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CCH® BENEFITS — 3/28/07

High-Deductible Plans Reduce Emergency Room Visits, Hospitalizations

from Spencer’s Benefits Reports: Emergency room visits dropped significantly for patients with single-option high-deductible health plans (HDHPs), mainly for repeat visits for low- or indeterminate-severity care, according to a study recently conducted by the Harvard Medical School and Harvard Pilgrim Health Care. The HDHP participants also had fewer hospitalizations from the emergency room than did participants in a traditional HMO. The study was published in the March 14 issue of the Journal of the American Medical Association.

The Harvard study did not look at HDHPs under the federal health savings account (HSA) law.Rather, the HDHP studied plans in which participants were subject to copayments for certain outpatient visits in addition to the high deductible, including a $100 copayment for emergency room use even after the deductible was met. Emergency room expenses also were subject to the plan deductible.

All plans in the study were offered through Harvard Pilgrim Health Care, and employers also could include what the authors referred to as a health reimbursement account (HRA). However, more than likely this was either a medical flexible spending account or a medical savings account, as employees could contribute to such an account, which is not permitted for HRAs with an HDHP.

During the baseline period, average inpatient copayments during the baseline period were $248 for HDHP members and $151 for the control group. After controlling for multiple factors, the researchers found a 10% relative decrease in HDHP members’ visits to the emergency room from the baseline to the follow-up periods, compared with the control group. However, the decline in emergency room visits was much lower (4.1%) for first visits than for second or subsequent visits (24.9%). In addition, this decline was greatest for low- or indeterminate-severity events, while the drop in the number of visits for high-severity events was small, the study authors wrote. The drop in emergency room use among HDHP participants was highest (25%) among the bottom two income categories and minuscule (1.3%) among the top two income categories.

HDHP deductibles ranged from $500 to $2,000 for individual coverage and from $1,000 to $4,000 for family coverage. About 70% of those studied had family coverage. As the deductible increased, those who exceeded the deductible decreased: 41.9% of those with a $1,000 family deductible exceeded that deductible, while only 9.9% of those with a $4,000 family deductible exceeded that in claims.

During the follow-up period, 83% of all HDHP plan members’ emergency room visits and 89% of first visits took place before members had met their deductibles. However, members with individual coverage who exceeded their deductibles did not have significantly higher use of the emergency room than they did before they surpassed their deductible. In addition, those with the $500 deductible had the highest likelihood of emergency room visits. Emergency room visits for members with family coverage did not change before and after meeting the deductible, the study revealed.

Drops In Emergency Room Visits

The percentage of emergency room visits followed by a hospitalization also dropped by 25% for the HDHP group. Furthermore, the decline was even higher for “potentially avoidable” hospitalizations.

The average length of hospital stay dropped from 4.4 days to 3.6 days for HDHP members, 21% less than members of the control group. Furthermore, the average annual emergency room expenses per HDHP member dropped to less than half of the baseline expense (from $75 to $36). compared with an increase from $81 to $94 for control group members. Control group members experienced a higher increase in their emergency room expenses (from $90 to $103) than did the HDHP members (from $83 to $86).

As the RAND Health Insurance Experiment previously concluded, the Harvard Pilgrim study found that, at least in the short term, cost sharing did not cause most HDHP insureds to forgo necessary emergency care. The question remains, however, whether reductions in repeat visits to emergency rooms for indeterminate-severity cases ultimately will result in worse outcomes. According to the authors,“Observed declines in the utilization among the HDHP group would be worrisome if they reflect needed care that was forgone because of an untenable economic trade-off.” However, the authors said that they “believe that reductions in hospitalizations and shorter stays may reflect unnecessary utilization among controls, rather than inappropriate discharges from the emergency department or hospital among HDHP members.”

At least in the short term, HDHPs may reduce overall emergency room use without significantly affecting the most severe cases, the study authors concluded. The long-term effects on health of avoided care due to HDHPs is still in question.. As HDHPs expand, medical staff “may be required to participate in greater levels of shared decision-making about medical necessity and affordability of care,” the authors suggest.

The study reviewed members up to age 64 who had at least one year of continuous enrollment in the traditional HMO plan (the baseline period), followed by at least six months in the sole-option HDHP in the period between March 1, 2001, and June 30, 2005. The control group represented Harvard Pilgrim Health Care group traditional HMO members during the same study period and who had no other Harvard Pilgrim Health Care plan option. Most of the individuals in the study had family coverage and most worked for small to midsize firms.The average age of participants in the study groups was age 35, and both sexes were equally represented.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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