The high-deductible trap

Late in May, one of Dr. Thomas Albani's patients came to see him after she had detected a lump in her breast.

“She knew she had this for a couple of months, but she didn't do anything about it,” said Albani, a family physician in Youngstown, Ohio.

The patient's husband was already coping with a prostate cancer scare. The looming threat of paying down a high deductible had kept her away from the doctor's office. “Unfortunately, in her situation, she now has a breast cancer that's further along than it should be because she kept putting it off,” Albani said. “And that was all due to her high deductible.”

Since a famous RAND Corp. study came out more than three decades ago, it has been well documented that out-of-pocket expenses influence people's health choices, and not always in a positive direction. High deductibles lead people to cut back on both less effective services and on interventions that matter.

This patient failure to discriminate between high- and low-value services runs counter to another cost-cutting effort—accountable care, which depends on patients receiving timely treatments, having their chronic diseases better managed and having them take advantage of preventive screenings. A growing number of experts fear erecting high deductibles on the path to healthcare could backfire by undermining moves to save money through encouraging high value services.

“The high-deductible health plans are working against what we're trying to do in the accountable care movement, which is to eliminate barriers to access to physicians, particularly primary-care doctors, and to eliminate barriers to prevention and wellness,” said Dr. David Shulkin, president of the Atlantic Accountable Care Organization, a group of hospitals and doctors in New Jersey that coordinates patient care. “This can be potentially harmful to us.”

Reductions in healthcare utilization—and the resulting effect on costs—are the key reason why high-deductible health plans have spread like wildfire across the U.S. The biggest drivers have been employers seeking to slow the growth in premiums by having employees spend down a deductible before their benefits kick in.

A survey by Towers Watson, published this year, found that firms with at least half of their employees in an account-based health plan (which typically includes a high deductible) spent $1,000 less per employee than companies without this type of health insurance plan.

Already, 19% of workers with health insurance were covered by a high-deductible health plan that offered some sort of savings account to pay for the deductible (at least $1,000 in this case), according to a survey by the Kaiser Family Foundation. That's up from just 4% in 2006. The popularity of those types of plans is expected to only grow.

The definition of a high deductible can vary, but the Internal Revenue Service sets the threshold at $1,250 for an individual and $2,500 for a family. Often those types of insurance plans are paired with a health savings account, funded either by the member or the employer.

The number of people with a high-deductible plan—both in the individual and group markets—rose from 1 million in 2005 to 13.5 million in 2012, according to

America's Health Insurance Plans.

High-deductible plans have the potential to yield massive spending reductions in healthcare. A study published last year by researchers at the RAND Corp., the University of Southern California and Towers Watson predicted a drop in annual healthcare spending of $57 billion if high-deductible plans are taken up by 50% of employers.

Employers are expected to continue shifting employees onto high-deductible plans, and the forthcoming health insurance exchanges will include a high deductible on the menu. For example, the “bronze” plan under Covered California, the state's new health insurance exchange for 2014, includes a $2,000 deductible, which is the upper limit for an individual deductible for the exchanges.

Furthermore, 90% of account-based health plans offered by employers look as if they will exceed the Patient Protection and Affordable Care Act's standards for coverage, according to an analysis by Towers Watson.

But even as employers are pushing their workers into high-deductible plans, they are encouraging their insurers to demand value-based payment models from providers, in particular, accountable care organizations.

Provider organizations in ACOs take on some financial responsibility for limiting the cost of care, even as they seek to achieve a “triple aim”: cost containment, patient satisfaction and improved health outcomes.

According to tracking efforts by David Muhlestein, a senior analyst at consultancy Leavitt Partners, there were just a few ACOs in 2010, but by early 2013, there were more than 400. Muhlestein said high deductibles have not been much of a focus for ACOs because their target populations rarely overlap.

High-deductible plans are usually picked up by the healthier, younger segment of the population, while ACOs have been mostly tried with the biggest healthcare spenders. The biggest potential cost reductions can usually be found by providing more cost-effective care to the sickest, oldest and usually most expensive patients.

“I really think both are going to grow, and there will be overlap,” Muhlestein said.

