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The Devil You Know: Why Do Employers Accept Legacy Health Plan Risks?

2 min

Employers admit that legacy insurance carriers deliver poor service and do nothing to control escalating healthcare costs. Yet they stick with the status quo, insisting that changing plans is too hard for employees. Paradoxically, this inertia carries high costs and multiple risks for plan members.

Financial distress is one of the most negative results of staying with an underperforming employee health plan. Year after year, such plans impact employee finances by reducing benefits and redirecting their wealth into ever-higher payroll contributions, deductibles, and out-of-pocket expenses.

Studies show that shifting rising healthcare costs onto employees has outpaced wage and cost-of-living increases, effectively reducing or stagnating wages and increasing income disparities. Forward-looking employers know that by making health benefits more affordable, they can improve employee satisfaction and financial security and stay competitive in a tight labor market.

Members are further harmed when legacy health plans routinely deny claims and limit patient access to network-gated providers, services, and procedures. As a result, employees are exposed to (and often liable for) high-cost, out-of-network claims that can be financially devastating.

Consider this $97,000 surprise bill for transporting an infant from a local ER to a regional hospital for life-saving treatment. Although doctors determined the transfer was the child’s best chance for survival, using the air ambulance was deemed “not medically necessary.” Coverage and multiple appeals were denied, and resolution is still outstanding.

Plan sponsors should consider how situations like this can negatively affect employees and take decisive steps to reduce the spiraling costs and uncovered claims inherent in legacy insurance plans. Perceived challenges in moving to a new and modern health plan are often overblown, especially when the change results in better benefits, lower costs, and less financial risk.

Employees are not as fragile and incapable of adapting to change as employers make them out to be. Using employees as human shields to excuse the status quo increases employee harm and risk and exposes employer plan sponsor fiduciaries to liability.

Like it or not, employers are in the business of healthcare. As with other business improvements, successful leaders advocate for change and have confidence that their employees will recognize and embrace the benefits of a member-focused health plan.

Stampede for New Weight Loss Drugs Can Bankrupt Your Health Plan

3 min

A comprehensive, member-focused prescription drug plan provides access to the most clinically effective medications at the lowest net cost. How can employers meet demands for costly semaglutide and other heavily-promoted GLP-1 drugs while balancing fiduciary responsibilities and member health?

The key is staying current on unbiased medical research before expanding a prescription drug plan formulary to include the growing number of diabetes and weight loss medications in this wildly popular new class of drugs.

Sixty percent of health systems surveyed want more “real world results” on a drug’s efficacy from sources other than pharmaceutical manufacturers. Employers should expect the same.

Long-Term Results Are Inconclusive

Emerging results are mixed, at best. What we know so far is that these drugs are too costly for most plans and patients, are over-prescribed based on consumer demand, and often do not live up to their promises. Employers should consider just how revolutionary these drugs are before moving forward.

  • Weight loss varies by individual. Some lose a great deal of weight; others lose less or none at all. It’s also important to note that GLP-1 drugs do not work alone. Their effectiveness requires a concurrent commitment to exercising and eating healthy foods in smaller portions.
  • GLP-1 inhibitors do not reverse diabetes. They simply manage it, just like many safer and less expensive medications. Long-term remission can only be achieved through weight loss and permanent lifestyle and dietary changes. While Ozempic can help with weight loss, this two-pronged approach is essential for reversing diabetes.
  • Patients routinely experience serious side effects… from “Ozempic face” and persistent gastrointestinal problems to headache, fatigue, and retinopathy. A large study revealed that nearly 17% of patients taking semaglutide, the active ingredient in Ozempic and Wegovy, discontinued the medication because of side effects. Patients need to evaluate the long-term impact of these side effects on their overall health.
  • To maintain weight loss and mitigate (but not reverse) diabetes, GLP-1 medications require “lifelong use to maintain their effectiveness” while prolonging their side effects. Stopping drug therapy reverses many benefits that may have been realized and sometimes exacerbates the original condition.
  • These drugs are being used to treat a growing number of “off-label” conditions, including substance abuse disorders and cardiac health. Although results are promising, more research into long-term safety and effectiveness is needed before GLP-1s are widely prescribed for these conditions.
How Employers Can Support Member Health

Continued peer-reviewed research into this new class of drugs is needed to determine long-term cost effectiveness, side effects, and safety. Until then, proven alternatives to GLP-1s are and have been readily available to support members’ health and weight loss needs.

