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How to Help Employees Beat Medical Debt and Financial Stress

2 min

Everyone struggles with finances occasionally, but those with medical debt bear a heavier burden than most. KFF, an independent source for health policy research, reports that “People with medical debt are much more likely than those without such debt to show other signs of financial vulnerability.”

This often takes the form of carrying high credit card balances and having no extra cash on hand to meet unexpected expenses.

The financial worries from “just getting by” create considerable stress and potential mental health issues that can impact both personal and professional responsibilities. To meet current financial obligations, the study found that those with medical debt are more likely to seek short-term funds from costly sources such as payday loans and pawn shops. Individuals also risk future insolvency by withdrawing needed funds from retirement accounts.

Delaying Treatment: Strategy or Tragedy?

Many individuals attempt to stabilize medical expenses by delaying or forgoing needed care, sometimes with life-threatening implications.

Yet another study reveals that:

“Forty percent of Americans admit they have delayed care due to costs, while one in six say their work has suffered due to a health issue they couldn’t afford to address.“

Impact on Job Performance

There is a clear connection between an employee’s mental health and their job performance. Although this finding reflects the perspectives of younger employees, it no doubt applies to all generations experiencing financial insecurity:

“More than 30% of Gen Z and millennials say their personal financial worries have been a distraction at work. More financial education can help workers address their financial challenges, reduce stress and improve focus and productivity.”

Employers can reduce medical financial stressors that negatively affect job and business performance and improve employee satisfaction and retention. By passing along the significant savings that a modern health plan can deliver, plan sponsors can provide better benefits and lower out-of-pocket costs for employees and their families. This includes low or no-cost plan features including surgeries, prescription drugs, and mental health telemedicine.

Survey Says… Employees Want Lower Health Plan Costs and Better Benefits

2 min

Americans have long struggled with a dysfunctional healthcare industry and legacy insurance plans that cost too much and don’t deliver. Instead of focusing on what’s wrong with the status quo, a recent study asked employees to prioritize what future health plans should offer.

Source | BuzzRx Survey

Employers can (and should) align with the survey results when choosing an employee health plan by prioritizing:

  • Lower Costs
    Reducing insurance premiums, co-pays, and deductibles is a clear baseline. Equally important is for employers to provide built-in access to employee financial assistance and no-cost options for prescription drugs, common surgical procedures, and mental health care.
  • Expanded Services
    Remote telehealth services became essential during the pandemic. They have since been embraced by both patients and providers as a convenient and effective way to deliver high quality medical and therapeutic care. Every employee health plan should include them, ideally at no cost to the employee.
  • Less Complexity
    Who doesn’t need help navigating complex medical systems and bureaucratic digital paper trails? Employees deserve robust online tools and a dedicated support team to get the most from their health plan. This is especially important for Gen Z and other younger employees.

It’s no secret that robust health benefits, retirement plans, and other perks help attract and retain a talented and dedicated workforce. Conversely, the survey reveals that 1 in 6 respondents “dislike their job but stay for health benefits.” The corollary to this is that employees will leave for less costly, better health benefits. This means that employers should be proactive in prioritizing what current and potential employees want most in a health plan.

Employers and benefits advisors who really want to make a difference can choose a compassionate, member-focused health plan that saves up to 30% in health care costs, enhances benefits, and delivers an exceptional member experience.

How Rising Health Care Costs Drive Wage Stagnation and Inequality

2 min

A comprehensive JAMA study analyzing 32 years of data suggests that health premiums for employer-sponsored health benefits have been rising faster than wages. These costs are often passed on to employees, further reducing or stagnating wages and increasing income disparities by race, ethnicity, and wage level.

According to JAMA, “Since the 1980s, real wages have increased among the highest earners but have been flat for most workers, leading to a widening earnings inequality. During the same period, the costs of employer-paid health care benefits have also increased substantially. As health economists demonstrate, it is generally accepted that increasing health care premiums result in lower wages for employees.”

Additionally, health care premiums as a percentage of compensation were significantly higher for Asian, Black, and Hispanic families than for White families.

The study also notes that “most employers do not adjust the health care premiums charged to workers by employee earnings; thus, the displacement of wages owing to increasing health care premiums could be particularly problematic for lower-wage workers and could be associated with earnings inequality.”

Improve Real Wages and Equity by Halting Healthcare Overspending

Instead of perpetuating this damaging dynamic, forward-thinking employers have the power to fix the healthcare cost drain on their employees’ wages. With a modern health plan that reduces overspending by 30% while improving member support, Vitori employers can use these substantial savings to lower health plan premiums and implement more equitable wage-banded premiums. They can also fund competitive benefit and business enhancements to attract and retain talent.

Looming Employer Litigation: Is J&J the Canary in the Coal Mine?

3 min

There is looming fiduciary litigation risk for employers who continue to passively patronize the legacy insurance and PBM industry with its long, public history of predatory practices. Johnson and Johnson leaders who were individually-named fiduciaries in a recent class action lawsuit can attest to this.

