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entitled 'Consumer-Directed Health Plans: Health Status, Spending, and 
Utilization of Enrollees in Plans Based on Health Reimbursement 
Arrangements' which was released on August 16, 2010. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

July 2010: 

Consumer-Directed Health Plans: 

Health Status, Spending, and Utilization of Enrollees in Plans Based 
on Health Reimbursement Arrangements: 

GAO-10-616: 

GAO Highlights: 

Highlights of GAO-10-616, a report to congressional requesters. 

Why GAO Did This Study: 

Consumer-directed health plans (CDHP) combine a high-deductible health 
plan with a tax-advantaged account, such as a health reimbursement 
arrangement (HRA), that enrollees can use to pay for health care 
expenses. In an effort to restrain cost growth, several employers, 
including the federal government through its Office of Personnel 
Management (OPM), have offered HRAs for several years. 

For enrollees in HRAs compared with those in traditional plans such as 
preferred provider organization (PPO) plans, GAO assessed (1) 
differences in health status, and (2) changes in spending and 
utilization of health care services. GAO analyzed data from two large 
employers—one public and one private—that introduced an HRA option in 
2003. GAO compared changes in health spending and utilization before 
and after 2003 for enrollees who switched from a PPO into an HRA (the 
HRA group) with those who stayed in a PPO (the PPO group). At the time 
GAO made its data requests to each employer, 2007 data from the public 
employer and 2005 data from the private employer were the most current 
and complete data available. GAO also reviewed published studies that 
included an assessment of the health status, spending, or utilization 
of HRA and other CDHP enrollees compared with traditional plan 
enrollees. Results are not generalizable beyond the enrollees, health 
plans, and employers GAO reviewed and also cannot be compared between 
the public and private employers. 

What GAO Found: 

On average, enrollees in the HRA groups of both employers GAO reviewed 
spent less and generally used fewer health care services before they 
switched into the HRA in 2003 than those who remained in the PPO, 
suggesting that the HRA groups were healthier. Average annual spending 
per enrollee for the public employer’s HRA group was $1,505 lower than 
the PPO group for the 2-year period prior to switching. (Spending for 
the public employer was based on analysis of both medical and pharmacy 
claims.) Likewise, the private employer’s HRA group spent $566 less 
per enrollee for the 2-year period prior to switching than the PPO 
group (we were not able to examine pharmacy claims for the private 
employer). Similarly, of the 21 studies GAO reviewed that assessed the 
health status of HRA and other CDHP enrollees, 18 found they were 
healthier than traditional plan enrollees based on utilization of 
health care services, self-reported health status, or the prevalence 
of certain diseases or disease indicators. Other demographic 
differences may also explain spending and utilization differences 
including that policyholders in the HRA group were younger than those 
in the PPO group. 

Spending and utilization for enrollees in HRAs generally increased by 
a smaller amount or decreased compared with those in traditional plans 
that GAO reviewed. 

* Public employer. From the 2-year period before switching—2001 to 
2002—to the 5-year period after switching—2003 to 2007—average annual 
spending for the HRA group increased by $478 per enrollee compared 
with $879 for the PPO group. This smaller increase for the HRA group 
was partially driven by decreases in spending for prescription drugs. 
Additionally, average annual utilization of services per enrollee 
increased by a smaller amount or decreased for the HRA group compared 
with the PPO group for six out of eight services GAO reviewed. 

* Private employer. From the 2-year period before switching—2001 to 
2002—to the 3-year period after switching—2003 to 2005—average annual 
spending for the HRA group increased by $152 per enrollee compared 
with $206 for the PPO group. This smaller increase for the HRA group 
was partially driven by smaller increases in spending for physician 
office visits and decreases in spending for emergency room services. 
Additionally, average annual utilization of services per enrollee 
increased by a smaller amount or decreased for the HRA group compared 
with the PPO group for four out of seven services GAO reviewed. 

Similarly, GAO’s review of published studies found that seven out of 
eight students that examined spending and controlled for differences 
in health status or other characteristics reported lower spending 
among HRAs and other CDHP enrollees relative to traditional plans. 

OPM did not provide comments on the draft report. Representatives of 
the two employers whose health plans GAO reviewed did not comment on 
the draft report. 

View [hyperlink, http://www.gao.gov/products/GAO-10-616] or key 
components. For more information, contact John Dicken at (202) 512-
7114 or dickenj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Data Suggest HRA Enrollees Were Healthier Than Traditional Plan 
Enrollees: 

Spending and Utilization for Enrollees in HRAs Generally Increased by 
a Smaller Amount or Decreased Compared with Those in Traditional Plans: 

Agency and External Comments: 

Appendix I: Scope and Methodology: 

Appendix II: Review of Published Studies: 

Appendix III: Financial Features of the HRA and PPO Plans Offered at 
the Public and Private Employers: 

Appendix IV: Utilization of Services for Enrollees in HRAs and 
Traditional Plans: 

Appendix V: Demographics of Enrollees in HRAs and Traditional Plans: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Key Features of HRAs: 

Table 2: Average Annual Spending per Enrollee by Service Type for the 
Period before Introduction of an HRA, 2001-2002: 

Table 3: Average Annual Spending per Enrollee by Service Type at the 
Public Employer before and after Introduction of an HRA: 

Table 4: Average Annual Spending per Enrollee by Service Type at the 
Private Employer before and after Introduction of an HRA: 

Table 5: Published Studies of HRA and other CDHP Enrollees and 
Traditional Plan Enrollees, January 2003-March 2009: 

Table 6: Financial Features of the HRA and PPO Plans Offered at the 
Public and Private Employers for In-Network Services, 2003: 

Table 7: Average Annual Utilization of Services per Enrollee at the 
Public Employer before and after Introduction of an HRA: 

Table 8: Average Annual Utilization of Services per Enrollee at the 
Private Employer before and after Introduction of an HRA: 

Table 9: Number of Published Studies That Reported on Utilization by 
Service Type, 2003-2009: 

Table 10: Average Age of Policyholders in the HRA and PPO Groups, 2003: 

Table 11: Percentage of Male Policyholders in the HRA and PPO Groups, 
2003: 

Table 12: Percentage of Policyholders with Single Coverage in the HRA 
and PPO Groups, 2003: 

Figures: 

Figure 1: Graphic Model of the Employer HRA and PPO Groups: 

Figure 2: Hypothetical Benefit Design of an HRA: 

Figure 3: Average Annual Spending per Enrollee for the Period before 
Introduction of an HRA, 2001-2002: 

Figure 4: Average Annual Spending per Enrollee at the Public Employer 
before and after Introduction of an HRA: 

Figure 5: Average Annual Spending per Enrollee for the HRA and PPO 
Groups at the Public Employer, 2001-2007: 

Figure 6: Average Annual Spending per Enrollee at the Private Employer 
before and after Introduction of an HRA: 

Figure 7: Average Annual Spending per Enrollee for the HRA and PPO 
Groups at the Private Employer, 2001-2005: 

Abbreviations: 

CDHP: consumer-directed health plan: 

FEHBP: Federal Employees Health Benefits Program: 

HRA: health reimbursement arrangement: 

HSA: health savings account: 

IRS: Internal Revenue Service: 

OPM: Office of Personnel Management: 

PPO: preferred provider organization: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

July 16, 2010: 

The Honorable Henry A. Waxman: 
Chairman: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Pete Stark: 
Chairman: 
Subcommittee on Health: 
Committee on Ways and Means: 
House of Representatives: 

More employers--including the federal government--are offering 
consumer-directed health plans (CDHP) in an effort to restrain health 
care cost growth. CDHPs combine a high-deductible health plan with a 
tax-advantaged account that enrollees can use to pay for health care 
expenses.[Footnote 1] One type of CDHP is based on a health 
reimbursement arrangement (HRA), a tax-advantaged account that 
reimburses enrollees for health care expenses.[Footnote 2],[Footnote 
3] HRA-based plans typically have higher deductibles and lower 
premiums than do traditional health insurance plans--such as preferred 
provider organization (PPO) plans--and unused account balances may 
carry over from year to year.[Footnote 4],[Footnote 5] HRAs are owned 
by the employer, and only the employer may make contributions to them. 
HRAs are typically not portable and may not be taken by the enrollees 
if they leave their employer. Employers began offering CDHPs based on 
HRAs in 2001. 

Debate surrounding CDHPs has grown as more employers offer them to 
their employees. Proponents contend that the plans can help restrain 
health care spending, arguing that the high deductibles and ability to 
carry over balances give enrollees an incentive to seek lower-cost 
health care services and to obtain services only when necessary. 
Critics are concerned that these plans may attract healthier enrollees 
who use fewer health care services or may discourage enrollees from 
obtaining necessary care. 

Many employers, including the federal government, now have several 
years' experience offering CDHPs, particularly the HRAs that were 
introduced first.[Footnote 6] Given this experience and the potential 
role of CDHPs as health care reforms are implemented,[Footnote 7] 
there is interest in the health status of those selecting HRAs and how 
these plans affect enrollees' health care spending and utilization 
compared with traditional plans. For enrollees who switched into an 
HRA compared with enrollees who stayed in a traditional plan, we 
assessed (1) differences in health status and (2) changes in spending 
and utilization of health care services. To do this, we conducted an 
analysis of an HRA and a traditional health plan for two large 
employers and supplemented our work with the results of several 
published studies. 

* Two large employers. We obtained HRA and PPO plan enrollment and 
claims data for plan years 2001 through 2007 for a large public 
employer and for plan years 2001 through 2005 for a large private 
employer.[Footnote 8] Both employers introduced an HRA as a health 
insurance option for employees at the beginning of the 2003 plan year. 
[Footnote 9] For each employer, we defined a group of HRA enrollees 
and a group of PPO enrollees by analyzing enrollment data.[Footnote 
10] The HRA group included policyholders who were continuously 
enrolled in the PPO in the 2001 and 2002 plan years, switched into the 
HRA in the 2003 plan year, and stayed in the HRA for the remainder of 
our study periods. The PPO group included policyholders who were 
continuously enrolled in the PPO from the 2001 plan year through the 
remainder of our study periods.[Footnote 11] Additionally, all groups 
included the covered dependents of policyholders. (See figure 1.) 

Figure 1: Graphic Model of the Employer HRA and PPO Groups: 

[Refer to PDF for image: illustration] 

The HRA group: 
For the purposes of this report, these policyholders and their 
dependents are termed the HRA group. 

2001: 
Policyholders originally enrolled in the PPO. 

2003: 
Introduction of HRA. 

End of study period: 
Policyholders who switched and remained in the HRA. 

The PPO group: 
For the purposes of this report, these policyholders and their 
dependents are termed the PPO group. 

2001: 
Policyholders originally enrolled in the PPO. 

2003: 
Introduction of HRA. 

End of study period: 
Policyholders who remained continuously in the PPO. 

Source: GAO. 

[End of figure] 

* Published studies. We conducted a comprehensive review of studies 
published from January 2003 through March 2009 that included an 
assessment of the health status, spending, utilization, or other 
demographic characteristics of HRA and other CDHP enrollees compared 
with those in traditional plans. We identified 31 such studies, of 
which 18 focused exclusively on HRA enrollees, and 13 focused on both 
HRA and other CDHP enrollees.[Footnote 12] Our review comprised peer- 
reviewed journal articles, studies by insurance carriers or 
independent consultants, national surveys, and government 
publications. For our review of health status, we included studies 
that used self-reported health status, assessed the health status or 
illness burden of plan enrollees based on diagnoses or disease 
indicators, or examined utilization prior to enrolling in an HRA or 
other CDHP. For our review of spending and utilization, we included 
only those studies that addressed selection bias as part of the 
methodology to account for differences between HRA and other CDHP 
enrollees and traditional plan enrollees that may affect the use of 
health care services. 

To assess differences in the health status of enrollees who switched 
into an HRA compared with those who stayed in a traditional plan, we 
analyzed HRA and PPO plan claims data for the two large employers we 
examined.[Footnote 13] We compared spending and utilization for health 
care services between the HRA and PPO groups for each employer before 
introduction of the HRA in 2003. This design enabled us to observe the 
potential effect of selection bias due to differences in health status 
or other characteristics which we did not separately control for 
between the two groups. We also summarized the findings of studies 
that compared health status and other demographic characteristics of 
HRA and other CDHP enrollees with those in traditional plans. 

