Mercy CDH Plan Provides Financial Rewards for Healthy Lifestyles

As seen in Inside Consumer-Directed Care - November 14, 2003

Rewarding employees with lower out-of-pocket costs for taking a more active role in their own health might do more to change behavior than would a health reimbursement arrangement (HRA) coupled with a high-deductible PPO, according to William Bennett, head of marketing and communications at Mercy Health Plans, a subsidiary of the St. Louis-based Sisters of Mercy Health System.

This year, Mercy rolled out its version of CDH, which it hopes will cut health coverage costs by encouraging employees to quit smoking, lose weight and follow national best medical practices to treat chronic illnesses.

Bennett detailed Mercy's experiences during a Nov. 10 session at the Consumer Directed Health Care Conference and Expo in Nashville, Tenn.  The conference was sponsored by Richmond, Va.-based The Emergent Group.

Provider-owned "health management company" Mercy operates in Missouri, Illinois and Texas.  Mercy administers health insurance, processes bills and educates members about ways to improve their overall health, Bennett explained.

"When we looked at the consumer-driven model, we though that there were some flaws," he said.  "We found that 85% of our members spend $1,000 or less on their health care, and giving $1,000 to all employees [in the form of an HRA] might increase demand."  Bennett added that an HRA-based model might cause chronically ill patients to avoid care if they face a high deductible.

Healthy Habits Required

Mercy's MyChoice CDH strategy is available only to self-insured employers, but it could be rolled out as a fully insured product at some point in the future, Bennett said.

Depending on how the employer structures the incentive, he said, employees enrolled in the MyChoice option can have out-of-pocket costs reduced by 10%, 15% or 20%.  Employees enrolled in the standard PPO, for example, might be responsible for 20% of coinsurance under a PPO, while MyChoice enrollees might pay only a 10% coinsurance, or pay lower premiums, for PPO coverage, Bennett said.

To qualify, employees must agree to adhere to or change lifestyle behaviors.  A diabetic, for example, might agree to work with a physician and follow a care plan.  All enrolled members must complete a questionnaire and a health risk assessment.  A registered nurse meets with employees at the beginning of the program to assess members and monitor progress.

Mercy's first client, Pohlman, Inc., an automotive components plant in Chesterfield, Mo., joined in March.  The company has about 300 employees, 76% of whom enrolled in the MyChoice plan.  About 80% of the company's 45 smokers who enrolled in the plan have been "smoke free" since July.  Two more employers plan to go live with the plan on Jan. 1, according to Bennett.

For more information, contact Bennett at wbennett@mhp.mercy.net.