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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
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.
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.
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 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.
Paying healthcare claims should be transparent, less costly, and stress free but for many plan sponsors, it is anything but. Insurance company discounts off price-blind billing fuel rising costs, and referenced based pricing (RBP) antagonizes providers and members alike. A better approach is Fair Market Payment™ (FMP). Read More about Fair Market Payment™: Big Savings, Less Friction than BUCA or RBP Plans
America… the land of the free and the home of the world’s highest health care costs and lowest life expectancy. While you may be familiar with such global comparisons, you may be surprised by the wide disparities in health care quality, affordability, and access, between and even within our states.
A recent WalletHub study ranked the best and worst states for health care based on these and other criteria including infant mortality rate, doctors and dentists per capita, and the number of adults who have not seen a doctor or dentist in two years. The results are alarming, and the challenge is daunting.
The study includes an interactive table that can be sorted by rank, cost, access, and outcomes. The top two performers are Minnesota and Rhode Island, which are among the top 10 in all four categories. In three out of four categories are Colorado, Connecticut, Maryland, Massachusetts, and Vermont.
Results at the other end of the spectrum are more nuanced. Massachusetts, for example, has high costs but ranks #1 in access and outcomes. Others, like Alabama, Alaska, Louisiana, Oklahoma, and Texas, rate the most poorly in three out of four categories.
While the WalletHub study focused on health care in general, the March of Dimes dug deeper into maternity care. This is especially important because in poorly rated states, there is a direct relationship to high infant mortality rates.
The March of Dimes study identified what it calls “maternity care deserts.” These locations are defined as “any county without a hospital or birth center offering obstetric care and without any obstetric providers.” Obstetric providers include obstetrician-gynecologists, certified nurse midwives, and certified midwives.
It’s hard to imagine that nearly 7 million American women of childbearing age now live in a county with limited or no maternity care services. One-third of U.S. counties, more than half of which are rural, are now maternity deserts. And that number is growing as local and regional hospitals get gobbled up by large hospital systems.
Employers can take an active role in mitigating the nation’s healthcare mess, at the local and individual levels, by choosing an integrated employee health plan with national coverage. It’s best to seek out a next-generation health plan designed specifically to reduce overspending while improving access to quality health care, regardless of location.
Given the difficulty navigating our broken healthcare system, a preferred employee health plan should also include high levels of member support. From answering questions to locating qualified providers, members deserve personalized assistance to get the best care at the lowest cost.
A new study shows that 71% of US employers expect moderate to significant increases in healthcare costs over the next three years, including a 6% rise in 2023. While the need to manage costs is clear, it’s shocking that 1-in-4 employers plans to shift costs to employees through higher contributions.
As quoted in the WTW study, “Employers must focus on changes that go beyond addressing their employees’ needs to also support efforts to attract and retain talent during a tight labor market.”
Increasing premium contributions effectively reduces employee income and quality of life, and is contrary to a growing focus on making employee benefits more affordable. It’s certainly not the best way to win the war for talent and boost employee satisfaction and retention.
In addition to higher payroll deductions, 23% of employers surveyed have further eroded employee earnings and freedom of choice by increasing out-of-pocket costs for non-preferred labs, providers, and facilities. Another 19% expect to do so by 2024. Boxing employees into narrow networks is never popular and does little to effectively balance cost management with health care affordability.
Employers have a fiduciary responsibility under ERISA to manage plan expenses on behalf of plan participants. At the same time, they need to seek competitive advantages and avoid future risk. A next-generation health plan is a strategic tool for meeting these goals by countering inflationary pressures and making health care affordable without reducing benefits.
While 27% of respondents currently use programs to combat fraud and waste, such capabilities can be fully integrated into a modern health plan to ensure sustainable savings and help prevent such abuse from happening in the first place.
The same is true for concierge support services, which help employees navigate the healthcare system and get more value from their health plan. A key driver of employee satisfaction, this essential service is currently only offered by 21% of respondents, with another 25% expecting to do so by 2024.
Employers willing to let go of their “devil you know” mindset can deliver better, more affordable health care for their employees and successfully fight the rising costs and low transparency of legacy health plans.
Technology leaders and top executives from US hospitals and health systems met recently to focus on healthcare affordability and transforming the patient financial experience. Although many good ideas were generated, the definition and expectation of affordability clearly varies by stakeholder.