To assess changes in spending and utilization of health care services 
for enrollees who switched into an HRA compared with those who stayed 
in a traditional plan, we analyzed the changes in spending and 
utilization for the HRA and PPO groups from the period before to the 
period after introduction of the HRA in plan year 2003. We also 
summarized the findings of studies that compared spending and 
utilization of HRA and other CDHP enrollees with those in traditional 
plans. 

The results of our analyses are not generalizable beyond the 
enrollees, health plans, and employers included in our review. The 
results of our employer analyses cannot be compared between the public 
and private employers. In particular, the results of our spending and 
utilization analyses from the two employers may be influenced by the 
benefit design--such as the financial features--of the health plans we 
reviewed and the sizes of the HRA and PPO groups in our study. 
Additionally, because our analyses of the two employers reflected 
instances where employees had a choice between an HRA and a PPO plan 
option, they do not represent the experiences of employees who have 
HRAs as their only plan option. We reviewed all data for soundness and 
consistency and determined that they were sufficiently reliable for 
our purposes. We conducted this performance audit predominantly in two 
phases from July 2007 through October 2008 and from September 2009 
through July 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. Appendix I provides more detail on our methodology and the 
limitations of the data we report, and appendix II describes the 
published studies that we reviewed. Appendix III provides more 
information on the financial features of each of the two employers' 
HRA and PPO plans that we reviewed. 

Background: 

In the past several years, employers and insurance carriers have begun 
to offer HRAs and other CDHPs, which are intended to reduce health 
care spending.[Footnote 14] To achieve this goal, CDHPs combine a high-
deductible health plan with a tax-advantaged account to pay for health 
care expenses.[Footnote 15] CDHP insurance carriers may also offer 
online tools to help enrollees evaluate the cost and quality of health 
care services and providers. The two most common types of CDHPs 
offered are those based on an HRA beginning in 2001 and those that are 
eligible to be coupled with a health savings account (HSA), which were 
offered beginning in 2004. 

Several studies and surveys have attempted to quantify the individuals 
enrolled in CDHPs and the employers that offer them. For example, one 
study using national survey data estimates that about 5.5 million 
employees were enrolled in CDHPs of which 2.2 million were enrolled in 
HRAs and 3.2 million were enrolled in HSA-eligible plans as of 2008. 
[Footnote 16] Furthermore, based on data from the Office of Personnel 
Management (OPM)--the agency that administers the Federal Employees 
Health Benefits Program (FEHBP)--about 57,000 of the nearly 8 million 
enrollees in the FEHBP were enrolled in CDHPs in 2009. About 42,000 of 
these FEHBP enrollees were in HRAs and about 15,000 were in HSA-
eligible plans. Another study using national survey data found that 
HRAs were offered by 8 percent and HSA-eligible plans were offered by 
14 percent of employers with 500 or more employees in 2008.[Footnote 
17] CDHPs are offered by employers as one of a number of plan options, 
such as PPOs, health maintenance organizations, or other traditional 
plans.[Footnote 18] 

Enrollees in HRAs pay premiums to access covered services. Coverage of 
most services is subject to the deductible while other services, such 
as preventive care services, may be exempted from the 
deductible.[Footnote 19] Enrollees use their HRA account to pay for 
qualified medical expenses. While account balances may accrue from 
year to year, the accounts are typically not portable--that is, 
employees do not own the accounts and cannot keep unspent funds if 
they change jobs.[Footnote 20] HRA accounts are administered by the 
employer or an insurance carrier and only employers may contribute to 
the accounts. Table 1 describes the key features of HRAs. 

Table 1: Key Features of HRAs: 

Health plan features: Deductible; 
Most employers pair HRA accounts with high-deductible plans. 

Health plan features: Out-of-pocket spending limit[A]; 
IRS does not specify a maximum out-of-pocket spending limit. 

HRA account features: 

HRA account features: Use; 
Reimbursement of qualified medical expenses intended to prevent or 
alleviate a mental or physical condition (including vision and dental 
services), and may include certain costs for insurance premiums, long-
term care insurance, and transportation to obtain medical care[B]. 

HRA account features: Ownership; 
Employers. 

HRA account features: Portability; 
Typically, employees cannot retain the HRA account when they leave 
their employer. 

HRA account features: Who may contribute; 
Employers. 

HRA account features: Annual contribution amount; 
Employers typically determine contribution amounts. 

HRA account features: Unspent funds; 
May roll over from year to year; some employers limit the maximum 
balance. 

HRA account features: Tax treatment; 
Withdrawals for qualified medical expenses are exempt from federal 
income taxes; employer contributions are excluded from gross income by 
employers and are not treated as taxable income to employees. 

HRA account features: Nonmedical withdrawals; 
All withdrawals must be for documented medical expenses. 

Source: GAO analysis of IRS guidance. 

[A] Premiums and services not covered by the insurance plan do not 
count toward the out-of-pocket spending limit. 

[B] Qualified medical expenses are identified under the Internal 
Revenue Code (See 26 U.S.C. §§ 213(d), 223(d)(2)(A)). 

[End of table] 

HRA enrollees must keep track of funds in their accounts. If the funds 
are exhausted before the deductible is met in a given year, enrollees 
are responsible for paying for the difference out of pocket. After an 
enrollee meets the deductible, the plan operates much like a 
traditional PPO plan. That is, the plan generally pays for most of the 
cost of covered services and the enrollee contributes a cost-sharing 
amount--which varies by plan--until meeting the maximum out-of-pocket 
spending limit, at which point the plan pays 100 percent of the cost 
of covered services[Footnote 21]. Any unspent funds in an HRA account 
may be rolled over to the next year, thereby reducing or eliminating 
the enrollee's share of the deductible in subsequent years.[Footnote 
22] See figure 2 for a hypothetical HRA benefit design. 

Figure 2: Hypothetical Benefit Design of an HRA: 

[Refer to PDF for image: illustration] 

Plan deductible of $1,500 for year 1: 

Year 1 HRA account: $1,000 annual employer contribution; 
* Health care expenses are first paid through the HRA account; 
* Unspent employer contributions in the HRA account can be rolled over 
to the next year. 

Example: Employer contributes $1,000 to the HRA account. Enrollee 
incurs $600 in health care expenses, leaving $400 in the HRA account 
that can be rolled over to Year 2. 

Year 1 enrollee share: up to $500; 
* Difference between the HRA account balance and the deductible, if 
any. 

Example: Enrollee share is $0 since all health care expenses were 
covered by the HRA account balance. 

Traditional coverage: 

Once the deductible has been met, the HRA operates much like a 
traditional health plan and the enrollee pays coinsurance until the 
out-of-pocket spending limit is reached. 

Example: Traditional coverage does not apply since all health care 
expenses were covered by the HRA account balance. 

Plan deductible of $1,500 for year 2: 

Year 2 HRA account: $1,000 annual employer contribution plus any 
unspent employer contributions from year 1. 

Example: Employer again contributes $1,000 to the HRA account, 
bringing the total balance to $1,400. Enrollee incurs expenses of 
$2,000. 

Year 2 enrollee share: up to $500; 
* Difference between the HRA account balance and the deductible, if 
any. 

Example: Enrollee’s share is $100 ($1,500 plan deductible minus $1,400 
HRA account balance). 

Traditional coverage: 
Once the deductible has been met, the HRA operates much like a 
traditional health plan and the enrollee pays coinsurance until the 
out-of-pocket spending limit is reached. 

Example: The remaining $500 in expenses is paid under traditional 
coverage terms. 

Source: GAO. 

[End of figure] 

Data Suggest HRA Enrollees Were Healthier Than Traditional Plan 
Enrollees: 

On average, enrollees in the HRA groups of both employers we reviewed 
spent less and generally used fewer health care services before they 
switched into the HRA in 2003 than those who remained in the PPO, 
suggesting that they were healthier. Average annual spending per 
enrollee for the public employer's HRA group was $1,505 lower than the 
PPO group for the 2-year period prior to switching in 2003. Similarly, 
the private employer's HRA group spent $566 less per enrollee for the 
2-year period prior to switching than the PPO group. (See figure 3.) 

Figure 3: Average Annual Spending per Enrollee for the Period before 
Introduction of an HRA, 2001-2002: 

[Refer to PDF for image: vertical bar graph] 

Average Annual Spending: 

Public employer: 

HRA group: $823; 
PPO group: $2,328; 
Difference: $1,505. 

Private employer: 

HRA group: $623; 
PPO group: $1,188; 
Difference: $566. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical and pharmacy claims for the 
public employer, but only medical claims for the private employer. 
Annual spending was adjusted to 2007 dollars. Plan years were from 
January 1 through December 31 for the public employer and from July 1 
through June 30 for the private employer. Enrollees 65 years and older 
were not included in our analysis. All calculations may not reflect 
reported values due to rounding. 

[End of figure] 

We also found that for each service type we reviewed, the HRA groups 
for both employers spent less per enrollee than the PPO groups over 
the 2-year period prior to the switch. Most notably, we found that the 
public employer's HRA group spent $399 less than the PPO group on 
prescription drugs and inpatient hospital services, and $289 less on 
physician office services. The private employer's HRA group spent $346 
less for inpatient hospital services and $110 less for outpatient 
services than the PPO group.[Footnote 23] (See table 2.) 

Table 2: Average Annual Spending per Enrollee by Service Type for the 
Period before Introduction of an HRA, 2001-2002: 

Service type: Inpatient hospital; 
Public employer: HRA group (n=968-989): $71; 
Public employer: PPO group (n=1.54-1.62 million): $470; 
Private employer: HRA group (n= 572-573): $73; 
Private employer: PPO group (n=1,079-1,086): $419. 

Service type: Outpatient; 
Public employer: HRA group (n=968-989): $147; 
Public employer: PPO group (n=1.54-1.62 million): $402; 
Private employer: HRA group (n= 572-573): $188; 
Private employer: PPO group (n=1,079-1,086): $298. 

Service type: Physician office; 
Public employer: HRA group (n=968-989): $319; 
Public employer: PPO group (n=1.54-1.62 million): $608; 
Private employer: HRA group (n= 572-573): $303; 
Private employer: PPO group (n=1,079-1,086): $380. 

Service type: Emergency room; 
Public employer: HRA group (n=968-989): $8; 
Public employer: PPO group (n=1.54-1.62 million): $12; 
Private employer: HRA group (n= 572-573): $55; 
Private employer: PPO group (n=1,079-1,086): $81. 

Service type: Prescription drugs[A]; 
Public employer: HRA group (n=968-989): $211; 
Public employer: PPO group (n=1.54-1.62 million): $610; 
Private employer: HRA group (n= 572-573): [Empty]; 
Private employer: PPO group (n=1,079-1,086): [Empty]. 

Service type: Other; 
Public employer: HRA group (n=968-989): $66; 
Public employer: PPO group (n=1.54-1.62 million): $225; 
Private employer: HRA group (n= 572-573): $3; 
Private employer: PPO group (n=1,079-1,086): $10. 

Service type: All services (total); 
Public employer: HRA group (n=968-989): $823; 
Public employer: PPO group (n=1.54-1.62 million): $2,328; 
Private employer: HRA group (n= 572-573): $623; 
Private employer: PPO group (n=1,079-1,086): $1,188. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical and pharmacy claims for the 
public employer, but only medical claims for the private employer. 
Annual spending was adjusted to 2007 dollars. Plan years were from 
January 1 through December 31 for the public employer and from July 1 
through June 30 for the private employer. Enrollees 65 years and older 
were not included in our analysis. All columns may not sum to the 
reported total due to rounding. 

[A] We were not able to examine pharmacy claims data for the private 
employer. 

[End of table] 

In addition, we found that utilization of services was also generally 
lower for the HRA groups over the 2-year period before switching into 
the HRA compared with the PPO groups. For example, at the public 
employer, the average annual number of physician office visits for the 
HRA group was about four visits per enrollee compared with about seven 
visits for the PPO group. Additionally, the HRA group filled an 
average of about 4 prescriptions per enrollee per year compared with 
an average of about 10 prescriptions for the PPO group. Similarly, at 
the private employer, the average annual number of physician office 
visits for the HRA group was about three visits per enrollee for the 
HRA group compared with about four visits for the PPO group. In 
addition, the average length of a hospital stay for the private 
employer's HRA group was about 2 days compared with about 4 days for 
the PPO group. Overall, the average percentage of enrollees who did 
not receive any medical services was higher for both employers' HRA 
groups relative to the PPO groups--about 21 percent versus about 17 
percent, respectively, for the public employer, and about 31 percent 
versus about 26 percent, respectively, for the private employer. (See 
appendix IV for more information on utilization by service type.) 

