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Insulin Cap May Drive PBMs to Keep Profits by Hiking Employer Premiums

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Medicare patients cheered when the Inflation Reduction Act capped monthly insulin costs at $35. Then drug manufacturers controlling 90% of the market set this $35 cap for everyone by bypassing the PBM middlemen. To protect their black box of profits, insiders expect PBMs to raise employer premiums.

Consider how much money is at stake. Patients who paid over $1,000 per month for insulin in 2018 are now paying only $35 in 2023. And despite slashing insulin costs by 70%, pharmaceutical companies will still profit handsomely. It’s a win-win for all stakeholders except the PBMs.

This huge gap represents the “60% or 70% of fees” taken by PBMs, who act as intermediaries between drug manufacturers and pharmacies in the supply chain. These fees are a driving force behind the rise in prescription drug costs. Such predatory business practices are all about profits, so a loss here must be offset by a gain somewhere else. Next target, employers.

Employers can fight back and save money by axing their PBM and working with a modern health plan that delivers an ethically-grounded pharmacy program and formulary based on science and clinical value with advanced cost-plus pricing technology for net lowest cost results. Transparent pharmacy services administration ensures that what’s paid at the pharmacy is what the employer plan sponsor pays and 100% of rebates paid monthly.

It’s time to eliminate the dubious fees and questionable practices that raise costs for employers and their members.

How Can Employers Get Fair Hospital Pricing?

2 min

Healthcare costs are spiking to record levels and burdening the nation’s employers. Significant portions of premium dollars pay for inpatient hospital services, with employers paying 200% or more of Medicare prices. “Plan sponsors as plan fiduciaries have to take action. They can’t just stand for it.”

So says Michael Thompson, president and chief executive officer of the National Alliance of Healthcare Purchaser Coalitions (National Alliance), whose playbook supports employers’ claims that hospital prices are unreasonable and unsustainable. It also urges employers to take more responsibility for negotiations.

While very large employers might have the wherewithal to navigate reimbursement discussions with hospitals and health systems, it’s like asking patients to be cost-effective healthcare shoppers in an opaque and foreign healthcare economy: much easier said than done.

The legacy health insurance carriers have done almost nothing to address hospital cost relief for decades. In fact, BUCA contracts with hospitals perpetuate the cost escalation, allowing hospitals to charge whatever they want with little oversight while insurance carrier profits increase along with rising hospital charges.

Reference-based pricing (RBP) is often touted as an alternative because it caps costs at a negotiated percentage above the baseline Medicare price. The downside is that RBP’s overly simplistic reimbursement method and combative stance with providers routinely results in contested claims payments. Employees bear the brunt of this friction with balance bills that increase their medical costs and create financial uncertainty.

Achieving Fair Pricing with Fair Market Payment™

Vitori Health removes the unrealistic expectation of hospital price negotiation from employers and their health plan participants with its exclusive Fair Market Payment™ algorithm that determines appropriate claim payments honored by providers without friction. This unique and sophisticated approach drives significant health plan savings while delivering an exceptional member experience.

A nationwide analysis of plan performance reveals that:

  • 98.8% of Vitori FMP reimbursements are paid by providers without question. Claims with extenuating clinical circumstances may warrant an easily administered reimbursement adjustment. BUCA insurers and RBP plans regularly deny and delay a much larger percentage of claims, frustrating providers.
  • Less than 0.24% of Vitori claims have an unexpected member bill compared to BUCA and RBP plans, which have 10-40 times higher rate of unexpected member billing.

A modern, member-first health plan with advanced technology can effectively counteract today’s skyrocketing hospital and healthcare costs. Employers can realize 30% savings with industry-leading plan advantages and unprecedented 80+ Net Promoter member satisfaction scores.

Patients=$0. Insurers=Millions. How to Boost Profits by Denying Claims.

2 min

Medical directors adjudicating claims are supposed to examine patient records, review coverage policies, and use their expertise to approve or deny claims. But at Cigna, they spend only 1.2 seconds on each case and instantly reject millions of claims without even opening the file.

This unfair review process, known as PXDX, is designed to boost profits by reducing claims processing costs, denying coverage, and avoiding payment of health care claims. The volume is staggering. According to a ProPublica exposé, “Over a period of two months last year, Cigna doctors denied over 300,000 requests for payments using this method.”

