Nextera HealthCare has a hot new brag:
These results were not risk adjusted. But they desperately need to be.
The St Vrain Valley School District had this health benefit structure for its employees during the period studied:
The school district’s 10% coinsurance rate for the PPO predates the arrival of the Nextera option. The school district also has a Kaiser Permanente plan that includes 10% coinsurance. The school district created the unique 20% coinsurance rate for Nextera DPC patients to help fund the added primary care investment involved. Here’s how that benefit structure impacts employees expecting various levels of usage in an coming year.
As the Nextera image above shows, $5,000 per year is about an average utilization level for an employee member of the district; an employee expecting average utilization can gain over $900 dollars by rejecting Nextera. Every penny of that advantage for the employee comes out of the employer’s hide — and then it shows up in Nextera’s table as a Nextera win. A employee with moderately heavy utilization – more than twice the average — might even hit the jackpot of shifting $1787 from his pocket to the employer, simply by rejecting Nextera. Heavier utilizers will do no worse than break even by rejecting Nextera.
This benefit design pushes a large swath of risky, costly patients away from Nextera.
And notice that even after the Nextera harvests the relatively healthy, those Nextera members who end up needing significant downstream care needs face vastly more cost-sharing discipline under this benefit plan than their PPO counterparts.
If the employer’s claims costs are adjusted for both the health risk difference between Nextera and non-Nextera populations, and the confounding effect of subjecting the Nextera cohort to stronger cost-sharing discipline for downstream costs, Nextera’s cost savings brag will likely be shredded.
Indeed, we have good reason — from the recent Milliman study — to suspect that a population risk-adjustment of about a third is quite likely. Adjust the Nextera brag by that third and the savings will not simply vanish, they will turn into increased costs.