Participants in the leadership summit acknowledged that “healthcare in the U.S. is notoriously expensive, including for many people covered by insurance — a reality underscored by the role medical debt plays in more than 60 percent of bankruptcies.” Yet for these constituents, affordability means “enlightened” payment plans that “focus on maximizing the repayment success of the patient.” In other words, let’s improve the odds of the patient paying a bill that is outrageously and unnecessarily high.
The healthcare industry is increasing its use of technology to improve what it calls the “patient financial experience.” Direct-to-provider payment plans are still the norm, but they are rapidly being replaced by medical credit cards whose lines of credit roughly equal the amount of the patient’s bill.
Research for an article in Crain’s Chicago Business revealed that Synchrony Financial, one of the largest issuers of medical credit cards, reported a 50% increase in purchase volume (from $8 to nearly $12 billion) from 2015 to 2021. The author predicts that it’s just a matter of time before medical credit cards overtake payment plans as the preferred financing method. But preferred by whom?
Hospitals love them because they get paid up front and incur lower transaction fees: a single swipe for a one-time payment vs. 60 swipes for a five-year payment plan. These cards are also promoted (with training provided by the card issuers) by dentists, cosmetic surgeons, and providers whose charges are out of pocket or subject to high deductibles. Even veterinarians are in on the game.
So while hospitals and providers clear outstanding charges from their books, their alliance with medical credit card companies pushes patients into a debt vehicle that’s not in their best interest. The ethics get murkier for nonprofit hospitals who should be providing acceptable levels of free care and services to the community in exchange for substantial tax relief.
Patient reaction to medical credit cards is decidedly mixed. While some appreciate the convenience, others feel they were preyed upon or misled about the terms of their debt, specifically the no-interest introductory period and when interest charges begin accruing. Patients report being pushed to open an account during point of care, including in the emergency room or at discharge.
Kristen Schell, who was profiled in the Crain’s article, says she was pressured into charging urgent gall bladder surgery to a medical credit card, despite being in the financial field for 15 years and “knowing better” that it was not prudent.
Consumer credit experts say medical credit cards should be the last resort for paying a large medical bill. Interest rates are higher: CareCredit is close to 27% while regular credit cards average 19% to 20%. And once medical debt hits a credit card of any kind, it is indistinguishable from consumer debt.
This is a very important consideration for anyone supposedly concerned about the patient financial experience. Consumers rejoiced when the three major credit reporting agencies agreed to remove medical debt from credit reports. However, this only applies to money owed directly to a hospital, care provider, or collection agency. It does not apply to medical debt on any type of credit card. Once charged, it’s just a massive amount of debt in the patient’s credit history that’s viewed less favorably by credit card bureaus.
The most encouraging outcome of the leadership summit was a push toward price transparency. Participants acknowledged that “patients still have surprisingly little visibility into what they owe, why they owe it, and how they can pay for it in a way that fits within their budgets.” Additionally, patients “rarely have an opportunity to inform themselves what a consultation, a lab test or an intervention will cost them.”
Technology and artificial intelligence chat bots are being touted as mechanisms to digitize and improve the patient financial experience. And while the technology may be ready, the industry is not. An executive from a Chicago-based health system made the following observation.
“Organizations are putting their prices out there and patients are looking at quality and at what it might cost them, but the problem is they don’t understand the full cost because there’s all this back work with payers about what their true out-of-pocket will be.” In reality, better payment predictive analytics are needed for these efforts to have any real value to consumers.
From a patient perspective, knowing real and accurate costs in advance doesn’t necessarily make them reasonable or affordable, but such transparency is a step in the right direction in that it supports better financial decision making when it comes to health care.
Employers should consider these two highly effective ways to help protect the financial and health interests of their employees.
Americans spend about $500 billion a year on prescription drugs with no visibility into the processes that set prices or the comparative effectiveness of drugs approved for the same clinical purpose. This opaqueness makes it impossible to ensure that prices are aligned with the value a drug provides.
PBMs are primarily responsible for this lack of transparency by adding cost through spread pricing and creating drug formularies based on the rebates they receive from manufacturers. The good news for employer health plan sponsors and their members is that some researchers are trying to change this.
In their review of research by the Center for Evaluation of Value and Risk in Health at Tufts Medical Center, Health Affairs notes that there is no single entity in the U.S. that makes drug coverage and pricing decisions. This is compounded by the mix of private and public payers that follow different rules, and a system that grants monopolies to drug manufacturers and allows them to charge whatever the market will bear.