ERISA was designed to protect the interests of employee benefit plan participants by establishing standards of conduct, responsibility, and obligation for employer health plan fiduciaries. When mismanagement occurs, it empowers employees with “appropriate remedies, sanctions, and ready access to the Federal courts.”

Such empowerment is now playing out in a New Jersey federal court. On February 5, 2024, an explosive class action complaint was filed against Johnson and Johnson, its Pension & Benefits Committee, and individually named fiduciaries. It accuses Johnson and Johnson of breaching its fiduciary responsibilities by failing to negotiate lower prescription drug prices and burdening employees with millions of dollars in overpayments for generic drugs.

Manipulating Rx Drug Plans to Maximize Profit

As stated in the complaint, the federal Employee Retirement Income Security Act of 1974 (ERISA) requires employer health plan fiduciaries “to make a diligent and thorough comparison of alternative service providers in the marketplace, to seek the lowest level of costs for the services to be provided, and to continuously monitor plan expenses to ensure that they remain reasonable under the circumstances.”

The plaintiffs assert that Johnson and Johnson did not comply to the extent required by ERISA, and that the firm failed to engage in a prudent and reasoned decision-making process, specifically regarding prescription drug costs. According to the complaint,

“Defendants agreed to make the plans and their beneficiaries pay, on average, a markup of 498% above what it costs pharmacies to acquire those drugs…roughly 6 times as much as the PBM (or a PBM-owned pharmacy) paid for those very same drugs.”

The lawsuit exposes the predatory practices of traditional PBMs and how they conflict with ERISA’s goals and a fiduciary’s responsibilities: “No prudent fiduciary would agree to make its plan and beneficiaries pay a price that is two-hundred-and-fifty times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket.”

What Role Do Brokers Play?

Organizations rely on brokers and Employee Benefit Consultants (EBCs) for key guidance in choosing plans that are wholly “for the exclusive benefit of participants in the plan.” It is an unfortunate truth, however, that some EBCs participate in these unethical PBM schemes for their own enrichment while purporting to act in the best interest of their clients.

EBCs are sometimes paid by PBMs in ways that incentivize them to act against the plan’s interest. For example, PBMs may promise a commission on every prescription if the EBC recommends the PBM to its clients.

Employer health plan fiduciaries cannot simply rely on the advice of third-party service providers, consultants, or experts, especially those who have conflicts of interest that may prevent them from providing advice solely for the benefit of the plan. While they can take their suggestions into account, fiduciaries must exercise independent, prudent, and impartial fiduciary judgment on all matters for which they receive advice from EBCs.

An Ethical Approach to Choosing a Health Plan

As demonstrated by the Johnson and Johnson lawsuit, plan participants may seek injunctive and equitable relief from fiduciaries who breach their responsibilities. Brokers and EBCs can take an active role in protecting their clients from legal action by offering principled solutions that avoid conflicts of interest and solely benefit plan participants.

“If Defendants had engaged in a prudent and reasoned decision-making process, they would have known of, and adopted, any of numerous options that…would have resulted in…cost savings for the plans and their beneficiaries. Implementing those available options would have saved the plans and their beneficiaries millions of dollars over the proposed class period.”

There is a multi-year pattern of legacy insurance carriers and PBMs failing to put the interests of employer plan sponsors and plan beneficiaries ahead of profits. Employer fiduciaries who continue to engage these underperforming entities when alternatives are clearly available do so at growing legal risk. Vitori Health eliminates this risk with member-first, industry-leading health plans that reduce overspending by up to 30%, transparent VitoriRx lowest net cost pharmacy administration, and a remarkable member experience.

Americans Struggle to Pay for Health Care. Vitori Can Help.

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The results from the Commonwealth Fund 2023 Health Care Affordability Survey are grim. American consumers continue to struggle with unsustainably high costs and inadequate coverage. Unsurprisingly, nearly 40% forgo or delay needed care and don’t fill prescriptions to avoid risking financial ruin.

This includes individuals with employer-sponsored health plans, 43% of whom said it was “very or somewhat difficult to afford their health care.” Insurance coverage didn’t prevent people from incurring medical debt. Additionally, 30% of covered employees report paying off debt from medical or dental care over time, especially for treatment of an ongoing health condition.

The survey concludes with suggestions for making healthcare more affordable, including lowering deductibles and out-of-pocket costs. A comprehensive, member-focused health plan from Vitori Health goes even further by shrinking total medical and Rx cost by 30% and adding these free benefits wrapped in a remarkable member support experience.

  • No-cost telemedicine, including mental health services
  • $0 Surgeons of Excellence program
  • Rx financial assistance and no-cost specialty medications
  • Advocacy for securing hospital financial assistance
  • No member liability for balance billing

Plan sponsors seeking long-term cost stability and security will appreciate Vitori Vantage, our industry-first, level-funded health plan that delivers 36 months of fixed premiums for stable cash flow and predictable budgeting.

