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.”

Source: Health Insurance Literacy Survey 2022

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.”

Source: Health Insurance Literacy Survey 2022

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.”

Strategies for Empowerment

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.

• Expand current financial education programs to include health insurance education. Human Resources and/or plan administrators can create custom resources that meet the specific needs of their workforce and reinforce this information during open enrollment.
• Implement a compassionate, member-focused health plan that unburdens plan administrators by offering unlimited access to personalized support services during open enrollment and beyond. Services should combine member assistance with claims, unexpected bills, and providers, with education on plan features and guidance navigating the healthcare system.
• Choose an open access plan that eliminates confusion about network providers and the potential for high or unexpected medical bills.
• Avoid legacy insurance carrier plans that have strict networks as well as reference-based pricing (RBP) plans, which are adversarial with providers. Payment under RBP plans is considered unfair, and providers often bill patients for the balance of what they thought they should have been paid. Instead, consider a next-generation plan that uses Fair Market Payment™ (FMP) that is equitable for providers, employers, and plan members while saving significantly over legacy insurance plans.

Everyone benefits when employees understand health insurance language and have a simpler, cost-saving, open access plan with better member support.

The war for talent has escalated thanks to “The Great Resignation,” a pandemic-driven trend in which employees are quitting their jobs in record numbers. While some change careers, most seek new positions that better align with their priorities, which include higher pay and better health benefits.

This level of churn is exhausting, expensive, and disruptive. Consider that 44% of employees are “job seekers” and of them, 33% are active “job hunters,” according to the 2022 Global Benefits Attitudes Survey conducted by WTW (Willis Towers Watson).

Additionally, Gallup estimates that “The cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. So, a 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year.”

Clearly, this is not sustainable.

The Importance of Cost-Effective Health Benefits

Although making more money is often the top reason for changing jobs, a CNBC analysis of the WTW survey identifies health benefits as the #2 reason why “almost 20% said they’d take a new job for the same pay — suggesting factors other than wages are important, too.”

The WTW survey affirms this. “Benefits packages that meet the needs of employees and provide an enhanced experience result in significantly greater retention (78% vs 41% when the benefits package does not meet the needs).”

Employers competing for top talent should consider replacing high-cost, traditional health plans with innovative plans that challenge and transcend the byzantine practices of insurers, PBMS, and health systems. Decisive steps can be taken today to offer enhanced health benefits that deliver better access to care at lower, more realistic costs for employers and employees.

Employees Have Responsibilities Too

It’s one thing for employees and job seekers to demand better health benefits. It’s another to take responsibility for personal finances by fully understanding everything offered by a health plan.

The Wall Street Journal asserts that the best time to evaluate plan options is during open enrollment. When confronted with thick booklets and lengthy documents, many employees make quick, simple choices instead of exploring the potential value of more complex plan options. This is a missed opportunity to save money and secure the most appropriate coverage for their family.

It also prevents employees from evaluating whether certain benefits are worth the cost. While employers have been ramping up benefits in the war for talent, inflation has made consumers more cost sensitive. Employees can reduce monthly paycheck deductions and increase satisfaction with their health plan by choosing only those benefits that best support them, especially during the continued and evolving pandemic.

A Sustainable Benefits Future

In the war for talent, health plans that offer better health benefits at a lower cost have a clear competitive advantage. When companies save 30% on health plan spending without cost shifting, they can redirect those funds to what employees and candidates seek: higher salaries and signing bonuses, increased direct and indirect compensation, and enhanced employment amenities. And there’s an immediate and significant improvement to the balance sheet that can catapult a business ahead of its competition.

Employees are demanding health benefits beyond the status quo as they move from job to job. Employers can make that happen by offering a better health plan experience and helping employees evaluate their options during open enrollment.

Now that’s sustainable!

Twenty years ago, nearly two-thirds of doctors were independent practitioners. Today, only one-quarter remain independent. This mass exodus is being driven by financial pressures, marketplace competition, and the politics of health care. Which begs the question: where have all the doctors gone?

They’re still here… they’ve just switched from being employers to employees. Research by the Physicians Advocacy Institute reveals that by the end of 2021, 52.1% of physicians were employed by hospitals and health systems and another 21.8% were employed by corporate entities such as health insurance and private equity firms.

This is not good news for consumers. Health systems, which are aggregating unchecked across the country, buy and control doctors in order to capture and control more revenue. This is done under the guise of “integration efficiencies.” However, anyone who’s had the misfortune to be a patient can attest to the inefficiency, duplication, miscommunication, and unpleasant billing surprises within these mega systems.

Health systems routinely buy and employ primary care physicians (PCPs) and press these doctors for high volume patient throughput. This leaves mere minutes for most PCP visits and drives more tests and procedures. It also increases costs and maximizes revenue generation for the health system.

Direct Care or Referral?

It gets worse. To maintain this level of throughput, PCPs employed by health systems are required to refer patients to specialists and outpatient facilities within their vertical system, further generating revenue while limiting choice for patients and doctors.

These PCPs are practicing well below their licensure capability. Family, internal, and general medicine physicians are well trained to care for most acute illnesses and manage the most prevalent chronic conditions when patients don’t have extenuating circumstances. Try getting an IV, stitches, a mole or skin tag removed, or a simple fracture set in a PCP office today.

Twenty years ago, less than five percent of PCP visits resulted in a referral to a specialist. The rate of referrals to specialists has more than tripled today.

A New Model for Independent Physicians

Our health care system needs more Direct Primary Care (DPC) physicians who maintain their independence from hospitals, health systems, and corporate employers. DPCs can provide a much wider array of care and when necessary, can refer to lower cost, higher quality independent specialists.