One former executive describes PXDX as “…a system built to deny claims.” Another, who helped conceive the program, questioned at the time whether such speedy denials satisfied the law or fell into a gray zone. “We sent the idea to legal, and they sent it back saying it was OK.”

It may be legal, but it’s certainly not ethical. The practice leaves patients with unexpected bills and encourages health care avoidance for services that should be covered by any decent employee health plan.

Ironically, Cigna has stated that its PXDX system does not prevent a patient from receiving care — it only decides when the insurer won’t pay: “Reviews occur after the service has been provided to the patient and does not result in any denials of care.”

Employers can circumvent this insanity by avoiding monopoly insurance carriers that prioritize profits over people. The ideal solution is a self-funded plan from a modern health plan plan administrator. Fair Market Payment™ (FMP), which is offered exclusively by Vitori Health, establishes fair and acceptable claim payments and eliminates provider friction that creates balance billing problems for plan members.

With a less costly, more compassionate health plan, employers can realize significant savings and reduce fiduciary risks while improving employee health and other benefits.

Hospital Mergers Raise Costs, Cut Competition, and Pump Profits

2 min

Hospital and health system mergers have become rampant and are typically announced with glowing press releases promising greater access to better and more affordable health care. However, research into the results of consolidation exposes outcomes that run counter to these promises.

In 2022, healthcare mergers and acquisitions resulted in a record setting $45+ billion in total transacted revenue. Industry insiders expect even more activity in 2023 with Deloitte predicting that “after consolidation in the next decade, only 50 percent of current health systems will likely remain.”

The nonprofit, nonpartisan Kaiser Family Foundation (KFF) has studied the real impact of consolidation on American consumers, 54% of whom receive healthcare through employer-sponsored health plans. Their findings align with other studies showing the unmet promises and benefits promoted by hospital system aggregators.

Unrealized Quality

Results are mixed with the majority of studies concluding that health care quality is essentially unchanged or worsened. Research from The National Institute for Health Care Management (NIHCM) Foundation states that there is “no evidence that clinical processes or patient outcomes improved after an ownership change, but results point to modestly worsening quality from the patient experience perspective.” Findings from the New England Journal of Medicine show “modestly worse patient experiences” resulting from hospital mergers and acquisitions.

A Harvard review found that care quality was only slightly better at consolidated health systems than private practices. According to Nancy Beaulieu, study first author, “One of the key arguments for hospital mergers and practice acquisition was that health systems would deliver better-value care for patients. This study provides the most comprehensive evidence yet that this isn’t happening.”

Competition and Cost

Despite claims by the American Hospital Association (AHA) that consolidation reduces health care costs, mergers have shown to increase prices and reduce affordability even as profits increase.

Studies continue to show that consolidation and health care costs have a detrimental association. Less competition means fewer choices and more opportunities for health systems to monopolize a market and raise prices. This impact is nuanced in large, metropolitan areas and keenly felt in small and mid-sized markets where dominant providers emerge as the result of consolidation.

Trade association AHIP (America’s Health Insurance Plans) describes this connection rather succinctly:

“Everyday Americans bear the brunt of hospital consolidation. Hospitals in highly concentrated markets can charge higher prices for medical services and have greater leverage to negotiate higher prices from health insurance providers, leading to ever-increasing health care costs for individuals and families.”

Neutralizing the Impact of Consolidation

KFF calls for policymakers “to address any potential anti-competitive behavior in markets that are already consolidated.” And NIHCM declares, “In the face of ongoing hospital market consolidation and accompanying price increases, consumers deserve to experience measurable and meaningful quality [and cost] improvements… Merging hospitals must be held more accountable for achieving, not just promising, such benefits.”

Employers that maintain allegiance to legacy insurance carriers whose profits increase when hospital prices rise will feel the negative impact of health system consolidation in higher medical claim costs and insurance premiums. While there are plenty of excuses for sticking with the status quo, employers who choose a modern health plan administrator using advanced claims payment technology can limit the negative impacts of health system consolidation, and meet their fiduciary obligation to manage costs for their health plan participants.

The Top 5 Excuses Why Employers Don’t Drop Their Legacy Insurance Carrier

3 min

As healthcare costs continue to rise, many employer health plan sponsors struggle to cover their employees without breaking the bank. Unfortunately, many keep returning to the same old solutions: a monopoly of legacy insurance carriers with high-priced plans and suboptimal benefits and member support. Read More about The Top 5 Excuses Why Employers Don’t Drop Their Legacy Insurance Carrier

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