Our review of published studies generally found that HRA and other 
CDHP enrollees tend to be healthier than those enrolled in traditional 
plans. Specifically, of the 21 studies that assessed health status of 
HRA and other CDHP enrollees, 18 found that they were healthier than 
traditional plan enrollees based on utilization of health care 
services, self-reported health status, or the prevalence of certain 
diseases or disease indicators. For example, one study found that HRA 
and other CDHP enrollees appeared to be nearly 14 percent healthier 
than those enrolled in a traditional plan based on certain clinical 
categories.[Footnote 24] In another study conducted by the Kaiser 
Family Foundation, 64 percent of HRA and other CDHP enrollees reported 
being in very good or excellent health, compared with 52 percent of 
those enrolled in traditional plans, and were less likely to have 
certain chronic conditions--23 percent versus 35 percent, 
respectively.[Footnote 25] We reported in 2005 that a larger share of 
non-elderly enrollees in an HRA offered by the FEHBP reported being in 
"excellent" or "very good" health compared with enrollees in other 
traditional plans--73 percent versus 64 and 58 percent, respectively. 
[Footnote 26] 

In addition to health status, other demographic differences between 
the HRA and PPO groups may also explain differences in spending and 
utilization prior to introduction of the HRA. For example, our 
analyses of data from the two employers showed that policyholders who 
switched into the HRA were about 3 years younger, and slightly more 
likely to be male and elect single coverage in 2003 than those who 
remained in the PPO plan. (See appendix V for additional information 
on the demographics of HRA and traditional plan enrollees.) 

Spending and Utilization for Enrollees in HRAs Generally Increased by 
a Smaller Amount or Decreased Compared with Those in Traditional Plans: 

For the public and private employers we reviewed, health care spending 
and utilization of health care services for the HRA groups generally 
increased by a smaller amount or decreased compared with the PPO 
groups, from the period before to the period after switching. 
Additionally, the majority of the studies we reviewed that examined 
total or medical spending and controlled for differences in health 
status or other characteristics of enrollees reported lower spending 
among enrollees in HRAs and other CDHPs relative to traditional plans. 

Public Employer: 

At the public employer, average annual spending for the HRA group 
increased by a smaller amount from the 2-year period before switching 
to the 5-year period after switching compared with the PPO group. 
Specifically, average annual spending for the HRA group increased by 
$478 per enrollee compared with $879 for the PPO group. (See figure 4.) 

Figure 4: Average Annual Spending per Enrollee at the Public Employer 
before and after Introduction of an HRA: 

[Refer to PDF for image: vertical bar graph] 

Average Annual Spending: 

HRA group: 
Year: 2001-2002: $823; 
Year: 2003-2007: $1,301; 
Difference: $478. 

PPO group: 
Year: 2001-2002: $2,328; 
Year: 2003-2007: $3,206; 
Difference: $879. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical and pharmacy claims for the 
public employer. The plan year was from January 1 through December 31. 
Annual spending was adjusted to 2007 dollars. Enrollees 65 years and 
older were not included in our analysis. All calculations may not 
reflect reported values due to rounding. 

[End of figure] 

Although the average annual spending for the HRA group remained 
consistently lower than the PPO group after introduction of the HRA, 
the average annual percentage increase in spending from 2003 through 
2007 was higher for the HRA group--10 percent versus 7 percent, 
respectively.[Footnote 27] This higher average annual percentage 
increase for the HRA group was likely influenced by the lower base of 
spending compared with the PPO group. (See figure 5.) 

Figure 5: Average Annual Spending per Enrollee for the HRA and PPO 
Groups at the Public Employer, 2001-2007: 

[Refer to PDF for image: multiple line graph] 

Year: 2001; 
HRA group: $814; 
PPO group: $2,104. 

Year: 2002; 
HRA group: $831; 
PPO group: $2,564. 

Year: 2003 (Introduction of HRA); 
HRA group: $1,012; 
PPO group: $2,802. 

Year: 2004; 
HRA group: $1,301; 
PPO group: $3,043. 

Year: 2005; 
HRA group: $1,334; 
PPO group: $3,243. 

Year: 2006; 
HRA group: $1,368; 
PPO group: $3,383. 

Year: 2007; 
HRA group: $1,503; 
PPO group: $3,649. 

HRA: 10% average annual percentage increase since 2003; 
PPO: 7% average annual percentage increase since 2003. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical and pharmacy claims for the 
public employer. The plan year was from January 1 through December 31. 
Annual spending was adjusted to 2007 dollars. Enrollees 65 years and 
older were not included in our analysis. 

[End of figure] 

At the specific service level, the public employers' HRA group 
experienced greater increases in spending for inpatient hospital, 
outpatient, physician office, and emergency room services than the PPO 
group, but these increases were offset by decreases in spending for 
prescription drugs and other services from the 2-year period before 
switching to the 5-year period after switching.[Footnote 28] For 
example, average annual spending for physician office services for the 
HRA group increased by $159 per enrollee compared with an increase of 
$120 per enrollee for the PPO group. However, average annual spending 
for prescription drugs for the HRA group decreased by $47 per enrollee 
compared with an increase of $263 per enrollee for the PPO group. (See 
table 3.) 

Table 3: Average Annual Spending per Enrollee by Service Type at the 
Public Employer before and after Introduction of an HRA: 

Service type: Inpatient hospital; 
HRA group (n=967-1,013): 2001-2002: $71; 
HRA group (n=967-1,013): 2003-2007: $248; 
HRA group (n=967-1,013): Change: $176; 
PPO group (n=1.25-1.62 million): 2001-2002: $470; 
PPO group (n=1.25-1.62 million): 2003-2007: $630; 
PPO group (n=1.25-1.62 million): Change: $160. 

Service type: Outpatient; 
HRA group (n=967-1,013): 2001-2002: $147; 
HRA group (n=967-1,013): 2003-2007: $377; 
HRA group (n=967-1,013): Change: $230; 
PPO group (n=1.25-1.62 million): 2001-2002: $402; 
PPO group (n=1.25-1.62 million): 2003-2007: $610; 
PPO group (n=1.25-1.62 million): Change: $207. 

Service type: Physician office; 
HRA group (n=967-1,013): 2001-2002: $319; 
HRA group (n=967-1,013): 2003-2007: $478; 
HRA group (n=967-1,013): Change: $159; 
PPO group (n=1.25-1.62 million): 2001-2002: $608; 
PPO group (n=1.25-1.62 million): 2003-2007: $728; 
PPO group (n=1.25-1.62 million): Change: $120. 

Service type: Emergency room; 
HRA group (n=967-1,013): 2001-2002: $8; 
HRA group (n=967-1,013): 2003-2007: $20; 
HRA group (n=967-1,013): Change: $12; 
PPO group (n=1.25-1.62 million): 2001-2002: $12; 
PPO group (n=1.25-1.62 million): 2003-2007: $21; 
PPO group (n=1.25-1.62 million): Change: $8. 

Service type: Prescription drugs; 
HRA group (n=967-1,013): 2001-2002: $211; 
HRA group (n=967-1,013): 2003-2007: $164; 
HRA group (n=967-1,013): Change: -$47; 
PPO group (n=1.25-1.62 million): 2001-2002: $610; 
PPO group (n=1.25-1.62 million): 2003-2007: $873; 
PPO group (n=1.25-1.62 million): Change: $263. 

Service type: Other; 
HRA group (n=967-1,013): 2001-2002: $66; 
HRA group (n=967-1,013): 2003-2007: $15; 
HRA group (n=967-1,013): Change: -$51; 
PPO group (n=1.25-1.62 million): 2001-2002: $225; 
PPO group (n=1.25-1.62 million): 2003-2007: $346; 
PPO group (n=1.25-1.62 million): Change: $120. 

Service type: All services (total); 
HRA group (n=967-1,013): 2001-2002: $823; 
HRA group (n=967-1,013): 2003-2007: $1,301; 
HRA group (n=967-1,013): Change: $478; 
PPO group (n=1.25-1.62 million): 2001-2002: $2,328; 
PPO group (n=1.25-1.62 million): 2003-2007: $3,206; 
PPO group (n=1.25-1.62 million): Change: $879. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical and pharmacy claims for the 
public employer. The plan year was from January 1 through December 31. 
Annual spending was adjusted to 2007 dollars. Enrollees 65 years and 
older were not included in our analysis. All calculations may not 
reflect reported values due to rounding. 

[End of table] 

In addition, we found that when compared with the PPO group, the 
average annual utilization of services per enrollee for the HRA group 
either increased by a smaller amount or decreased from the 2-year 
period before switching to the 5-year period after switching for six 
out of eight service types we reviewed. For example, the average 
annual number of prescriptions filled decreased by less than one 
prescription per enrollee for the HRA group compared with an increase 
of about four prescriptions per enrollee for the PPO group. However, 
the average annual number of preventive services increased by about 
one per enrollee for the HRA group compared with less than one for the 
PPO group. (See appendix IV for more information on utilization by 
service type.) 

Private Employer: 

For the HRA group, similar to the public employer, average annual 
spending at the private employer increased by a smaller amount than 
for the PPO group from the 2-year period before to the 3-year period 
after switching. Specifically, average annual spending for the private 
employer's HRA group increased by $152 per enrollee compared with $206 
for the PPO group (we were not able to analyze pharmacy claims for 
this employer). (See figure 6.) 

Figure 6: Average Annual Spending per Enrollee at the Private Employer 
before and after Introduction of an HRA: 

[Refer to PDF for image: vertical bar graph] 

Average Annual Spending: 

HRA group: 
Year: 2001-2002: $623; 
Year: 2003-2007: $775; 
Difference: $152. 

PPO group: 
Year: 2001-2002: $1,188; 
Year: 2003-2007: $1,395; 
Difference: $206. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical claims; we were not able to 
analyze pharmacy claims for the private employer. Annual spending was 
adjusted to 2007 dollars. The plan year was from July 1 through June 
30. Enrollees 65 years and older were not included in our analysis. 
All calculations may not reflect reported values due to rounding. 

[End of figure] 

Moreover, average annual spending for the HRA group remained 
consistently lower than for the PPO group after introduction of the 
HRA, although spending fluctuated for both groups. The average annual 
rate of spending for the HRA group decreased by 2 percent from 2003 
through 2005, while the average annual rate of spending for the PPO 
group remained about the same.[Footnote 29] (See figure 7.) 

Figure 7: Average Annual Spending per Enrollee for the HRA and PPO 
Groups at the Private Employer, 2001-2005: 

[Refer to PDF for image: multiple line graph] 

Year: 2001; 
HRA group: $569; 
PPO group: $927. 

Year: 2002; 
HRA group: $676; 
PPO group: $1,451. 

Year: 2003 (Introduction of HRA); 
HRA group: $717; 
PPO group: $1,450. 

Year: 2004; 
HRA group: $914; 
PPO group: $1,285. 

Year: 2005; 
HRA group: $691; 
PPO group: $1,449. 

HRA: 2% average annual percentage decrease since 2003; 
PPO: 0% average annual percentage change since 2003. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical claims; we were not able to 
analyze pharmacy claims for the private employer. Annual spending was 
adjusted to 2007 dollars. The plan year was from July 1 through June 
30. Enrollees 65 years and older were not included in our analysis. 

[End of figure] 

At the specific service level, the private employer's HRA group 
experienced greater increases in spending for inpatient hospital 
services compared with the PPO group, but this increase was offset by 
a decrease in spending for emergency room services as well as lower 
increases in spending for outpatient, physician office, and other 
services from the 2-year period before switching to the 3-year period 
after switching.[Footnote 30] For example, average annual spending for 
inpatient hospital services for the HRA group increased by $82 per 
enrollee compared with an increase of $23 per enrollee for the PPO 
group. However, the average annual spending for emergency room 
services for the HRA group decreased by $28 per enrollee compared with 
an increase of $20 per enrollee for the PPO group. Additionally, the 
average annual spending for physician office services for the HRA 
group increased by only $22 per enrollee compared with an increase of 
$73 per enrollee for the PPO group. (See table 4.) 

