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WATCH | Timely Tips on Self-Funding 201 + Fair Market Payments™

Vitori Health on July 6, 2022

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In the third and fourth quarters, employee health plan brokers and advisors are busy closing new business and managing client renewals. This is a great time to offer next-generation plan designs that can significantly reduce expenses for employers and employees while improving overall benefits.

Watch this on-demand webinar to stay current on the newest and most advantageous reimbursement strategies and self-funding trends. Speakers include Aaron Polkoski, Regional Vice President, Matrix Group Benefits and Neil Quinn, Chief Strategy Officer, Vitori Health, interviewed by David Slepak.

You will gain valuable insights into:

Stop-loss pro tips and how to get the most competitive rates
New trends in underwriting including census-based solutions
How reimbursement methods impact stop-loss rates
Fair Market Payment™ (FMP)… the next generation reimbursement methodology
How to leverage Vitori Health and Matrix to grow your book of business

WATCH NOW

40 Percent of PBM Profit Can’t be Traced. Where is it Hiding?

Vitori Health on June 29, 2022

3 min

A report by the PBM Accountability Project reveals the details of PBMs’ “evolving business models and revenue.” Despite the available financial data, the authors could not identify “the source of nearly 40% of PBMs’ total gross profit.” Can this “business as usual” become a catalyst for change?

The coalition of pharmacy, labor, healthcare, business, and patient advocacy groups that supports the PBM Accountability Project certainly hopes so.

A Sea of Shifting Profits

As described in the report, revenue flows to PBMs from multiple stakeholders in the supply chain, not just payer clients. And gross profit is generated through multiple sources and business activities, including but not limited to retained rebates, retained manufacturer administrative service fees, and their own mail order/specialty pharmacies.

So where is that 40% of unaccounted-for profit hiding? Potential sources may include “spread pricing, pharmacy fees and clawbacks, fees collected from payers, and other non-administrative fees collected from manufacturers.”

Despite stakeholders demanding more transparency, PBMs play shell games by rebalancing revenue streams and identifying new ones to offset those with smaller profits. Their results have been quite successful: a 12% increase in overall gross profit, from $25 billion in 2017 to $28 billion in 2019.

Source: PBM Accountability Project: Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers 2021

PBMs: A Black Box of Control

Efforts to ensure that public and private sector health plans don’t overpay for prescription medicines often focus on government control of drug prices through legislation, including through the Build Back Better Act currently under debate. Given the complexity of the pharmaceutical supply chain, which is the most effective point to apply such legislation?

Source: PBM Accountability Project: Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers 2021

In an interview by AIS Health, Lindsay Bealor Greenleaf, vice president at ADVI Health, acknowledges that “the legislation does impose some new transparency requirements on PBMs,” but that it is setting “government price controls on manufacturers while letting the PBMs completely off the hook.”

Greenleaf asserts that PBMs “operate in a black box, and they profit most from drugs with the highest list prices, and then they make patients pay coinsurance based off those inflated list prices.” Holding so much power is a dangerous combination that must be addressed to hold PBMs accountable for their role in rising prescription drug costs.

If PBMs don’t innovate and proactively adopt reforms and the government doesn’t force the issue, “the biggest hope for change” is likely to come from employers and other clients of PBMs, Greenleaf says. “The hope is that they keep stepping up and saying, ‘What’s going on here, am I getting the best deal, and even if I am getting a good deal, how good of a deal are you getting?’”

Employers can seek out ethical, member-focused prescription drug plans like VitoriRx to eliminate the predatory practices and half-measures of transparency from legacy PBMs. They can also support groups like the PBM Accountability Project, whose sponsors demand lower drug prices and cost increases and greater accountability and transparency from PBMs.

Who Benefits the Most from Rising Drug Rebates? It’s Not Patients.

Vitori Health on June 15, 2022

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A study published in JAMA Health Forum reveals that pre- and post-sale rebates from prescription drug manufacturers to commercial health plan sponsors are steadily increasing. Far from reducing out-of-pocket expenses for patients, this convoluted backroom strategy actually makes things worse.

The study succinctly describes how this complex dynamic negatively affects members. (The bold emphasis is ours.)

“Prescription drug manufacturers routinely offer post-sale rebates to pharmacy benefit managers (PBMs) and health insurance plans. While drug rebates can reduce plans’ net costs, rebates do not reduce patients’ cost sharing, which is usually based on pre-rebate list prices set by drug companies. Drug rebates can incentivize drug manufacturers to inflate list prices and PBMs to distort drug formularies to favor high list price and high rebate therapies.”

This can also create equity issues for consumers buying individual plans as well as members covered by an employee health plan.

A related Axios article quotes Ge Bai, accounting professor at Johns Hopkins Carey Business School and one of the authors of the study, as saying, “We have the sick people paying more than their fair share for the drug and the rebate goes back to the plan to reduce premiums for the healthy.”

To build a better formulary, it’s best not to include drugs that are not supported by sound comparative effectiveness research. Follow evidence-based clinical guidelines for prior-authorization of drugs and step-therapy to use less expensive, equally effective medicines first.

