In a recent article on state healthcare insurance costs in Governing, journalist Heather Kerrigan makes mention of how Maryland’s new health insurance contracts seek to reduce costs through a carrot and stick mentality towards wellness.
Those who see a primary care physician, get a health assessment and follow up on recommendations made by the doctor will have their preventative care (including lab work, x-rays and some generic drugs) fully covered with no co-pay; while those who choose not to see a doctor or follow their advice will see their premiums rise by up to $375 per year by 2017. The state says it stands to save $4 billion in health-care costs over the next ten years.
The Maryland Reporter also covered the new health insurance contract’s approach,
The new health insurance contract emphasizes preventive care and patient wellness, rather than just fee for service. . . “Low preventive care use and poor treatment compliance cost the program over $700 million annually,” the Department of Budget and Management said in its submission to the board. “The new plans have participant incentives and penalties to encourage engagement.”
During the health insurance contract’s hearing before the Board of Public Works, Anne Timmons, Executive Director of the Maryland Employee Benefits Program described the program as follows,
So we’re going to give them [state employees] all these great incentives to participate [in the State’s wellness and disease management programs]. But if they still choose not to, well, we are going to have some penalties. For the first year it is a $50 per year surcharge, premium surcharge. And that is divided over their 24 pays for the year. And that is for not completing, not selecting a primary care physician and completing the health risk assessment. But if they are identified as somebody who has a chronic condition and the disease management reaches out to them, if they refuse to engage in that then they will be looking at a $250 premium surcharge that will be spread out over 2016.
And we are also going to hold our carriers accountable for helping us achieve these goals as well. So we have performance measures that will encourage the carriers to help increase the percentage of eligible members who are receiving preventive care, including cancer screenings; increased treatment compliance, especially with participants that have diabetes, hypertension, high cholesterol; increase the number of participants that have those conditions, have their numbers in a normal range, so get to where they want to be; reducing hospital readmission rates that occur with 30 days of discharge; and also cutting down on the number of emergency room visits by participants that have asthma, COPD, and diabetes. If they manage their care, they shouldn’t have to rush to the emergency room as often.
The cost benefits of this new contract, if we continue down the path with the exact same plans that we have in place right now, it is projected to cost us $20 billion over the next ten years. If we implement the contracts as awarded, we can avoid $4 billion of that cost in that same period. We do that by improved awareness and treatment compliance, which is going to flatten the trend line; improve preventive care usage, which will avoid the cost of acute inpatient admissions; and cost avoidance improves the sustainability of the program. And again, we want to be that employer of choice and being able to continue to offer a rich benefit package is key to doing that.