Table 4: Average Annual Spending per Enrollee by Service Type at the 
Private Employer before and after Introduction of an HRA: 

Service type: Inpatient hospital; 
HRA group (n=570-584): 2001-2002: $73; 
HRA group (n=570-584): 2003-2005: $155; 
HRA group (n=570-584): Change: $82; 
PPO group (n=1,079-1,098): 2001-2002: $419; 
PPO group (n=1,079-1,098): 2003-2005: $442; 
PPO group (n=1,079-1,098): Change: $23. 

Service type: Outpatient; 
HRA group (n=570-584): 2001-2002: $188; 
HRA group (n=570-584): 2003-2005: $264; 
HRA group (n=570-584): Change: $76; 
PPO group (n=1,079-1,098): 2001-2002: $298; 
PPO group (n=1,079-1,098): 2003-2005: $380; 
PPO group (n=1,079-1,098): Change: $82. 

Service type: Physician office; 
HRA group (n=570-584): 2001-2002: $303; 
HRA group (n=570-584): 2003-2005: $326; 
HRA group (n=570-584): Change: $22; 
PPO group (n=1,079-1,098): 2001-2002: $380; 
PPO group (n=1,079-1,098): 2003-2005: $453; 
PPO group (n=1,079-1,098): Change: $73. 

Service type: Emergency room; 
HRA group (n=570-584): 2001-2002: $55; 
HRA group (n=570-584): 2003-2005: $27; 
HRA group (n=570-584): Change: -$28; 
PPO group (n=1,079-1,098): 2001-2002: $81; 
PPO group (n=1,079-1,098): 2003-2005: $101; 
PPO group (n=1,079-1,098): Change: $20. 

Service type: Prescription drugs[A]; 
HRA group (n=570-584): 2001-2002: 
-; 
HRA group (n=570-584): 2003-2005: [Empty]; 
HRA group (n=570-584): Change: [Empty]; 
PPO group (n=1,079-1,098): 2001-2002: [Empty]; 
PPO group (n=1,079-1,098): 2003-2005: [Empty]; 
PPO group (n=1,079-1,098): Change: [Empty]. 

Service type: Other; 
HRA group (n=570-584): 2001-2002: $3; 
HRA group (n=570-584): 2003-2005: $4; 
HRA group (n=570-584): Change: $0; 
PPO group (n=1,079-1,098): 2001-2002: $10; 
PPO group (n=1,079-1,098): 2003-2005: $19; 
PPO group (n=1,079-1,098): Change: $9. 

Service type: All services (total); 
HRA group (n=570-584): 2001-2002: $623; 
HRA group (n=570-584): 2003-2005: $775; 
HRA group (n=570-584): Change: $152; 
PPO group (n=1,079-1,098): 2001-2002: $1,188; 
PPO group (n=1,079-1,098): 2003-2005: $1,395; 
PPO group (n=1,079-1,098): Change: $206. 

Source: GAO analysis of health insurance claims data. 

Notes: Analysis was based on medical claims for the private employer. 
Annual spending was adjusted to 2007 dollars. The plan year was from 
July 1 through June 30. Enrollees 65 years and older were not included 
in our analysis. All calculations may not reflect reported values due 
to rounding. 

[A] We were not able to analyze pharmacy claims for the private 
employer. 

[End of table] 

In addition, we found that when compared with the PPO group, the 
average annual utilization of services per enrollee for the HRA group 
either increased by a smaller amount or decreased from the 2-year 
period before switching to the 3-year period after switching for four 
out of seven service types we reviewed. For example, the average 
annual number of preventive services increased slightly less for the 
HRA group compared with the PPO group. For emergency room visits, the 
average annual number of visits per enrollee slightly decreased for 
the HRA group while it slightly increased for the PPO group. (See 
appendix IV for more information on utilization by service type.) 

Published Studies: 

Consistent with our analysis of employer data, most published studies 
that examined health care spending reported lower spending among 
enrollees in HRAs and other CDHPs relative to traditional plans. Of 
the eight studies in our review that examined total or medical 
spending and controlled for differences in health status or other 
characteristics of enrollees, seven found that HRAs and other CDHPs 
reduced spending relative to traditional plans.[Footnote 31] For 
example, the cost of medical and pharmacy care for HRA and other CDHP 
enrollees was more than 4 percent lower than that of those in 
traditional plans after accounting for differences in illness burden. 
[Footnote 32] In addition, of the six studies that reviewed spending 
for prescription drugs, four reported that HRA and other CDHP 
enrollees spent less than did traditional plan enrollees.[Footnote 33] 
For example, one study found that costs were 10 percent lower for HRA 
and other CDHPs than for traditional plans, suggesting a higher use of 
generic drugs and mail order purchasing.[Footnote 34] The one study 
that did not find savings in total spending through an HRA found that 
it was 23 percent more expensive than the traditional plan by its 
third year of existence.[Footnote 35] However, the study authors 
acknowledged that this may be due to the plan design of the HRA, which 
provided 100 percent coverage after enrollees paid a small share of 
the deductible. 

When considering the results of the published studies that reviewed 
spending, it is important to note that these studies assessed 
differences over a short time period. Of the seven studies that found 
reduced spending, five studies found lower rates over a 1-or 2-year 
period. For example, three of the studies were published by Cigna 
HealthCare and were each a 1-year update on the claims costs of their 
HRAs and other CDHPs relative to their traditional plans.[Footnote 36] 
The study that did not find lower spending reported that spending was 
higher among HRA enrollees than among traditional plan enrollees over 
a 3-year period, by as much as 26 percent in a single year.[Footnote 
37] 

We also reviewed published studies that reported on differences in 
utilization of health care services and generally found lower 
utilization among HRA and other CDHP enrollees compared with 
traditional plan enrollees for two of the five service types we 
reviewed. In particular, we reviewed studies that reported on 
utilization of inpatient hospital admissions, outpatient visits, 
emergency room visits, physician office visits, and preventive 
services and whether they reported a lower, higher, or no conclusive 
difference in utilization among HRA and other CDHP enrollees compared 
with traditional plan enrollees. For example, three out of four 
studies that assessed visits to the emergency room found a decrease in 
emergency room utilization among HRA and other CDHP enrollees relative 
to traditional plan enrollees. Eight studies assessed the utilization 
of preventive services, and six found an increase among HRA and other 
CDHP enrollees relative to traditional plan enrollees. This may be due 
to the fact that most HRAs and other CDHPs exempt preventive services 
from the deductible. (See appendix IV for more information on the 
results of our review of published studies on utilization by service 
type for HRA and other CDHP enrollees compared with those in 
traditional plans.) 

Agency and External Comments: 

We provided a draft of the report for review and comment to OPM 
because of its role administering the health insurance program for 
federal employees. We provided a draft of this report to 
representatives of the public and private employers whose health plans 
we reviewed and to two independent health policy researchers with 
experience studying CDHPs. OPM did not comment on the draft report. 
One of the independent researchers commented that the study made good 
use of employer data sets and existing research, the methods were 
appropriate to the study objectives, and the findings were consistent 
with the larger body of research in this area. The researcher also 
raised several questions about the implications of our findings that 
were beyond the scope of this study. The remaining parties did not 
comment on the draft report. 

As we agreed with your offices, unless you publicly announce the 
contents of this report earlier, we plan no further distribution of it 
until 30 days from the date of this report. At that time, we will send 
copies of this report to the Director of OPM, appropriate 
congressional committees, and other interested parties. The report 
will be available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have questions about this report, please contact 
me at (202) 512-7114 or at dickenj@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix VI. 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Appendix I: Scope and Methodology: 

For enrollees who switched into plans based on health reimbursement 
arrangements (HRA) compared with enrollees who stayed in a traditional 
plan, we assessed (1) differences in health status and (2) changes in 
spending and utilization of health care services.[Footnote 38] We 
conducted this performance audit predominantly in two phases from July 
2007 through October 2008 and from September 2009 through July 2010 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Data and Information Sources: 

To address our research objectives, we conducted an analysis of an HRA 
and a traditional health plan for two large employers and supplemented 
our work with the results of several published studies. 

* Two large employers. We obtained HRA and preferred provider 
organization (PPO) plan enrollment and claims data for plan years 2001 
through 2007 for a large public employer and for plan years 2001 
through 2005 for a large private employer.[Footnote 39] We 
judgmentally selected these employers because each: 

- offered an HRA as one of multiple plan options for at least 3 years; 

- offered traditional plans, including a PPO, for 2 years before and 
at least 3 years after the HRA was implemented; and: 

- did not switch insurance carriers or significantly change their HRA 
or PPO plan features during the study period.[Footnote 40] (See 
appendix III for financial features of each employer's HRA and PPO 
plans.) 

Both employers introduced an HRA as a health insurance option for 
employees at the beginning of the 2003 plan year.[Footnote 41] For 
each employer, we defined a group of HRA enrollees and a group of PPO 
enrollees by analyzing enrollment data.[Footnote 42] The HRA group 
included policyholders who were continuously enrolled in the PPO in 
the 2001 and 2002 plan years, switched into the HRA in the 2003 plan 
year, and stayed in the HRA for the remainder of our study periods. 
The PPO group included policyholders who were continuously enrolled in 
the PPO from the 2001 plan year through the remainder of our study 
periods.[Footnote 43] Additionally, all groups included the covered 
dependents of policyholders. 

For the public employer, the total number of enrollees ranged from 967 
to 1,013 in the HRA group and from 1.25 million to 1.62 million in the 
PPO group over the study period. For the private employer, the number 
of enrollees ranged from 570 to 584 in the HRA group and from 1,079 to 
1,098 in the PPO group over the study period. Group sizes fluctuated 
from year to year as enrollees who turned 65 years of age were removed 
from the analysis and the number of dependents changed.[Footnote 44] 

* Published studies. We conducted a comprehensive review of studies 
published from January 2003 through March 2009 that included an 
assessment of the health status, spending, utilization, or other 
demographic characteristics of HRA and other CDHP enrollees compared 
with those in traditional plans. We identified 31 such studies, of 
which 18 focused exclusively on HRA enrollees, and 13 focused on both 
HRA and other consumer-directed health plan (CDHP) enrollees in plans 
eligible to be coupled with a health savings account (HSA).[Footnote 
45] Our review comprised peer-reviewed journal articles, studies by 
insurance carriers or independent consultants, national surveys, and 
government publications. For our review of health status, we included 
studies that used self-reported health status, assessed the health 
status or illness burden of plan enrollees based on diagnoses or 
disease indicators, or examined utilization prior to enrolling in an 
HRA. For our review of spending and utilization, we included only 
those studies that addressed selection bias as part of the methodology 
to account for differences between HRA and other CDHP enrollees and 
traditional plan enrollees that may affect the use of health care 
services. (See appendix II for our methodology and a list of studies 
we included in our review of published studies.) 

Health Status of HRA and Traditional Plan Enrollees: 

To assess differences in the health status of enrollees who switched 
into an HRA compared with those who stayed in a traditional plan, we 
analyzed HRA and PPO plan claims data for the two large employers we 
examined.[Footnote 46],[Footnote 47] We compared spending and 
utilization of health care services between the HRA and PPO groups for 
each employer before introduction of the HRA in plan year 2003. 
[Footnote 48] This design enabled us to observe the potential effect 
of selection bias due to differences in health status or other 
characteristics which we did not separately control for between the 
two groups. We also summarized the findings of studies that compared 
health status and other demographic characteristics of HRA and other 
CDHP enrollees with those in traditional plans.[Footnote 49] 

Spending and Utilization of HRA and Traditional Plan Enrollees: 

To assess changes in spending and utilization of health care services 
for enrollees who switched into an HRA compared with those who stayed 
in a traditional plan, we analyzed the change in spending and 
utilization of health care services for the HRA and PPO groups from 
the period before to the period after introduction of the HRA in plan 
year 2003. We also summarized the findings of studies that compared 
spending and utilization of HRA and other CDHP enrollees with those in 
traditional plans. 