By dropping legacy insurance carriers and outdated PBMs, plan sponsors can substantially improve employee health and financial well-being and help bring needed change to the US healthcare industry.

Privacy or Cover-up? Hiding Behind HIPAA to Inflate Insurance Premiums

< 1 minuteWhen the HIPAA Privacy Rule was enacted in 1996, its intent was to protect personal medical records and health information. This goal has since been weaponized by legacy health insurance carriers who withhold data from fully-insured plan sponsors to obscure their justification for higher premiums.

A recent article explains how smaller employers “only receive meager large-claims data at the end of the year. You will not get month-to-month claims versus premium information. The stated reason: carriers are concerned that if they give you too much specific detail about your employees’ health and claim activity, you may be able to discern who has what condition. This, the logic goes, violates HIPAA. The smaller your population, the greater this risk. … This argument is absurd, but it has been the reality in the industry for twenty years.”

There is another, perhaps more insidious, reason for not sharing claims data: to keep employers from escaping the prison of the legacy carriers’ fully-insured health plan. Claims data are the “receipts” for an employer’s plan expenditures with healthcare providers. Without this vital information, fully-insured employers cannot get the stop-loss insurance that enables self-insurance and the cost control and plan design freedom that it brings.

Privacy and transparency are not mutually exclusive. Both can be attained with a modern, self-funded health plan that eliminates the conflicts of interest inherent in fully-insured legacy plans.

By choosing a health plan administrator like Vitori Health, employers can experience freedom of choice, total transparency, and unfettered access to claims data supported by a proven cost and risk suppression platform. Employees will receive better benefits at a lower cost and a remarkable member experience.

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

< 1 minuteMedicare 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.

7 Burning Questions About Commercial Prices for Health Care Services

3 minHealth Affairs has launched a timely analysis of physician, hospital, and other health care provider prices in private-sector markets and their impact on overall spending. We applaud this pursuit of definitive answers but until such truths are revealed, employers won’t have any cost relief any time soon.

The Forefront series, Provider Prices in the Commercial Sector, kicked off with an excellent article discussing what Health Affairs considers “under-explored burning questions in the price debate” that they think deserve attention. We couldn’t agree more!

Read the full article when you can. In the meantime, we’ve highlighted key takeaways to help frame this important conversation for employers and all stakeholders seeking lower health care costs and a better member experience.

  1.   Do Poorly Set Public Prices Distort Commercial Prices?

Our current systems for setting prices in public programs are flawed. For example, Medicare pays different amounts for the same service delivered in different settings and reimburses more for higher cost drugs. Additionally, relative value units for physician services are often inaccurate. Although there is some evidence that higher Medicare prices lead to higher commercial prices, more evidence is needed.

  2.   How Should Services Be Defined?

Our payment systems rely on very granular service definitions. For example, there are ten CPT codes for office visits. This creates opportunities for providers to choose more lucrative codes and adds administrative costs. The general sense is that our system has erred on the side of too little standardization. Broader service categories may be desirable.

  3.   How Does Quality Respond To Changes In Pricing?

Cross-national evidence suggests countries paying lower prices do not suffer significantly worse quality of care. Studies of mergers and prices suggest antitrust activities may lower prices but not degrade quality, supporting the position that policies intended to lower heath care prices do not necessarily impact quality adversely.

  4.   How Should We Price New Digital Services?

Given the fee-for-service chassis of the US health system, the instinct is often to create codes for these services and then assign prices, but that is problematic. For many interventions, there is limited evidence about their appropriate use.

  5.   How Much Spending is Flowing Outside of The Claims System?

Most pricing research is based on claims data, a valuable but flawed resource. Increasingly, funds are flowing from payers to providers outside of the claims system via fixed payments, quality bonuses, or shared savings from alternative payment models.

  6.   Are Pay-for-Performance Systems Worth It?

There is a growing body of evidence suggesting value-based care incentives are not effective. Often, quality measures are not tied closely enough to health outcomes to merit additional payments. Operating these models is expensive and may distract from other activities. It is reasonable to conclude that some of these systems should at least be scaled back, maybe even abandoned, until better, more targeted approaches to eliminating substandard care and improving quality can be designed.

  7.   To What Extent Do High Prices Reflect Higher US Production Costs and Why?

While we know market power and a lack of pricing transparency and direct competition is an important determinant of higher prices in the US, a further understanding of production costs would be valuable. In part, health care prices likely reflect higher labor costs in the US. Prices of technologies are higher in the US compared to other nations. And the complexity and fragmentation of the American health care system create higher administrative costs, driving higher prices.

Closing Thoughts

It takes time to delve into these questions and implement solutions for changing the American health care model. The more immediate imperative for employer commercial plan sponsors is to take the reins now with a health plan that is proven to reel in claims overspending while improving benefits and providing a better member experience.

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