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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.

3x3x3 Interview Captures Vitori’s Outstanding Value Proposition

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We 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?


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 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.

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

3 min

Corporate 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.

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

What’s the Best Way to Chop Prescription Drug Costs? Axe Your PBM!

2 min

The Inflation Reduction Act is a great first step toward lowering prescription drug prices and out-of-pocket expenses for Americans covered by Medicare. What’s unknown is how this will impact future Rx costs for members of employer-sponsored plans. How can employers cut costs now without reducing care?

Recent commentary asserts that drug manufacturers will experience losses as a result of this new legislation and are likely to “shift some of the losses onto commercial payers, leading to higher drug costs for employer-sponsored plan members. We’ve already seen this scenario play out in health care, as Medicare pays considerably lower rates for the same service compared to commercial plans, with hospitals and providers often increasing charges for employer-sponsored plans to make up for the difference.”

The author recommends that employers work with their Pharmacy Benefit Manager (PBM) to better understand their pricing practices and terms of service. While all efforts to improve communication and transparency are commendable, the Federal Trade Commission has already exposed the controversial, self-serving practices of six of the largest PBMs whose sole purpose is to limit competition and increase profits.

Employers and plan sponsors need to go beyond understanding the machinations of this corruption and implement a contemporary pharmacy benefit plan that prioritizes patients over secret profits.

Pharmacy Administration without the Predation

According to the PBM Accountability Project, “It’s no coincidence that out-of-pocket drug costs are rising, while PBM profits are increasing. The process of pricing our medications is unknown to many Americans. The opacity and complexity of the drug pricing system undermines the possibility for dynamic, price competition between PBMs — putting consumers at a disadvantage.” 

Vitori Health’s lowest net-cost pharmacy administration offers employers the antithesis of predation and disadvantage. It includes unmatched technology-enabled contracting and built-in advocacy on behalf of members who are reliant on high-cost specialty medications. By securing member financial assistance from pharmaceutical manufacturers, Vitori also removes plan sponsor costs and adds value as cost cascading occurs in the market.

It’s time to stop letting the fox guard the hen house. Contact Vitori Health for information about our non-PBM VitoriRx plan that gives employers and members a clear advantage.

Catalyst for Payment Reform Names Vitori Health a Market-Shaping Enterprise

4 min

Vitori Health has been recognized as a Market-Shaping Enterprise (MSE) by Catalyst for Payment Reform (CPR). Independent and influential, CPR’s thought leaders empower health care purchasers to proactively improve today’s dysfunctional healthcare market. Vitori is proud to advance this mission.

CPR Logo RGBCPR has published a white paper that examines the evolution, mechanisms, and strategy behind MSE solutions. It also explores the most important questions health care purchasers should consider when evaluating an MSE vendor.

As part of its research, CPR interviewed Neil Quinn, Vitori’s Chief Strategy Officer, for his perspective on current market practices and how MSEs can make a difference.

CPR | What’s your “theory of the case” as to why health care costs and prices continue to rise unabated?

QUINN | Costs and prices continue to rise unabated because there are no real countervailing forces to reduce the systemic financial inflammation. This has created a chronic business interruption disease for employer-purchasers that constantly drains dollars, hours, and energy away from core business priorities. At 20% of GDP, U.S. health care is a monopolistic mega-business that’s increasingly driven by shareholder profits, mergers and acquisitions, and massive multi-faction lobbies.

Unfortunately for employers, it has been generally unfettered by government public-good and antitrust guardrails and is not beholden to free-market forces. All actors in the health care system continue to maximize their financial interests and advantage to the detriment of employer-purchasers and their people.

CPR | Why have traditional health plans been unable to stem the tide?

QUINN | Too often the firemen are the arsonists. Efforts by traditional health plans to control costs and prices are analogous to spitting into an out-of-control fire. With deeply embedded conflicts of interest, these plans have neither intrinsic motivation nor external pressure significant enough to motivate meaningful and durable solutions.

Entrenched stakeholders aren’t going to disintermediate themselves. Their existing business models are reinforced by an interwoven collusion with provider systems, broker-advisors, and other healthcare matrix entities to collectively maintain shareholder priorities.

CPR | What types of strategies have the greatest potential to rebalance market power toward health care purchasers and consumers?

QUINN | Market-shapers are always great simplifiers. Trying to rebalance market power using broken traditional components results in a whole that is less than the sum of its parts. At best, it is simply managing the racketeering. The strategies with the greatest potential are those that recuse themselves of legacy industry elements and economics.

The sweet spot includes transparency-focused solutions such as Fair Market Payment™, net lowest cost Rx pricing technology, direct primary care, and bundled value-based contracting. These and other strategies create a consequential rebalancing of market power towards purchasers, while often removing financial barriers for plan members and patients.

CPR | On the flip side, why can Vitori as a non-traditional entity succeed where traditional models have failed?

QUINN | We aren’t saddled with the “hammer and nail” rigidity that maintains the status quo. Our success begins with the high-minded goal to truly liberate employer-purchasers and plan participants. Independence from legacy system components and economics gives us the freedom to solve problems created by that system without conflicts of interest and furtive revenue streams that deter traditional stakeholders from pursuing meaningful strategies. This unencumbered business model has given us the ability, agility, and drive to rapidly fail, adjust, and succeed.

CPR | What would you say is the greatest challenge to growing your business?

QUINN | One of our greatest challenges is getting past the “room with no windows” that keeps employer-purchasers in the dark about proven, better health plan alternatives. They are unaware that their broker-advisors and legacy insurance carriers hide these options and gaslight them into a disquieting Stockholm syndrome loyalty to their captors.

We routinely challenge a deeply embedded Principal-Agent problem built on enormous information asymmetry. The Principal (employer), who should be well informed and at the heart of the transaction, is instead veiled from price, quality, and value purchasing comparatives. The cabal of Agents (brokers, insurers, provider systems, PBMs) does not act in a transparent and trustworthy capacity, perpetuating economic and structural conflicts of interest.

CPR | What do you need from employer-purchasers to make your product successful?

QUINN | Employer-purchasers need to let go of their “devil you know” mindset and stop buying into the narrative that employees can’t handle change. Although there may be risks in taking action, they are far less than the risks of comfortable inaction that have enabled a vast transfer of wealth from working Americans to the medical industrial complex.

As legal fiduciaries to their health plan participants, employers need to ask themselves: Do traditional insurers/payers really have my organization’s and employees’ best interests at heart? Can I afford to ignore the financial competitive advantage that proven alternatives offer? What has happened year-over-year to employee disposable income and health care financial risk through our moral inertia?

As a Market-Shaping Enterprise, Vitori Health joins CPR in its commitment to rebalancing power in the healthcare market. Every aspect of a Vitori Health plan makes it easy for employer-purchasers to gain control of costs and ensure a better, more compassionate member experience.

Catalyst for Payment Reform (CPR) is an independent nonprofit corporation whose mission is to catalyze employers, public purchasers and others to implement strategies that produce higher-value health care and improve the functioning of the health care marketplace. CPR does not partner or endorse offerings from Vitori Health or other vendors.

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