  • The “original” weight loss medications, which have been in use for the last 10-20 years, continue to be a viable alternative for many patients. These widely available drugs produce, on average, half the weight loss at less than 1/30th the price.
  • Bariatric surgery has significantly fewer side effects and superior long-term results for both weight loss and diabetes remission. Bariatric surgeon, Dr. Mir Ali, says that for those who meet the criteria, bariatric surgery “has the highest success rate for weight loss and long-term remission of many medical conditions.”
  • Endoscopic sleeve gastroplasty (ESG) is a one-day procedure that works well for almost everyone. Over a 5-year period, ESG sustained greater weight loss than semaglutide at a significantly lower cost ($33,583 less).

Employers should be offering modern health and prescription drug plans that include appropriate exclusions and authorization triage protocols to control cost and ensure that these medications, if used, are for the right patient, for the right reason, for the correct intended outcome, and at the right cost.

No Raises in 2024? Find Money to Stay Competitive and Keep Employees Happy

< 1 minute

Economic factors are turning 2024 into a potentially rough year financially for employees. Healthcare costs are expected to rise and employers are planning to scale back on raises and promotions, with many not even planning on a cost-of-living increase.

This double whammy will effectively reduce employee net compensation and disposable income. Despite the downside for retention, many employers seem willing to take this risk. Key findings of a recent survey of 600 business leaders revealed:

  • 26% of companies will not or may not give raises next year
  • Half of companies giving raises say less than half of employees will receive one
  • 52% of business leaders anticipate layoffs in 2024

Employers need to do everything possible to ensure their compensation and benefits packages remain competitive. Offering a member-first health plan from Vitori Health is a smart strategy for achieving cost control and employee retention goals.

  • Vitori Vantage, the industry’s first 3-year level premium health plan, eliminates the unpredictability of rising annual healthcare expenses. Vantage stabilizes cash flow and helps employers budget for strategic workforce investments.

Employers tethered to legacy insurance carriers with uncontrolled healthcare costs are giving up competitive advantage with fewer options for improving employee pay and benefits. It’s time to take a modern approach to employer sponsored healthcare that boosts employee satisfaction while successfully reducing plan costs.

How to Beat Fully-Insured Employer Health Plans That Deny Care

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It is abundantly clear that employers need to break free from fully-insured health plans with legacy insurance carriers. Premiums spiral higher with every renewal, and employees and their families are increasingly exposed to devastating denials of care and coverage… all in the pursuit of greater profit.

Despite laws to the contrary, insurers create the illusion of coverage while finding loopholes to avoid providing actual care. In its series on how the insurance industry routinely denies coverage to patients, ProPublica exposes the system’s inner workings and how it harms the people it purports to help.

For one patient, denial of cancer care had tragic results that sadly, could happen to any employee covered by a traditional, fully-insured health plan. The good news is that employers can break free from this profit-driven corruption by moving to a self-funded or 3-year level-funded health plan from Vitori Health.

Vitori removes the risk of legacy plans that cede all power to the insurance company by providing greater control over coverage and care. It also offers upwards of 30% in savings and includes low and no-cost care options to covered members.

Employers can provide real health care coverage to their valued employees.

How Can Employers Get Fair Hospital Pricing?

2 minHealthcare 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.

3x3x3 Interview Captures Vitori’s Outstanding Value Proposition

< 1 minuteWe are excited to share that Neil Quinn, Chief Strategy Officer at Vitori Health, was interviewed by Chris Fisher to create a BenefitsAlly 3x3x3 video.

