Consumers in CDHPs see costs as real dollars

Proponents of consumer-directed health plans (CDHPs) have a new study to cheer about: A retrospective claims analysis from a large employer that introduced a CDHP, a point-of-service (POS) plan, and a preferred-provider organization (PPO) to employees in 2001 found that the CDHP was cost-neutral or saved money on pharmacy compared with the POS plan and PPO, both of which used a three-tier pharmacy benefit.

“The CDHP design pretty much did as well as, if not better than, the three-tier design,” says Stephen T. Parente, PhD, the lead author and an associate professor in the department of finance at the Carlson School of Management at the University of Minnesota.

The researchers found that CDHP pharmacy expenses were lower than those in the POS cohort in one year with no differences in the use of brand name drugs. They found some evidence of lower drug consumption by CDHP enrollees with chronic illness. The researchers also reported that fewer prescriptions for generic drugs were filled and CDHP members used more mail-order pharmacy in the second year.

Parente says that employers shouldn’t fear the consumer plan “because it makes consumers see the costs as real dollars.”

“If a member enrolls in a CDHP, the member is not going to stop taking his medication if he has a chronic condition,” says Parente, “but rather the CDHP constraints will make the member look around for a good price.” Other research suggests that enrollees in CDHPs could forego needed medications, but Parente says there was very little evidence in his study that CDHP lowered drug use for patients with chronic conditions.

Marginal impact of CDHPs and PPOs compared with POS plans

Source: Parente ST, Feldman R, Chen S. Effects of a consumer driven health plan on Pharmaceutical Spending and Utilization. Health Res and Educ Trust. 2008 May 13; electronically published ahead of print.