For all of our spending analyses, we included the portion paid by the 
health plan and the portion paid by the enrollee in our calculations. 
[Footnote 50] We examined total spending across all medical services 
and by the following service types:[Footnote 51] 

* inpatient hospital, 

* outpatient, 

* physician office, 

* emergency room, and: 

* prescription drugs.[Footnote 52] 

All spending results were expressed in 2007 dollars using the medical 
care consumer price index to control for inflation.[Footnote 53] 

Similar to our spending analyses, we examined utilization of the 
service types listed above.[Footnote 54] In addition, we examined 
utilization by the following service types and other measures: 

* nonpreventive diagnostic radiology procedures, 

* nonpreventive diagnostic pathology or laboratory procedures, 

* preventive care services, 

* length of stay for an inpatient hospital admission, and: 

* percentage of enrollees with no medical claims.[Footnote 55] 

Data Reliability and Limitations: 

We reviewed all data for soundness and consistency and determined that 
they were sufficiently reliable for our purposes. We discussed our 
data sources with knowledgeable officials from the health plans and 
employers we reviewed. For the employer data, we also performed data 
reliability checks to test the internal consistency and reliability of 
the data, including removing outlier claims for each year,[Footnote 
56] interviewing health plan officials to understand their coding 
systems, and reviewing steps the plans took to ensure their enrollment 
and claims data were complete and accurate. We excluded claims that 
indicated a coordination of benefits between the HRA or PPO plans and 
other insurers.[Footnote 57] Because we analyzed health insurance 
claims from an HRA and a PPO plan for each of the two employers we 
reviewed, variations may exist across the data systems used by each 
plan in how they designate claims by service type. Further, 
differences may exist in the negotiated rates that each plan pays 
providers for services. 

The results of our analyses are not generalizable beyond the 
enrollees, health plans, and employers included in our review. The 
results of our employer analyses cannot be compared between the public 
and private employers. In particular, the results of our spending and 
utilization analyses from the two employers may be influenced by the 
benefit design of the health plans we reviewed and the sizes of the 
HRA and PPO groups in our study. Additionally, because our analyses of 
the two employers reflected instances where employees had a choice 
between an HRA and a PPO plan option, they do not represent the 
experiences of employees who have HRAs as their only plan option. 

[End of section] 

Appendix II: Review of Published Studies: 

We conducted a comprehensive review of published studies from January 
2003 through March 2009 that included an assessment of the health 
status, spending, utilization, or other demographic characteristics of 
HRA and other CDHP enrollees compared with traditional plan enrollees. 
We identified 31 such studies, of which 18 focused exclusively on HRA 
enrollees, and 13 focused on both HRA and other CDHP enrollees in an 
HSA-eligible plan. Our review comprised peer-reviewed journal 
articles, studies by insurance carriers or independent consultants, 
national surveys, and government publications.[Footnote 58] 

For our review of health status, we included studies that used self- 
reported health status, assessed the health status or illness burden 
of plan enrollees based on diagnoses or disease indicators, or 
examined utilization prior to enrolling in an HRA or other CDHP. For 
our review of spending and utilization, we included only those studies 
that addressed selection bias as part of the methodology to account 
for differences between HRA and other CDHP enrollees and traditional 
plan enrollees that may affect the use of health care services. For 
example, these methodologies included: 

* using a regression analysis to control for differences in 
demographic characteristics between study and control groups; 

* weighting the data to adjust for differences in demographic 
characteristics between groups; or: 

* examining the change from a traditional plan to a full replacement 
HRA, whereby all of the traditional plan enrollees migrated to the HRA. 

Our review of spending by HRA and other CDHP enrollees compared with 
traditional plan enrollees also included only those studies that 
included both the employer and the employee portion of spending for a 
health care service. 

For our review of other demographic characteristics, we assessed the 
age, gender, type of coverage (single or family), and salary of HRA 
and other CDHP enrollees compared with traditional plan enrollees. 

Table 5 identifies the 31 studies included in our review, and whether 
we used each study to address health status, spending, utilization, or 
otherwise describe demographic characteristics of enrollees. 

Table 5: Published Studies of HRA and other CDHP Enrollees and 
Traditional Plan Enrollees, January 2003-March 2009: 

Study: Barry, C., and others. "Who Chooses a Consumer-Directed Health 
Plan?" Health Affairs, vol. 27, no. 6 (2008): 1671-1679; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Blue Cross Blue Shield Association. Consumer-Directed Health 
Plans: Consumer Perspectives, 2008 CDHP Member Experience Report. 
November 2008; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check] 
Demographic characteristics: [Check]. 

Study: Briggs Fowles, J., and others. "Early Experience with Employee 
Choice of Consumer-Directed Health Plans and Satisfaction with 
Enrollment." Health Services Research, vol. 39, no. 4, Part II (2004): 
1141-1158; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Christianson, J. B., and others. "Consumer Experiences in a 
Consumer-Driven Health Plan." Health Services Research, vol. 39, no. 
4, Part II (2004): 1123-1139; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Cigna Choice Fund Results Analysis, November 2006; 
Health status: [Empty]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Cigna Choice Fund Experience Study, October 2007; 
Health status: [Empty]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Cigna Choice Fund Experience Study, January 2009; 
Health status: [Empty]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Dixon, A., and others. "Do Consumer-Directed Health Plans Drive 
Change in Enrollees' Health Care Behavior?" Health Affairs, vol. 27, 
no. 4 (2008): 1120-1131; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Express Scripts. What Happens to Prescription Drug Use After 
Consumer-Directed Health Plan Enrollment? April 2007; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Feldman, R., and others. "Consumer-Directed Health Plans: New 
Evidence on Spending and Utilization." Inquiry, vol. 44, no. 1 (2007): 
26-40; 
Health status: [Check]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Fronstin, P., and S. Collins. "Early Experience with High- 
Deductible and Consumer-Driven Health Plans: Findings From the EBRI/ 
Commonwealth Fund Consumerism in Health Survey." EBRI Issue Brief, no. 
288 (December 2005); 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Fronstin, P., and S. Collins. "The 2nd Annual EBRI/Commonwealth 
Fund Consumerism in Health Care Survey, 2006: Early Experience with 
High Deductible and Consumer-Driven Health Plans." EBRI Issue Brief, 
no. 300 (December 2006); 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Fronstin, P., and S. Collins. "Findings From the 2007 EBRI/ 
Commonwealth Fund Consumerism in Health Survey." EBRI Issue Brief, no. 
315 (March 2008); 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Fronstin, Paul. "Findings From the 2008 EBRI Consumer 
Engagement in Health Care Survey." EBRI Issue Brief, no. 323 (November 
2008); 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: GAO. Federal Employees Health Benefits Program: Early 
Experience with a Consumer-Directed Health Plan. GAO-06-143. 
Washington, D.C.: November 21, 2005; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Greene, J., and others. "The Impact of Consumer-Directed Health 
Plans on Prescription Drug Use." Health Affairs, vol. 27, no. 4 
(2008): 1111-1119; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Greene, J., and others. "Which Consumers Are Ready for Consumer-
Directed Health Plans?" Journal of Consumer Policy, vol. 29, no. 3 
(2006): 247-262; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: HealthPartners. Consumer Directed Health Plans Analysis. 
October 2007; 
Health status: [Check]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Hibbard, J., and others. "Does Enrollment in a CDHP Stimulate 
Cost-Effective Utilization?" Medical Care Research and Review, vol. 
65, no. 4 (2008): 437-449; 
Health status: [Empty]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: The Henry J. Kaiser Family Foundation. National Survey of 
Enrollees in Consumer Directed Health Plans. Menlo Park, Calif., 
November 2006; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Lo Sasso, A., and others. "Tales from the New Frontier: 
Pioneers' Experiences with Consumer-Driven Health Care." Health 
Services Research, vol. 39, no. 4, Part II (2004): 1071-1089; 
Health status: [Empty]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: McKinsey and Company. Consumer-Directed Health Plan Report - 
Early Evidence Is Promising. Pittsburgh, Pa., June 2005; 
Health status: [Empty]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Milliman, Inc. Consumer-Driven Impact Study, Seattle, Wash., 
April 2008; 
Health status: [Empty]; 
Spending: [Check]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Nair, K., and others. "Consumer-Driven Health Plans: Their 
Impact on Medical Utilization, Pharmacy Utilization, and 
Expenditures." Journal of Health Care Finance, vol. 35, no. 1 (2008): 
1-12; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Parente, S., and others. "Effects of a Consumer Driven Health 
Plan on Pharmaceutical Spending and Utilization." Health Services 
Research, vol. 43, no. 5, Part I (2008): 1542-1556; 
Health status: [Check]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Parente, S., and others. "Employee Choice of Consumer-Driven 
Health Insurance in a Multi-Plan Multi-Product Setting." Health 
Services Research, vol. 39, no. 4, Part II (2004): 1091-1111; 
Health status: [Empty]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: Parente, S., and others. "Evaluation of the Effect of a 
Consumer-Driven Health Plan on Medical Care Expenditures and 
Utilization." Health Services Research, vol. 39, no. 4, Part II 
(2004): 1189-1209; 
Health status: [Check]; 
Spending: [Check]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Study: Rowe, J. W., and others. "The Effect of Consumer-Directed 
Health Plans on the Use of Preventative and Chronic Illness Services." 
Health Affairs, vol. 27, no. 1 (2008): 113-120; 
Health status: [Empty]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Tollen, L. A., and others. "Risk Segmentation Related to the 
Offering of a Consumer-Directed Health Plan: A Case Study of Humana, 
Inc." Health Services Research, vol. 39, no. 4, Part II (2004): 1167- 
1187; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Empty]; 
Demographic characteristics: [Check]. 

Study: United Health Group. Definity Consumer-Driven Health (CDH) 
Impact Study, July 2006; 
Health status: [Empty]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Empty]. 

Study: Wilson, A., and others. "More Preventative Care, and Fewer 
Emergency Room Visits and Prescription Drugs: Health Care Utilization 
in a Consumer-Driven Health Plan." Benefits Quarterly, vol. 24, no. 1 
(2008): 46-54; 
Health status: [Check]; 
Spending: [Empty]; 
Utilization: [Check]; 
Demographic characteristics: [Check]. 

Source: GAO analysis of published studies. 

[End of table] 

[End of section] 

Appendix III: Financial Features of the HRA and PPO Plans Offered at 
the Public and Private Employers: 

Table 6 below summarizes the financial features of the HRA and PPO 
plans offered by the public and private employers we reviewed. The 
financial features presented are for in-network services in plan year 
2003--the first year HRAs were introduced by the employers. 

Table 6: Financial Features of the HRA and PPO Plans Offered at the 
Public and Private Employers for In-Network Services, 2003: 

Feature: Annual enrollee share of premium; 
Coverage type: Single; 
Public employer: HRA: $946; 
Public employer: PPO: $1,187; 
Private employer: HRA: $312[A]; 
Private employer: PPO: $624[A]. 

Feature: Annual enrollee share of premium; 
Coverage type: Family[B]; 
Public employer: HRA: $2,244; 
Public employer: PPO: $2,736; 
Private employer: HRA: $1,248[A]; 
Private employer: PPO: $2,172[A]. 

Feature: Annual enrollee deductible[C]; 
Coverage type: Single; 
Public employer: HRA: $1,600; 
Public employer: PPO: $250; 
Private employer: HRA: $2,500; 
Private employer: PPO: $300. 

Feature: Annual enrollee deductible[C]; 
Coverage type: Family[B]; 
Public employer: HRA: $3,200; 
Public employer: PPO: $500; 
Private employer: HRA: $5,000; 
Private employer: PPO: $600. 

Feature: Annual employer HRA contribution[D]; 
Coverage type: Single; 
Public employer: HRA: $1,000; 
Public employer: PPO: N/A; 
Private employer: HRA: $750[E]; 
Private employer: PPO: N/A. 

Feature: Annual employer HRA contribution[D]; 
Coverage type: Family[B]; 
Public employer: HRA: $2,000; 
Public employer: PPO: N/A; 
Private employer: HRA: $1,500[E]; 
Private employer: PPO: N/A. 

Feature: Enrollee coinsurance after deductible is met; 
Coverage type: Single; 
Public employer: HRA: 15%[F]; 
Public employer: PPO: 10%[G]; 
[Empty]; 
Private employer: HRA: 0%; 
Private employer: PPO: 15%. 

Feature: Enrollee coinsurance after deductible is met; 
Coverage type: Family[B]; 
Public employer: HRA: 15%[F]; 
Public employer: PPO: 10%[G]; 
Private employer: HRA: 0%; 
Private employer: PPO: 15%. 

Feature: Annual enrollee out-of-pocket maximum; 
Coverage type: Single; 
Public employer: HRA: $4,500[H]; 
Public employer: PPO: $4,000[I]; 
[Empty]; 
Private employer: HRA: N/A[J]; 
Private employer: PPO: $2,000[K]. 