Some DPCs have joined accountable care organizations and adopted patient-centered, medical home models. Nearly 24% are considering ancillary or subscription-based services to benefit their patients.

These doctors generally charge a monthly fixed fee that covers most of the care that the average patient and family will need, including telemedicine, annual checkups, basic blood work, urgent care, chronic condition care, medication management, and more, all without insurance paperwork and extra cost.

This disturbing trend reinforces the industry emphasis on generating profit vs. helping practitioners provide optimal health care. The unfortunate result is that physician and patient choice will continue to erode while costs rise and quality of care declines.

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

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.

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 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.

It’s no secret that hospital charges are skyrocketing. What’s worse is that these charges are disproportionate to actual hospital costs and that patients are often on the hook for outrageous medical bills that can result in extraordinary collection actions (ECAs) against them.

The outdated health insurance system is feeling increasingly less safe and prudent for employer-sponsored health plans, making change more attractive and attainable. What’s behind this significant shift?

In a recent Vitori Health Digital Forum, hundreds of advisors and employers shared the key factors that have heightened their willingness to take a more progressive approach to employer-sponsored health plans. Behind these dynamics is a compelling impulse to seek a competitive advantage, avoid future risk, and not lag behind more forward-looking peers.

1. Health Care Cost Increases
   Employers and advisors are tired of the continuous cost increases in the legacy insurance system. They are no longer willing to shift these costs to employees, who have seen their disposable income dwindle.
   dddd
2. Self-serving Industry Practices
   Continual revelations of unethical and potentially criminal practices on the part of hospital systems, insurance carriers, PBMs, and traditional insurance brokers have raised employer awareness that the legacy system does not serve their interests.
   xxxx
3. Talent Acquisition and Retentions
   To win the war for workers and talent, employers must free up money to increase salaries and bonuses, improve benefits, and more.
   xxxx
4. Reduced Market Competition
   Mergers and acquisitions among and between health systems, insurance carriers, PBMs, and pharmacies continue unchecked, each one reducing competition and increasing prices. Employers are demanding more competitive and more cost-effective health plan options.
   xxxx
5. Increased Adoption of Alternatives
   Approximately 1 in 15 employers currently deploy an alternative to legacy insurance carriers and PBMs. That number continues to grow as employers realize the benefits of alternatives.
   xxxx
6. Regulatory Actions
   Incumbent stakeholders are under tighter scrutiny from the Healthcare Price Transparency and No Surprises Acts, elements of the Consolidated Appropriations Act, proposed prescription drug pricing legislation, and more.
   xxxx
7. Fiduciary Responsibility
   Employers and their boards of directors, are increasingly concerned that they are breaching their fiduciary responsibility to manage shared employer and employee health plan assets and expenses, exposing them to the harsh litigation risks that have impacted employee retirement plans.

Collectively, these factors are accelerating employer transitions to health plans that reduce overspending, offer better member service, and free up money for workforce and business investments. Our ability to meet this market-driven need with a unique and comprehensive next-generation health plan helps to explain Vitori’s exponential growth.

A recent article posted to JAMA Network reveals how the dysfunctional interests of insurers, hospitals, pharmaceutical companies, and PBMs ultimately reduce quality of life for U.S. employees through financial distress induced by the health benefits market.

According to the authors, “It is assumed that insurers compete intensely to improve the value received by employers and employees by negotiating to keep prices down and advocating for employers and employees.” This is not the case, however.

The article shares that “…the mean premium for family coverage increased by 55% from 2010 to 2020 (from $13,770 to $21,342) and employee contributions increased by 40% (from $3,997 to $5,588). Deductibles per enrolled individual increased 110% (from $646 to $1,364) and, to reduce monthly premium deductions from their paychecks, 31% of employees are now enrolled in high-deductible health plans.

“Partly as a result of employer-paid costs of employee benefits rising faster than employer income…take-home pay for most workers stagnated, with real median wages increasing 11% from $62,865 in 2007 to $69,560 in 2019, depriving employees of wage gains resulting from growth in their productivity.

“In the absence of intense counterpressure from insurers, hospitals and most other health care organizations have prioritized growth of high-priced services and developed costly marketing strategies, rather than restructuring to become a low-cost, high-quality solution for employees.”

The top three health insurers work aggressively to increase their monopoly market share of provider contracts that offer little value yet keep providers from pursuing arrangements with alternative payers. Compounding this, healthcare competition is severely hindered as more health systems, many of which don’t pay taxes, merge and purchase hospitals and physician practices, raising prices with each acquisition.

In examining insurance company revenue, profit, and shareholder dynamics, the authors illustrate, shockingly, that “Even if an insurer manages to improve profit margins by 20% while slowing per capita spending growth to 2%, their projected share prices would be lower than if per capita spending growth continued to increase at a 4% rate.” Read that again.

Employers and employees are effectively trapped in this dysfunctional industry matrix that prioritizes rapid growth and financial performance for shareholders.

Although higher healthcare costs are an obvious result of this aberrant system, other costs are more subtle and toxic. In an effort to maintain financial viability, employers often transfer higher health plan costs to employees through lower or no wage increases and higher payroll deductions, plans deductibles, co-insurance, and co-pays.

In the end, employees experience net wage stagnation, are unable to pay their out-of-pocket share when they use healthcare, avoid getting preventive and chronic care, and endure a diminishing quality of life as a direct result of an underperforming healthcare market.

What’s needed are seismic structural changes throughout the industry and better enforcement of regulations designed to accelerate price transparency and competition. In the meantime, employers play a key role in disrupting a system that actively works against the best interests of their organization and their employees.

How? By choosing a high-performance health plan that can save 30%+ over legacy insurance carrier plans while delivering high-quality care and improved member support. When better benefits are offered at a lower cost, employers can improve the quality of life of their workforce and their families.