FDA Lets Pharma Thwart Low Cost Generic Inhalers for 35 Years

Vitori Health on June 7, 2022

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Brand name inhaler manufacturers tinker with patents and use gimmicks the Food and Drug Administration (FDA) shouldn’t allow to thwart the availability of low-cost generic inhalers. And profits are so high that a tobacco manufacturer took over an asthma inhaler company to “diversity its portfolio.”

A research article in Health Affairs reveals that manufacturers recycle the same patents on multiple inhalers from different classes and shift old ingredients to new devices. Of the 62 inhalers for asthma and chronic obstructive pulmonary disease (COPD) approved by the FDA during the past 35 years, only one contained an active ingredient with a new mechanism of action. More than half of the patents issued were for the actual inhaler devices.

The researchers conclude that regulatory and patent reform is critical to ensure that patent protection bestowed on brand name inhaler manufacturers better reflects the true clinical benefits of new products. Until then, patients will continue to experience the dual medical and financial burdens of asthma and COPD.

Death by 7865 Paper Cuts | An Artist’s View of Health Care Bureaucracy

Vitori Health on May 10, 2022

2 min

In 2012, Emily Barker, a 19-year old student at the Art Institute of Chicago, fell four stories inside an improperly secured building. The accident led to paraplegia, a six-month hospital stay, countless operations, chronic pain, and a stack of bills and correspondence that inspired “Death by 7865 Paper Cuts.”

This installation-based work is a neat pile of 7,865 documents from 2012 to 2015 that includes bills for medical treatments, medical records, and care plans with their accompanying costs. Had all communications with the bureaucracy of the healthcare system to date been included, the pile would have fallen over.

In an interview with the Whitney Museum of American Art, Barker, who experienced spinal cord injury and uses a wheelchair, says the stack of papers over two feet tall “shows the medical industrial system and the healthcare industrial system and the pharmaceutical industrial system and how those all operate together when something tragic happens or an accident happens. You’re then faced with millions of dollars of medical bills and debt.”

Note the piece of paper on top of the pile: a partial bill from the day after the accident in excess of $144,000 for various surgical interventions on Barker’s spinal cord.

Barker says that she “racked up hundreds of thousands of dollars” for six months of hospitalization and “hit a million in the first year” of her recovery.

Barker is among the tens of millions of U.S. households whose credit reports include $88 billion in medical debt as of June 2021. Caught in a doom loop between medical providers and insurance companies, families and individuals struggle under crushing debt that often impacts their quality of life beyond the underlying medical concerns.

No longer able to paint, Emily Barker now lives and works in Los Angeles as a multimedia conceptual artist, designer, and activist. Her work confronts the blind spots in everyday dimensional and design standards that “leave out and patronize people who do not fit within these preconceived notions of normalcy.”

View Barker’s work to learn more.

How to Combat Wasteful Health Care Spending with Payment Integrity Controls

Vitori Health on May 5, 2022

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Despite new federal transparency rules, it’s hard to know what you’re paying for when medical claims and payments are automatically adjudicated. This lack of oversight creates countless opportunities for fraud, waste, and abuse, all of which increase costs for employers and plan participants.

Consider that the U.S. Department of Health and Human Services, which tracks and reports improper payment rates for Medicaid, noted that 21.7% of all healthcare claims were improperly paid in fiscal year 2021. Similar results were published by the Journal for the American Medical Association, which found that nearly 20% of U.S. healthcare spending is wasteful and fraudulent.

An effective solution to this predicament is payment integrity, which goes beyond simply ensuring that medical claims are accurate. Payment integrity adds transparency to all aspects of the billing and claims paying process to catch and eliminate errors before the claim is paid. And it’s a practice whose time has come.

Health plan administrators like Vitori Health combat this systemic overpayment using rigorous claims pre-payment control protocols. Real-world results show that self-funded plans can save more than 10% of their annual expenditure with this vigilance alone.

Vitori Supports NAHU Mission and Chapter Conferences

Vitori Health on April 21, 2022

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Vitori Health actively supports industry associations whose missions align with our own. The National Association of Healthcare Underwriters, which seeks to ensure that all Americans have access to high quality, affordable health care, is one such organization.

We are proud to sponsor and exhibit at the Los Angeles, Arizona, and Georgia chapter conferences. Each event offers a compelling slate of insightful speakers and presentations as well as diverse exhibitors and lots of networking opportunities. Click on the links to learn more about each high-impact event.

Los Angeles Association of Healthcare Underwriters (LAAHU)
Annual Symposium | April 26, 2022
Pasadena Convention Center | Pasadena, CA
Arizona Association of Healthcare Underwriters (AAHU)
Annual Conference | May 6, 2022
Talking Stick Resort | Scottsdale, AZ
Georgia Associations of Healthcare Underwriters (GAHU)
2022 Annual Convention | May 17-19, 2022
The DeSoto Savannah | Savannah, GA

There’s nothing like an in-person conversation to get to the heart of a solution. We look forward to seeing you at an upcoming conference and discussing how Vitori Health delivers a less costly, more compassionate employee health plan. Or contact us directly to schedule a private meeting in advance.

