Cisco Pushes Use Of IT To Keep Employee Health Costs At BayCisco Pushes Use Of IT To Keep Employee Health Costs At Bay

As a group, Cisco Systems employees are generally a healthy bunch. However, with the average age of Cisco employees at 40 and a 90% worker retention rate, Cisco realizes that it's only a matter of time before many in its workforce begin to develop health problems that come with aging.

With this in mind, the company is already trying to get a handle on the potential for increased health problems among its employees and rising medical costs. A big part of that strategy is to encourage its health-care providers to adopt health IT, such as electronic health record systems, which can keep costs down by reducing waste and redundancy, as well as help prevent medical mistakes and improve quality of care, says Dr. Jeffrey Rideout, M.D., Cisco's corporate medical director and VP of health for Internet business solutions.

The company is also encouraging its large health-care insurance providers to reimburse doctors for "E-visits," or E-mail exchanges between patients and doctors that can substitute for office visits in certain nonemergency situations. E-visits can save money and time because they're less expensive and more time-effective than having an employee miss work for a doctor office visit, he says. Also, because many Cisco employees frequently travel, E-visits would provide an opportunity for employees to seek medical care remotely for nonemergency issues or questions, Rideout says.

"We have a healthy population [of employees], but they are getting older at a fairly rapid rate," Rideout says. The company's chronic-disease-related costs will increase as its employees age, he says. However, Cisco is hoping to avoid what other employers have had to do in recent years as they also struggle with double-digit increases in health costs--reducing benefits or shifting more of those costs to employees. "We're trying to set the stage for the next five to 10 years," Rideout says. "We want to keep the lid on the rate of increase by using a health IT strategy."

Cisco has 37,500 employees worldwide, and two-thirds of them are based in the United States. Of those U.S. workers, about 66% are located near Cisco headquarters in the San Jose, Calif., area. Overall, Cisco provides health-care benefits to about 65,000 employees and their dependents worldwide, costing "hundreds of millions of dollars" annually, Rideout says.

Many of those local Cisco employees and dependents receive health care from a number of the large medical groups in the Bay Area, including Palo Alto Medical Foundation, which has already deployed electronic health record systems but doesn't yet offer E-visits, Rideout says. While the insurance industry has adopted a new billing code for E-visits, very few health-care providers offer those visits, and few health-insurance companies reimburse for them. More doctors would provide those E-services if payers reimbursed them, Rideout says, and Cisco is encouraging some of its largest health payers, including Cigna and United Health Care, to reimburse for such visits.

Currently, Cisco pays a subscription fee to Palo Alto Medical so Cisco employees can access their electronic health records, such as lab test results, online, Rideout says. Cisco is also developing a pay-for-performance program for 2006 that would offer its health-care providers incentives to adopt electronic health records and other cost-saving IT.

In the development of its pay-for-performance program, Cisco has been working with the Integrated Healthcare Association, which represents health-care stakeholders in California and offers a pay-for-performance quality incentive plan for managed-care organizations.

IHA's program rewards California medical groups based on performance on clinical quality, patient experience, and investment in IT. IHA says California physician groups who participated in its program and achieved key quality measurements in 2004 received a total of $50 million in additional income.

The majority of Cisco employees have health-care coverage under preferred provider organization plans, or PPO models, which differ from managed-care organization benefit plans, says Rideout. However, many of the same large medical groups in the Bay Area that participate in HMO plans and the IHA pay-for-performance program also participate in PPO programs. So Cisco is modeling its pay-for-performance plan after the IHA program so that it's less confusing for doctors participating in the quality programs, Rideout says.

Some large health-care payers--including Medicare--also have launched pay-for-performance pilots or programs that include incentives for physicians and hospitals to adopt health IT systems.