Feature: Annual enrollee out-of-pocket maximum; 
Coverage type: Family[B]; 
Public employer: HRA: $4,500[H]; 
Public employer: PPO: $4,000[I]; 
Private employer: HRA: N/A[J]; 
Private employer: PPO: $4,000[K]. 

Source: GAO analysis of HRA and PPO plan brochures. 

Notes: Financial features presented in this table represent the 
features of the four health plans used in our analysis from plan year 
2003--the first year HRAs were introduced by those employers. Except 
for an increase in premiums, there were no major changes in any of the 
plans' financial features for the period of our analysis between 2001 
and 2007. The plan year for the public employer runs from January 1 
through December 31, while the plan year for the private employer runs 
from July 1 through June 30. 

[A] Premiums listed for the private employer's plans are for employees 
who are nonsmokers and earn less than $85,000 annually. Premiums are 
higher for employees who are smokers or earn $85,000 or more annually. 

[B] Family coverage includes the policyholder, spouse, and children. 

[C] Under the PPOs, copayments do not count toward the deductible, and 
there are no copayments under the HRAs. Under the HRAs, charges for 
preventive care are not subject to the deductible. 

[D] Unused funds from the employer's contribution toward the HRA 
account can be rolled over from year to year. The public employer plan 
limits the funds that can accrue in the HRA account to a maximum 
account balance of $4,000 for single coverage or $6,000 for family 
coverage while the private employer plan imposes no such limitation. 
The enrollee is responsible for the portion of the annual deductible 
that is not covered by the employer's contribution. 

[E] Employer contributions listed in the table are for employees 
earning more than $35,000 annually. The employer contributes more if 
employees earn less than $35,000 annually. 

[F] Twenty-five percent coinsurance is charged for covered 
prescription drugs obtained through a retail pharmacy with a minimum 
of $8 per prescription. 

[G] Twenty-five percent coinsurance is charged for covered 
prescription drugs obtained through a retail pharmacy. 

[H] Out-of-pocket expenses that count towards the maximum include 
coinsurance, but do not include coinsurance for outpatient 
prescription drugs. 

[I] Out-of-pocket expenses that count towards the maximum include 
deductibles, coinsurance, and copayments. 

[J] One hundred percent of all in-network services are covered after 
the enrollee has met the deductible. 

[K] Out-of-pocket expenses that count towards the maximum include 
deductibles and coinsurance. 

[End of table] 

[End of section] 

Appendix IV: Utilization of Services for Enrollees in HRAs and 
Traditional Plans: 

Tables 7 and 8 compare utilization by service type for the HRA groups 
with the PPO groups before and after introduction of the HRA for the 
public and private employers we reviewed. Table 9 summarizes the 
findings of studies we reviewed that included an assessment of the 
utilization of HRA and other CDHP enrollees compared with those in 
traditional plans. 

Table 7: Average Annual Utilization of Services per Enrollee at the 
Public Employer before and after Introduction of an HRA: 

Service type: Inpatient hospital admissions; 
HRA group (n=967-1,013): 2001-2002: 0.02; 
HRA group (n=967-1,013): 2003-2007: 0.03; 
HRA group (n=967-1,013): Change: 0.01; 
PPO group (n=1.25-1.62 million): 2001-2002: 0.09; 
PPO group (n=1.25-1.62 million): 2003-2007: 0.09; 
PPO group (n=1.25-1.62 million): Change: 0.00. 

Service type: Outpatient visits; 
HRA group (n=967-1,013): 2001-2002: 0.51; 
HRA group (n=967-1,013): 2003-2007: 0.54; 
HRA group (n=967-1,013): Change: 0.03; 
PPO group (n=1.25-1.62 million): 2001-2002: 1.23; 
PPO group (n=1.25-1.62 million): 2003-2007: 1.64; 
PPO group (n=1.25-1.62 million): Change: 0.41. 

Service type: Physician office visits; 
HRA group (n=967-1,013): 2001-2002: 3.72; 
HRA group (n=967-1,013): 2003-2007: 3.82; 
HRA group (n=967-1,013): Change: 0.10; 
PPO group (n=1.25-1.62 million): 2001-2002: 6.62; 
PPO group (n=1.25-1.62 million): 2003-2007: 7.77; 
PPO group (n=1.25-1.62 million): Change: 1.14. 

Service type: Emergency room visits; 
HRA group (n=967-1,013): 2001-2002: 0.05; 
HRA group (n=967-1,013): 2003-2007: 0.09; 
HRA group (n=967-1,013): Change: 0.04; 
PPO group (n=1.25-1.62 million): 2001-2002: 0.08; 
PPO group (n=1.25-1.62 million): 2003-2007: 0.15; 
PPO group (n=1.25-1.62 million): Change: 0.06. 

Service type: Radiology procedures; 
HRA group (n=967-1,013): 2001-2002: 0.39; 
HRA group (n=967-1,013): 2003-2007: 0.30; 
HRA group (n=967-1,013): Change: -0.09; 
PPO group (n=1.25-1.62 million): 2001-2002: 0.92; 
PPO group (n=1.25-1.62 million): 2003-2007: 0.97; 
PPO group (n=1.25-1.62 million): Change: 0.05. 

Service type: Pathology/laboratory procedures; 
HRA group (n=967-1,013): 2001-2002: 0.84; 
HRA group (n=967-1,013): 2003-2007: 0.49; 
HRA group (n=967-1,013): Change: -0.36; 
PPO group (n=1.25-1.62 million): 2001-2002: 1.68; 
PPO group (n=1.25-1.62 million): 2003-2007: 1.71; 
PPO group (n=1.25-1.62 million): Change: 0.03. 

Service type: Preventive services; 
HRA group (n=967-1,013): 2001-2002: 1.26; 
HRA group (n=967-1,013): 2003-2007: 2.30; 
HRA group (n=967-1,013): Change: 1.04; 
PPO group (n=1.25-1.62 million): 2001-2002: 0.70; 
PPO group (n=1.25-1.62 million): 2003-2007: 0.93; 
PPO group (n=1.25-1.62 million): Change: 0.22. 

Service type: Prescriptions filled; 
HRA group (n=967-1,013): 2001-2002: 3.80; 
HRA group (n=967-1,013): 2003-2007: 3.57; 
HRA group (n=967-1,013): Change: -0.23; 
PPO group (n=1.25-1.62 million): 2001-2002: 10.42; 
PPO group (n=1.25-1.62 million): 2003-2007: 14.90; 
PPO group (n=1.25-1.62 million): Change: 4.48. 

Other measures: Length of hospital stay (days); 
HRA group (n=967-1,013): 2001-2002: 1.36; 
HRA group (n=967-1,013): 2003-2007: 2.66; 
HRA group (n=967-1,013): Change: 1.30; 
PPO group (n=1.25-1.62 million): 2001-2002: 2.01; 
PPO group (n=1.25-1.62 million): 2003-2007: 2.43; 
PPO group (n=1.25-1.62 million): Change: 0.42. 

Other measures: Percentage with no medical claims; 
HRA group (n=967-1,013): 2001-2002: 21.36; 
HRA group (n=967-1,013): 2003-2007: 19.37; 
HRA group (n=967-1,013): Change: -1.99; 
PPO group (n=1.25-1.62 million): 2001-2002: 16.71; 
PPO group (n=1.25-1.62 million): 2003-2007: 19.74; 
PPO group (n=1.25-1.62 million): Change: 3.03. 

Source: GAO analysis of health insurance claims data. 

Notes: Utilization is based on analysis of medical and pharmacy claims 
for the public employer. Radiology and pathology/laboratory procedures 
are for nonpreventive diagnostic procedures. The plan year was from 
January 1 through December 31. Enrollees 65 years and older were not 
included in our analysis. All calculations may not reflect reported 
values due to rounding. 

[End of table] 

Table 8: Average Annual Utilization of Services per Enrollee at the 
Private Employer before and after Introduction of an HRA: 

Service type: Inpatient hospital admissions; 
HRA group (n=570-584): 2001-2002: 0.01; 
HRA group (n=570-584): 2003-2005: 0.01; 
HRA group (n=570-584): Change: 0.00; 
PPO group (n=1,079-1,098): 2001-2002: 0.03; 
PPO group (n=1,079-1,098): 2003-2005: 0.03; 
PPO group (n=1,079-1,098): Change: 0.00. 

Service type: Outpatient visits; 
HRA group (n=570-584): 2001-2002: 0.55; 
HRA group (n=570-584): 2003-2005: 0.71; 
HRA group (n=570-584): Change: 0.16; 
PPO group (n=1,079-1,098): 2001-2002: 0.84; 
PPO group (n=1,079-1,098): 2003-2005: 1.07; 
PPO group (n=1,079-1,098): Change: 0.23. 

Service type: Physician office visits; 
HRA group (n=570-584): 2001-2002: 3.35; 
HRA group (n=570-584): 2003-2005: 3.36; 
HRA group (n=570-584): Change: 0.01; 
PPO group (n=1,079-1,098): 2001-2002: 4.12; 
PPO group (n=1,079-1,098): 2003-2005: 4.91; 
PPO group (n=1,079-1,098): Change: 0.79. 

Service type: Emergency room visits; 
HRA group (n=570-584): 2001-2002: 0.19; 
HRA group (n=570-584): 2003-2005: 0.12; 
HRA group (n=570-584): Change: -0.08; 
PPO group (n=1,079-1,098): 2001-2002: 0.27; 
PPO group (n=1,079-1,098): 2003-2005: 0.30; 
PPO group (n=1,079-1,098): Change: 0.03. 

Service type: Radiology procedures; 
HRA group (n=570-584): 2001-2002: 0.33; 
HRA group (n=570-584): 2003-2005: 0.42; 
HRA group (n=570-584): Change: 0.09; 
PPO group (n=1,079-1,098): 2001-2002: 0.48; 
PPO group (n=1,079-1,098): 2003-2005: 0.54; 
PPO group (n=1,079-1,098): Change: 0.06. 

Service type: Pathology/laboratory procedures; 
HRA group (n=570-584): 2001-2002: 0.43; 
HRA group (n=570-584): 2003-2005: 0.63; 
HRA group (n=570-584): Change: 0.20; 
PPO group (n=1,079-1,098): 2001-2002: 0.70; 
PPO group (n=1,079-1,098): 2003-2005: 0.85; 
PPO group (n=1,079-1,098): Change: 0.15. 

Service type: Preventive services; 
HRA group (n=570-584): 2001-2002: 0.87; 
HRA group (n=570-584): 2003-2005: 1.11; 
HRA group (n=570-584): Change: 0.24; 
PPO group (n=1,079-1,098): 2001-2002: 1.05; 
PPO group (n=1,079-1,098): 2003-2005: 1.34; 
PPO group (n=1,079-1,098): Change: 0.29. 

Service type: Prescriptions filled[A]; 
HRA group (n=570-584): 2001-2002: [Empty]; 
HRA group (n=570-584): 2003-2005: [Empty] 
HRA group (n=570-584): Change: [Empty]; 
PPO group (n=1,079-1,098): 2001-2002: [Empty]; 
PPO group (n=1,079-1,098): 2003-2005: [Empty]; 
PPO group (n=1,079-1,098): Change: [Empty]. 

Other measures: Length of hospital stay (days); 
HRA group (n=570-584): 2001-2002: 2.30; 
HRA group (n=570-584): 2003-2005: 2.32; 
HRA group (n=570-584): Change: 0.02; 
PPO group (n=1,079-1,098): 2001-2002: 3.64; 
PPO group (n=1,079-1,098): 2003-2005: 3.67; 
PPO group (n=1,079-1,098): Change: 0.03. 

Other measures: Percentage with no medical claims; 
HRA group (n=570-584): 2001-2002: 31.35; 
HRA group (n=570-584): 2003-2005: 29.20; 
HRA group (n=570-584): Change: -2.16; 
PPO group (n=1,079-1,098): 2001-2002: 25.73; 
PPO group (n=1,079-1,098): 2003-2005: 22.20; 
PPO group (n=1,079-1,098): Change: -3.53. 

Source: GAO analysis of health insurance claims data. 

Note: Utilization is based on an analysis of medical claims for the 
private employer. Radiology and pathology/laboratory procedures are 
for nonpreventive diagnostic procedures. The plan year was from July 1 
through June 30. Enrollees 65 years and older were not included in our 
analysis. All calculations may not reflect reported values due to 
rounding. 