$350 Billion in Health Care Rebates Go to Middlemen

Vitori Health on April 12, 2022

2 min

You know things are bad when a pharmaceutical executive calls out the dysfunctional and deceptive industry practices that trigger skyrocketing drug costs for prescription medicines. But if drug companies are not the culprit, as asserted by Adam Gluck, Head of US Corporate Affairs at Sanofi, who is?

In a recent article, Gluck reveals that health insurance plans and pharmacy benefit managers (PBMs) mislead the public about their role in determining the price consumers pay at the pharmacy counter. In 2021, drug manufacturers funneled $350 billion in discounts and rebates into a black hole that has become revenue for these middlemen to spend however they choose.

None of this money finds its way to consumers to lower the price paid at the pharmacy counter. Out-of-pocket costs continue to rise as patients grapple with medical debt and potentially life-threatening situations when they’re unable to afford prescription drugs.

Patient-Centered Solutions

Gluck suggests three patient-centered solutions to address rising prescription drug costs.

Transparency | Many states have enacted transparency requirements for drug manufacturers, but patients and policymakers are in the dark on where more than half of the money in the system goes or how it’s used. Transparency is needed for all stakeholders.
Discounts and Rebates | Focus on patients! The government should require that the discounts and rebates paid by manufacturers be used to directly lower the costs of medicines for patients at the pharmacy counter.
Fee Structure | Eliminate all fees that have no benefit or value to the patient, especially dubious charges for “services” such as providing data and administering rebates. In addition, any fees should be based on fair market value rather than a percentage of a drug’s list price.

Until such changes occur, employers should seek out pharmacy plans with transparent purchasing practices, ethical cost control mechanisms, and no conflicts of interest. Replacing traditional PBMs with a Medical Benefit Manager will reduce drug costs and pass 100% of all rebates to the employer.

Employers can consult this checklist to determine how well the structure of their PBM benefits members and not middlemen.

US Has World’s Highest Health Care Costs, Lowest Life Expectancy

Vitori Health on April 6, 2022

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Most would agree with the common adage that you get what you pay for, but that’s not the case when it comes to paying for healthcare in America. U.S. spending per capita is up to four times higher than other wealthy countries and yet shockingly, we have the absolute lowest life expectancy of them all.

One contributing factor is that Americans suffer higher death rates from smoking, obesity, homicides, opioid overdoses, suicides, road accidents, and infant mortality. In fact, low-income Americans die at a younger age than poor people in other developed nations because of deep poverty and less access to healthcare.

The other half of the equation is a system that delivers sick care instead of health care and reaps billions of dollars in profits driven by outrageously high fees, opaque pricing, and dubious business practices. And that’s not about to change anytime soon, despite crushing consumer medical debt and rising health plan costs for American employers.

Employers should seek out health plans that are designed to lower the cost of care and improve outcomes. When members spend less on premiums and out-of-pocket costs, they have more resources available to take better care of themselves — from quality food to the pursuit of mental and financial health. Such plans allow people to embrace wellness and bend the life expectancy curve to their advantage.

Credit Bureaus to Remove 70 Percent of Medical Debt from Personal Reports

Vitori Health on March 30, 2022

2 min

Medical debt is devastating the credit integrity of American consumers. The Consumer Financial Protection Bureau (CPFB) has taken steps to mitigate this doom loop and the three major credit reporting agencies are now taking action as well, no doubt in response to a greater focus on medical debt.

Transunion, Equifax, and Experian have decided in unison that:

All paid medical debt will be removed from credit reports.
Effective July 1, 2022, the time in which to report any outstanding medical debt will be increased from six to 12 months.
Effective July 1, 2023, outstanding medical debt less than $500 will not be reported at all.

Do No Harm

Consumer healthcare debt is most often incurred by those who are least able to afford it and are most vulnerable to being persecuted for payment. In fact, much healthcare debt should not even be classified as such.

A large proportion of this so-called debt should have been covered from the beginning by hospital financial assistance programs (FAPs), which are mandated by law for non-profit hospitals. These hospitals receive immensely valuable tax-exempt status in return for their commitment to provide services of equal value to patients with financial need.

Research has shown that hospitals fall egregiously short of these charitable commitments. Many neglect to even inform patients that such FAP programs are available to them. Multiple articles and studies, including research conducted by Johns Hopkins University, reveals a “wide variation in charity care provision” and that “many government and nonprofit hospitals’ charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment.”

Moving Forward

Personal credit report relief and similar efforts by the CFPB are promising progress in an area of significant collateral damage caused by the dysfunctional U.S. healthcare business machine. However, bigger strides are needed to protect individuals from the predation and profiteering inherent in our healthcare system.

It’s time to eliminate the financial injury caused by medical debt that’s endured by working Americans. Patients will benefit from next-generation health plans that use advanced, fair market payments for providers, and offer advocates to help patients receive all hospital financial assistance for which they are eligible.

Author: Vitori Health

Vitori Voice

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WATCH | Timely Tips on Self-Funding 201 + Fair Market Payments™