MANA Plan Plunge Makes Real Splash

A lot of employers have dipped their toes into the consumer-driven health care pool, but Larry Shackelford is one of the few to do a cannon ball.

The CEO of Fayetteville’s Medical Associates of Northwest Arkansas P.A., Shackelford said his 400-employee firm converted in 2003 from a preferred provider organization to a health reimbursement arrangement.

HRAs, the employer-owned cousin of employee-owned health savings accounts, are another form of personal health accounts that set aside money to cover initial medical expenses. The primary difference is employers fund HRAs while employees, employers or a combination of the two funds HSAs.

Bosses are increasingly offering HRAs and HSAs as alternatives to PPO or health maintenance organization platforms. But during its fall 2003 insurance renewal, MANA became the state’s first Arkansas Blue Cross & Blue Shield customer to make a complete conversion to an HRA. That makes MANA’s last year of experience one of the first empirical studies on consumer-driven plans in Arkansas.

Shackelford was scheduled to discuss MANA’s results on May 24 during a Business Leaders Forum at the Northwest Arkansas Holiday Inn. The invitation event for CEOs and executives is the sixth in a 2005 series on consumer-driven plans sponsored by ABCBS.

MANA, an independent network with more than 65 health care providers and nine clinics, uses an ABCBS HRA, but the forums are not designed to hawk the underwriter’s products. Instead, Shackelford just focuses in on results.

Shackelford said during his firm’s 2003-2004 inaugural HRA year, total employer premiums stayed the same because the firm reinvested in the HRA. Premiums to employees, however, were reduced by 10 percent.

During the same time when most Arkansas employers saw a 10.4 percent increase in health care costs, MANA saw a 3.7 percent reduction. Combine that 14 percent swing with a 36.2 percent decrease in total claims paid, and the change made a real difference.

Shackelford said his firm chose an HRA model over HSA because the latter has some limitations on “first-dollar coverage,” and MANA wanted to provide some of that.

“The folks who are happiest are the ones trying to take care of themselves and who feel like they have an insurance policy where, if something catastrophic happens, they’re covered,” Shackelford said. “But also if they’re being wise consumers, their balance in their HRA account also continues to grow.”

Shackelford cautions that one year does not make a trend. But thanks to a big education campaign, he said, employees bought into their HRAs as “their money.”

The presentation included a comparison to car insurance — where most people don’t file a claim for a minor “ding” because it increases their premium. Shackelford said utilization has definitely been impacted.

“Where before, the thought might have been, ‘I’m not feeling well today so I’ll just go make my $20 co-pay to the doctor,'” Shackelford said. “Now, it’s more like, ‘I’ll wait until tomorrow to see if I’m feeling better, and if I don’t spend the money it’s mine to carry forward.'”

Although his company is in the health care field, Shackelford said MANA employees are not more predisposed to success with an HRA or HSA plan. In fact, he said, insurance providers typically count health care workers among the most expensive to insure because they have fewer barriers to care.

Bigger Picture

Dr. Raymond C. Bredfeldt, ABCBS’ northwest regional medical director, estimated that less than 5 percent of ABCBS’ Northwest Arkansas customers are on consumer-oriented plans so far. ABCBS serves more than 130,000 members in its nine-county northwest region.

The national paradigm shift toward personal health accounts, he said, will likely continue because market factors are about the only check left for unbalanced health care costs. The provider-driven health care system, Bredfeldt said, is the biggest culprit.

“Right now doctors tell us how often to come in, what lab to use, what specialist to see, what hospital to go to,” Bredfeldt said. “That’s a very unique part of the economy in that the provider has so much ability to drive the use of the service.”

The point of the business leader forums, Bredfeldt said, is to help employers understand what is really driving health care costs and to pull the consumer back into the equation.

Bredfeldt, whose presentation tackles both micro- and macro-economic impacts of health care costs, details how obesity and smoking affect the corporate bottom line.

Bredfeldt also cites a number of national reports, including a 2003 study by the National Association of Manufacturers, that indicate America’s health care costs will pressure its standard of living in coming years.

“It’s important for business leaders to understand the disadvantage American industries have because of the cost of health care,” Bredfeldt said. “Unless health care costs get under control, we will see the standard of living go down in this country because of our lack of ability to compete on the world stage.”