[A] We were not able to analyze pharmacy claims for the private 
employer. 

[End of table] 

Table 9: Number of Published Studies That Reported on Utilization by 
Service Type, 2003-2009: 

Service type: Inpatient hospital admissions; 
Compared with traditional plan enrollees, the number of studies that 
reported: 
Lower utilization among HRA and other CDHP enrollees: 2; 
Higher utilization among HRA and other CDHP enrollees: 2; 
No difference or mixed results: 2; 
Total number of studies: 6. 

Service type: Outpatient visits; 
Compared with traditional plan enrollees, the number of studies that 
reported: 
Lower utilization among HRA and other CDHP enrollees: 1; 
Higher utilization among HRA and other CDHP enrollees: 0; 
No difference or mixed results: 1; 
Total number of studies: 2. 

Service type: Emergency room visits; 
Compared with traditional plan enrollees, the number of studies that 
reported: 
Lower utilization among HRA and other CDHP enrollees: 3; 
Higher utilization among HRA and other CDHP enrollees: 0; 
No difference or mixed results: 1; 
Total number of studies: 4. 

Service type: Physician office visits; 
Compared with traditional plan enrollees, the number of studies that 
reported: 
Lower utilization among HRA and other CDHP enrollees: 3; 
Higher utilization among HRA and other CDHP enrollees: 1; 
No difference or mixed results: 1; 
Total number of studies: 5. 

Service type: Preventive services; 
Compared with traditional plan enrollees, the number of studies that 
reported: 
Lower utilization among HRA and other CDHP enrollees: 0; 
Higher utilization among HRA and other CDHP enrollees: 6; 
No difference or mixed results: 2; 
Total number of studies: 8. 

Source: GAO review of published studies that included an assessment of 
the utilization of HRA and other CDHP enrollees compared with those in 
traditional plans, and controlled for selection bias. 

[End of table] 

[End of section] 

Appendix V: Demographics of Enrollees in HRAs and Traditional Plans: 

To understand demographic differences between HRA enrollees and 
traditional plan enrollees, we relied on an analysis of enrollment 
data from the two large employers we reviewed and compared our results 
to other national data sources and published studies. Specifically, we 
examined the age, gender, type of coverage (single or family), and 
salary of policyholders in the HRA and PPO groups at the beginning of 
plan year 2003 when the HRAs were first offered by each 
employer.[Footnote 59] We also analyzed these demographic 
characteristics using 2004 data from large insurance carriers active 
in the HRA and PPO markets[Footnote 60] and summarized the findings of 
studies included in our review that included a comparison of the 
demographic characteristics of HRA and other CDHP enrollees with those 
in traditional plans. 

Demographic Characteristics of Policyholders in the Employer HRA and 
PPO Groups: 

Our analyses of enrollment data from the two large employers showed 
that policyholders who switched into the HRA in 2003 were younger, 
more likely to be male, and elect single coverage than those who 
remained in the PPO plan. Specifically, we found that policyholders 
from both employers' HRA groups were on average 3 years younger than 
the PPO group in 2003. The HRA groups from both employers also had a 
slightly higher percentage--2 to 5 percentage points--of male 
enrollees than the PPO group in 2003. (See tables 10 and 11.) 

Table 10: Average Age of Policyholders in the HRA and PPO Groups, 2003: 

Employer: Public; 
HRA: 47; 
PPO: 50. 

Employer: Private; 
HRA: 39; 
PPO: 42. 

Source: GAO analysis of health plan enrollment data from a public and 
a private employer. Policyholders 65 years and older were not included 
in our analysis. 

[End of table] 

Table 11: Percentage of Male Policyholders in the HRA and PPO Groups, 
2003: 

Employer: Public; 
HRA: 68; 
PPO: 63. 

Employer: Private; 
HRA: 62; 
PPO: 60. 

Source: GAO analysis of health plan enrollment data from a public and 
a private employer. Policyholders 65 years and older were not included 
in our analysis. 

[End of table] 

We also found that policyholders in the HRA group were more likely to 
elect single coverage compared with policyholders in the PPO. While 
family coverage represented the majority of enrollment in both plans 
offered by the public employer, the percentage of policyholders with 
single coverage was higher for the HRA group than for the PPO group--
40 percent versus 31 percent, respectively, in 2003. This difference 
was more pronounced at the private employer, where 57 percent of 
policyholders in the HRA group elected single coverage versus only 38 
percent of policyholders in the PPO group in 2003. (See table 12.) 

Table 12: Percentage of Policyholders with Single Coverage in the HRA 
and PPO Groups, 2003: 

Employer: Public; 
HRA: 40; 
PPO: 31. 

Employer: Private; 
HRA: 57; 
PPO: 38. 

Source: GAO analysis of health plan enrollment data from a public and 
a private employer. Policyholders 65 years and older were not included 
in our analysis. 

[End of table] 

We also found that policyholders in the HRA group for the private 
employer had higher average salaries compared with those in the PPO 
group--$55,884 versus $51,762, respectively, in 2003. Data limitations 
precluded us from assessing salary differences for the public employer. 

Demographic Characteristics of HRA and Traditional Plan Enrollees: 

Unlike our findings that policyholders in the HRA groups were younger 
and more likely to be male than those in the PPO groups for the two 
employers we reviewed, our analysis of national insurance carrier data 
and findings from published studies found mixed evidence on the age 
and gender of HRA enrollees compared with traditional plan enrollees. 
However, similar to the HRA and PPO groups we reviewed, our analysis 
of national insurance carrier data and published studies found that 
HRA enrollees were more likely to elect single coverage than 
traditional plan enrollees. Additionally, our analysis of published 
studies found that HRA and other CDHP enrollees have higher salaries 
than traditional plan enrollees. 

Our analysis of data from the national insurance carriers found that 
enrollees in the HRAs were younger than those in PPO plans, but our 
review of published studies produced mixed evidence on the ages of HRA 
and other CDHP enrollees relative to traditional plan enrollees. Our 
analysis of national carrier data found that HRA enrollees were on 
average 5 years younger than PPO enrollees in 2004. However, of the 23 
studies that reported on age, 7 found that HRA and other CDHP 
enrollees were younger than those enrolled in traditional plans, 8 
found them to be about the same age, 5 found them to be older, and 3 
found mixed results within their study populations. For example, 1 
study found that HRA and other CDHP enrollees at one employer were 
about 5 years younger, on average, than those in traditional plans, 
whereas at another employer such enrollees were about the same age as 
those in traditional plans.[Footnote 61] 

Our analysis of national insurance carrier data and findings from 
published studies also found mixed evidence on the gender of HRA 
enrollees compared with those in traditional plans. Our analysis of 
insurance carrier data found a roughly equal distribution of males and 
females in the HRA and PPO plans--49 versus 48 percent, respectively, 
in 2004. Similarly, of the 16 studies that assessed gender, 10 found 
that HRAs and other CDHPs had a higher proportion of males than did 
traditional plans, 1 found a higher proportion of women, and 5 found 
either no difference or mixed results. For example, 1 study determined 
through a survey of nearly 4,700 employees at a particular employer 
that 41 percent of those who chose an HRA were male compared with 29 
percent of those who chose a traditional plan.[Footnote 62] 

We also found that HRA enrollees were more likely to elect single 
coverage than traditional plan enrollees. Data from the national 
insurance carriers showed that 44 percent of HRA enrollees compared 
with 42 percent of PPO enrollees opted for single coverage in 2004. 
Similarly, three of the five studies that reviewed coverage type among 
HRA and other CDHP enrollees also found that they more often elected 
single coverage than did those who enrolled in traditional plan types. 
For example, one study of an employer's benefits data found that 51 
percent of HRA enrollees had single coverage, compared with 37 percent 
of traditional plan enrollees.[Footnote 63] 

Finally, the published studies we reviewed consistently found that HRA 
and other CDHP enrollees had higher salaries than did traditional plan 
enrollees.[Footnote 64] Specifically, 14 of the 16 studies that 
reported on salary came to that conclusion. For example, a case study 
of a large employer found the average salary of HRA enrollees was 
$93,409, compared with $69,555 for PPO enrollees.[Footnote 65] 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Contact: 

John E. Dicken, (202) 512-7114, dickenj@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Randy DiRosa, Assistant 
Director; Rashmi Agarwal; Laura Brogan; Martha Kelly; Suzanne Worth; 
and Timothy Walker made key contributions to this report. 

[End of section] 

Related GAO Products: 

Health Savings Accounts: Participation Increased and Was More Common 
among Individuals with Higher Incomes. [hyperlink, 
http://www.gao.gov/products/GAO-08-474R]. Washington, D.C.: April 1, 
2008. 

Employer-Sponsored Health and Retirement Benefits: Efforts to Control 
Employer Costs and the Implications for Workers. [hyperlink, 
http://www.gao.gov/products/GAO-07-355]. Washington, D.C.: March 30, 
2007. 

Health Savings Accounts: Early Enrollee Experiences with Accounts and 
Eligible Health Plans. [hyperlink, 
http://www.gao.gov/products/GAO-06-1133T]. Washington, D.C.: September 
26, 2006. 

Consumer-Directed Health Plans: Early Enrollee Experiences with Health 
Savings Accounts and Eligible Health Plans. [hyperlink, 
http://www.gao.gov/products/GAO-06-798]. Washington, D.C.: August 9, 
2006. 

Consumer-Directed Health Plans: Small but Growing Enrollment Fueled by 
Rising Cost of Health Care Coverage. [hyperlink, 
http://www.gao.gov/products/GAO-06-514]. Washington, D.C.: April 28, 
2006. 

Federal Employees Health Benefits Program: First-Year Experience with 
High-Deductible Health Plans and Health Savings Accounts. [hyperlink, 
http://www.gao.gov/products/GAO-06-271]. Washington, D.C.: January 31, 
2006. 

Federal Employees Health Benefits Program: Early Experience with a 
Consumer-Directed Health Plan. [hyperlink, 
http://www.gao.gov/products/GAO-06-143]. Washington, D.C.: November 
21, 2005. 

[End of section] 

Footnotes: 

[1] Many health care plans require enrollees to pay a portion of their 
health care costs up to a certain threshold, known as the deductible. 
Once the deductible has been met, the plan pays most of the costs. 
Among employer-sponsored health plans, the average annual deductible 
in 2009 for HRA-based plans was $1,690 for single coverage and $3,422 
for family coverage, and for HSA-eligible plans, the average annual 
deductibles were $1,922 (single) and $3,734 (family), respectively. 
See Henry J. Kaiser Family Foundation and Health Research & 
Educational Trust, Employer Health Benefits: 2009 Annual Survey (Menlo 
Park, Calif. and Chicago, Ill.: 2009). 

[2] The Internal Revenue Service (IRS) held in 2002 that employer 
contributions to HRAs were excludable from gross income for tax 
purposes and therefore not to be treated as taxable income to 
employees. IRS Rev. Rul. 02-41, 2002-2 C.B. 75; IRS Notice 02-45, 2002-
2 C.B. 93. 

[3] In addition to HRAs, another type of account associated with CDHPs 
is a health savings account (HSA). HSA-related tax advantages were 
authorized by the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003. Pub. L. No. 108-173, §1201, 117 Stat. 2066, 
2469 (codified in pertinent part at 26 U.S.C. §§ 106(d) and 223). 
Employer contributions to HSAs are excludable from gross income and 
employee contributions are deductible from federal income taxes. 

[4] For the purposes of this report, traditional plans include PPO 
plans, health maintenance organization plans, and other types of 
comprehensive medical insurance. 

[5] PPO plans generally allow enrollees to select their own health 
care providers and reimburse either the provider or the enrollee for 
the cost of covered services. Enrollees' costs are generally lower if 
they obtain care from the plan's network of preferred providers. 

[6] For the purposes of this report, we will refer to HRA-based plans 
and their accounts as HRAs. 

[7] Under the Patient Protection and Affordable Care Act, by 2014 
states are to establish exchanges to facilitate the purchase of 
qualified health plans, which could potentially include CDHPs. See 
Pub. L. No. 111-148, Title I, 124 Stat. 119, 162, 173. 

[8] Plan years were from January 1 through December 31 for the public 
employer and from July 1 through June 30 for the private employer. 