The way out of this mess is to build prescription drug formularies that consider comparative effectiveness research and cost. The researchers support the science-driven approach that is advocated by the Institute for Clinical and Economic Review (ICER) and is used by next-generation Rx plans to deliver better value and better outcomes.
ICER is an independent, non-profit research organization founded in 2006 at Harvard Medical School. It evaluates the clinical and economic value of prescription drugs, medical tests and devices, and health system delivery innovations. ICER believes that when drug pricing reflects how well the drug improves patients’ lives, it will incentivize transformational innovation by rewarding pharmaceutical companies for developing more highly effective drugs. Without such philosophical and economic shifts, Americans will continue to pay too much for drugs that do too little.
ICER has developed a recommended health-benefit price benchmark (HBPB) for U.S. drug prices, net of rebates and discounts. This is certainly a step in the right direction but as we know, rebates and other PBM practices are little more than a scam. Additionally, of all the drugs ICER has assessed, only slightly more than 25% were priced within their HBPB range.
Brokers and advisors can empower employers by offering prescription drug plans that deliver value based on cost and comparative clinical efficacy. It’s time to replace the predatory practices and overriding profit motive of PBMs with formularies that prioritize drugs offering the best overall value based on comparative data, next-generation payment technology, smart sourcing, and evidence-based improvements in patient outcomes and savings.
Contact Vitori Health for information about our non-PBM VitoriRx plan that does all this and more.
The Health Rosetta is an innovative blueprint for high performance health plans that is transforming the benefits experience for employers and plan members. Vitori Health supports this mission and is proud to sponsor and attend the upcoming Health Rosetta Summit in Denver.
Our shared mission can be summarized as simplifying the path to lower costs and improved financial performance through better benefits, improved outcomes, and higher quality care for employees. The Health Rosetta framework contains these foundational components and is constantly evolving to include more and better components, case studies, data, best practices, and related solutions.
The Health Rosetta Summit will take place on August 15-17, 2022 in Denver, Colorado. The outstanding speakers and robust content will focus on how “Transparency Rebuilds the American Dream” and is a proven path to delivering world class health care to employees at significantly less cost.
The goal is for attendees to collaborate with the CEOs, union and civic leaders, and benefits advisors who have “transformed health plans from the #1 driver of inflation, poverty and bankruptcy to the top driver of restoring hope and well-being.”
Vitori Health is proud to sponsor and participate in this exceptional event. Attendees visiting the Hydration Station can pick up an eco-friendly water bottle and enjoy a variety of beverages to stay healthy and hydrated throughout the summit.
We are also hosting a raffle at the Hydration Station for an inflatable stand-up paddleboard. Just scan the QR code and use our Dynamic Financial Impact Calculator to estimate savings using Vitori Health. Downloading the results automatically enters attendees in the raffle.
We look forward to strengthening our connections to member advisors, employers, solutions providers, and ecosystem guests at this Health Rosetta community-building event. It’s time to scale simple, practical, and proven fixes to the healthcare system!
Employers take great care to choose the best possible health plan for their members. But to get value from their plan, employees must understand common health insurance terms to make sound health care decisions. A recent study shows how a lack of literacy is resulting in confusion and higher costs.
The 2022 health insurance literacy survey published by HealthCare.com asked respondents how well they understood specific health insurance language. The results show “bewilderment over a wide range of health insurance terms and how health insurance functions in the United States.”
Despite these varying degrees of confidence, it’s clear that respondents don’t correctly understand how things work.
For example, “copay” ranks as the best understood of all the health insurance terms presented. And yet half of all respondents erroneously “believe that copays count toward deductibles when they generally do not.”
Additionally, “understanding the meaning of “in-network” is crucial to not getting socked by unexpected health insurance bills. But 4 in 10 respondents (41%) were unable to select the correct option” among four choices to describe its meaning: “See only doctors who are contracted with a carrier associated with your policy.”
As a result, “1 in 4 Americans (26%) say lack of health insurance understanding caused them to receive a higher than expected medical bill.”
Employers are ideally positioned to bring clarity to the healthcare conversation and help employees avoid surprise medical bills due to misunderstandings. Here are several strategies that can help members (and employers) in significant ways.
Everyone benefits when employees understand health insurance language and have a simpler, cost-saving, open access plan with better member support.
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