In 3x3x3 interviews, innovative solution providers answer three questions of interest to benefit advisers using three slides in under three minutes. Neil provides quick yet comprehensive answers to these questions:

1. What is Vitori Health?

2. How is Vitori Health different?

3. Who is a good fit for Vitori Health?

>>WATCH THE VIDEO

Benefit consultants can learn more about the advantages of a modern health plan from Vitori Health and Vitori Vantage, the industry’s first 3-year level-premium plan that breaks the cycle of annual renewal cost increases.

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Chris Fisher is the founder of BenefitsAlly. Their mission is to discover programs that are innovative, solve a problem, and have a proven track record of success. They share these great solutions with benefits consultants so they can stay competitive by bringing essential solutions to employers before their competition does.

Hospital Mergers Raise Costs, Cut Competition, and Pump Profits

2 minHospital 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.

Should Boards Probe Health Care Costs? Deloitte Would Say Yes.

3 minCorporate boards have historically relegated employee and workforce concerns to management. In 2020, COVID-19’s dramatic impact on operations and employee health began changing that perspective in significant ways, leading to a more expansive approach to how boards fulfill their responsibilities.

In a recent publication, Deloitte’s Center for Board Effectiveness confirms that:

“Events related to the pandemic … have … thrust workforce management to the forefront of board agendas. In many cases an afterthought, a lagging consideration to the business and technology strategy, workforce management is now a leading priority, on an equal footing with other key areas of board focus.”

This much-needed emphasis is both timely and necessary. There is organizational risk for boards that do not press for better performance beyond the status quo. Enterprise risk programs should do more than “check the boxes” and boards must challenge those who insist they’re doing “everything they can” for employees as well as shareholders.

Mitigating Employee Health Plan Risk

ERISA, which ensures that both retirement and health plans are managed in the best interests of plan participants, tightened its regulations around retirement plans after rising numbers of class action suits resulted in billions of dollars in settlements. From imprudent investments and grossly high fees to mismanaging shared plan assets, employers were called to task for reduced earnings for employees.

As for healthcare benefits, boards can (and should) urge organizations to move away from legacy health plans that prioritize insurer and PBM profits over plan participants. This has fueled runaway employer costs, siphoned employee income, and burdened employees with medical debt when they need to use their health insurance.

Most employers and their employees are overspending on healthcare by 30% or more. This drain on corporate profits and employee income can be addressed by a modern health plan administrator with leading technology and a moral imperative to represent the best interests of employers and health plan participants.

Although it is unlikely that ERISA-driven regulatory changes around health plans are imminent, ERISA does expect organizations (and by extension, their boards) to manage health plan expenses. It is not difficult to envision employee health plan participants initiating legal action because employers and benefits consultants maintain plans with legacy insurance carriers that fail to demonstrate any cost control. Boards are encouraged to be more diligent and take proactive steps to mitigate the risk of such a scenario.

Board Responsibilities to Society

Deloitte cites the 2022 Edelman Trust Barometer, whose top ten findings reinforce the role business plays as the society’s most trusted institution. Respondents affirm that “societal leadership is now a core function of business” and that “business needs to step up on societal issues.”

There are few societal issues or obligations more critical than addressing the challenges of today’s healthcare system. As an integral part of this system, employer health plan sponsors have an enormous responsibility and cannot afford to be complacent actors. A greater emphasis on employee health and wellbeing is needed, as supported by Springer, which finds that some boards “view health as a business opportunity or even a moral obligation.”

Although 54% of the population receives health insurance through an employer health plan, 29% of those with employer coverage are functionally uninsured. Legacy health plans subject employees to immense financial distress and instability, often resulting in bankruptcy and crippling debt from which many struggle to recover.

Corporations and their boards have responsibilities to employees as well as shareholders and when it comes to employee health, those priorities are not mutually exclusive. Private sector employers need to embrace the growing workforce stewardship taken by many state and municipal government leaders as they root out unnecessary spending and seek more cost-effective, member-focused health plan alternatives.

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