High-deductible insurance and ACOs clearly have a common goal in working to slow the rise in healthcare costs, but some experts fear their different approaches may clash.

On the cost side, ACO leaders agree that high-deductible health plans can lower overall spending. A RAND study from 2011 found that families who switched from a conventional insurance plan to one with a high deductible and a health savings account reduced their healthcare outlays by 21% in the first year.

“Having the patient involved in thinking about the total cost of care would align everyone's best interests in making sure that what the provider and patient agree to do together is always the most efficient and effective in meeting the patient's needs,” said Dr. Barbara Walters, the executive medical director at the Dartmouth-Hitchcock health system, based in Lebanon, N.H., and the chief medical officer of ACO OneCare Vermont.

High-deductible plans promote engaged consumerism, agreed Shulkin of the Atlantic ACO, saying “if we want to improve, we need to have patients highly educated and engaged in their own healthcare.”

But in that ideal world, patients would cut back only on unnecessary services and marginally beneficial interventions and not avoid the care that matters. Albani's patient illustrates that that isn't always the case.

“In general, people make cuts across the board,” said Dr. Alison Galbraith, an assistant professor at Harvard Medical School and the Harvard Pilgrim Health Care Institute. “They don't make a distinction between high-value and low-value care.”

Here, the compatibility between ACOs and high deductibles starts to fray. “What the high-deductible health plans do is they very effectively address the cost of care, but they don't have a positive impact on the quality of care or on access,” Shulkin said.

Another 2011 RAND study revealed that people with high deductibles used preventive services less often than their counterparts in traditional insurance plans. “Ironically, the preventive care was covered ... but it did not stop reduction in utilization of preventive services,” said Jill Yegian, vice president of policy and external relations at the Integrated Healthcare Association, a not-for-profit that promotes quality improvement and affordability in California.

Joe Damore, a vice president at the Premier healthcare alliance, said high-deductible health plans can align with accountable care principles, but “the devil is in the details of the plan design ... People can delay care if the high-deductible plan is not designed correctly.”

Insurers have tried to address the potential pitfalls of high deductibles. Cigna Corp., for instance, includes 100% coverage for preventive services, health coaches and disease-

management programs in its high-deductible plans. “It's not just a high deductible with a fund,” said Joe Mondy, a Cigna spokesman.

The company has tracked the behavior of 407,000 customers who have a high-deductible health plan and found that they are actually more likely to seek out evidence-based care and preventive services than members with conventional plans.

“We do see more sophisticated plans that have more access to primary care,” Shulkin said. “We're comfortable with those types of plans because they're trying to fine-tune those unintended consequences” of the high deductible.

Dr. Tricia Nguyen, chief medical officer for the Mesa, Ariz.-based ACO Banner Health Network, agreed that ACOs and high-deductible health plans can work together if patients have cost and quality information available to help them make decisions. However, health systems don't always have that information readily available. “In today's environment, it is not conducive to members who have a high-deductible health plan because there's a lack of transparency, a lack of information around cost and quality of services,” she said.

Even with greater transparency, encouraging consumers to shop around for care can create a challenge for ACOs.

Patients' commitment to an ACO is important for that organization to manage the health of a population, said Stuart Lockman, president of Michigan Pioneer ACO, which is affiliated with Detroit Medical Center. Doctors make an investment, say, through education or coordination of care, to prevent disease or keep chronic conditions in check.

“The concept of a high-deductible health plan is not necessarily inconsistent with that, but ... to the extent that the patient leaves the system and goes elsewhere, to the extent that the patient switches plans, to the extent that the patient does not come back into the system to receive follow-up care, all of those things work as disincentives to achieving the kinds of outcomes that I think we're all interested in achieving,” Lockman said.

Philip Kamp, CEO of Valence Health, a data-analytics consulting firm, said there may need to be some tweaks to benefit design to keep consumers with high deductibles within an ACO. But in theory, there's no reason why the two can't work hand-in-hand.

“The concepts make sense together,” Kamp said. “We want patients to make decisions based on value and them actually paying money for it. So it should connect with the concept of providers assuming risk ... I don't see it in conflict.”

Kerry Grens is a freelance writer and regular contributor to Modern Healthcare.