Unlike many local and state governments with steadily rising healthcare costs and a looming Cadillac tax, Houston is saving a fair amount with an accountable care network and wellness program.
The Houston city government has saved more than $42 million on its employee health plan over the past three years, thanks to a network-based accountable care and engagement program.
The city has 21,000 employees and, with their dependents, about 54,000 lives in its health plan. Facing skyrocketing costs approaching $330 million a year in 2010, city leaders wants to act. Along with switching to self-funding, they set up new choices for employees--with one designed to save workers and the city money through a range of interventions.
As one network option, they enlisted the help of the Kelsey-Seybold Clinic, a multi-specialty network, and crafted an ACO that also includes Catholic Health Initiatives' St. Luke's Health, Medical Center in Sugar Land, The Vintage and The Woodlands, Clear Lake Regional Medical Center, The Woman's Hospital of Texas and Texas Children's Hospital.
Nearly 75 percent of employees chose the narrow networks, and the bulk of them chose the KelseyCare ACO.
The ACO network focuses on prevention, health risk assessments and health engagement, with incentives for workers to exercise more often, and higher premiums for those opting out of the HRA screenings. The program also leveraged generic drugs, offering copay-free generics for asthma, diabetes, hypertension, cardiovascular disease and cholesterol, and hit 87 percent utilization over four years.
"Approximately 9 percent of our members have diabetes," said Omar Reid, the city's human resources director. "The HRA gave us valuable data on how and what to focus on through our revamped benefits strategy--no one realized how prevalent diabetes or high cholesterol was in our workforce. People began receiving the appropriate care to help them manage their chronic diseases."
Houston has held annual increases to 1.1 percent for healthcare costs since changing its benefits. Emergency room admissions among staff are down 9 percent and average patient bed days have decreased by 29 percent
While many employers are passing on higher healthcare costs to employees in the form of high-deductible plans, Houston is one of a few public employers thas turned to narrow networks, ACOs and wellness programs.
Public employee health plans especially will have to confront the Cadillac Tax at the end of this decade--if they don't make changes in benefits.
"When the Cadillac Tax takes effect in 2018, almost all local and state governments will face huge penalties unless they get their costs under control," according to a study by United Benefits Advisors.
Among major employers using an ACO approach, there is also Boeing. The Seattle-based aviation giant recently became one of the first employers to craft an ACO partnership with two health systems, the Providence-Swedish Health Alliance and University of Washington Medicine, in a plan with no-copay primary care and full coverage for generic medications.