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TN Plans Encouraged to Give "Good Driver Discounts"

Proposed recommendations for the Tennessee Health Insurance Exchange encourage health plans and employers to establish expectations about personal responsibility and engagement through benefit designs in the Exchange.   The wellness program could provide some sort of "good driver discount" in the form of a lower premium or other incentives to those enrollees who satisfy these standards. Having the exchange plans offer these incentives will make it easier for larger employers too!

Here is an excerpt from the "Best Alternatives to a Federal Insurance Exchange in Tennessee" published by the Tennessee Insurance Exchange Planning Initiative on October 21, 2011.

" Overview Stakeholders have emphasized that wellness is a significant concern and the “on-boarding” of newly-insured enrollees offers an opportunity to set expectations in this regard. The PPACA requires plans to implement wellness programs and provide services that will encourage and enable enrollees to improve their health status. PPACA also removes the ability of issuers to consider the health status of people enrolling in health plans when establishing premium rates. The law requires issuers to accept all eligible applicants regardless of an individual’s health status. Wellness incentives and rewards must comply with other federal rules related to nondiscrimination.

Options Available to Tennessee If Tennessee operates the exchange, the state would have the opportunity to emphasize the importance of prevention and wellness by harnessing the power of market-based solutions. Accordingly, the exchange may create incentives designed to support and coach enrollees to maintain healthy lifestyles and take responsibility for their medical conditions.

The State of Tennessee recently implemented a large, program-wide wellness incentive for the 200,000+ adults in its public employee health plans. Beginning in 2011, the State offers a "Partnership PPO" with a lower premium and low member cost-sharing -- but eligibility is predicated on the member's completion of a health questionnaire, biometric screening, etc. Members who do not agree to the terms of this "Partnership Promise" must enroll in the Standard PPO, which has a higher premium and higher member cost-sharing.

In developing in the Partnership Promise, the State conducted an exhaustive review of the scientific literature, government reports, available unpublished manuscripts, and materials from the National Business Group on Health and others. Though this process, we were able to tailor an approach that we felt would be most likely to succeed in our market.

Tennessee’s approach was inspired in part by approaches akin to that described by Ian Ayres of Yale Law School in his book, "Carrots and Sticks." He cites on example of BeniComp, an Arkansas-based company, that has achieved renown for its wellness efforts:

  • BeniComp Advantage has caused a stir in the group insurance industry by providing companies with plans that lower an employee's deductible by hundreds of dollars each year if the employee meets certain National Institutes of Health wellness goals. 'It's like a good-driver discount for health insurance,' [BeniComp President Doug] Short said. For example, in Benton County, Arkansas, the BeniComp plan came in and raised health-care deductibles for county employees from $750 in 2004 to a whopping $2,750 in 2005. But the employees can reduce their deductibles to as low as $500 if they don't smoke, are not overweight (with a BMI of less than 24.9), and have low cholesterol (LDL under 160), low blood pressure (lower than 140/90), and low glucose (under 126).

In essence, the wellness program could provide some sort of "good driver discount" in the form of a lower premium or other incentives to reward enrollees who meet specific health measurement criteria that are within their control. To comply with federal non-discrimination requirements, though, there would need to be reasonable alternatives to qualify for incentives for those enrollees for whom it is unreasonably difficult or medically inadvisable to achieve the standards.

Specific options available to the state to increase the utilization of wellness programs in exchange plans include:

  • Provide incentives for health plan issuers who develop innovative wellness programs; and/or
  • Require QHPs to include in their consumer publications and on-line plan materials detailed information describing wellness program services and how the company protects the privacy and personal health information of all program participants.

With respect to risk assessment or questionnaires, stakeholders noted that consumers could confuse these with medical underwriting practices (which the PPACA prohibits beginning in October 21, 2011 2014). Stakeholders suggest that any health risk assessment process occur only after an individual has enrolled in a plan. As a practical matter, such questionnaires should be at least 30 days following the completion of enrollment in order to reduce confusion among new members about enrollment, coverage and the new incentives.

Ensuring a Stable and Competitive Market Wellness programs provide a valuable opportunity for health plans to identify enrollees at risk for health problems and work with enrollees to develop a patient-specific program for achieving maximum health care results. A successful, market-based program will not only improve the health of enrollees and prevent future complications among those with chronic conditions, but will also encourage personal responsibility and provide enrollees with the information they need to take control of their personal health care. The state will continue to work with health care experts and behavioral economists to identify additional program options that are compliant with federal requirements, and invites stakeholder input to on wellness incentives in exchange plans."

Read the full white paper.

Posted by Cristie Travis at 8:19 PM

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