In “Healthcare Innovations in Georgia:Two Recommendations”, the report it prepared for the Georgia Public Policy Foundation, the Anderson Economic Group and Wilson Partners (AEG/WP) for the Georgia Public Policy Foundation, clearly explained their computations and made clear the assumptions underlying their report. This facilitates the public discussion that the Georgia Public Policy Foundation sought to foster in publishing the report. I have addressed various aspects of their explanation and assumption in previous blog entries, and more are on the way. Right now I wish to address AEG/WP’s inclusion of a “wellness” program in its direct primary care proposal.
AEG/WP recommended that each large insurer provide a “wellness-demand management program” to each participant who elected direct primary care. This type of voluntary program “uses the results of health risk assessments and claims data to determine a personalized health and well-being curriculum that “would include education, health coaching support, and activity goal-setting and tracking.” It also envisioned “a reward vehicle in the form of a Health Reimbursement Arrangement for members enrolled through employer or group coverage, or a Georgia Healthcare Premium Account for members enrolled through individual coverage” and even a “modest cash incentive could be substituted to encourage particularly reluctant individuals to enter into a wellness plan”.
Naturally, AEG/WP included the positive effects of their wellness plan in computing cost savings from their direct primary care plan. Their estimates of low but gradually growing wellness plan participation and its benefits in improved health in the following years resulted in a set of claims cost reductions that amounted to about 0.5 per cent of claims costs in the second year, 1.0 per cent in the third year, 1.50 percent in the fourth year, and so on. Their computation assumes that by year five over 60,000 members will be enrolled in the wellness program and claim cost reductions would reach 2%.
It is important to note these more modest numbers were then added to the predicted 15% reduction of downstream care costs attributed to direct primary care. So, that in the fifth year, for example, AEG/WP savings computation reflects 17% lower claims costs for DPC participants, but 2% of the 17% is due to the wellness program.
What is concerning is that, while the additional 2% savings in year five is scored as a computed as a positive effect of the AEG/WP direct primary care plan, AEG/WP failed to include in their computation any costs associated with a 60,000 person wellness program; there’s not a penny for the study of the personal claims data, the personalized curricula, the coaching, the rewards. They credited their program with the financial benefits from a wellness program, but did not bother to debit it with the financial costs of a wellness program.
It may be a relatively small amount of money as these things go, about four million dollars in year five. But this instance of inclusion of benefits and the exclusion of their costs seems similar to other, more financially consequential failures of analysis addressed in my other recent posts; one in which the AEG/WP team also looked at one group of DPC practices to determine what the benefits of paying monthly DPC fees are and then at a different group to determine the cost of DPC fees; and another in which the same team determined that downstream cost savings will rise exponentially with rising medical care costs, but assumed that the monthly fees of DPC practices would remain flat.