[9] We initially requested from both employers claims data for plan 
years 2001 through 2005, covering the period 2 years before to 3 years 
after the introduction of the HRA. At the time we made our request, 
2005 was the most current and complete plan-year of claims data 
available. Because some data from the public employer were originally 
omitted, we subsequently requested them along with additional years of 
data to enhance the timeliness of our study up to the most current and 
complete plan-year of data then available, which was through 2007. 

[10] Unless otherwise stated, enrollees refer to policyholders and 
their dependents. 

[11] For the public employer, the total number of enrollees ranged 
from 967 to 1,013 in the HRA group and from 1.25 million to 1.62 
million in the PPO group over the study period. For the private 
employer, the number of enrollees ranged from 570 to 584 in the HRA 
group and from 1,079 to 1,098 in the PPO group over the study period. 
Group sizes fluctuated from year to year as enrollees who turned 65 
years of age were removed from the analysis and the number of 
dependents changed. 

[12] For the purposes of this report, we will refer to the enrollees 
included in these 31 studies as "HRA and other CDHP enrollees." 

[13] Data from the public employer included both medical and pharmacy 
claims, whereas data from the private employer included only medical 
claims. We were not able to analyze pharmacy claims for the private 
employer. 

[14] The majority of Americans receive their health care coverage 
through the private health insurance market. About 160.6 million of 
the nearly 263 million individuals under age 65 in 2008 received 
health care coverage through private, employer-sponsored health care 
plans. See Paul Fronstin, "Sources of Health Insurance and 
Characteristics of the Uninsured: Analysis of the March 2009 Current 
Population Survey," EBRI Issue Brief, no. 334 (September 2009). 
Employers can purchase coverage for their employees from an insurance 
carrier or fund their own health care plans. 

[15] Qualified medical expenses are identified under the Internal 
Revenue Code. See 26 U.S.C. §§ 213(d), 223(d)(2)(A). 

[16] Henry J. Kaiser Family Foundation and Health Research & 
Educational Trust, Employer Health Benefits: 2008 Annual Survey (Menlo 
Park, Calif. and Chicago, Ill.: 2008). 

[17] Mercer, National Survey of Employer-Sponsored Health Plans: 2008 
Survey Report (2009). 

[18] HSA-eligible plans are also sold by health insurance carriers in 
the individual health insurance market. According to a survey of 
health insurance carriers, approximately 2.1 million individuals were 
enrolled in an HSA-eligible plan in the individual market in January 
2010, a 17 percent increase since January 2009. The same survey 
reports that approximately 10 million people overall--both individual 
and group markets--were covered by such a plan in January 2010. The 
survey estimates enrollment in HSA-eligible plans, but does not 
indicate the extent to which these enrollees have or contribute to an 
HSA. See America's Health Insurance Plans Center for Policy and 
Research, January 2010 Census Shows 10 Million People Covered by 
HSA/High-Deductible Health Plans (Washington, D.C.: May 2010). 

[19] The IRS definition of preventive care includes periodic health 
evaluations, including tests and diagnostic procedures ordered in 
connection with routine examinations, routine prenatal and well-child 
care, immunizations, tobacco cessation programs, obesity weight-loss 
programs, and various screening services. 

[20] HRAs are generally set up as notional arrangements--employers do 
not actually deposit funds into the accounts for their employees. 
Instead, the employers reimburse employees for their medical expenses 
as they occur. 

[21] An out-of-pocket spending limit represents the maximum amount an 
enrollee is required to pay toward the cost of covered services. The 
out-of-pocket spending limit includes cost sharing, but does not 
include premiums. Because IRS does not specify requirements for out-of-
pocket spending limits, some plans may cover all costs once 
traditional coverage begins. 

[22] HSA-eligible health plans operate similarly to HRAs with certain 
exceptions. Unlike HRAs, HSA-eligible health plans must meet certain 
statutorily defined criteria including a minimum deductible amount and 
a maximum limit on out-of-pocket spending. Additionally, the enrollee, 
rather than the employer, owns the account. Unlike most HRAs, HSAs are 
portable, meaning that enrollees may take the account with them if 
they leave their employer. Both enrollees and employers may contribute 
to HSAs, when they are coupled with an HSA-eligible health plan, up to 
IRS-specified contribution limits. 

[23] We were not able to examine pharmacy claims data for the private 
employer. 

[24] A. Wilson and others, "More Preventative Care, and Fewer 
Emergency Room Visits and Prescription Drugs: Health Care Utilization 
in a Consumer-Driven Health Plan," Benefits Quarterly, vol. 24, no. 1 
(2008): 46-54. 

[25] The Henry J. Kaiser Family Foundation, National Survey of 
Enrollees in Consumer Directed Health Plans (Menlo Park, Ca.: November 
2006). 

[26] See GAO, Federal Employees Health Benefits Program: Early 
Experience with a Consumer-Directed Health Plan, [hyperlink, 
http://www.gao.gov/products/GAO-06-143] (Washington, D.C.: Nov. 21, 
2005). 

[27] The average annual rate of change assumes that spending increases 
or decreases at the same rate during each year between 2003 and 2007. 

[28] Other services for the HRA and PPO groups included those provided 
at a patient's home or by military treatment facilities; skilled 
nursing facilities; ambulances; psychiatric facilities or mental 
health centers; rehabilitation facilities; substance abuse facilities; 
independent laboratories; or state, local, or rural health clinics. 

[29] The average annual rate of change assumes that spending increases 
or decreases at the same rate during each year between 2003 and 2005. 

[30] For the HRA group, other services included those provided at a 
patient's home or provided by ambulances or independent laboratories. 
For the PPO group, other services included those provided at a 
patient's home or provided by urgent care facilities or skilled 
nursing facilities. 

[31] Four of the nine studies reported on total spending, while five 
studies reported separately on medical spending only. 

[32] HealthPartners, Consumer Directed Health Plans Analysis (October 
2007). 

[33] The other two studies reported differences that were not 
statistically significant. 

[34] Cigna Choice Fund Experience Study (January 2009). 

[35] R. Feldman and others, "Consumer-Directed Health Plans: New 
Evidence on Spending and Utilization," Inquiry, vol. 44, no. 1 (2007): 
26-40. This study found higher spending among HRA enrollees compared 
to those in a traditional plan for 3 years. The results were 
statistically significant for the second and third year only. 

[36] Cigna Choice Fund Results Analysis (November 2006); Cigna Choice 
Fund Experience Study (October 2007); and Cigna Choice Fund Experience 
Study (January 2009). 

[37] R. Feldman and others, "Consumer-Directed Health Plans: New 
Evidence on Spending and Utilization." 

[38] We refer to HRA-based plans and their accounts as HRAs. We refer 
to traditional plans as those which include PPO plans, health 
maintenance organization plans, and other types of comprehensive 
medical insurance. 

[39] Plan years were from January 1 through December 31 for the public 
employer and from July 1 through June 30 for the private employer. 

[40] The HRAs offered by the two employers were administered by the 
same insurance carrier. The PPOs were administered by different 
insurance carriers. 

[41] We initially requested from both employers claims data for plan 
years 2001 through 2005, covering the period 2 years before to 3 years 
after the introduction of the HRA. At the time we made our request, 
2005 was the most current and complete plan-year of claims data 
available. Because some data from the public employer were originally 
omitted, we subsequently requested them along with additional years of 
data to enhance the timeliness of our study up to the most current and 
complete plan-year of data then available, which was through 2007. 

[42] Unless otherwise stated, enrollees refer to policyholders and 
dependents. 

[43] We included policyholders who joined their HRA or PPO plan within 
the first 3 months of the 2001 plan year and those who withdrew within 
the last 3 months of the public employer's 2007 plan year and the 
private employer's 2005 plan year. For the public employer, we only 
included policyholders who lived in the continental United States. 
Data from the private employer did not contain address information and 
some policyholders may have lived outside the continental United 
States. 

[44] At the beginning of each plan year, we removed from each of the 
study groups from that point forward any enrollees who had reached age 
65 in order to exclude Medicare beneficiaries. The number of 
dependents also fluctuated from year to year due to life events such 
as births and marriages. 

[45] We refer to the enrollees included in these 31 studies as "HRA 
and other CDHP enrollees." 

[46] Data from the public employer included both medical and pharmacy 
claims, whereas data from the private employer included only medical 
claims. We were not able to analyze pharmacy claims for the private 
employer. 

[47] All claims data used in our analyses were final-action claims. 
The public employer provided claims based on date of service during 
our study period. The private employer provided claims based on date 
of payment, but our analyses were based on dates of service covering 
our study period. Some claims that were rendered but not paid during 
our study period for the private employer may be missing. 

[48] All spending and utilization analyses were conducted on a per 
enrollee basis for each plan year. 

[49] To understand other demographic differences between HRA enrollees 
and traditional plan enrollees, we relied on an analysis of enrollment 
data from the two large employers we reviewed and compared our results 
to other national data sources and published studies. See appendix V. 

[50] The portion of each claim paid by the enrollee includes 
deductibles, copayments, or coinsurance. We did not capture any 
contributions made by employers or employees towards the monthly 
premiums as part of our spending calculations. 

[51] The data systems used by the different health plans in our review 
may not code their claims consistently for a service type. 

[52] We examined prescription drug claims only for the public 
employer; we were not able to analyze pharmacy claims for the private 
employer. 

[53] We used the nonseasonally adjusted medical care consumer price 
index to express all spending in 2007 dollars. The medical care 
consumer price index consists of two categories: medical care services 
and medical care commodities. Medical care services include 
expenditures for professional services, hospital and related services, 
and health insurance. Medical care commodities include expenditures 
for prescription and nonprescription drugs as well as medical supplies. 

[54] Specifically, we examined inpatient hospital admissions, 
outpatient visits, physician office visits, emergency room visits, and 
prescription drugs filled. 

[55] We identified radiology and pathology or laboratory procedures 
using diagnostic and procedure information in the claims data. If a 
procedure was preventive in nature, we did not identify it as a 
diagnostic radiology or pathology or laboratory procedure. For 
example, a mammogram was considered a preventive care service and not 
a diagnostic radiology procedure. To identify preventive care 
services, we developed a list of procedure, service, and diagnostic 
codes commonly classified as preventive using Current Procedural 
Terminology codes, Healthcare Common Procedure Coding System codes, 
and International Classification of Diseases codes. 

[56] We removed outlier claims that were plus or minus 3 standard 
deviations from the mean for each year for each spending and 
utilization variable we reviewed. 

[57] We excluded claims that indicated a coordination of benefits 
because we could not determine how much other insurance carriers paid 
for the claim. As a result, our spending results do not reflect any 
payments made by the HRA or PPO plans for these claims. 

[58] We did not consider press releases, slide presentations, 
abstracts, or testimonies in our review because we could not assess 
the methodology used. 

[59] We report demographic characteristics for policyholders less than 
65 years of age using health plan enrollment data for the public and 
private employers we reviewed. For the public employer, 446 
policyholders were in the HRA group and 708,841 policyholders were in 
the PPO group at the beginning of the 2003 plan year. For the private 
employer, 288 policyholders were in the HRA group and 455 
policyholders were in the PPO group at the beginning of the 2003 plan 
year. 

[60] We obtained demographic data from two large, national insurance 
carriers active in the HRA market. These data represented about 
209,000 policyholders and dependents under 65 years of age who were 
continuously enrolled in an HRA in 2004. For comparison purposes, we 
also obtained demographic data for about 650,000 policyholders and 
dependents under 65 years of age who were continuously enrolled in a 
PPO plan in 2004. These data were obtained from Medstat's MarketScan, 
Commercial Claims and Encounters Database--a database which compiles 
data from insurance carriers nationally. 

[61] Express Scripts, What Happens to Prescription Drug Use After 
Consumer Directed Health Plan Enrollment? (April 2007). 

[62] J. Briggs Fowles and others, "Early Experience with Employee 
Choice of Consumer-Directed Health Plans and Satisfaction with 
Enrollment," Health Services Research, vol. 39, no. 4 (2004): 1141- 
1158. 

[63] J. Briggs Fowles and others, "Early Experience with Employee 
Choice of Consumer-Directed Health Plans and Satisfaction with 
Enrollment." 

[64] Data from the national insurance carriers did not contain any 
salary information. 

[65] R. Feldman and others, "Consumer-Directed Health Plans: New 
Evidence on Spending and Utilization," Inquiry, vol. 44, no. 1 (2007): 
26-40. 

[End of section] 

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