IBM announced last week that it is eliminating copayment requirements when its employees see primary care physicians. (This is applicable to the 90% of its employees in self-insured plans, and IBM previously had a $20 copayment for these office visits.)
IBM states that this move will help it reduce health care costs. How likely is this?
Incremental costs to IBM will be:
- Loss of copay contribution from employees.
- Incremental PCP visits (which are likely to be small, since IBM's plan does not have high barriers in the first place)
With almost 400,000 employees, waived copayments could easily cost IBM over $35 million (400,000 employees, average family size of 2.2, average of 2 visits per year, which includes young children who have many office visits)
Offsetting benefits could be:
- Decreased specialist visits (a "medical home" pilot at Group Health in Seattle actually saw an increase in specialist visits when primary care access improved - which is disappointing. )
- Decreased ED visits
- Decreased admissions (but not many of these are preventable by a primary care office visit in the employed population)
I'm skeptical that this initiative will actually save IBM money in health care claims. This is because the extra cost to IBM for each incremental PCP office visit is not $20 - but is actually much more (since the majority of waived copayments were for visits that would have happened anyway). If this new policy increases PCP office visits by 10%, for instance, the incremental cost for each PCP office visit could easily be $100 for the visit and $200 for the waived office visit copays on the other 10 visits that would have happened anyway. I'm not sure the "value" of this incremental visit would often be $300! Further, some incremental visits might remedy undercare - which improves quality but raises cost.
This initiative might be value-generating for IBM if productivity implications are taken into account. But IBM is not likely to see cost savings in health care expenses alone.
