposals and analyze their estimated impact on costs, and to develop the online portals and other support tools. On an ongoing basis, the incremental costs consist primarily of salaries and benefits for the two new staff members (roughly $150,000 to $200,000 a year). As noted, growth in overall PMPM health care costs have slowed since the program began.
The Connecticut legislature authorized the funding to cover the salaries and benefits for the two new staff members hired for the program.
The Robert Wood Johnson Foundation's State Health Access Reform Evaluation (more commonly known as SHARE) provided funding to the University of Michigan Center for Value-Based Insurance Design to support the ongoing formal evaluation of the program.
Through the governor's office, Connecticut currently participates in the Center for Medicare & Medicaid Innovation State Innovation Model (SIM) program. The State recently received a SIM planning grant that will be used to test whether provider payment reform is more effective on its own or when combined with value-based insurance design programs such as HEP.
Tools and Resources
The University of Michigan Center for Value-Based Insurance Design offers a variety of tools and other resources to assist in implementing value-based insurance designs. More information is available at: http://vbidcenter.org/.
Getting Started with This Innovation
- Explain merits versus alternatives: Public and private employers interested in creating this type of program must explain and sell the benefits to affected employees and families. The program should be positioned as a more effective and palatable alternative to traditional cost-shifting mechanisms such as higher deductibles and copayments. Messages should emphasize that value-based insurance designs often reduce out-of-pocket costs for those who make value-based choices and engage in their health.
- Keep debate focused on specific plan: In selling the plan to the unions, program leaders faced significant communication challenges, as many employees ended up confusing the value-based insurance design concept with a parallel discussion going on in the Connecticut legislature. The legislature was considering creation of a quasi-public organization that would manage the State employee health benefit plans, Connecticut's Medicaid program, and eventually a public insurance option for those in the private sector. This simultaneous debate ended up causing massive confusion among rank-and-file union members as they considered the HEP proposal, including the mistaken belief that they would be forced to enroll in Medicaid.
- Leave time to plan for initial enrollment: Delays in securing union ratification left little time to conduct outreach and get people signed up for the program. Ideally, adequate time would exist to design the benefit and to conduct outreach in advance of the go-live date.
- Determine metrics to evaluate compliance: To the extent possible, the precise metrics that will be used to determine if an individual has complied with the various requirements should be specified in advance. Due to the compressed time frame in Connecticut, HEP leaders ended up doing some of this work after implementation.
- Incorporate meaningful incentives: Just by signing up, HEP enrollees qualify for tangible savings of nearly $2,600 a year for a family of 4 ($1,400 from the waiver of the deductible and $1,200 due to lower monthly premiums). They also have the potential to save additional money through lower copayments for office visits and other services, and have the opportunity to qualify for a year-end incentive. The magnitude of these incentives played a major role in achieving high participation and compliance rates.
Sustaining This Innovation
- Provide multiple mechanisms of support: Along with financial incentives, enrollees need additional help in complying with plan requirements, including regular reminders and Web-based information and tools. Anyone not in compliance should receive ample notification so that he or she will have time to rectify the situation. This advance warning also ensures that noncompliant enrollees will not be surprised when they are forced to leave the plan.
- Start with simple requirements, expand over time: The HEP plan design initially incorporated relatively simple requirements related to preventive care and chronic disease management. Over time, program leaders are considering the addition of more complex requirements, such as requiring that employees demonstrate engagement in their health and health care.
Contact the Innovator
Note: Innovator contact information is no longer being updated and may not be current.
Office of the State Comptroller
55 Elm Street
Hartford, CT 06106
Phone: (860) 702-3389
Mr. Wojcik reported having no financial or business/professional relationships relevant to the work described in this profile.
The University of Michigan Center for Value-Based Insurance Design. V-BID in Action: A Profile of Connecticut's Health Enhancement Program. V-BID Center Brief. January 2013. Available at: http://vbidcenter.org/wp-content/uploads/2014/10/V-BID-brief_CT-HEP-final.pdf.